Floor Packet Page No. 159
Amend CSHB 4 as follows:
1. Strike ARTICLE 3 and substitute the following:
ARTICLE 3. FRANCHISE TAX
SECTION 3.01. Section 171.001(b), Tax Code, is amended to
read as follows:
(b) In this chapter:
(1) "Banking corporation" means each state, national,
domestic, or foreign bank, including a limited banking association,
as defined by Section 1.002(a), Texas Banking Act (Article
342-1.002, Vernon's Texas Civil Statutes), and each bank organized
under Section 25(a), Federal Reserve Act (12 U.S.C. Secs. 611-631)
(edge corporations), but does not include a bank holding company
as that term is defined by Section 2, Bank Holding Company Act of
1956 (12 U.S.C. Sec. 1841).
(2) "Beginning date" means:
(A) for a corporation chartered in this state,
the date on which the corporation's charter takes effect; and
(B) a foreign corporation, the earlier of the
date on which:
(i) the corporation's certificate of
authority takes effect; or
(ii) the corporation begins doing business
in this state.
(3) "Commercial domicile" means the principal location
of a taxable entity's day-to-day commercial operations. If the
taxable entity conducts its day-to-day commercial operations
equally or substantially equally in more than one state or foreign
country, "commercial domicile" means the state or foreign country
in which:
(A) is located the principal location from which
the day-to-day operations of the taxable entity are directed; and
(B) the taxable entity conducts significant
commercial operations.
(4) "Corporation" includes:
(A) a limited liability company, as defined
under the Texas Limited Liability Company Act; and
(B) a state or federal savings and loan
association.
(5) <(4)> "Charter" includes a limited liability
company's certificate of organization.
(6) <(5)> "Internal Revenue Code" means the Internal
Revenue Code of 1986 in effect for the federal tax year beginning
on or after January 1, 1996 <1994>, and before January 1, 1997
<1995>, and any regulations adopted under that code applicable to
that period.
(7) <(6)> "Officer" and "director" include a limited
liability company's directors and managers and a limited banking
association's directors and managers and participants if there are
no directors or managers.
(8) <(7)> "Savings and loan association" includes a
state or federal savings bank.
(9) <(8)> "Shareholder" includes a limited liability
company's member and a limited banking association's participant.
SECTION 3.02. Subchapter B, Chapter 171, Tax Code, is amended
by adding Section 171.0515 to read as follows:
Sec. 171.0515. UNRELATED BUSINESS TAXABLE INCOME OF AN EXEMPT
TAXABLE ENTITY. A taxable entity, otherwise exempt from the tax
imposed by this chapter, is subject to the net taxable earned
surplus component of the franchise tax to the extent of its
unrelated business taxable income, as defined by the Internal
Revenue Code.
SECTION 3.07. Section 171.063(a), Tax Code, is amended to
read as follows:
(a) The following corporations are exempt from the franchise
tax:
(1) a nonprofit corporation exempted from the federal
income tax under Section 501(c)(3), (4), (5), (6), (7), (8),
(10), or (19), Internal Revenue Code, which in the case of a
nonprofit hospital means a hospital providing charity care and
community benefits as set forth in Paragraph (A), (B), (C), (D),
(E), (F), or (G):
(A) charity care and government-sponsored
indigent health care are provided at a level which is reasonable in
relation to the community needs, as determined through the
community needs assessment, the available resources of the hospital
or hospital system, and the tax-exempt benefits received by the
hospital or hospital system;
(B) charity care and government-sponsored
indigent health care are provided in an amount equal to at least
four percent of the hospital's or hospital system's net patient
revenue;
(C) charity care and government-sponsored
indigent health care are provided in an amount equal to at least
100 percent of the hospital's or hospital system's tax-exempt
benefits, excluding federal income tax;
(D) for tax periods beginning before January 1,
1996, charity care and community benefits are provided in a
combined amount equal to at least five percent of the hospital's
net patient revenue, provided that charity care and
government-sponsored indigent health care are provided in an amount
equal to at least three percent of net patient revenue;
(E) for tax periods beginning after December 31,
1995, charity care and community benefits are provided in a
