1-1 By: Duncan, Zaffirini, Fraser S.B. No. 174
1-2 (In the Senate - Filed December 15, 2000; January 11, 2001,
1-3 read first time and referred to Committee on Finance;
1-4 April 24, 2001, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 11, Nays 0; April 24, 2001,
1-6 sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 174 By: Duncan
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to the exemption from ad valorem taxation of tangible
1-11 personal property held at certain locations only temporarily for
1-12 assembling, manufacturing, processing, or other commercial
1-13 purposes.
1-14 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-15 SECTION 1. Subchapter B, Chapter 11, Tax Code, is amended by
1-16 adding Section 11.252 to read as follows:
1-17 Sec. 11.252. TANGIBLE PERSONAL PROPERTY IN TRANSIT. (a) In
1-18 this section, "goods-in-transit" means property that is exempt from
1-19 taxation under Section 1-n, Article VIII, Texas Constitution.
1-20 (b) A person is entitled to an exemption from taxation of
1-21 the appraised value of that portion of the person's property that
1-22 consists of goods-in-transit.
1-23 (c) The exemption provided by Subsection (b) is subtracted
1-24 from the market value of the property determined under Section
1-25 23.01 or 23.12, as applicable, to determine the taxable value of
1-26 the property.
1-27 (d) Except as provided by Subsections (f) and (g), the chief
1-28 appraiser shall determine the appraised value of goods-in-transit
1-29 under this subsection. The chief appraiser shall determine the
1-30 percentage of the market value of inventory or other property owned
1-31 by the property owner in the preceding calendar year that was
1-32 contributed by goods-in-transit. For the first year to which the
1-33 exemption applies to a taxing unit, the chief appraiser shall
1-34 determine that percentage as if the exemption applied to the
1-35 preceding year. The chief appraiser shall apply that percentage to
1-36 the market value of the property owner's inventory or other
1-37 property for the current year to determine the appraised value of
1-38 goods-in-transit for the current year.
1-39 (e) In determining the market value of goods-in-transit that
1-40 in the preceding year were assembled, manufactured, repaired,
1-41 maintained, processed, or fabricated in this state or used by the
1-42 person who acquired or imported the property in the repair or
1-43 maintenance of aircraft operated by a certificated air carrier, the
1-44 chief appraiser shall exclude the cost of equipment, machinery, or
1-45 materials that entered into and became component parts of the
1-46 goods-in-transit but were not themselves goods-in-transit or that
1-47 were not transported to another location in this state or out of
1-48 this state before the expiration of 270 days after the date they
1-49 were brought into this state by the property owner or acquired by
1-50 the property owner in this state. For component parts held in
1-51 bulk, the chief appraiser may use the average length of time a
1-52 component part was held by the owner of the component parts during
1-53 the preceding year at a location in this state that was not owned
1-54 or under the control of the owner of the component parts in
1-55 determining whether the component parts were transported to another
1-56 location in this state or out of this state before the expiration
1-57 of 270 days.
1-58 (f) If the property owner was not engaged in transporting
1-59 goods-in-transit to other locations in this state or out of this
1-60 state for the entire preceding year, the chief appraiser shall
1-61 calculate the percentage of the market value described in
1-62 Subsection (d) for the portion of the year in which the property
1-63 owner was engaged in transporting goods-in-transit to another
1-64 location in this state or out of this state.
2-1 (g) If the property owner or the chief appraiser
2-2 demonstrates that the method provided by Subsection (d)
2-3 significantly understates or overstates the market value of the
2-4 property qualified for an exemption under Subsection (b) in the
2-5 current year, the chief appraiser shall determine the market value
2-6 of the goods-in-transit to be exempt by determining, according to
2-7 the property owner's records and any other available information,
2-8 the market value of those goods-in-transit owned by the property
2-9 owner on January 1 of the current year, excluding the cost of
2-10 equipment, machinery, or materials that entered into and became
2-11 component parts of the goods-in-transit but were not themselves
2-12 goods-in-transit or that were not transported to another location
2-13 in this state or out of this state before the expiration of 270
2-14 days after the date they were brought into this state by the
2-15 property owner or acquired by the property owner in this state.
