78R7281 CBH-D
By: Shapleigh S.B. No. 1031
A BILL TO BE ENTITLED
AN ACT
relating to imposition of the sales and use tax on certain services.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter A, Chapter 151, Tax Code, is amended
by adding Section 151.0023 to read as follows:
Sec. 151.0023. "ACCOUNTING AND AUDIT SERVICES."
"Accounting and audit services" means the making and recording of
business financial records and statements, the creation and
implementation of accounting or bookkeeping systems, cost
accounting or bookkeeping services, and services provided by a
certified public accountant, enrolled agent, or bookkeeping firm in
connection with the preparation of financial and auditing reports.
The term includes financial planning services, tax return
preparation, and budgeting services.
SECTION 2. Subchapter A, Chapter 151, Tax Code, is amended
by adding Section 151.0025 to read as follows:
Sec. 151.0025. "ADVERTISING MEDIA SERVICES." "Advertising
media services" means the provision of advertising space and time,
including television and radio time, magazine space, and newspaper
space.
SECTION 3. Subchapter A, Chapter 151, Tax Code, is amended
by adding Section 151.0029 to read as follows:
Sec. 151.0029. "ARCHITECTURAL SERVICES." "Architectural
services" means an act or activity constituting the "practice of
architecture," as that term is defined by Section 1051.001,
Occupations Code, and any other act or activity provided to an
architect's client in relation to the practice of architecture.
SECTION 4. Section 151.0031, Tax Code, is amended to read as
follows:
Sec. 151.0031. "COMPUTER PROGRAM." "Computer program"
means a series of instructions that are coded for acceptance or use
by a computer system and that are designed to permit the computer
system to process data and provide results and information. The
series of instructions may be contained in or on magnetic tapes,
punched cards, printed instructions, or other tangible or
electronic media. For purposes of this chapter, the term includes a
computer program created or developed exclusively for a client who
retains all rights to the program.
SECTION 5. Subchapter A, Chapter 151, Tax Code, is amended
by adding Section 151.00335 to read as follows:
Sec. 151.00335. "COMMERCIAL RESEARCH, DEVELOPMENT, OR
TESTING SERVICES." (a) "Commercial research, development, or
testing services" includes:
(1) commercial physical and biological research and
development;
(2) analyzing, developing, creating, or testing
items, products, or processes using methods of scientific
experimentation and observation; and
(3) commercial research involving business,
marketing, opinion, and other economic, sociological, and
education research.
(b) "Commercial research, development, or testing services"
does not include:
(1) research and development directly engaged in by
aircraft and spacecraft manufacturers;
(2) research by a noncommercial establishment funded
by an endowment, grant, or contribution;
(3) medical tests performed on a human or on tissue,
fluids, or other substances removed from a human in connection with
diagnosis or treatment; or
(4) another medical service provided for a human by a
licensed practitioner of the healing arts.
SECTION 6. Subchapter A, Chapter 151, Tax Code, is amended
by adding Section 151.0037 to read as follows:
Sec. 151.0037. "EMPLOYMENT AGENCY SERVICES." (a)
"Employment agency services" means services performed in an effort
to locate or find employment for an employer or a person seeking
employment, including executive, professional, administrative,
secretarial, clerical, service, manufacturing, and health care
personnel. The term includes employment services by an employment
registry service or a casting bureau or agency for the theater,
radio, television, or motion pictures.
(b) "Employment agency services" does not include temporary
labor supply services, agricultural facilities support, or staff
leasing services.
SECTION 7. Subchapter A, Chapter 151, Tax Code, is amended
by adding Section 151.00372 to read as follows:
Sec. 151.00372. "ENGINEERING SERVICES." "Engineering
services" means an act or activity constituting the "practice of
engineering" as that term is defined by Section 1001.003,
Occupations Code, and any other act or activity provided to an
engineer's client in relation to the practice of engineering.
SECTION 8. Subchapter A, Chapter 151, Tax Code, is amended
by adding Section 151.00375 to read as follows:
Sec. 151.00375. "FINANCIAL SERVICES." "Financial
services" means services for or benefits provided to customers,
clients, or depositors by banks, savings and loan associations,
credit unions, stock brokerage firms, or other financial entities
that allow or assist the client, customer, or depositor to control,
manage, conserve, or spend the person's money or other assets. The
term includes:
(1) a commission or fee paid for bond brokerage,
investment banking, sale of investment certificates, security
underwriting, oil and gas lease brokerage, financial advice and
service investment, and investment counseling; and
(2) bank account charges, insufficient check charges,
automated teller machine charges, stop payment order charges,
certified check charges, and safety deposit box rental fees.
SECTION 9. Subchapter A, Chapter 151, Tax Code, is amended
by adding Section 151.0041 to read as follows:
Sec. 151.0041. "LEGAL SERVICES." "Legal services" means an
act or activity constituting the practice of law and any other act
or activity provided by an attorney-at-law licensed by the Supreme
Court of Texas to a client in connection with the practice of law.
