76R16366 DAK-F
By Ellis, et al. S.B. No. 441
Substitute the following for S.B. No. 441:
By McCall C.S.S.B. No. 441
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the application of the sales and use tax to certain
1-3 services.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subchapter A, Chapter 151, Tax Code, is amended
1-6 by adding Sections 151.00393 and 151.00394 to read as follows:
1-7 Sec. 151.00393. INTERNET. "Internet" means collectively the
1-8 myriad of computer and telecommunications facilities, including
1-9 equipment and operating software, that comprise the interconnected
1-10 worldwide network of networks that employ the Transmission Control
1-11 Protocol/Internet Protocol, or any predecessor or successor
1-12 protocols to the protocol, to communicate information of all kinds
1-13 by wire or radio.
1-14 Sec. 151.00394. INTERNET ACCESS SERVICE. (a) "Internet
1-15 access service" means a service that enables users to access
1-16 content, information, electronic mail, or other services offered
1-17 over the Internet and may also include access to proprietary
1-18 content, information, and other services as part of a package of
1-19 services offered to consumers. The term does not include
1-20 telecommunications services.
1-21 (b) "Internet access service" does not include and the
1-22 exemption under Section 151.325 does not apply to any other taxable
1-23 service listed in Section 151.0101(a) or 151.01011, unless the
2-1 taxable service is provided in conjunction with and is merely
2-2 incidental to the provision of Internet access service.
2-3 (c) On and after October 1, 1999, "Internet access service"
2-4 is not included in the definitions of data processing services and
2-5 information services.
2-6 SECTION 2. Section 151.0101(a), Tax Code, is amended to read
2-7 as follows:
2-8 (a) "Taxable services" means:
2-9 (1) amusement services;
2-10 (2) cable television services;
2-11 (3) personal services;
2-12 (4) motor vehicle parking and storage services;
2-13 (5) the repair, remodeling, maintenance, and
2-14 restoration of tangible personal property, except:
2-15 (A) aircraft;
2-16 (B) a ship, boat, or other vessel, other than:
2-17 (i) a taxable boat or motor as defined by
2-18 Section 160.001;
2-19 (ii) a sports fishing boat; or
2-20 (iii) any other vessel used for pleasure;
2-21 (C) the repair, maintenance, and restoration of
2-22 a motor vehicle; and
2-23 (D) the repair, maintenance, creation, and
2-24 restoration of a computer program, including its development and
2-25 modification, not sold by the person performing the repair,
2-26 maintenance, creation, or restoration service;
2-27 (6) telecommunications services;
3-1 (7) credit reporting services;
3-2 (8) debt collection services;
3-3 (9) insurance services;
3-4 (10) [information services;]
3-5 [(11)] real property services;
3-6 (11) [(12) data processing services;]
3-7 [(13)] real property repair and remodeling;
3-8 (12) [(14)] security services;
3-9 (13) [and (15)] telephone answering services; and
3-10 (14) Internet access service.
3-11 SECTION 3. Subchapter A, Chapter 151, Tax Code, is amended
3-12 by adding Section 151.01011 to read as follows:
3-13 Sec. 151.01011. CERTAIN TEMPORARY TAXABLE SERVICES. (a)
3-14 "Taxable services" include information services and data processing
3-15 services.
3-16 (b) This section expires October 1, 2003.
3-17 SECTION 4. Section 151.0103, Tax Code, is amended to read as
3-18 follows:
3-19 Sec. 151.0103. TELECOMMUNICATIONS SERVICES. For the
3-20 purposes of this title only, "telecommunications services" means
3-21 the electronic or electrical transmission, conveyance, routing, or
3-22 reception of sounds, signals, data, or information utilizing wires,
3-23 cable, radio waves, microwaves, satellites, fiber optics, or any
3-24 other method now in existence or that may be devised, including but
3-25 not limited to long-distance telephone service. The term does not
3-26 include:
3-27 (1) the storage of data or information for subsequent
4-1 retrieval or the processing, or reception and processing, of data
4-2 or information intended to change its form or content; [or]
4-3 (2) the sale or use of a telephone prepaid calling
4-4 card; or
4-5 (3) Internet access service.
4-6 SECTION 5. Section 151.320(b), Tax Code, is amended to read
4-7 as follows:
4-8 (b) "Magazine" means a publication that is usually
4-9 paperbacked and sometimes illustrated, that appears at a regular
4-10 interval, and that contains stories, articles, and essays by
4-11 various writers and advertisements. ["Magazine" does not mean the
4-12 publication of current information which is taxable pursuant to
4-13 Section 151.0038 of this code as an "information service."]
4-14 SECTION 6. Subchapter H, Chapter 151, Tax Code, is amended
4-15 by adding Section 151.325 to read as follows:
4-16 Sec. 151.325. BASIC FEE FOR INTERNET ACCESS SERVICE.
4-17 (a) The sale, use, or other consumption in this state of Internet
4-18 access service is exempted from the taxes imposed by this chapter
4-19 in an amount not to exceed the first $25 of a monthly charge.
4-20 (b) The exemption provided by this section applies without
4-21 regard to:
4-22 (1) whether the Internet access service is bundled
4-23 with another service, including any other taxable service listed in
4-24 Section 151.0101(a) or 151.01011; or
4-25 (2) the billing period used by the service provider.
4-26 (c) The exemption in this section applies to the total sales
4-27 price the service provider charges for Internet access to a
5-1 purchaser, without regard to whether the service provider charges
5-2 one lump-sum amount or separately bills the purchaser for each
5-3 user.
5-4 SECTION 7. Subchapter H, Chapter 151, Tax Code, is amended
5-5 by adding Section 151.351 to read as follows:
5-6 Sec. 151.351. INFORMATION SERVICES AND DATA PROCESSING
5-7 SERVICES. (a) Information services and data processing services
5-8 are exempted from the taxes imposed by this chapter as follows:
5-9 (1) for services rendered on or after January 1, 2000,
5-10 and before October 1, 2000, 20 percent of the value of the services
5-11 is exempt;
5-12 (2) for services rendered on or after October 1, 2000,
5-13 and before October 1, 2001, 40 percent of the value of the services
5-14 is exempt;
5-15 (3) for services rendered on or after October 1, 2001,
5-16 and before October 1, 2002, 60 percent of the value of the services
5-17 is exempt; and
5-18 (4) for services rendered on or after October 1, 2002,
5-19 and before October 1, 2003, 80 percent of the value of the services
5-20 is exempt.
5-21 (b) This section expires October 1, 2003.
5-22 SECTION 8. Sections 151.0035 and 151.0038, Tax Code, are
5-23 repealed.
5-24 SECTION 9. (a) Except as otherwise provided by this Act,
5-25 this Act takes effect October 1, 1999.
5-26 (b) Sections 5 and 8 of this Act take effect October 1,
5-27 2003.
6-1 (c) The change in law made by this Act does not affect taxes
6-2 imposed before the effective date of this Act, and the law in
6-3 effect before the effective date of this Act is continued in effect
6-4 for purposes of the liability for and collection of those taxes.
6-5 SECTION 10. The importance of this legislation and the
6-6 crowded condition of the calendars in both houses create an
6-7 emergency and an imperative public necessity that the
6-8 constitutional rule requiring bills to be read on three several
6-9 days in each house be suspended, and this rule is hereby suspended.