LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
May 11, 2001
TO: Honorable David Sibley, Chair, Senate Committee on
Business & Commerce
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB2582 by Chavez (Relating to customs brokers.), As
Engrossed
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB2582, As Engrossed: negative impact of $(5,476,000) through the *
* biennium ending August 31, 2003. *
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General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $(2,485,000) *
* 2003 (2,991,000) *
* 2004 651,000 *
* 2005 1,000,000 *
* 2006 1,000,000 *
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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 *
* 2002 $(2,485,000) $(572,000) $(221,000) $(68,000) *
* 2003 (2,991,000) (721,000) (278,000) (85,000) *
* 2004 651,000 (126,000) (49,000) (15,000) *
* 2005 1,000,000 0 0 0 *
* 2006 1,000,000 0 0 0 *
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Fiscal Analysis
The bill would amend Chapter 151 of the Tax Code to allow customs brokers
licensed by the Comptroller to issue documentation certifying that
delivery of tangible personal property was made to a point outside the
territorial limits of the United States if: the broker actually watched
the property cross the border of the United States, actually watched the
property being placed on a common carrier for delivery outside the United
States, or verified that the purchaser was a foreign national
transporting the property outside of the United States.
A customs broker would have to examine picture identification of the
purchaser, require the purchaser to produce the original receipt for the
property, require the purchaser to state the foreign country destination
of the property, require the purchaser to state the date and time when
the property would be expected to arrive in the foreign country, and
require the purchaser to sign a form stating the required information and
documentation was provided and notifying the purchaser of the
liabilities if the property was not properly exported or if a refund was
improperly obtained.
The Comptroller could suspend or revoke a license issued to a customs
broker if the broker did not comply with the requirements relating to
issuing documentation showing exportation of property or if the brokers
knowingly or intentionally issued documentation that was false to obtain
a refund of taxes paid on tangible personal property not exported or to
assist another person in obtaining a refund.
The Comptroller could require a customs broker to pay the amount of any
tax refunded if the broker did not comply with the documentation
requirements. In addition to the amount of the refunded tax, the
Comptroller could require the customs broker to pay a penalty in an
amount equal to two times the amount of the refunded tax, but not less
than $500 nor more than $5,000. The requirement to pay the refunded tax
and penalty would be in addition to any civil or criminal penalty
provided by law.
Export documentation provided by customs brokers would have to include
export certification stamps issued by the Comptroller. The Comptroller
would charge $0.50 for each stamp issued to brokers. Money from the sale
of stamps only could be used for costs related to producing the stamps.
One-third of any surplus would be allocated for enforcement. The
remaining two-thirds would be allocated to the Texas Department of
Transportation for expenses related to transportation infrastructure
maintenance and improvement.
Article 1 of the bill would take effect September 1, 2001. The proposed
Section 151.1575 - relating to export documentation - would expire
September 1, 2003. Article 2 of the bill, which would reenact the
current Section 151.157(a), (d), (f), and (g), would take effect
September 1, 2003.
The bill would take effect September 1, 2001.
Methodology
Under current law, proof of export may be shown in several ways. One way
is through documentation provided by a U.S. Customs Broker. If this
method is utilized, certain conditions must be met.
The bill would amplify on the existing provision of Section
151.307(b)(2)(B), relating to certification of delivery made to points
outside the territorial limits of the U.S., to include three possible
options for certification: 1) a visual verification of the property
crossing the border; 2) visual verification of property being placed on
a common carrier for delivery outside the U.S; or 3) verification that
the purchaser of the property is a foreign national transporting the
property to a destination outside of the U.S.
For the purposes of this analysis, it was assumed that, to the degree
that the third method was used, losses would occur due to the more
lenient nature of the certification process. Presently, a customs broker
is responsible for verification; the bill would provide the option that
the purchaser state that the item was destined for an international
location, along with the expected date and time of arrival. The
Comptroller's Office assumes a loss of sales tax revenue reflected in
part in the table above.
The Comptroller issues approximately 2,000,000 export stamps per year.
This amount was multiplied by the $0.50 per stamp fee required by the
bill and added to the lost sales tax revenue reflected in the table above
to determine the final cost to the General Revenue Fund 0001. The bill
stipulates that one-third of the revenue from the stamp fees shall be
allocated for the enforcement of the provisions of Section 151.157, Tax
Code, and two-thirds of this revenue shall be allocated to the Department
of Transportation for expenses related to transportation infrastructure
maintenance and improvement.
Note: It is estimated that approximately $60 million in state and local
sales and use taxes is refunded annually to consumers for tangible
personal property legitimately exported from Texas to Mexico.
Local Government Impact
Local units of government would have a corresponding fiscal impact from
sales tax revenues, as indicated in the table above.
Source Agencies: 304 Comptroller of Public Accounts
LBB Staff: JK, JC, SD, SM