By Haggerty H.B. No. 1397 75R4311 CBH-F A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to the authority of certain municipalities to impose a 1-3 local tax on the gross rental receipts from the rental of a rented 1-4 motor vehicle; providing penalties. 1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-6 SECTION 1. Subtitle C, Title 3, Tax Code, is amended by 1-7 adding Chapter 326 to read as follows: 1-8 CHAPTER 326. MUNICIPAL TAX ON RENTAL OF RENTED MOTOR VEHICLE 1-9 SUBCHAPTER A. GENERAL PROVISIONS 1-10 Sec. 326.001. DEFINITIONS. (a) In this chapter, "athletic 1-11 event" means a postseason intercollegiate athletic football bowl 1-12 game. 1-13 (b) Words used in this chapter and defined by Chapter 152 1-14 have the meanings assigned by Chapter 152. 1-15 Sec. 326.002. OTHER PORTIONS OF TAX APPLICABLE. Subtitles A 1-16 and B, Title 2, and Chapter 152 apply to the taxes and to the 1-17 administration and enforcement of the taxes imposed by this chapter 1-18 in the same manner that those laws apply to state taxes, unless 1-19 modified by this chapter. 1-20 Sec. 326.003. APPLICATION OF CHAPTER. This chapter applies 1-21 only in a municipality in which an athletic event is held annually. 1-22 (Sections 326.004-326.100 reserved for expansion 2-1 SUBCHAPTER B. IMPOSITION OF GROSS RENTAL RECEIPTS 2-2 TAXES BY MUNICIPALITY 2-3 Sec. 326.101. TAX AUTHORIZED. (a) A municipality by 2-4 ordinance may impose a tax on the gross rental receipts from the 2-5 rental of a rented motor vehicle. 2-6 (b) A municipality by ordinance may repeal or increase or 2-7 decrease the rate of a tax imposed under Subsection (a). 2-8 Sec. 326.102. EFFECTIVE DATES: NEW TAX, TAX REPEAL, 2-9 BOUNDARY CHANGE. (a) The imposition of a tax under this chapter, 2-10 the repeal of a tax imposed under this chapter, or a change in the 2-11 tax rate takes effect on the first day of the first calendar 2-12 quarter occurring after the expiration of the first complete 2-13 calendar quarter occurring after the date on which the comptroller 2-14 receives a notice of the action sent by United States registered or 2-15 certified mail that includes a certified copy of the ordinance and, 2-16 if the action is the initial imposition of the tax, a map of the 2-17 municipality clearly showing its boundaries and the location of the 2-18 athletic event. 2-19 (b) If a municipality in which the tax imposed under this 2-20 chapter is in effect changes its boundaries, the municipal 2-21 secretary shall send by United States registered or certified mail 2-22 to the comptroller a certified copy of the ordinance that adds or 2-23 detaches municipal territory and that shows the effective date of 2-24 the boundary change. The ordinance must be accompanied by a map 2-25 clearly showing the added or detached territory. Except as 2-26 provided by Subsection (c), the tax takes effect in the added 2-27 territory or is inapplicable to the detached territory on the first 3-1 day of the first calendar quarter after the comptroller receives 3-2 the ordinance and map. 3-3 (c) If, within 10 days after the receipt of an ordinance and 3-4 map sent under Subsection (b), the comptroller notifies the 3-5 secretary of the municipality that more time is required, the 3-6 effective date of the application of the tax in the added or 3-7 detached area is the first day of the first calendar quarter after 3-8 the expiration of the first complete calendar quarter occurring 3-9 after the date on which the comptroller receives the ordinance and 3-10 map. 3-11 Sec. 326.103. RENTAL TAX. The tax authorized by this 3-12 chapter may be imposed at a rate in increments of one-eighth of one 3-13 percent, not to exceed five percent, on the gross rental receipts 3-14 from the rental of a rented motor vehicle within the municipality. 3-15 (Sections 326.104-326.150 reserved for expansion 3-16 SUBCHAPTER C. USE OF TAX REVENUE 3-17 Sec. 326.151. AUTO RENTAL TAX FUND. (a) A municipality 3-18 that adopts a tax under this chapter shall establish by resolution 3-19 a fund known as the auto rental tax fund. 3-20 (b) The municipality shall deposit into the auto rental tax 3-21 fund the proceeds of the tax imposed by the municipality under this 3-22 chapter. 3-23 (c) The municipality may use money in the auto rental tax 3-24 fund only to operate one or more athletic events and to pay costs 3-25 associated with the events, including: 3-26 (1) paying the costs of planning, acquiring, 3-27 establishing, developing, advertising, promoting, or administering 4-1 an athletic event; 4-2 (2) making payments to colleges and universities 4-3 participating in an athletic event; 4-4 (3) paying the costs of conducting, sponsoring, or 4-5 otherwise supporting an athletic event; and 4-6 (4) paying the contractual obligations associated with 4-7 an athletic event. 