By Ratliff S.B. No. 977
76R1924 GJH-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to exemptions from ad valorem and sales and use taxation
1-3 of certain timber and certain items used in timber operations and
1-4 the valuation of certain timber land for ad valorem tax purposes.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Section 6.12(b), Tax Code, is amended to read as
1-7 follows:
1-8 (b) One of the agricultural advisory board members must be a
1-9 representative of the county agricultural stabilization and
1-10 conservation service, and the remainder of the members must be
1-11 landowners of the district whose land qualifies for appraisal under
1-12 Subchapter C, D, [or] E, or H, [of] Chapter 23, and who have been
1-13 residents of the district for at least five years.
1-14 SECTION 2. Section 11.16(c), Tax Code, is amended to read as
1-15 follows:
1-16 (c) For purposes of this exemption, the following
1-17 definitions apply:
1-18 (1) "Farm products" include [includes] livestock,
1-19 [and] poultry, and timber.
1-20 (2) "In the hands of the producer," for livestock and
1-21 poultry, means under the ownership of the person who is financially
1-22 providing for the physical requirements of such livestock and
1-23 poultry on January 1 of the tax year and, for timber, means
1-24 standing timber or timber that has been harvested and, on January 1
2-1 of the tax year, is located on the real property on which it was
2-2 produced and is under the ownership of the person who owned the
2-3 timber when it was standing.
2-4 SECTION 3. Section 11.161, Tax Code, is amended to read as
2-5 follows:
2-6 Sec. 11.161. IMPLEMENTS OF HUSBANDRY [FARMING OR RANCHING].
2-7 Implements of husbandry that are used in the production of farm or
2-8 ranch products or of timber are exempt from ad valorem taxation.
2-9 SECTION 4. Section 23.76(g), Tax Code, is amended to read as
2-10 follows:
2-11 (g) If the use of the land changes to a use that qualifies
2-12 under Subchapter C, [or] D, or H of this chapter, the sanctions
2-13 provided by Subsection (a) of this section do not apply.
2-14 SECTION 5. Chapter 23, Tax Code, is amended by adding
2-15 Subchapter H to read as follows:
2-16 SUBCHAPTER H. APPRAISAL OF RESTRICTED-USE TIMBER LAND
2-17 Sec. 23.9801. DEFINITIONS. In this subchapter:
2-18 (1) "Aesthetic management zone" means timber land on
2-19 which timber harvesting is restricted for aesthetic or conservation
2-20 purposes, including:
2-21 (A) maintaining standing timber adjacent to
2-22 public rights-of-way, including highways and roads; and
2-23 (B) preserving an area in a forest, as defined
2-24 by Section 152.003, Natural Resources Code, that is designated by
2-25 the director of the Texas Forest Service as special or unique
2-26 because of the area's natural beauty, topography, or historical
2-27 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
3-27 (B) preserve a waterway, including a lake,
4-1 river, stream, or creek.
4-2 (6) "Qualified restricted-use timber land" means land
4-3 that qualifies for appraisal as provided by this subchapter.
4-4 Sec. 23.9802. QUALIFICATION FOR APPRAISAL AS RESTRICTED-USE
4-5 TIMBER LAND. (a) Land qualifies for appraisal as provided by this
4-6 subchapter if the land is in an aesthetic management zone, critical
4-7 wildlife habitat zone, or streamside management zone.
4-8 (b) Land qualifies for appraisal as provided by this
4-9 subchapter if:
4-10 (1) timber was harvested from the land in a year in
4-11 which the land was appraised under Subchapter E; and
4-12 (2) the land has been regenerated for timber
4-13 production to the degree of intensity generally accepted in the
4-14 area for commercial timber land and with intent to produce income.
4-15 (c) Land ceases to qualify for appraisal under Subsection
4-16 (b) on the 10th anniversary of the date the timber was harvested
4-17 under Subsection (b)(1). This subsection does not disqualify the
4-18 land from qualifying for appraisal under this section in a tax year
4-19 following that anniversary based on the circumstances existing in
4-20 that subsequent tax year.
4-21 Sec. 23.9803. APPRAISAL OF QUALIFIED RESTRICTED-USE TIMBER
4-22 LAND. (a) Except as provided by Subsection (b), the appraised
4-23 value of qualified restricted-use timber land is one-half of the
4-24 appraised value of the land as determined under Section 23.73(a).
