79R7558 DAK-D
By: Chisum H.B. No. 2841
A BILL TO BE ENTITLED
AN ACT
relating to the exemption from the sales and use tax for gas and
electricity used in manufacturing and processing.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter H, Chapter 151, Tax Code, is amended
by adding Sections 151.3171 and 151.3172 to read as follows:
Sec. 151.3171. PREDOMINANT USE OF GAS AND ELECTRICITY IN
MANUFACTURING AND PROCESSING. (a) This section applies to a person
who claims an exemption under Section 151.317(a)(2) for the use of
gas and electricity if the amount of gas and electricity claimed
exempt during a regular monthly billing period is more than 50
percent of the person's total use of gas and electricity for that
period.
(b) The comptroller shall certify that a person to whom this
section applies is eligible for an exemption under Section
151.317(a)(2) only if the comptroller receives a copy of a
comprehensive electric and gas predominant use study by an
independent service provider registered under Section 151.3172
that shows that 50 percent or more of the person's use of gas and
electricity is for manufacturing and processing as described by
Section 151.317(a)(2).
(c) The study required under Subsection (b) must be
conducted by a person licensed as an engineer by this state.
(d) The certification under Subsection (b) expires on the
third anniversary of the date the comptroller granted the
certification. To renew a certification, a person must submit to
the comptroller an updated comprehensive electric and gas
predominant use study as provided by this section.
(e) The comptroller or a provider of gas or electricity
shall provide to a person seeking to qualify under this section or
to an agent of the person any records of gas and electricity
consumption by the person in their possession during the four years
preceding the date of the person's request for the records. The
comptroller or provider of gas or electricity may not charge the
person an amount greater than $50 for each request made by the
person to produce the records.
Sec. 151.3172. INDEPENDENT SERVICE PROVIDERS;
REGISTRATION. (a) The comptroller may adopt and enforce rules
relating to the registration of an independent service provider
qualified to conduct a comprehensive electric and gas predominant
use study under Section 151.3171.
(b) The comptroller shall charge each independent service
provider an annual registration fee of $2,000.
(c) Each applicant for registration under this section
shall file or have on file a bond with the comptroller. The bond
must:
(1) be payable to this state;
(2) be in a form and contain terms and conditions
prescribed by the comptroller; and
(3) be in an amount of not less than $20,000.
(d) Subject to the approval of the comptroller, a person
may, instead of the bond required by Subsection (c), submit to the
comptroller, in an amount not less than $20,000:
(1) cash;
(2) an irrevocable letter of credit, payable to this
state; or
(3) a certificate of deposit, from a federally insured
bank or savings and loan institution authorized to do business in
this state, assigned to this state.
(e) A person certified as an independent service provider
under this section may:
(1) conduct a comprehensive electric and gas
predominant use study under Section 151.3171 to establish a
person's qualification for the exemption under Section
151.317(a)(2) for current or past uses of gas and electricity, as
allowed by law; and
(2) engage the services of an engineer licensed in
this state to conduct the study.
SECTION 2. Section 151.317(a), Tax Code, is amended to read
as follows:
(a) Subject to Subsection (d) and Section 151.3171, gas and
electricity are exempted from the taxes imposed by this chapter
when sold for:
(1) residential use;
(2) use in powering equipment exempt under Section
151.318 or 151.3185 by a person processing tangible personal
property for sale as tangible personal property, other than
preparation or storage of prepared food described by Section
151.314(c-2);
(3) use in lighting, cooling, and heating in the
manufacturing area during the actual manufacturing or processing of
tangible personal property for sale as tangible personal property,
other than preparation or storage of prepared food described by
Section 151.314(c-2);
(4) use directly in exploring for, producing, or
transporting, a material extracted from the earth;
(5) use in agriculture, including dairy or poultry
operations and pumping for farm or ranch irrigation;
(6) use directly in electrical processes, such as
electroplating, electrolysis, and cathodic protection;
(7) use directly in the off-wing processing, overhaul,
or repair of a jet turbine engine or its parts for a certificated or
licensed carrier of persons or property;
(8) use directly in providing, under contracts with or
on behalf of the United States government or foreign governments,
defense or national security-related electronics, classified
intelligence data processing and handling systems, or
defense-related platform modifications or upgrades;
(9) a direct or indirect use, consumption, or loss of
electricity by an electric utility engaged in the purchase of
electricity for resale; or
(10) use in timber operations, including pumping for
irrigation of timberland.
SECTION 3. The change in law made by this Act applies only
to taxes imposed on gas and electricity used on or after October 1,
2005. This Act does not affect taxes imposed on the use of gas and
electricity before October 1, 2005, and the law in effect before
that date is continued in effect for purposes of the liability for
and collection of those taxes.
SECTION 4. This Act takes effect September 1, 2005.