By West                                          S.B. No. 736

      75R5588 SMH-D                           

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to the ad valorem taxation of an inventory of computer

 1-3     software.

 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-5           SECTION 1.  Section 1.04, Tax Code, is amended by amending

 1-6     Subdivision (5) and adding Subdivisions (20) and (21) to read as

 1-7     follows:

 1-8                 (5)  "Tangible personal property" means personal

 1-9     property that can be seen, weighed, measured, felt, or otherwise

1-10     perceived by the senses, but does not include a document or other

1-11     perceptible object that constitutes evidence of a valuable

1-12     interest, claim, or right and has negligible or no intrinsic value.

1-13     The term includes an inventory of computer software held for sale

1-14     at wholesale or retail by a person who is in the business of

1-15     selling property of that kind.

1-16                 (20)  "Computer program" means intellectual property

1-17     consisting of an ordered set of data representing coded

1-18     instructions or statements that when executed by a computer cause

1-19     the computer to process data or perform specific functions.

1-20                 (21)  "Computer software" means:

1-21                       (A)  a computer program developed for retail sale

1-22     but not yet installed on a computer, computer system, or computer

1-23     network;

1-24                       (B)  any tangible medium on which the program is

 2-1     stored; and

 2-2                       (C)  any associated documentation related to the

 2-3     operation of a computer, computer system, or computer network.

 2-4           SECTION 2.  This Act takes effect January 1, 1998.

 2-5           SECTION 3.  The importance of this legislation and the

 2-6     crowded condition of the calendars in both houses create an

 2-7     emergency and an imperative public necessity that the

 2-8     constitutional rule requiring bills to be read on three several

 2-9     days in each house be suspended, and this rule is hereby suspended.