1-1     By:  Shapleigh                                         S.B. No. 856

 1-2           (In the Senate - Filed February 27, 1997; March 5, 1997, read

 1-3     first time and referred to Committee on State Affairs;

 1-4     March 26, 1997, reported adversely, with favorable Committee

 1-5     Substitute by the following vote:  Yeas 7, Nays 4; March 26, 1997,

 1-6     sent to printer.)

 1-7     COMMITTEE SUBSTITUTE FOR S.B. No. 856                     By:  Luna

 1-8                            A BILL TO BE ENTITLED

 1-9                                   AN ACT

1-10     relating to the authority of certain municipalities to impose a

1-11     local tax on the gross rental receipts from the rental of a motor

1-12     vehicle.

1-13           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

1-14           SECTION 1.  Subtitle C, Title 3, Tax Code, is amended by

1-15     adding Chapter 326 to read as follows:

1-16           CHAPTER 326.  MUNICIPAL TAX ON RENTAL OF MOTOR VEHICLE

1-17                      SUBCHAPTER A.  GENERAL PROVISIONS

1-18           Sec. 326.001.  DEFINITIONS.  (a)  In this chapter:

1-19                 (1)  "Athletic event" means a postseason

1-20     intercollegiate athletic football bowl game for which a fee for

1-21     admission to one or more sports or athletic events is charged.

1-22                 (2)  "Auto rental tax fund" means the fund established

1-23     by a municipality by resolution for the deposit of the tax revenue

1-24     collected under this chapter.

1-25                 (3)  "Motor vehicle" means a self-propelled vehicle

1-26     designed principally to transport persons or property on a public

1-27     roadway and includes a passenger car, van, station wagon, sport

1-28     utility vehicle, and truck.  The term does not include a:

1-29                       (A)  trailer, semitrailer, house trailer, truck

1-30     having a manufacturer's rating of more than one-half ton, or

1-31     road-building machine;

1-32                       (B)  device moved only by human power;

1-33                       (C)  device used exclusively on stationary rails

1-34     or tracks;

1-35                       (D)  farm machine; or

1-36                       (E)  mobile office.

1-37                 (4)  "Place of business of the owner" means an

1-38     established outlet, office, or location operated by the owner of a

1-39     motor vehicle or the owner's agent or employee for the purpose of

1-40     renting motor vehicles and includes any location at which three or

1-41     more rentals are made during a year.

1-42                 (5)  "Rental" means an agreement by the owner of a

1-43     motor vehicle to authorize for not longer than 30 days the

1-44     exclusive use of that vehicle to another for consideration.

1-45           (b)  Except as provided by Subsection (a), words used in this

1-46     subchapter and defined by Chapter 152 have the meanings assigned by

1-47     Chapter 152.

1-48           Sec. 326.002.  APPLICATION OF CHAPTER.  This chapter applies

1-49     only to a municipality with a population of more than 500,000 that

1-50     is situated in a county bordering the United Mexican States and

1-51     that has an athletic event located within the municipality's

1-52     boundaries.

1-53              (Sections 326.003-326.100 reserved for expansion

1-54          SUBCHAPTER B.  IMPOSITION OF GROSS RENTAL RECEIPTS TAX BY

1-55                                MUNICIPALITY

1-56           Sec. 326.101.  TAX AUTHORIZED.  (a)  A municipality by

1-57     ordinance may impose a tax on the gross rental receipts from the

1-58     rental in the municipality of a motor vehicle.

1-59           (b)  A municipality by ordinance may repeal or decrease the

1-60     rate of a tax imposed under Subsection (a).

1-61           (c)  A municipality may impose a tax under this chapter only

1-62     if the tax is approved at an election held under Section 326.102.

1-63           Sec. 326.102.  ELECTION.  (a)  An election under this chapter

1-64     is called by the adoption of a resolution by the governing body of

 2-1     a municipality.

 2-2           (b)  The governing body may call the election by a majority

 2-3     vote of its members.

 2-4           (c)  The ballot at the election held under this section must

 2-5     be printed to permit voting for or against the proposition:

 2-6           "Authorizing __________________ (insert name of municipality)

 2-7     to establish an auto rental tax fund and to impose a tax on the

 2-8     gross rental receipts from the rental of a motor vehicle at the

 2-9     rate of _______ (insert the maximum rate of the tax) for the

2-10     purpose of financing athletic events."

