By Raymond                                            H.B. No. 3571
         Line and page numbers may not match official copy.
         Bill not drafted by TLC or Senate E&E.
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to customs brokers.
 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1. Section 151.157, Tax Code, is amended by amending
 1-5     Subsection (e) to read as follows:
 1-6           (e)  A customs broker licensed under this section shall make
 1-7     available to the comptroller, on or after the 15th day after the
 1-8     date the broker receives written notice from the comptroller, the
 1-9     customs broker's books and records relating to the business of
1-10     issuing documentation certifying the export of tangible personal
1-11     property beyond the territorial limits of the United States for
1-12     purposes of exempting the property from the taxes imposed by this
1-13     chapter.  The customs broker shall make available to the
1-14     comptroller, without notice from the comptroller, the customs
1-15     broker's books and records if the comptroller determines that the
1-16     comptroller's ability to administer and enforce effectively the
1-17     provisions of this chapter relating to documentation for the
1-18     purpose of showing the exemption of tangible personal property
1-19     under Section 151.307(b)(2) is jeopardized by providing notice.
1-20     The customs broker shall keep the books and records described by
1-21     this subsection for at least four [two] years after the date of the
1-22     last entry that they contain.
1-23           SECTION 2.  Subchapter E, Chapter 151, Tax Code, is amended
 2-1     by adding Section 151.1575 to read as follows:
 2-2           Sec. 151.1575.  EXPORT VERIFICATION CENTER. (a)  To be
 2-3     designated as an export verification center as defined in
 2-4     Subsection (h) of this section, a location must:
 2-5                 (1)  be licensed by the comptroller;
 2-6                 (2)  be operated by a person licensed by the
 2-7     comptroller; and
 2-8                 (3)  comply with any rules prescribed by the
 2-9     comptroller to administer this section and to prevent evasion of
2-10     the tax under this chapter and local sales and use taxes.
2-11           (b)  A customs broker is required to work through or with an
2-12     export verification center as defined in Subsection (h) of this
2-13     section to verify that tangible personal property is exported
2-14     outside the territorial limits of the United States.  The
2-15     comptroller may revoke or suspend a license issued under Section
2-16     151.157 if a customs broker licensed under Section 151.157 is in
2-17     violation of this subsection.
2-18           (c)  A customs broker shall pay the monthly cost of the
2-19     export verification center in accordance with the ratio that the
2-20     number of export vouchers submitted to the location by the broker
2-21     during the month bears to the total number of export vouchers
2-22     submitted to that location by all customs brokers during that
2-23     month.
2-24           (d)  On receipt of an export voucher, the export verification
2-25     center through which the customs broker conducts his business shall
2-26     verify that the tangible personal property that is listed on the
 3-1     export voucher was actually exported outside the territorial limits
 3-2     of the United States, and attach to the export voucher, a stamp
 3-3     issued under Section 151.158 and return the stamped export voucher
 3-4     to the customs broker.
 3-5           (e)  A customs broker may not issue documentation for the
 3-6     purpose of showing the exemption of tangible personal property
 3-7     under Section 151.307(b)(2) unless the broker receives a stamped
 3-8     export voucher that verifies exportation of the property in
 3-9     accordance with Subsection (d).
3-10           (f)  An export verification center shall make available to
3-11     the comptroller, on or after the 15th day after the date the center
3-12     receives notice from the comptroller, the center's books and
3-13     records relating to the business of verifying the export of
3-14     tangible personal property beyond the territorial limits of the
3-15     United States for purposes of exempting the property from the taxes
3-16     that are imposed by this chapter.  The export verification center
3-17     shall make available to the comptroller, without notice from the
3-18     comptroller, the center's books and records if the comptroller
3-19     determines that the comptroller's ability to administer and enforce
3-20     effectively the provisions of this chapter relating to verification
3-21     for the purpose of showing the exemption of tangible personal
3-22     property under section 151.307(b)(2) is jeopardized by providing
3-23     notice.  The export verification center shall keep the books and
3-24     records described by this subsection for at least four years after
3-25     the date of the last entry that they contain.
3-26           (g)  An export verification center shall file a report that
 4-1     identifies tangible personal property that has been exported beyond
 4-2     the territorial limits of the United States and the amount of tax
 4-3     for which an export voucher is issued and any other information the
 4-4     comptroller may require.
 4-5           (h)  In this section:
 4-6                 (1)  "Export verification center" means a facility
 4-7     operated by a person licensed by the comptroller at a location
 4-8     approved by the comptroller for the purpose of verifying that
 4-9     tangible personal property is exported beyond the territorial
4-10     limits of the United States.
4-11                 (2)  "Export voucher" means a document provided by a
4-12     customs broker licensed under Section 151.157 for the purpose of
4-13     identifying tangible personal property that is intended to be
4-14     exported beyond the territorial limits of the United States.  The
4-15     export voucher shall be in a form prescribed by the comptroller.