combined amount equal to at least five percent of the hospital's
or hospital system's net patient revenue, provided that charity
care and government-sponsored indigent health care are provided in
an amount equal to at least four percent of net patient revenue;
(F) a nonprofit hospital that has been
designated as a disproportionate share hospital under the state
Medicaid program in the current year or in either of the previous
two fiscal years is considered to have provided a reasonable amount
of charity care and government-sponsored indigent health care and
is considered in compliance with the standards provided by this
subsection; or
(G) a hospital operated on a nonprofit basis
that is located in a county with a population of less than 50,000
and in which the entire county or the population of the entire
county has been designated as a health professionals shortage area
is considered in compliance with the standards provided by this
subsection;
(2) a corporation exempted under Section 501(c)(2) or
(25), Internal Revenue Code, if the corporation or corporations for
which it holds title to property is either exempt from or not
subject to the franchise tax;
(3) a corporation exempted from federal income tax
under Section 501(c)(16), Internal Revenue Code; and
(4) a nonprofit corporation exempted from the federal
income tax under Section 501(c)(3), Internal Revenue Code, that
does not receive any payment for providing health care services to
inpatients or outpatients from any source including but not limited
to the patient or person legally obligated to support the patient,
third-party payors, Medicare, Medicaid, or any other state or
local indigent care program. Payment for providing health care
services does not include charitable donations, legacies,
bequests, or grants or payments for research.
For purposes of satisfying Paragraph (E) of Subdivision (1),
a hospital or hospital system may not change its existing fiscal
year unless the hospital or hospital system changes its ownership
or corporate structure as a result of a sale or merger.
For purposes of this subsection, a hospital that satisfies
Paragraph (A), (F), or (G) of Subdivision (1) shall be excluded in
determining a hospital system's compliance with the standards
provided by Paragraph (B), (C), (D), or (E) of Subdivision (1).
For purposes of this subsection, the terms "charity care,"
"government-sponsored indigent health care," "health care
organization," "hospital system," "net patient revenue," "nonprofit
hospital," and "tax-exempt benefits" have the meanings set forth
in Sections 311.031 and 311.042, Health and Safety Code. A
determination of the amount of community benefits and charity care
and government-sponsored indigent health care provided by a
hospital or hospital system and the hospital's or hospital
system's compliance with the requirements of Section 311.045,
Health and Safety Code, shall be based on the most recently
completed and audited prior fiscal year of the hospital or
hospital system.
The providing of charity care and government-sponsored
indigent health care in accordance with Paragraph (A) of
Subdivision (1) shall be guided by the prudent business judgment
of the hospital which will ultimately determine the appropriate
level of charity care and government-sponsored indigent health care
based on the community needs, the available resources of the
hospital, the tax-exempt benefits received by the hospital, and
other factors that may be unique to the hospital, such as the
hospital's volume of Medicare and Medicaid patients. These
criteria shall not be determinative factors, but shall be
guidelines contributing to the hospital's decision along with other
factors which may be unique to the hospital. The formulas
contained in Paragraphs (B), (C), (D), and (E) of Subdivision (1)
shall also not be considered determinative of a reasonable amount
of charity care and government-sponsored indigent health care.
The requirements of this subsection shall not apply to the
extent a hospital or hospital system demonstrates that reductions
in the amount of community benefits, charity care, and
government-sponsored indigent health care are necessary to maintain
financial reserves at a level required by a bond covenant, are
necessary to prevent the hospital or hospital system from
endangering its ability to continue operations, or if the hospital,
as a result of a natural or other disaster, is required
substantially to curtail its operations.