4-25 (b) The appraised value determined under Subsection (a) may
4-26 not exceed the lesser of:
4-27 (1) the market value of the land as determined by
5-1 other appraisal methods; or
5-2 (2) the appraised value of the land for the year
5-3 preceding the first year of appraisal under this subchapter.
5-4 (c) The chief appraiser shall determine the market value of
5-5 qualified restricted-use timber land and shall record both the
5-6 market value and the appraised value in the appraisal records.
5-7 Sec. 23.9804. APPLICATION. (a) A person claiming that the
5-8 person's land is eligible for appraisal as provided by this
5-9 subchapter must file a valid application with the chief appraiser.
5-10 (b) To be valid, an application for appraisal under Section
5-11 23.9802(a) must:
5-12 (1) be on a form provided by the appraisal office and
5-13 prescribed by the comptroller;
5-14 (2) provide evidence that the land qualifies for
5-15 designation as an aesthetic management zone, critical wildlife
5-16 habitat zone, or streamside management zone;
5-17 (3) specify the location of the proposed zone and the
5-18 quantity of land, in acres, in the proposed zone; and
5-19 (4) contain other information necessary to determine
5-20 the validity of the claim.
5-21 (c) To be valid, an application for appraisal under Section
5-22 23.9802(b) must:
5-23 (1) be on a form provided by the appraisal office and
5-24 prescribed by the comptroller;
5-25 (2) provide evidence that the land on which the timber
5-26 was harvested was appraised under Subchapter E in the year in which
5-27 the timber was harvested;
6-1 (3) provide evidence that all of the land has been
6-2 regenerated in compliance with Section 23.9802(b)(2); and
6-3 (4) contain other information necessary to determine
6-4 the validity of the claim.
6-5 (d) The comptroller shall include on the form a notice of
6-6 the penalties prescribed by Section 37.10, Penal Code, for making
6-7 or filing an application containing a false statement. The
6-8 comptroller, in prescribing the contents of the application form,
6-9 shall require that the form permit a claimant who has previously
6-10 been allowed appraisal under this subchapter to indicate that the
6-11 previously reported information has not changed and to supply only
6-12 the eligibility information not previously reported.
6-13 (e) The form must be filed before May 1. However, for good
6-14 cause shown, the chief appraiser may extend the filing deadline for
6-15 not more than 15 days.
6-16 (f) If a person fails to file a valid application on time,
6-17 the land is ineligible for appraisal as provided by this subchapter
6-18 for that year. Once an application is filed and appraisal under
6-19 this subchapter is allowed, the land is eligible for appraisal
6-20 under the applicable provision of this subchapter in subsequent
6-21 years without a new application unless the ownership of the land
6-22 changes, the standing timber is harvested, or the land's
6-23 eligibility under this subchapter ends. However, if the chief
6-24 appraiser has good cause to believe the land's eligibility under
6-25 this subchapter has ended, the chief appraiser may require a person
6-26 allowed appraisal under this subchapter in a previous year to file
6-27 a new application to confirm that the land is currently eligible
7-1 under this subchapter by delivering a written notice that a new
7-2 application is required, accompanied by the application form, to
7-3 the person who filed the application that was previously allowed.
7-4 (g) The appraisal office shall make a sufficient number of
7-5 printed application forms readily available at no charge.
7-6 (h) Each year the chief appraiser for each appraisal
7-7 district shall publicize, in a manner reasonably designed to notify
7-8 all residents of the district, the requirements of this section and
7-9 the availability of application forms.
7-10 (i) A person whose land is allowed appraisal under this
7-11 subchapter shall notify the appraisal office in writing before May
7-12 1 after eligibility of the land under this subchapter ends. If a
7-13 person fails to notify the appraisal office as required by this
7-14 subsection, a penalty is imposed on the property equal to 10
7-15 percent of the difference between the taxes imposed on the property
7-16 in each year it is erroneously allowed appraisal under this
7-17 subchapter and the taxes that would otherwise have been imposed.