4-8 (Sections 326.152-326.200 reserved for expansion 4-9 SUBCHAPTER D. COMPUTATION OF TAXES 4-10 Sec. 326.201. COMPUTATION OF GROSS RENTAL RECEIPTS TAXES. 4-11 (a) Each motor vehicle owner registered as a retailer under 4-12 Section 152.065 in a municipality that has adopted a tax authorized 4-13 by this chapter shall add the gross rental receipts tax imposed by 4-14 the municipality under this chapter and by Chapter 152 to the 4-15 rental charge, and the sum of the taxes is a part of the rental 4-16 charge, a debt owed to the motor vehicle owner by the person 4-17 renting the vehicle, and recoverable at law in the same manner as 4-18 the rental charge. 4-19 (b) The amount of the total tax is computed by multiplying 4-20 the combined applicable tax rates by the amount of the rental 4-21 charge. If the product results in a fraction of a cent less than 4-22 one-half of one cent, the fraction of a cent is not collected. If 4-23 the fraction of a cent is one-half of one cent or more, the 4-24 fraction shall be collected as one cent. 4-25 (c) All gross receipts of an owner of a motor vehicle from 4-26 the rental of the motor vehicle are presumed to be subject to the 4-27 tax imposed by this chapter, except for gross receipts for which 5-1 the owner has accepted in good faith a properly completed exemption 5-2 certificate. 5-3 (d) The comptroller may publish schedules and brackets of 5-4 amounts of taxes based on the formula provided by Subsection (b) 5-5 for use in municipalities that have adopted the tax authorized by 5-6 this chapter. 5-7 Sec. 326.202. CONSUMMATION OF RENTAL. (a) A rental of a 5-8 rented motor vehicle occurs within the municipality in which the 5-9 rental is consummated. A rental is consummated as provided by this 5-10 section regardless of the place where transfer of possession 5-11 occurs. A rental of a rented motor vehicle by the owner is 5-12 consummated at the owner's place of business: 5-13 (1) where the owner delivers the motor vehicle, if the 5-14 owner delivers the motor vehicle to a point designated by the 5-15 renter; or 5-16 (2) where the renter takes possession of and removes 5-17 the motor vehicle, if the renter takes possession of and removes 5-18 the motor vehicle from the owner's place of business. 5-19 (b) If neither the possession of the motor vehicle is taken 5-20 at or delivery of the motor vehicle is made from the owner's place 5-21 of business in this state, the rental is consummated: 5-22 (1) at the owner's place of business in this state 5-23 where the order is received; or 5-24 (2) if the order is not received at a place of 5-25 business of the owner, at the place of business from which the 5-26 owner's agent who took the order operates. 5-27 Sec. 326.203. LOCAL TAX INAPPLICABLE WHEN NO STATE TAX. The 6-1 tax authorized by this chapter does not apply to the gross receipts 6-2 from the rental of a rented motor vehicle unless the tax imposed by 6-3 Chapter 152 also applies to the rental. 6-4 Sec. 326.204. STATE EXEMPTIONS APPLICABLE. The exemptions 6-5 provided by Subchapter E, Chapter 152, apply to the taxes 6-6 authorized by this chapter. 6-7 Sec. 326.205. TRANSITION EXEMPTION. (a) For a period of 6-8 three years only after the effective date of the imposition or 6-9 increase of the tax authorized by this chapter in a municipality, 6-10 the gross rental receipts from the rental of a rented motor vehicle 6-11 are exempt from that imposition or increase if the notice required 6-12 by Subsection (b) is given and if: 6-13 (1) the items are used for the performance of a 6-14 written contract entered into before the effective date of the 6-15 imposition or increase if the contract may be affected and the 6-16 contract may not be modified because of the tax; or 6-17 (2) the items are used under the obligation of a bid 6-18 submitted before the effective date of the imposition or increase 6-19 if the contract may be affected and the bid may not be withdrawn or 6-20 modified because of the tax. 6-21 (b) The taxpayer must give the comptroller notice of the 6-22 contract or bid on which an exemption is to be claimed within 30 6-23 days after the effective date of the imposition or increase of the 6-24 tax under this chapter in the municipality. The taxpayer must send 6-25 a copy of the contract or bid to the comptroller. The taxpayer 6-26 must attach an affidavit of the taxpayer stating that the contract 6-27 or bid is a true copy of the contract or bid on which the exemption 7-1 is claimed. 