BILL ANALYSIS S.B. 982 By: Truan (Holzheauser) April 20, 1995 Committee Report (Unamended) BACKGROUND Currently, a person purchasing taxable items in Texas for resale in foreign countries must pay both state and local sales taxes on those purchases. Upon securing acceptable documentation proving that the items have been exported beyond the territorial limits of the United States and pursuant to the U.S. Constitution, the person may approach the Texas retailer where the items were purchased and obtain a refund of sales taxes paid. Prior to 1969, Mexican businesses could give a limited number of resale certificates to Texas businesses. Currently, resale certificates are not honored because of the inability to verify that items were purchased for resale in other countries. The Border States Caucus has developed a uniform information exchange agreement authorizing information exchange with Mexico, allowing Texas to confirm purchases for resale. PURPOSE This bill includes the United Mexican States in certain sales tax exemptions. 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 Section 151.006 ("Sale for Resale"), Tax Code, by expanding the definition of "sale for resale" to include the United Mexican States in addition to the United States of America or a possession or territory of the U.S.. SECTION 2. Amends Section 151.152 (Resale Certificate: Form), Tax Code, by adding Subsection (c), to require additional information on resale certificates from a person engaged in business in the United Mexican States. In addition to the information required in Subsection (b), certificates must include the purchaser's United Mexican States federal identification number and any other information required by the comptroller. SECTION 3. Amends Section 151.027 (Confidentiality of Tax Information), Subsection (c), Tax Code, to allow the Comptroller to authorize tax officials of the United Mexican States the right to examine confidential sales, use and excise tax information. SECTION 4. Amends Section 111.006 (Confidentiality of Information), Tax Code, by amending Subsection (a) and adding Subsection (d). (a) Provides that Subsection (d) is an exception to this section. (d) Authorizes information made confidential in this title (State Taxation) to be examined by a state officer, a law enforcement officer of this state, a tax official of another state, a tax official of the United Mexican States, an official of the United States, or an authorized representative of any of these officers or officials if: (1) the comptroller authorizes the examination, and (2) for an official or officer of another state, the United States, or the United Mexican States, there exists a reciprocal agreement allowing the comptroller to examine tax information in a similar manner. SECTION 5. Effective Date: September 1, 1995. SECTION 6. Emergency Clause. SUMMARY OF COMMITTEE ACTION Public notice was posted in accordance with the rules, and a public hearing was held on April 18, 1995. Representative Holzheauser explained the bill. By a record vote of 9 ayes, 0 nays, 0 present not voting and 2 absent, the committee voted to report S.B. 982 to the House without amendment with the recommendation that it be sent to the Local & Consent Calendar, and that it do pass. Testimony received in favor of the bill: Mickey Moore, representing the Texas Retailers Assn.