The term also includes services provided by a paralegal or a legal
secretary employed by an attorney-at-law and provided to the
attorney's client in relation to the practice of law and lawyer
referral services.
SECTION 10. Subchapter A, Chapter 151, Tax Code, is amended
by adding Section 151.0042 to read as follows:
Sec. 151.0042. "MANAGEMENT, CONSULTING, OR PUBLIC
RELATIONS SERVICES." (a) "Management, consulting, or public
relations services" includes:
(1) directing, analyzing, evaluating, or giving
advice relating to the management of a business, including:
(A) business operations;
(B) organizational structure;
(C) financial planning and budgeting;
(D) business strategies and marketing objectives
and policies;
(E) information systems, including hardware and
software needs, options, or solutions;
(F) human resources and employee management
policies, practices, and planning; and
(G) production scheduling or control processes;
(2) facilities support management services;
(3) services to determine or influence the opinion or
sentiments of the public or specific individuals, governmental
officials, or groups, including services the performance of which
would require a person to be registered under Chapter 305,
Government Code; and
(4) services relating to gathering or compiling
economic, sociological, consumer, or other information.
(b) "Management, consulting, or public relations services"
does not include, except for services provided to a client for which
registration is required under Chapter 305, Government Code:
(1) legal services provided by an attorney; or
(2) accounting services provided by a certified public
accountant, enrolled agent, or bookkeeping firm to produce
financial reports or prepare tax returns.
SECTION 11. Subchapter A, Chapter 151, Tax Code, is amended
by adding Section 151.0046 to read as follows:
Sec. 151.0046. "REAL ESTATE BROKERAGE AND AGENCY SERVICES."
"Real estate brokerage and agency services" means services
described by Section 1101.002(1) or (6), Occupations Code, that are
performed by a person licensed under Chapter 1101, Occupations
Code.
SECTION 12. Section 151.006, Tax Code, is amended to read as
follows:
Sec. 151.006. "SALE FOR RESALE." "Sale for resale" means a
sale of:
(1) tangible personal property or a taxable service to
a purchaser who acquires the property or service for the purpose of
reselling it in the United States of America or a possession or
territory of the United States of America or in the United Mexican
States in the normal course of business in the form or condition in
which it is acquired or as an attachment to or integral part of
other tangible personal property or taxable service;
(2) tangible personal property to a purchaser for the
sole purpose of the purchaser's leasing or renting it in the United
States of America or a possession or territory of the United States
of America or in the United Mexican States to another person, but
not if incidental to the leasing or renting of real estate;
(3) tangible personal property to a purchaser who
acquires the property for the purpose of transferring it in the
United States of America or a possession or territory of the United
States of America or in the United Mexican States as an integral
part of a taxable service; [or]
(4) a taxable service, other than a transportation
service, performed on tangible personal property that is held for
sale by the purchaser of the taxable service; or
(5) the provision of temporary labor supply services
if the employee provided is directly engaged in providing a taxable
service under this chapter.
SECTION 13. Section 151.0101(a), Tax Code, is amended to
read as follows:
(a) "Taxable services" means:
(1) amusement services;
(2) cable television services;
(3) personal services;
(4) motor vehicle parking and storage services;
(5) the repair, remodeling, maintenance, and
restoration of tangible personal property, except:
(A) aircraft;
(B) a ship, boat, or other vessel, other than:
(i) a taxable boat or motor as defined by
Section 160.001;
(ii) a sports fishing boat; or
(iii) any other vessel used for pleasure; and
(C) the repair, maintenance, and restoration of a
motor vehicle; [and
[(D) the repair, maintenance, creation, and
restoration of a computer program, including its development and
modification, not sold by the person performing the repair,
maintenance, creation, or restoration service;]
(6) telecommunications services;
(7) credit reporting services;
(8) debt collection services;
(9) insurance services;
(10) information services;
(11) real property services;
(12) data processing services;
(13) real property repair and remodeling;
(14) security services;
(15) telephone answering services;
(16) Internet access service; [and]
(17) a sale by a transmission and distribution
utility, as defined in Section 31.002, Utilities Code, of
transmission or delivery of service directly to an electricity
end-use customer whose consumption of electricity is subject to
taxation under this chapter;
(18) accounting and audit services;
(19) advertising media services;
(20) architectural services;
(21) commercial research, development, or testing
services;
(22) employment agency services;
(23) engineering services;
(24) financial services;
(25) legal services;
(26) management, consulting, or public relations
services;
(27) real estate brokerage and agency services;
(28) temporary labor supply services;
(29) transportation services; and
(30) veterinary services.
SECTION 14. Subchapter A, Chapter 151, Tax Code, is amended
by adding Section 151.0106 to read as follows:
Sec. 151.0106. "TEMPORARY LABOR SUPPLY SERVICES." (a)
"Temporary labor supply services" means the supplying of
individuals who are the employees of a supplier as temporary or
continuing employment to supplement the business's existing
workforce, under a contract, including a contract providing for
payment as fees, in which the supplier's employees are on the
payroll of the supplier but may be under the direct or general
supervision of the business to whom the employees are supplied.
