By Craddick                                            H.B. No. 944
         76R3582 DAK-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to exempting Internet access service from the sales tax.
 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1.  Subchapter A, Chapter 151, Tax Code, is amended
 1-5     by adding Sections 151.00393 and 151.00394  to read as follows:
 1-6           Sec. 151.00393.  "INTERNET."  "Internet" means collectively
 1-7     the myriad of computer and telecommunications facilities, including
 1-8     equipment and operating software, that comprise the interconnected
 1-9     worldwide network of networks that employ the Transmission Control
1-10     Protocol/Internet Protocol, or any predecessor or successor
1-11     protocols to that protocol, to communicate information of all kinds
1-12     by wire or radio.
1-13           Sec. 151.00394.  "INTERNET ACCESS SERVICE."  "Internet access
1-14     service" means a service that enables users to access content,
1-15     information, electronic mail, or other services offered over the
1-16     Internet and may also include access to proprietary content,
1-17     information, and other services as part of a package of services
1-18     offered to consumers.
1-19           SECTION 2.  Subchapter H, Chapter 151, Tax Code, is amended
1-20     by adding Section 151.325 to read as follows:
1-21           Sec. 151.325.  INTERNET ACCESS SERVICE.  (a)  The sale, use,
1-22     or other consumption in this state of Internet access service is
1-23     exempted from the taxes imposed by this chapter.
1-24           (b)  Internet access service does not include and the
 2-1     exemption under Subsection (a)  does not apply to:
 2-2                 (1)  data processing service;
 2-3                 (2)  information service;
 2-4                 (3)  telecommunications services; and
 2-5                 (4)  cable television service.
 2-6           SECTION 3.  (a)  This Act takes effect on the first day of
 2-7     the first calendar quarter beginning on or after the date that it
 2-8     may take effect under Section 39, Article III, Texas Constitution.
 2-9           (b)  The change in law made by this Act does not affect taxes
2-10     imposed before the effective date of this Act, and the law in
2-11     effect before the effective date of this Act is continued in effect
2-12     for purposes of the liability for and collection of those taxes.
2-13           SECTION 4.  The importance of this legislation and the
2-14     crowded condition of the calendars in both houses create an
2-15     emergency and an imperative public necessity that the
2-16     constitutional rule requiring bills to be read on three several
2-17     days in each house be suspended, and this rule is hereby suspended,
2-18     and that this Act take effect and be in force according to its
2-19     terms, and it is so enacted.