7-2 (Sections 326.206-326.300 reserved for expansion 7-3 SUBCHAPTER E. ADMINISTRATION OF TAXES 7-4 Sec. 326.301. COMPTROLLER TO COLLECT AND ADMINISTER TAXES. 7-5 The comptroller shall administer, collect, and enforce the tax 7-6 imposed by a municipality under this chapter. The tax imposed 7-7 under this chapter and the tax imposed under Chapter 152 shall be 7-8 collected together. 7-9 Sec. 326.302. COMPTROLLER'S REPORTING DUTIES. (a) The 7-10 comptroller shall make quarterly reports to a municipality that has 7-11 adopted the tax authorized by this chapter. A report must include 7-12 the name, address, and account number of each person in the 7-13 municipality that has remitted to the comptroller a tax payment 7-14 during the quarter covered by the report. 7-15 (b) If a municipality requests an additional report, the 7-16 comptroller shall make an additional quarterly report to the 7-17 municipality including the name, address, and account number, if 7-18 any, of, and the amount of tax due from, each person doing business 7-19 in the municipality who has failed to pay the tax under this 7-20 chapter to the municipality or under Chapter 152. The additional 7-21 report must also include statements: 7-22 (1) showing whether or not there has been a partial 7-23 tax payment by the delinquent taxpayer; 7-24 (2) showing whether or not the taxpayer is delinquent 7-25 in the payment of gross rental receipts taxes to the state; and 7-26 (3) describing the steps taken by the comptroller to 7-27 collect the delinquent taxes. 8-1 (c) If a municipality determines that a person doing 8-2 business in the municipality is not included in a comptroller's 8-3 report, the municipality shall report to the comptroller the name 8-4 and address of the person. Within 90 days after receiving the 8-5 report from a municipality, the comptroller shall send to the 8-6 municipality: 8-7 (1) an explanation as to why the person is not 8-8 obligated for the municipal tax; 8-9 (2) a statement that the person is obligated for the 8-10 municipal tax and the tax is delinquent; or 8-11 (3) a certification that the person is obligated for 8-12 the municipal tax and that the full amount of the tax due has been 8-13 credited to the municipality's account. 8-14 (d) The comptroller shall send by United States certified or 8-15 registered mail to the municipal tax collector a notice of each 8-16 person who is delinquent in the payment to the municipality of the 8-17 taxes authorized by this chapter and shall send a copy of the 8-18 notice to the attorney general. A notice sent under this 8-19 subsection is a certification of the amount of tax owed and is 8-20 prima facie evidence of a determination of that amount and of its 8-21 delinquency. 8-22 Sec. 326.303. DISPOSITION OF AMOUNT ERRONEOUSLY COLLECTED. 8-23 (a) If in a territory added to a municipality an owner erroneously 8-24 collects an amount as a tax imposed under this chapter before the 8-25 date the taxes imposed under this chapter by the municipality take 8-26 effect in the added territory under Section 326.102, the amount 8-27 collected is treated as if it were revenue from the tax imposed by 9-1 the municipality under this chapter, and the comptroller shall 9-2 collect and administer the amount in the same manner as tax 9-3 revenue. 9-4 (b) This section does not affect the right of a person who 9-5 paid an amount erroneously collected by an owner to claim a refund 9-6 or the authority of the comptroller to make a refund of that 9-7 amount. 9-8 Sec. 326.304. PERMITS. (a) A motor vehicle owner required 9-9 to collect, report, and pay a tax on gross rental receipts under 9-10 this chapter shall comply with Section 152.065 and applicable 9-11 provisions of Chapter 151. 9-12 (b) An additional permit, exemption, or certificate is not 9-13 required except that the comptroller may prescribe a separate 9-14 exemption certificate form for the transition exemption for prior 9-15 contracts and bids under Section 326.205. 9-16 Sec. 326.305. DISCOUNTS. A discount allowed an owner under 9-17 Chapter 152 and applicable provisions of Chapter 151 for the 9-18 collection and prepayment of the taxes under that chapter is 9-19 allowed and applicable to the taxes collected under this chapter. 