By: Shapleigh S.B. No. 856 97S0390/2 A BILL TO BE ENTITLED AN ACT 1-1 relating to the authority of certain municipalities to impose a 1-2 local tax on the gross rental receipts from the rental of a motor 1-3 vehicle. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Subtitle C, Title 3, Tax Code, is amended by 1-6 adding Chapter 326 to read as follows: 1-7 CHAPTER 326. MUNICIPAL TAX ON RENTAL OF MOTOR VEHICLE 1-8 SUBCHAPTER A. GENERAL PROVISIONS 1-9 Sec. 326.001. DEFINITIONS. In this chapter: 1-10 (1) "Athletic event" means a postseason 1-11 intercollegiate athletic football bowl game for which a fee for 1-12 admission to one or more sports or athletic events is charged. 1-13 (2) "Auto rental tax fund" means the fund established 1-14 by a municipality by resolution for the deposit of the tax revenue 1-15 collected under this chapter. 1-16 (3) "Gross rental receipts" means value received or 1-17 promised as consideration to the owner or lessor of a motor vehicle 1-18 for rental of the vehicle, but the term does not include: 1-19 (A) separately stated charges for insurance; 1-20 (B) charges for damages to the motor vehicle 1-21 occurring during the rental agreement period; 1-22 (C) separately stated charges for motor fuel 1-23 sold by the owner of the motor vehicle; or 2-1 (D) discounts. 2-2 (4) "Motor vehicle" includes: 2-3 (A) a self-propelled vehicle designed to 2-4 transport persons or property on a public street and highway; 2-5 (B) a trailer and semitrailer, including a van, 2-6 flatbed, tank, dumpster, dolly, jeep, stinger, auxiliary axle, or 2-7 converter gear; and 2-8 (C) a house trailer as defined by Section 2-9 501.002, Transportation Code. 2-10 (5) "Rental of a motor vehicle" means an agreement by 2-11 the owner or lessor of a motor vehicle registered as a retailer 2-12 under Section 152.065 to authorize the exclusive use of the vehicle 2-13 to another for consideration. 2-14 Sec. 326.002. OTHER PORTIONS OF TAX APPLICABLE. Subtitles A 2-15 and B, Title 2, and Chapter 152 apply to the taxes and to the 2-16 administration and enforcement of the taxes imposed by this chapter 2-17 in the same manner that those laws apply to state taxes, unless 2-18 modified by this chapter. 2-19 Sec. 326.003. APPLICATION OF CHAPTER. This chapter applies 2-20 only to a municipality with a population of more than 500,000 that 2-21 is situated in a county bordering the Republic of Mexico and which 2-22 has an athletic event located within the municipality's boundaries. 2-23 SUBCHAPTER B. IMPOSITION OF GROSS RENTAL RECEIPTS TAX BY 2-24 MUNICIPALITY 2-25 Sec. 326.101. TAX AUTHORIZED. (a) A municipality by 3-1 ordinance may impose a tax on the gross rental receipts from the 3-2 rental of a motor vehicle. 3-3 (b) A municipality by ordinance may repeal or increase or 3-4 decrease the rate of a tax imposed under Subsection (a). 3-5 (c) A municipality may impose or increase a tax under this 3-6 chapter only if the tax is approved by a majority of the qualified 3-7 voters of the municipality voting at an election called and held 3-8 for that purpose under Section 326.102. 3-9 Sec. 326.102. ELECTION. (a) An election under this chapter 3-10 is called by the adoption of a resolution by the governing body of 3-11 a municipality. 3-12 (b) The governing body may call the election by a majority 3-13 vote of its members. 3-14 (c) The ballot at the election held under this section must 3-15 be printed to permit voting for or against the proposition: 3-16 "Authorizing (insert name of municipality) to establish 3-17 an auto rental tax fund and to impose a tax on the gross rental 3-18 receipts from the rental of a motor vehicle at the rate of 3-19 (insert the maximum rate of the tax) for the purpose of 3-20 financing athletic events." 3-21 (d) The Election Code governs an election held under this 3-22 chapter, except that the uniform election date provisions of 3-23 Section 41.001(a), Election Code, do not apply to an election 3-24 ordered under this section. 