By: Ratliff, Ogden, Nixon S.B. No. 977
A BILL TO BE ENTITLED
AN ACT
1-1 relating to exemptions from ad valorem and sales and use taxation
1-2 of certain timber and certain items used in timber operations and
1-3 the valuation of certain timber land for ad valorem tax purposes.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subsection (b), Section 6.12, Tax Code, is
1-6 amended to read as follows:
1-7 (b) One of the agricultural advisory board members must be a
1-8 representative of the county agricultural stabilization and
1-9 conservation service, and the remainder of the members must be
1-10 landowners of the district whose land qualifies for appraisal under
1-11 Subchapter C, D, [or] E, or H, [of] Chapter 23, and who have been
1-12 residents of the district for at least five years.
1-13 SECTION 2. Subsection (c), Section 11.16, Tax Code, is
1-14 amended to read as follows:
1-15 (c) For purposes of this exemption, the following
1-16 definitions apply:
1-17 (1) "Farm products" include [includes] livestock,
1-18 [and] poultry, and timber.
1-19 (2) "In the hands of the producer," for livestock and
1-20 poultry, means under the ownership of the person who is financially
1-21 providing for the physical requirements of such livestock and
1-22 poultry on January 1 of the tax year and, for timber, means
1-23 standing timber or timber that has been harvested and, on January 1
1-24 of the tax year, is located on the real property on which it was
2-1 produced and is under the ownership of the person who owned the
2-2 timber when it was standing.
2-3 SECTION 3. Section 11.161, Tax Code, is amended to read as
2-4 follows:
2-5 Sec. 11.161. IMPLEMENTS OF HUSBANDRY [FARMING OR RANCHING].
2-6 Implements of husbandry that are used in the production of farm or
2-7 ranch products or of timber are exempt from ad valorem taxation.
2-8 SECTION 4. Subsection (g), Section 23.76, Tax Code, is
2-9 amended to read as follows:
2-10 (g) If the use of the land changes to a use that qualifies
2-11 under Subchapter C, [or] D, or H of this chapter, the sanctions
2-12 provided by Subsection (a) of this section do not apply.
2-13 SECTION 5. Chapter 23, Tax Code, is amended by adding
2-14 Subchapter H to read as follows:
2-15 SUBCHAPTER H. APPRAISAL OF RESTRICTED-USE TIMBER LAND
2-16 Sec. 23.9801. DEFINITIONS. In this subchapter:
2-17 (1) "Aesthetic management zone" means timber land on
2-18 which timber harvesting is restricted for aesthetic or conservation
2-19 purposes, including:
2-20 (A) maintaining standing timber adjacent to
2-21 public rights-of-way, including highways and roads; and
2-22 (B) preserving an area in a forest, as defined
2-23 by Section 152.003, Natural Resources Code, that is designated by
2-24 the director of the Texas Forest Service as special or unique
2-25 because of the area's natural beauty, topography, or historical
2-26 significance.
3-1 (2) "Critical wildlife habitat zone" means timber land
3-2 on which the timber harvesting is restricted so as to provide at
3-3 least three of the following benefits for the protection of an
3-4 animal or plant that is listed as endangered or threatened under
3-5 the Endangered Species Act of 1973 (16 U.S.C. Section 1531 et seq.)
3-6 and its subsequent amendments or as endangered under Section
3-7 68.002, Parks and Wildlife Code:
3-8 (A) habitat control;
3-9 (B) erosion control;
3-10 (C) predator control;
3-11 (D) providing supplemental supplies of water;
3-12 (E) providing supplemental supplies of food;
3-13 (F) providing shelters; and
3-14 (G) making of census counts to determine
3-15 population.
3-16 (3) "Management plan" means a plan that uses forestry
3-17 best management practices consistent with the agricultural and
3-18 silvicultural nonpoint source pollution management program
3-19 administered by the State Soil and Water Conservation Board under
3-20 Section 201.026, Agriculture Code.
3-21 (4) "Regenerate" means to replant or manage natural
3-22 regeneration.
3-23 (5) "Streamside management zone" means timber land on
3-24 which timber harvesting is restricted in accordance with a
3-25 management plan to:
3-26 (A) protect water quality; or
4-1 (B) preserve a waterway, including a lake,
4-2 river, stream, or creek.
4-3 (6) "Qualified restricted-use timber land" means land
4-4 that qualifies for appraisal as provided by this subchapter.
