By Ellis S.B. No. 1263
77R7053 DAK-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to state taxes.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 155.001, Tax Code, is amended to read as
1-5 follows:
1-6 Sec. 155.001. DEFINITIONS. In this chapter:
1-7 (1) "Bonded agent" means a person in this state who is
1-8 an agent of a person outside this state and receives cigars and
1-9 tobacco products in interstate commerce and stores the cigars and
1-10 tobacco products for distribution or delivery to distributors under
1-11 orders from the person outside this state.
1-12 (2) "Chewing tobacco" means any leaf tobacco that is
1-13 intended to be placed in the mouth, including Cavendish, Twist,
1-14 plug, and scrap.
1-15 (3) "Cigar" means a roll of fermented tobacco that is
1-16 wrapped in tobacco and the main stream of smoke from which produces
1-17 an alkaline reaction to litmus paper.
1-18 (4) [(3)] "Common carrier" means a motor carrier
1-19 registered under Chapter 643, Transportation Code, or a motor
1-20 carrier operating under a certificate issued by the Interstate
1-21 Commerce Commission or a successor agency to the Interstate
1-22 Commerce Commission.
1-23 (5) [(4)] "Consumer" means a person who possesses
1-24 tobacco products for personal consumption.
2-1 (6) [(5)] "Distributor" means a person who:
2-2 (A) receives tobacco products for the purpose of
2-3 making a first sale in this state from a manufacturer outside the
2-4 state or within the state or otherwise brings or causes to be
2-5 brought into this state tobacco products for sale, use, or
2-6 consumption;
2-7 (B) manufactures or produces tobacco products;
2-8 or
2-9 (C) is an importer or import broker.
2-10 (7) "Dry snuff" means any snuff commonly known within
2-11 the tobacco industry as dry snuff.
2-12 (8) [(6)] "Export warehouse" means a person in this
2-13 state who receives tobacco products from manufacturers and stores
2-14 the tobacco products for the purpose of making sales to authorized
2-15 persons for resale, use, or consumption outside the United States.
2-16 (9) [(7)] "First sale" means, except as otherwise
2-17 provided by this chapter:
2-18 (A) the first transfer of possession in
2-19 connection with a purchase, sale, or any exchange for value of
2-20 tobacco products in intrastate commerce;
2-21 (B) the first use or consumption of tobacco
2-22 products in this state; or
2-23 (C) the loss of tobacco products in this state
2-24 whether through negligence, theft, or other unaccountable loss.
2-25 (10) [(8)] "Importer" or "import broker" means a
2-26 person who ships, transports, or imports into this state tobacco
2-27 products manufactured or produced outside the United States for the
3-1 purpose of making a first sale in this state.
3-2 (11) [(9)] "Manufacturer" means a person who
3-3 manufactures or produces tobacco products and sells tobacco
3-4 products to a distributor.
3-5 (12) [(10)] "Manufacturer's representative" means a
3-6 person employed by a manufacturer to sell or distribute the
3-7 manufacturer's tobacco products.
3-8 (13) "Moist snuff" means any snuff commonly known
3-9 within the tobacco industry as moist snuff.
3-10 (14) [(11)] "Permit holder" means a bonded agent,
3-11 distributor, wholesaler, or retailer required to obtain a permit
3-12 under Section 155.041.
3-13 (15) "Pipe tobacco" means any tobacco that, because of
3-14 its appearance, type, packaging, or labeling, is suitable for use
3-15 and likely to be offered to or purchased by a consumer as tobacco
3-16 to be smoked in a pipe.
3-17 (16) [(12)] "Place of business" means:
3-18 (A) a commercial business location where tobacco
3-19 products are sold;
3-20 (B) a commercial business location where tobacco
3-21 products are kept for sale or consumption or otherwise stored; or
3-22 (C) a vehicle from which tobacco products are
3-23 sold.
3-24 (17) [(13)] "Retailer" means a person who engages in
3-25 the practice of selling tobacco products to consumers and includes
3-26 the owner of a coin-operated vending machine.
