By: McCall (Senate Sponsor - Armbrister) H.B. No. 2424
(In the Senate - Received from the House May 19, 2003;
May 20, 2003, read first time and referred to Committee on Finance;
May 26, 2003, reported adversely, with favorable Committee
Substitute by the following vote: Yeas 11, Nays 0; May 26, 2003,
sent to printer.)
COMMITTEE SUBSTITUTE FOR H.B. No. 2424 By: Zaffirini
A BILL TO BE ENTITLED
AN ACT
relating to technical changes to taxes and fees administered by the
comptroller; providing penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 161.122, Health and Safety Code, is
amended by adding Subsection (f) to read as follows:
(f) A person commits an offense if the person places or
authorizes the placement of a sign in violation of this section. An
offense under this subsection is a Class C misdemeanor.
SECTION 2. Article 1.16(b), Insurance Code, is amended to
read as follows:
(b) Assessments for the expenses of such domestic
examination which shall be sufficient to meet all the expenses and
disbursements necessary to comply with the provisions of the laws
of Texas relating to the examination of insurance companies and to
comply with the provisions of this Article and Articles 1.17 and
1.18 of this Code, shall be made by the State Board of Insurance
upon the corporations or associations to be examined taking into
consideration annual premium receipts, and/or admitted assets that
are not attributable to 90 percent of pension plan contracts as
defined in Section 818(a) of the Internal Revenue Code of 1986 (26
U.S.C. Section 818(a)), and/or insurance in force; provided such
assessments shall be made and collected as follows: (1) expenses
attributable directly to a specific examination including
employees' salaries and expenses and expenses provided by Article
1.28 of this Code shall be collected at the time of examination;
(2) assessments calculated annually for each corporation or
association which take into consideration annual premium receipts,
and/or admitted assets that are not attributable to 90 percent of
pension plan contracts as defined in Section 818(a) of the Internal
Revenue Code of 1986 (26 U.S.C. Section 818(a)), and/or insurance
in force shall be assessed annually for each such corporation or
association. In computing the assessments, the board may not
consider insurance premiums for insurance contracted for by a state
or federal governmental entity to provide welfare benefits to
designated welfare recipients or contracted for in accordance with
or in furtherance of Title 2, Human Resources Code, or the federal
Social Security Act (42 U.S.C. Section 301 et seq.). The amount of
all examination and evaluation fees [the assessments] paid in each
taxable year to [or for the use of] the State of Texas by an [any]
insurance carrier [corporation or association hereby affected]
shall be allowed as a credit on the amount of premium taxes due
under this article [to be paid by any such insurance corporation or
association for such taxable year except as provided by Article
1.28 of this Code]. The limitations provided by Sections
803.007(1) and (2)(B) of this code for domestic insurance companies
apply to foreign insurance companies.
SECTION 3. Section 1, Article 4.10, Insurance Code, is
amended to read as follows:
Sec. 1. PAYMENT OF TAX. Every insurance carrier, including
Lloyd's and reciprocal or interinsurance exchanges and any other
organization or concern receiving gross premiums from the business
of fire, marine, marine inland, accident, credit, livestock,
fidelity, guaranty, surety, casualty, workers' compensation,
employers' liability, or any other kind or character of insurance,
except title insurance and except as provided in Sections 2, 3, and
4 of this article, shall pay to the comptroller a tax upon such
gross premium receipts as provided in this article. Any such
insurance carrier doing other kinds of insurance business shall pay
the tax levied upon its gross premiums received from such other
kinds of business as provided in Articles 4.03 and 4.11 of this
code.
SECTION 4. Section 13, Article 4.10, Insurance Code, is
amended to read as follows:
Sec. 13. EXAMINATION AND EVALUATION FEE CREDITS. The
amount of all examination and evaluation fees paid in each taxable
year to [or for the use of] the State of Texas by an insurance
carrier shall be allowed as a credit on the amount of premium taxes
due under this article [except as provided by Article 1.28 of this
code]. The limitations provided by Sections 803.007(1) and (2)(B)
of this code for domestic insurance companies apply to foreign
insurance companies. Any credit allowed by the provisions of this
section is in addition to any other credits allowable by statute.
SECTION 5. Section 8, Article 4.11, Insurance Code, is
amended to read as follows:
Sec. 8. EXAMINATION AND EVALUATION [VALUATION] FEES ALLOWED
AS CREDITS. The amount of all examination and evaluation
[valuation] fees paid in [during] each taxable [tax] year to [or for
the use of] the State of Texas by an insurance carrier shall be
allowed as a credit on the amount of premium taxes due under this
article [except as provided by Article 1.28 of this code]. The
limitations provided by Sections 803.007(1) and (2)(B) of this code
for domestic insurance companies apply to foreign insurance
companies. Any credit allowed by the provisions of this section is
in addition to any other credits allowable by statute.
SECTION 6. Article 4.17(a), Insurance Code, is amended to
read as follows:
(a) The commissioner shall annually determine the rate of
assessment of a maintenance tax to be paid on an annual, semiannual,
or other periodic basis, as determined by the comptroller. The rate
of assessment may not exceed .04 percent of the correctly reported
gross premiums of life, health, and accident insurance coverages
and the gross considerations for annuity and endowment contracts
collected by all authorized insurers writing life, health, and
accident insurance, annuity, or endowment contracts in this state.
The comptroller shall collect the maintenance tax. For purposes of
this article, the gross premiums on which an assessment is based may
not include:
(1) premiums received from this state or the United
States for insurance contracted for by this state or the United
States for the purpose of providing welfare benefits to designated
welfare recipients or for insurance contracted for by this state or
the United States in accordance with or in furtherance of Title 2,
Human Resources Code, or the federal Social Security Act (42 U.S.C.
Section 301 et seq.); or
(2) premiums paid on group health, accident, and life
policies in which the group covered by the policy consists of a
single nonprofit trust established to provide coverage primarily
for employees of:
(A) a municipality, county, or hospital district
in this state; or
(B) a county or municipal hospital, without
regard to whether the employees are employees of the county or
municipality or of an entity operating the hospital on behalf of the
county or municipality.
SECTION 7. Section 7, Article 9.59, Insurance Code, is
amended to read as follows:
Sec. 7. EXAMINATION AND EVALUATION FEE CREDITS. The amount
of all examination and evaluation fees paid in each taxable year to
[or for the use of] the State of Texas by a title insurance company
shall be allowed as a credit on the amount of premium taxes due
under this article [except as provided by Article 1.28 of this
code]. The limitations provided by Sections 803.007(1) and (2)(B)
of this code for domestic insurance companies apply to foreign
insurance companies. Any credit allowed by this section is in
addition to any other credits allowed by law.
SECTION 8. Article 20A.33(d), Insurance Code, is amended to
read as follows:
(d) The commissioner shall annually determine the rate of
assessment of a per capita maintenance tax to be paid on an annual
or semiannual basis, on the correctly reported gross revenues for
the issuance of health maintenance certificates or contracts
collected by all authorized health maintenance organizations
issuing such coverages in this state. The rate of assessment may
not exceed $2 for each enrollee. The rate of assessment may differ
between basic health care plans, limited health care service plans,
and single health care service plans and shall equitably reflect
any differences in regulatory resources attributable to each type
of plan. The comptroller shall collect the maintenance tax. For
purposes of this section, the amount of maintenance tax assessed
may not be computed on:
(1) enrollees who as individual certificate holders or
their dependents are covered by a master group policy paid for by
revenues received from this state or the United States for
insurance contracted for by this state or the United States for the
purpose of providing welfare benefits to designated welfare
recipients or for insurance contracted for by this state or the
United States in accordance with or in furtherance of Title 2, Human
Resources Code, or the federal Social Security Act (42 U.S.C.
Section 301 et seq.); or
(2) revenues paid on group health, accident, and life
certificates or contracts in which the group covered by the
certificate or contract consists of a single nonprofit trust
established to provide coverage primarily for employees of:
(A) a municipality, county, or hospital district
in this state; or
(B) a county or municipal hospital, without
regard to whether the employees are employees of the county or
municipality or of an entity operating the hospital on behalf of the
county or municipality.