7-18 (j) The chief appraiser shall make an entry in the appraisal
7-19 records for the property against which the penalty is imposed
7-20 indicating liability for the penalty and shall deliver a written
7-21 notice of imposition of the penalty to the person who owns the
7-22 property. The notice shall include a brief explanation of the
7-23 procedures for protesting the imposition of the penalty. The
7-24 assessor for each taxing unit that imposed taxes on the property on
7-25 the basis of appraisal under this subchapter shall add the amount
7-26 of the penalty to the unit's tax bill for taxes on the property
7-27 against which the penalty is imposed. The penalty shall be
8-1 collected at the same time and in the same manner as the taxes on
8-2 the property against which the penalty is imposed. The amount of
8-3 the penalty constitutes a lien on the property against which the
8-4 penalty is imposed and on delinquency accrues penalty and interest
8-5 in the same manner as a delinquent tax.
8-6 (k) If the chief appraiser discovers that appraisal under
8-7 this subchapter has been erroneously allowed in any of the 10
8-8 preceding years because of failure of the person whose land was
8-9 allowed appraisal under this subchapter to give notice that the
8-10 land's eligibility had ended, the chief appraiser shall add the
8-11 difference between the appraised value of the land under this
8-12 subchapter and the market value of the land for any year in which
8-13 the land was ineligible for appraisal under this subchapter to the
8-14 appraisal records as provided by Section 25.21 for other property
8-15 that escapes taxation.
8-16 Sec. 23.9805. ACTION ON APPLICATION. (a) The chief
8-17 appraiser shall determine separately each applicant's right to have
8-18 the applicant's land appraised under this subchapter. After
8-19 considering the application and all relevant information, the chief
8-20 appraiser shall, based on the law and facts:
8-21 (1) approve the application and allow appraisal under
8-22 this subchapter;
8-23 (2) disapprove the application and request additional
8-24 information from the applicant in support of the claim; or
8-25 (3) deny the application.
8-26 (b) If the chief appraiser requests additional information
8-27 from an applicant, the applicant must furnish it not later than the
9-1 30th day after the date of the request or the chief appraiser shall
9-2 deny the application. However, for good cause shown, the chief
9-3 appraiser may extend the deadline for furnishing the information by
9-4 written order for a single period not to exceed 15 days.
9-5 (c) The chief appraiser shall determine the validity of each
9-6 application for appraisal under this subchapter filed with the
9-7 chief appraiser before the chief appraiser submits the appraisal
9-8 records for review and determination of protests as provided by
9-9 Chapter 41.
9-10 (d) If the chief appraiser denies an application, the chief
9-11 appraiser shall deliver a written notice of the denial to the
9-12 applicant not later than the fifth day after the date the chief
9-13 appraiser makes the determination. The chief appraiser shall
9-14 include with the notice a brief explanation of the procedures for
9-15 protesting the denial.
9-16 Sec. 23.9806. APPLICATION DENIAL BASED ON ZONE LOCATION.
9-17 (a) Before a chief appraiser may deny an application under Section
9-18 23.9805 on the ground that the land is not located in an aesthetic
9-19 management zone, critical wildlife habitat zone, or streamside
9-20 management zone, the chief appraiser must first request a
9-21 determination letter from the director of the Texas Forest Service
9-22 as to the type, location, and size of the zone, if any, in which
9-23 the land is located.
9-24 (b) The chief appraiser shall notify the landowner and each
9-25 taxing unit in which the land is located that a determination
9-26 letter has been requested.
9-27 (c) The director's letter is conclusive as to the type,
10-1 size, and location of the zone for purposes of appraisal of the
10-2 land under this subchapter.
10-3 (d) If the land is located in a zone described in the
10-4 determination letter, the chief appraiser shall approve the
10-5 application and allow appraisal under this subchapter if the
10-6 applicant is otherwise entitled to have the applicant's land
10-7 appraised under this subchapter.
10-8 (e) The director of the Texas Forest Service by rule shall
10-9 adopt procedures under this section. The procedures must allow the
10-10 chief appraiser, the landowner, and a representative of each taxing
10-11 unit in which the land is located to present information to the
10-12 director before the director issues the determination letter.
10-13 (f) Chapters 41 and 42 do not apply to a determination under
10-14 this section by the director of the Texas Forest Service of the
10-15 type, size, and location of a zone.
