By McCall                                             H.B. No. 3212
         Line and page numbers may not match official copy.
         Bill not drafted by TLC or Senate E&E.
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to technical changes to statutes involving taxes or fees
 1-3     administered by the Comptroller of Public Accounts.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Article 102.075(g), Code of Criminal Procedure,
 1-6     is amended to read as follows:
 1-7           (g)  A municipality or county may retain 10 percent of the
 1-8     money collected under this article as a service fee for collection
 1-9     if the municipality or county remits the funds to the comptroller
1-10     within the period prescribed in Subsection (f).  The municipality
1-11     or county may retain any interest accrued on the money if the
1-12     custodian of the money deposited in the treasury keeps records of
1-13     the amount of money collected under this article that is on deposit
1-14     in the treasury and remits the funds to the comptroller within the
1-15     period prescribed in Subsection (f).
1-16           SECTION 2.  Section 12(b), Article 1.14-1, Insurance Code, is
1-17     amended to read as follows:
1-18           (b)  The report shall be filed and any tax due shall be paid
1-19     by the insured or by any other person designated by the insured.
1-20     The report and tax are due on or before May 15 [March 1] of the
1-21     calendar year after the calendar year in which the insurance was
 2-1     procured, continued, or renewed or on another date prescribed by
 2-2     the comptroller.
 2-3           SECTION 3.  Sections 12(a) and (b), Article 1.14-2, Insurance
 2-4     Code are amended to read as follows:
 2-5           (a)  The premiums charged for surplus lines insurance are
 2-6     subject to a premium receipts tax of 4.85 percent of gross premiums
 2-7     charged for such insurance.  The term premium includes all
 2-8     premiums, membership fees, assessments, dues or any other
 2-9     consideration for insurance.  Such tax shall be in lieu of all
2-10     other insurance taxes.  The surplus lines agent shall collect from
2-11     the insured the amount of the tax at the time of delivery of the
2-12     cover note, certificate of insurance, policy or other initial
2-13     confirmation of insurance, in addition to the full amount of the
2-14     gross premium charged by the insurer for the insurance.  No agent
2-15     shall absorb such tax nor shall any agent, as an inducement for
2-16     insurance or for any other reason, rebate all or any part of such
2-17     tax or his commission.  The surplus lines agent shall file a report
2-18     and pay taxes to the comptroller on or before March 1 of each year
2-19     on forms prescribed by the comptroller.  The [the] amount of taxes
2-20     shall be based on gross premiums written or received for such
2-21     insurance placed through an eligible surplus lines insurer during
2-22     the calendar year ending on the preceding December 31.  A tax
2-23     prepayment shall be required any time accrued taxes due equal or
2-24     exceed $70,000.  The prepayment of the accrued taxes, together with
2-25     a form prescribed by the comptroller, shall be due by the 15th day
 3-1     of the month following the month in which accrued taxes total
 3-2     $70,000 [and shall pay to the comptroller the tax as provided for
 3-3     by this Article].  If a surplus lines policy covers risks or
 3-4     exposures only partially in this state, the tax payable shall be
 3-5     computed on the portions of the premium which are properly
 3-6     allocated to the risks or exposures located in this state.  In
 3-7     determining the amount of premiums taxable in this state, all
 3-8     premiums written, procured, or received in this state and all
 3-9     premiums on policies negotiated in this state shall be deemed
3-10     written on property or risks located or resident in this state,
3-11     except such premiums as are properly allocated or apportioned and
3-12     reported as premiums which may be subject to taxation by any other
3-13     state or states. Premiums that are properly allocated to any other
3-14     state or states that are specifically exempt from taxation under
3-15     the regulations of that state or states are not taxable in this
3-16     state.  Premiums on risks or exposures which are properly allocated
3-17     to federal waters, international waters or under the jurisdiction
3-18     of a foreign government shall not be taxable by this state.  In
3-19     event of cancellation and rewriting of any surplus lines insurance
3-20     contract the additional premium for premium receipts tax purposes
3-21     shall be the premium in excess of the unearned premium of the
3-22     canceled insurance contract.
3-23           (b)  All surplus lines premium receipt taxes collected by a
3-24     surplus lines agent are trust funds in his hands [and property of
3-25     the state.  Such funds shall be maintained by the surplus lines
 4-1     agent in a separate account and shall not be mingled with any other
 4-2     funds, either business or private].  Any surplus lines agent who
 4-3     fails or refuses to pay over to the state the surplus lines premium
 4-4     receipts tax at the time required by [in] this section, or who
 4-5     fraudulently withholds or appropriates or otherwise uses such money
 4-6     or any portions thereof belonging to the state is guilty of theft
 4-7     and shall be punished as provided by law for the crime of theft,
 4-8     irrespective of whether such surplus lines agent has or claims to
 4-9     have any interest in such money so received by him.
4-10           SECTION 4.  Section 9(b), Texas State College and University
4-11     Employees Uniform Insurance Benefits Act (Article 3.50-3, Vernon's
4-12     Texas Insurance Code), is amended to read as follows:
4-13           (b)  Premiums on policies, insurance contracts, or agreements
4-14     with health maintenance organizations established under this Act
4-15     are not subject to any state tax, regulatory fee, or surcharge,
4-16     including premium or maintenance taxes or fees.
4-17           SECTION 5.  Section 11(b), Texas Public School Employees
4-18     Group Insurance Act (Article 3.50-4, Vernon's Texas Insurance
4-19     Code), is amended to read as follows:
4-20           (b)  A premium or contribution on a policy, insurance
4-21     contract, or agreement authorized as provided by this article is
4-22     not subject to any state tax, regulatory fee, or surcharge,
4-23     including premium or maintenance taxes or fees.
4-24           SECTION 6.  Section 326.029(a), Local Government Code, is
4-25     amended to read as follows:
 5-1           (a)  If a majority of the votes received in the election
 5-2     favor the creation of the district and the adoption of the sales
 5-3     and use tax, the commissioners court shall by resolution or
 5-4     ordinance declare that the district is created and shall declare
 5-5     the amount of the local sales and use tax adopted and enter the
 5-6     result in its minutes.
 5-7           SECTION 7.  Section 326.092(a), Local Government Code, is
 5-8     amended to read as follows:
 5-9           (a)  Chapter 323, Tax Code, to the extent not inconsistent
5-10     with this chapter, governs the imposition, computation,
5-11     administration, and governance of the tax under this subchapter,
5-12     except that Section 323.101, 323.105, [and] 323.404, and 323.406
5-13     through 323.408, Tax Code, do not apply.
5-14           SECTION 8.  Section 101.003, Tax Code, is amended by adding
5-15     Subdivision (13) to read as follows:
5-16                 (13)  "Tax" means a tax, fee, assessment, charge, or
5-17     other amount that the comptroller is authorized to administer.
5-18           SECTION 9.  Section 111.0041(b), Tax Code, is amended to read
5-19     as follows:
5-20           (b)  This section prevails over any other conflicting
5-21     provision of this title [except Section 191.024(b) of this code].
5-22           SECTION 10.  Section 111.104(e), Tax Code, is amended to read
5-23     as follows:
5-24           (e)  This section applies to all taxes and license fees
5-25     collected or administered by the comptroller, except the state
 6-1     property tax [and those taxes that qualify for refund allowed under
 6-2     Section 151.318(g) or (n)].
 6-3           SECTION 11.  Section 111.107, Tax Code, is amended to read as
 6-4     follows:
 6-5           Sec. 111.107.  When Refund or Credit is Permitted.  Except as
 6-6     otherwise expressly provided, a person may request a refund or a
 6-7     credit or the comptroller may make a refund or issue a credit for
 6-8     the overpayment of a tax imposed by this title at any time before
 6-9     the expiration of the period during which the comptroller may
6-10     assess a deficiency for the tax and not thereafter unless the
6-11     refund or credit is requested:
6-12                 (1)  under Subchapter B of Chapter 112 and the refund
6-13     is made or the credit is issued under a court order;
6-14                 (2)  under the provision of Section 111.104(c)(3)
6-15     applicable to a refund claim filed after a jeopardy or deficiency
6-16     determination becomes final; or
6-17                 (3)  under Chapter 153, except Section 153.1195(e),
6-18     153.121(d), 153.2225(e), or 153.224(d)[; or]
6-19                 [(4)  under Section 151.318(g) or (n)].
6-20           SECTION 12.  Sections 151.310(c) and (e), Tax Code, are
6-21     amended to read as follows:
6-22           (c)  An organization that qualifies for an exemption under
6-23     Subsection (a)(1) or (a)(2) of this section, and each bona fide
6-24     chapter of the organization, may hold two tax-free sales or
6-25     auctions under this subsection during a calendar year and each
 7-1     tax-free sale or auction may continue for one day only.  The sale
 7-2     of a taxable item the sales price of which is $5,000 or less by a
 7-3     qualified organization or chapter of the organization at a tax-free
 7-4     sale or auction is exempted from the sales tax imposed by
 7-5     Subchapter C of this chapter, except that a taxable item
 7-6     manufactured by or donated to the qualified organization or chapter
 7-7     of the organization may be sold tax free regardless of the sales
 7-8     price to any purchaser other than the donor.  The storage, use, or
 7-9     consumption of a taxable item that is acquired from a qualified
7-10     organization or chapter of the organization at a tax-free sale or
7-11     auction and that is exempted under this subsection from the taxes
7-12     imposed by Subchapter C of this chapter is exempted from the use
7-13     tax imposed by Subchapter D of this chapter  until the item is
7-14     resold or subsequently transferred.