3-27 (18) "Roll-your-own tobacco" means any tobacco that,
4-1 because of its appearance, type, packaging, or labeling, is
4-2 suitable for use and likely to be offered to or purchased by a
4-3 consumer as tobacco for making cigarettes.
4-4 (19) "Snuff" means any finely cut, ground, or powdered
4-5 tobacco that is intended to be placed in the mouth.
4-6 (20) [(14)] "Tobacco product" means:
4-7 (A) a cigar;
4-8 (B) smoking tobacco, including pipe tobacco,
4-9 roll-your-own tobacco, granulated, plug-cut, crimp-cut,
4-10 ready-rubbed, and any form of tobacco suitable for smoking in a
4-11 pipe or as a cigarette;
4-12 (C) chewing tobacco[, including Cavendish,
4-13 Twist, plug, scrap, and any kind of tobacco suitable for chewing];
4-14 (D) snuff or other preparations of pulverized
4-15 tobacco; or
4-16 (E) an article or product that is made of
4-17 tobacco or a tobacco substitute and that is not a cigarette.
4-18 (21) [(15)] "Wholesaler" means a person, including a
4-19 manufacturer's representative, who sells or distributes tobacco
4-20 products in this state for resale but who is not a distributor.
4-21 SECTION 2. Section 155.0211, Tax Code, is amended by amending
4-22 Subsection (b) and adding Subsections (c), (d), and (e) to read as
4-23 follows:
4-24 (b) The tax rate for tobacco products other than cigars,
4-25 moist snuff, dry snuff, chewing tobacco, pipe tobacco, and
4-26 roll-your-own tobacco is 35.213 percent of the manufacturer's list
4-27 price, exclusive of any trade discount, special discount, or deal.
5-1 (c) The tax rate for each can or package of the following
5-2 tobacco products is:
5-3 (1) moist snuff, 58 cents per ounce and a
5-4 proportionate tax rate on all fractional parts of an ounce;
5-5 (2) dry snuff, 33 cents per ounce and a proportionate
5-6 tax rate on all fractional parts of an ounce;
5-7 (3) chewing tobacco, 16 cents per ounce and a
5-8 proportionate tax rate on all fractional parts of an ounce;
5-9 (4) pipe tobacco, 42 cents per ounce and a
5-10 proportionate tax rate on all fractional parts of an ounce; and
5-11 (5) roll-your-own tobacco, 39 cents per ounce and a
5-12 proportionate tax on all fractional parts of an ounce.
5-13 (d) For purposes of Subsection (c), the tax on moist snuff,
5-14 dry snuff, chewing tobacco, pipe tobacco, and roll-your-own tobacco
5-15 shall be computed based on the net weight as listed by the
5-16 manufacturer. The total tax to be imposed on a multi-unit package
5-17 is the sum of the taxes imposed by Subsection (c) on each
5-18 individual package intended for sale or distribution at retail.
5-19 (e) An ambiguity regarding the proper classification of a
5-20 tobacco product for purposes of taxation under this section shall
5-21 be resolved by reference to the classification of the tobacco
5-22 product for federal tobacco tax purposes.
