74R11214 JD-F
By Rusling, Averitt, et al. H.B. No. 2608
Substitute the following for H.B. No. 2608:
By Craddick C.S.H.B. No. 2608
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the exemption from ad valorem taxation of certain
1-3 tangible personal property held at a location for not more than a
1-4 specified period.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Sections 11.251(a), (e)-(g), and (i)-(k), Tax
1-7 Code, are amended to read as follows:
1-8 (a) In this section, "freeport goods" means property that
1-9 under Section 1-m, Article VIII, <Section 1-j, of the> Texas
1-10 Constitution, is not taxable.
1-11 (e) In determining the market value of freeport goods that
1-12 in the preceding year were assembled, manufactured, repaired,
1-13 maintained, processed, or fabricated in this state or used by the
1-14 person who acquired or imported the property in the repair or
1-15 maintenance of aircraft operated by a certificated air carrier, the
1-16 chief appraiser shall exclude the cost of equipment, machinery, or
1-17 materials that entered into and became component parts of the
1-18 freeport goods but were not themselves freeport goods or that were
1-19 not transported to another location in this state or outside the
1-20 state before the expiration of 270 <175> days after the date they
1-21 were brought into this state by the property owner or acquired by
1-22 the property owner in this state. For component parts held in
1-23 bulk, the chief appraiser may use the average length of time a
2-1 component part was held at a location in this state by the property
2-2 owner during the preceding year in determining whether the
2-3 component parts were transported to another location in this state
2-4 or out of this state before the expiration of 270 <175> days.
2-5 (f) If the property owner was not engaged in transporting
2-6 freeport goods to other locations in this state or out of this
2-7 state for the entire preceding year, the chief appraiser shall
2-8 calculate the percentage of cost described in Subsection (d) for
2-9 the portion of the year in which the property owner was engaged in
2-10 transporting freeport goods to other locations in this state or
2-11 out of this state.
2-12 (g) If the property owner or the chief appraiser
2-13 demonstrates that the method provided by Subsection (d)
2-14 significantly understates or overstates the market value of the
2-15 property qualified for an exemption under Subsection (b) in the
2-16 current year, the chief appraiser shall determine the market value
2-17 of the freeport goods to be exempt by determining, according to the
2-18 property owner's records and any other available information, the
2-19 market value of those freeport goods owned by the property owner on
2-20 January 1 of the current year, excluding the cost of equipment,
2-21 machinery, or materials that entered into and became component
2-22 parts of the freeport goods but were not themselves freeport goods
2-23 or that were not transported to other locations in this state or
2-24 outside the state before the expiration of 270 <175> days after the
2-25 date they were brought into this state by the property owner or
3-1 acquired by the property owner in this state.
3-2 (i) The exemption provided by Subsection (b) does not apply
3-3 to:
3-4 (1) a school district created under Section 3, Article
3-5 VII, Texas Constitution, other than a junior college district; or
3-6 (2) a taxing unit that takes action to tax the
3-7 property under Section 1-m(d), Article VIII, Texas Constitution.
3-8 <Article VIII, Section 1-j, Subsection (b), of the Texas
3-9 Constitution.>
3-10 (j) Petroleum products as set forth in Section 1-m, Article
3-11 VIII, <Section 1-j, of the> Texas Constitution, shall mean liquid
3-12 and gaseous materials that are the immediate derivatives of the
3-13 refining of oil or natural gas.
3-14 (k) Property that meets the requirements of Section 1-m(a),
3-15 Article VIII, <Sections 1-j(a)(1) and (2), of the> Texas
3-16 Constitution, and that is transported to another location in this
3-17 state or outside of this state not later than 270 <175> days after
3-18 the date the person who owns it on January 1 acquired it or
3-19 imported it into this state is freeport goods regardless of whether
3-20 the person who owns it on January 1 is the person who transports it
3-21 to another location in this state or outside of this state.
3-22 SECTION 2. Section 11.436(a), Tax Code, as added by Chapter
3-23 779, Acts of the 73rd Legislature, 1993, is amended to read as
3-24 follows:
3-25 (a) A person who operates a warehouse used primarily for the
4-1 storage of cotton for transportation to other locations in this
4-2 state or outside of this state may apply for an exemption under
4-3 Section 11.251 for cotton stored in the warehouse on behalf of all
4-4 the owners of the cotton. An exemption granted under this section
4-5 applies to all cotton stored in the warehouse that is eligible to
4-6 be exempt under Section 11.251. Cotton that is stored in a
4-7 warehouse covered by an exemption granted under this section and
4-8 that is transported to other locations in this state or outside of
4-9 this state is presumed to have been transported to other locations
4-10 in this state or outside of this state within the time permitted by
4-11 Section 1-m, Article VIII, <Section 1-j, of the> Texas
4-12 Constitution, for cotton to qualify for an exemption under that
4-13 section.
4-14 SECTION 3. Section 22.01(e), Tax Code, is amended to read as
4-15 follows:
4-16 (e) Notwithstanding Subsections (a) and (b), a person is not
4-17 required to render for taxation cotton that:
4-18 (1) the person manages and controls as a fiduciary;
4-19 (2) is stored in a warehouse for which an exemption
4-20 for cotton has been granted under Section 11.436; and
4-21 (3) the person intends to transport to other locations
4-22 in this state or outside of this <the> state within the time
4-23 permitted by Section 1-m, Article VIII, <Section 1-j, of the> Texas
4-24 Constitution, for cotton to qualify for an exemption under that
4-25 section.
5-1 SECTION 4. Section 26.04, Tax Code, is amended by adding
5-2 Subsection (m) to read as follows:
5-3 (m) The rollback tax rate in the 1996 tax year of a taxing
5-4 unit that in the 1995 tax year taxed property exempt under Section
5-5 11.251 in the 1996 tax year is calculated as otherwise provided by
5-6 this section, except that last year's levy used to calculate the
5-7 effective maintenance and operations rate of the unit is increased
5-8 by the amount of taxes imposed by the unit in the 1995 tax year on
5-9 property exempt under Section 11.251 in the 1996 tax year. This
5-10 subsection expires January 1, 1997.
5-11 SECTION 5. This Act takes effect January 1, 1996, and
5-12 applies only to taxes imposed for tax years beginning on or after
5-13 that date, but only if the constitutional amendment proposed by
5-14 H.J.R. No. 107, 74th Legislature, Regular Session, 1995, takes
5-15 effect. If that amendment is not approved by the voters, this Act
5-16 has no effect.
5-17 SECTION 6. The importance of this legislation and the
5-18 crowded condition of the calendars in both houses create an
5-19 emergency and an imperative public necessity that the
5-20 constitutional rule requiring bills to be read on three several
5-21 days in each house be suspended, and this rule is hereby suspended.