7-15           (e)  A nonprofit hospital or hospital system that qualifies
7-16     for an exemption under Subsection (a)(2) shall provide community
7-17     benefits that include charity care and government-sponsored
7-18     indigent health care [community benefits] as set forth in
7-19     Subchapter D, Chapter 311, Health and Safety Code.  [Subdivision
7-20     (1), (2), (3), (4), (5), (6), (7), or (8) below:]
7-21                 [(1)  charity care and government-sponsored indigent
7-22     health care are provided at a level which is reasonable in relation
7-23     to the community needs, as determined through the community needs
7-24     assessment, the available resources of the hospital or hospital
7-25     system, and the tax-exempt benefits received by the hospital or
 8-1     hospital system;]
 8-2                 [(2)  charity care and government-sponsored indigent
 8-3     health care are provided in an amount equal to at least four
 8-4     percent of the hospital's or hospital system's net patient revenue;]
 8-5                 [(3)  charity care and government-sponsored indigent
 8-6     health care are provided in an amount equal to at least 100 percent
 8-7     of the hospital's or hospital system's tax-exempt benefits,
 8-8     excluding federal income tax;]
 8-9                 [(4)  for tax periods beginning before January 1, 1996,
8-10     charity care and community benefits are provided in a combined
8-11     amount equal to at least five percent of the hospital's or hospital
8-12     system's net patient revenue, provided that charity care and
8-13     government-sponsored indigent health care are provided in an amount
8-14     equal to at least three percent of net patient revenue;]
8-15                 [(5)  for tax periods beginning after December 31,
8-16     1995, charity care and community benefits are provided in a
8-17     combined amount equal to at least five percent of the hospital's or
8-18     hospital system's net patient revenue, provided that charity care
8-19     and government-sponsored indigent health care are provided in an
8-20     amount equal to at least four percent of net patient revenue;]
8-21                 [(6)  a nonprofit hospital that has been designated as
8-22     a disproportionate share hospital under the state Medicaid program
8-23     in the current year or in either of the previous two fiscal years
8-24     is considered to have provided a reasonable amount of charity care
8-25     and government-sponsored indigent health care and is considered in
 9-1     compliance with the standards provided by this subsection;]
 9-2                 [(7)  a hospital operated on a nonprofit basis that is
 9-3     located in a county with a population of less than 50,000 and in
 9-4     which the entire county or the population of the entire county has
 9-5     been designated as a health professionals shortage area is
 9-6     considered to be in compliance with the standards provided by this
 9-7     subsection; or]
 9-8                 [(8)  a hospital providing health care services to
 9-9     inpatients or outpatients without receiving any payment for
9-10     providing those services from any source, including the patient or
9-11     person legally obligated to support the patient, third-party
9-12     payors, Medicare, Medicaid, or any other state or local indigent
9-13     care program but excluding charitable donations, legacies,
9-14     bequests, or grants or payments for research, is considered to be
9-15     in compliance with the standards provided by this subsection.]
9-16           [For purposes of satisfying Subdivision (5), a hospital or
9-17     hospital system may not change its existing fiscal year unless the
9-18     hospital or hospital system changes its ownership or corporate
9-19     structure as a result of a sale or merger.  For purposes of this
9-20     subsection, a hospital that satisfies Subdivision (1), (6), (7), or
9-21     (8) shall be excluded in determining a hospital system's compliance
9-22     with the standards provided by Subdivision (2), (3), (4), or (5).]
9-23           [For purposes of this subsection, the terms "charity care,"
9-24     "government-sponsored indigent health care," "health care
9-25     organization," "hospital system," "net patient revenue," "nonprofit
 10-1    hospital," and "tax-exempt benefits" have the meanings set forth in
 10-2    Sections 311.031 and 311.042, Health and Safety Code.  A
 10-3    determination of the amount of community benefits and charity care
 10-4    and government-sponsored indigent health care provided by a
 10-5    hospital or hospital system and the hospital's or hospital system's
 10-6    compliance with the requirements of this subsection and Section
 10-7    311.045, Health and Safety Code, shall be based on the most
 10-8    recently completed and audited prior fiscal year of the hospital or
 10-9    hospital system.]
10-10          [The providing of charity care and government-sponsored
10-11    indigent health care in accordance with Subdivision (1) shall be
10-12    guided by the prudent business judgment of the hospital which will
10-13    ultimately determine the appropriate level of charity care and
10-14    government-sponsored indigent health care based on the community
10-15    needs, the available resources of the hospital, the tax-exempt
10-16    benefits received by the hospital, and other factors that may be
10-17    unique to the hospital, such as the hospital's volume of Medicare
10-18    and Medicaid patients.  These criteria shall not be determinative
10-19    factors, but shall be guidelines contributing to the hospital's
10-20    decision along with other factors which may be unique to the
10-21    hospital.  The formulas contained in Subdivisions (2), (3), (4),
10-22    and (5) shall also not be considered determinative of a reasonable
10-23    amount of charity care and government-sponsored indigent health
10-24    care.]
10-25          [The requirements of this subsection shall not apply to the
 11-1    extent a hospital or hospital system demonstrates that reductions
 11-2    in the amount of community benefits, charity care, and
 11-3    government-sponsored indigent health care are necessary to maintain
 11-4    financial reserves at a level required by a bond covenant, are
 11-5    necessary to prevent the hospital or hospital system from
 11-6    endangering its ability to continue operations, or if the hospital
 11-7    or hospital system, as a result of a natural or other disaster, is
 11-8    required substantially to curtail its operations.]
 11-9          [In any fiscal year that a hospital or hospital system,
11-10    through unintended miscalculation, fails to meet any of the
11-11    standards in this subsection, the hospital or hospital system shall
11-12    not lose its tax-exempt status without the opportunity to cure the
11-13    miscalculation in the fiscal year following the fiscal year the
11-14    failure is discovered by both meeting one of the standards and
11-15    providing an additional amount of charity care and
11-16    government-sponsored indigent health care that is equal to the
11-17    shortfall from the previous fiscal year.  A hospital or hospital
11-18    system may apply this provision only once every five years.]
11-19          SECTION 13.  Section 151.312, Tax Code, is amended to read as
11-20    follows:
11-21          Sec. 151.312.  Periodicals and Writings of Religious,
11-22    Philanthropic, Charitable, Historical, Scientific, and Similar
11-23    Organizations.  Periodicals and writings, including those presented
11-24    on audio tape, video tape, and computer disk, that are published
11-25    and [or] distributed by a religious, philanthropic, charitable,
 12-1    historical, scientific, or other similar organization that is not
 12-2    operated for profit, but excluding an educational organization, are
 12-3    exempted from the taxes imposed by this chapter.
 12-4          SECTION 14.  Sections 151.318(a), (c), (g), (o), (q), and
 12-5    (s), Tax Code, are amended to read as follows:
 12-6          (a)  The following items are exempted from the taxes imposed
 12-7    by this chapter if sold, leased, or rented to, or stored, used, or
 12-8    consumed by a manufacturer:
 12-9                (1)  tangible personal property that will become an
12-10    ingredient or component part of tangible personal property
12-11    manufactured, processed, or fabricated for ultimate sale;
12-12                (2)  tangible personal property directly used or
12-13    consumed in or during the actual manufacturing, processing, or
12-14    fabrication of tangible personal property for ultimate sale if the
12-15    use or consumption of the property is necessary or essential to the
12-16    manufacturing, processing, or fabrication operation and directly
12-17    makes or causes a chemical or physical change to:
12-18                      (A)  the product being manufactured, processed,
12-19    or fabricated for ultimate sale; or
12-20                      (B)  any intermediate or preliminary product that
12-21    will become an ingredient or component part of the product being
12-22    manufactured, processed, or fabricated for ultimate sale;
12-23                (3)  services performed directly on the product being
12-24    manufactured prior to its distribution for sale and for the purpose
12-25    of making the product more marketable;
 13-1                (4)  actuators, steam production equipment and its
 13-2    fuel, in-process flow through tanks, cooling towers, generators,
 13-3    heat exchangers, electronic control room equipment, computerized
 13-4    control units, pumps, compressors, and hydraulic units, that are
 13-5    used to power, supply, support, or control equipment that qualifies
 13-6    for exemption under Subdivision (2) or (5) or to generate
 13-7    electricity, chilled water, or steam for ultimate sale; and
 13-8    transformers located at an electric generating facility that
 13-9    increase the voltage of electricity generated for ultimate sale;
13-10    the switches, breakers, capacitor banks, regulators, and relays
13-11    that are related to such transformers; and the electrical cable
13-12    that carries the electricity from the electric generating equipment
13-13    to such transformers;
13-14                (5)  [machinery, equipment, and replacement parts or
13-15    accessories] tangible personal property used or consumed in the
13-16    actual manufacturing, processing, or fabrication of tangible
13-17    personal property for ultimate sale if [their] the use or
13-18    consumption of the property is necessary and essential to a
13-19    pollution control process;
13-20                (6)  lubricants, chemicals, chemical compounds, gases,
13-21    or liquids that are used or consumed during the actual
13-22    manufacturing, processing, or fabrication of tangible personal
13-23    property for ultimate sale if their use or consumption is necessary
13-24    and essential to prevent the decline, failure, lapse, or
13-25    deterioration of equipment exempted by this section;
 14-1                (7)  gases used on the premises of a manufacturing
 14-2    plant to prevent contamination of raw material or product, or to
 14-3    prevent a fire, explosion, or other hazardous or environmentally
 14-4    damaging situation at any stage in the manufacturing process or in
 14-5    loading or storage of the product or raw material on premises;
 14-6                (8)  tangible personal property used or consumed during
 14-7    the actual manufacturing, processing, or fabrication of tangible
 14-8    personal property for ultimate sale if the use or consumption of
 14-9    the property is necessary and essential to a quality control
14-10    process;
14-11                (9)  safety apparel or work clothing that is used
14-12    during the actual manufacturing, processing, or fabrication of
14-13    tangible personal property for ultimate sale if the use of the
14-14    apparel or clothing is necessary and essential to the manufacturing
14-15    process and the apparel or clothing is not resold to the employee.
