BILL ANALYSIS


                                                         H.B. 596
                                             By: Duncan (Sponsor)
                                                          Finance
                                                          4-28-95
                              Senate Committee Report (Unamended)
BACKGROUND

Chapter 151H, Tax Code, provides for exemptions on limited sales,
excise, and use taxes.  Currently, student organizations at public
institutions of higher education can qualify for tax exempt status
only by engaging in a lengthy process.  The staff of the
administrative office of these organizations changes frequently
enough to make compliance with the complex rules and requirements
necessary to obtain and maintain the exemption difficult.

PURPOSE

As proposed, H.B. 596 exempts sales by university and college
student organizations from the state sales tax.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not grant any
additional rulemaking authority to a state officer, institution, or
agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Chapter 151H, Tax Code, by adding Section
151.321, as follows:

     Sec. 151.321.  UNIVERSITY AND COLLEGE STUDENT ORGANIZATIONS. 
     (a) Exempts a taxable item sold by a qualified student
     organization from the taxes imposed by Subchapter C if the
     student organization sells the items at a sale that may last
     for one day only to raise funds for the organization and holds
     not more than one sale under Subdivision (1) each month for
     which the exemption is claimed for an item sold.
     
     (b) Declares that a student organization qualifies for the
       exemption if the student organization is affiliated with an
       institution of higher education or a private or independent
       college or university in this state and accredited by a
       recognized accrediting agency; has as its primary purpose a
       purpose other than engaging in business or performing an
       activity designed to make a profit; and files a
       certification with the comptroller as required by Subsection
       (c).
       
       (c) Requires a student organization to file with the
       comptroller a certification issued by the institution,
       college, or university under Subsection (b)(1) showing that
       the organization is affiliated with the institution,
       college, or university.  Declares that the certification is
       valid for two years after the date that the comptroller
       receives it.
       
       (d) Exempts the storage, use, or consumption of a taxable
       item acquired tax-free under this section from the use tax
       imposed by Subchapter D until the item is resold or
       subsequently transferred.
       
       SECTION 2.   (a) Effective date: the first day of the first calendar
quarter beginning on or after the date that it may take effect
under Section 39, Article III, Texas Constitution.

     (b) Makes application of this Act prospective.
     
     SECTION 3.     Emergency clause.