In any fiscal year that a hospital or hospital system,
through unintended miscalculation, fails to meet any of the
standards in Subdivision (1), the hospital or hospital system
shall not lose its tax-exempt status without the opportunity to
cure the miscalculation in the fiscal year following the fiscal
year the failure is discovered by both meeting one of the standards
and providing an additional amount of charity care and government-
sponsored indigent health care that is equal to the shortfall from
the previous fiscal year. A hospital or hospital system may apply
this provision only once every five years.
SECTION 3.03. Section 171.103, Tax Code, is amended to read
as follows:
Sec. 171.103. DETERMINATION OF GROSS RECEIPTS FROM BUSINESS
DONE IN THIS STATE FOR TAXABLE CAPITAL. (a) In apportioning taxable
capital, the gross receipts of a corporation from its business done
in this state is the sum of the corporation's receipts from:
(1) each sale of tangible personal property if the
property is delivered or shipped to a buyer in this state
regardless of the FOB point or another condition of the sale, and
each sale of tangible personal property shipped from this state to
a purchaser in another state in which the seller is not subject to
taxation;
(2) each service performed in this state;
(3) each rental of property situated in this state;
(4) each <royalty for the> use of a patent, <or>
copyright, trademark, franchise, or license in this state; <and>
(5) each sale of real property located in this state,
including royalties for oil, gas, or other mineral interests; and
(6) other business done in this state.
(b) If a corporation sells an investment or capital asset,
the corporation's gross receipts from business done in this state
include only the gain from the sale.
(c) Gross receipts from interest, dividends, sales of
intangibles, and other business done in this state shall be
apportioned to this state if:
(1) the commercial domicile of the recipient is in
this state; and
(2) the gross receipt is not interest from, a dividend
from, or the sale of stock of a subsidiary, associate, or
affiliated corporation:
(A) whose income is received predominantly from
sources outside of the United States or from a subsidiary,
associate, or affiliated corporation whose income is predominantly
from sources outside of the United States; and
(B) that does not transact and does not have a
subsidiary that transacts a substantial portion of its business, or
regularly maintains a substantial portion of its assets, in the
United States.
(d) For purposes of Subsection(c)(2)(B), a holding company
incorporated in the United States that owns stock only of a
subsidiary, associate, or affiliated corporation that transacts
substantially all of its business outside of the United States or
of another holding company that owns stock only of a subsidiary,
associate, or affiliated corporation that transacts substantially
all of its business outside of the United States does not transact
a substantial portion of its business or regularly maintain a
substantial portion of its assets in the United States.
(e) In apportioning taxable capital of a telephone company
or a transportation company, the comptroller shall adopt rules to
apportion to this state receipts from this state's portion of a
transaction within and without this state.
SECTION 3.04. Section 171.1032, Tax Code, is amended to read
as follows:
Sec. 171.1032. DETERMINATION OF GROSS RECEIPTS FROM BUSINESS
DONE IN THIS STATE FOR TAXABLE EARNED SURPLUS. (a) Except for the
gross receipts of a corporation that are subject to the provisions
of Section 171.1061, in apportioning taxable earned surplus, the
gross receipts of a corporation from its business done in this
state is the sum of the corporation's receipts from:
(1) each sale of tangible personal property if the
property is delivered or shipped to a buyer in this state
regardless of the FOB point or another condition of the sale, and
each sale of tangible personal property shipped from this state to
a purchaser in another state in which the seller is not subject to
any tax on, or measured by, net income, without regard to whether
the tax is imposed;
(2) each service performed in this state;
(3) each rental of property situated in this state;
(4) each <royalty for the> use of a patent,
<or>copyright, trademark, franchise, or license in this state;
and
(5) each sale of real property located in this state,
including royalties for oil, gas, or other mineral interests; and
(6) other business done in this state.
(b) If a corporation sells an investment or capital asset,
the corporation's gross receipts from business done in this state
include only the gain from the sale <A corporation shall deduct
from its gross receipts computed under Subsection (a) any amount to
the extent included under Subsection (a) because of the application
of Section 78 or Sections 951 964, Internal Revenue Code, and
dividends received from a subsidiary, associate, or affiliated
corporation that does not transact a substantial portion of its
business or regularly maintain a substantial portion of its assets
in the United States>.