4-5 Sec. 23.9802. QUALIFICATION FOR APPRAISAL AS RESTRICTED-USE
4-6 TIMBER LAND. (a) Land qualifies for appraisal as provided by this
4-7 subchapter if the land is in an aesthetic management zone, critical
4-8 wildlife habitat zone, or streamside management zone.
4-9 (b) Land qualifies for appraisal as provided by this
4-10 subchapter if:
4-11 (1) timber was harvested from the land in a year in
4-12 which the land was appraised under Subchapter E; and
4-13 (2) the land has been regenerated for timber
4-14 production to the degree of intensity generally accepted in the
4-15 area for commercial timber land and with intent to produce income.
4-16 (c) Land ceases to qualify for appraisal under Subsection
4-17 (b) on the 10th anniversary of the date the timber was harvested
4-18 under Subsection (b)(1). This subsection does not disqualify the
4-19 land from qualifying for appraisal under this section in a tax year
4-20 following that anniversary based on the circumstances existing in
4-21 that subsequent tax year.
4-22 Sec. 23.9803. APPRAISAL OF QUALIFIED RESTRICTED-USE TIMBER
4-23 LAND. (a) Except as provided by Subsection (b), the appraised
4-24 value of qualified restricted-use timber land is one-half of the
4-25 appraised value of the land as determined under Section 23.73(a).
4-26 (b) The appraised value determined under Subsection (a) may
5-1 not exceed the lesser of:
5-2 (1) the market value of the land as determined by
5-3 other appraisal methods; or
5-4 (2) the appraised value of the land for the year
5-5 preceding the first year of appraisal under this subchapter.
5-6 (c) The chief appraiser shall determine the market value of
5-7 qualified restricted-use timber land and shall record both the
5-8 market value and the appraised value in the appraisal records.
5-9 Sec. 23.9804. APPLICATION. (a) A person claiming that the
5-10 person's land is eligible for appraisal as provided by this
5-11 subchapter must file a valid application with the chief appraiser.
5-12 (b) To be valid, an application for appraisal under Section
5-13 23.9802(a) must:
5-14 (1) be on a form provided by the appraisal office and
5-15 prescribed by the comptroller;
5-16 (2) provide evidence that the land qualifies for
5-17 designation as an aesthetic management zone, critical wildlife
5-18 habitat zone, or streamside management zone;
5-19 (3) specify the location of the proposed zone and the
5-20 quantity of land, in acres, in the proposed zone; and
5-21 (4) contain other information necessary to determine
5-22 the validity of the claim.
5-23 (c) To be valid, an application for appraisal under Section
5-24 23.9802(b) must:
5-25 (1) be on a form provided by the appraisal office and
5-26 prescribed by the comptroller;
6-1 (2) provide evidence that the land on which the timber
6-2 was harvested was appraised under Subchapter E in the year in which
6-3 the timber was harvested;
6-4 (3) provide evidence that all of the land has been
6-5 regenerated in compliance with Section 23.9802(b)(2); and
6-6 (4) contain other information necessary to determine
6-7 the validity of the claim.
6-8 (d) The comptroller shall include on the form a notice of
6-9 the penalties prescribed by Section 37.10, Penal Code, for making
6-10 or filing an application containing a false statement. The
6-11 comptroller, in prescribing the contents of the application form,
6-12 shall require that the form permit a claimant who has previously
6-13 been allowed appraisal under this subchapter to indicate that the
6-14 previously reported information has not changed and to supply only
6-15 the eligibility information not previously reported.
6-16 (e) The form must be filed before May 1. However, for good
6-17 cause shown, the chief appraiser may extend the filing deadline for
6-18 not more than 15 days.
6-19 (f) If a person fails to file a valid application on time,
6-20 the land is ineligible for appraisal as provided by this subchapter
6-21 for that year. Once an application is filed and appraisal under
6-22 this subchapter is allowed, the land is eligible for appraisal
6-23 under the applicable provision of this subchapter in subsequent
6-24 years without a new application unless the ownership of the land
6-25 changes, the standing timber is harvested, or the land's
6-26 eligibility under this subchapter ends. However, if the chief
7-1 appraiser has good cause to believe the land's eligibility under
7-2 this subchapter has ended, the chief appraiser may require a person
7-3 allowed appraisal under this subchapter in a previous year to file
7-4 a new application to confirm that the land is currently eligible
7-5 under this subchapter by delivering a written notice that a new
7-6 application is required, accompanied by the application form, to
7-7 the person who filed the application that was previously allowed.
