SRC-EPT, TBR S.B. 248 77(R)BILL ANALYSIS


Senate Research CenterS.B. 248
By: Carona
Finance
6/14/2001
Enrolled


DIGEST AND PURPOSE 

Under the Texas Tax Code, all leased vehicles are subject to ad valorem
property taxes, originally intended to apply to businesses leasing fleets
of vehicles, while many such leases today are for individuals interested in
driving a new vehicle for a lower price. S.B. 248 eliminates ad valorem
taxes for vehicles leased primarily for personal use. 

RULEMAKING AUTHORITY

Rulemaking authority is expressly granted to the comptroller of public
accounts in SECTION 1 (Section 11.252, Tax Code). 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Chapter 11B, Tax Code, by adding Section 11.252, as
follows: 

 Sec. 11.252. MOTOR VEHICLES LEASED FOR PERSONAL USE.  (a) Provides that
the owner of a motor vehicle that is subject to a lease is entitled to an
exemption from taxation of the vehicle if certain requirements are met. 

 (b)  Provides that, for the purposes of this section, a motor vehicle is
used primarily for activities that do not involve the production of income
if more than 50 percent of the miles the vehicle is driven in a year are
for non-income producing purposes. 

 (c)  Requires the comptroller by rule to establish exemption application
requirements and appropriate procedures to determine whether a motor
vehicle subject to a lease qualifies for an exemption under Subsection (a). 

 (d)  Requires the comptroller by rule, in connection with the requirements
and procedures under Subsection (c), to adopt a form to be completed by the
lessee of a motor vehicle for which the owner of the vehicle may apply for
an exemption under Subsection (a).  Requires the form to require the lessee
to provide the lessee's name, address, and driver's license number, and to
certify under oath that the lessee does not hold the vehicle for the
production of income and that the vehicle is used primarily for activities
that do not involve the production of income.  Requires the comptroller to
include on the form a notice of the penalties prescribed by Section 37.10
(Tampering with Governmental Record), Penal Code, for making a false
statement on the form. 

 (e)  Requires the owner of a motor vehicle that is subject to a lease to
maintain the form completed by the lessee of the vehicle and make the form
available for inspection and copying by the chief appraiser of the
applicable appraisal district at all reasonable times. Provides that if the
owner does not maintain a completed form relating to the vehicle, the owner
will be subject to certain provisions. 

(f)  Authorizes the governing body of a municipality by ordinance adopted
before  January 1, 2002, to provide for the taxation of leased motor
vehicles otherwise exempted under Subsection (a).  Provides that if the
governing body of a municipality provides for the taxation of leased motor
vehicles under this subsection, the exemption provided by Subsection (a)
does not apply to a municipality. 

(g)  Provides that if not continued in effect by the legislature, this
section expires December 31, 2003. 

  (h)  Defines "lease" and "motor vehicle."

(i)  Requires the comptroller, in addition to the requirements of
Subsections (c) and (d), to prescribe a property report form to be
completed by the lessor describing the leased motor vehicles that the
lessor owns.  Requires the property report form to require the lessor to
list each leased vehicle the lessor owns on January 1, to provide the year,
make, model, and vehicle identification number of each leased vehicle, and
to provide the name of the lessee, the address at which the vehicle is
kept, and an indication of whether the lessee has designated the vehicle as
not held for the production and not used for the production of income.  

(j)  Requires the lessor to provide the chief appraiser with the completed
property report form adopted by the comptroller  in the manner provided by
Chapter 22B. 

SECTION 2.Effective date:  January 1, 2002.
  Makes application of this Act retroactive to January 2, 2001.