(c) Gross receipts from interest, dividends, sales of
intangibles, and other business done in this state shall be
apportioned to this state if:
(1) the commercial domicile of the recipient is in
this state; and
(2) the gross receipt is not interest from, a dividend
from, or the sale of stock of, a subsidiary, associate, or
affiliated corporation:
(A) whose income is received predominantly from
sources outside of the United States or from a subsidiary,
associate, or affiliated corporation whose income is predominantly
from sources outside of the United States; and
(B) that does not transact and does not have a
subsidiary that transacts a substantial portion of its business, or
regularly maintains a substantial portion of its assets, in the
United States.
(d) For purposes of Subsection (c)(2)(B), a holding company
incorporated in the United States that owns stock only of a
subsidiary, associate, or affiliated corporation that transacts
substantially all of its business outside of the United States or
of another holding company that owns stock only of a subsidiary,
associate, or affiliated corporation that transacts substantially
all of its business outside of the United States does not transact
a substantial portion of its business or regularly maintain a
substantial portion of its assets in the United States.
(e) In apportioning taxable earned surplus of a telephone
company or a transportation company, the comptroller shall adopt
rules to apportion to this state receipts from this state's portion
of a transaction within and without this state.
SECTION 3.05. Section 171.106, Tax Code, is amended to read
as follows:
Sec. 171.106. APPORTIONMENT OF TAXABLE CAPITAL AND TAXABLE
EARNED SURPLUS TO THIS STATE. (a) A corporation's <Except as
provided by Subsection (c), a corporation's> taxable capital is
apportioned to this state to determine the amount of the tax
imposed under Section 171.002(b)(1) by multiplying the
corporation's taxable capital by a fraction, the numerator of
which is the corporation's gross receipts from business done in
this state, as determined under Section 171.103 or 171.1031, as
applicable, and the denominator of which is the corporation's gross
receipts from its entire business, as determined under Section
171.105.
(b) A corporation's <Except as provided by Subsection (c), a
corporation's> taxable earned surplus is apportioned to this state
to determine the amount of tax imposed under Section 171.002(b)(2)
by multiplying the taxable earned surplus by a fraction, the
numerator of which is the corporation's gross receipts from
business done in this state, as determined under Section 171.1031
or 171.1032, as applicable, and the denominator of which is the
corporation's gross receipts from its entire business, as
determined under Section 171.1051.
<(c) A corporation's taxable capital or earned surplus that
is derived, directly or indirectly, from the sale of management,
distribution, or administration services to or on behalf of a
regulated investment company, including a corporation that includes
trustees or sponsors of employee benefit plans that have accounts
in a regulated investment company, is apportioned to this state to
determine the amount of the tax imposed under Section 171.002 by
multiplying the corporation's total taxable capital or earned
surplus from the sale of services to or on behalf of a regulated
investment company by a fraction, the numerator of which is the
average of the sum of shares owned at the beginning of the year and
the sum of shares owned at the end of the year by the investment
company shareholders who are commercially domiciled in this state,
and the denominator of which is the average of the sum of shares
owned at the beginning of the year and the sum of shares owned at
the end of the year by all investment company shareholders. The
corporation shall make a separate computation to allocate taxable
capital and earned surplus. In this subsection, "regulated
investment company" has the meaning assigned by Section 851(a),
Internal Revenue Code.>
SECTION 3.06. Section 171.109, Tax Code, as amended by
Chapters 801 and 1198, Acts of the 71st Legislature, Regular
Session, 1989, is amended to read as follows:
Sec. 171.109. SURPLUS. (a) In this chapter:
(1) "Surplus" means the net assets of a corporation
minus its stated capital. For a limited liability company,
"surplus" means the net assets of the company minus its members'
contributions. Surplus includes unrealized, estimated, or
contingent losses or obligations or any writedown of assets other
than those listed in Subsection (i) of this section net of
appropriate income tax provisions. The definition under this
subdivision does not apply to earned surplus.
