1-1     By:  Brown                                            S.B. No. 1114
 1-2           (In the Senate - Filed March 6, 2001; March 7, 2001, read
 1-3     first time and referred to Committee on Finance; April 24, 2001,
 1-4     reported adversely, with favorable Committee Substitute by the
 1-5     following vote:  Yeas 12, Nays 0; April 24, 2001, sent to printer.)
 1-6     COMMITTEE SUBSTITUTE FOR S.B. No. 1114                 By:  Jackson
 1-7                            A BILL TO BE ENTITLED
 1-8                                   AN ACT
 1-9     relating to an exemption from the sales and use tax for taxable
1-10     items used in the performance of a space flight contract.
1-11           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12           SECTION 1.  Subchapter H, Chapter 151, Tax Code, is amended
1-13     by adding Section 151.355 to read as follows:
1-14           Sec. 151.355.  TAXABLE ITEMS USED IN PERFORMANCE OF SPACE
1-15     FLIGHT CONTRACT.  (a)  In this section:
1-16                 (1)  "Space flight" means a flight designed for
1-17     suborbital, orbital, or interplanetary travel capable of placing
1-18     humans at a minimum altitude of 50 miles above mean sea level.  The
1-19     term does not include flight by an aircraft as defined by Section
1-20     151.328(c).
1-21                 (2)  "Space flight contract" means a contract with the
1-22     National Aeronautics and  Space Administration for the use or
1-23     provision of taxable items related to the development, construction
1-24     or fabrication, testing, administrative support, research and
1-25     development, vehicle assembly, processing, remodeling, repair,
1-26     operation, or maintenance of space vehicles.
1-27                 (3)  "Space vehicles" means tangible personal property
1-28     that:
1-29                       (A)  has space flight capability, including a
1-30     space shuttle, orbital space facility, space propulsion system,
1-31     satellite, or space station of any kind;
1-32                       (B)  is placed on or used aboard property
1-33     described by Paragraph (A); or
1-34                       (C)  is an integral part of and is used in
1-35     support of a space flight, including tangible personal property
1-36     used in training, launch, ground support, landing, and recovery
1-37     activities.
1-38           (b)  The sale, lease, rental, storage, use, or consumption of
1-39     a taxable item that is used or consumed by a person in the
1-40     performance of a space flight contract is exempt from the taxes
1-41     imposed by this chapter if the item is included as an  allowable
1-42     direct or indirect item of cost under 48 C.F.R. Section
1-43     9904.418-30, 48 C.F.R. Section 52.216-7, 48 C.F.R. Subpart 31.2, or
1-44     similar federal regulations, regardless of whether the contract is
1-45     a cost-reimbursement contract.
1-46           (c)  This section does not apply to a part of direct or
1-47     indirect costs allocated to a contract that is not a space flight
1-48     contract.
1-49           SECTION 2.  (a)  This Act takes effect September 1, 2003, if
1-50     it receives a majority vote of the members elected to each house
1-51     during the 78th Legislature, Regular Session, 2003.
1-52           (b)  The change in law made by this Act does not affect taxes
1-53     imposed before the effective date of this Act, and the former law
1-54     is continued in effect for purposes of the liability for and
1-55     collection of those taxes.
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