SECTION 9. Section 101.053(b), Insurance Code, as effective
June 1, 2003, is amended to read as follows:
(b) Sections 101.051 and 101.052 do not apply to:
(1) the lawful transaction of surplus lines insurance
under Chapter 981;
(2) the lawful transaction of reinsurance by insurers;
(3) a transaction in this state that:
(A) involves a policy that:
(i) is lawfully solicited, written, and
delivered outside this state; and
(ii) covers, at the time the policy is
issued, only subjects of insurance that are not resident, located,
or expressly to be performed in this state; and
(B) takes place after the policy is issued;
(4) a transaction:
(A) that involves an insurance contract
independently procured by the insured from an insurance company not
authorized to do insurance business in this state through
negotiations occurring entirely outside this state;
(B) that is reported; and
(C) on which premium tax is paid in accordance
with this chapter;
(5) a transaction in this state that:
(A) involves group life, health, or accident
insurance, other than credit insurance, and group annuities in
which the master policy for the group was lawfully issued and
delivered in a state in which the insurer or person was authorized
to do insurance business; and
(B) is authorized by a statute of this state;
(6) an activity in this state by or on the sole behalf
of a nonadmitted captive insurance company that insures solely:
(A) directors' and officers' liability insurance
for the directors and officers of the company's parent and
affiliated companies;
(B) the risks of the company's parent and
affiliated companies; or
(C) both the individuals and entities described
by Paragraphs (A) and (B);
(7) the issuance of a qualified charitable gift
annuity under Chapter 102; or
(8) a lawful transaction by a servicing company of the
Texas workers' compensation employers' rejected risk fund under
Section 4.08, Article 5.76-2, as that article existed before its
repeal.
SECTION 9A. Subchapter L, Chapter 843, Insurance Code, is
amended to read as follows:
Sec. 843.409. EXAMINATION EXPENSES. (a) A credit against
the amount of premium taxes to be paid by a health maintenance
organization in a taxable year may not be allowed on:
(1) an examination fee or expense paid to another
state; or
(2) an examination expense:
(A) directly attributable to an examination of
the books, records, accounts, or principal offices of a health
maintenance organization located outside this state; or
(B) paid in a different taxable year.
(b) The limitations provided by Subsections (a)(1) and
(a)(2)(B) apply to foreign health maintenance organizations.
SECTION 10. Section 912.002(b), Insurance Code, as
effective June 1, 2003, is amended to read as follows:
(b) A county mutual insurance company is subject to:
(1) Sections 38.001 and 822.204; and
(2) Articles 1.15, 1.15A, 1.16, 1.35B, 2.10, 4.10,
5.12, 5.37, 5.38, 5.39, 5.40, 5.49, 21.21, and 21.49.
SECTION 11. Section 376.470, Local Government Code, as
added by Chapter 1433, Acts of the 77th Legislature, Regular
Session, 2001, is amended by adding Subsection (d) to read as
follows:
(d) Chapter 321, Tax Code, applies to the imposition,
computation, administration, enforcement, and collection of the
sales and use tax imposed by this section except to the extent it is
inconsistent with this chapter.
SECTION 12. Section 2153.153(a), Occupations Code, is
amended to read as follows:
(a) A license applicant must file with the comptroller a
license application that:
(1) contains a complete statement about the ownership
of the business that is the subject of the application, including:
(A) the nature of the business entity; and
(B) except as provided by Subsection (b), the
name and residence address of each person who has a financial
interest in the business, including the nature, type, and extent of
the interest;
(2) designates:
(A) an individual, as described by Subsection
(c), responsible for maintaining a record of and reporting to the
comptroller information as required by Section 2153.202; and
(B) an office located in this state where the
applicant proposes to maintain the records required by this
chapter, a rule adopted under this chapter, or other law;
(3) is accompanied by:
(A) a written statement executed by the
individual designated under Subdivision (2) that the individual
accepts the responsibility described by that subdivision; and
(B) a cashier's check, [or] money order, personal
check, or other method of payment authorized by the comptroller, in
an amount equal to the annual license fee under Section 2153.154;
(4) includes any other relevant information required
by the comptroller; and
(5) states that the information contained in the
application is true and correct.
SECTION 13. Section 111.0046, Tax Code, is amended to read
as follows:
Sec. 111.0046. [REFUSAL TO] PERMIT OR LICENSE. (a) The
comptroller shall refuse to issue or renew any permit or license to
a person who:
(1) is not permitted or licensed as required by law for
a different tax or activity administered by the comptroller, except
if the issuance or renewal of such license or permit is pending
before the comptroller; or
(2) is currently delinquent in the payment of any tax
collected by the comptroller.
(b) The comptroller by rule may establish a minimum age for
a person to be eligible to apply for a permit or license issued by
the comptroller.
SECTION 14. Sections 111.012(a) and (g), Tax Code, are
amended to read as follows:
(a) If the comptroller finds that a tax imposed by this
title is insecure, the comptroller may require a taxpayer [who is
delinquent in the payment of the tax] to:
(1) provide security for the payment of taxes; or
(2) establish a tax escrow account at a bank or other
financial institution.
(g) If a taxpayer does not furnish security to the
comptroller or establish a tax escrow account as required by the
comptroller before the expiration of 10 days following the day on
which notice is received, the comptroller may:
(1) bring suit in a district court in Travis County for
an order enjoining the taxpayer from engaging in business until the
security is furnished or the tax escrow account is established; or
(2) pursue any other remedies or collection actions
available to the comptroller under this chapter or Chapter 113 to
ensure the security is furnished or the tax escrow account is
established. [Venue for a suit under this section is in Travis
County.]
SECTION 15. Section 113.006(b), Tax Code, is amended to
read as follows:
(b) One tax lien notice is sufficient to cover all taxes of
any [the same] nature administered by the comptroller, including
penalty and interest computed by reference to the amount of tax,
that may have accrued before or after the filing of the notice.
SECTION 16. Section 151.0035, Tax Code, is amended to read
as follows:
Sec. 151.0035. "DATA PROCESSING SERVICE." "Data processing
service" includes word processing, data entry, data retrieval, data
search, information compilation, payroll and business accounting
data production, the performance of a totalisator service with the
use of computational equipment [equiptment] required by the Texas
Racing Act (Article 179e, Vernon's Texas Civil Statutes), and other
computerized data and information storage or manipulation. "Data
processing service" also includes the use of a computer or computer
time for data processing whether the processing is performed by the
provider of the computer or computer time or by the purchaser or
other beneficiary of the service. "Data processing service" does
not include the transcription of medical dictation by a medical
transcriptionist. "Data storage," as used in this section, does not
include a classified advertisement, banner advertisement, vertical
advertisement, or link when the item is displayed on an Internet
website owned by another person.
SECTION 17. Section 151.005, Tax Code, is amended to read as
follows:
Sec. 151.005. "SALE" OR "PURCHASE." "Sale" or "purchase"
means any of the following when done or performed for
consideration:
(1) a transfer of title or possession of tangible
personal property;
(2) the exchange, barter, lease, or rental of tangible
personal property;
(3) the performance of a taxable service, the charge
for an extended warranty or service contract for the performance of
a taxable service, or, in the case of an amusement service, a
transfer of title to or possession of a ticket or other admission
document, the collection of an admission fee, whether by individual
performance, subscription series, or membership privilege, the
collection of dues or a fee, charge, or assessment, including an
initiation fee, by a club or organization for membership or a
special privilege, status, or membership classification in the club
or organization, or the use of a coin-operated machine;
(4) the production, fabrication, processing,
printing, or imprinting of tangible personal property for consumers
who directly or indirectly furnish the materials used in the
production, fabrication, processing, printing, or imprinting;
(5) the furnishing and distribution of tangible
personal property by a social club or fraternal organization to
anyone;
(6) the furnishing, preparation, or service of food,
meals, or drinks;
(7) a transfer of the possession of tangible personal
property if the title to the property is retained by the seller as
security for the payment of the price; or
(8) a transfer of the title or possession of tangible
personal property that has been produced, fabricated, or printed to
the special order of the customer.
SECTION 18. Section 151.056, Tax Code, is amended by adding
Subsection (f) to read as follows:
(f) A contractor is not eligible for the exemption provided
by Section 151.318 on items used in the performance of a contract to
improve real property.
