This website will be unavailable from Thursday, May 30, 2024 at 6:00 p.m. through Monday, June 3, 2024 at 7:00 a.m. due to data center maintenance.

                                                                                

78R4937 DAK-D

By:  Nelson                                                       S.B. No. 1106



A BILL TO BE ENTITLED

AN ACT

relating to exempting certain purchases of machinery and equipment 
used for research or development from sales and use taxes.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Subchapter H, Chapter 151, Tax Code, is amended 
by adding Section 151.3182 to read as follows:
	Sec. 151.3182.  EQUIPMENT USED IN RESEARCH OR DEVELOPMENT.  
(a)  In this section, "manufacturing" has the meaning assigned by 
Section 151.318.
	(b)  There are exempted from the taxes imposed by this 
chapter machinery, equipment, and replacement parts that are used 
directly in the research or development of inventions, products, 
processes, or technology by a person that is primarily engaged in:
		(1)  the manufacturing, processing, or fabrication of 
tangible personal property for ultimate sale; or
		(2)  the performance of scientific or technical 
services for a person described by Subdivision (1).
	(c)  The exemption does not include:                                    
		(1)  office equipment or supplies; or                                  
		(2)  equipment or supplies used in sales or 
distribution activities or in transportation activities.
	(d)  The exemption provided by Subsection (b) takes effect 
January 1, 2010.  Until that date, a person is entitled to a credit 
or refund of a portion of the taxes paid under this chapter on an 
item that, after January 1, 2010, will be exempted from the taxes 
imposed by this chapter under Subsection (b).  The amount of the 
credit or refund is determined as follows:
		(1)  for an item for which the taxable event occurs on 
or after January 1, 2006, and before January 1, 2007, the taxpayer 
is entitled to a refund or credit in an amount equal to 20 percent of 
the tax paid on the item;
		(2)  for an item for which the taxable event occurs on 
or after January 1, 2007, and before January 1, 2008, the taxpayer 
is entitled to a refund or credit in an amount equal to 40 percent of 
the tax paid on the item;
		(3)  for an item for which the taxable event occurs on 
or after January 1, 2008, and before January 1, 2009, the taxpayer 
is entitled to a refund or credit in an amount equal to 60 percent of 
the tax paid on the item; and
		(4)  for an item for which the taxable event occurs on 
or after January 1, 2009, and before January 1, 2010, the taxpayer 
is entitled to a refund or credit in an amount equal to 80 percent of 
the tax paid on the item.
	(e)  A taxpayer entitled to a credit or refund under 
Subsection (d) may elect to receive either a credit or a refund.  A 
taxpayer who elects to receive a credit must claim the credit on the 
return for a period that ends not later than the first anniversary 
of the date on which the taxable event occurred.  A taxpayer who 
elects to receive a refund must apply to the comptroller for the 
refund before or during the calendar year following the year in 
which the tax on the item was paid.
	SECTION 2.  (a)  This Act takes effect January 1, 2006.                        
	(b)  The change in law made by this Act does not affect taxes 
imposed before the effective date of this Act, and the law in effect 
before the effective date of this Act is continued in effect for 
purposes of the liability for and collection of those taxes.