By Carona                                             S.B. No. 1056
         76R5948 CBH-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to exempting certain machinery and equipment used for
 1-3     certain telecommunications services from the sales and use tax.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Subchapter H, Chapter 151, Tax Code, is amended
 1-6     by adding Section 151.3235 to read as follows:
 1-7           Sec. 151.3235.  CERTAIN TELECOMMUNICATIONS MACHINERY AND
 1-8     EQUIPMENT.  (a)  In this section:
 1-9                 (1)  "Internet" means, collectively, the computer and
1-10     telecommunications facilities, including equipment and operating
1-11     software, that comprise the interconnected worldwide network or
1-12     networks that employ the Transmission Control Protocol/Internet
1-13     Protocol, or any predecessor or successor protocols to that
1-14     protocol.
1-15                 (2)  "Internet service" means the offering or provision
1-16     of use of the Internet.
1-17                 (3)  "Telecommunications provider" means a person who
1-18     provides  telecommunications services for a fee directly to the
1-19     public, or to a class of users in a manner that effectively
1-20     constitutes making those services directly available to the public,
1-21     regardless of the facilities used.  The term does not include a
1-22     person selling or providing telecommunications services, such as a
1-23     hotel, motel, or  owner or lessee of an office, residential
1-24     building, or development, that contracts and pays for
 2-1     telecommunications services for resale to guests or tenants.
 2-2           (b)  Machinery, equipment, operating software, and
 2-3     replacement parts and accessories used to provide
 2-4     telecommunications service or Internet  service are exempt from the
 2-5     taxes imposed by this chapter if the machinery, equipment,
 2-6     operating software, replacement parts, or accessories are sold,
 2-7     leased, or rented to, or stored, used, or consumed by:
 2-8                 (1)  a telecommunications provider in the conduct of a
 2-9     telecommunications service or Internet service business; or
2-10                 (2)  a subsidiary, affiliate, partner, or co-venturer
2-11     of the telecommunications provider who uses the equipment to
2-12     upgrade systems to allow for the provision of the
2-13     telecommunications service or Internet service.
2-14           (c)  The exemption provided by this section does not include
2-15     office furniture and related office equipment.
2-16           SECTION 2.  (a)  This Act takes effect on the first day of
2-17     the first calendar quarter beginning on or after the earliest date
2-18     that it  may take effect under Section 39, Article III, Texas
2-19     Constitution.
2-20           (b)  The change in law made by this Act does not affect taxes
2-21     imposed before the effective date of this Act, and the law in
2-22     effect before that date is continued in effect for purposes of the
2-23     liability for and collection of those taxes.
2-24           SECTION 3.  The importance of this legislation and the
2-25     crowded condition of the calendars in both houses create an
2-26     emergency and an imperative public necessity that the
2-27     constitutional rule requiring bills to be read on three several
 3-1     days in each house be suspended, and this rule is hereby suspended,
 3-2     and that this Act take effect and be in force according to its
 3-3     terms, and it is so enacted.