By Gallego                                              H.B. No. 82
         77R177 KEL-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to an exemption from sales and use taxes for certain
 1-3     taxable items sold by a qualified student organization affiliated
 1-4     with an institution of higher education.
 1-5           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-6           SECTION 1. Section 151.321, Tax Code, is amended to read as
 1-7     follows:
 1-8           Sec. 151.321.  UNIVERSITY AND COLLEGE STUDENT ORGANIZATIONS.
 1-9     (a)  A taxable item sold by a qualified student organization and
1-10     for which the sales price is $5,000 or less, is exempted from the
1-11     taxes imposed by Subchapter C, except that a taxable item
1-12     manufactured by or donated to the organization is exempt from the
1-13     taxes imposed by Subchapter C regardless of sales price unless sold
1-14     to the donor, if the student organization:
1-15                 (1)  sells the item at a sale that may last for one day
1-16     only and the primary purpose of which is to raise funds for the
1-17     organization; and
1-18                 (2)  holds not more than one sale described by
1-19     Subdivision (1) each month for which an exemption is claimed for an
1-20     item sold.
1-21           (b)  In each calendar year, the first $5,000 of a qualified
1-22     student organization's total receipts from sales of taxable items
1-23     not otherwise exempt under Subsection (a) is exempt from the taxes
1-24     imposed by Subchapter C.
 2-1           (c)  A student organization qualifies for the exemptions
 2-2     [exemption] under Subsections [Subsection] (a) and (b) if the
 2-3     student organization:
 2-4                 (1)  is affiliated with an institution of higher
 2-5     education as defined by Section 61.003, Education Code, or a
 2-6     private or independent college or university that is located in
 2-7     this state and that is accredited by a recognized accrediting
 2-8     agency under Section 61.003, Education Code;
 2-9                 (2)  has as its primary purpose a purpose other than
2-10     engaging in business or performing an activity designed to make a
2-11     profit; and
2-12                 (3)  files a certification with the comptroller as
2-13     required by Subsection (d) [(c)].
2-14           (d) [(c)]  A student organization must file with the
2-15     comptroller a certification issued by the institution, college, or
2-16     university described in Subsection (c)(1) [(b)(1)] showing that the
2-17     organization is affiliated with the institution, college, or
2-18     university.
2-19           (e) [(d)]  The storage, use, or consumption of a taxable item
2-20     acquired tax-free under this section is exempted from the use tax
2-21     imposed by Subchapter D until the item is resold or subsequently
2-22     transferred.
2-23           SECTION 2. (a)  This Act takes effect October 1, 2001.
2-24           (b)  The change in law made by this Act does not affect taxes
2-25     imposed before the effective date of this Act, and the law in
2-26     effect before the effective date of this Act is continued in effect
2-27     for purposes of liability for and collection of those taxes.
 3-1           (c)  For purposes of application of Section 151.321(b), Tax
 3-2     Code, as added by this Act, to the 2001 calendar year, the period
 3-3     beginning October 1, 2001, and ending December 31, 2001, is treated
 3-4     as a calendar year.