7-8 (g) The appraisal office shall make a sufficient number of
7-9 printed application forms readily available at no charge.
7-10 (h) Each year the chief appraiser for each appraisal
7-11 district shall publicize, in a manner reasonably designed to notify
7-12 all residents of the district, the requirements of this section and
7-13 the availability of application forms.
7-14 (i) A person whose land is allowed appraisal under this
7-15 subchapter shall notify the appraisal office in writing before May
7-16 1 after eligibility of the land under this subchapter ends. If a
7-17 person fails to notify the appraisal office as required by this
7-18 subsection, a penalty is imposed on the property equal to 10
7-19 percent of the difference between the taxes imposed on the property
7-20 in each year it is erroneously allowed appraisal under this
7-21 subchapter and the taxes that would otherwise have been imposed.
7-22 (j) The chief appraiser shall make an entry in the appraisal
7-23 records for the property against which the penalty is imposed
7-24 indicating liability for the penalty and shall deliver a written
7-25 notice of imposition of the penalty to the person who owns the
7-26 property. The notice shall include a brief explanation of the
8-1 procedures for protesting the imposition of the penalty. The
8-2 assessor for each taxing unit that imposed taxes on the property on
8-3 the basis of appraisal under this subchapter shall add the amount
8-4 of the penalty to the unit's tax bill for taxes on the property
8-5 against which the penalty is imposed. The penalty shall be
8-6 collected at the same time and in the same manner as the taxes on
8-7 the property against which the penalty is imposed. The amount of
8-8 the penalty constitutes a lien on the property against which the
8-9 penalty is imposed and on delinquency accrues penalty and interest
8-10 in the same manner as a delinquent tax.
8-11 (k) If the chief appraiser discovers that appraisal under
8-12 this subchapter has been erroneously allowed in any of the 10
8-13 preceding years because of failure of the person whose land was
8-14 allowed appraisal under this subchapter to give notice that the
8-15 land's eligibility had ended, the chief appraiser shall add the
8-16 difference between the appraised value of the land under this
8-17 subchapter and the market value of the land for any year in which
8-18 the land was ineligible for appraisal under this subchapter to the
8-19 appraisal records as provided by Section 25.21 for other property
8-20 that escapes taxation.
8-21 Sec. 23.9805. ACTION ON APPLICATION. (a) The chief
8-22 appraiser shall determine separately each applicant's right to have
8-23 the applicant's land appraised under this subchapter. After
8-24 considering the application and all relevant information, the chief
8-25 appraiser shall, based on the law and facts:
8-26 (1) approve the application and allow appraisal under
9-1 this subchapter;
9-2 (2) disapprove the application and request additional
9-3 information from the applicant in support of the claim; or
9-4 (3) deny the application.
9-5 (b) If the chief appraiser requests additional information
9-6 from an applicant, the applicant must furnish it not later than the
9-7 30th day after the date of the request or the chief appraiser shall
9-8 deny the application. However, for good cause shown, the chief
9-9 appraiser may extend the deadline for furnishing the information by
9-10 written order for a single period not to exceed 15 days.
9-11 (c) The chief appraiser shall determine the validity of each
9-12 application for appraisal under this subchapter filed with the
9-13 chief appraiser before the chief appraiser submits the appraisal
9-14 records for review and determination of protests as provided by
9-15 Chapter 41.
9-16 (d) If the chief appraiser denies an application, the chief
9-17 appraiser shall deliver a written notice of the denial to the
9-18 applicant not later than the fifth day after the date the chief
9-19 appraiser makes the determination. The chief appraiser shall
9-20 include with the notice a brief explanation of the procedures for
9-21 protesting the denial.
9-22 Sec. 23.9806. APPLICATION DENIAL BASED ON ZONE LOCATION.
9-23 (a) Before a chief appraiser may deny an application under Section
9-24 23.9805 on the ground that the land is not located in an aesthetic
9-25 management zone, critical wildlife habitat zone, or streamside
9-26 management zone, the chief appraiser must first request a
10-1 determination letter from the director of the Texas Forest Service
10-2 as to the type, location, and size of the zone, if any, in which
10-3 the land is located.
10-4 (b) The chief appraiser shall notify the landowner and each
10-5 taxing unit in which the land is located that a determination
10-6 letter has been requested.
10-7 (c) The director's letter is conclusive as to the type,
10-8 size, and location of the zone for purposes of appraisal of the
10-9 land under this subchapter.
