SRC-DBM S.B. 1003 76(R)   BILL ANALYSIS


Senate Research Center   S.B. 1003
By: Wentworth
Finance
4/9/1999
As Filed


DIGEST 

Currently, under the Internet Tax Freedom Act passed by the 105th United
States Congress, a state is prohibited from assessing a sales tax for
Internet access charges.  However, the law contained a "grandfather clause"
allowing states such as Texas that were already assessing such a tax, to
continue to do so.  Under current Texas law, Internet access is considered
to be an information service which is a taxable service subject to sales
tax.  S.B. 1003 would exempt Internet access service from sales tax. 

PURPOSE

As proposed, S.B. 1003 exempts Internet access service from the sales tax.

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 Chapter 151H, Tax Code, by adding Section 151.325, as
follows: 

Sec. 151.325.  INTERNET ACCESS SERVICE.  Provides that the sale, use, or
other consumption in this state of Internet access service is exempted from
taxes imposed by this chapter.  Provides that Internet access service does
not include and the exemption under Subsection (a) does not apply to data
processing services, information services, telecommunications services, and
cable television services. 

SECTION 3.(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.