14-16    Such apparel or clothing is necessary and essential only if the
14-17    manufacturing process would not be possible without its use;
14-18                (10)  tangible personal property used or consumed in
14-19    the actual manufacturing, processing, or fabrication of tangible
14-20    personal property for ultimate sale if the use or consumption of
14-21    the property is necessary and essential to comply with federal,
14-22    state, or local law or rules for public health; and
14-23                (11)  tangible personal property specifically installed
14-24    to:
14-25                      (A)  reduce water use and wastewater flow volumes
 15-1    from the manufacturing, processing, fabrication, or repair
 15-2    operation;
 15-3                      (B)  reuse and recycle wastewater streams
 15-4    generated within the manufacturing, processing, fabrication, or
 15-5    repair operation; or
 15-6                      (C)  treat wastewater from another industrial or
 15-7    municipal source for the purpose of replacing existing freshwater
 15-8    sources in the manufacturing, processing, fabrication, or repair
 15-9    operation.
15-10          (c)  The exemption does not include:
15-11                (1)  intraplant transportation equipment, including
15-12    intraplant transportation equipment used to move a product or raw
15-13    material in connection with the manufacturing process and
15-14    specifically including all piping and conveyor systems, provided
15-15    that the following remain eligible for the exemption:
15-16                      (A)  piping or conveyor systems that are [is] a
15-17    component part of a single item of manufacturing equipment or
15-18    pollution control equipment eligible for the exemption under
15-19    Subsection (a)(2), (a)(4), or (a)(5);
15-20                      (B)  piping through which the product or an
15-21    intermediate or preliminary product that will become an ingredient
15-22    or component part of the product is recycled or circulated in a
15-23    loop between the single item of manufacturing equipment and the
15-24    ancillary equipment that supports only that single item of
15-25    manufacturing equipment if the single item of manufacturing
 16-1    equipment and the ancillary equipment operate together to perform a
 16-2    specific step in the manufacturing process; and
 16-3                      (C)  piping through which the product or an
 16-4    intermediate or preliminary product that will become an ingredient
 16-5    or component part of the product is recycled back to another single
 16-6    item of manufacturing equipment and its ancillary equipment in the
 16-7    same manufacturing process. [remains eligible for the exemption]
 16-8    Piping through which material is transported forward from one
 16-9    single item of manufacturing equipment and its ancillary support
16-10    equipment to another single item of manufacturing equipment and its
16-11    ancillary support equipment is not considered a component part of a
16-12    single item of manufacturing equipment and is not exempt.  An
16-13    integrated group of manufacturing and processing machines and
16-14    ancillary equipment that operate together to create or produce the
16-15    product or an intermediate or preliminary product that will become
16-16    an ingredient or component part of the product is not a single item
16-17    of manufacturing equipment;
16-18                (2)  [maintenance or janitorial supplies or equipment
16-19    or other machinery, equipment, materials, or supplies that are used
16-20    incidentally in a manufacturing, processing, or fabrication
16-21    operation;]
16-22                [(3)]  hand tools;
16-23                [(4)] (3)  maintenance supplies not otherwise exempted
16-24    under this section, maintenance equipment, janitorial supplies or
16-25    equipment, office equipment or supplies, or equipment or supplies
 17-1    used in sales or distribution activities, research or development
 17-2    of new products, or transportation activities[, or other tangible
 17-3    personal property not used in an actual manufacturing, processing,
 17-4    or fabrication operation]; or
 17-5                [(5)] (4)  machinery and equipment or supplies used to
 17-6    [maintain] preserve or store tangible personal property.
 17-7          [(g)  Each person engaged in manufacturing, processing,
 17-8    fabricating, or repairing tangible personal property for ultimate
 17-9    sale is entitled to a refund or a reduction in the amount of tax
17-10    imposed by this chapter as provided by Subsection (h) for the
17-11    purchase of machinery, equipment, and replacement parts or
17-12    accessories with a useful life in excess of six months if the
17-13    equipment is:]
17-14                [(1)  used or consumed in or during the actual
17-15    manufacturing, processing, fabrication, or repair of tangible
17-16    personal property for ultimate sale, and the use or consumption of
17-17    the property is necessary or essential to the manufacturing,
17-18    processing, fabrication, or repair operation, or to a pollution
17-19    control process; or]
17-20                [(2)  specifically installed to:]
17-21                      [(A)  reduce water use and wastewater flow
17-22    volumes from the manufacturing, processing, fabrication, or repair
17-23    operation;]
17-24                      [(B)  reuse and recycle wastewater streams
17-25    generated within the manufacturing, processing, fabrication, or
 18-1    repair operation; or]
 18-2                      [(C)  treat wastewater from another industrial or
 18-3    municipal source for the purpose of replacing existing freshwater
 18-4    sources in the manufacturing, processing, fabrication, or repair
 18-5    operation.]
 18-6          (o)  The production of a publication for the dissemination of
 18-7    news of a general character and of a general interest that is
 18-8    printed on newsprint and distributed to the general public free of
 18-9    charge at a daily, weekly, or other short interval is considered
18-10    "manufacturing" for purposes of [Subsections (d)-(m) of] this
18-11    section.
18-12          (q)  For purposes of Subsection (b), "semiconductor
18-13    fabrication cleanrooms and equipment" means all tangible personal
18-14    property, without regard to whether the property is affixed to or
18-15    incorporated into realty, used in connection with the
18-16    manufacturing, processing, or fabrication in a cleanroom
18-17    environment of a semiconductor product, without regard to whether
18-18    the property is actually contained in the cleanroom environment.
18-19    The term includes integrated systems, fixtures, and piping, all
18-20    property necessary or adapted to reduce contamination or to control
18-21    airflow, temperature, humidity, chemical purity, or other
18-22    environmental conditions or manufacturing tolerances, and
18-23    production equipment and machinery.  The term does not include the
18-24    building or a permanent, nonremovable component of the building,
18-25    that houses the cleanroom environment.  The term includes moveable
 19-1    cleanroom partitions and cleanroom lighting. "Semiconductor
 19-2    fabrication cleanrooms and equipment" are not "interplant
 19-3    transportation equipment" [or "used incidentally in a
 19-4    manufacturing, processing, or fabrication operation"] as [those
 19-5    terms are] that term is used in [Subsections] Subsection (c)(1)
 19-6    [and (c)(2)].
 19-7          (s)  The following do not apply to the semiconductor
 19-8    fabrication cleanrooms and equipment in Subsection (q):
 19-9                (1)  limitations in Subsection (a)(2) that refer to
19-10    tangible personal property directly causing chemical and physical
19-11    changes to the product being manufactured, processed, or fabricated
19-12    for ultimate sale;
19-13                (2)  Subsection (c)(1); and
19-14                (3)  Subsection (c)[(5)](4).
19-15          SECTION 15.  Section 151.321(a), Tax Code, is amended to read
19-16    as follows:
19-17          (a)  A taxable item sold by a qualified student organization
19-18    and for which the sales price is $5,000 or less, is exempted from
19-19    the taxes imposed by Subchapter C, except that a taxable item
19-20    manufactured by or donated to the organization is exempt from the
19-21    taxes imposed by subchapter C regardless of sales price unless sold
19-22    to the donor, if the student organization:
19-23                (1)  sells the item at a sale that may last for one day
19-24    only and the primary purpose of which is to raise funds for the
19-25    organization; and
 20-1                (2)  holds not more than one sale described by
 20-2    Subdivision (1) each month for which an exemption is claimed for an
 20-3    item sold.
 20-4          SECTION 16.  Section 151.350(d), Tax Code, is amended to read
 20-5    as follows:
 20-6          (d)  In this section, "restore" means:
 20-7                (1)  launder, [or] clean, repair, treat, or apply
 20-8    protective chemicals to an item, to the extent the service is a
 20-9    personal service as defined in Section 151.0045; and
20-10                (2)  repair, restore, or remodel, to the extent the
20-11    service is:
20-12                      (A)  a real property repair or remodeling service
20-13    as defined in Section 151.0047; or
20-14                      (B)  defined as a taxable service in Section
20-15    151.0101(a)(5) [151.0101(5)].