9-20 Sec. 326.306. COMPTROLLER'S RULES. The comptroller may 9-21 adopt reasonable rules and prescribe forms that are consistent with 9-22 this chapter for the administration, collection, reporting, and 9-23 enforcement of this chapter. 9-24 Sec. 326.307. DELINQUENT TAXES: LIMITATIONS. The 9-25 limitations for the bringing of a suit for the collection of a tax 9-26 imposed or a penalty due under this chapter after the tax and 9-27 penalty are delinquent or after a determination against the 10-1 taxpayer are the same as limitations provided by Chapter 152 and 10-2 applicable provisions of Chapter 151. 10-3 Sec. 326.308. SEIZURE AND SALE OF PROPERTY. If the 10-4 comptroller lawfully seizes property for the payment of the taxes 10-5 imposed under Chapter 152 and the property owner is delinquent in 10-6 the payment of taxes under this chapter, the comptroller shall sell 10-7 sufficient property to pay the delinquent taxes and penalties of 10-8 both taxes. The proceeds of a sale of seized property shall first 10-9 be applied to the payment of amounts due the state and the 10-10 remainder, if any, to the amounts due to the municipality to which 10-11 the taxes are due. 10-12 Sec. 326.309. SUIT FOR TAX COLLECTION. (a) A municipality 10-13 acting through its attorney may join as a plaintiff in any suit 10-14 brought by the attorney general to seek a judgment for delinquent 10-15 taxes and penalties due to the municipality under this chapter. 10-16 (b) A municipality may bring suit for the collection of 10-17 taxes owed to the municipality under this chapter if: 10-18 (1) a written notice of the tax delinquency and the 10-19 municipality's intention to bring suit is given by certified mail 10-20 to the taxpayer, the attorney general, and the comptroller at least 10-21 60 days before the suit is filed; and 10-22 (2) neither the comptroller nor the attorney general 10-23 disapproves of the suit. 10-24 Sec. 326.310. DISAPPROVAL OF MUNICIPAL SUIT. (a) The 10-25 comptroller or the attorney general may disapprove of the 10-26 institution of a suit by a municipality under Section 326.309(b) if 10-27 negotiations between the state and the taxpayer are being conducted 11-1 for the purpose of the collection of delinquent taxes owed to the 11-2 state and the municipality seeking to bring suit. 11-3 (b) A notice of disapproval to a municipality must be in 11-4 writing and give the reason for the determination by the 11-5 comptroller or attorney general. 11-6 (c) A disapproval is final and not subject to review. 11-7 (d) Not earlier than the first anniversary of the date of a 11-8 disapproval of the institution of a municipal collection suit, the 11-9 municipality may again proceed as provided by Section 326.309(b) 11-10 even though the liability of the taxpayer includes taxes for which 11-11 the municipality has previously given notice and the comptroller or 11-12 attorney general has disapproved of the suit. 11-13 Sec. 326.311. JUDGMENTS IN MUNICIPAL SUIT. (a) A judgment 11-14 in a suit under Section 326.309(b) for or against a taxpayer does 11-15 not affect a claim against the taxpayer by another municipality or 11-16 the state unless the state is party to the suit. 11-17 (b) A municipality shall abstract a copy of each final 11-18 judgment for taxes imposed under this chapter in a case in which 11-19 the state is not a party and shall send to the comptroller a copy 11-20 of the judgment and the abstract. 11-21 (c) A municipality shall by execution collect the taxes 11-22 awarded to it in each judgment received by the municipality and is 11-23 responsible for the renewal of the judgment before its expiration. 11-24 (d) The municipality shall notify the comptroller by 11-25 certified mail of the amount of any taxes collected on the 11-26 judgment. 11-27 Sec. 326.312. RECORDS. The owner of a motor vehicle used 12-1 for rental purposes shall keep for four years records and 12-2 supporting documents containing the following information on the 12-3 amount of: 12-4 (1) gross rental receipts received from the rental of 12-5 the motor vehicle; and 12-6 (2) the tax imposed under this chapter and paid to the 12-7 comptroller on each motor vehicle used for rental purposes by the 12-8 owner. 12-9 Sec. 326.313. FAILURE TO KEEP RECORDS. (a) An owner of a 12-10 motor vehicle commits an offense if the owner fails to make and 12-11 retain complete records for the four-year period required by 12-12 Section 326.312. 12-13 (b) An offense under this section is a misdemeanor 12-14 punishable by a fine of not less than $25 or more than $500. 