(b) "Temporary labor supply services" does not include
supplying employment for agricultural purposes, staff leasing
services, or facility support services.
SECTION 15. Subchapter A, Chapter 151, Tax Code, is amended
by adding Section 151.0108 to read as follows:
Sec. 151.0108. "TRANSPORTATION SERVICES." "Transportation
services" means transportation of passengers or property that
originates and terminates in this state, other than the regularly
scheduled transport of passengers by airline, train, bus, or boat,
including:
(1) freight hauled by rail or by motor vehicle;
(2) private mail or package delivery or courier
service;
(3) towing of a motor vehicle;
(4) bus or van service, including airport or bus
terminal shuttle service;
(5) limousine service; and
(6) taxi service.
SECTION 16. Subchapter A, Chapter 151, Tax Code, is amended
by adding Section 151.012 to read as follows:
Sec. 151.012. "VETERINARY SERVICES." "Veterinary
services" means an act or activity constituting the "practice of
veterinary medicine," as that term is defined by Section 801.002,
Occupations Code, and any other act or activity provided to a
veterinarian's client in relation to the practice of veterinary
medicine. The term also includes prescribed medications,
artificial insemination, breeding services, boarding, and training
provided by a veterinarian or a person employed by a veterinarian.
SECTION 17. Section 151.057, Tax Code, is amended to read as
follows:
Sec. 151.057. SERVICES BY EMPLOYEES. The following
services are not taxable under this chapter:
(1) a service performed by an employee for his
employer in the regular course of business, within the scope of the
employee's duties, and for which the employee is paid his regular
wages or salary; or
(2) [a service performed by an employee of a temporary
employment service as defined by Section 93.001, Labor Code, for an
employer to supplement the employer's existing work force on a
temporary basis, when the service is normally performed by the
employer's own employees, the employer provides all supplies and
equipment necessary, and the help is under the direct or general
supervision of the employer to whom the help is furnished; or
[(3)] a service performed by assigned employees of a
staff leasing company, either licensed under Chapter 91, Labor
Code, or exempt from the licensing requirements of that chapter,
for a client company under a written contract that provides for
shared employment responsibilities between the staff leasing
company and the client company for the assigned employees, most of
whom must have been previously employed by the client company. The
comptroller shall prescribe by rule the minimum percentage of
assigned employees that must have been previously employed by the
client company, the minimum time period the assigned employees must
have been employed by the client company prior to the commencement
of its contract, and such other criteria as the comptroller may deem
necessary to properly implement this section.
SECTION 18. Section 151.3111, Tax Code, is amended by
adding Subsection (d) to read as follows:
(d) This section does not apply to transportation services.
SECTION 19. Section 151.3185(c), Tax Code, is amended to
read as follows:
(c) The exemption does not include:
(1) office equipment or supplies;
(2) maintenance or janitorial equipment or supplies;
(3) machinery, equipment, or supplies used in sales,
transmission, or transportation activities;
(4) machinery, equipment, or supplies used in
distribution activities, unless otherwise exempted by this
section;
(5) taxable items that are used incidentally in a
production described by Subsection (a)(2)(A) or (B); or
(6) the following taxable items, regardless of whether
they are used incidentally in a production described by Subsection
(a)(2)(A) or (B):
(A) telecommunications equipment and services;
(B) transmission equipment;
(C) security services;
(D) motor vehicle parking services; [and]
(E) food ready for immediate consumption;
(F) employment agency services or temporary
labor supply services; and
(G) transportation services.
SECTION 20. Section 151.338, Tax Code, is amended to read as
follows:
Sec. 151.338. ENVIRONMENT AND CONSERVATION SERVICES. (a)
The services involved in the repair, remodeling, maintenance, or
restoration of tangible personal property are not taxable under
this chapter if the repair, remodeling, maintenance, or restoration
is required by statute, ordinance, order, rule, or regulation of
any commission, agency, court, or political, governmental, or
quasi-governmental entity in order to protect the environment or to
conserve energy.
(b) This section does not apply to a service that was not
taxable under this chapter on August 31, 2003.
SECTION 21. Section 151.346(c), Tax Code, is amended to
read as follows:
(c) An exemption authorized by this section does not apply
to:
(1) a service that would have been taxable under this
chapter as it existed on September 1, 1987; or
(2) a service that was not taxable under this chapter
on August 31, 2003.
SECTION 22. (a) There are exempted from the taxes imposed by
Chapter 151, Tax Code, the receipts from the sale, use, storage,
rental, or other consumption in this state of services that became
subject to the taxes because of the terms of this Act and that are
the subject of a written contract or bid entered into on or before
June 2, 2003.
(b) The exemption provided by this section expires January
1, 2006.
SECTION 23. This Act takes effect September 1, 2003.