5-23 SECTION 3. Section 155.101, Tax Code, is amended to read as
5-24 follows:
5-25 Sec. 155.101. RECORD OF PURCHASE OR RECEIPT. Each
5-26 distributor, wholesaler, bonded agent, and export warehouse shall
5-27 keep records at each place of business of all tobacco products
6-1 purchased or received. Each retailer shall keep records at a
6-2 single location, which the retailer shall designate as its
6-3 principal place of business in the state, of all tobacco products
6-4 purchased and received. These records must include the following,
6-5 except that Subdivision (7) applies to distributors only and
6-6 Subdivisions (8) and (9) apply to the purchase or receipt of moist
6-7 snuff, dry snuff, chewing tobacco, pipe tobacco, and roll-your-own
6-8 tobacco only:
6-9 (1) the name and address of the shipper or carrier and
6-10 the mode of transportation;
6-11 (2) all shipping records or copies of records,
6-12 including invoices, bills of lading, waybills, freight bills, and
6-13 express receipts;
6-14 (3) the date and the name of the place of origin of
6-15 the tobacco product shipment;
6-16 (4) the date and the name of the place of arrival of
6-17 the tobacco product shipment;
6-18 (5) a statement of the number, kind, and price paid
6-19 for the tobacco products;
6-20 (6) the name, address, permit number, and tax
6-21 identification number of the seller;
6-22 (7) the manufacturer's list price for the tobacco
6-23 products; [and]
6-24 (8) the net weight as listed by the manufacturer for
6-25 each unit;
6-26 (9) the aggregate net weight of moist snuff, dry
6-27 snuff, chewing tobacco, pipe tobacco, and roll-your-own tobacco,
7-1 respectively, listed on each invoice; and
7-2 (10) any other information required by rules of the
7-3 comptroller.
7-4 SECTION 4. Section 155.102, Tax Code, is amended by adding
7-5 Subsection (c) to read as follows:
7-6 (c) In addition to the information required under Subsection
7-7 (b), the records for each sale, distribution, exchange, or use of
7-8 moist snuff, dry snuff, chewing tobacco, pipe tobacco, and
7-9 roll-your-own tobacco must show:
7-10 (1) the net weight as listed by the manufacturer for
7-11 each unit; and
7-12 (2) the aggregate net weight of moist snuff, dry
7-13 snuff, chewing tobacco, pipe tobacco, and roll-your-own tobacco,
7-14 respectively, listed on each invoice.
7-15 SECTION 5. Section 155.103, Tax Code, is amended by amending
7-16 Subsection (b) and adding Subsection (c) to read as follows:
7-17 (b) In addition to the information required under Subsection
7-18 (a), the records for each sale of moist snuff, dry snuff, chewing
7-19 tobacco, pipe tobacco, and roll-your-own tobacco must show:
7-20 (1) the net weight as listed by the manufacturer for
7-21 each unit; and
7-22 (2) the aggregate net weight of moist snuff, dry
7-23 snuff, chewing tobacco, pipe tobacco, and roll-your-own tobacco,
7-24 respectively, listed on each invoice.
7-25 (c) A manufacturer who sells tobacco products to a permit
7-26 holder in this state shall file with the comptroller, on or before
7-27 the last day of each month, a report showing the information
8-1 required to be listed by Subsections [in Subsection] (a) and (b),
8-2 if applicable, for the previous month.
8-3 SECTION 6. Section 155.111, Tax Code, is amended by amending
8-4 Subsection (c) and adding Subsection (d) to read as follows:
8-5 (c) In addition to the information required under Subsection
8-6 (b), for moist snuff, dry snuff, chewing tobacco, pipe tobacco, and
8-7 roll-your-own tobacco purchased, received, or acquired, the report
8-8 must show:
8-9 (1) the net weight as listed by the manufacturer for
8-10 each unit; and
8-11 (2) the aggregate net weight of moist snuff, dry
8-12 snuff, chewing tobacco, pipe tobacco, and roll-your-own tobacco,
8-13 respectively, listed on each invoice.
8-14 (d) The comptroller shall prescribe the form and content of
8-15 the report.
8-16 SECTION 7. Section 171.052, Tax Code, is amended to read as
8-17 follows:
8-18 Sec. 171.052. CERTAIN CORPORATIONS. An [A corporation that
8-19 is an] insurance organization, title insurance company, or title
8-20 insurance agent authorized to engage in insurance business in this
8-21 state [company, surety, guaranty, or fidelity company] now required
8-22 to pay [or who pays] an annual tax under Chapter 4 or 9, Insurance
8-23 Code, measured by its [their] gross premium receipts is exempted
8-24 from the franchise tax. An insurance organization performing
8-25 management or accounting activities in this state on behalf of a
8-26 nonadmitted captive insurance company under Chapter 101, Insurance
8-27 Code, that is required to pay a gross premium receipts tax during a
9-1 tax year is exempted from the franchise tax for that same tax year.