SECTION 19. Section 151.313(a), Tax Code, is amended to
read as follows:
(a) The following items are exempted from the taxes imposed
by this chapter:
(1) a drug or medicine, other than insulin, if
prescribed or dispensed for a human or animal by a licensed
practitioner of the healing arts;
(2) insulin;
(3) subject to Subsection (c), a drug or medicine,
without regard to whether it is prescribed or dispensed by a
licensed practitioner of the healing arts;
(4) a hypodermic syringe or needle;
(5) a brace; hearing aid or audio loop; orthopedic,
dental, or prosthetic device; ileostomy, colostomy, or ileal
bladder appliance; or supplies or replacement parts for the listed
items;
(6) a therapeutic appliance, device, and any related
supplies specifically designed for those products, if dispensed or
prescribed by a licensed practitioner of the healing arts, when
those items are purchased and used by an individual for whom the
items listed in this subdivision were dispensed or prescribed;
(7) corrective lens and necessary and related
supplies, if dispensed or prescribed by an ophthalmologist or
optometrist;
(8) specialized printing or signalling equipment used
by the deaf for the purpose of enabling the deaf to communicate
through the use of an ordinary telephone and all materials, paper,
and printing ribbons used in that equipment;
(9) a braille wristwatch, braille writer, braille
paper and braille electronic equipment that connects to computer
equipment, and the necessary adaptive devices and adaptive computer
software;
(10) each of the following items if purchased for use
by the blind to enable them to function more independently: a slate
and stylus, print enlarger, light probe, magnifier, white cane,
talking clock, large print terminal, talking terminal, or harness
for guide dog;
(11) hospital beds;
(12) blood glucose monitoring test strips;
(13) an adjustable eating utensil used to facilitate
independent eating if purchased for use by a person, including a
person who is elderly or physically disabled, has had a stroke, or
is a burn victim, who does not have full use or control of the
person's hands or arms; [and]
(14) subject to Subsection (d), a dietary supplement;
and
(15) intravenous systems, supplies, and replacement
parts used in the treatment of humans.
SECTION 20. Section 151.314(e), Tax Code, is amended to
read as follows:
(e) Food products, candy, carbonated beverages, and diluted
juices are exempted from the taxes imposed by this chapter if sold
at an exempt sale qualifying under this subsection or if stored or
used by the purchaser of the item at the exempt sale. A sale is
exempted under this subsection if:
(1) the sale is made by a [person under 19 years old
who is a] member of or volunteer for a nonprofit organization
devoted to the exclusive purpose of education or religious or
physical training or by a group associated with a public or private
elementary or secondary school;
(2) the sale is made as a part of a fund-raising drive
sponsored by the organization or group; and
(3) all net proceeds from the sale go to the
organization or group for its exclusive use.
SECTION 21. Section 151.319(f), Tax Code, is amended to
read as follows:
(f) In this section, "newspaper" means a publication that is
printed on newsprint, the average sales price of which for each copy
over a 30-day period does not exceed $1.50 [75 cents], and that is
printed and distributed at a daily, weekly, or other short interval
for the dissemination of news of a general character and of a
general interest. "Newspaper" does not include a magazine,
handbill, circular, flyer, sales catalog, or similar printed item
unless the printed item is printed for distribution as a part of a
newspaper and is actually distributed as a part of a newspaper. For
the purposes of this section, an advertisement is news of a general
character and of a general interest. Notwithstanding any other
provision of this subsection, "newspaper" includes:
(1) a publication containing articles and essays of
general interest by various writers and advertisements that is
produced for the operator of a licensed and certified carrier of
persons and distributed by the operator to its customers during
their travel on the carrier; and
(2) a publication for the dissemination of news of a
general character and of a general interest that is printed on
newsprint and distributed to the general public free of charge at a
daily, weekly, or other short interval.
SECTION 22. Section 151.323, Tax Code, is amended to read as
follows:
Sec. 151.323. CERTAIN TELECOMMUNICATIONS SERVICES. (a)
There are exempted from the taxes imposed by this chapter the
receipts from the sale, use, or other consumption in this state of:
(1) long-distance telecommunications services that
are not both originated from and billed to a telephone number or
billing or service address within Texas;
(2) access to a local exchange telephone company's
network by a regulated provider of telecommunications services; and
(3) broadcasts, other than cable television service,
by commercial radio or television stations licensed or regulated by
the Federal Communications Commission.
(b) The exemption provided by this section does not apply to
mobile telecommunications services.
SECTION 23. Subchapter H, Chapter 151, Tax Code, is amended
by adding Section 151.3501 to read as follows:
Sec. 151.3501. LABOR TO RESTORE, REPAIR, OR REMODEL
HISTORIC SITES. (a) Labor to restore, repair, or remodel an
improvement to real property is exempted from the taxes imposed by
this chapter if:
(1) the amount of the charge for labor is separately
itemized; and
(2) the restoration, repair, or remodeling is
performed on an improvement to real property listed in the National
Register of Historic Places.
(b) The exemption provided by this section does not apply to
tangible personal property transferred by the service provider to
the purchaser as part of the service.
SECTION 24. Section 151.355, Tax Code, as amended by
Chapters 966 and 1234, Acts of the 77th Legislature, Regular
Session, 2001, is reenacted and amended to read as follows:
Sec. 151.355. WATER-RELATED EXEMPTIONS. The following are
exempted from taxes imposed by this chapter:
(1) rainwater harvesting equipment or supplies, water
recycling and reuse equipment or supplies, or other equipment,
services, or supplies used solely to reduce or eliminate water use;
(2) equipment, services, or supplies used solely for
desalination of surface water or groundwater;
(3) equipment, services, or supplies used solely for
brush control designed to enhance the availability of water;
(4) equipment, services, or supplies used solely for
precipitation enhancement;
(5) equipment, services, or supplies used solely to
construct or operate a water or wastewater system certified by the
Texas Commission on Environmental Quality [Natural Resource
Conservation Commission] as a regional system; and
(6) equipment, services, or supplies used solely to
construct or operate a water supply or wastewater system by a
private entity as a public-private partnership as certified by the
political subdivision that is a party to the project.
SECTION 25. Section 152.086(a), Tax Code, is amended to
read as follows:
(a) The taxes imposed by this chapter do not apply to the
sale or use of a motor vehicle that:
(1) has been or will be modified before the second
anniversary of the date of purchase for operation by, or for the
transportation of, an orthopedically handicapped person; and
(2) is driven by or used for the transportation of an
orthopedically handicapped person.
SECTION 26. Subchapter F, Chapter 152, Tax Code, is amended
by adding Section 152.106 to read as follows:
Sec. 152.106. PROHIBITED ADVERTISING; CRIMINAL PENALTY.
(a) A person who is required by Chapter 503, Transportation Code,
to hold a dealer's general distinguishing number commits an offense
if the person directly or indirectly advertises, holds out, or
states to a customer or to the public that the person:
(1) will assume, absorb, or refund a part of the tax
imposed by this chapter; or
(2) will not add the tax imposed by this chapter to the
sales price of the motor vehicle sold, leased, or rented.
(b) An offense under this section is a Class C misdemeanor.
SECTION 27. Section 153.013(a), Tax Code, is amended to
read as follows:
(a) A distributor, supplier, dealer, interstate trucker,
jobber, dyed diesel fuel bonded user, [or] agricultural bonded
user, or other user who fails to keep a record, issue an invoice, or
file a report required by this chapter, is presumed to have sold or
used for taxable purposes all motor fuel shown by an audit by the
comptroller to have been sold to the distributor, supplier, dealer,
interstate trucker, jobber, dyed diesel fuel bonded user, [or]
agricultural bonded user, or other user. Motor fuel unaccounted
for is presumed to have been sold or used for taxable purposes. The
comptroller may fix or establish the amount of taxes, penalties,
and interest due the state from the records of deliveries or from
any records or information available to him. If a tax claim, as
developed from this procedure, is not paid, after the opportunity
to request a redetermination, the claim and any audit made by the
comptroller or any report filed by the distributor, supplier,
dealer, interstate trucker, jobber, dyed diesel fuel bonded user,
[or] agricultural bonded user, or other user, are evidence in any
suit or judicial proceedings filed by the attorney general, and are
prima facie evidence of the correctness of the claim or audit. A
prima facie presumption of the correctness of the claim may be
overcome at the trial by evidence adduced by the distributor,
supplier, dealer, interstate trucker, jobber, dyed diesel fuel
bonded user, [or] agricultural bonded user, or other user.
