76R14212 JD-D
By Craddick H.B. No. 1218
Substitute the following for H.B. No. 1218:
By Craddick C.S.H.B. No. 1218
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the exemption from ad valorem taxation of certain
1-3 tangible personal property held only temporarily for assembling,
1-4 manufacturing, processing, or other commercial purposes.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Subchapter B, Chapter 11, Tax Code, is amended by
1-7 adding Section 11.252 to read as follows:
1-8 Sec. 11.252. TANGIBLE PERSONAL PROPERTY IN TRANSIT. (a) In
1-9 this section, "goods-in-transit" means property that is exempt from
1-10 taxation under Section 1-n, Article VIII, Texas Constitution.
1-11 (b) A person is entitled to an exemption from taxation of
1-12 the appraised value of that portion of the person's property that
1-13 consists of goods-in-transit.
1-14 (c) The exemption provided by Subsection (b) is subtracted
1-15 from the market value of the property determined under Section
1-16 23.12 to determine the taxable value of the property.
1-17 (d) Except as provided by Subsections (f) and (g), the chief
1-18 appraiser shall determine the appraised value of goods-in-transit
1-19 under this subsection. The chief appraiser shall determine the
1-20 percentage of the market value of inventory or property owned by
1-21 the property owner in the preceding calendar year that was
1-22 contributed by goods-in-transit. For the first year to which the
1-23 exemption applies to a taxing unit, the chief appraiser shall
1-24 determine that percentage as if the exemption applied to the
2-1 preceding year. The chief appraiser shall apply that percentage to
2-2 the market value of the property owner's inventory or property for
2-3 the current year to determine the appraised value of
2-4 goods-in-transit for the current year.
2-5 (e) In determining the market value of goods-in-transit that
2-6 in the preceding year were assembled, manufactured, repaired,
2-7 maintained, processed, or fabricated in this state or used by the
2-8 person who acquired or imported the property in the repair or
2-9 maintenance of aircraft operated by a certificated air carrier, the
2-10 chief appraiser shall exclude the cost of equipment, machinery, or
2-11 materials that entered into and became component parts of the
2-12 goods-in-transit but were not themselves goods-in-transit or that
2-13 were not transported to another location in this state or out of
2-14 this state before the expiration of 270 days after the date they
2-15 were brought into this state by the property owner or acquired by
2-16 the property owner in this state. For component parts held in
2-17 bulk, the chief appraiser may use the average length of time a
2-18 component part was held by the owner of the component parts during
2-19 the preceding year at a location in this state that was not owned
2-20 or under the control of the owner of the component parts in
2-21 determining whether the component parts were transported to another
2-22 location in this state or out of this state before the expiration
2-23 of 270 days.
2-24 (f) If the property owner was not engaged in transporting
2-25 goods-in-transit to other locations in this state or out of this
2-26 state for the entire preceding year, the chief appraiser shall
2-27 calculate the percentage of the market value described in
3-1 Subsection (d) for the portion of the year in which the property
3-2 owner was engaged in transporting goods-in-transit to another
3-3 location in this state or out of this state.
3-4 (g) If the property owner or the chief appraiser
3-5 demonstrates that the method provided by Subsection (d)
3-6 significantly understates or overstates the market value of the
3-7 property qualified for an exemption under Subsection (b) in the
3-8 current year, the chief appraiser shall determine the market value
3-9 of the goods-in-transit to be exempt by determining, according to
3-10 the property owner's records and any other available information,
3-11 the market value of those goods-in-transit owned by the property
3-12 owner on January 1 of the current year, excluding the cost of
3-13 equipment, machinery, or materials that entered into and became
3-14 component parts of the goods-in-transit but were not themselves
3-15 goods-in-transit or that were not transported to another location
3-16 in this state or out of this state before the expiration of 270
3-17 days after the date they were brought into this state by the
3-18 property owner or acquired by the property owner in this state.
3-19 (h) The chief appraiser by written notice delivered to a
3-20 property owner who claims an exemption under this section may
3-21 require the property owner to provide copies of property records to
3-22 determine the amount and value of goods-in-transit and whether the
3-23 location in this state where the goods-in-transit were detained for
3-24 assembling, storing, manufacturing, processing, or fabricating
3-25 purposes was not owned or under the control of the owner of the
3-26 goods-in-transit. If the property owner fails to deliver the
3-27 information requested in the notice before the 31st day after the
4-1 date the notice is delivered to the property owner, the property
4-2 owner forfeits the right to claim or receive the exemption for that
4-3 year.
4-4 (i) For the purposes of Section 1-n, Article VIII, Texas
4-5 Constitution, "petroleum products" means liquid and gaseous
4-6 materials that are the immediate derivatives of the refining of oil
4-7 or natural gas.
4-8 (j) Property that meets the requirements of Section 1-n(a),
4-9 Article VIII, Texas Constitution, constitutes goods-in-transit
4-10 regardless of whether the person who owns the property on January 1
4-11 is the person who transports it to another location in this state
4-12 or out of this state.
4-13 SECTION 2. Section 11.437(a), Tax Code, is amended to read
4-14 as follows:
4-15 (a) A person who operates a warehouse used primarily for the
4-16 storage of cotton for transportation to another location in this
4-17 state or outside of this state may apply for an exemption under
4-18 Section 11.251 or 11.252 for cotton stored in the warehouse on
4-19 behalf of all the owners of the cotton. An exemption granted under
4-20 this section applies to all cotton stored in the warehouse that is
4-21 eligible to be exempt under Section 11.251 or 11.252. Cotton that
4-22 is stored in a warehouse covered by an exemption granted under this
4-23 section and that is transported to another location in this state
4-24 or outside of this state is presumed to have been transported to
4-25 another location in this state or outside of this state within the
4-26 time permitted by Section 1-j or 1-n, Article VIII, [Section 1-j,
4-27 of the] Texas Constitution, for cotton to qualify for an exemption
5-1 under that section.
5-2 SECTION 3. Section 22.01(e), Tax Code, is amended to read as
5-3 follows:
5-4 (e) Notwithstanding Subsections (a) and (b), a person is not
5-5 required to render for taxation cotton that:
5-6 (1) the person manages and controls as a fiduciary;
5-7 (2) is stored in a warehouse for which an exemption
5-8 for cotton has been granted under Section 11.437 [11.436]; and
5-9 (3) the person intends to transport to another
5-10 location in this state or outside of this [the] state within the
5-11 time permitted by Section 1-j or 1-n, Article VIII, [Section 1-j,
5-12 of the] Texas Constitution, for cotton to qualify for an exemption
5-13 under that section.
5-14 SECTION 4. This Act takes effect January 1, 2001, and
5-15 applies only to taxes imposed for a tax year beginning on or after
5-16 that date, but only if the constitutional amendment proposed by the
5-17 76th Legislature, Regular Session, 1999, to exempt from ad valorem
5-18 taxation tangible personal property held at certain locations only
5-19 temporarily for assembling, manufacturing, processing, or other
5-20 commercial purposes, takes effect. If that amendment is not
5-21 approved by the voters, this Act has no effect.
5-22 SECTION 5. The importance of this legislation and the
5-23 crowded condition of the calendars in both houses create an
5-24 emergency and an imperative public necessity that the
5-25 constitutional rule requiring bills to be read on three several
5-26 days in each house be suspended, and this rule is hereby suspended.