9-2 SECTION 8. Section 171.110(e), Tax Code, is amended to read
9-3 as follows:
9-4 (e) For purposes of this section, a business loss is any
9-5 negative amount after apportionment and allocation. The business
9-6 loss shall be carried forward to the year succeeding the loss year
9-7 as a deduction to net taxable earned surplus, then successively to
9-8 the succeeding four taxable years after the loss year or until the
9-9 loss is exhausted, whichever occurs first, but for not more than
9-10 five taxable years after the loss year. Notwithstanding the
9-11 preceding sentence, a business loss from a tax year that ends
9-12 before January 1, 1991, may not be used to reduce net taxable
9-13 earned surplus. A business loss can be carried forward only by the
9-14 corporation that incurred the loss and cannot be transferred to or
9-15 claimed by any other entity, including the survivor of a merger if
9-16 the loss was incurred by the corporation that did not survive the
9-17 merger.
9-18 SECTION 9. Article 4.01, Insurance Code, is amended to read
9-19 as follows:
9-20 Art. 4.01. TAX OTHER THAN PREMIUM TAX. All insurance
9-21 companies incorporated under the laws of this state shall hereafter
9-22 be required to render for county and municipal taxation all of
9-23 their real estate and all furniture, fixtures, automobiles,
9-24 equipment, and data processing systems, as other such real estate
9-25 and tangible personal property is rendered in the city and county
9-26 where such property is located.
9-27 All other personal property owned by such insurance
10-1 companies, except fire insurance companies and casualty insurance
10-2 companies, shall be valued as other such property is valued for
10-3 assessment by the taxing authority in the following manner:
10-4 From the total valuation of the entire assets of each
10-5 insurance company shall be deducted:
10-6 (a) All the debts of every kind and character owed by
10-7 such insurance company;
10-8 (b) All intangible personal property owned by such
10-9 insurance company;
10-10 (c) All reserves, being the amount of the debts of
10-11 such insurance company by reason of its outstanding policies in
10-12 gross.
10-13 From the remainder shall be deducted the assessed value of
10-14 all real estate and the assessed value of all furniture, fixtures,
10-15 automobiles, equipment, and data-processing systems, rendered for
10-16 taxation, and the remainder, if any there be, shall be taxable as
10-17 personal property by the city and county where the principal
10-18 business office of any such company is fixed by its charter.
10-19 All other personal property of fire insurance companies and
10-20 casualty insurance companies incorporated under the laws of this
10-21 state shall be valued as other such property is valued for
10-22 assessment by the taxing authority in the following manner:
10-23 From the total valuation of the entire assets of each
10-24 insurance company shall be deducted:
10-25 (a) All the debts of every kind and character owed by
10-26 such insurance company;
10-27 (b) All intangible personal property owned by such
11-1 insurance company;
11-2 (c) All reserves, which reserves shall be computed in
11-3 such manner as may be prescribed by the rules and regulations of
11-4 the State Board of Insurance, for unearned premiums and for all
11-5 bona fide outstanding losses.
11-6 From the remainder shall be deducted the assessed value of
11-7 all real estate and the assessed value of all furniture, fixtures,
11-8 automobiles, equipment, and data-processing systems, rendered for
11-9 taxation, and the remainder, if any there be, shall be taxable as
11-10 personal property by the city and county where the principal
11-11 business office of any company is fixed by its charter.
11-12 [Domestic insurance companies shall not be required to pay
11-13 any occupation or gross receipts tax except as otherwise provided
11-14 by this code.]
11-15 SECTION 10. Article 4.06, Insurance Code, is amended to read
11-16 as follows:
11-17 Art. 4.06. TAXES IMPOSED EXCLUSIVE. (a) This chapter applies
11-18 to insurance organizations authorized to do insurance business in
11-19 this state, other than eligible surplus lines insurers.