10-10 (d) If the land is located in a zone described in the
10-11 determination letter, the chief appraiser shall approve the
10-12 application and allow appraisal under this subchapter if the
10-13 applicant is otherwise entitled to have the applicant's land
10-14 appraised under this subchapter.
10-15 (e) The director of the Texas Forest Service by rule shall
10-16 adopt procedures under this section. The procedures must allow the
10-17 chief appraiser, the landowner, and a representative of each taxing
10-18 unit in which the land is located to present information to the
10-19 director before the director issues the determination letter.
10-20 (f) Chapters 41 and 42 do not apply to a determination under
10-21 this section by the director of the Texas Forest Service of the
10-22 type, size, and location of a zone.
10-23 Sec. 23.9807. CHANGE OF USE OF LAND. (a) If the use of
10-24 land that has been appraised as provided by this subchapter changes
10-25 to a use that qualifies the land for appraisal under Subchapter E,
10-26 an additional tax is imposed on the land equal to the sum of:
11-1 (1) the difference between:
11-2 (A) the taxes imposed on the land for each of
11-3 the five years preceding the year in which the change of use occurs
11-4 that the land was appraised as provided by this subchapter; and
11-5 (B) the taxes that would have been imposed had
11-6 the land been appraised under Subchapter E in each of those years;
11-7 and
11-8 (2) interest at an annual rate of seven percent
11-9 calculated from the dates on which the differences would have
11-10 become due.
11-11 (b) If the use of land that has been appraised as provided
11-12 by this subchapter changes to a use that does not qualify the land
11-13 for appraisal under Subchapter E or under this subchapter, an
11-14 additional tax is imposed on the land equal to the sum of:
11-15 (1) the difference between:
11-16 (A) the taxes imposed on the land for each of
11-17 the five years preceding the year in which the change of use occurs
11-18 that the land was appraised as provided by this subchapter; and
11-19 (B) the taxes that would have been imposed had
11-20 the land been taxed on the basis of market value in each of those
11-21 years; and
11-22 (2) interest at an annual rate of seven percent
11-23 calculated from the dates on which the differences would have
11-24 become due.
11-25 (c) A tax lien attaches to the land on the date the change
11-26 of use occurs to secure payment of the additional tax and interest
12-1 imposed by this section and any penalties incurred. The lien
12-2 exists in favor of all taxing units for which the additional tax is
12-3 imposed.
12-4 (d) The additional tax imposed by this section does not
12-5 apply to a year for which the tax has already been imposed.
12-6 (e) If the change of use applies to only part of a parcel
12-7 that has been appraised as provided by this subchapter, the
12-8 additional tax applies only to that part of the parcel.
12-9 (f) A determination that a change in use of the land has
12-10 occurred is made by the chief appraiser. The chief appraiser shall
12-11 deliver a notice of the determination to the owner of the land as
12-12 soon as possible after making the determination and shall include
12-13 in the notice an explanation of the owner's right to protest the
12-14 determination. If the owner does not file a timely protest or if
12-15 the final determination of the protest is that the additional taxes
12-16 are due, the assessor for each taxing unit shall prepare and
12-17 deliver a bill for the additional taxes and interest as soon as
12-18 practicable after the change of use occurs. The taxes and interest
12-19 are due and become delinquent and incur penalties and interest as
12-20 provided by law for ad valorem taxes imposed by the taxing unit if
12-21 not paid before the next February 1 that is at least 20 days after
12-22 the date the bill is delivered to the owner of the land.
12-23 (g) The harvesting of timber from the land before the
12-24 expiration of the period provided by Section 23.9802(c) constitutes
12-25 a change of use of the land for purposes of this section.
12-26 (h) The sanction provided by Subsection (a) or (b) does not
13-1 apply if the change of use occurs as a result of a:
13-2 (1) sale for right-of-way;
13-3 (2) condemnation; or
13-4 (3) change in law.