3-25 Sec. 326.103. EFFECTIVE DATE OF NEW TAX, TAX REPEAL, OR RATE 4-1 CHANGE; BOUNDARY CHANGE. (a) The imposition of a tax under this 4-2 chapter, the repeal of a tax imposed under this chapter, or a 4-3 change in the tax rate under this chapter shall in each case take 4-4 effect on the first day of the first calendar quarter occurring 4-5 after the expiration of the first complete calendar quarter 4-6 occurring after the date on which the comptroller receives notice 4-7 of the action, sent by United States registered or certified mail, 4-8 that includes a certified copy of the ordinance and if the action 4-9 is the initial imposition of the tax, a map of the municipality 4-10 clearly showing its boundaries and the location of the venue for 4-11 the athletic event. 4-12 (b) If a municipality which has in effect the tax authorized 4-13 under this chapter changes its boundaries, the municipal secretary 4-14 shall send by United States registered or certified mail to the 4-15 comptroller a certified copy of the ordinance that adds or detaches 4-16 municipal territory and that shows the effective date of the 4-17 boundary change. The ordinance must be accompanied by a map 4-18 clearly showing the added or detached territory. Except as 4-19 provided by Subsection (c), the tax takes effect in the added 4-20 territory or is inapplicable to the detached territory on the first 4-21 day of the first calendar quarter after the comptroller receives 4-22 the ordinance and map. 4-23 (c) If, within 10 days after the receipt of an ordinance and 4-24 map sent under Subsection (b), the comptroller notifies the 4-25 secretary of the municipality that more time is required, the 5-1 effective date of the application of the tax in the added or 5-2 detached territory is the first day of the first calendar quarter 5-3 after the expiration of the first complete calendar quarter 5-4 occurring after the date on which the comptroller receives the 5-5 ordinance and map. 5-6 Sec. 326.104. RENTAL TAX. The tax authorized by this 5-7 chapter may be imposed at a rate in increments of one-eighth of one 5-8 percent, not to exceed five percent, on the gross rental receipts 5-9 from the rental of a motor vehicle within the municipality. 5-10 SUBCHAPTER C. USE OF TAX REVENUE 5-11 Sec. 326.201. AUTO RENTAL TAX FUND. (a) A municipality 5-12 shall establish by resolution a fund known as the auto rental tax 5-13 fund. 5-14 (b) The municipality shall deposit into the auto rental tax 5-15 fund the proceeds of any tax imposed by the municipality under this 5-16 chapter. 5-17 (c) The municipality may use money in the auto rental tax 5-18 fund only to operate one or more athletic events, including but not 5-19 limited to paying the costs of planning, acquiring, establishing, 5-20 developing, advertising, promoting, conducting, sponsoring, or 5-21 otherwise supporting such an event. 5-22 SUBCHAPTER D. COMPUTATION OF TAX 5-23 Sec. 326.301. COMPUTATION OF GROSS RENTAL RECEIPTS TAX. 5-24 (a) Each motor vehicle owner or lessor in a municipality that has 5-25 adopted a tax authorized by this chapter shall add the gross rental 6-1 receipts tax imposed by the municipality under this chapter and by 6-2 Chapter 152 to the rental charge. The sum of the taxes shall be 6-3 part of the rental charge, a debt owed to the motor vehicle owner 6-4 or lessor by the person renting the vehicle, and recoverable at law 6-5 in the same manner as the rental charge. 6-6 (b) The amount of the total tax is computed by multiplying 6-7 the combined applicable tax rates by the amount of the rental 6-8 charge. If the product results in a fraction of a cent less than 6-9 one-half of one cent, the fraction of a cent is not collected. If 6-10 the fraction of a cent is one-half of one cent or more, the 6-11 fraction shall be collected as one cent. 6-12 (c) All gross rental receipts of an owner or lessor of a 6-13 motor vehicle registered as a retailer under Section 152.065 from 6-14 the rental of the motor vehicle are presumed to be subject to the 6-15 tax imposed under this chapter, except for gross rental receipts 6-16 for which the owner or lessor has accepted in good faith a properly 6-17 completed exemption certificate. 