SECTION 28. Section 153.117, Tax Code, is amended by adding
Subsection (i) to read as follows:
(i) A bulk user who files a claim for refund shall keep:
(1) a record showing the number of gallons of:
(A) all gasoline purchased or received, showing
the name of the seller and date of purchase;
(B) all gasoline deliveries into the fuel supply
tanks of motor vehicles;
(C) gasoline used for other purposes, showing the
purpose for which used; and
(D) all gasoline lost by fire, theft, or
accident; and
(2) a distribution log if used by a bulk user for
documentation to support a refund claim.
SECTION 29. Section 153.120, Tax Code, is amended by adding
Subsection (d) to read as follows:
(d) A distribution log filed with the comptroller to support
the number of gallons of gasoline removed from a bulk user's own
bulk storage must contain the name and address of the bulk user
making the delivery stamped or preprinted on it and for each
individual delivery from the bulk storage:
(1) the date of delivery;
(2) the number of gallons of gasoline delivered;
(3) the signature of the bulk user; and
(4) the type or description of off-highway equipment
into which the gasoline was delivered, or the type of licensed motor
vehicle into which the gasoline was delivered, including the state
highway license plate number or vehicle identification number, and
the odometer or hubmeter reading.
SECTION 30. Section 153.205, Tax Code, as amended by
Chapters 1263 and 1444, Acts of the 77th Legislature, Regular
Session, 2001, is reenacted and amended to read as follows:
Sec. 153.205. STATEMENT FOR PURCHASE OF DIESEL FUEL TAX
FREE. (a) The first sale or use of diesel fuel in this state is
taxable, except that sales of dyed diesel fuel, or of undyed diesel
fuel if the fuel will be used for an agricultural nonhighway
purpose, may be made without collecting the tax if the purchaser
furnishes to a permitted supplier a signed statement, including an
end user number or agricultural exemption number issued by the
comptroller. A person who wants to use a signed statement to
purchase dyed diesel fuel must apply to the comptroller for an end
user number to be used in conjunction with a signed statement. A
person who wants to use a signed statement to purchase dyed or
undyed diesel fuel for an agricultural nonhighway purpose must
apply to the comptroller for an agricultural exemption number to be
used in conjunction with a signed statement. A supplier may not make
a tax-free sale of any diesel fuel to a purchaser using a signed
statement unless the purchaser has an end user number or
agricultural exemption number issued by the comptroller under this
section.
(b) A sale of dyed diesel fuel may be made without
collecting the tax if the purchaser furnishes to a permitted
supplier a signed statement, including an end user number issued by
the comptroller, that stipulates that:
(1) all [none] of the diesel fuel purchased on the
signed statement will be dyed diesel fuel [is of a type that may
legally be used on the public highway];
(2) all of the dyed diesel fuel purchased on the signed
statement will be consumed by the purchaser[, or all of the diesel
fuel will be consumed by the purchaser in oil or gas production, as
applicable,] and will not be resold; and
(3) none of the dyed diesel fuel purchased on the
signed statement will be delivered or permitted to be delivered
into the fuel supply tank of a motor vehicle operated on the public
highways of this state.
(c) A sale of dyed or undyed diesel fuel for an agricultural
nonhighway use may be made without collecting the tax if the
purchaser furnishes to a permitted supplier a signed statement,
including an agricultural exemption number issued by the
comptroller, that stipulates that:
(1) all of the dyed and undyed diesel fuel purchased on
the signed statement will be used exclusively in agricultural
nonhighway equipment;
(2) all of the dyed and undyed diesel fuel purchased on
the signed statement will be consumed by the purchaser and will not
be resold; and
(3) none of the dyed or undyed diesel fuel purchased on
the signed statement will be delivered or permitted to be delivered
into the fuel supply tank of a motor vehicle operated on the public
highways of this state.
(d) A person may not make a tax-free purchase and a
permitted supplier may not make a tax-free sale to a purchaser of
any diesel fuel under this section using a signed statement:
(1) for the purchase or the sale of more than 7,400
gallons of dyed or undyed diesel fuel in a single [transaction or]
delivery; or
(2) in a calendar month in which the person has
previously purchased from all sources or in which the permitted
supplier has previously sold to that purchaser more than:
(A) 10,000 gallons of dyed diesel fuel [from all
sources];
(B) 25,000 gallons of dyed diesel fuel [from all
sources] if the purchaser stipulates in the signed statement that
all of the fuel will be consumed by the purchaser in the original
production of, or to increase the production of, oil or gas and
furnishes the supplier with a letter of exception issued by the
comptroller [production]; or
(C) 25,000 gallons of dyed or undyed diesel fuel
[from all sources] if purchased for agricultural purposes by a
person who furnishes to the permitted supplier, in conjunction with
the signed statement, an agricultural exemption number issued by
the comptroller.
(e) Any gallons purchased or sold in excess of the
limitations prescribed by Subsection (d) constitute a taxable
purchase or sale. The purchaser paying the tax on dyed or undyed
diesel fuel in excess of the limitations prescribed by Subsection
(d) may claim a refund of the tax paid on any dyed or undyed diesel
fuel used for nonhighway purposes under Section 153.222.
(f) [A supplier may not make a tax-free sale of any diesel
fuel under this section to a purchaser using a signed statement:
[(1) for the sale of more than 7,400 gallons of dyed or
undyed diesel fuel in a single transaction or delivery; or
[(2) in a calendar month in which the supplier has
previously sold more than:
[(A) 10,000 gallons of dyed diesel fuel to the
purchaser;
[(B) 25,000 gallons of dyed diesel fuel to the
purchaser if the purchaser stipulates in the signed statement that
all of the fuel will be consumed by the purchaser in oil or gas
production; or
[(C) 25,000 gallons of dyed or undyed diesel fuel
to the purchaser if the purchaser furnishes to the permitted
supplier, in conjunction with the signed statement, an agricultural
exemption number issued by the comptroller.
[(g) Any gallons sold in excess of the limitations
prescribed by Subsection (f) constitute a taxable sale. The
purchaser paying the tax on dyed or undyed diesel fuel in excess of
the limitations prescribed by Subsection (f) may claim a refund of
the tax paid on any dyed or undyed diesel fuel used for nonhighway
purposes under Section 153.222.
[(h)] The signed statement and end user number or
agricultural exemption number from the purchaser as provided by
this section relieves the permitted supplier from the burden of
proof that the sale of dyed diesel fuel or of undyed diesel fuel for
an agricultural nonhighway purpose was not taxable to the purchaser
and remains in effect unless:
(1) the statement is revoked in writing by the
purchaser or supplier; [or]
(2) the comptroller notifies the supplier in writing
that the purchaser may no longer make tax-free purchases; or
(3) the supplier is put on notice by making taxable
sales of dyed diesel fuel to a purchaser who has previously
furnished a signed statement to the supplier.
(g) For purposes of Subsection (f)(3), the supplier is not
put on notice when taxable sales of dyed diesel fuel are made in
accordance with Subsection (e).
(h) The statement must be signed by the purchaser or the
purchaser's representative.
(i) The comptroller by rule may allow separate operating
divisions of a corporation to give separate signed statements as if
the divisions were different legal entities.
(j) The comptroller may adopt necessary forms and rules to
administer and enforce this section.
(k) [(i)] A taxable use of any part of the dyed or undyed
diesel fuel purchased under a signed statement shall, in addition
to any criminal penalty, forfeit the right of the person to purchase
dyed or undyed diesel fuel tax free for a period of one year from the
date of the offense, and any tax, interest, and penalty found to be
due through false or erroneous execution or continuance of a
promissory statement by the purchaser, if assessed to the supplier,
is a debt of the purchaser to the supplier until paid, and is
recoverable at law in the same manner as the purchase price of the
fuel. The person may, however, claim a refund of the tax paid on any
dyed or undyed diesel fuel used for nonhighway purposes under
Section 153.222.