13-5 SECTION 6. Subsection (a), Section 25.02, Tax Code, is
13-6 amended to read as follows:
13-7 (a) The appraisal records shall be in the form prescribed by
13-8 the comptroller and shall include:
13-9 (1) the name and address of the owner or, if the name
13-10 or address is unknown, a statement that it is unknown;
13-11 (2) real property;
13-12 (3) separately taxable estates or interests in real
13-13 property, including taxable possessory interests in exempt real
13-14 property;
13-15 (4) personal property;
13-16 (5) the appraised value of land and, if the land is
13-17 appraised as provided by Subchapter C, D, [or] E, or H, Chapter 23
13-18 [of this code], the market value of the land;
13-19 (6) the appraised value of improvements to land;
13-20 (7) the appraised value of a separately taxable estate
13-21 or interest in land;
13-22 (8) the appraised value of personal property;
13-23 (9) the kind of any partial exemption the owner is
13-24 entitled to receive, whether the exemption applies to appraised or
13-25 assessed value, and, in the case of an exemption authorized by
13-26 Section 11.23 [of this code], the amount of the exemption;
14-1 (10) the tax year to which the appraisal applies; and
14-2 (11) an identification of each taxing unit in which
14-3 the property is taxable.
14-4 SECTION 7. Subsection (a), Section 25.22, Tax Code, is
14-5 amended to read as follows:
14-6 (a) By May 15 or as soon thereafter as practicable, the
14-7 chief appraiser shall submit the completed appraisal records to the
14-8 appraisal review board for review and determination of protests.
14-9 However, the chief appraiser may not submit the records until the
14-10 chief appraiser has delivered the notices required by Subsection
14-11 (d) of Section 11.45, Subsection (d) of Section 23.44, Subsection
14-12 (d) of Section 23.57, Subsection (d) of Section 23.79, Subsection
14-13 (d) of Section 23.85, Subsection (d) of Section 23.95, Subsection
14-14 (d) of Section 23.9805, and Section 25.19.
14-15 SECTION 8. Subsections (c) and (d), Section 31.01, Tax Code,
14-16 are amended to read as follows:
14-17 (c) The tax bill or a separate statement accompanying the
14-18 tax bill shall:
14-19 (1) identify the property subject to the tax;
14-20 (2) state the appraised value, assessed value, and
14-21 taxable value of the property;
14-22 (3) if the property is land appraised as provided by
14-23 Subchapter C, D, [or] E, or H, Chapter 23 [of this code], state the
14-24 market value and the taxable value for purposes of deferred or
14-25 additional taxation as provided by Section 23.46, 23.55, [or]
14-26 23.76, or 23.9807, as applicable[, of this code];
15-1 (4) state the assessment ratio for the unit;
15-2 (5) state the type and amount of any partial exemption
15-3 applicable to the property, indicating whether it applies to
15-4 appraised or assessed value;
15-5 (6) state the total tax rate for the unit;
15-6 (7) state the amount of tax due, the due date, and the
15-7 delinquency date;
15-8 (8) explain the payment option and discounts provided
15-9 by Sections 31.03 and 31.05 [of this code], if available to the
15-10 unit's taxpayers, and state the date on which each of the discount
15-11 periods provided by Section 31.05 concludes, if the discounts are
15-12 available;
15-13 (9) state the rates of penalty and interest imposed
15-14 for delinquent payment of the tax;
15-15 (10) include the name and telephone number of the
15-16 assessor for the unit and, if different, of the collector for the
15-17 unit; and
15-18 (11) include any other information required by the
15-19 comptroller.
15-20 (d) Each tax bill shall also state the amount of penalty, if
15-21 any, imposed pursuant to Sections 23.431, 23.54, 23.541, 23.75,
15-22 23.751, 23.87, [and] 23.97, and 23.9804 [of this code].
15-23 SECTION 9. Subsection (a), Section 41.01, Tax Code, is
15-24 amended to read as follows:
15-25 (a) The appraisal review board shall:
15-26 (1) determine protests initiated by property owners;
16-1 (2) determine challenges initiated by taxing units;
16-2 (3) correct clerical errors in the appraisal records
16-3 and the appraisal rolls;
16-4 (4) act on motions to correct appraisal rolls under
16-5 Section 25.25;
16-6 (5) determine whether an exemption or a partial
16-7 exemption is improperly granted and whether land is improperly
16-8 granted appraisal as provided by Subchapter C, D, [or] E, or H,
16-9 Chapter 23; and
16-10 (6) take any other action or make any other
16-11 determination that this title specifically authorizes or requires.
