JWB H.B. 1411 75(R)BILL ANALYSIS WAYS & MEANS H.B. 1411 By: Oliveira 3-25-97 Committee Report (Unamended) BACKGROUND Telephone prepaid calling cards are a relatively new product offered by the telecommunications industry. These cards have a preset value in the form of minutes which are debited according to the use of the card. The telecommunication provider connects the customer, tracks the charge for the call, and reduces the available amount in its records. There are no limitations on where the calls originate, or their duration. These cards are usually sold in convenience stores and other retail outlets. Currently, telephone prepaid calling cards are taxed as telecommunications services for purposes of the sales tax. Companies that issue the cards must track the call and the charge, then try and determine the proper amount of sales tax due, and to what political subdivision it's due. Changing the tax treatment of the cards to "tangible personal property", which is taxed at the point of sale, could eliminate the accounting burdens of determining the proper amount of sales tax and the appropriate location to which it's due. PURPOSE This bill would change the definition of prepaid calling cards from telecommunications services to tangible personal property for the purposes of the sales tax. 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 A, Chapter 151, Tax Code, by adding Section 151.0037, TELEPHONE PREPAID CALLING CARD, defining a telephone prepaid calling card as a card or other item, including an access code, that represents the right to make one or more telephone calls for which payment has been previously made. SECTION 2.Amends Section 151.009, Tax Code, defining a telephone prepaid calling card as "tangible personal property," for the purposes of sales tax. SECTION 3.Amends Section 151.0103, Tax Code, by striking telephone prepaid calling cards from the definition of "telecommunications services" for the purposes of the sales tax. SECTION 4. Establishes the effective date. SECTION 5.Emergency clause.