SECTION 31. Section 153.208(d), Tax Code, is amended to
read as follows:
(d) A supplier may not make a tax-free sale or delivery of
diesel fuel into the fuel supply tanks of a motor vehicle other than
a motor vehicle:
(1) owned by the United States;
(2) exclusively operated by a public school district
in this state; or
(3) operated by a commercial transportation company
that provides public school transportation services to a school
district in this state under Section 34.008, Education Code, and
that is used by the company exclusively to provide those services.
SECTION 32. Section 153.219(c), Tax Code, is amended to
read as follows:
(c) A dyed diesel fuel bonded user, an agricultural bonded
user, or other user [with nonhighway equipment uses] who files a
claim for a refund shall keep:
(1) a record showing the number of gallons of:
(A) [(1)] inventories of all diesel fuel on hand
at the first of each month;
(B) [(2)] all diesel fuel purchased or
received, showing the name of the seller and the date of each
purchase;
(C) [(3)] all diesel fuel deliveries into the
fuel supply tanks of motor vehicles;
(D) [(4)] diesel fuel used for other purposes,
showing the purpose for which used; and
(E) [(5)] all diesel fuel lost by fire, theft,
or accident; and
(2) a distribution log if used by a bulk user for
documentation to support a refund claim.
SECTION 33. Section 153.222(a), Tax Code, is amended to
read as follows:
(a) A dealer or diesel fuel jobber who has paid tax on diesel
fuel that has been used or sold for use by the dealer or diesel fuel
jobber for any purpose except in a motor vehicle operated or
intended to be operated [other than propelling a motor vehicle] on
the public highways [of this state] or that has been sold to the
United States or a public school district in this state for the
exclusive use of the purchaser, or to a commercial transportation
company for exclusive use in providing public school transportation
services to a school district under Section 34.008, Education Code,
without adding the amount of the tax to his selling price, and a
user who has paid tax on any diesel fuel that has been used by him
for any [a] purpose except in a motor vehicle operated or intended
to be operated [other than propelling a motor vehicle] on the public
highways, is a public school district and has paid the tax on diesel
fuel purchased for its exclusive use, is a commercial
transportation company and has paid the tax on diesel fuel used by
the company exclusively to provide public school transportation
services to a school district under Section 34.008, Education Code,
or is a person who has paid tax on diesel fuel used in a commercial
motor vehicle as provided by Section 153.203(a)(10) [153.203(10)]
may file a claim for a refund of taxes paid, less the deduction
allowed vendors.
SECTION 34. Section 153.223, Tax Code, is amended by adding
Subsection (d) to read as follows:
(d) A distribution log filed with the comptroller to support
the number of gallons of diesel fuel removed from a bulk user's own
bulk storage must contain the name and address of the bulk user
making the delivery stamped or preprinted on it and for each
individual delivery from the bulk storage:
(1) the date of delivery;
(2) the number of gallons of diesel fuel delivered;
(3) the signature of the bulk user; and
(4) the type or description of off-highway equipment
into which the diesel fuel was delivered, or the type of licensed
motor vehicle into which the diesel fuel was delivered, including
the state highway license plate number or vehicle identification
number, and the odometer or hubmeter reading.
SECTION 35. Section 153.403, Tax Code, is amended to read as
follows:
Sec. 153.403. CRIMINAL OFFENSES. Except as provided by
Section 153.404, a person commits an offense if the person:
(1) refuses to stop and permit the inspection and
examination of a motor vehicle transporting or using motor fuel on
the demand of a peace officer or the comptroller;
(2) is required to hold a valid trip permit or
interstate trucker's permit, but operates a motor vehicle in this
state without a valid trip permit or interstate trucker's permit;
(3) operates a liquefied gas-propelled motor vehicle
that is required to be licensed in Texas, including a motor vehicle
equipped with dual carburetion, and does not display a current
liquefied gas tax decal or multistate fuels tax agreement decal;
(4) transports gasoline or diesel fuel in any cargo
tank that has a connection by pipe, tube, valve, or otherwise with
the fuel injector or carburetor or with the fuel supply tank feeding
the fuel injector or carburetor of the motor vehicle transporting
the product;
(5) sells or delivers gasoline or diesel fuel from a
fuel supply tank that is connected with the fuel injector or
carburetor of a motor vehicle;
(6) owns or operates a motor vehicle for which reports
or mileage records are required by this chapter without an
operating odometer or other device in good working condition to
record accurately the miles traveled;
(7) as a diesel tax prepaid user fails to prepay the
tax on every diesel-powered motor vehicle owned or operated by him;
(8) uses dyed diesel fuel[, on which a tax is required
to be paid,] for the operation of a motor vehicle on a public
highway, unless that use is permitted by another provision of this
chapter;
(9) makes a tax-free sale or delivery of liquefied gas
into the fuel supply tank of a motor vehicle that does not display a
current Texas liquefied gas tax decal;
(10) makes a sale or delivery of liquefied gas on which
the person knows the tax is required to be collected, if at the time
the sale is made the person does not hold a valid dealer's permit;
(11) makes a tax-free sale or delivery of liquefied
gas into the fuel supply tank of a motor vehicle bearing
out-of-state license plates;
(12) makes a delivery of liquefied gas into the fuel
supply tank of a motor vehicle bearing Texas license plates and no
Texas liquefied gas tax decal, unless licensed under a multistate
fuels tax agreement;
(13) refuses to permit the comptroller or the attorney
general to inspect, examine, or audit a book or record required to
be kept by a distributor, supplier, dyed diesel fuel bonded user,
agricultural bonded user, dealer, interstate trucker, aviation
fuel dealer, jobber, common or contract carrier, or any person
required to hold a permit under this chapter;
(14) refuses to permit the comptroller or the attorney
general to inspect or examine any plant, equipment, materials, or
premises where motor fuel is produced, processed, stored, sold,
delivered, or used;
(15) refuses to permit the comptroller, the attorney
general, an employee of either of those officials, a peace officer,
an employee of the Texas Commission on Environmental Quality
[Natural Resource Conservation Commission], or an employee of the
Department of Agriculture to measure or gauge the contents of or
take samples from a storage tank or container on premises where
motor fuel is produced, processed, stored, sold, delivered, or
used;
(16) is a distributor, dyed diesel fuel bonded user,
agricultural bonded user, interstate trucker, or supplier and fails
or refuses to make or deliver to the comptroller a report required
by this chapter to be made and delivered to the comptroller;
(17) is an importer who does not obtain an import
verification number when required by this chapter;
(18) purchases motor fuel for export, on which the tax
imposed by this chapter has not been paid, and subsequently diverts
or causes the motor fuel to be diverted to a destination in this
state or any other state or country other than the originally
designated state or country without first obtaining a diversion
number;
(19) conceals motor fuel with the intent of engaging
in any conduct proscribed by this chapter or refuses to make sales
of motor fuel on the volume-corrected basis prescribed by this
chapter;
(20) refuses, while transporting motor fuel, to stop
the motor vehicle he is operating when called on to do so by a person
authorized to stop the motor vehicle;
(21) refuses to surrender a motor vehicle and cargo
for impoundment after being ordered to do so by a person authorized
to impound the motor vehicle and cargo;
(22) mutilates, destroys, or secretes a book or record
required by this chapter to be kept by a distributor, supplier, dyed
diesel fuel bonded user, agricultural bonded user, dealer,
interstate trucker, aviation fuel dealer, jobber, or person
required to hold a permit under this chapter;
(23) is a distributor, supplier, dyed diesel fuel
bonded user, agricultural bonded user, dealer, interstate trucker,
aviation fuel dealer, jobber, or other person required to hold a
permit under this chapter, or the agent or employee of one of those
persons and makes a false entry or fails to make an entry in the
books and records required under this chapter to be made by the
person or fails to retain a document as required by this chapter;
(24) transports in any manner motor fuel under a false
cargo manifest or shipping document, or transports in any manner
motor fuel to a location without delivering at the same time a
shipping document relating to that shipment;
(25) engages in a motor fuel transaction that requires
that the person have a permit under this chapter without then and
there holding the required permit;
(26) makes and delivers to the comptroller a report
required under this chapter to be made and delivered to the
comptroller, if the report contains false information;
(27) forges, falsifies, or alters an invoice
prescribed by law;
(28) makes any statement, knowing said statement to be
false, in a claim for a tax refund filed with the comptroller;
(29) furnishes to a supplier a signed statement for
purchasing diesel fuel tax free and then uses the tax-free diesel
fuel to operate a diesel-powered motor vehicle on a public highway;
(30) holds an aviation fuel dealer's permit and makes a
taxable sale or use of any gasoline or diesel fuel;
(31) fails to remit any tax funds collected by a
distributor, supplier, dyed diesel fuel bonded user, agricultural
bonded user, dealer, interstate trucker, jobber, or any other
person required to hold a permit under this chapter;
(32) makes a sale of diesel fuel tax free into a
storage facility of a person who:
(A) is not permitted as a supplier, as an
aviation fuel dealer, as a dyed diesel fuel bonded user, as an
agricultural bonded user, or as a diesel tax prepaid user of diesel
fuel; or
(B) does not furnish to the permitted supplier a
signed statement prescribed in Section 153.205;
(33) makes a sale of gasoline tax free to any person
who is not permitted as either a distributor or an aviation fuel
dealer;
(34) is a dealer who purchases any motor fuel tax free
when not authorized to make a tax-free purchase under this chapter;
(35) is a dealer who purchases motor fuel with the
intent to evade any tax imposed by this chapter, or who accepts a
delivery of motor fuel by any means and does not at the same time
accept or receive a shipping document relating to the delivery;
(36) transports motor fuel for which a cargo manifest
or shipping document is required to be carried without possessing
or exhibiting on demand by an officer authorized to make the demand
a cargo manifest or shipping document containing the information
required to be shown on the manifest or shipping document;
(37) imports, sells, uses, distributes, or stores
motor fuel within this state on which the taxes imposed by this
chapter are owed but have not been first paid to or reported by the
holder of a distributor, supplier, liquefied gas dealer, interstate
trucker, diesel tax prepaid user, dyed diesel fuel bonded user, or
agricultural bonded user permit;
(38) blends products together to produce a blended
fuel that is offered for sale, sold, or used that expands the volume
of the original product to evade paying applicable motor fuel
taxes; or
(39) evades or attempts to evade in any manner a tax
imposed on motor fuel by this chapter.