10-16 Sec. 23.9807. CHANGE OF USE OF LAND. (a) If the use of
10-17 land that has been appraised as provided by this subchapter changes
10-18 to a use that qualifies the land for appraisal under Subchapter E,
10-19 an additional tax is imposed on the land equal to the sum of:
10-20 (1) the difference between:
10-21 (A) the taxes imposed on the land for each of
10-22 the five years preceding the year in which the change of use occurs
10-23 that the land was appraised as provided by this subchapter; and
10-24 (B) the taxes that would have been imposed had
10-25 the land been appraised under Subchapter E in each of those years;
10-26 and
10-27 (2) interest at an annual rate of seven percent
11-1 calculated from the dates on which the differences would have
11-2 become due.
11-3 (b) If the use of land that has been appraised as provided
11-4 by this subchapter changes to a use that does not qualify the land
11-5 for appraisal under Subchapter E or under this subchapter, an
11-6 additional tax is imposed on the land equal to the sum of:
11-7 (1) the difference between:
11-8 (A) the taxes imposed on the land for each of
11-9 the five years preceding the year in which the change of use occurs
11-10 that the land was appraised as provided by this subchapter; and
11-11 (B) the taxes that would have been imposed had
11-12 the land been taxed on the basis of market value in each of those
11-13 years; and
11-14 (2) interest at an annual rate of seven percent
11-15 calculated from the dates on which the differences would have
11-16 become due.
11-17 (c) A tax lien attaches to the land on the date the change
11-18 of use occurs to secure payment of the additional tax and interest
11-19 imposed by this section and any penalties incurred. The lien
11-20 exists in favor of all taxing units for which the additional tax is
11-21 imposed.
11-22 (d) The additional tax imposed by this section does not
11-23 apply to a year for which the tax has already been imposed.
11-24 (e) If the change of use applies to only part of a parcel
11-25 that has been appraised as provided by this subchapter, the
11-26 additional tax applies only to that part of the parcel.
11-27 (f) A determination that a change in use of the land has
12-1 occurred is made by the chief appraiser. The chief appraiser shall
12-2 deliver a notice of the determination to the owner of the land as
12-3 soon as possible after making the determination and shall include
12-4 in the notice an explanation of the owner's right to protest the
12-5 determination. If the owner does not file a timely protest or if
12-6 the final determination of the protest is that the additional taxes
12-7 are due, the assessor for each taxing unit shall prepare and
12-8 deliver a bill for the additional taxes and interest as soon as
12-9 practicable after the change of use occurs. The taxes and interest
12-10 are due and become delinquent and incur penalties and interest as
12-11 provided by law for ad valorem taxes imposed by the taxing unit if
12-12 not paid before the next February 1 that is at least 20 days after
12-13 the date the bill is delivered to the owner of the land.
12-14 (g) The harvesting of timber from the land before the
12-15 expiration of the period provided by Section 23.9802(c) constitutes
12-16 a change of use of the land for purposes of this section.
12-17 (h) The sanction provided by Subsection (a) or (b) does not
12-18 apply if the change of use occurs as a result of a:
12-19 (1) sale for right-of-way;
12-20 (2) condemnation; or
12-21 (3) change in law.
12-22 SECTION 6. Section 25.02(a), Tax Code, is amended to read as
12-23 follows:
12-24 (a) The appraisal records shall be in the form prescribed by
12-25 the comptroller and shall include:
12-26 (1) the name and address of the owner or, if the name
12-27 or address is unknown, a statement that it is unknown;
13-1 (2) real property;
13-2 (3) separately taxable estates or interests in real
13-3 property, including taxable possessory interests in exempt real
13-4 property;
13-5 (4) personal property;
13-6 (5) the appraised value of land and, if the land is
13-7 appraised as provided by Subchapter C, D, [or] E, or H, Chapter 23
13-8 [of this code], the market value of the land;
13-9 (6) the appraised value of improvements to land;
13-10 (7) the appraised value of a separately taxable estate
13-11 or interest in land;
13-12 (8) the appraised value of personal property;
13-13 (9) the kind of any partial exemption the owner is
13-14 entitled to receive, whether the exemption applies to appraised or
13-15 assessed value, and, in the case of an exemption authorized by
13-16 Section 11.23 [of this code], the amount of the exemption;
13-17 (10) the tax year to which the appraisal applies; and
13-18 (11) an identification of each taxing unit in which
13-19 the property is taxable.
13-20 SECTION 7. Section 25.22(a), Tax Code, is amended to read as
13-21 follows:
13-22 (a) By May 15 or as soon thereafter as practicable, the
13-23 chief appraiser shall submit the completed appraisal records to the
13-24 appraisal review board for review and determination of protests.