20-16          SECTION 17.  Sections 151.429(d) and (g), Tax Code, are
20-17    amended to read as follows:
20-18          (d)  To receive a refund under this section, an enterprise
20-19    project must apply to the comptroller for the refund.  The Texas
20-20    Department of Economic Development [department of commerce] shall
20-21    provide the comptroller with the assistance that the comptroller
20-22    requires in administering this section.
20-23          (g)  The refund provided by this section is conditioned on
20-24    the enterprise project maintaining at least the same level of
20-25    employment of qualified employees as existed at the time it
 21-1    qualified for a refund for a period of three years from that date.
 21-2    The Texas Department of Economic Development [Commerce] shall
 21-3    annually certify to the comptroller and the Legislative Budget
 21-4    Board whether that level of employment of qualified employees has
 21-5    been maintained.  On the Texas Department of Economic Development
 21-6    [Commerce] certifying that such a level has not been maintained,
 21-7    the comptroller shall assess that portion of the refund
 21-8    attributable to any such decrease in employment, including penalty
 21-9    and interest from the date of the refund.
21-10          SECTION 18.  Section 151.429(e)(1), Tax Code, is amended to
21-11    read as follow:
21-12                (1)  "Enterprise project" means a person designated by
21-13    the Texas Department of Economic Development [Commerce] as an
21-14    enterprise project under Chapter 2303, Government Code.
21-15          SECTION 19.  Sections 151.4291(d) and (g), Tax Code, are
21-16    amended to read as follows:
21-17          (d)  To receive a refund under this section, a defense
21-18    readjustment project must apply to the comptroller for the refund.
21-19    The Texas Department of Economic Development [Commerce] shall
21-20    provide the comptroller with the assistance that the comptroller
21-21    requires in administering this section.
21-22          (g)  The refund provided by this section is conditioned on
21-23    the defense readjustment project maintaining at least the same
21-24    level of employment of qualified employees as existed at the time
21-25    it qualified for a refund for a period of three years from that
 22-1    date.  The Texas Department of Economic Development [Commerce]
 22-2    shall annually certify to the comptroller and the Legislative
 22-3    Budget Board whether that level of employment of qualified
 22-4    employees has been maintained.  On the Texas Department of Economic
 22-5    Development [Commerce] certifying that such a level has not been
 22-6    maintained, the comptroller shall assess that portion of the refund
 22-7    attributable to any such decrease in employment, including penalty
 22-8    and interest from the date of the refund.
 22-9          SECTION 20.  Section 151.4291(e)(1), Tax Code, is amended to
22-10    read as follows:
22-11                (1)  "Defense readjustment project" means a person
22-12    designated by the Texas Department of Economic Development
22-13    [Commerce] as a defense readjustment project under Chapter 2310,
22-14    Government Code.
22-15          SECTION 21.  Section 151.431(a), Tax Code, is amended to read
22-16    as follows:
22-17          (a)  A qualified business operating in the enterprise zone's
22-18    jurisdiction for at least three consecutive years may apply for and
22-19    be granted a onetime refund of sales and use tax paid by the
22-20    qualified business after certification of the qualified business as
22-21    provided by Subsection (b) of this section to a vendor or directly
22-22    to the state for the purchase of equipment or machinery sold to the
22-23    business for use in an enterprise zone if the governing body or
22-24    bodies certify to the Texas Department of Economic Development
22-25    [Commerce] that the business is retaining 10 or more jobs held by
 23-1    qualified employees during the year.  For the purposes of this
 23-2    subsection "job" means an existing employment position of a
 23-3    qualified business that has provided employment to a qualified
 23-4    employee of at least 1,820 hours annually.
 23-5          SECTION 22.  Section 152.041, Tax Code, is amended by adding
 23-6    Subsection (e) to read as follows:
 23-7          (e)  If a motor vehicle title applicant has paid the tax to
 23-8    the seller who is required by this chapter to collect the tax and
 23-9    the seller has failed to remit the tax to the county tax
23-10    assessor-collector, the tax assessor-collector may accept
23-11    application for title to the motor vehicle without the payment of
23-12    additional tax by the applicant.  Before title to the motor vehicle
23-13    may be issued under these circumstances, the motor vehicle title
23-14    applicant must present satisfactory documentation to the tax
23-15    assessor-collector that the tax was paid.  The county tax
23-16    assessor-collector shall notify the comptroller in writing of the
23-17    seller's failure to remit the tax.  The notice must:
23-18                (1)  be made before the 31st day after the date the
23-19    application for title is accepted;
23-20                (2)  contain the name and address of the seller; and
23-21                (3)  include any documentation of the payment of the
23-22    tax provided to the county tax assessor-collector by the motor
23-23    vehicle title applicant.
23-24          SECTION 23.  Sections 153.117(a), (b), (d), and (h), Tax
23-25    Code, are amended to read as follows:
 24-1          (a)  A distributor shall keep a record showing the number of
 24-2    gallons of:
 24-3                (1)  all gasoline inventories on hand at the first of
 24-4    each month;
 24-5                (2)  all gasoline refined, compounded, or blended;
 24-6                (3)  all gasoline purchased or received, showing the
 24-7    name of the seller and date of each purchase or receipt;
 24-8                (4)  all gasoline sold, distributed, or used, showing
 24-9    the name of the purchaser and the date of the sale or use; and
24-10                (5)  all gasoline lost by fire, theft, or other
24-11    accident.
24-12          (b)  A dealer shall keep a record showing the number of
24-13    gallons of:
24-14                (1)  gasoline inventories on hand at the first of each
24-15    month;
24-16                (2)  all gasoline purchased or received, showing the
24-17    name of the seller and the date of each purchase or receipt;
24-18                (3)  all gasoline sold or used, showing the date of the
24-19    sale or use; and
24-20                (4)  all gasoline lost by fire, theft, or other
24-21    accident.
24-22          (d)  An aviation fuel dealer shall keep a record showing the
24-23    number of gallons of:
24-24                (1)  all gasoline inventories on hand at the first of
24-25    each month;
 25-1                (2)  all gasoline purchased or received, showing the
 25-2    name of the seller and date of each purchase or receipt;
 25-3                (3)  all gasoline sold or used in aircraft or aircraft
 25-4    servicing equipment; and
 25-5                (4)  all gasoline lost by fire, theft, or other
 25-6    accident.
 25-7          (h)  A gasoline jobber shall keep a record showing the number
 25-8    of gallons of:
 25-9                (1)  all gasoline inventories on hand at the first of
25-10    each month;
25-11                (2)  all gasoline purchased or received, showing the
25-12    name of the seller and date of each purchase or receipt;
25-13                (3)  all gasoline sold, distributed, or used, showing
25-14    the name of the purchaser and the date of the sale or use; and
25-15                (4)  all gasoline lost by fire, theft, or other
25-16    accident.
25-17          SECTION 24.  Sections 153.119(a) and (e), Tax Code, are
25-18    amended to read as follows:
25-19          (a)  A person who exports, sells to the federal government,
25-20    to a public school district in this state, or to a commercial
25-21    transportation company for exclusive use in providing public school
25-22    transportation services to a school district under Section 34.008,
25-23    Education Code, without having added the amount of the tax imposed
25-24    by this chapter to his selling price, loses by fire, theft, or
25-25    other accident, or uses gasoline for the purpose of operating or
 26-1    propelling a motorboat, tractor used for agricultural purposes, or
 26-2    stationary engine, or for another purpose except in a vehicle
 26-3    operated or intended to be operated on the public highways of this
 26-4    state, and who has paid the tax imposed on gasoline by this chapter
 26-5    either directly or indirectly is, when the person has complied with
 26-6    the invoice and filing provisions of this section and the rules of
 26-7    the comptroller, entitled to reimbursement of the tax paid by him,
 26-8    less a filing fee and any amount allowed distributors[, wholesalers
 26-9    or jobbers, dealers, or others] under Section 153.105(e)[(c)] of
26-10    this code.  A public school district that has paid the tax imposed
26-11    under this chapter on gasoline used by the district or a commercial
26-12    transportation company that has paid the tax imposed under this
26-13    chapter on gasoline used by the company exclusively to provide
26-14    public school transportation services to a school district under
26-15    Section 34.008, Education Code, is entitled to reimbursement of the
26-16    amount of the tax paid in the same manner and subject to the same
26-17    procedures as other exempted users.
26-18          (e)  A person who exports or loses by fire, theft, or other
26-19    accident 100 or more gallons of gasoline on which the tax has been
26-20    paid, or sells gasoline in any quantity to the United States
26-21    government for the exclusive use of that government on which the
26-22    tax has been paid, may file a claim for a refund of the net tax
26-23    paid to the state in the manner provided by this chapter or as the
26-24    comptroller may direct.
