SRC-PNG S.B. 341 76(R)   BILL ANALYSIS


Senate Research Center   S.B. 341
76R3817 DAK-DBy: Ogden
Finance
2/17/1999
As Filed


DIGEST 

Currently, the United States Congress passed the Internet Tax Freedom Act
of 1998 establishing a three-year moratorium on state and local taxes
concerning Internet access and multiple or discretionary taxes on
electronic commerce, and grandfathered existing state and local taxes
currently imposed on the Internet.  This bill conforms Texas law with the
current federal law by exempting the sale, use, or consumption of certain
Internet access service from taxation. 

PURPOSE

As proposed, S.B. 341 exempts the sale, use, or consumption of certain
Internet access service from taxation. 

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Chapter 151A, Tax Code, by adding Sections 151.00393 and
151.00394, as follows: 

Sec.  151.00393.  "INTERNET."  Defines "Internet."

Sec.  151.00394.  "INTERNET ACCESS SERVICE."  Defines "Internet access
service." 

SECTION 2. Amends Section 151.0101(a), Tax Code, to redefine "taxable
services." 

SECTION 3. Amends Chapter 151C, Tax Code, by adding Section 151.061, as
follows: 

Sec.  151.061.  BUNDLING OF CERTAIN SERVICES.  Provides that this section
applies to the sale, use, or consumption in this state of a service that
bundles on-ramp Internet access service exempt under Section 151.325 with
certain taxable services.  Establishes that the value of the taxable
services is computed according to certain methods the provider may select,
subject to Subsection (c).  Prohibits the value of exempt Internet on-ramp
access service from exceeding $25 a month.  Provides that this section
expires September 1, 2002. 

SECTION 4. Amends Chapter 151H, Tax Code, by adding Section 151.325, as
follows: 

Sec.  151.325.  ON-RAMP INTERNET ACCESS SERVICE.  Exempts the sale, use, or
other consumption in this state of Internet access service from taxes
imposed by this chapter only under certain conditions.  Provides that
on-ramp Internet access service does not include certain services.
Establishes that a provider of on-ramp Internet access service who
maintains that the service is exempted under this section has the burden of
demonstrating certain information.  Sets forth that the exemption under
this section does not apply to the amount by which the value of on-ramp
Internet access service exceeds $25 a month. Provides that this section
expires September 1, 2002. 

SECTION 5. (a) Effective date: the first day of the first calendar quarter
beginning on or after the  date that it may take effect under Section 39,
Article III, Texas Constitution.  (b) Makes application of this Act
prospective. 

SECTION 6. Emergency clause.