16-12 SECTION 10. Section 41.03, Tax Code, is amended to read as
16-13 follows:
16-14 Sec. 41.03. CHALLENGE BY TAXING UNIT. (a) A taxing unit is
16-15 entitled to challenge before the appraisal review board:
16-16 (1) the level of appraisals of any category of
16-17 property in the district or in any territory in the district, but
16-18 not the appraised value of a single taxpayer's property;
16-19 (2) an exclusion of property from the appraisal
16-20 records;
16-21 (3) a grant in whole or in part of a partial
16-22 exemption;
16-23 (4) a determination that land qualifies for appraisal
16-24 as provided by Subchapter C, D, [or] E, or H, Chapter 23 [of this
16-25 code]; or
16-26 (5) failure to identify the taxing unit as one in
17-1 which a particular property is taxable.
17-2 (b) If a taxing unit challenges a determination that land
17-3 qualifies for appraisal under Subchapter H, Chapter 23, on the
17-4 ground that the land is not located in an aesthetic management
17-5 zone, critical wildlife habitat zone, or streamside management
17-6 zone, the taxing unit must first seek a determination letter from
17-7 the director of the Texas Forest Service. The appraisal review
17-8 board shall accept the letter as conclusive proof of the type,
17-9 size, and location of the zone.
17-10 SECTION 11. Subsection (a), Section 41.41, Tax Code, is
17-11 amended to read as follows:
17-12 (a) A property owner is entitled to protest before the
17-13 appraisal review board the following actions:
17-14 (1) determination of the appraised value of the
17-15 owner's property or, in the case of land appraised as provided by
17-16 Subchapter C, D, [or] E, or H, Chapter 23, determination of its
17-17 appraised or market value;
17-18 (2) unequal appraisal of the owner's property;
17-19 (3) inclusion of the owner's property on the appraisal
17-20 records;
17-21 (4) denial to the property owner in whole or in part
17-22 of a partial exemption;
17-23 (5) determination that the owner's land does not
17-24 qualify for appraisal as provided by Subchapter C, D, [or] E, or H,
17-25 Chapter 23;
17-26 (6) identification of the taxing units in which the
18-1 owner's property is taxable in the case of the appraisal district's
18-2 appraisal roll;
18-3 (7) determination that the property owner is the owner
18-4 of property;
18-5 (8) a determination that a change in use of land
18-6 appraised under Subchapter C, D, [or] E, or H, Chapter 23, has
18-7 occurred; or
18-8 (9) any other action of the chief appraiser, appraisal
18-9 district, or appraisal review board that applies to and adversely
18-10 affects the property owner.
18-11 SECTION 12. Subsection (a), Section 41.44, Tax Code, is
18-12 amended to read as follows:
18-13 (a) Except as provided by Subsections (b) and (c), to be
18-14 entitled to a hearing and determination of a protest, the property
18-15 owner initiating the protest must file a written notice of the
18-16 protest with the appraisal review board having authority to hear
18-17 the matter protested:
18-18 (1) before June 1 or not later than the 30th day after
18-19 the date that notice was delivered to the property owner as
18-20 provided by Section 25.19, whichever is later;
18-21 (2) in the case of a protest of a change in the
18-22 appraisal records ordered as provided by Subchapter A of this
18-23 chapter or by Chapter 25, not later than the 30th day after the
18-24 date notice of the change is delivered to the property owner; or
18-25 (3) in the case of a determination that a change in
18-26 the use of land appraised under Subchapter C, D, [or] E, or H,
19-1 Chapter 23, has occurred, not later than the 30th day after the
19-2 date the notice of the determination is delivered to the property
19-3 owner.
19-4 SECTION 13. Subsection (b), Section 151.3111, Tax Code, is
19-5 amended to read as follows:
19-6 (b) Subsection (a) [of this section] does not apply to the
19-7 performance of a service on:
19-8 (1) tangible personal property that would be exempted
19-9 solely because of the exempt status of the seller of the property;
19-10 (2) tangible personal property that is exempted solely
19-11 because of the application of Section 151.303, 151.304, or 151.306
19-12 [of this code];
19-13 (3) motor vehicles, trailers, or semitrailers as
19-14 defined, taxed, or exempted by Chapter 152 [of this code]; or
19-15 (4) a taxable boat or motor as defined by Section
19-16 160.001[; or]
19-17 [(5) machinery and equipment with a purchase price
19-18 greater than $50,000 used exclusively in a commercial timber
19-19 operation as described by Section 151.3161(a)].
