Bill not drafted by TLC or Senate E&E.
Line and page numbers may not match official copy.
By Eiland H.B. No. 1855
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the sales tax exemption for items used in manufacturing
1-3 tangible personal property for ultimate sale.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 151.318, Tax Code, is amended by amending
1-6 subsections (a) and (c), and adding subsection (q), to read as
1-7 follows:
1-8 (a) The following items are exempted from the taxes imposed
1-9 by this chapter:
1-10 (1) tangible personal property that will become an
1-11 ingredient or component part of tangible personal property
1-12 manufactured, processed, or fabricated for ultimate sale;
1-13 (2) tangible personal property directly used or
1-14 consumed in or during the actual manufacturing, processing, or
1-15 fabrication of tangible personal property for ultimate sale if the
1-16 use or consumption of the property is necessary or essential to the
1-17 manufacturing, processing, or fabrication operation and directly
1-18 makes or causes a chemical or physical change to the product being
1-19 manufactured, processed or fabricated for ultimate sale; and
1-20 (3) services performed directly on the product being
1-21 manufactured prior to its distribution for sale and for the purpose
1-22 of making the product more marketable.
1-23 (c) The exemption does not include:
1-24 (1) machinery, equipment, or replacement parts or
2-1 their accessories having a useful life when new in excess of six
2-2 months;
2-3 (2) intraplant transportation equipment, including
2-4 intraplant transportation equipment used to move a product or raw
2-5 material in connection with the manufacturing process and
2-6 specifically including all piping and conveyor systems;
2-7 (3) maintenance or janitorial supplies or equipment,
2-8 or other machinery, equipment, materials, or supplies that are used
2-9 incidentally in a manufacturing, processing, or fabrication
2-10 operation;
2-11 (4) [(3)] hand tools; [or]
2-12 (5) [(4)] office equipment or supplies, equipment or
2-13 supplies used in sales or distribution activities, research or
2-14 development of new products, or transportation activities, or other
2-15 tangible personal property not used in an actual manufacturing,
2-16 processing, or fabrication operation;
2-17 (6) machinery and equipment or supplies used to
2-18 manufacture, maintain, repair, or remodel items that are not sold;
2-19 or
2-20 (7) machinery and equipment or supplies used to
2-21 maintain or store tangible personal property.
2-22 (q) A taxpayer claiming exemption under this section must
2-23 maintain proof that purchases of taxable services and tangible
2-24 personal property are exempted under this section and not excluded
2-25 from the exemption.
2-26 SECTION 2. This Act takes effect October 1, 1997.
2-27 SECTION 3. The importance of this legislation and the
2-28 crowded condition of the calendars in both houses create an
2-29 emergency and an imperative public necessity that the
2-30 constitutional rule requiring bills to be read on three several
3-1 days in each house be suspended, and this rule is hereby suspended.