BILL ANALYSIS H.B. 596 By: Duncan March 15, 1995 Committee Report (Unamended) BACKGROUND Chapter 151, Tax Code is the Limited Sales, Excise, and Use Tax Act. Subchapter H, Chapter 151, Tax Code, provides for exemptions on limited sales, excise, and use taxes. Currently, student organizations at public institutions of higher education can only qualify for a tax exempt status by going through a lengthy process. Because the administrative offices in these organizations turn over frequently, compliance with the complex rules and requirements necessary to obtain and maintain the exemption is difficult. PURPOSE This bill proposes to exempt a taxable item sold by a non-profit student organization, that is affiliated with a public or private institution of higher education and that has no more than one single-day sale per month, from the state sales tax and from the state use tax until the item is sold or transferred by the purchaser RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter H, Chapter 151, Tax Code, by adding Section 151.321 (University and College Student Organizations). (a) Exempts a taxable item sold by a student organization from the state sales tax if the organization holds no more than one single-day sale per month. (b) Allows the exemption to be applied only to qualified, not-for-profit student organizations affiliated with a recognized institution of higher education who files a certification with the Comptroller as required under subsection (c). (c) Requires a student organization to file a biennial certification with the Comptroller to verify its qualification for the exemption. (d) Exempts a taxable item sold by a student organization under this section from the state use tax until the item is resold or transferred by the purchaser. SECTION 2. Effective date of the first quarter that follows either ninety days after adjournment of the session or the first day of the calendar quarter that follows immediate effect depending on whether the bill obtains two-thirds vote of all members of each house. SECTION 3. Emergency Clause SUMMARY OF COMMITTEE ACTION Public notice was posted in accordance to the rules and a public hearing was held on March 14, 1995. Representatives Duncan and Naishtat explained the bill. By a record vote of 7 ayes, 0 nays, 0 present not voting and 4 absent, the committee voted to report H.B. 596 to the House without amendment with the recommendation that it be sent to the Local and Consent Calendar and that it do pass.