By:  Brown                                            S.B. No. 1114
         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 an exemption from the sales and use tax for taxable
 1-3     items used in the performance of a space flight contract.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Subchapter H, Chapter 151, Tax Code, is amended
 1-6     by adding Section 151.355 to read as follows:
 1-7           Sec. 151.355.  TAXABLE ITEMS USED IN PERFORMANCE OF SPACE
 1-8     FLIGHT CONTRACT.  (a)  In this section:
 1-9                 (1)  "Space flight contract" means a contract with the
1-10     National Aeronautics and Space Administration for the use or
1-11     provision of taxable items related to the development, construction
1-12     or fabrication, testing, administrative support, research and
1-13     development, vehicle assembly, processing, remodeling, repair,
1-14     operation, or maintenance of space vehicles.
1-15                 (2)  "Space vehicles" means tangible personal property
1-16     that:
1-17                       (A)  has space flight capability, including a
1-18     space shuttle, orbital space facility, space propulsion system,
1-19     satellite, or space station of any kind;
1-20                       (B)  is placed on or used aboard property
1-21     described by Subdivision (A); or
1-22                       (C)  is an integral part of and is used in
1-23     support of a space flight, including tangible personal property
 2-1     used in training, launch, ground support, landing, and recovery
 2-2     activities.
 2-3           (b)  The sale, lease, rental, or storage, use or consumption
 2-4     of a taxable item that is used or consumed by a person in the
 2-5     performance of a space flight contract is exempt from the taxes
 2-6     imposed by this chapter if the item is included within the
 2-7     definition of an allowable direct or indirect item of cost under 48
 2-8     C.F.R. Section 9904.418-30, 48 C.F.R. Section 52.216-7, 48 C.F.R.
 2-9     Subpart 31.2, or similar federal regulations, regardless of whether
2-10     the contract is a cost-reimbursement contract.
2-11           (c)  This section does not apply to a part of direct or
2-12     indirect costs allocated to a contract that is not a space flight
2-13     contract.
2-14           SECTION 2.  (a)  This Act takes effect July 1, 2001, if it
2-15     receives a vote of two-thirds of all the members elected to each
2-16     house, as provided by Section 39, Article III, Texas Constitution.
2-17     If this Act does not receive the vote necessary for effect on that
2-18     date, this Act takes effect October 1, 2001.
2-19           (b)  The change in law made by this Act does not affect taxes
2-20     imposed before the effective date of this Act, and the former law
2-21     is continued in effect for purposes of the liability for and
2-22     collection of those taxes.