By George                                             H.B. No. 3573
         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 exempting certain purchases and leases of machinery and
 1-3     equipment used by certain companies for research and development
 1-4     from sales and use taxes.
 1-5           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-6           SECTION 1. Subchapter H, Chapter 151, Tax Code, is amended by
 1-7     adding Section 151.3181 to read as follows:
 1-8           Sec. 151.3181.  EQUIPMENT USED IN RESEARCH OR DEVELOPMENT.
 1-9     (a)  There are exempted from the taxes imposed by this chapter the
1-10     purchase or lease of machinery, equipment, or replacement parts
1-11     that are used directly in the research or development of
1-12     biotechnology or nanotechnology inventions, products, or processes.
1-13           (b)  The exemption does not include:
1-14                 (1)  office equipment or supplies; or
1-15                 (2)  equipment or supplies used in sales or
1-16     distribution activities or in transportation activities.
1-17           (c)  In this section, "manufacturing" has the meaning
1-18     assigned by Section 151.318.
1-19           SECTION 2. (a)  This Act takes effect October 1, 2001.
1-20           (b)  The change in law made by this Act does not affect taxes
1-21     imposed before the effective date of this Act, and the law in
1-22     effect before the effective date of this Act is continued in effect
1-23     for purposes of the liability for and collection of those taxes.