By Duncan S.B. No. 1490
76R8908 JD-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the exemption from ad valorem taxation of certain
1-3 tangible personal property held only temporarily for assembling,
1-4 manufacturing, processing, or other commercial purposes.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Subchapter B, Chapter 11, Tax Code, is amended by
1-7 adding Section 11.252 to read as follows:
1-8 Sec. 11.252. TANGIBLE PERSONAL PROPERTY IN TRANSIT. (a) In
1-9 this section, "goods-in-transit" means property that has been
1-10 exempted from taxation by the governing body of a taxing unit under
1-11 Section 1-n, Article VIII, Texas Constitution.
1-12 (b) A person is entitled to an exemption from taxation of
1-13 the appraised value of that portion of the person's property that
1-14 consists of goods-in-transit.
1-15 (c) The exemption provided by Subsection (b) is subtracted
1-16 from the market value of the property determined under Section
1-17 23.12 to determine the taxable value of the property.
1-18 (d) Except as provided by Subsections (f) and (g), the chief
1-19 appraiser shall determine the appraised value of goods-in-transit
1-20 under this subsection. The chief appraiser shall determine the
1-21 percentage of the market value of inventory or property owned by
1-22 the property owner in the preceding calendar year that was
1-23 contributed by goods-in-transit. For the first year to which the
1-24 exemption applies to a taxing unit, the chief appraiser shall
2-1 determine that percentage as if the exemption applied to the
2-2 preceding year. The chief appraiser shall apply that percentage to
2-3 the market value of the property owner's inventory or property for
2-4 the current year to determine the appraised value of
2-5 goods-in-transit for the current year.
2-6 (e) In determining the market value of goods-in-transit that
2-7 in the preceding year were assembled, manufactured, repaired,
2-8 maintained, processed, or fabricated in this state or used by the
2-9 person who acquired or imported the property in the repair or
2-10 maintenance of aircraft operated by a certificated air carrier, the
2-11 chief appraiser shall exclude the cost of equipment, machinery, or
2-12 materials that entered into and became component parts of the
2-13 goods-in-transit but were not themselves goods-in-transit or that
2-14 were not transported to another location in this state or out of
2-15 this state before the expiration of 270 days after the date they
2-16 were brought into this state by the property owner or acquired by
2-17 the property owner in this state. For component parts held in
2-18 bulk, the chief appraiser may use the average length of time a
2-19 component part was held at a location in this state by the property
2-20 owner during the preceding year in determining whether the
2-21 component parts were transported to another location in this state
2-22 or out of this state before the expiration of 270 days.
2-23 (f) If the property owner was not engaged in transporting
2-24 goods-in-transit to other locations in this state or out of this
2-25 state for the entire preceding year, the chief appraiser shall
2-26 calculate the percentage of the market value described in
2-27 Subsection (d) for the portion of the year in which the property
3-1 owner was engaged in transporting goods-in-transit to another
3-2 location in this state or out of this state.
3-3 (g) If the property owner or the chief appraiser
3-4 demonstrates that the method provided by Subsection (d)
3-5 significantly understates or overstates the market value of the
3-6 property qualified for an exemption under Subsection (b) in the
3-7 current year, the chief appraiser shall determine the market value
3-8 of the goods-in-transit to be exempt by determining, according to
3-9 the property owner's records and any other available information,
3-10 the market value of those goods-in-transit owned by the property
3-11 owner on January 1 of the current year, excluding the cost of
3-12 equipment, machinery, or materials that entered into and became
3-13 component parts of the goods-in-transit but were not themselves
3-14 goods-in-transit or that were not transported to another location
3-15 in this state or out of this state before the expiration of 270
3-16 days after the date they were brought into this state by the
3-17 property owner or acquired by the property owner in this state.
3-18 (h) The chief appraiser by written notice delivered to a
3-19 property owner who claims an exemption under this section may
3-20 require the property owner to provide copies of property records to
3-21 determine the amount and value of goods-in-transit. If the
3-22 property owner fails to deliver the information requested in the
3-23 notice before the 31st day after the date the notice is delivered
3-24 to the property owner, the property owner forfeits the right to
3-25 claim or receive the exemption for that year.
3-26 (i) For the purposes of Section 1-n, Article VIII, Texas
3-27 Constitution, "petroleum products" means liquid and gaseous
4-1 materials that are the immediate derivatives of the refining of oil
4-2 or natural gas.
4-3 (j) Property that meets the requirements of Section 1-n(a),
4-4 Article VIII, Texas Constitution, constitutes goods-in-transit
4-5 regardless of whether the person who owns the property on January 1
4-6 is the person who transports it to another location in this state
4-7 or out of this state.
4-8 SECTION 2. Section 11.437(a), Tax Code, is amended to read
4-9 as follows:
4-10 (a) A person who operates a warehouse used primarily for the
4-11 storage of cotton for transportation to another location in this
4-12 state or outside of this state may apply for an exemption under
4-13 Section 11.251 or 11.252 for cotton stored in the warehouse on
4-14 behalf of all the owners of the cotton. An exemption granted under
4-15 this section applies to all cotton stored in the warehouse that is
4-16 eligible to be exempt under Section 11.251 or 11.252. Cotton that
4-17 is stored in a warehouse covered by an exemption granted under this
4-18 section and that is transported to another location in this state
4-19 or outside of this state is presumed to have been transported to
4-20 another location in this state or outside of this state within the
4-21 time permitted by Section 1-j or 1-n, Article VIII, [Section 1-j,
4-22 of the] Texas Constitution, for cotton to qualify for an exemption
4-23 under that section.
4-24 SECTION 3. Section 22.01(e), Tax Code, is amended to read as
4-25 follows:
4-26 (e) Notwithstanding Subsections (a) and (b), a person is not
4-27 required to render for taxation cotton that:
5-1 (1) the person manages and controls as a fiduciary;
5-2 (2) is stored in a warehouse for which an exemption
5-3 for cotton has been granted under Section 11.437 [11.436]; and
5-4 (3) the person intends to transport to another
5-5 location in this state or outside of this [the] state within the
5-6 time permitted by Section 1-j or 1-n, Article VIII, [Section 1-j,
5-7 of the] Texas Constitution, for cotton to qualify for an exemption
5-8 under that section.
5-9 SECTION 4. This Act takes effect January 1, 2000, and
5-10 applies only to taxes imposed for a tax year beginning on or after
5-11 that date, but only if the constitutional amendment proposed by the
5-12 76th Legislature, Regular Session, 1999, to exempt from ad valorem
5-13 taxation tangible personal property held only temporarily for
5-14 assembling, manufacturing, processing, or other commercial
5-15 purposes, takes effect. If that amendment is not approved by the
5-16 voters, this Act has no effect.
5-17 SECTION 5. The importance of this legislation and the
5-18 crowded condition of the calendars in both houses create an
5-19 emergency and an imperative public necessity that the
5-20 constitutional rule requiring bills to be read on three several
5-21 days in each house be suspended, and this rule is hereby suspended.