13-25 However, the chief appraiser may not submit the records until the
13-26 chief appraiser has delivered the notices required by Subsection
13-27 (d) of Section 11.45, Subsection (d) of Section 23.44, Subsection
14-1 (d) of Section 23.57, Subsection (d) of Section 23.79, Subsection
14-2 (d) of Section 23.85, Subsection (d) of Section 23.95, Section
14-3 23.9805(d), and Section 25.19.
14-4 SECTION 8. Sections 31.01(c) and (d), Tax Code, are amended
14-5 to read as follows:
14-6 (c) The tax bill or a separate statement accompanying the
14-7 tax bill shall:
14-8 (1) identify the property subject to the tax;
14-9 (2) state the appraised value, assessed value, and
14-10 taxable value of the property;
14-11 (3) if the property is land appraised as provided by
14-12 Subchapter C, D, [or] E, or H, Chapter 23 [of this code], state the
14-13 market value and the taxable value for purposes of deferred or
14-14 additional taxation as provided by Section 23.46, 23.55, [or]
14-15 23.76, or 23.9807, as applicable[, of this code];
14-16 (4) state the assessment ratio for the unit;
14-17 (5) state the type and amount of any partial exemption
14-18 applicable to the property, indicating whether it applies to
14-19 appraised or assessed value;
14-20 (6) state the total tax rate for the unit;
14-21 (7) state the amount of tax due, the due date, and the
14-22 delinquency date;
14-23 (8) explain the payment option and discounts provided
14-24 by Sections 31.03 and 31.05 [of this code], if available to the
14-25 unit's taxpayers, and state the date on which each of the discount
14-26 periods provided by Section 31.05 concludes, if the discounts are
14-27 available;
15-1 (9) state the rates of penalty and interest imposed
15-2 for delinquent payment of the tax;
15-3 (10) include the name and telephone number of the
15-4 assessor for the unit and, if different, of the collector for the
15-5 unit; and
15-6 (11) include any other information required by the
15-7 comptroller.
15-8 (d) Each tax bill shall also state the amount of penalty, if
15-9 any, imposed pursuant to Sections 23.431, 23.54, 23.541, 23.75,
15-10 23.751, 23.87, [and] 23.97, and 23.9804 [of this code].
15-11 SECTION 9. Section 41.01(a), Tax Code, is amended to read as
15-12 follows:
15-13 (a) The appraisal review board shall:
15-14 (1) determine protests initiated by property owners;
15-15 (2) determine challenges initiated by taxing units;
15-16 (3) correct clerical errors in the appraisal records
15-17 and the appraisal rolls;
15-18 (4) act on motions to correct appraisal rolls under
15-19 Section 25.25;
15-20 (5) determine whether an exemption or a partial
15-21 exemption is improperly granted and whether land is improperly
15-22 granted appraisal as provided by Subchapter C, D, [or] E, or H,
15-23 Chapter 23; and
15-24 (6) take any other action or make any other
15-25 determination that this title specifically authorizes or requires.
15-26 SECTION 10. Section 41.03, Tax Code, is amended to read as
15-27 follows:
16-1 Sec. 41.03. CHALLENGE BY TAXING UNIT. (a) A taxing unit is
16-2 entitled to challenge before the appraisal review board:
16-3 (1) the level of appraisals of any category of
16-4 property in the district or in any territory in the district, but
16-5 not the appraised value of a single taxpayer's property;
16-6 (2) an exclusion of property from the appraisal
16-7 records;
16-8 (3) a grant in whole or in part of a partial
16-9 exemption;
16-10 (4) a determination that land qualifies for appraisal
16-11 as provided by Subchapter C, D, [or] E, or H, Chapter 23 [of this
16-12 code]; or
16-13 (5) failure to identify the taxing unit as one in
16-14 which a particular property is taxable.
16-15 (b) If a taxing unit challenges a determination that land
16-16 qualifies for appraisal under Subchapter H, Chapter 23, on the
16-17 ground that the land is not located in an aesthetic management
16-18 zone, critical wildlife habitat zone, or streamside management
16-19 zone, the taxing unit must first seek a determination letter from
16-20 the director of the Texas Forest Service. The appraisal review
16-21 board shall accept the letter as conclusive proof of the type,
16-22 size, and location of the zone.
