By: Carona S.B. No. 1550
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 exempting certain machinery and equipment used to
1-3 provide broadband services.
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 151.3235 to read as follows:
1-7 Sec. 151.3235. CERTAIN MACHINERY AND EQUIPMENT USED IN
1-8 PROVIDING BROADBAND SERVICE. (a) In this section:
1-9 (1) "Broadband service" means the transport of voice,
1-10 data, or video signals at the minimum attainable downstream rate of
1-11 at least 128 kilobits per second.
1-12 (2) "Broadband service provider" means a
1-13 telecommunications or cable television service provider that
1-14 provides broadband service for a fee, regardless of the medium
1-15 used. For the purposes of this section, the term does not include
1-16 a person limited to selling or providing broadband services to
1-17 single structures such as hotels, motels, office or residential
1-18 buildings, or owners or lessees of developments that contract and
1-19 pay for broadband services for resale to guests or tenants.
1-20 (3) "Qualifying equipment" includes machinery,
1-21 equipment, cables, wires, operating software, replacement parts,
1-22 and accessories that are used to provide broadband service. The
1-23 term includes upgrades to a cable television system to allow the
2-1 system to provide broadband service.
2-2 (4) "Subscriber" means a person who purchases
2-3 broadband service.
2-4 (5) "Downstream rate" means the rate that a subscriber
2-5 receives voice, data or video signals from a broadband service
2-6 provider, based on the specifications of the manufacturer of the
2-7 relevant qualifying equipment. Downstream rate does not mean the
2-8 actual rate at which a subscriber receives voice, data or video
2-9 signals from a broadband service provider. Downstream rate does
2-10 not measure the speed at which signals are transmitted from the
2-11 subscriber.
2-12 (6) "Strategic Investment Area" has the meaning
2-13 assigned by Section 171.721(2) as determined for the calendar year
2-14 2000.
2-15 (b) Qualifying equipment placed in service in a strategic
2-16 investment area and used to provide broadband service is exempt
2-17 from the taxes imposed by this chapter if the equipment is sold,
2-18 leased, or rented to, or stored, used, or consumed by a broadband
2-19 service provider or a subsidiary, affiliate or partner of such
2-20 provider in the conduct of providing broadband service. Qualifying
2-21 equipment which is not placed in service in a strategic investment
2-22 area and used to provide broadband service is exempt from the taxes
2-23 imposed by this chapter as prescribed in subsection (c) of this
2-24 section if the equipment is sold, leased, or rented to, or stored,
2-25 used, or consumed by a broadband service provider or a subsidiary,
2-26 affiliate or partner of such provider in the conduct of providing
3-1 broadband service. Qualifying equipment which is not placed in
3-2 service in a strategic investment area and used to provide
3-3 broadband service is subject to the taxes imposed by a city under
3-4 the Local Sales and Use Tax Act and a county under the County Sales
3-5 and Use Tax Act.
3-6 (c) The exemption as provided in subsection (b)(2) of this
3-7 section shall be determined as follows:
3-8 (1) for property purchased during 2003, the purchaser
3-9 is entitled to a refund of 25 percent of the tax paid to this
3-10 state;
3-11 (2) for property purchased during 2004, the purchaser
3-12 is entitled to a refund of 50 percent of the tax paid to this
3-13 state;
3-14 (3) for property purchased during 2005, the purchaser
3-15 is entitled to a refund of 75 percent of the tax paid to this
3-16 state; and
3-17 (4) property purchased on or after January 1, 2006, is
3-18 exempted from the taxes imposed by this chapter.
3-19 (d) To receive a refund under subsection (c) of this
3-20 section, the taxpayer must apply to the Comptroller for the refund
3-21 during the calendar year immediately following the year in which
3-22 the taxes were paid. The taxpayer must provide the Comptroller
3-23 with any information the Comptroller requires to determine the
3-24 validity of a refund claim.
3-25 (f) A refund must be paid after the Comptroller determines
3-26 that the person is eligible.
4-1 SECTION 2. Subchapter C, Chapter 321, Tax Code, Section
4-2 321.208 is amended to read as follows:
4-3 Sec. 321.208. State Exemptions Applicable. The exemptions
4-4 provided by Subchapter H, Chapter 151, apply to the taxes
4-5 authorized by this chapter, except as provided by Section
4-6 151.317(b) and Section 151.3235(b)(2).
4-7 SECTION 3. Subchapter C, Chapter 323, Tax Code, Section
4-8 323.207 is amended to read as follows:
4-9 Sec. 323.207. State Exemptions Applicable. The exemptions
4-10 provided by Subchapter H, Chapter 151, apply to the taxes
4-11 authorized by this chapter, except as provided by Section
4-12 151.317(b) and Section 151.3235(b)(2).
4-13 SECTION 4. (a) This act takes effect immediately if it
4-14 receives a vote of two-thirds of all members elected to each house,
4-15 as provided by Section 39, Article III, Texas Constitution. If
4-16 this Act does not receive the vote necessary for immediate effect,
4-17 this Act takes effect September 1, 2001.
4-18 (b) The change in the law made by this Act does not affect
4-19 taxes imposed before the effective date of this Act, and the law in
4-20 effect before the effective date of this Act is continued in effect
4-21 for purposes of the liability for and collection of those taxes.