By: Armbrister S.B. No. 1199
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the taxation of items that are incorporated in or used
1-2 for the improvement of realty for exempt organizations; providing a
1-3 prior contracts exemption for certain equipment and machinery
1-4 purchases.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Section 151.311, Tax Code, is amended to read as
1-7 follows:
1-8 Sec. 151.311. TAXABLE ITEMS INCORPORATED INTO OR <PROPERTY>
1-9 USED FOR IMPROVEMENT OF REALTY OF AN EXEMPT ENTITY <OF A SCHOOL
1-10 DISTRICT OR NONPROFIT HOSPITAL>. (a) The purchase of tangible
1-11 personal property for use in the performance of a contract for an
1-12 improvement to realty for an organization exempted under Section
1-13 151.309 or 151.310 of this code is exempt if the tangible personal
1-14 property is incorporated into realty in the performance of the
1-15 contract.
1-16 (b) The purchase of tangible personal property, other than
1-17 machinery or equipment and its accessories and repair and
1-18 replacement parts, for use in the performance of a contract for an
1-19 improvement to realty for an organization exempted under Section
1-20 151.309 or 151.310 of this code is exempt if the tangible personal
1-21 property is:
1-22 (1) necessary and essential for the performance of the
1-23 contract; and
2-1 (2) completely consumed at the job site.
2-2 (c) The purchase of a taxable service for use in the
2-3 performance of a contract for an improvement to realty that is
2-4 performed for an organization exempted under Section 151.309 or
2-5 151.310 of this code is exempt if the service is performed at the
2-6 job site and if:
2-7 (1) the contract expressly requires the specific
2-8 service to be provided or purchased by the person performing the
2-9 contract; or
2-10 (2) the service is integral to the performance of the
2-11 contract.
2-12 (d) For purposes of this section, tangible personal property
2-13 is completely consumed if after being used once for its intended
2-14 purpose it is used up or destroyed. Tangible personal property
2-15 that is rented or leased for use in the performance of the contract
2-16 cannot be completely consumed for purposes of this section.
2-17 <Tangible personal property purchased by a contractor for use in
2-18 the performance of a contract for the improvement of realty for a
2-19 school district or nonprofit hospital is exempted from the taxes
2-20 imposed by this chapter to the extent of the value of the tangible
2-21 personal property used or consumed or both in the performance of
2-22 the contract. In this section "nonprofit hospital" means a
2-23 hospital licensed under Chapter 241 or 577, Health and Safety Code,
2-24 that is operated as a charitable or nonprofit establishment.>
2-25 SECTION 2. (a) There are exempted from the taxes imposed by
3-1 Chapter 151, Tax Code, machinery or equipment and its accessories
3-2 and repair and replacement parts purchased by a contractor for use
3-3 in the performance of a contract for the improvement of realty for
3-4 a school district or nonprofit hospital that became subject to
3-5 sales or use tax because of amendments to Section 151.311, Tax
3-6 Code, and that were purchased subject to a written contract or bid
3-7 entered into on or before the effective date of this Act. The
3-8 exemption provided by this section has no effect after three years
3-9 from the effective date of this Act.
3-10 (b) In this section, "nonprofit hospital" means a hospital
3-11 licensed under Chapter 241 or 577, Health and Safety Code, that is
3-12 operated as a charitable or nonprofit establishment.
3-13 SECTION 3. This Act takes effect on the first day of the
3-14 first quarter following the 91st day after the day on which the
3-15 73rd Legislature, Regular Session, 1993, adjourns.
3-16 SECTION 4. This Act applies to taxes due on or after the
3-17 effective date of this Act. Taxes due before the effective date of
3-18 this Act are governed by the law in effect when the taxes became
3-19 due, and that law is continued in effect for the collection of
3-20 taxes due and for civil and criminal enforcement of the liability
3-21 for those taxes.
3-22 SECTION 5. The importance of this legislation and the
3-23 crowded condition of the calendars in both houses create an
3-24 emergency and an imperative public necessity that the
3-25 constitutional rule requiring bills to be read on three several
4-1 days in each house be suspended, and this rule is hereby suspended.