16-23 SECTION 11. Section 41.41(a), Tax Code, is amended to read
16-24 as follows:
16-25 (a) A property owner is entitled to protest before the
16-26 appraisal review board the following actions:
16-27 (1) determination of the appraised value of the
17-1 owner's property or, in the case of land appraised as provided by
17-2 Subchapter C, D, [or] E, or H, Chapter 23, determination of its
17-3 appraised or market value;
17-4 (2) unequal appraisal of the owner's property;
17-5 (3) inclusion of the owner's property on the appraisal
17-6 records;
17-7 (4) denial to the property owner in whole or in part
17-8 of a partial exemption;
17-9 (5) determination that the owner's land does not
17-10 qualify for appraisal as provided by Subchapter C, D, [or] E, or H,
17-11 Chapter 23;
17-12 (6) identification of the taxing units in which the
17-13 owner's property is taxable in the case of the appraisal district's
17-14 appraisal roll;
17-15 (7) determination that the property owner is the owner
17-16 of property;
17-17 (8) a determination that a change in use of land
17-18 appraised under Subchapter C, D, [or] E, or H, Chapter 23, has
17-19 occurred; or
17-20 (9) any other action of the chief appraiser, appraisal
17-21 district, or appraisal review board that applies to and adversely
17-22 affects the property owner.
17-23 SECTION 12. Section 41.44(a), Tax Code, is amended to read
17-24 as follows:
17-25 (a) Except as provided by Subsections (b) and (c), to be
17-26 entitled to a hearing and determination of a protest, the property
17-27 owner initiating the protest must file a written notice of the
18-1 protest with the appraisal review board having authority to hear
18-2 the matter protested:
18-3 (1) before June 1 or not later than the 30th day after
18-4 the date that notice was delivered to the property owner as
18-5 provided by Section 25.19, whichever is later;
18-6 (2) in the case of a protest of a change in the
18-7 appraisal records ordered as provided by Subchapter A of this
18-8 chapter or by Chapter 25, not later than the 30th day after the
18-9 date notice of the change is delivered to the property owner; or
18-10 (3) in the case of a determination that a change in
18-11 the use of land appraised under Subchapter C, D, [or] E, or H,
18-12 Chapter 23, has occurred, not later than the 30th day after the
18-13 date the notice of the determination is delivered to the property
18-14 owner.
18-15 SECTION 13. Section 151.3111(b), Tax Code, is amended to
18-16 read as follows:
18-17 (b) Subsection (a) [of this section] does not apply to the
18-18 performance of a service on:
18-19 (1) tangible personal property that would be exempted
18-20 solely because of the exempt status of the seller of the property;
18-21 (2) tangible personal property that is exempted solely
18-22 because of the application of Section 151.303, 151.304, or 151.306
18-23 [of this code];
18-24 (3) motor vehicles, trailers, or semitrailers as
18-25 defined, taxed, or exempted by Chapter 152 [of this code]; or
18-26 (4) a taxable boat or motor as defined by Section
18-27 160.001[; or]
19-1 [(5) machinery and equipment with a purchase price
19-2 greater than $50,000 used exclusively in a commercial timber
19-3 operation as described by Section 151.3161(a)].
