LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 77th Regular Session
  
                              March 23, 2001
  
  
          TO:  Honorable Rodney Ellis, Chair, Senate Committee on Finance
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  SB1450  by Lindsay (Relating to the collection and
               enforcement of taxes; providing penalties.), As Introduced
  
**************************************************************************
*  No significant fiscal implication to the State is anticipated.        *
**************************************************************************
  
The bill would amend Chapter 111 of the Tax Code to allow the Comptroller
to recharacterize transactions, activities, or relationships and treat
them in a manner consistent with their underlying nature if the
Comptroller determined the actions or relationships did not have a
significant business purpose or lacked economic substance.

The bill would amend Chapter 151 of the Tax Code to define the terms,
"person" and "representative" and to codify Comptroller policy on
physical presence and indirect ownership of property, as those terms and
concepts relate to the administration of the state sales and use tax.
The bill would clarify standards for determining if a retailer was
engaged in business in this state as that concept relates to the state
use tax.

The bill would take effect September 1, 2001.

Methodology

The Comptroller would be granted the authority to recharacterize actions
or relationships that did not have a significant business purpose or
lack economic substance, but which were made for the purpose of tax
avoidance.  This recharacterization could result in increased tax
liability related to those actions or relationships, which could produce
some gain to the state and units of local government.  Given the
magnitude of current sales tax revenue, it is not anticipated that the
provisions of this bill would result in a significant impact in state
sales tax revenue.
  
Local Government Impact
  
No significant fiscal implication to units of local government is
anticipated.
  
  
Source Agencies:   304   Comptroller of Public Accounts
LBB Staff:         JK, SD, SM