By Gallego H.B. No. 438
77R2914 GJH-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the exemption from ad valorem taxation of tangible
1-3 personal property held at certain locations only temporarily for
1-4 assembling, manufacturing, processing, or other commercial
1-5 purposes.
1-6 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-7 SECTION 1. Subchapter B, Chapter 11, Tax Code, is amended by
1-8 adding Section 11.252 to read as follows:
1-9 Sec. 11.252. TANGIBLE PERSONAL PROPERTY IN TRANSIT. (a) In
1-10 this section, "goods-in-transit" means property that is exempt from
1-11 taxation under 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 23.01 or 23.12, as applicable, to determine the taxable value of
1-18 the property.
1-19 (d) Except as provided by Subsections (f) and (g), the chief
1-20 appraiser shall determine the appraised value of goods-in-transit
1-21 under this subsection. The chief appraiser shall determine the
1-22 percentage of the market value of inventory or other property owned
1-23 by the property owner in the preceding calendar year that was
1-24 contributed by goods-in-transit. For the first year to which the
2-1 exemption applies to a taxing unit, the chief appraiser shall
2-2 determine that percentage as if the exemption applied to the
2-3 preceding year. The chief appraiser shall apply that percentage to
2-4 the market value of the property owner's inventory or other
2-5 property for the current year to determine the appraised value of
2-6 goods-in-transit for the current year.
2-7 (e) In determining the market value of goods-in-transit that
2-8 in the preceding year were assembled, manufactured, repaired,
2-9 maintained, processed, or fabricated in this state or used by the
2-10 person who acquired or imported the property in the repair or
2-11 maintenance of aircraft operated by a certificated air carrier, the
2-12 chief appraiser shall exclude the cost of equipment, machinery, or
2-13 materials that entered into and became component parts of the
2-14 goods-in-transit but were not themselves goods-in-transit or that
2-15 were not transported to another location in this state or out of
2-16 this state before the expiration of 270 days after the date they
2-17 were brought into this state by the property owner or acquired by
2-18 the property owner in this state. For component parts held in
2-19 bulk, the chief appraiser may use the average length of time a
2-20 component part was held by the owner of the component parts during
2-21 the preceding year at a location in this state that was not owned
2-22 or under the control of the owner of the component parts in
2-23 determining whether the component parts were transported to another
2-24 location in this state or out of this state before the expiration
2-25 of 270 days.
2-26 (f) If the property owner was not engaged in transporting
2-27 goods-in-transit to other locations in this state or out of this
3-1 state for the entire preceding year, the chief appraiser shall
3-2 calculate the percentage of the market value described in
3-3 Subsection (d) for the portion of the year in which the property
3-4 owner was engaged in transporting goods-in-transit to another
3-5 location in this state or out of this state.
3-6 (g) If the property owner or the chief appraiser
3-7 demonstrates that the method provided by Subsection (d)
3-8 significantly understates or overstates the market value of the
3-9 property qualified for an exemption under Subsection (b) in the
3-10 current year, the chief appraiser shall determine the market value
3-11 of the goods-in-transit to be exempt by determining, according to
3-12 the property owner's records and any other available information,
3-13 the market value of those goods-in-transit owned by the property
3-14 owner on January 1 of the current year, excluding the cost of
3-15 equipment, machinery, or materials that entered into and became
3-16 component parts of the goods-in-transit but were not themselves
3-17 goods-in-transit or that were not transported to another location
3-18 in this state or out of this state before the expiration of 270
3-19 days after the date they were brought into this state by the
3-20 property owner or acquired by the property owner in this state.
3-21 (h) The chief appraiser by written notice delivered to a
3-22 property owner who claims an exemption under this section may
3-23 require the property owner to provide copies of property records to
3-24 determine the amount and value of goods-in-transit and whether the
3-25 location in this state where the goods-in-transit were detained for
3-26 assembling, storing, manufacturing, processing, or fabricating
3-27 purposes was not owned or under the control of the owner of the
4-1 goods-in-transit. If the property owner fails to deliver the
4-2 information requested in the notice before the 31st day after the
4-3 date the notice is delivered to the property owner, the property
4-4 owner forfeits the right to claim or receive the exemption for that
4-5 year.
4-6 (i) For the purposes of Section 1-n, Article VIII, Texas
4-7 Constitution, "petroleum products" means liquid and gaseous
4-8 materials that are the immediate derivatives of the refining of oil
4-9 or natural gas.
4-10 (j) Property that meets the requirements of Section 1-n(a),
4-11 Article VIII, Texas Constitution, constitutes goods-in-transit
4-12 regardless of whether the person who owns the property on January 1
4-13 is the person who transports it to another location in this state
4-14 or out of this state.
4-15 SECTION 2. Section 11.437(a), Tax Code, is amended to read
4-16 as follows:
4-17 (a) A person who operates a warehouse used primarily for the
4-18 storage of cotton for transportation to another location in this
4-19 state or outside of this state may apply for an exemption under
4-20 Section 11.251 or 11.252 for cotton stored in the warehouse on
4-21 behalf of all the owners of the cotton. An exemption granted under
4-22 this section applies to all cotton stored in the warehouse that is
4-23 eligible to be exempt under Section 11.251 or 11.252. Cotton that
4-24 is stored in a warehouse covered by an exemption granted under this
4-25 section and that is transported to another location in this state
4-26 or outside of this state is presumed to have been transported to
4-27 another location in this state or outside of this state within the
5-1 time permitted by Section 1-j or 1-n, Article VIII, [Section 1-j,
5-2 of the] Texas Constitution, for cotton to qualify for an exemption
5-3 under that section.
5-4 SECTION 3. Section 22.01(e), Tax Code, is amended to read as
5-5 follows:
5-6 (e) Notwithstanding Subsections (a) and (b), a person is not
5-7 required to render for taxation cotton that:
5-8 (1) the person manages and controls as a fiduciary;
5-9 (2) is stored in a warehouse for which an exemption
5-10 for cotton has been granted under Section 11.437 [11.436]; and
5-11 (3) the person intends to transport to another
5-12 location in this state or outside of this [the] state within the
5-13 time permitted by Section 1-j or 1-n, Article VIII, [Section 1-j,
5-14 of the] Texas Constitution, for cotton to qualify for an exemption
5-15 under that section.
5-16 SECTION 4. This Act takes effect January 1, 2003, and
5-17 applies only to taxes imposed for a tax year beginning on or after
5-18 that date, but only if the constitutional amendment proposed by the
5-19 77th Legislature, Regular Session, 2001, to exempt from ad valorem
5-20 taxation tangible personal property held at certain locations only
5-21 temporarily for assembling, manufacturing, processing, or other
5-22 commercial purposes, takes effect. If that amendment is not
5-23 approved by the voters, this Act has no effect.