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. 4-7 * * * * *