26-25          SECTION 25.  Section 153.121(a), Tax Code, is amended to read
 27-1    as follows:
 27-2          (a)  Except as provided by this section, a claim for a refund
 27-3    must be filed with the comptroller within one year after the first
 27-4    day of the calendar month following the purchase, use, delivery,
 27-5    export, or loss by fire, theft, or other accident of gasoline,
 27-6    whichever period expires latest.
 27-7          SECTION 26.  Section 153.206, Tax Code, is amended by adding
 27-8    Subsection (j) to read as follows:
 27-9          (j)  In each subsequent sale of diesel fuel on which the tax
27-10    has been collected, the amount of the tax shall be added to the
27-11    selling price so that the tax is paid ultimately by the person
27-12    using or consuming the diesel fuel for the purpose of propelling a
27-13    vehicle on the public highways of this state.
27-14          SECTION 27.  Sections 153.219(a), (b), (c), (d), and (i), Tax
27-15    Code, are amended to read as follows:
27-16          (a)  A supplier shall keep a record showing the number of
27-17    gallons of:
27-18                (1)  all diesel fuel inventories on hand at the first
27-19    of each month;
27-20                (2)  all diesel fuel refined, compounded, or blended;
27-21                (3)  all diesel fuel purchased or received, showing the
27-22    name of the seller, and the date of each purchase or receipt;
27-23                (4)  all diesel fuel sold, distributed, or used showing
27-24    the name of the purchaser and the date of sale, distribution, or
27-25    use; and
 28-1                (5)  all diesel fuel lost by fire, theft, or other
 28-2    accident.
 28-3          (b)  A dealer shall keep a record showing the number of
 28-4    gallons of:
 28-5                (1)  all diesel fuel inventories on hand at the first
 28-6    of each month;
 28-7                (2)  all diesel fuel purchased or received, showing the
 28-8    name of the seller, the date of each purchase or receipt;
 28-9                (3)  all diesel fuel sold, distributed, or used; and
28-10                (4)  all diesel fuel lost by fire, theft, or other
28-11    accident.
28-12          (c)  A bonded user or other user with nonhighway equipment
28-13    uses who files a claim for a refund shall keep a record showing the
28-14    number of gallons of:
28-15                (1)  inventories of all diesel fuel on hand at the
28-16    first of each month;
28-17                (2)  all diesel fuel purchased or received, showing the
28-18    name of the seller and the date of each purchase;
28-19                (3)  all diesel fuel deliveries into the fuel supply
28-20    tanks of motor vehicles;
28-21                (4)  diesel fuel used for other purposes, showing the
28-22    purpose for which used; and
28-23                (5)  all diesel fuel lost by fire, theft, or other
28-24    accident.
28-25          (d)  An aviation fuel dealer shall keep a record showing the
 29-1    number of gallons of:
 29-2                (1)  all diesel fuel inventories on hand at the first
 29-3    of each month;
 29-4                (2)  all diesel fuel purchased or received, showing the
 29-5    name of the seller and the date of each purchase or receipt;
 29-6                (3)  all diesel fuel sold, distributed, or used in
 29-7    aircraft or aircraft servicing equipment; and
 29-8                (4)  diesel fuel lost by fire, theft, or other
 29-9    accident.
29-10          (i)  A diesel fuel jobber shall keep a record showing the
29-11    number of gallons of:
29-12                (1)  all diesel fuel inventories on hand at the first
29-13    of each month;
29-14                (2)  all diesel fuel purchased or received, showing the
29-15    name of the seller and date of each purchase or receipt;
29-16                (3)  all diesel fuel sold, distributed, or used,
29-17    showing the name of the purchaser and the date of the sale or use;
29-18    and
29-19                (4)  all diesel fuel lost by fire, theft, or other
29-20    accident.
29-21          SECTION 28.  Section 153.222(e), Tax Code, is amended to read
29-22    as follows:
29-23          (e)  A person who exports or loses by fire, theft, or other
29-24    accident 100 or more gallons of diesel fuel on which the tax has
29-25    been paid, or who sells diesel fuel in any quantity to the United
 30-1    States for its exclusive use on which the tax has been paid, may
 30-2    file a claim for a refund of the net tax paid to the state as the
 30-3    comptroller may direct.
 30-4          SECTION 29.  Section 153.224(a), Tax Code, is amended to read
 30-5    as follows:
 30-6          (a)  Except as provided by this section, a claim for a refund
 30-7    must be filed with the comptroller within one year after the first
 30-8    day of the calendar month following the purchase, use, delivery,
 30-9    export, or loss by fire, theft, or other accident of diesel fuel,
30-10    whichever period expires latest.
30-11          SECTION 30.  Sections 154.114(c) and (g), Tax Code, are
30-12    amended to read as follows:
30-13          (c)  The comptroller shall deliver [mail] the written notice
30-14    by personal service or by [certified] mail[, return receipt
30-15    requested,] to the permit holder's mailing address as it appears on
30-16    the comptroller's records.  Service by mail is complete when the
30-17    notice is deposited with [received, as evidenced by return receipt
30-18    from] the U.S. Postal Service.
30-19          (g)  If the comptroller suspends or revokes a permit, the
30-20    comptroller shall provide written notice of the suspension or
30-21    revocation, within a reasonable time, to each distributor and
30-22    wholesaler permit holder in the state.  A distributor or wholesaler
30-23    permit holder violates Section 154.1015(a) by selling or
30-24    distributing cigarettes to a person whose permit has been suspended
30-25    or revoked only after the distributor or wholesaler permit holder
 31-1    receives written notice of the suspension or revocation from the
 31-2    comptroller.
 31-3          SECTION 31.  Section 154.210(a), Tax Code, is amended to read
 31-4    as follows:
 31-5          (a)  A distributor shall deliver to the comptroller, on or
 31-6    before the last [15th] day of each month, a report for the
 31-7    preceding month.
 31-8          SECTION 32.  Section 154.308(b), Tax Code, is amended to read
 31-9    as follows:
31-10          (b)  On making a deficiency determination, the comptroller
31-11    shall notify the person by [certified] mail or personal service[,
31-12    return receipt requested].  Service by mail is complete when the
31-13    notice is deposited with [received, as evidenced by return receipt
31-14    from] the U.S. Postal Service.
31-15          SECTION 33.  Sections 154.309(b) and (d), Tax Code, are
31-16    amended to read as follows:
31-17          (b)  A written request for redetermination must be filed at
31-18    the office of the comptroller not later than the 30th [15th
31-19    working] day after the date notice of deficiency is issued
31-20    [received].  If a written request for redetermination is not filed
31-21    as required by this subsection, the determination is final.
31-22          (d)  The comptroller shall give notice of a redetermination
31-23    hearing by personal service or by [certified] mail[, return receipt
31-24    requested].  Service by mail is complete when the notice is
31-25    deposited with [received, as evidenced by return receipt from] the
 32-1    U.S. Postal Service.
 32-2          SECTION 34.  Section 155.059(c), Tax Code, is amended to read
 32-3    as follows:
 32-4          (c)  The comptroller shall deliver [mail] the written notice
 32-5    by personal service or by [certified] mail[, return receipt
 32-6    requested,] to the permit holder's mailing address as it appears in
 32-7    the comptroller's records.  Service by mail is complete when the
 32-8    notice is deposited with [received, as evidenced by the return
 32-9    receipt from] the United States Postal Service.
32-10          SECTION 35.  Section 155.103(b), Tax Code, is amended to read
32-11    as follows:
32-12          (b)  A manufacturer who sells tobacco products to a permit
32-13    holder in this state shall file with the comptroller, on or before
32-14    the last [15th] day of each month, a report showing the information
32-15    listed in Subsection (a) for the previous month.
32-16          SECTION 36.  Section 155.111(a), Tax Code, is amended to read
32-17    as follows:
32-18          (a)  A distributor shall file with the comptroller on or
32-19    before the last [30th] day of each month, a report for the
32-20    preceding month.
32-21          SECTION 37.  Section 155.185(b), Tax Code, is amended to read
32-22    as follows:
32-23          (b)  On making a deficiency determination, the comptroller
32-24    shall notify the person by personal service or by [certified]
32-25    mail[, return receipt requested].  Service by mail is complete when
 33-1    the notice is deposited with [received, as evidenced by return
 33-2    receipt from] the U.S. Postal Service.
 33-3          SECTION 38.  Sections 155.186(b) and (d), Tax Code, are
 33-4    amended to read as follows:
 33-5          (b)  A written request for redetermination must be filed at
 33-6    the office of the comptroller not later than the 30th [15th
 33-7    working] day after the date notice of deficiency is issued
 33-8    [received].  If a written request for redetermination is not filed
 33-9    as required by this subsection, the determination is final.
33-10          (d)  The comptroller shall give notice of a redetermination
33-11    hearing by personal service or by [certified] mail[, return receipt
33-12    requested].  Service by mail is complete when the notice is
33-13    deposited with [received, as evidenced by return receipt from] the
33-14    U.S. Postal Service.