19-20 SECTION 14. Subchapter H, Chapter 151, Tax Code, is amended
19-21 by adding Section 151.3162 to read as follows:
19-22 Sec. 151.3162. TIMBER ITEMS. (a) In this section,
19-23 "original producer" means a person who:
19-24 (1) harvests timber that the person owns and continues
19-25 to own until the timber is processed, packed, or marketed; or
19-26 (2) grows timber, exercises predominant operational
20-1 control over the growth of the timber, and bears the risk of loss
20-2 of investment in the timber.
20-3 (b) The following items are exempted from the tax imposed by
20-4 this chapter:
20-5 (1) seedlings of trees commonly grown for commercial
20-6 timber;
20-7 (2) defoliants, desiccants, equipment, fertilizers,
20-8 fungicides, herbicides, insecticides, and machinery exclusively
20-9 used in the production of timber to be sold in the regular course
20-10 of business;
20-11 (3) machinery and equipment used in, and pollution
20-12 control equipment required as a result of, the processing, packing,
20-13 or marketing of timber products by an original producer if:
20-14 (A) the processing, packing, or marketing occurs
20-15 at or from a location operated by the original producer;
20-16 (B) at least 50 percent of the value of the
20-17 timber products processed, packed, or marketed at or from the
20-18 location is attributable to products produced by the original
20-19 producer and not purchased or acquired from others; and
20-20 (C) the original producer does not process,
20-21 pack, or market for consideration timber products that belong to
20-22 another person with a value greater than five percent of the total
20-23 value of the timber products processed, packed, or marketed by the
20-24 producer; and
20-25 (4) tangible personal property sold or used to be
20-26 installed as a component of an underground irrigation system
21-1 exclusively used in the production of timber to be sold in the
21-2 regular course of business.
21-3 (c) Two or more corporations that operate timber activities
21-4 on the same or adjacent tracts of land and that are entirely owned
21-5 by the same individual or a combination of the individual and the
21-6 individual's spouse or children are considered to be a single
21-7 original producer for the purposes of Subsection (b)(3).
21-8 (d) The exemption provided by Subsection (b) takes effect
21-9 January 1, 2008. Until that date, a person is entitled to a credit
21-10 or refund of a portion of the taxes paid under this chapter on an
21-11 item that after January 1, 2008, will be exempted from the taxes
21-12 imposed by this chapter under Subsection (b). The amount of the
21-13 credit or refund is determined as follows:
21-14 (1) for an item for which the taxable event occurs on
21-15 or after October 1, 2001, and before January 1, 2004, the taxpayer
21-16 is entitled to a refund or credit in an amount equal to 33 percent
21-17 of the tax paid on the item;
21-18 (2) for an item for which the taxable event occurs on
21-19 or after January 1, 2004, and before January 1, 2006, the taxpayer
21-20 is entitled to a refund or credit in an amount equal to 50 percent
21-21 of the tax paid on the item; and
21-22 (3) for an item for which the taxable event occurs on
21-23 or after January 1, 2006, and before January 1, 2008, the taxpayer
21-24 is entitled to a refund or credit in an amount equal to 75 percent
21-25 of the tax paid on the item.
21-26 (e) A taxpayer entitled to a credit or refund under
22-1 Subsection (d) may elect to receive either a credit or a refund. A
22-2 taxpayer who elects to receive a credit must claim the credit on
22-3 the return for a period that ends not later than the first
22-4 anniversary of the date on which the taxable event occurred. A
22-5 taxpayer who elects to receive a refund must apply to the
22-6 comptroller for the refund before or during the calendar year
22-7 following the year in which the tax on the item was paid.
22-8 SECTION 15. Subdivision (2), Subsection (c), Section
22-9 151.317, Tax Code, is amended to read as follows:
22-10 (2) "Commercial use" means use by a person engaged in
22-11 selling, warehousing, or distributing a commodity or a professional
22-12 or personal service, but does not include:
22-13 (A) use by a person engaged in:
22-14 (i) processing tangible personal property
22-15 for sale as tangible personal property, other than preparation or
22-16 storage of food for immediate consumption;
22-17 (ii) exploring for, producing, or
22-18 transporting, a material extracted from the earth;
22-19 (iii) agriculture, including dairy or
22-20 poultry operations and pumping for farm or ranch irrigation;
22-21 (iv) timber operations, including pumping
22-22 for irrigation of timber land;
22-23 (v) electrical processes such as
22-24 electroplating, electrolysis, and cathodic protection;
22-25 (vi) [(v)] the off-wing processing,
22-26 overhaul, or repair of a jet turbine engine or its parts for a
23-1 certificated or licensed carrier of persons or property; or
23-2 (vii) [(vi)] providing, under contracts
23-3 with or on behalf of the United States government or foreign
23-4 governments, defense or national security-related electronics,
23-5 classified intelligence data processing and handling systems, or
23-6 defense-related platform modifications or upgrades; or
23-7 (B) a direct or indirect use, consumption, or
23-8 loss of electricity by an electric utility engaged in the purchase
23-9 of electricity for resale.
