By Horn H.B. No. 1760
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the sales tax treatment of nonresidential real property
1-3 construction services; and declaring an emergency.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 151.0047, Tax Code, is amended to read as
1-6 follows:
1-7 Sec. 151.0047. "Nonresidential Real Property Construction
1-8 Services <Repairs and Remodeling>." "Nonresidential real property
1-9 construction services <repairs and remodeling> means the repair,
1-10 restoration, remodeling, maintenance, <or> modification,
1-11 demolition, or initial construction of an improvement to real
1-12 property other than<:> residential real property, as defined in
1-13 Section 151.056.
1-14 <(1) a structure or separate part of a structure used
1-15 as a residence by an owner of the structure or of the separate part
1-16 of the structure; or>
1-17 <(2) an improvement immediately adjacent to a
1-18 structure described by Subdivision (1) of this section and used in
1-19 the residential occupancy of the structure or separate part of the
1-20 structure by the owner using the structure or part as a residence.>
1-21 SECTION 2. Subsection (a), Section 151.0101, Tax Code, is
1-22 amended to read as follows:
1-23 Sec. 151.0101. "Taxable Services." (a) "Taxable services"
2-1 means:
2-2 (1) amusement services;
2-3 (2) cable television services;
2-4 (3) personal services;
2-5 (4) motor vehicle parking and storage services;
2-6 (5) the repair, remodeling, maintenance, and
2-7 restoration of tangible personal property, except:
2-8 (A) aircraft;
2-9 (B) a ship, boat, or other vessel, other than:
2-10 (i) a taxable boat or motor as defined by
2-11 Section 160.001;
2-12 (ii) a sports fishing boat; or
2-13 (iii) any other vessel used for pleasure;
2-14 (C) the repair, maintenance, and restoration of
2-15 a motor vehicle; and
2-16 (D) the repair, maintenance, creation, and
2-17 restoration of a computer program, including its development and
2-18 modification, not sold by the person performing the repair,
2-19 maintenance, creation, or restoration service;
2-20 (6) telecommunications services;
2-21 (7) credit reporting services;
2-22 (8) debt collection services;
2-23 (9) insurance services;
2-24 (10) information services;
2-25 (11) real property services;
3-1 (12) data processing services;
3-2 (13) nonresidential real property construction
3-3 services <repair and remodeling>;
3-4 (14) security services; and
3-5 (15) telephone answering services.
3-6 SECTION 3. The title, and Subsections (a), (b), and (d),
3-7 Section 151.056, Tax Code, are amended to read as follows:
3-8 Sec. 151.056. PROPERTY CONSUMED IN CONTRACTS TO IMPROVE
3-9 RESIDENTIAL REAL PROPERTY. (a) A contractor who improves
3-10 residential real property is the consumer of tangible personal
3-11 property furnished by him and incorporated into the property of his
3-12 customer if the contract between the contractor and his customer
3-13 contains a lump-sum price covering both the performance of the
3-14 service and the furnishing of the necessary incidental materials.
3-15 (b) A contractor who improves residential real property is
3-16 the seller of tangible personal property furnished by him and
3-17 incorporated into the property of his customer, from whom he shall
3-18 collect the tax, if the contract between the contractor and his
3-19 customer contains separate amounts for the performance of the
3-20 service and for the furnishing of the necessary incidental
3-21 material. The tax rate is applied to the price of the materials as
3-22 agreed in the contract or the price of the materials to the
3-23 contractor, whichever is the greater.
3-24 (d) In this section:<,>
3-25 (1) "contractor" means a person, other than one who
4-1 makes sales of taxable services, who makes an improvement on real
4-2 estate and who, as a necessary or incidental part of the service,
4-3 incorporates tangible personal property into the property improved;
4-4 and <.>
4-5 (2) "residential" means:
4-6 (i) property used as a family dwelling or a
4-7 multifamily apartment or housing complex, nursing homes,
4-8 condominiums, or retirement homes. The term does not include a
4-9 hotel or other facility which is subject to the hotel occupancy
4-10 tax; or
4-11 (ii) a building listed in the National Register
4-12 of Historic Places.
4-13 SECTION 4. Chapter 151, Tax Code, is amended by adding a new
4-14 Section 151.0561 to read as follows:
4-15 Sec. 151.0561. CONTRACTS TO PERFORM NONRESIDENTIAL REAL
4-16 PROPERTY CONSTRUCTION SERVICES. (a) The sales price of
4-17 nonresidential real property construction services is ____
4-18 percentage of the net contract price, as defined in Subsection (b)
4-19 of this section.
4-20 (b) "Net contract price" means the agreed upon written
4-21 contract price less, if separately stated in the
4-22 contract: engineering fees, architectural fees, and the cost of
4-23 manufacturing equipment exempted under Section 151.318 of this
4-24 code.
4-25 (c) Persons performing nonresidential construction services
5-1 may purchase taxable items, other than machinery or equipment, for
5-2 use or incorporation in the performance of the contract, for
5-3 resale.
5-4 SECTION 5. The title and Subsection (a), Section 151.311,
5-5 Tax Code, are amended to read as follows:
5-6 Sec. 151.311. TAXABLE ITEMS <PROPERTY> INCORPORATED INTO OR
5-7 USED FOR IMPROVEMENT OF REALTY OF AN EXEMPT ENTITY <OF A SCHOOL
5-8 DISTRICT OR NONPROFIT HOSPITAL>. (a) A taxable item, other than
5-9 machinery or equipment, purchased for use or incorporation in the
5-10 performance of a contract for either the improvement of residential
5-11 real property or nonresidential construction services for an
5-12 organization exempted under Sections 151.309 or 151.310 of this
5-13 code, is exempted from the taxes imposed by this chapter.
5-14 <Tangible personal property purchased by a contractor for use in
5-15 the performance of a contract for the improvement of realty for a
5-16 school district or nonprofit hospital is exempted from the taxes
5-17 imposed by this chapter to the extent of the value of the tangible
5-18 personal property used or consumed or both in the performance of
5-19 the contract. In this section "nonprofit hospital" means a
5-20 hospital licensed under Chapter 241 or 577, Health and Safety Code,
5-21 that is operated as a charitable or nonprofit establishment>.
5-22 SECTION 6. Section 321.203, Tax Code, is amended by adding a
5-23 new Subsection (l) to read as follows:
5-24 (l) The sale of nonresidential real property construction
5-25 services is consummated at the location where the services are
6-1 being performed.
6-2 SECTION 7. Section 323.203, Tax Code, is amended by adding a
6-3 new Subsection (l) to read as follows:
6-4 (l) The sale of nonresidential real property construction
6-5 services is consummated at the location where the services are
6-6 being performed.
6-7 SECTION 8. This Act takes effect October 1, 1993 and applies
6-8 to all nonresidential real property construction services contracts
6-9 entered into on or after October 1, 1993.
6-10 SECTION 9. The importance of this legislation and the
6-11 crowded condition of the calendars in both houses create an
6-12 emergency and imperative public necessity that the constitutional
6-13 rule requiring bills to be read on three several day in each house
6-14 be suspended, and this rule is hereby suspended.