SRC-AAA S.B. 1424 75(R)   BILL ANALYSIS


Senate Research Center   S.B. 1424
By: Ratliff
Finance
4-7-97
As Filed


DIGEST 

Currently, there is confusion as to sales tax exemptions for manufacturing
equipment.  This bill  requires to be eligible for an exemption, equipment
used in the manufacturing process must have direct involvement with the
item being manufactured for ultimate sale.  Additionally, this bill will
put the burden on the taxpayer claiming the exemption to prove that
manufacturing equipment purchased is not excluded from the exemption. 

PURPOSE

As proposed, S.B. 1424 requires to be eligible for an exemption, equipment
used in the manufacturing process to have direct involvement with the item
being manufactured for ultimate sale.  Additionally, this bill will put
the burden on the taxpayer claiming the exemption to prove that
manufacturing equipment purchased is not excluded from the exemption. 

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 151.318, Tax Code, by amending Subsections (a)
and (c) and adding Subsection (r), as follows: 

(a) Provides that certain property is exempt from taxes under this chapter
if the personal property directly makes or causes chemical or physical
change to the product being manufactured, processed, or fabricated for
ultimate sale. 

(c)  Provides that the exemption does not include certain intraplant
transportation equipment or machinery and  equipment or supplies used to
maintain or store tangible personal property. 

(r)  Requires a taxpayer to maintain proof that purchases of taxable
services and tangible personal property are exempted under this section
and not excluded from the exemption. 

SECTION 2. Effective date: September 1, 1997.

SECTION 3. Emergency clause.