6-18 Sec. 326.302. CONSUMMATION OF RENTAL. (a) A rental of a 6-19 motor vehicle occurs within the municipality in which the rental is 6-20 consummated. 6-21 (b) The rental is consummated in the municipality: 6-22 (1) where the owner or lessor delivers the motor 6-23 vehicle, if the owner or lessor delivers the motor vehicle to a 6-24 point designated by the renter; or 6-25 (2) where the renter takes possession of and removes 7-1 the motor vehicle from the possession of the vehicle owner or 7-2 lessor. 7-3 (c) If neither the place at which possession of the motor 7-4 vehicle is taken nor the place to which delivery of the motor 7-5 vehicle is made from the owner's or lessor's place of business is 7-6 in this state, the rental is consummated: 7-7 (1) at the owner's or lessor's place of business in 7-8 this state where the order is received; or 7-9 (2) if the order is not received at a place of 7-10 business of the owner or lessor, at the place of business from 7-11 which the owner's or lessor's agent who took the order operates. 7-12 Sec. 326.303. LOCAL TAX INAPPLICABLE WHEN NO STATE TAX. The 7-13 tax authorized by this chapter does not apply to the gross rental 7-14 receipts from the rental of a motor vehicle unless the tax imposed 7-15 by Chapter 152 also applies to the rental. 7-16 Sec. 326.304. STATE EXEMPTIONS APPLICABLE. The exemptions 7-17 provided by Subchapter E, Chapter 152, apply to the taxes 7-18 authorized by this chapter. 7-19 Sec. 326.305. TRANSITION EXEMPTION. (a) Before September 7-20 1, 2000, the gross rental receipts from the rental of a motor 7-21 vehicle are exempt from the imposition of the tax if the notice 7-22 required by Subsection (b) is given and if: 7-23 (1) the rental of the motor vehicle is used for the 7-24 performance of a written contract entered into before the effective 7-25 date of the imposition, if the contract may be affected and the 8-1 contract may not be modified because of the tax; or 8-2 (2) the rental of the motor vehicle is used under the 8-3 obligation of a bid submitted before the effective date of the 8-4 imposition of or increase in the tax if the contract may be 8-5 affected and the bid may not be withdrawn or modified because of 8-6 the tax. 8-7 (b) The taxpayer must give the comptroller notice of the 8-8 contract or bid on which an exemption is to be claimed within 30 8-9 days after the effective date of the imposition or increase of the 8-10 tax under this chapter in the municipality. The taxpayer shall 8-11 provide to the comptroller a copy of the contract or bid. 8-12 SUBCHAPTER E. ADMINISTRATION OF TAX 8-13 Sec. 326.401. COMPTROLLER TO COLLECT AND ADMINISTER TAX. 8-14 The comptroller shall administer, collect, and enforce the tax 8-15 imposed by a municipality under this chapter. The tax imposed 8-16 under this chapter and the tax imposed under Chapter 152 shall be 8-17 collected together. 8-18 Sec. 326.402. COMPTROLLER'S REPORTING DUTIES. (a) The 8-19 comptroller quarterly shall make a report to a municipality that 8-20 has adopted the tax authorized by this chapter. The report must 8-21 include the name, address, and account number of each person in the 8-22 municipality that has remitted to the comptroller a tax payment 8-23 during the quarter covered by the report. 8-24 (b) If a municipality requests an additional report, the 8-25 comptroller shall make an additional quarterly report to the 9-1 municipality including the name, address, and account number, if 9-2 any, of and the amount of tax due from each person doing business 9-3 in the municipality who has failed to pay the tax under this 9-4 chapter or under Chapter 152. The additional report must also 9-5 include statements: 9-6 (1) showing whether there has been a partial tax 9-7 payment by the delinquent taxpayer; 9-8 (2) showing whether the taxpayer is delinquent in the 9-9 payment of gross rental receipts taxes to the state; and 9-10 (3) describing the steps taken by the comptroller to 9-11 collect the delinquent taxes. 