SECTION 35A. Section 155.002, Tax Code, is amended to read
as follows:
Sec. 155.002. STORAGE. (a) The commercial business
location where tobacco products are stored or kept cannot be a
residence or a unit in a public storage facility.
(b) This section does not apply to a manufacturer's
representative.
SECTION 36. Section 156.051(a), Tax Code, is amended to
read as follows:
(a) A tax is imposed on a person who, under a lease,
concession, permit, right of access, license, contract, or
agreement, pays for the use or possession or for the right to the
use or possession of a room or space in a hotel costing $15 [$2] or
more each day.
SECTION 37. Section 156.102(b), Tax Code, is amended to
read as follows:
(b) For purposes of this section:
(1) a corporation or association that is organized and
operated exclusively for the cleaning of beaches and that has no
part of its net earnings inure to the benefit of a private
shareholder or individual is organized and operated exclusively for
a charitable purpose; and
(2) a public or private institution of higher
education is organized and operated exclusively for an educational
purpose only if the institution is defined as a Texas [an]
institution of higher education or as a Texas private or
independent institution of higher education under any subdivision
of Section 61.003, Education Code.
SECTION 38. Subchapter C, Chapter 156, Tax Code, is amended
by adding Section 156.104 to read as follows:
Sec. 156.104. EXEMPTION CERTIFICATE. (a) The right to use
or possess a room or space in a hotel is exempt from taxation under
this chapter if the person required to collect the tax receives, in
good faith from a guest, a properly completed exemption certificate
stating that the guest is qualified for an exemption under Section
156.102 or 156.103. An exemption certificate must be supported by
the documentation required under rules adopted by the comptroller.
(b) The comptroller shall produce and maintain a list of
entities that have been provided a letter of exemption from the
state hotel occupancy tax under Section 156.102. The comptroller
shall make the list available on the comptroller's Internet
website.
SECTION 39. Section 171.001(a), Tax Code, is amended to
read as follows:
(a) A franchise tax is imposed on:
(1) each corporation that does business in this state
or that is chartered [or authorized to do business] in this state;
[,] and
(2) each limited liability company that does business
in this state or that is organized under the laws of this state [or
is authorized to do business in this state].
SECTION 40. Section 171.001(b)(2), Tax Code, is amended to
read as follows:
(2) "Beginning date" means:
(A) for a corporation chartered in this state,
the date on which the corporation's charter takes effect; and
(B) for a foreign corporation, [the earlier of]
the date on which[:
[(i) the corporation's certificate of
authority takes effect; or
[(ii)] the corporation begins doing business
in this state.
SECTION 41. Section 171.052, Tax Code, is amended to read as
follows:
Sec. 171.052. CERTAIN CORPORATIONS. An insurance
organization, title insurance company, or title insurance agent
authorized to engage in insurance business in this state now
required to pay an annual tax under Chapter 4 or 9, Insurance Code,
measured by its gross premium receipts is exempted from the
franchise tax. A [An insurance organization performing management
or accounting activities in this state on behalf of a] nonadmitted
[captive] insurance organization [company under Chapter 101,
Insurance Code,] that is required to pay a gross premium receipts
tax during a tax year is exempted from the franchise tax for that
same tax year. Farm mutuals, local mutual aid associations, and
burial associations are not subject to the franchise tax.
SECTION 42. Section 171.084(c), Tax Code, is amended to
read as follows:
(c) In this section, "wholesale center" means a permanent
wholesale facility that has permanent tenants and that promotes at
least four national or regional trade shows in a calendar year. A
tenant leasing space at a wholesale center for a period longer than
the period prescribed by Subsection (b) may qualify for the
exemption provided by this section only if the tenant solicits
orders on an occasional basis at the trade show as prescribed by
Subsection (b).
SECTION 43. Section 171.1032(b), Tax Code, is amended to
read as follows:
(b) A corporation shall deduct from its gross receipts
computed under Subsection (a) any amount to the extent included
under Subsection (a) because of the application of Section 78 or
Sections 951-964, Internal Revenue Code, any amount excludable
under Section 171.110(k), and dividends received from a subsidiary,
associate, or affiliated corporation that does not transact a
substantial portion of its business or regularly maintain a
substantial portion of its assets in the United States.
SECTION 44. Section 171.1051(c), Tax Code, is amended to
read as follows:
(c) A corporation shall deduct from its gross receipts
computed under Subsection (a) any amount to the extent included in
Subsection (a) because of the application of Section 78 or Sections
951-964, Internal Revenue Code, any amount excludable under Section
171.110(k), and dividends received from a subsidiary, associate, or
affiliated corporation that does not transact a substantial portion
of its business or regularly maintain a substantial portion of its
assets in the United States.
SECTION 45. Section 171.106, Tax Code, is amended by adding
Subsection (i) to read as follows:
(i) Receipts from services that a defense readjustment
project performs in a defense economic readjustment zone are not
receipts from business done in this state.
SECTION 46. Section 171.109, Tax Code, is amended by adding
Subsection (a-1) to read as follows:
(a-1) A legally enforceable obligation that requires the
return of a like-kind property that was borrowed will be considered
debt if it is a liability according to generally accepted
accounting principles and if the return must be made within an
ascertainable period of time or on demand. The amount that will be
considered debt is the fair market value measured on the last day on
which the report is based as required by Section 171.153. For
purposes of this subsection, "like-kind property" means the same
quantity, quality, and nature or character as the property
borrowed.
SECTION 47. Section 171.110, Tax Code, is amended by
amending Subsection (a) and adding Subsections (k) and (l) to read
as follows:
(a) The net taxable earned surplus of a corporation is
computed by:
(1) determining the corporation's reportable federal
taxable income, subtracting from that amount any amount excludable
under Subsection (k), any amount included in reportable federal
taxable income under Section 78 or Sections 951-964, Internal
Revenue Code, and dividends received from a subsidiary, associate,
or affiliated corporation that does not transact a substantial
portion of its business or regularly maintain a substantial portion
of its assets in the United States, and adding to that amount any
compensation of officers or directors, or if a bank, any
compensation of directors and executive officers, to the extent
excluded in determining federal taxable income to determine the
corporation's taxable earned surplus;
(2) apportioning the corporation's taxable earned
surplus to this state as provided by Section 171.106(b) or (c), as
applicable, to determine the corporation's apportioned taxable
earned surplus;
(3) adding the corporation's taxable earned surplus
allocated to this state as provided by Section 171.1061; and
(4) subtracting from that amount any allowable
deductions and any business loss that is carried forward to the tax
reporting period and deductible under Subsection (e).