12-15 (c) The penalty provided by this section is in addition to 12-16 any penalty provided by Chapter 152. 12-17 Sec. 326.314. OTHER PENALTIES. (a) A person commits an 12-18 offense if the person signs an affidavit required by this chapter 12-19 and the person knows that it is false in any material fact. 12-20 (b) An offense under this section is a felony punishable by 12-21 imprisonment for not less than two nor more than five years or a 12-22 fine of not more than $1,000, or both. 12-23 (c) The penalty provided by this section is in addition to 12-24 any penalty provided by Chapter 152. 12-25 (Sections 326.315-326.400 reserved for expansion 12-26 SUBCHAPTER F. REVENUE DEPOSIT, DISTRIBUTION, AND USE 12-27 Sec. 326.401. TRUST ACCOUNT. (a) The comptroller shall 13-1 deposit the taxes collected under this chapter. The comptroller 13-2 shall keep the deposits in trust in the separate suspense account 13-3 of the municipality from which the taxes were collected. 13-4 (b) The comptroller and each employee of the comptroller who 13-5 has any duty or responsibility in connection with the collection, 13-6 deposit, transfer, transmittal, disbursement, safekeeping, 13-7 accounting, or recording of the funds that are acquired by the 13-8 comptroller under this chapter shall enter into one or more surety 13-9 bonds in the amount of $100,000 payable to any and all 13-10 municipalities from which the funds are collected. The comptroller 13-11 may enter into a blanket bond or bonds covering the comptroller and 13-12 the comptroller's employees. 13-13 (c) The premiums for the bonds required by this section 13-14 shall be paid when due from the state's share of money collected 13-15 and held by the comptroller under this chapter before its deposit 13-16 in the general revenue fund. 13-17 Sec. 326.402. DISTRIBUTION OF TRUST FUNDS. At least twice 13-18 during each state fiscal year and at other times as often as 13-19 feasible, the comptroller shall send to the municipal treasurer or 13-20 to the person who performs the office of the municipal treasurer 13-21 payable to the municipality the municipality's share of the taxes 13-22 collected by the comptroller under this chapter. 13-23 Sec. 326.403. STATE'S SHARE. Before sending any money to a 13-24 municipality under this subchapter the comptroller shall deduct two 13-25 percent of the amount of the taxes collected within the 13-26 municipality during the period for which a distribution is made as 13-27 the state's charge for its services under this chapter and shall 14-1 credit the money deducted to the general revenue fund. 14-2 Sec. 326.404. AMOUNTS RETAINED IN TRUST ACCOUNT. (a) The 14-3 comptroller may retain in the suspense account of a municipality a 14-4 portion of the municipality's share of the tax collected for the 14-5 municipality under this chapter, not to exceed five percent of the 14-6 amount remitted to the municipality. If the municipality has 14-7 abolished the tax, the amount that may be retained may not exceed 14-8 five percent of the final remittance to the municipality at the 14-9 time of the termination of the collection of the tax. 14-10 (b) From the amounts retained in a municipality's suspense 14-11 account, the comptroller may make refunds for overpayments to the 14-12 account and to redeem dishonored checks and drafts deposited to the 14-13 credit of the account. 14-14 (c) Not later than the first anniversary of the effective 14-15 date of the abolition of a municipality's tax under this chapter 14-16 the comptroller shall send to the municipality the remainder of the 14-17 money in the municipality's account and shall close the account. 14-18 Sec. 326.405. INTEREST ON TRUST ACCOUNT. Interest earned on 14-19 all deposits made by the comptroller under Section 326.401, 14-20 including interest earned from retained suspense accounts, shall be 14-21 credited to the general revenue fund. 14-22 Sec. 326.406. TAX POWERS OF MUNICIPALITY NOT LIMITED. This 14-23 chapter does not abolish or limit the tax powers of a municipality. 14-24 SECTION 2. The importance of this legislation and the 14-25 crowded condition of the calendars in both houses create an 14-26 emergency and an imperative public necessity that the 14-27 constitutional rule requiring bills to be read on three several 15-1 days in each house be suspended, and this rule is hereby suspended, 15-2 and that this Act take effect and be in force from and after its 15-3 passage, and it is so enacted.