9-12 (c) If a municipality determines that a person doing 9-13 business in the municipality is not included in a report from the 9-14 comptroller, the municipality shall report to the comptroller the 9-15 name and address of the person. Within 90 days after receiving the 9-16 report from a municipality, the comptroller shall send to the 9-17 municipality: 9-18 (1) an explanation as to why the person is not 9-19 obligated for the municipal tax; 9-20 (2) a statement that the person is obligated for the 9-21 municipal tax and the tax is delinquent; or 9-22 (3) a certification that the person is obligated for 9-23 the municipal tax and that the full amount of the tax due has been 9-24 credited to the municipality's account. 9-25 (d) The comptroller shall send by United States certified or 10-1 registered mail to the municipal tax collector a notice of each 10-2 person who is delinquent in the payment to the municipality of the 10-3 taxes authorized by this chapter and shall send a copy of the 10-4 notice to the attorney general. A notice sent under this 10-5 subsection is a certification of the amount of tax owed and is 10-6 prima facie evidence of a determination of that amount and of its 10-7 delinquency. 10-8 Sec. 326.403. DISPOSITION OF AMOUNT ERRONEOUSLY COLLECTED. 10-9 (a) If, in territory added to a municipality, an owner or lessor 10-10 erroneously collects an amount as a tax imposed under this chapter 10-11 before the date the tax imposed under this chapter by the 10-12 municipality takes effect in the added territory under Section 10-13 326.103, the amount collected is treated as if it were revenue from 10-14 the tax imposed by the municipality under this chapter, and the 10-15 comptroller shall collect and administer the amount in the same 10-16 manner as tax revenue. 10-17 (b) This section does not affect the right of a person who 10-18 paid an amount erroneously collected by an owner or lessor to claim 10-19 a refund or the authority of the comptroller to make a refund of 10-20 that amount. 10-21 Sec. 326.404. PERMITS. (a) A motor vehicle owner or lessor 10-22 required to collect, report, and pay a tax on gross rental receipts 10-23 under this chapter shall comply with Section 152.065 and applicable 10-24 provisions of Chapter 151. 10-25 (b) An additional permit, exemption, or certificate is not 11-1 required except that the comptroller may prescribe a separate 11-2 exemption certificate form for the transition exemption for prior 11-3 contracts and bids under Section 326.305. 11-4 Sec. 326.405. DISCOUNTS. A discount allowed an owner or 11-5 lessor under Chapter 152 and applicable provisions of Chapter 151 11-6 for the collection and prepayment of the taxes under that chapter 11-7 are allowed and applicable to the taxes collected under this 11-8 chapter. 11-9 Sec. 326.406. RECORDS. The owner or lessor of a motor 11-10 vehicle used for rental purposes shall keep for four years after 11-11 the rental of a motor vehicle all records and supporting documents 11-12 containing information on the amount of: 11-13 (1) the gross rental receipts received from the rental 11-14 of the motor vehicle; and 11-15 (2) the tax imposed under this chapter and paid to the 11-16 municipality on each motor vehicle used for rental purposes by the 11-17 owner. 11-18 Sec. 326.407. FAILURE TO KEEP RECORDS. (a) An owner or 11-19 lessor of a motor vehicle commits an offense if the owner or lessor 11-20 fails to make and retain complete records as required under Section 11-21 326.406. 11-22 (b) An offense under this section is a misdemeanor 11-23 punishable by a fine of not less than $25 or more than $500. 11-24 Sec. 326.408. COMPTROLLER'S RULES. The comptroller may 11-25 adopt reasonable rules and prescribe forms that are consistent with 12-1 this chapter for implementing the administration, collection, 12-2 reporting, and enforcement provisions of this chapter. 