LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
February 27, 2001
TO: Honorable Rene Oliveira, Chair, House Committee on Ways &
Means
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB1098 by Bonnen (Relating to the collection of taxes on
printed materials distributed by mail.), As Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB1098, As Introduced: a negative impact of $(7,321,000) through *
* the biennium ending August 31, 2003, if the effective date of the *
* bill is July 1, 2001; and a negative impact of $(6,766,000) *
* through the biennium ending August 31, 2003, if the effective date *
* of the bill is September 1, 2001. *
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The following table assumes an effective date of July 1, 2001.
All Funds, Five-Year Impact:
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*Fiscal Probable Probable Probable Probable *
* Year Revenue Revenue Revenue Revenue *
* Gain/(Loss) to Gain/(Loss) to Gain/(Loss) to Gain/(Loss) to *
* General Revenue Cities Transit Counties/SPDs *
* Fund Authorities *
* 0001 *
* 2001 $(270,000) $0 $0 $0 *
* 2002 (3,420,000) (617,000) (238,000) (73,000) *
* 2003 (3,631,000) (656,000) (253,000) (78,000) *
* 2004 (3,885,000) (702,000) (271,000) (83,000) *
* 2005 (4,158,000) (751,000) (290,000) (89,000) *
* 2006 (4,466,000) (806,000) (311,000) (95,000) *
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The following table assumes an effective date of September 1, 2001.
***************************************************************************
*Fiscal Probable Probable Probable Probable *
* Year Revenue Revenue Revenue Revenue *
* Gain/(Loss) to Gain/(Loss) to Gain/(Loss) to Gain/(Loss) to *
* General Revenue Cities Transit Counties/SPDs *
* Fund Authorities *
* 0001 *
* 2002 $(3,135,000) $(515,000) $(199,000) $(61,000) *
* 2003 (3,631,000) (656,000) (253,000) (78,000) *
* 2004 (3,885,000) (702,000) (271,000) (83,000) *
* 2005 (4,158,000) (751,000) (290,000) (89,000) *
* 2006 (4,466,000) (806,000) (311,000) (95,000) *
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Fiscal Analysis
The bill would amend Chapter 151 of the Tax Code to place sole
responsibility for state sales and use tax on the purchaser of printed
materials in those instances when the printer of the materials delivers
them to the United States Postal Service for mailing to persons other
than the purchaser.
A printer would be required to collect state sales and use taxes on
printed materials when all, or substantially all, of the materials were
mailed to persons located within this state. For purposes of a printer's
tax collection duty, there would be a rebuttable presumption that all
materials printed at a facility would be mailed to persons located within
the state in which the facility was located. Documentation provided by
the purchaser to the printer concerning the delivery of the printed
materials would be sufficient to rebut this presumption.
The bill would take effect July 1, 2001, assuming that it received the
requisite two-thirds majority votes in both houses of the Legislature.
Otherwise, it would take effect September 1, 2001.
Methodology
Under the provisions of the bill, it would be assumed that all printed
materials would be mailed within the state in which the printing facility
was located. Therefore, purchasers of printed materials would be
responsible for the payment of all sales and use taxes on materials
shipped into Texas, regardless of whether the printer had nexus in this
state. Printers located within Texas would be required to collect tax on
all shipments unless they could provide documentation from the purchaser
relating to the destination of the materials.
The sales tax is predominantly a seller-based system. All sellers of
taxable items are necessarily permitted by the Comptroller; purchasers,
however, may not be registered in all cases and would not necessarily
have knowledge of their new duties under this bill. Based on IRS
reporting, approximately 50% of all businesses in the state hold some
type of tax permit with the Comptroller. Data on the sale of printed
materials to Texas from out-of-state printers were gathered from
Comptroller tax files. Sales data were multiplied by the state sales
tax rate and adjusted for assumed 50% compliance arising from the change
in reporting entity. The result was adjusted for potential effective
dates of July 1, 2001 and September 1, 2001 and extrapolated through
2006. The fiscal impact on units of local government were estimated
proportionally.
Local Government Impact
Local units of government would have a corresponding fiscal impact from
sales tax revenues, as indicated in the tables above.
Source Agencies: 304 Comptroller of Public Accounts
LBB Staff: JK, SD, SM