33-15          SECTION 39.  Section 156.102, Tax Code, is amended to read as
33-16    follows:
33-17          Sec. 156.102.  Exception--Religious, Charitable, or
33-18    Educational Organization.  This chapter does not impose a tax on a
33-19    corporation or association that:
33-20                (1)  is organized and operated exclusively for a
33-21    religious, charitable, or educational purpose if no part of the net
33-22    earnings of the corporation or association inure to the benefit of
33-23    a private shareholder or individual; or
33-24                (2)  qualifies for exemption from federal income taxes
33-25    under Section 501(c)(3), Internal Revenue Code of 1986.
 34-1          SECTION 40.  Sections 156.103(a), (b), (c), and (d), Tax
 34-2    Code, are amended to read as follows:
 34-3          (a)  This [Subject to this section, this] chapter does not
 34-4    impose a tax on:
 34-5                (1)  the United States;
 34-6                (2)  a governmental entity of the United States[, this
 34-7    state, or an agency, institution, board, or commission of this
 34-8    state other than an institution of higher education;]
 34-9                [(2)  an officer or employee of a state governmental
34-10    entity described by Subdivision (1) when traveling on or otherwise
34-11    engaged in the course of official duties for the governmental
34-12    entity]; or
34-13                (3)  an officer or employee of a governmental entity of
34-14    the United States when traveling on or otherwise engaged in the
34-15    course of official duties for the governmental entity [if the
34-16    governmental entity directly pays to the hotel the price for the
34-17    room].
34-18          (b)  This state, or an agency, institution, board, or
34-19    commission of this state other than an institution of higher
34-20    education [A governmental entity otherwise excepted under this
34-21    section] shall pay the tax imposed by this chapter and is entitled
34-22    to a refund of the amount of tax paid in accordance with Section
34-23    156.154.
34-24          (c)  A state officer or employee of a state governmental
34-25    entity described by Subsection (b) [(a)(2)] who is entitled to
 35-1    reimbursement for the cost of lodging and for whom a special
 35-2    provision or exception to the general rate of reimbursement under
 35-3    the General Appropriations Act is not applicable shall pay the tax
 35-4    imposed by [under] this chapter [as if it were imposed by this
 35-5    chapter].  The state governmental entity with whom the person is
 35-6    associated is entitled under Section 156.154 to a refund of the tax
 35-7    paid.
 35-8          (d)  A state officer or employee of a state governmental
 35-9    entity described by Subsection (b) [(a)(2)] for whom a special
35-10    provision or exception to the general rate of reimbursement under
35-11    the General Appropriations Act applies and who is provided with
35-12    photo identification verifying the identity and exempt status of
35-13    the person is not required to pay the tax and is not entitled to a
35-14    refund.  The photo identification of a state officer or employee
35-15    described by this section may be modified for the purposes of this
35-16    section.
35-17          SECTION 41.  Section 171.063, Tax Code, is amended by
35-18    amending Subsection (a) and by adding Subsection (h) to read as
35-19    follows:
35-20          (a)  The following corporations are exempt from the franchise
35-21    tax:
35-22                (1)  a nonprofit corporation exempted from the federal
35-23    income tax under Section 501(c)(3), (4), (5), (6), (7), (8), (10),
35-24    or (19), Internal Revenue Code which in the case of a nonprofit
35-25    hospital means a hospital providing community benefits that include
 36-1    charity care and government-sponsored indigent health care
 36-2    [community benefits] as set forth in Subchapter D, Chapter 311,
 36-3    Health and Safety Code; [Paragraph (A), (B), (C), (D), (E), (F), or
 36-4    (G):]
 36-5                      [(A)  charity care and government-sponsored
 36-6    indigent health care are provided at a level which is reasonable in
 36-7    relation to the community needs, as determined through the
 36-8    community needs assessment, the available resources of the hospital
 36-9    or hospital system, and the tax-exempt benefits received by the
36-10    hospital or hospital system;]
36-11                      [(B)  charity care and government-sponsored
36-12    indigent health care are provided in an amount equal to at least
36-13    four percent of the hospital's or hospital system's net patient
36-14    revenue;]
36-15                      [(C)  charity care and government-sponsored
36-16    indigent health care are provided in an amount equal to at least
36-17    100 percent of the hospital's or hospital system's tax-exempt
36-18    benefits, excluding federal income tax;]
36-19                      [(D)  for tax periods beginning before January 1,
36-20    1996, charity care and community benefits are provided in a
36-21    combined amount equal to at least five percent of the hospital's
36-22    net patient revenue, provided that charity care and
36-23    government-sponsored indigent health care are provided in an amount
36-24    equal to at least three percent of net patient revenue;]
36-25                      [(E)  for tax periods beginning after December
 37-1    31, 1995, charity care and community benefits are provided in a
 37-2    combined amount equal to at least five percent of the hospital's or
 37-3    hospital system's net patient revenue, provided that charity care
 37-4    and government-sponsored indigent health care are provided in an
 37-5    amount equal to at least four percent of net patient revenue;]
 37-6                      [(F)  a nonprofit hospital that has been
 37-7    designated as a disproportionate share hospital under the state
 37-8    Medicaid program in the current year or in either of the previous
 37-9    two fiscal years is considered to have provided a reasonable amount
37-10    of charity care and government-sponsored indigent health care and
37-11    is considered in compliance with the standards provided by this
37-12    subsection; or]
37-13                      [(G)  a hospital operated on a nonprofit basis
37-14    that is located in a county with a population of less than 50,000
37-15    and in which the entire county or the population of the entire
37-16    county has been designated as a health professionals shortage area
37-17    is considered in compliance with the standards provided by this
37-18    subsection;]
37-19                (2)  a corporation exempted under Section 501(c)(2) or
37-20    (25), Internal Revenue Code, if the corporation or corporations for
37-21    which it holds title to property is either exempt from or not
37-22    subject to the franchise tax; and
37-23                (3)  a corporation exempted from federal income tax
37-24    under Section 501(c)(16), Internal Revenue Code. [; and]
37-25                [(4)  a nonprofit corporation exempted from the federal
 38-1    income tax under Section 501(c)(3), Internal Revenue Code, that
 38-2    does not receive any payment for providing health care services to
 38-3    inpatients or outpatients from any source including but not limited
 38-4    to the patient or person legally obligated to support the patient,
 38-5    third-party payors, Medicare, Medicaid, or any other state or local
 38-6    indigent care program.  Payment for providing health care services
 38-7    does not include charitable donations, legacies, bequests, or
 38-8    grants or payments for research.]
 38-9          [For purposes of satisfying Paragraph (E) of Subdivision (1),
38-10    a hospital or hospital system may not change its existing fiscal
38-11    year unless the hospital or hospital system changes its ownership
38-12    or corporate structure as a result of a sale or merger.]
38-13          [For purposes of this subsection, a hospital that satisfies
38-14    Paragraph (A), (F), or (G) of Subdivision (1) shall be excluded in
38-15    determining a hospital system's compliance with the standards
38-16    provided by Paragraph (B), (C), (D), or (E) of Subdivision (1).]
38-17          [For purposes of this subsection, the terms "charity care,"
38-18    "government-sponsored indigent health care," "health care
38-19    organization," "hospital system," "net patient revenue," "nonprofit
38-20    hospital," and "tax-exempt benefits" have the meanings set forth in
38-21    Sections 311.031 and 311.042, Health and Safety Code.  A
38-22    determination of the amount of community benefits and charity care
38-23    and government-sponsored indigent health care provided by a
38-24    hospital or hospital system and the hospital's or hospital system's
38-25    compliance with the requirements of Section 311.045, Health and
 39-1    Safety Code, shall be based on the most recently completed and
 39-2    audited prior fiscal year of the hospital or hospital system.]
 39-3          [A requirement that a nonprofit hospital provide charity care
 39-4    and community benefits under this subsection may be satisfied by a
 39-5    donation of money to the Texas Healthy Kids Corporation established
 39-6    by Chapter 109, Health and Safety Code, provided that:]
 39-7                [(1)  the money is donated to be used for a purpose
 39-8    described by Section 109.033(c), Health and Safety Code; and]
 39-9                [(2)  not more than 10 percent of the charity care
39-10    required under any provision of this subsection may be satisfied by
39-11    the donation.]
39-12          [The providing of charity care and government-sponsored
39-13    indigent health care in accordance with Paragraph (A) of
39-14    Subdivision (1) shall be guided by the prudent business judgment of
39-15    the hospital which will ultimately determine the appropriate level
39-16    of charity care and government-sponsored indigent health care based
39-17    on the community needs, the available resources of the hospital,
39-18    the tax-exempt benefits received by the hospital, and other factors
39-19    that may be unique to the hospital, such as the hospital's volume
39-20    of Medicare and Medicaid patients.  These criteria shall not be
39-21    determinative factors, but shall be guidelines contributing to the
39-22    hospital's decision along with other factors which may be unique to
39-23    the hospital.  The formulas contained in Paragraphs (B), (C), (D),
39-24    and (E) of Subdivision (1) shall also not be considered
39-25    determinative of a reasonable amount of charity care and
 40-1    government-sponsored indigent health care.]
 40-2          [The requirements of this subsection shall not apply to the
 40-3    extent a hospital or hospital system demonstrates that reductions
 40-4    in the amount of community benefits, charity care, and
 40-5    government-sponsored indigent health care are necessary to maintain
 40-6    financial reserves at a level required by a bond covenant, are
 40-7    necessary to prevent the hospital or hospital system from
 40-8    endangering its ability to continue operations, or if the hospital,
 40-9    as a result of a natural or other disaster, is required
40-10    substantially to curtail its operations.]