(k) Dividends and interest received from federal
obligations are not included in earned surplus or gross receipts
for earned surplus purposes.
(l) In this section:
(1) "Federal obligations" means:
(A) stocks and other direct obligations of, and
obligations unconditionally guaranteed by, the United States
government and United States government agencies; and
(B) direct obligations of a United States
government-sponsored agency.
(2) "Obligation" means any bond, debenture, security,
mortgage-backed security, pass-through certificate, or other
evidence of indebtedness of the issuing entity. The term does not
include a deposit, a repurchase agreement, a loan, a lease, a
participation in a loan or pool of loans, a loan collateralized by
an obligation of a United States government agency, or a loan
guaranteed by a United States government agency.
(3) "United States government" means any department or
ministry of the federal government, including a federal reserve
bank. The term does not include a state or local government, a
commercial enterprise owned wholly or partly by the United States
government, or a local governmental entity or commercial enterprise
whose obligations are guaranteed by the United States government.
(4) "United States government agency" means an
instrumentality of the United States government whose obligations
are fully and explicitly guaranteed as to the timely payment of
principal and interest by the full faith and credit of the United
States government. The term includes the Government National
Mortgage Association, the Department of Veterans Affairs, the
Federal Housing Administration, the Farmers Home Administration,
the Export-Import Bank, the Overseas Private Investment
Corporation, the Commodity Credit Corporation, the Small Business
Administration, and any successor agency.
(5) "United States government-sponsored agency" means
an agency originally established or chartered by the United States
government to serve public purposes specified by the United States
Congress but whose obligations are not explicitly guaranteed by the
full faith and credit of the United States government. The term
includes the Federal Home Loan Mortgage Corporation, the Federal
National Mortgage Association, the Farm Credit System, the Federal
Home Loan Bank System, the Student Loan Marketing Association, and
any successor agency.
SECTION 48. Sections 171.110(b) and (c), Tax Code, are
amended to read as follows:
(b) Except as provided by Subsection (c), a [A] corporation
is not required to add the compensation of officers or directors as
required by Subsection (a)(1) if the corporation is:
(1) a corporation that has not more than 35
shareholders; or
(2) an S corporation, as that term is defined by
Section 1361, Internal Revenue Code.
(c) A subsidiary corporation may not claim the exclusion
under Subsection (b) if it has a parent corporation that does not
qualify for the exclusion. For purposes of this subsection, a
corporation qualifies as a parent if it ultimately controls the
subsidiary, even if the control arises through a series or group of
other subsidiaries or entities. Control is presumed if a parent
corporation directly or indirectly owns, controls, or holds a
majority of the outstanding voting stock of a corporation or
ownership interests in another entity [Subsection (b) does not
apply to a subsidiary corporation unless it applies to the
subsidiary's parent corporation].
SECTION 49. Section 171.203, Tax Code, is amended by adding
Subsection (f) to read as follows:
(f) A public information report that is filed
electronically complies with the signature and certification
requirements prescribed by Subsection (d).
SECTION 50. Subchapter O, Chapter 171, Tax Code, is amended
by adding Section 171.731 to read as follows:
Sec. 171.731. ASSIGNMENT PROHIBITED. A corporation may not
convey, assign, or transfer the credit allowed under this
subchapter to another entity unless all of the assets of the
corporation are conveyed, assigned, or transferred in the same
transaction.
SECTION 51. Section 171.751(1), Tax Code, is amended to
read as follows:
(1) "Agricultural processing" means an establishment
primarily engaged in activities described in categories 0724,
2011-2099, 2211, 2231, 2824, 2833, 2834, 2835, 2836, 2841,
3111-3199, 3262, or 3952, in product classes 28692 or 28698 of
category 2869, or in product classes 28992 or 28994 of category 2899
of the 1987 Standard Industrial Classification Manual published by
the federal Office of Management and Budget.
SECTION 52. Subchapter P, Chapter 171, Tax Code, is amended
by adding Section 171.7515 to read as follows:
Sec. 171.7515. "QUALIFIED BUSINESS." (a) In addition to the
meaning assigned by Section 171.751(8), "qualified business" also
means a corporation that has been designated as an enterprise
project or as a defense readjustment project and is certified by the
Texas Department of Economic Development as a qualified business
under Section 2303.402 or 2310.302, Government Code.
(b) This section expires January 1, 2005.
SECTION 53. Section 171.753, Tax Code, is amended to read as
follows:
Sec. 171.753. CALCULATION OF CREDIT. A corporation may
establish a credit equal to five percent of the total wages and
salaries paid by the corporation for qualifying jobs during the
period upon which the tax is based, on each of five consecutive
reports beginning with the report based on the period during which
the qualifying jobs were created.
SECTION 54. Subchapter P, Chapter 171, Tax Code, is amended
by adding Section 171.7541 to read as follows:
Sec. 171.7541. LENGTH OF CREDIT. Notwithstanding Section
171.753, a corporation that has been designated as an enterprise
project or as a defense readjustment project on or after September
1, 2001, may, beginning on the date the project is designated,
establish a credit equal to 25 percent of the total wages and
salaries paid by the corporation for qualifying jobs. Subject to
Section 171.755, the corporation may claim the entire credit earned
on a report originally due on or after September 1, 2003, and before
January 1, 2005. This section expires January 1, 2005.
SECTION 55. Section 171.802, Tax Code, is amended by adding
Subsection (d) to read as follows:
(d) A corporation that has been designated as an enterprise
project or as a defense readjustment project and is certified by the
Texas Department of Economic Development as a qualified business
under Section 2303.402 or 2310.302, Government Code, may qualify
for the credit provided by this subchapter, regardless of whether
the corporation meets the qualifications prescribed by Subsection
(b). This subsection expires January 1, 2005.
SECTION 56. Section 171.803, Tax Code, is amended to read as
follows:
Sec. 171.803. CALCULATION OF CREDIT. (a) Except as provided
by Subsection (b), a [A] corporation may establish a credit equal to
7.5 percent of the qualified capital investment during the period
upon which the tax is based.
(b) A corporation that has been designated as an enterprise
project or as a defense readjustment project on or after September
1, 2001, may, beginning on the date the project is designated,
establish a credit equal to 7.5 percent of the qualified capital
investment. This subsection expires January 1, 2005.
SECTION 57. Section 171.804(b), Tax Code, as effective
September 1, 2003, is amended to read as follows:
(b) Subject to Section 171.805, a corporation that has been
designated as an enterprise project or as a defense readjustment
project may claim the entire credit earned on a report originally
due on or after September 1, 2003, and before January 1, 2006
[during an accounting period against the taxes imposed for the
corresponding reporting period].
SECTION 58. Section 171.853(c), Tax Code, is amended to
read as follows:
(c) The credit claimed for each privilege period may not
exceed 50 percent of the amount of [net] franchise tax due, before
[after] any other applicable tax credits, for the privilege period.
SECTION 59. Chapter 171, Tax Code, is amended by adding
Subchapter U to read as follows:
SUBCHAPTER U. TAX CREDIT FOR TITLE INSURANCE HOLDING
COMPANIES
Sec. 171.891. APPLICABILITY OF DEFINITIONS. In this
subchapter:
(1) "Control" has the meaning described by Sections
823.005 and 823.151, Insurance Code.
(2) "Controlled insurer," "domestic insurer," and
"holding company" have the meanings assigned by Section 823.002,
Insurance Code.
(3) "Title insurance," "title insurance agent," and
"title insurance company" have the meanings assigned by Article
9.02, Insurance Code.
Sec. 171.892. ELIGIBILITY. A corporation is entitled to a
credit as provided by this subchapter against the tax imposed under
this chapter if the corporation:
(1) is a title insurance holding company subject to
Chapter 823, Insurance Code; and
(2) controls one or more domestic title insurance
companies that are subject to the tax on premiums imposed under
Article 9.59, Insurance Code.