(2) "Net assets" means the total assets of a
corporation minus its total debts.
(3) "Debt" means any legally enforceable obligation
measured in a certain amount of money which must be performed or
paid within an ascertainable period of time or on demand.
(b) Except as otherwise provided in this section, a
corporation must compute its surplus, assets, and debts according
to generally accepted accounting principles. If generally
accepted accounting principles are unsettled or do not specify an
accounting practice for a particular purpose related to the
computation of surplus, assets, or debts, the comptroller by rule
may establish rules to specify the applicable accounting practice
for that purpose.
(c) A corporation whose taxable capital is less than $1
million may report its surplus according to the method used in the
corporation's most recent federal income tax return originally due
on or before the date on which the corporation's franchise tax
report is originally due. In determining if taxable capital is
less than $1 million, the corporation shall apply the methods the
corporation used in computing that federal income tax return
unless another method is required under this chapter.
(d) A corporation shall report its surplus based solely on
its own financial condition. Consolidated reporting of the surplus
of related corporations is prohibited.
(e) A corporation <Unless the provisions of Section 171.111
apply due to an election under that section, a corporation> may not
change the accounting methods used to compute its surplus more
often than once every four years without the written consent of
the comptroller. A change in accounting methods is not justified
solely because it results in a reduction of tax liability.
(f) A corporation declaring dividends shall exclude those
dividends from its taxable capital, and a corporation receiving
dividends shall include those dividends in its gross receipts and
taxable capital as of the earlier of:
(1) the date the dividends are declared, if the
dividends are actually paid within one year after the declaration
date; or
(2) the date the dividends are actually paid.
(g) All oil and gas exploration and production activities
conducted by a corporation that reports its surplus according to
generally accepted accounting principles as required or permitted
by this chapter must be reported according to the successful
efforts or the full cost method of accounting.
(h) A parent or investor corporation must use the cost
method of accounting in reporting and calculating the franchise tax
on its investments in subsidiary corporations or other investees.
The retained earnings of a subsidiary corporation or other investee
before acquisition by the parent or investor corporation may not
be excluded from the cost of the subsidiary corporation or investee
to the parent or investor corporation and must be included by the
parent or investor corporation in calculating its surplus.
(i) The following accounts may also be excluded from
surplus, to the extent they are in conformance with generally
accepted accounting principles or the appropriate federal income
tax method, whichever is applicable:
(1) a reserve or allowance for uncollectable accounts;
and
(2) a contra-asset account for depletion,
depreciation, or amortization.
(j) A corporation may not exclude from surplus:
(1) liabilities for compensation and other benefits
provided to employees, other than wages, that are not debt as of
the end of the accounting period on which the taxable capital
component is based, including retirement, medical, insurance,
postretirement, and other similar benefits; and
(2) deferred investment tax credits.
(k) Notwithstanding any other provision in this chapter, a
corporation subject to the tax imposed by this chapter shall use
double entry bookkeeping to account for all transactions that
affect the computation of that tax.
(l) The "first in-first out" and "last in-first out" methods
of accounting are acceptable methods for computing surplus.
(m) A corporation may not use the push-down method of
accounting in computing or reporting its surplus.
SECTION 3.15. Sections 171.112(e), Tax Code, is amended to
read as follows:
(e) A corporation <Unless the provisions of Section 171.111
apply due to an election under that section, a corporation> may not
change its accounting methods used to calculate gross receipts more
often than once every four years without the express written
consent of the comptroller. A change in accounting methods is not
justified solely because it results in a reduction of tax
liability.
SECTION 3.07. Section 171.1121(d), Tax Code, is amended to
read as follows:
(d) A corporation <Unless the provision of Section 171. 111
apply due an election under that section, a corporation> may not
change its accounting methods used to calculate gross receipts
more often than once every four years without the express written
consent of the comptroller. A change in accounting methods is not
justified solely because it results in a reduction of tax
liability.