40-11          [In any fiscal year that a hospital or hospital system,
40-12    through unintended miscalculation, fails to meet any of the
40-13    standards in Subdivision (1), the hospital or hospital system shall
40-14    not lose its tax-exempt status without the opportunity to cure the
40-15    miscalculation in the fiscal year following the fiscal year the
40-16    failure is discovered by both meeting one of the standards and
40-17    providing an additional amount of charity care and
40-18    government-sponsored indigent health care that is equal to the
40-19    shortfall from the previous fiscal year.  A hospital or hospital
40-20    system may apply this provision only once every five years.]
40-21          (h)  A requirement that a nonprofit hospital provide charity
40-22    care and community benefits under Subsection (a)(1) may be
40-23    satisfied by a donation of money to the Texas Healthy Kids
40-24    Corporation established by Chapter 109, Health and Safety Code, if:
40-25                (1)  the money is donated to be used for a purpose
 41-1    described by Section 109.033(c), Health and Safety Code; and
 41-2                (2)  not more than 10 percent of the charity care
 41-3    required under any provision of Section 311.045, Health and Safety
 41-4    Code, may be satisfied by the donation.
 41-5          SECTION 42.  Sections 171.063(c) and (d), Tax Code, are
 41-6    amended to read as follows:
 41-7          (c)  A corporation's exemption under Subsection (b) of this
 41-8    section is established by furnishing the comptroller with a copy of
 41-9    the Internal Revenue Service's letter of exemption issued to the
41-10    corporation.  [The copy of the letter must be filed with the
41-11    comptroller within 15 months after the day that is the last day of
41-12    a calendar month and that is nearest to the date of the
41-13    corporation's charter or certificate of authority.]
41-14          (d)  If the Internal Revenue Service has not timely issued to
41-15    a corporation a letter of exemption, evidence establishing the
41-16    corporation's provisional exemption under this section is
41-17    sufficient if the corporation timely files with the comptroller
41-18    [within the 15-month period established by Subsection (c) of this
41-19    section] evidence that the corporation has applied in good faith
41-20    for the federal tax exemption. The evidence must be filed not later
41-21    than the 15th month after the day that is the last day of a
41-22    calendar month and that is nearest to the date of the corporation's
41-23    charter or certificate of authority.
41-24          SECTION 43.  The heading of Subchapter C, Chapter 171, Tax
41-25    Code, is amended to read as follows:
 42-1    SUBCHAPTER C.  DETERMINATION OF TAXABLE CAPITAL AND TAXABLE EARNED
 42-2    SURPLUS; ALLOCATION AND APPORTIONMENT
 42-3          SECTION 44.  The heading of Section 171.1015, Tax Code, is
 42-4    amended to read as follows:
 42-5          Sec. 171.1015.  REDUCTION OF TAXABLE CAPITAL OR TAXABLE
 42-6    EARNED SURPLUS FOR INVESTMENT IN AN ENTERPRISE ZONE.
 42-7          SECTION 45.  Section 171.1015(f)(1), Tax Code, is amended to
 42-8    read as follows:
 42-9                (1)  "Enterprise project" means a person designated by
42-10    the Texas Department of Economic Development [Commerce] as an
42-11    enterprise project under Chapter 2303, Government Code.
42-12          SECTION 46.  Section 171.1015(g), Tax Code, is amended to
42-13    read as follows:
42-14          (g)  Only qualified businesses that have been certified as
42-15    eligible for a tax deduction under this section by the Texas
42-16    Department of Economic Development [Commerce] to the comptroller
42-17    and the Legislative Budget Board are entitled to the tax deduction.
42-18          SECTION 47.  The heading of Section 171.1016, Tax Code, is
42-19    amended to read as follows:
42-20          Sec. 171.1016.  REDUCTION OF TAXABLE CAPITAL OR TAXABLE
42-21    EARNED SURPLUS FOR INVESTMENT IN A READJUSTMENT ZONE.
42-22          SECTION 48.  Section 171.1016(f)(1), Tax Code, is amended to
42-23    read as follows:
42-24                (1)  "Defense readjustment project" means a person
42-25    designated by the Texas Department of Economic Development
 43-1    [Commerce] as a defense readjustment project under Chapter 2310,
 43-2    Government Code.
 43-3          SECTION 49.  Section 171.1016(g), Tax Code, is amended to
 43-4    read as follows:
 43-5          (g)  Only qualified businesses that have been certified as
 43-6    eligible for a tax deduction under this section by the Texas
 43-7    Department of Economic Development [Commerce] to the comptroller
 43-8    and the Legislative Budget Board are entitled to the tax deduction.
 43-9          SECTION 50.  The heading of Section 171.107, Tax Code, is
43-10    amended to read as follows:
43-11          Sec. 171.107.  DEDUCTION OF COST OF SOLAR ENERGY DEVICE FROM
43-12    TAXABLE CAPITAL OR TAXABLE EARNED SURPLUS APPORTIONED TO THIS
43-13    STATE.
43-14          SECTION 51.  Section 171.110, Tax Code, is amended by adding
43-15    Subsections (i) and (j) to read as follows:
43-16          (i)  For purposes of this section, any person designated as
43-17    an officer is presumed to be an officer if that person:
43-18                (1)  holds an office created by the board of directors
43-19    or pursuant to the corporate charter or bylaws, and
43-20                (2)  has legal authority to bind the corporation with
43-21    third parties by executing contracts or other legal documents.
43-22          (j)  A corporation may rebut the presumption described in
43-23    Subsection (i) that a person is an officer if it conclusively
43-24    shows, through the person's job description or other documentation,
43-25    that the person does not participate or have authority to
 44-1    participate in significant policymaking aspects of the corporate
 44-2    operations.
 44-3          SECTION 52.  Section 171.501(a), Tax Code, is amended to read
 44-4    as follows:
 44-5          (a)  A corporation that has been certified a qualified
 44-6    business as provided by Chapter 2303, Government Code may apply for
 44-7    and be granted a refund of franchise tax paid with an initial or
 44-8    annual report if the governing body or bodies certify to the Texas
 44-9    Department of Economic Development [Commerce] that the business has
44-10    created 10 or more new jobs in its enterprise zone held by
44-11    qualified employees during the calendar year that contains the end
44-12    of the accounting period on which the report is based.  The Texas
44-13    Department of Economic Development [Commerce] shall certify
44-14    eligibility for any refund to the comptroller.
44-15          SECTION 53.  The heading of Subchapter C, Chapter 183, Tax
44-16    Code, is amended to read as follows:
44-17            SUBCHAPTER C.  MIXED BEVERAGE TAX CLEARANCE [FUND]
44-18          SECTION 54.  The heading of Section 183.051, Tax Code, is
44-19    amended to read as follows:
44-20          Sec. 183.051.  MIXED BEVERAGE TAX CLEARANCE [FUND]
44-21          SECTION 55.  Section 183.051(b), Tax Code, is amended to read
44-22    as follows:
44-23          (b)  The comptroller shall issue to each county a warrant
44-24    drawn on the general revenue [mixed beverage tax clearance] fund in
44-25    the amount of 10.7143 percent of mixed beverage receipts from
 45-1    permittees within the county during the quarter and shall issue to
 45-2    each incorporated municipality a warrant drawn on that fund in the
 45-3    amount of 10.7143 percent of mixed beverage receipts from
 45-4    permittees within the incorporated municipality during the quarter.
 45-5    [The remainder of the receipts for the quarter and all interest
 45-6    earned on that fund shall be transferred to the general revenue
 45-7    fund.]
 45-8          SECTION 56.  Section 191.085(b), Tax Code, is amended to read
 45-9    as follows:
45-10          (b)  The person shall keep the record open for four [two]
45-11    years for inspection by the comptroller or the attorney general.
45-12          SECTION 57.  Section 203.051(a), Tax Code, is amended to read
45-13    as follows:
45-14          (a)  A producer shall keep a complete record of all sulphur
45-15    he produces in this state.  A producer may destroy a record
45-16    required by this section four [three] years after the last entry in
45-17    the record.
45-18          SECTION 58.  Section 321.103, Tax Code, is amended by adding
45-19    Subsections (e), (f), and (g) to read as follows:
45-20          (e)  If as a result of the imposition or increase in a sales
45-21    and use tax by a municipality in which there is located all or part
45-22    of a local governmental entity with an existing sales and use tax
45-23    or as a result of the annexation by a municipality of all or part
45-24    of the territory in a local governmental entity with an existing
45-25    sales and use tax the overlapping local sales and use taxes in the
 46-1    area will exceed two percent, the entity's sales and use tax is
 46-2    automatically reduced in that area to a rate that when added to the
 46-3    combined rate of local sales and use taxes will equal two percent.