19-4 SECTION 14. Section 151.316, Tax Code, is amended to read as
19-5 follows:
19-6 Sec. 151.316. AGRICULTURAL AND TIMBER ITEMS. (a) The
19-7 following items are exempted from the taxes imposed by this
19-8 chapter:
19-9 (1) horses, mules, and work animals;
19-10 (2) animal life the products of which ordinarily
19-11 constitute food for human consumption;
19-12 (3) feed for farm and ranch animals;
19-13 (4) feed for animals that are held for sale in the
19-14 regular course of business;
19-15 (5) seeds, seedlings of trees commonly grown for
19-16 commercial timber, and annual plants the products of which:
19-17 (A) ordinarily constitute food for human
19-18 consumption;
19-19 (B) are to be sold in the regular course of
19-20 business; or
19-21 (C) are used to produce feed for animals
19-22 exempted by this section;
19-23 (6) fertilizers, fungicides, insecticides, herbicides,
19-24 defoliants, and desiccants exclusively used or employed on a farm
19-25 or ranch in the production of:
19-26 (A) food for human consumption;
19-27 (B) feed for animal life; [or]
20-1 (C) other agricultural products to be sold in
20-2 the regular course of business; or
20-3 (D) timber to be sold in the regular course of
20-4 business;
20-5 (7) machinery and equipment exclusively used or
20-6 employed on a farm or ranch in the building or maintaining of roads
20-7 or water facilities or in the production of:
20-8 (A) food for human consumption;
20-9 (B) grass;
20-10 (C) feed for animal life; [or]
20-11 (D) other agricultural products to be sold in
20-12 the regular course of business; or
20-13 (E) timber to be sold in the regular course of
20-14 business;
20-15 (8) machinery and equipment exclusively used in, and
20-16 pollution control equipment required as a result of, the
20-17 processing, packing, or marketing of agricultural or timber
20-18 products by an original producer at a location operated by the
20-19 original producer for processing, packing, or marketing the
20-20 producer's own products if:
20-21 (A) 50 percent or more of the products
20-22 processed, packed, or marketed at or from the location are produced
20-23 by the original producer and not purchased or acquired from others;
20-24 and
20-25 (B) the producer does not process, pack, or
20-26 market for consideration any agricultural or timber products that
20-27 belong to other persons in an amount greater than five percent of
21-1 the total agricultural or timber products processed, packed, or
21-2 marketed by the producer; and
21-3 (9) ice exclusively used by commercial fishing boats
21-4 in the storing of aquatic species including but not limited to
21-5 shrimp, other crustaceans, finfish, mollusks, and other similar
21-6 creatures.
21-7 (b) Tangible personal property sold or used to be installed
21-8 as a component of an underground irrigation system is exempt from
21-9 the taxes imposed by this chapter if the system is exclusively used
21-10 or employed on a farm or ranch in the production of:
21-11 (1) food for human consumption;
21-12 (2) grass;
21-13 (3) feed or forage for:
21-14 (A) animal life the products of which ordinarily
21-15 constitute food for human consumption; or
21-16 (B) horses, mules, and work animals; [or]
21-17 (4) other agricultural products to be sold in the
21-18 regular course of business; or
21-19 (5) timber to be sold in the regular course of
21-20 business.
21-21 (c) In this section:
21-22 (1) "Farm or ranch" includes one or more tracts of
21-23 land used, in whole or in part, in the production of agricultural
21-24 products, including crops and [,] livestock, or timber [other
21-25 agricultural products] held for sale in the regular course of
21-26 business. The term includes feedlots, dairy farms, poultry farms,
21-27 commercial orchards, commercial nurseries, and similar commercial
22-1 agricultural operations and timber operations. The term does not
22-2 include a home garden [or a timber operation].
22-3 (2) "Original producer" means a person who:
22-4 (A) brings an agricultural product into being or
22-5 who harvests timber and is the owner of the agricultural product
22-6 from the time it is brought into being or of the timber from the
22-7 time it is harvested until it is processed, packed, or marketed; or
22-8 (B) is the grower of an agricultural product or
22-9 timber, exercises predominant operational control over the raising
22-10 of the agricultural product or timber, and bears a risk of loss of
22-11 investment in the agricultural product or timber.
22-12 (d) Two or more corporations that operate agricultural or
22-13 timber activities on the same tract or adjacent tracts of land and
22-14 that are entirely owned by an individual or a combination of the
22-15 individual, the individual's spouse, and the individual's children
22-16 may qualify as an original producer for the purposes of Subsection
22-17 (a)(8).
22-18 SECTION 15. Section 151.317(c)(2), Tax Code, is amended to
22-19 read as follows:
22-20 (2) "Commercial use" means use by a person engaged in
22-21 selling, warehousing, or distributing a commodity or a professional
22-22 or personal service, but does not include:
22-23 (A) use by a person engaged in:
22-24 (i) processing tangible personal property
22-25 for sale as tangible personal property, other than preparation or
22-26 storage of food for immediate consumption;
22-27 (ii) exploring for, producing, or
23-1 transporting, a material extracted from the earth;
23-2 (iii) agriculture, including dairy or
23-3 poultry operations and pumping for farm or ranch irrigation;
23-4 (iv) timber operations, including pumping
23-5 for irrigation of timber land;
23-6 (v) electrical processes such as
23-7 electroplating, electrolysis, and cathodic protection;
23-8 (vi) [(v)] the off-wing processing,
23-9 overhaul, or repair of a jet turbine engine or its parts for a
23-10 certificated or licensed carrier of persons or property; or
23-11 (vii) [(vi)] providing, under contracts
23-12 with or on behalf of the United States government or foreign
23-13 governments, defense or national security-related electronics,
23-14 classified intelligence data processing and handling systems, or
23-15 defense-related platform modifications or upgrades; or
23-16 (B) a direct or indirect use, consumption, or
23-17 loss of electricity by an electric utility engaged in the purchase
23-18 of electricity for resale.