4-16           SECTION 3.  Section 151.158, Tax Code, is amended by amending
4-17     Subsections (c), (e), and (f) to read as follows:
4-18           (c)  The comptroller shall require that the stamps be
4-19     manufactured so that a stamp may be easily and securely attached to
4-20     an export voucher in accordance with Section 151.1575
4-21     [documentation].
4-22           (e)  The comptroller may provide stamps only to the person
4-23     licensed by the comptroller to operate an export verification
4-24     center or to an authorized representative of that person [a customs
4-25     broker licensed under Section 151.157].
4-26           (f)  A stamp is invalid if transferred to a person other than
 5-1     the person licensed by the comptroller to operate an export
 5-2     verification center [customs broker] to whom the comptroller issued
 5-3     the stamp or[,] to an authorized representative [employee] of that
 5-4     person [customs broker, or to an authorized independent
 5-5     contractor].
 5-6           SECTION 4.  Section 151.159, Tax Code, is amended by amending
 5-7     Subsection (b) to read as follows:
 5-8           (b)  The comptroller may issue an export identification card
 5-9     to a wholesaler or retailer.  The card must contain the picture of
5-10     the person to whom the card is issued.  The comptroller may issue
5-11     the card only if the wholesaler or retailer shows by clear and
5-12     convincing evidence that the wholesaler or retailer is a citizen
5-13     and resident of a foreign country and that any tangible personal
5-14     property purchased in this state by the wholesaler or retailer is
5-15     for export purposes only and is to be used or consumed outside the
5-16     territorial limits of the United States.  A wholesaler or retailer
5-17     issued an export identification card may use the card only to
5-18     facilitate the preparation of documentation and attached export
5-19     vouchers by a customs broker under Section 151.307(b).  The
5-20     comptroller may require a wholesaler or retailer applying for an
5-21     export identification card to submit any information in any form
5-22     the comptroller determines is necessary and to pay for the cost of
5-23     issuing the card.
5-24           SECTION 5.  Section 151.307, Tax Code, is amended to read as
5-25     follows:
5-26           (a)  Tangible personal property or a service that this state
 6-1     is prohibited from taxing by the law of the United States, the
 6-2     United States Constitution, or the Constitution of Texas is
 6-3     exempted from the taxes imposed by this chapter.
 6-4           (b)  When an exemption is claimed because tangible personal
 6-5     property is exported beyond the territorial limits of the United
 6-6     States, proof of export may be shown only by:
 6-7                 (1)  a bill of lading issued by a licensed and
 6-8     certificated carrier of persons property showing the seller as
 6-9     consignor, the buyer as consignee, and a delivery point outside the
6-10     territorial limits of the United States;
6-11                 (2)  documentation and attached export vouchers:
6-12                       (A)  provided by a United States Customs Broker
6-13     licensed by the comptroller under Section 151.157;
6-14                       (B)  certifying that delivery was made to a point
6-15     beyond the territorial limits of the United States; [and]
6-16                       (C)  to which a stamp issued under Section
6-17     151.158 is affixed in the manner required by that section or
6-18     Section 151.157; and
6-19                       (D)  accompanied by documents from an export
6-20     verification center;
6-21                 (3)  import documents from the country of destination
6-22     showing that the property was imported into a country other than
6-23     the United States;
6-24                 (4)  an original airway, ocean, or railroad bill of
6-25     lading and a forwarder's receipt if an air, ocean, or rail freight
6-26     forwarder takes possession of the property; or
 7-1                 (5)  any other manner provided by the comptroller or an
 7-2     enterprise authorized to make tax free purchases under Section
 7-3     151.156.
 7-4           [(c)  Documentation, including the stamp affixed to the
 7-5     documentation, that is provided by a customs broker licensed by the
 7-6     comptroller under Section 151.157 is presumed valid in the absence
 7-7     of clear and convincing evidence that the tangible personal
 7-8     property covered by the documentation was not exported outside the
 7-9     territorial limits of the United States.]
7-10           [(d)  A retailer who receives documentation under Subsection
7-11     (b)(2) relating to the purchase of tangible personal property
7-12     exported beyond the limits of the United States may not refund the
7-13     tax paid under this chapter on that purchase before:]
7-14                 [(1)  the 24th hour after the hour stated as the time
7-15     of export on the documentation, if the retailer is located in a
7-16     country that borders the United Mexican States; or]
7-17                 [(2)  the seventh day after the day stated as the date
7-18     of export on the documentation, if the retailer is located in a
7-19     county that does not border the United Mexican States.]
7-20           (c) [(e)]  A retailer who makes a refund [before the time
7-21     prescribed by Subsection (d) or makes a refund] that is
7-22     undocumented or improperly documented is liable for the amount of
7-23     the tax refunded with interest.
7-24           (d) [(f)]  In this section:
7-25                 (1)  "Air forwarder" means a licensed International Air
7-26     Transportation Association freight forwarder.
 8-1                 (2)  "Export verification center" has the meaning
 8-2     assigned by Section 151.1575.