 46-4          (f)  If an entity's rate is reduced in accordance with
 46-5    Subsection (e), the comptroller shall withhold from the
 46-6    municipality's monthly sales and use tax allocation an amount equal
 46-7    to the amount that would have been collected by the entity had the
 46-8    municipality not imposed or increased its sales and use tax or
 46-9    annexed the area in the entity less amounts that the entity
46-10    collects following the municipality's levy of or increase in its
46-11    sales and use tax or annexation of the area in the district.  The
46-12    comptroller shall withhold and pay the amount withheld to the
46-13    entity under policies or procedures that the comptroller considers
46-14    reasonable.
46-15          (g)  A transit authority is not a local governmental entity
46-16    for the purposes of Subsections (e) and (f).
46-17          SECTION 59.  Section 323.102(c), Tax Code, is amended to read
46-18    as follows:
46-19          (c)  A tax imposed under Section 323.105 of this code or
46-20    Chapter 326, Local Government Code, takes effect on the first day
46-21    of the first calendar quarter after the expiration of the first
46-22    complete calendar quarter occurring after the date on which the
46-23    comptroller receives a notice of the action as required by Section
46-24    323.405(b).
46-25          SECTION 60.  Section 323.105(e), Tax Code, is amended to read
 47-1    as follows:
 47-2          (e)  The comptroller shall remit to the county amounts
 47-3    collected at the rate imposed under this section as part of the
 47-4    regular allocation of county tax revenue collected by the
 47-5    comptroller, if the district is composed of the entire county.  The
 47-6    comptroller [county] shall, if the district is composed of an area
 47-7    less than the entire county, remit the amount to the district.
 47-8    Retailers may not be required to use the allocation and reporting
 47-9    procedures in the collection of taxes under this section different
47-10    from the procedures that retailers use in the collection of other
47-11    sales and use taxes under this chapter.  An item, transaction, or
47-12    service that is taxable in a county under a sales or use tax
47-13    authorized by another section of this chapter is taxable under this
47-14    section.  An item, transaction, or service that is not taxable in a
47-15    county under a sales or use tax authorized by another section of
47-16    this chapter is not taxable under this section.
47-17          SECTION 61.  Section 351.006, Tax Code, is amended to read as
47-18    follows:
47-19          Sec. 351.006.  Exemption.  (a)  A United States governmental
47-20    entity described in Section 156.103(a) is exempt from the payment
47-21    of tax authorized by this chapter.  [A governmental entity excepted
47-22    from the tax imposed by Chapter 156 under Section 156.103(a)(1) or
47-23    (a)(3) shall pay the tax imposed by this chapter but is entitled to
47-24    a refund of the tax paid.]
47-25          (b)  A state governmental entity described in Section
 48-1    156.103(b) shall pay the tax imposed by this chapter but is
 48-2    entitled to a refund of the tax paid.
 48-3          (c)  A person who is described by Section 156.103(d) is
 48-4    exempt from the payment of the tax authorized by this chapter.
 48-5          (d) [(c)]  A person who is described by Section 156.103(c)
 48-6    shall pay the tax imposed by this chapter but the state
 48-7    governmental entity with whom the person is associated is entitled
 48-8    to a refund of the tax paid.
 48-9          (e) [(d)]  To receive a refund of tax paid under this
48-10    chapter, the governmental entity entitled to the refund must file a
48-11    refund claim on a form provided by the municipality and containing
48-12    the information required by the municipality.  The comptroller by
48-13    rule shall prescribe the form that must be used and the information
48-14    that must be provided.
48-15          (f) [(e)]  A governmental entity may file a refund claim with
48-16    the municipality under this chapter only for each calendar quarter
48-17    for all reimbursements accrued during that quarter.  The
48-18    municipality may adopt an ordinance to enforce this section.
48-19          SECTION 62.  Section 352.007, Tax Code, is amended to read as
48-20    follows:
48-21          Sec. 352.007.  Exemption.  (a)  A United States governmental
48-22    entity described in Section 156.103(a) is exempt from the payment
48-23    of tax authorized by this chapter.  [A governmental entity excepted
48-24    from the tax imposed by Chapter 156 under Section 156.103(a)(1) or
48-25    (a)(3) shall pay the tax imposed by this chapter but is entitled to
 49-1    a refund of the tax paid.]
 49-2          (b)  A state governmental entity subject to the tax imposed
 49-3    by Chapter 156 under Section 156.103(b) shall pay the tax imposed
 49-4    by this chapter but is entitled to a refund of the tax paid.
 49-5          (c)  A person who is described by Section 156.103(d) is
 49-6    exempt from the payment of the tax authorized by this chapter.
 49-7          (d) [(c)]  A person who is described by Section 156.103(c)
 49-8    shall pay the tax imposed by this chapter but the state
 49-9    governmental entity with whom the person is associated is entitled
49-10    to a refund of the tax paid.
49-11          (e) [(d)]  To receive a refund of a tax paid under this
49-12    chapter, the governmental entity entitled to the refund must file a
49-13    refund claim on a form provided by the county and containing the
49-14    information required by the county.  The comptroller by rule shall
49-15    prescribe the form that must be used and the information that must
49-16    be provided.
49-17          (f) [(e)]  A governmental entity may file a refund claim with
49-18    the county under this chapter only for each calendar quarter for
49-19    all reimbursements accrued during that quarter.  The county may
49-20    adopt a resolution to enforce this section.
49-21          SECTION 63.  Subsection 4B(e), Development Corporation Act of
49-22    1979 (Article 5190.6, Vernon's Texas Civil Statutes), as amended by
49-23    Section 3, Chapter 1022, and Section 12, Chapter 1031, Acts of the
49-24    73rd Legislature, Regular Session, 1993, is reenacted to read as
49-25    follows:
 50-1          (e)  The rate of a tax adopted under this section must be
 50-2    one-eighth, one-fourth, three-eighths, or one-half of one percent.
 50-3    The ballot proposition at the election held to adopt the tax must
 50-4    specify the rate of the tax to be adopted.  A corporation that
 50-5    holds an election to reduce a tax imposed under Section 4A of this
 50-6    Act may in a separate proposition on the same ballot adopt a tax
 50-7    under this section.  If an eligible city adopts the tax, a tax is
 50-8    imposed on the receipts from the sale at retail of taxable items
 50-9    within the eligible city at the rate approved at the election.
50-10    There is also imposed an excise tax on the use, storage, or other
50-11    consumption within the eligible city of tangible personal property
50-12    purchased, leased, or rented from a retailer during the period that
50-13    the tax is effective within the eligible city.  The rate of the
50-14    excise tax is the same as the rate of the sales tax portion of the
50-15    tax and is applied to the sale price of the tangible personal
50-16    property.
50-17          SECTION 64.  Section 152.062(d), Tax Code, is repealed.
50-18          SECTION 65.  Each change in law made to the following
50-19    provisions by this Act is a clarification of existing law and does
50-20    not imply that existing law may be construed as inconsistent with
50-21    the law as amended by this Act:
50-22                (1)  Section 102.075, Code of Criminal Procedure;
50-23                (2)  Section 9, Texas State College and University
50-24    Employees Uniform Insurance Benefits Act (Article 3.50-3, Vernon's
50-25    Texas Insurance Code;
 51-1                (3)  Section 11, Texas Public School Employees Group
 51-2    Insurance Act (Article 3.50-4, Insurance Code);
 51-3                (4)  Section 326.029, Local Government Code;
 51-4                (5)  Section 326.092, Local Government Code;
 51-5                (6)  Section 151.350(d), Tax Code;
 51-6                (7)  Section 152.041, Tax Code;
 51-7                (8)  Section 153.117, Tax Code;
 51-8                (9)  Section 153.119, Tax Code;
 51-9                (10)  Section 153.206, Tax Code;
51-10                (11)  Section 153.219, Tax Code;
51-11                (12)  Section 171.063, Tax Code;
51-12                (13)  The heading of Subchapter C, Chapter 171, Tax
51-13    Code;
51-14                (14)  The headings of Sections 171.1015, 171.1016, and
51-15    171.107, Tax Code;
51-16                (15)  Section 171.110, Tax Code;
51-17                (16)  Section 191.085, Tax Code; and
51-18                (17)  Section 203.051, Tax Code.
51-19          SECTION 66.  The comptroller of public accounts may adopt
51-20    rules and take other actions before October 1, 1999, as the
51-21    comptroller deems necessary or advisable to prepare for the taking
51-22    effect of this Act.
51-23          SECTION 67.  (a)  Except as provided by Subsections (b), (c),
51-24    and (d), this Act takes effect October 1, 1999.
51-25          (b)  Section 3 of this Act takes effect January 1, 2000, and
 52-1    applies to reporting periods beginning on or after that date.
 52-2          (c)  Sections 41 through 52 of this Act take effect January
 52-3    1, 2000, and apply to a report originally due on or after that
 52-4    date.
 52-5          (d)  Sections 59 and 66 of this Act take effect on the
 52-6    earliest date on which they may take effect under Section 39,
 52-7    Article III, Texas Constitution.
 52-8          SECTION 68.  The importance of this legislation and the
 52-9    crowded condition of the calendars in both houses create an
52-10    emergency and an imperative public necessity that the
52-11    constitutional rule requiring bills to be read on three several
52-12    days in each house be suspended, and this rule is hereby suspended,
52-13    and that this Act take effect and be in force according to its
52-14    terms, and it is so enacted.