2-11           (d)  The Election Code governs an election held under this

2-12     chapter, except that the uniform election date provisions of

2-13     Section 41.001(a), Election Code, do not apply to an election

2-14     ordered under this section.

2-15           Sec. 326.103.  SHORT-TERM RENTAL TAX.  (a)  The tax

2-16     authorized by this chapter is imposed at a rate in increments of

2-17     one-eighth of one percent, not to exceed 10 percent, on the gross

2-18     rental receipts from the rental in the municipality of a motor

2-19     vehicle.

2-20           (b)  The ballot proposition at the election held to adopt the

2-21     tax must specify the maximum rate of the tax to be adopted.

2-22           Sec. 326.104.  RATE INCREASE.  (a)  A municipality that has

2-23     adopted a tax under this chapter at a rate of less than 10 percent

2-24     may by ordinance increase the rate of the tax to a maximum of 10

2-25     percent if the increase is approved by a majority of the registered

2-26     voters of that municipality voting at an election called and held

2-27     for that purpose.

2-28           (b)  The ballot for an election to increase the rate of the

2-29     tax shall be printed to permit voting for or against the

2-30     proposition:  "The increase of the motor vehicle rental tax for the

2-31     purpose of financing athletic events to a maximum rate of ______

2-32     percent (insert new maximum rate not to exceed 10 percent)."

2-33              (Sections 326.105-326.200 reserved for expansion

2-34                      SUBCHAPTER C.  USE OF TAX REVENUE

2-35           Sec. 326.201.  AUTO RENTAL TAX FUND.  (a)  A municipality

2-36     shall establish by resolution a fund known as the auto rental tax

2-37     fund.

2-38           (b)  The municipality shall deposit into the auto rental tax

2-39     fund the proceeds of any tax imposed by the municipality under this

2-40     chapter.

2-41           (c)  The municipality may use money in the auto rental tax

2-42     fund only to collect the tax imposed by this chapter and to operate

2-43     one or more athletic events, including but not limited to paying

2-44     the costs of planning, acquiring, establishing, developing,

2-45     advertising, promoting, conducting, sponsoring, or otherwise

2-46     supporting such an event.

2-47              (Sections 326.202-326.300 reserved for expansion

2-48                      SUBCHAPTER D.  COMPUTATION OF TAX

2-49           Sec. 326.301.  COMPUTATION OF TAX.  (a)  The owner of a motor

2-50     vehicle subject to the tax imposed under this chapter shall collect

2-51     the tax for the benefit of the municipality.

2-52           (b)  The owner shall add the short-term motor vehicle rental

2-53     tax imposed by the municipality under this chapter, if applicable,

2-54     and the gross rental receipts tax imposed by Chapter 152 to the

2-55     rental charge, and the sum of the taxes is a part of the rental

2-56     charge, is a debt owed to the motor vehicle owner by the person

2-57     renting the vehicle, and is recoverable at law in the same manner

2-58     as the rental charge.

2-59           Sec. 326.302.  CONSUMMATION OF RENTAL.  A rental of a motor

2-60     vehicle occurs in the municipality in which transfer of possession

2-61     of the motor vehicle occurs.

2-62           Sec. 326.303.  SHORT-TERM TAX INAPPLICABLE WHEN NO STATE TAX.

2-63     The tax authorized by this chapter does not apply to the gross

2-64     receipts from the rental of a motor vehicle unless the tax imposed

2-65     by Chapter 152, also applies to the rental.

2-66           Sec. 326.304.  STATE EXEMPTIONS APPLICABLE.  The exemptions

2-67     provided by Subchapter E, Chapter 152, apply to the tax authorized

2-68     by this chapter.

2-69           Sec. 326.305.  GROSS RECEIPTS PRESUMED SUBJECT TO TAX.  All

 3-1     gross receipts of an owner of a motor vehicle from the rental of

 3-2     the motor vehicle are presumed to be subject to the tax imposed by

 3-3     this chapter, except for gross receipts for which the owner has

 3-4     accepted in good faith a properly completed exemption certificate.