23-19 SECTION 16. Section 152.091, Tax Code, is amended to read as
23-20 follows:
23-21 Sec. 152.091. FARM OR TIMBER USE. (a) The taxes imposed by
23-22 this chapter do not apply to the sale or use of a:
23-23 (1) farm machine, trailer, or semitrailer for use
23-24 primarily for farming and ranching, including the rearing of
23-25 poultry, and use in feedlots; or
23-26 (2) machine, trailer, or semitrailer for use primarily
23-27 for timber operations.
24-1 (b)(1) The taxes imposed by this chapter do not apply to the
24-2 purchase of a:
24-3 (A) farm machine, trailer, or semitrailer that
24-4 is to be leased for use primarily for farming and ranching,
24-5 including the rearing of poultry, and use in feedlots; or
24-6 (B) machine, trailer, or semitrailer that is to
24-7 be leased for use primarily for timber operations.
24-8 (2) The exemption provided by this subsection applies
24-9 only if the person purchasing the [farm] machine, trailer, or
24-10 semitrailer to be leased presents the tax assessor-collector a form
24-11 prescribed and provided by the comptroller showing:
24-12 (A) the identification of the motor vehicle;
24-13 (B) the name and address of the lessor and the
24-14 lessee; and
24-15 (C) verification by the lessee that the [farm]
24-16 machine, trailer, or semitrailer will be used primarily for:
24-17 (i) farming and ranching, including the
24-18 rearing of poultry, and use in feedlots; or
24-19 (ii) timber operations.
24-20 (3) If a motor vehicle for which the tax has not been
24-21 paid ceases to be leased for use primarily for farming and
24-22 ranching, including the rearing of poultry, and use in feedlots or
24-23 timber operations, the owner shall notify the comptroller on a form
24-24 provided by the comptroller and shall pay the sales or use tax on
24-25 the motor vehicle based on the owner's book value of the motor
24-26 vehicle. The tax is imposed at the same percentage rate that is
24-27 provided by [Subsection (b) of] Section 152.021(b) [152.021 of this
25-1 code].
25-2 (c) The taxes imposed by this chapter do not apply to the
25-3 rental of a farm machine, a trailer, or a semitrailer for use
25-4 primarily for farming and ranching, including the rearing of
25-5 poultry, and use in feedlots, or a machine, a trailer, or a
25-6 semitrailer for use primarily for timber operations. The tax that
25-7 would have been remitted on gross rental receipts without this
25-8 exemption shall be deemed to have been remitted for the purpose of
25-9 calculating the minimum gross rental receipts imposed by Section
25-10 152.026 [of this code]. The exemption provided by this subsection
25-11 applies only if the owner of the motor vehicle obtains in good
25-12 faith an exemption certificate from the person to whom the vehicle
25-13 is being rented.
25-14 SECTION 17. Section 151.3161, Tax Code, is repealed.
25-15 SECTION 18. (a) Except as provided by Subsections (b) and
25-16 (c) of this section, this Act takes effect September 1, 1999.
25-17 (b) Sections 11.16(c) and 11.161, Tax Code, as amended by
25-18 this Act, and Subchapter H, Chapter 23, Tax Code, as added by this
25-19 Act, take effect January 1, 2000.
25-20 (c) Sections 13, 14, and 15 of this Act, amending Sections
25-21 151.3111(b), 151.316, and 151.317(c)(2), Tax Code, take effect
25-22 October 1, 1999.
25-23 SECTION 19. The importance of this legislation and the
25-24 crowded condition of the calendars in both houses create an
25-25 emergency and an imperative public necessity that the
25-26 constitutional rule requiring bills to be read on three several
25-27 days in each house be suspended, and this rule is hereby suspended.