SECTION 3.08. The following provisions of the Tax Code are
repealed:
(1) Section 171.056;
(2) Section 171.074;
(3) Section 171.079;
(4) Section 171.080;
(5) Section 171.085;
(6) Section 171.104;
(7) Section 171.107; and
(8) Section 171.111.
SECTION 3.09. This article takes effect for initial or annual
reports originally due January 1, 1998, or later, and for final
reports originally due on the effective date of this Act or later.
2. On page 376, line 3, insert the following as ARTICLE 16
and renumber the remaining ARTICLES accordingly:
ARTICLE 16. PROFESSIONAL SERVICES
SECTION 16.01. Subtitle E, Title 2, Tax Code, is amended by
adding Chapter 165, to read as follows:
Chapter 165. PROFESSIONAL SERVICES SALES TAX.
Sec. 165.001. Short Title. This Act may be cited as the
Professional Services Sales Tax Act.
Sec. 165.002. Definitions.
(a) "Accounting and Bookkeeping Services" means a "service
involving the use of accounting, attesting, or auditing skills" as
defined in The Public Accountancy Act of 1991 (Article 41a-1,
Vernon's Texas Civil Statutes), and includes such services
provided by certified public _accountants, enrolled agents, tax
preparation firms, bookkeeping firms, and consultants.
(b) "Architectural Services" means services that constitute
the "practice of architecture" as defined in Article 249a,
Vernon's Texas Civil Statutes, or landscape architecture as defined
in Article 249c, Vernon's Texas Civil Statutes, and includes
related consulting, management, or advisory services.
(c) "Dental Services" means services that constitute the
practice of "dentistry" or "dental hygiene" as defined in the
Dental Practice Act (Article 4543, Vernon's Texas Civil Statutes)
and includes related consulting, management, or advisory services.
(d) "Engineering Services" means services of a type which
constitute the "practice of engineering" or the "practice of
professional engineering" as defined in The Texas Engineering
Practice Act (Article 3271a, Vernon's Texas Civil Statutes), and
includes related consulting, management, or advisory services.
(e) "Financial Brokerage Services" means the following,
whether performed or paid on a contract, commission, or fee basis:
(1) the brokerage of financial instruments, including
stocks, bonds, financial paper, futures, commodity contracts,
notes, investments, mineral leases, mortgages, mutual funds,
partnership shares, royalty rights, or options;
(2) the origination, underwriting, and distribution of
securities;
(3) the provision of investment advice; or
(4) the administration of mutual funds or other
investment plans.
(f) "Legal Services" means services that constitute the
"practice of law" for purposes of the State Bar Act (Chapter 81,
Government Code) and includes related consulting, management, or
advisory services.
(g) "Professional service" means a service of the type
defined in this section.
(h) "Real Estate Brokerage and Sales Services" means
services of the kind falling within the definition of "real estate
broker" or "real estate salesman" as those terms are defined in The
Real Estate License Act (Article 6573a Vernon's Texas Civil
Statutes) and includes related consulting, management, or advisory
services.
(i) "Sale" means providing, performing, making available, or
contracting or offering to provide, perform or make available a
professional service for consideration.
Sec. 165.003. Applicability of other terms.
(a) Except as modified in this chapter, terms used in this
chapter which are also used or defined in chapter 151 shall have
the same meaning for purposes of this chapter as for chapter 151,
and the provisions of chapter 151 in which those terms are used
shall be applicable to this chapter.
(b) A person providing a service subject to tax under this
chapter shall be considered a "seller" or "retailer."
(c) "Sales price" or "receipts" means the total amount,
valued in money, for which a service is provided, without a
deduction for the cost of the materials used, labor or service
employed, interest, losses, or other expenses.
(d) "Use" means the derivation in this state of a direct or
indirect benefit of a professional service.
Sec. 165.004. Applicability of other provisions.
