By Bernsen                                             S.B. No. 529
         77R3234 CBH-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to an exemption from the sales and use tax for tangible
 1-3     personal property rented in connection with the improvement of
 1-4     realty of a navigation district or port authority.
 1-5           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-6           SECTION 1. Section 151.311, Tax Code, is amended by amending
 1-7     Subsections (c) and (d) and adding Subsection (e) to read as
 1-8     follows:
 1-9           (c)  The rental of tangible personal property, including
1-10     machinery and equipment and its accessories and repair and
1-11     replacement parts,  for use in the performance of a contract for an
1-12     improvement of realty of a navigation district or port authority
1-13     created under Section 52, Article III, or Section 59, Article XVI,
1-14     Texas Constitution, is exempt if the property is:
1-15                 (1)  necessary and essential to perform the contract;
1-16                 (2)  rented for the sole purpose of being used to
1-17     perform the contract; and
1-18                 (3)  used only at the job site.
1-19           (d)  The purchase of a taxable service for use in the
1-20     performance of a contract for an improvement to realty that is
1-21     performed for an organization exempted under Section 151.309 or
1-22     151.310 [of this code] is exempt if the service is performed at the
1-23     job site and if:
1-24                 (1)  the contract expressly requires the specific
 2-1     service to be provided or purchased by the person performing the
 2-2     contract; or
 2-3                 (2)  the service is integral to the performance of the
 2-4     contract.
 2-5           (e) [(d)]  For purposes of Subsection (b) [this section],
 2-6     tangible personal property is completely consumed if after being
 2-7     used once for its intended purpose it is used up or destroyed.
 2-8     Tangible personal property that is rented or leased for use in the
 2-9     performance of the contract cannot be completely consumed for
2-10     purposes of Subsection (b) [this section].
2-11           SECTION 2. (a)  This Act takes effect July 1, 2001, if it
2-12     receives a vote of two-thirds of all the members elected to each
2-13     house, as provided by Section 39, Article III, Texas Constitution.
2-14     If this Act does not receive the vote necessary for effect on that
2-15     date, this Act takes effect October 1, 2001.
2-16           (b)  The change in law made by this Act does not affect taxes
2-17     imposed before the effective date of this Act, and the former law
2-18     is continued in effect for purposes of the liability for and
2-19     collection of those taxes.