Sec. 171.893. AMOUNT; LIMITATIONS. (a) The amount of the
credit for each controlled domestic title insurance company is
computed by multiplying the amount of tax on premiums paid by that
company in the most recent calendar year ending before the
franchise tax report is due by the percentage of ownership of the
title insurance holding company in the controlled domestic title
insurance company. The percentage of ownership of a controlled
domestic title insurance company is determined as of the accounting
year-end on which the report is based.
(b) A claim for a credit is subject to the following
limitations:
(1) if the total amount of the credit for all
controlled title insurance companies exceeds the franchise tax due,
the credit is an amount equal to the franchise tax due;
(2) no portion of a credit may be applied to another
year's franchise tax report; and
(3) a corporation may not take credit for the same tax
on premiums more than once.
Sec. 171.894. EFFECT ON OTHER TAXES. This subchapter does
not exempt a title insurance holding company, a title insurance
company, or a title insurance agent from paying a tax imposed by
this code, except that a title insurance company or a title
insurance agent whose principal activity is the business of title
insurance is exempt from a tax imposed by this chapter.
SECTION 60. Section 201.057(c), Tax Code, is amended to
read as follows:
(c) High-cost gas as defined in Subsection (a)(2)(A)
produced from a well that is spudded or completed after August 31,
1996, [and before September 1, 2010,] is entitled to a reduction of
the tax imposed by this chapter for the first 120 consecutive
calendar months beginning on the first day of production, or until
the cumulative value of the tax reduction equals 50 percent of the
drilling and completion costs incurred for the well, whichever
occurs first. The amount of tax reduction shall be computed by
subtracting from the tax rate imposed by Section 201.052 the
product of that tax rate times the ratio of drilling and completion
costs incurred for the well to twice the median drilling and
completion costs for high-cost wells as defined in Subsection
(a)(2)(A) spudded or completed during the previous state fiscal
year, except that the effective rate of tax may not be reduced below
zero.
SECTION 61. Section 202.054(c), Tax Code, is amended to
read as follows:
(c) This section applies to an enhanced recovery project
that begins active operation on or after September 1, 1989, and to
an expansion that the commission approves on or after September 1,
1991. An application for approval under this section must be filed
on or after September 1, 1989, [and before January 1, 2008,] for a
new enhanced recovery project. An application for approval under
this section must be filed on or after September 1, 1991, [and
before January 1, 2008,] for an expansion of an existing enhanced
recovery project. A project may not qualify as an expansion if the
project has qualified as a new enhanced recovery project under this
section. An application may be filed on or after September 1, 1989,
even if a separate application for approval of the project or
expansion has already been filed under Subchapter B, Chapter 101,
Natural Resources Code, or for approval as a tertiary recovery
project for purposes of Section 4993, Internal Revenue Code of
1986, if the operation of a new project or the expansion of an
existing project, other than a co-production project, does not
begin before the application for approval under this section is
approved by the commission; provided, however, nothing herein
shall require commission approval of a co-production project prior
to commencing active operations on such project in order for such
project to be eligible for the recovered oil tax rate.
SECTION 62. Subchapter B, Chapter 321, Tax Code, is amended
by adding Section 321.107 to read as follows:
Sec. 321.107. ADMINISTRATION OF LOCAL SALES AND USE TAXES
IMPOSED BY OTHER GOVERNMENTAL ENTITIES. The imposition,
computation, administration, enforcement, and collection of any
local sales and use tax imposed by any other local governmental
entity is governed by this chapter, except as otherwise provided by
law. In this section, "other local governmental entity" includes
any governmental entity created by the legislature that has a
limited purpose or function, that has a defined or restricted
geographic territory, and that is authorized by law to impose a
local sales and use tax. The term does not include a county, county
health services district, county landfill and criminal detention
center district, metropolitan transportation authority, economic
development district, crime control district, hospital district,
emergency services district, or library district.
SECTION 63. Section 321.203(j), Tax Code, is amended to
read as follows:
(j) The sale of [cable television] services delivered
through a cable system is consummated at the point of delivery to
the consumer.
SECTION 64. Section 322.001(a), Tax Code, is amended to
read as follows:
(a) This chapter applies to the imposition, assessment,
collection, administration, and enforcement of a sales and use tax
imposed under Chapter 451, 452, [or] 453, or 460, Transportation
Code.
SECTION 65. Section 322.002(1), Tax Code, is amended to
read as follows:
(1) "Taxing entity" means a rapid transit authority, a
regional transit authority, including a subregional transportation
authority, or a municipal mass transit department created under
Chapter 451, 452, or 453, Transportation Code, or a coordinated
county transportation authority created under Chapter 460,
Transportation Code, that has adopted a sales and use tax under the
law authorizing the creation of the entity.
SECTION 66. Section 323.203(j), Tax Code, is amended to
read as follows:
(j) The sale of [cable television] services delivered
through a cable system is consummated at the point of delivery to
the consumer.
SECTION 67. The following are repealed:
(1) Section 171.754, Tax Code;
(2) Section 2.08, Chapter 1134, Acts of the 77th
Legislature, Regular Session, 2001; and
(3) Section 16, Article 9.59, Insurance Code.
SECTION 68. Each change in law made to the following
provisions by this Act is a clarification of existing law and does
not imply that existing law may be construed as inconsistent with
the law as amended by this Act:
(1) Section 1, Article 4.10, Insurance Code;
(2) Article 4.17(a), Insurance Code;
(3) Article 20A.33(d), Insurance Code;
(4) Section 101.053(b), Insurance Code;
(5) Section 912.002(b), Insurance Code;
(6) Section 376.470(d), Local Government Code, as
added by Chapter 1433, Acts of the 77th Legislature, Regular
Session, 2001;
(7) Section 2153.153(a), Occupations Code;
(8) Section 151.0035, Tax Code;
(9) Section 151.005, Tax Code;
(10) Section 151.056(f), Tax Code;
(11) Section 151.313(a), Tax Code;
(12) Section 151.3501, Tax Code;
(13) Section 151.355, Tax Code;
(14) Section 153.013(a), Tax Code;
(15) Section 153.120(d), Tax Code;
(16) Section 153.205, Tax Code;
(17) Section 153.222(a), Tax Code;
(18) Section 153.403, Tax Code;
(19) Section 171.052, Tax Code;
(20) Section 171.084(c), Tax Code;
(21) Section 171.1032(b), Tax Code;
(22) Section 171.1051(c), Tax Code;
(23) Section 171.106(i), Tax Code;
(24) Sections 171.110(a), (b), (c), (k), and (l), Tax
Code;
(25) Section 171.731, Tax Code;
(26) Section 171.751(1), Tax Code;
(27) Subchapter U, Chapter 171, Tax Code;
(28) Section 321.107, Tax Code;
(29) Section 322.001(a), Tax Code; and
(30) Section 322.002(1), Tax Code.
SECTION 69. To the extent of any conflict, this Act prevails
over another Act of the 78th Legislature, Regular Session, 2003,
relating to nonsubstantive codifications of law or nonsubstantive
additions to and corrections in enacted codes.
SECTION 70. (a) Except as otherwise provided by this
section, this Act takes effect September 1, 2003.
(b) Sections 14, 28, 36, and 37 of this Act take effect
October 1, 2003.
(c) Section 15 of this Act applies only to a tax lien filed
on or after the effective date of this Act. A tax lien filed before
the effective date of this Act is governed by the law in effect on
the date the tax lien is filed, and that law is continued in effect
for that purpose.
(d) Sections 2, 4, 5, 7, 8, and 9A of this Act take effect
January 1, 2004.
(e) Sections 46, 49, and 58 of this Act take effect January
1, 2004, and apply to reports originally due on or after that date.
A report originally due before January 1, 2004, is governed by the
law in effect on the date the report is originally due, and that law
is continued in effect for that purpose.
(f) Sections 51, 52, 53, 54, 55, 56, and 57 of this Act apply
only to a report originally due on or after the effective date of
this Act.
(g) Section 156.104(b), Tax Code, as added by Section 38 of
this Act, takes effect January 1, 2004.
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