The tax imposed by this chapter shall be administered,
collected, and enforced in the same manner and under the same
procedures, remedies and authority as the tax on services levied
in Chapter 151, except as may be specifically provided to the
contrary in this chapter.
(Sections 165.005 - 165.050 reserved for expansion)
Sec. 165.051. Tax imposed.
(a) A tax is imposed on each sale of a professional service
in this state.
(b) The tax is at the rate of 2.875 per cent of the sales
price of the professional service.
Sec. 165.052. Use Tax Imposed
(a) A tax is imposed on the use or consumption in the state
of a professional service purchased from a seller for use or
consumption in the state.
(b) The tax is at the same percentage rate as is provided by
Sec. 165.051 on the sales price of the professionals service.
(Sec. 165.053 - 165.100 reserved for expansion)
Sec. 165.101. Exemption: Sale for Resale.
(a) The sale for resale of a professional service is exempt
from the taxes imposed by this chapter.
(b) "Sale for Resale" means a sale of a service that is
taxable under this chapter to a purchaser who acquires the service
for the purpose of resaling it in the United States of America or a
possession or territory of the United States of America or in the
United Mexican States in the normal course of business as in
interchangeable or identical part of a service also taxable under
this chapter.
Sec. 165.102. Exemption required by other law.
A sale of a professional service that this state is
prohibited from taxing by the law of the United States, the United
States Constitution, or the Constitution of Texas is exempted from
the taxes imposed by this chapter.
Sec. 165.103. Exemption: Sales to Governmental
Entities. (a) A professional service sold to or used by a
governmental entity is exempt from the taxes imposed by this
chapter.
(b) For purchases of this section, "governmental entities"
means:
(1) the United States;
(2) and unincorporated instrumentality of the United
States;
(3) a corporation that is an agency or instrumentality
of the United States and is wholly owned by the United States or by
another corporation wholly owned by the United States;
(4) this state; or
(5) a county, city, special district, or other
political subdivision of this state.
Sec. 165.104. Exemption: Religious, Educational, and Public
Service Organizations. A professional service sold to or used or
consumed by any organization which is exempted by the terms of
Section 151.310 is exempted from the taxes imposed by this chapter.
Sec. 165.105. Exemption: Services Across State Lines.
(a) Professional services performed for use outside this
state are exempt for the tax imposed by Section 165.051 of this
chapter.
(b) Professional services performed for use both within and
outside this state are exempted to the extent the services are for
use outside this state.
(c) The exemption provided by Subsections (a) and (b) of
this section does not apply to services performed outside this
state for use within this state.
Sec. 165.106. Exemption: Sales to Indian Tribes. A
professional service sold to, or used or consumed by, a tribal
council or a business owned by a tribal council of the
Alabama-Coushatta Indian Tribe, the Tigua Indian Tribe, or the
Texas Band of Kickapoo Indians is exempted from the taxes imposed
by this chapter.
Sec. 165.107. Exemption: Development Corporations.
(a) A professional service sold to, or used or consumed by,
a nonprofit corporation formed under the Development Corporations
Act of 1979 (Article 5190.6, Vernon's Texas Civil Statutes), is
exempted from the taxes imposed by this chapter if the service is
for the exclusive use and benefit of the nonprofit corporation.
(b) The exemption provided by this section does not apply to
a service purchased in connection with a project or a part of a
project that is to be leased, sold, or lent by the nonprofit
corporation.
Sec. 165.108. Exemption: Services Taxed Under Chapter 151. A
professional service taxable both under this chapter and Chapter
151 is exempt from the tax imposed by this chapter. Services
purchased by the professional service provider are not considered
professional services solely because they become part of the
service provider's sales price.
Sec. 165.109. Other taxes not applicable. Professional
services are not subject to taxation under Title 3 of this code.
Sec. 165.110. Services not exempt. The exemptions provided in
subchapter H, Chapter 151, Tax Code, are not applicable to this
chapter.