By: Hirschi H.B. No. 387
73R1171 CBH-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the application of the sales tax to certain
1-3 intercorporate services.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Sections 151.346(a) and (b), Tax Code, are
1-6 amended to read as follows:
1-7 (a) There are exempt from the taxes imposed by this chapter
1-8 service transactions among:
1-9 (1) affiliated entities, at least one of which is a
1-10 corporation, that report their income to the Internal Revenue
1-11 Service on a single consolidated return for the tax year in which
1-12 the transaction occurs; and
1-13 (2) corporations that are members of a brother-sister
1-14 controlled group if the company providing the service:
1-15 (A) receives only reimbursement for providing
1-16 the service in the amount of the overhead costs for providing the
1-17 service only;
1-18 (B) provides the service only to other members
1-19 of the controlled group; and
1-20 (C) does not offer the service to the public.
1-21 (b) For purposes of this section:
1-22 (1) "Affiliated<, "affiliated> entity" includes an
1-23 entity that would be classified as a member of an affiliated group
1-24 under 26 U.S.C. Section 1504 but for the exclusions provided by
2-1 that section.
2-2 (2) "Brother-sister controlled group" has the meaning
2-3 assigned by Section 1563(a)(2), Internal Revenue Code of 1986.
2-4 SECTION 2. This Act takes effect October 1, 1993.
2-5 SECTION 3. The importance of this legislation and the
2-6 crowded condition of the calendars in both houses create an
2-7 emergency and an imperative public necessity that the
2-8 constitutional rule requiring bills to be read on three several
2-9 days in each house be suspended, and this rule is hereby suspended.