 3-5              (Sections 326.306-326.400 reserved for expansion

 3-6                    SUBCHAPTER E.  ADMINISTRATION OF TAX

 3-7           Sec. 326.401.  RECORDS.  (a)  The owner of a motor vehicle

 3-8     used for rental purposes shall keep for four years records and

 3-9     supporting documents containing the amount of the:

3-10                 (1)  gross rental receipts received from the rental of

3-11     the motor vehicle; and

3-12                 (2)  tax imposed under this chapter and paid to the

3-13     municipality on each motor vehicle used for rental purposes by the

3-14     owner.

3-15           (b)  Mileage records are not required.

3-16           Sec. 326.402.  FAILURE TO KEEP RECORDS.  (a)  An owner of a

3-17     motor vehicle commits an offense if the owner fails to make and

3-18     retain complete records for the four-year period required by

3-19     Section 326.401.

3-20           (b)  An offense under this section is a misdemeanor

3-21     punishable by a fine of not less than $25 or more than $500.

3-22           Sec. 326.403.  EFFECTIVE DATE OF TAX.  A tax imposed under

3-23     this chapter or a change in the tax rate takes effect on the date

3-24     prescribed by the ordinance imposing the tax or changing the rate.

3-25           Sec. 326.404.  TAX COLLECTION; PENALTY.  (a)  The owner of a

3-26     motor vehicle required to collect the tax imposed under this

3-27     chapter shall report and send the taxes collected to the

3-28     municipality as provided by the ordinance imposing the tax.

3-29           (b)  A municipality by ordinance may prescribe penalties,

3-30     including interest charges, for failure to keep records required by

3-31     the municipality, to report when required, or to pay the tax when

3-32     due.

3-33           (c)  The attorney acting for the municipality may bring suit

3-34     against a person who fails to collect a tax under this chapter and

3-35     to pay it over to the municipality as required.

3-36           Sec. 326.405.  COLLECTION PROCEDURES ON PURCHASE OF MOTOR

3-37     VEHICLE RENTAL BUSINESS.  (a)  If the owner of a motor vehicle

3-38     rental business that makes rentals subject to the tax imposed by

3-39     this chapter sells the business, the successor to the seller or the

3-40     seller's assignee shall withhold an amount of the purchase price

3-41     sufficient to pay the amount of tax due until the seller provides a

3-42     receipt by a person designated by the municipality to provide the

3-43     receipt showing that the amount has been paid or a certificate

3-44     showing that no tax is due.

3-45           (b)  The purchaser of a motor vehicle rental business who

3-46     fails to withhold an amount of the purchase price as required by

3-47     this section is liable for the amount required to be withheld to

3-48     the extent of the value of the purchase price.

3-49           (c)  The purchaser of a motor vehicle rental business may

3-50     request that the person designated by the municipality to provide a

3-51     receipt under Subsection (a) issue a certificate stating that no

3-52     tax is due or issue a statement of the amount required to be paid

3-53     before a certificate may be issued.  The person designated by the

3-54     municipality shall issue the certificate or statement not later

3-55     than the 60th day after the date the person receives the request.

3-56           (d)  If the person designated by the municipality to provide

3-57     a receipt under Subsection (a) fails to issue the certificate or

3-58     statement within the period provided by Subsection (c), the

3-59     purchaser is released from the obligation to withhold the purchase

3-60     price or pay the amount due.

3-61           Sec. 326.406.  REIMBURSEMENT FOR TAX COLLECTION EXPENSES.

3-62     (a)  A municipality by ordinance may permit a person who is

3-63     required to collect a tax under this subchapter to retain a

3-64     percentage of the amount collected and required to be reported as

3-65     reimbursement to the person for the costs of collecting the tax.

3-66           (b)  A municipality may provide that the person may retain

3-67     the amount authorized by Subsection (a) only if the person pays the

3-68     tax and files reports as required by the municipality.

3-69           SECTION 2.  The importance of this legislation and the

 4-1     crowded condition of the calendars in both houses create an

 4-2     emergency and an imperative public necessity that the

 4-3     constitutional rule requiring bills to be read on three several

 4-4     days in each house be suspended, and this rule is hereby suspended,

 4-5     and that this Act take effect and be in force from and after its

 4-6     passage, and it is so enacted.

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