11-20 (b) An insurance organization subject to a tax levied by
11-21 this chapter may not be required to pay any additional tax in
11-22 proportion to its gross premium receipts levied by this state or
11-23 any county or municipality, except as otherwise provided by this
11-24 code or the Labor Code. This exemption may not be construed to
11-25 limit the applicability of other taxes, fees, and assessments that
11-26 are imposed by other chapters of this code. This exemption may not
11-27 be construed to prohibit the levy and collection of state, county,
12-1 and municipal taxes on the real and personal property of insurance
12-2 organizations, or the levy and collection of state, county, and
12-3 municipal taxes that are imposed by other laws of this state,
12-4 unless a specific exemption for insurance organizations is provided
12-5 in those laws. [No occupation tax other than herein imposed shall
12-6 be levied by the State or any county, city or town, upon any
12-7 insurance organization herein subject to the occupation tax in
12-8 proportion to its gross premium receipts, or its agents. The
12-9 occupation tax imposed by this chapter shall be the sole occupation
12-10 tax which any company doing business in this State under the
12-11 provisions of this chapter shall be required to pay.]
12-12 SECTION 11. Section 8, Article 9.59, Insurance Code, is
12-13 amended to read as follows:
12-14 Sec. 8. NO OTHER TAXES TO BE LEVIED OR COLLECTED;
12-15 EXCEPTIONS. (a) Title insurance companies and title insurance
12-16 agents subject to the tax levied by this article may not be
12-17 required to pay any additional tax in proportion to their gross
12-18 premium receipts levied by this state or any county or
12-19 municipality, except as otherwise provided by this code and the
12-20 Labor Code. This exemption may not be construed to limit the
12-21 applicability of other taxes, fees, and assessments that are
12-22 imposed by other chapters of this code. This exemption may not be
12-23 construed to prohibit the levy and collection of state, county, and
12-24 municipal taxes on the real and personal property of title
12-25 insurance companies and title insurance agents, or the levy and
12-26 collection of state, county, and municipal taxes that are imposed
12-27 by other laws of this state, unless a specific exemption for title
13-1 insurance companies and title insurance agents is provided in those
13-2 laws. [An occupational tax may not be levied on title insurance
13-3 companies or title insurance agents who are subject to this premium
13-4 tax by any county, city, or town. The taxes in this article
13-5 constitute all taxes collectible under the laws of this state
13-6 against any title insurance company or title insurance agent,
13-7 except maintenance taxes specifically levied under the laws of this
13-8 state and assessed by the State Board of Insurance to support the
13-9 various activities of the divisions of the State Board of
13-10 Insurance.]
13-11 (b) [No other tax may be levied or collected from any title
13-12 insurance company or title insurance agent by the state or any
13-13 county or city, but this law may not be construed to prohibit the
13-14 levy and collection of state, county, and municipal taxes on the
13-15 real and personal property of the title insurance company or title
13-16 insurance agent.] The premium tax is levied on all amounts defined
13-17 to be premium in this Chapter, whether paid to the title insurance
13-18 company or retained by the title insurance agent, such tax being in
13-19 lieu of the tax on the premium retained by the agent. The State of
13-20 Texas facilitates the collection of the premium tax on the premium
13-21 retained by the agent by setting the division of the premium
13-22 between insurer and agent so that the insurer receives the premium
13-23 tax due on the agent's portion of the premium and remits it to the
13-24 State.
13-25 SECTION 12. The following provisions of the Insurance Code
13-26 are repealed:
13-27 (1) Section 14, Article 4.10; and
14-1 (2) Section 9, Article 4.11.
14-2 SECTION 13. Section 171.110(e), Tax Code, as amended by
14-3 Section 8 of this Act, is a clarification of existing law and not a
14-4 substantive change in law.
14-5 SECTION 14. (a) This Act takes effect September 1, 2001.
14-6 (b) The change in law made by this Act does not affect taxes
14-7 imposed before the effective date of this Act, and the law in
14-8 effect before the effective date of this Act is continued in effect
14-9 for purposes of the liability for and collection of those taxes.