2-16 (h) The chief appraiser by written notice delivered to a
2-17 property owner who claims an exemption under this section may
2-18 require the property owner to provide copies of property records to
2-19 determine the amount and value of goods-in-transit and whether the
2-20 location in this state where the goods-in-transit were detained for
2-21 assembling, storing, manufacturing, processing, or fabricating
2-22 purposes was not owned or under the control of the owner of the
2-23 goods-in-transit. If the property owner fails to deliver the
2-24 information requested in the notice before the 31st day after the
2-25 date the notice is delivered to the property owner, the property
2-26 owner forfeits the right to claim or receive the exemption for that
2-27 year.
2-28 (i) For the purposes of Section 1-n, Article VIII, Texas
2-29 Constitution, "petroleum products" means liquid and gaseous
2-30 materials that are the immediate derivatives of the refining of oil
2-31 or natural gas.
2-32 (j) Property that meets the requirements of Section 1-n(a),
2-33 Article VIII, Texas Constitution, constitutes goods-in-transit
2-34 regardless of whether the person who owns the property on January 1
2-35 is the person who transports it to another location in this state
2-36 or out of this state.
2-37 (k) The governing body of a taxing unit, in the manner
2-38 required for official action by the governing body, may provide for
2-39 the taxation of tangible personal property exempt under Subsection
2-40 (b) and not exempt under other law. Before acting to tax the
2-41 exempt property, the governing body of the taxing unit must conduct
2-42 a public hearing as required by Section 1-n(d), Article VIII, Texas
2-43 Constitution. If the governing body of a taxing unit provides for
2-44 the taxation of the personal property as provided by this
2-45 subsection, the exemption prescribed by Subsection (b) does not
2-46 apply to that unit.
2-47 (l) This section expires August 31, 2003.
2-48 SECTION 2. Subsection (a), Section 11.437, Tax Code, is
2-49 amended to read as follows:
2-50 (a) A person who operates a warehouse used primarily for the
2-51 storage of cotton for transportation to another location in this
2-52 state or outside of this state may apply for an exemption under
2-53 Section 11.251 or 11.252 for cotton stored in the warehouse on
2-54 behalf of all the owners of the cotton. An exemption granted under
2-55 this section applies to all cotton stored in the warehouse that is
2-56 eligible to be exempt under Section 11.251 or 11.252. Cotton that
2-57 is stored in a warehouse covered by an exemption granted under this
2-58 section and that is transported to another location in this state
2-59 or outside of this state is presumed to have been transported to
2-60 another location in this state or outside of this state within the
2-61 time permitted by Section 1-j or 1-n, Article VIII, [Section 1-j,
2-62 of the] Texas Constitution, for cotton to qualify for an exemption
2-63 under that section.
2-64 SECTION 3. Subsection (e), Section 22.01, Tax Code, is
2-65 amended to read as follows:
2-66 (e) Notwithstanding Subsections (a) and (b), a person is not
2-67 required to render for taxation cotton that:
2-68 (1) the person manages and controls as a fiduciary;
2-69 (2) is stored in a warehouse for which an exemption
3-1 for cotton has been granted under Section 11.437 [11.436]; and
3-2 (3) the person intends to transport to another
3-3 location in this state or outside of this [the] state within the
3-4 time permitted by Section 1-j or 1-n, Article VIII, [Section 1-j,
3-5 of the] Texas Constitution, for cotton to qualify for an exemption
3-6 under that section.
3-7 SECTION 4. This Act takes effect January 1, 2002, and
3-8 applies only to taxes imposed for a tax year beginning on or after
3-9 that date, but only if the constitutional amendment proposed by the
3-10 77th Legislature, Regular Session, 2001, to exempt from ad valorem
3-11 taxation tangible personal property held at certain locations only
3-12 temporarily for assembling, manufacturing, processing, or other
3-13 commercial purposes, takes effect. If that amendment is not
3-14 approved by the voters, this Act has no effect.
3-15 * * * * *