12-3 Sec. 326.409. DELINQUENT TAXES: LIMITATIONS. The 12-4 limitations for the bringing of a suit for the collection of a tax 12-5 imposed or a penalty due under this chapter after the tax and 12-6 penalty are delinquent or after a determination against the 12-7 taxpayer are the same as limitations provided by Chapter 152 and 12-8 applicable provisions of Chapter 151. 12-9 Sec. 326.410. SEIZURE AND SALE OF PROPERTY. If the 12-10 comptroller lawfully seizes property for the payment of the taxes 12-11 imposed under Chapter 152 and the property owner is delinquent in 12-12 the payment of taxes under this chapter, the comptroller shall sell 12-13 sufficient property to pay the delinquent taxes and penalties of 12-14 both taxes. The proceeds of a sale of seized property shall first 12-15 be applied to the payment of amounts due the state, and the 12-16 remainder, if any, shall be applied to the amounts due to the 12-17 municipality to which the taxes are due. 12-18 Sec. 326.411. SUIT FOR TAX COLLECTION. (a) A municipality 12-19 acting through its attorney may join as a plaintiff in any suit 12-20 brought by the attorney general to seek a judgment for delinquent 12-21 taxes and penalties due to the municipality under this chapter. 12-22 (b) A municipality may bring suit for the collection of 12-23 taxes owed to the municipality under this chapter if: 12-24 (1) a written notice of the tax delinquency and the 12-25 municipality's intention to bring suit is sent by certified mail to 13-1 the taxpayer, the attorney general, and the comptroller at least 60 13-2 days before the suit is filed; and 13-3 (2) neither the comptroller nor the attorney general 13-4 disapproves of the suit pursuant to Section 326.412. 13-5 Sec. 326.412. DISAPPROVAL OF MUNICIPAL SUIT. (a) The 13-6 comptroller or the attorney general may disapprove of the 13-7 institution of a suit by a municipality under Section 326.411 if: 13-8 (1) negotiations between the state and the taxpayer 13-9 are being conducted for the purpose of the collection of delinquent 13-10 taxes owed to the state and the municipality seeking to bring suit; 13-11 (2) the taxpayer owes substantial taxes to the state 13-12 and there is a reasonable possibility that the taxpayer may be 13-13 unable to pay the total amount owed; 13-14 (3) the state will bring suit against the taxpayer for 13-15 all taxes due under this chapter and under Chapter 151; or 13-16 (4) the suit involves a critical legal question 13-17 relating to the interpretation of state law or a provision of the 13-18 Texas Constitution or the United States Constitution in which the 13-19 state has an overriding interest. 13-20 (b) A notice of disapproval to a municipality must be in 13-21 writing and must give the reason for the determination by the 13-22 comptroller or attorney general. 13-23 (c) Not earlier than the first anniversary of the date of 13-24 disapproval of the institution of a municipal collection suit, the 13-25 municipality may again proceed as provided by Section 326.411 even 14-1 though the liability of the taxpayer includes taxes for which the 14-2 municipality has previously given notice and the comptroller or 14-3 attorney general has disapproved of the suit. 14-4 Sec. 326.413. JUDGMENTS IN MUNICIPAL SUIT. (a) A judgment 14-5 in a suit under Section 326.411 for or against a taxpayer does not 14-6 affect a claim against the taxpayer by another municipality or the 14-7 state unless the state is party to the suit. 14-8 (b) A municipality shall abstract a copy of each final 14-9 judgment for taxes imposed in the municipality's favor under this 14-10 chapter in a case in which the state is not a party and shall send 14-11 to the comptroller a copy of the judgment and the abstract. 14-12 (c) A municipality shall by execution collect the taxes 14-13 awarded to it in each judgment received by the municipality and is 14-14 responsible for the renewal of the judgment before its expiration. 