23-10 SECTION 16. Section 152.091, Tax Code, is amended to read as
23-11 follows:
23-12 Sec. 152.091. FARM OR TIMBER USE. (a) The taxes imposed by
23-13 this chapter do not apply to the sale or use of a:
23-14 (1) farm machine, trailer, or semitrailer for use
23-15 primarily for farming and ranching, including the rearing of
23-16 poultry, and use in feedlots; or
23-17 (2) machine, trailer, or semitrailer for use primarily
23-18 for timber operations.
23-19 (b)(1) The taxes imposed by this chapter do not apply to the
23-20 purchase of a:
23-21 (A) farm machine, trailer, or semitrailer that
23-22 is to be leased for use primarily for farming and ranching,
23-23 including the rearing of poultry, and use in feedlots; or
23-24 (B) machine, trailer, or semitrailer that is to
23-25 be leased for use primarily for timber operations.
23-26 (2) The exemption provided by this subsection applies
24-1 only if the person purchasing the [farm] machine, trailer, or
24-2 semitrailer to be leased presents the tax assessor-collector a form
24-3 prescribed and provided by the comptroller showing:
24-4 (A) the identification of the motor vehicle;
24-5 (B) the name and address of the lessor and the
24-6 lessee; and
24-7 (C) verification by the lessee that the [farm]
24-8 machine, trailer, or semitrailer will be used primarily for:
24-9 (i) farming and ranching, including the
24-10 rearing of poultry, and use in feedlots; or
24-11 (ii) timber operations.
24-12 (3) If a motor vehicle for which the tax has not been
24-13 paid ceases to be leased for use primarily for farming and
24-14 ranching, including the rearing of poultry, and use in feedlots or
24-15 timber operations, the owner shall notify the comptroller on a form
24-16 provided by the comptroller and shall pay the sales or use tax on
24-17 the motor vehicle based on the owner's book value of the motor
24-18 vehicle. The tax is imposed at the same percentage rate that is
24-19 provided by [Subsection (b) of] Section 152.021(b) [152.021 of this
24-20 code].
24-21 (c) The taxes imposed by this chapter do not apply to the
24-22 rental of a farm machine, a trailer, or a semitrailer for use
24-23 primarily for farming and ranching, including the rearing of
24-24 poultry, and use in feedlots, or a machine, a trailer, or a
24-25 semitrailer for use primarily for timber operations. The tax that
24-26 would have been remitted on gross rental receipts without this
25-1 exemption shall be deemed to have been remitted for the purpose of
25-2 calculating the minimum gross rental receipts imposed by Section
25-3 152.026 [of this code]. The exemption provided by this subsection
25-4 applies only if the owner of the motor vehicle obtains in good
25-5 faith an exemption certificate from the person to whom the vehicle
25-6 is being rented.
25-7 SECTION 17. Section 151.3161, Tax Code, is repealed.
25-8 SECTION 18. (a) Except as provided by Subsections (b) and
25-9 (c) of this section, this Act takes effect September 1, 1999.
25-10 (b) Subsection (c), Section 11.16, and Section 11.161, Tax
25-11 Code, as amended by this Act, and Subchapter H, Chapter 23, Tax
25-12 Code, as added by this Act, take effect January 1, 2000.
25-13 (c) The following sections of this Act take effect
25-14 October 1, 2001:
25-15 (1) Sections 13, 15, and 16 of this Act, amending
25-16 Subsection (b), Section 151.3111, Subdivision (2), Subsection (c),
25-17 151.317, and Section 152.091, Tax Code;
25-18 (2) Section 14 of this Act, adding Section 151.3162,
25-19 Tax Code; and
25-20 (3) Section 17 of this Act, repealing Section
25-21 151.3161, Tax Code.
25-22 SECTION 19. The importance of this legislation and the
25-23 crowded condition of the calendars in both houses create an
25-24 emergency and an imperative public necessity that the
25-25 constitutional rule requiring bills to be read on three several
25-26 days in each house be suspended, and this rule is hereby suspended.