 8-3                 (3)  "Export voucher" has the meaning assigned by
 8-4     Section 151.1575.
 8-5                 (4) [(2)]  "Ocean forwarder" means a licensed Federal
 8-6     Maritime Commission freight forwarder.
 8-7           SECTION 6.  Section 151.712, Tax Code, is amended by amending
 8-8     Subsections (a), (b), (f), (g), and (i) to read as follows:
 8-9           (a)  A person may not sign or certify proof of export
8-10     documentation for the purpose of showing an exemption under Section
8-11     151.307(b)(2) unless:
8-12                 (1)  the person is:
8-13                       (A)  a customs broker licensed by the comptroller
8-14     under Section 151.157; or
8-15                       (B)  an authorized employee of a customs broker
8-16     licensed by the comptroller under Section 151.157; and
8-17                 (2)  the tangible personal property the export of which
8-18     the person certifies is exported on the date and to the place shown
8-19     on the export voucher attached to the export documentation signed
8-20     by the person.
8-21           (b)  A person who provides proof of documentation that
8-22     tangible personal property has been exported outside the United
8-23     States or a person who may benefit from the provision of the proof
8-24     of documentation, including a customs broker, authorized employee,
8-25     a person licensed by the comptroller to operate an export
8-26     verification center or an authorized representative of that person
 9-1     [authorized independent contractor], seller of the property or
 9-2     agent or employee of the seller, or a consumer of the property or
 9-3     agent or employee of the consumer, may not sell or buy the proof of
 9-4     documentation, including an export voucher or stamps required for
 9-5     the documentation.  This subsection does not apply to:
 9-6                 (1)  a customs broker who accepts a fee for providing
 9-7     documentation under Section 151.307(b); or
 9-8                 (2)  a person licensed by the comptroller to operate an
 9-9     export verification center that accepts payments and through which
9-10     customs brokers operate.
9-11           (f)  In addition to any monetary penalty under this section,
9-12     the comptroller shall require the person to pay the state any tax
9-13     revenue that is lost by the state due to that person's actions,
9-14     with interest, and may:
9-15                 (1)  suspend or revoke under Section 151.157 the
9-16     license of the customs broker who violates this section; or
9-17                 (2)  suspend or revoke the license of the person
9-18     licensed by the comptroller to operate an export verification
9-19     center under Section 151.1575.
9-20           (g)  A proceeding to impose a civil penalty or suspend or
9-21     revoke a license or designation because of a violation of this
9-22     section is a contested case under Chapter 2001, Government Code.
9-23     Judicial review is by trial de novo.  The district courts of Travis
9-24     County have exclusive original jurisdiction of a suit under this
9-25     section.
9-26           (i)  In this section:
 10-1                (1)  "Authorized[, "customs broker" and "authorized]
 10-2    employee" has [have] the meaning [meanings] assigned by Section
 10-3    151.157.
 10-4                (2)  "Customs broker" has the meaning assigned by
 10-5    Section 151.157.
 10-6                (3)  "Export verification center" has the meaning
 10-7    assigned by Section 151.1575.
 10-8                (4)  "Export voucher" has the meaning assigned by
 10-9    Section 151.1575.
10-10          SECTION 7.  Section 151.713, Tax Code, is amended by amending
10-11    Subsections (a), (g), and (h) to read as follows:
10-12          (a)  A person may not obtain or attempt to obtain export
10-13    documentation or an export voucher for the purpose of showing an
10-14    exemption under Section 151.307(b)(2) from a customs broker, [or]
10-15    an authorized employee of a customs broker, a person licensed by
10-16    the comptroller to operate an export verification center or an
10-17    authorized representative of that person if the person knows, at
10-18    the time the documentation or voucher is sought, that the
10-19    information provided to the broker, [or] employee, a person
10-20    licensed by the comptroller to operate an export verification
10-21    center or an authorized representative of that person is materially
10-22    false, in whole or in part, and the documentation or export voucher
10-23    is sought for the purpose of evading the tax imposed by this
10-24    chapter.
10-25          (g)  In addition to any monetary penalty under this section,
10-26    the comptroller shall require the person to pay to the state any
 11-1    tax revenue lost to this state due to the person's actions.  The
 11-2    penalty imposed by this section is in addition to any other tax,
 11-3    penalty, and interest that may be assessed against a person who
 11-4    violates this section.
 11-5          (h)  In this section:
 11-6                (1)  "Authorized[, "customs broker" and "authorized]
 11-7    employee" has [have] the meaning [meanings] assigned by Section
 11-8    151.157.
 11-9                (2)  "Customer broker" has the meaning assigned by
11-10    Section 151.157.
11-11                (3)  "Export verification center" has the meaning
11-12    assigned by Section 151.1575.
11-13                (4)  "Export voucher" has the meaning assigned by
11-14    Section 151.1575.
11-15          SECTION 8.  This act takes effect January 1, 2002.