14-15 (d) The municipality shall notify the comptroller by 14-16 certified mail of the amount of any taxes collected on the 14-17 judgment. 14-18 SUBCHAPTER F. REVENUE DEPOSIT, DISTRIBUTION, AND USE 14-19 Sec. 326.501. TRUST ACCOUNT. (a) The comptroller shall 14-20 deposit the taxes collected by the comptroller under this chapter 14-21 in the state treasury. The comptroller shall keep the deposits in 14-22 trust in the separate suspense account of the municipality from 14-23 which the taxes were collected. 14-24 (b) The comptroller and each employee of the comptroller who 14-25 has any duty or responsibility in connection with the collection, 15-1 deposit, transfer, transmittal, disbursement, safekeeping, 15-2 accounting, or recording of the funds that are acquired by the 15-3 comptroller under this chapter shall enter into one or more surety 15-4 bonds in the amount of $100,000 payable to any and all 15-5 municipalities from which the funds are collected. The comptroller 15-6 may enter into a blanket bond or bonds covering the comptroller and 15-7 the comptroller's employees. 15-8 (c) The premiums for the bonds required by this section 15-9 shall be paid when due from the state's share of money collected 15-10 and held by the comptroller under this chapter before its deposit 15-11 in the general revenue fund. 15-12 Sec. 326.502. DISTRIBUTION OF TRUST FUNDS. At least twice 15-13 during each state fiscal year and at other times as often as 15-14 feasible, the comptroller shall send to the municipal treasurer or 15-15 to the person who performs the office of the municipal treasurer, 15-16 payable to the municipality, the municipality's share of the taxes 15-17 collected by the comptroller under this chapter. 15-18 Sec. 326.503. STATE'S SHARE. Before sending any money to a 15-19 municipality under this subchapter, the comptroller shall deduct 15-20 two percent of the amount of the taxes collected within the 15-21 municipality during the period for which a distribution is made as 15-22 the state's charge for its services under this chapter and shall, 15-23 subject to premium payments under Section 326.501(c), credit the 15-24 money deducted to the general revenue fund. 15-25 Sec. 326.504. AMOUNTS RETAINED IN TRUST ACCOUNT. (a) The 16-1 comptroller may retain in the suspense account of a municipality a 16-2 portion of the municipality's share of the tax collected for the 16-3 municipality under this chapter, not to exceed five percent of the 16-4 amount remitted to the municipality. If the municipality has 16-5 abolished the tax, the amount that may be retained may not exceed 16-6 five percent of the final remittance to the municipality at the 16-7 time of the termination of the collection of the tax. 16-8 (b) From the amounts retained in a municipality's suspense 16-9 account, the comptroller may make refunds for overpayments to the 16-10 account and to redeem dishonored checks and drafts deposited to the 16-11 credit of the account. 16-12 (c) Not later than the first anniversary of the effective 16-13 date of the abolition of a municipality's tax under this chapter, 16-14 the comptroller shall send to the municipality the remainder of the 16-15 money in the municipality's suspense account and shall close the 16-16 account. 16-17 Sec. 326.505. INTEREST ON TRUST ACCOUNT. Interest earned on 16-18 all deposits made in the state treasury under Section 326.501, 16-19 including interest earned from retained suspense accounts, shall be 16-20 credited to the general revenue fund. 16-21 Sec. 326.506. TAX POWERS OF MUNICIPALITY NOT LIMITED. This 16-22 chapter does not abolish or limit the tax powers of a municipality. 16-23 SECTION 2. The importance of this legislation and the 16-24 crowded condition of the calendars in both houses create an 16-25 emergency and an imperative public necessity that the 17-1 constitutional rule requiring bills to be read on three several 17-2 days in each house be suspended, and this rule is hereby suspended, 17-3 and that this Act take effect and be in force from and after its 17-4 passage, and it is so enacted.