By:  Wentworth                                        S.B. No. 1003
         Line and page numbers may not match official copy.
         Bill not drafted by TLC or Senate E&E.
                                A BILL TO BE ENTITLED
                                       AN ACT
 1-1     relating to exempting Internet access service from the sales tax.
 1-2           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-3           SECTION 1.  Subchapter A, Chapter 151, Tax Code, is amended
 1-4     by adding Sections 151.00393 and 151.00394  to read as follows:
 1-5           Sec. 151.00393.  "INTERNET."  "Internet" means collectively
 1-6     the myriad of computer and telecommunications facilities, including
 1-7     equipment and operating software, that comprise the interconnected
 1-8     worldwide network of networks that employ the Transmission Control
 1-9     Protocol/Internet Protocol, or any predecessor or successor
1-10     protocols to that protocol, to communicate information of all kinds
1-11     by wire or radio.
1-12           Sec. 151.00394.  "INTERNET ACCESS SERVICE."  "Internet access
1-13     service" means a service that enables users to access content,
1-14     information, electronic mail, or other services offered over the
1-15     Internet and may also include access to proprietary content,
1-16     information, and other services as part of a package of services
1-17     offered to consumers.
1-18           SECTION 2.  Subchapter H, Chapter 151, Tax Code, is amended
1-19     by adding Section 151.325 to read as follows:
1-20           Sec. 151.325.  INTERNET ACCESS SERVICE.  (a)  The sale, use,
1-21     or other consumption in this state of Internet access service is
1-22     exempted from the taxes imposed by this chapter.
 2-1           (b)  Internet access service does not include and the
 2-2     exemption under Subsection (a) does not apply to:
 2-3                 (1)  data processing service;
 2-4                 (2)  information service;
 2-5                 (3)  telecommunications services; and
 2-6                 (4)  cable television service.
 2-7           SECTION 3.  (a)  This Act takes effect on the first day of
 2-8     the first calendar quarter beginning on or after the date that it
 2-9     may take effect under Section 39, Article III, Texas Constitution.
2-10           (b)  The change in law made by this Act does not affect taxes
2-11     imposed before the effective date of this Act, and the law in
2-12     effect before the effective date of this Act is continued in effect
2-13     for purposes of the liability for and collection of those taxes.