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AN ACT
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relating to the sales and use tax. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 151.0048, Tax Code, is amended by adding |
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Subsection (b-1) to read as follows: |
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(b-1) "Real property service" does not include a service |
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listed under Subsection (a) if the service is performed by a landman |
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and is necessary to negotiate or secure land or mineral rights for |
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acquisition or trade, including: |
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(1) determining ownership; |
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(2) negotiating a trade or agreement regarding land or |
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mineral rights; |
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(3) drafting and administering contractual |
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agreements; |
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(4) ensuring that all governmental regulations are |
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complied with; and |
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(5) any other action necessary to complete the |
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transaction related to a service described by this subsection, |
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other than an information service described by Section 151.0038. |
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SECTION 2. Section 151.006, Tax Code, is amended to read as |
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follows: |
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Sec. 151.006. "SALE FOR RESALE." (a) "Sale for resale" |
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means a sale of: |
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(1) tangible personal property or a taxable service to |
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a purchaser who acquires the property or service for the purpose of |
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reselling it in the United States of America or a possession or |
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territory of the United States of America or in the United Mexican |
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States in the normal course of business in the form or condition in |
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which it is acquired or as an attachment to or integral part of |
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other tangible personal property or taxable service; |
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(2) tangible personal property to a purchaser for the |
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sole purpose of the purchaser's leasing or renting it in the United |
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States of America or a possession or territory of the United States |
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of America or in the United Mexican States in the normal course of |
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business to another person, but not if incidental to the leasing or |
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renting of real estate; |
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(3) tangible personal property to a purchaser who |
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acquires the property for the purpose of transferring it in the |
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United States of America or a possession or territory of the United |
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States of America or in the United Mexican States as an integral |
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part of a taxable service; or |
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(4) a taxable service performed on tangible personal |
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property that is held for sale by the purchaser of the taxable |
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service. |
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(b) Subsection (a)(3) applies to a transfer of a wireless |
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voice communication device as an integral part of a taxable |
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service, regardless of whether there is a separate charge for the |
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wireless voice communication device or whether the purchaser is the |
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provider of the taxable service, if payment for the service is a |
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condition for receiving the wireless voice communication device. |
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SECTION 3. Section 151.056, Tax Code, is amended by adding |
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Subsection (g) to read as follows: |
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(g) In this subsection, "ready mix concrete contractor" |
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means a person who manufactures or produces ready mixed concrete |
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for construction purposes and incorporates the ready mixed concrete |
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in the property improved. A ready mix concrete contractor |
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performing a contract must separate and individually invoice the |
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customer for each yard of ready mixed concrete produced and |
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consumed for the improvement of real property and collect and remit |
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the tax imposed under this chapter on the ready mixed concrete |
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produced and consumed. The tax rate is applied to the price of the |
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materials determined by the greater of the invoice price or fair |
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market value of ready mixed concrete incorporated into the project. |
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This subsection does not apply to an invoice submitted by a ready |
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mix concrete contractor for a public works project. |
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SECTION 4. Sections 151.313(a) and (c), Tax Code, are |
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amended to read as follows: |
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(a) The following items are exempted from the taxes imposed |
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by this chapter: |
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(1) a drug or medicine, other than insulin, if |
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prescribed or dispensed for a human or animal by a licensed |
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practitioner of the healing arts; |
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(2) insulin; |
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(3) [subject to Subsection (c),] a drug or medicine |
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that is required to be labeled with a "Drug Facts" panel in |
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accordance with regulations of the federal Food and Drug |
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Administration, without regard to whether it is prescribed or |
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dispensed by a licensed practitioner of the healing arts; |
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(4) a hypodermic syringe or needle; |
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(5) a brace; hearing aid or audio loop; orthopedic, |
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dental, or prosthetic device; ileostomy, colostomy, or ileal |
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bladder appliance; or supplies or replacement parts for the listed |
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items; |
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(6) a therapeutic appliance, device, and any related |
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supplies specifically designed for those products, if dispensed or |
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prescribed by a licensed practitioner of the healing arts, when |
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those items are purchased and used by an individual for whom the |
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items listed in this subdivision were dispensed or prescribed; |
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(7) corrective lens and necessary and related |
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supplies, if dispensed or prescribed by an ophthalmologist or |
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optometrist; |
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(8) specialized printing or signalling equipment used |
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by the deaf for the purpose of enabling the deaf to communicate |
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through the use of an ordinary telephone and all materials, paper, |
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and printing ribbons used in that equipment; |
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(9) a braille wristwatch, braille writer, braille |
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paper and braille electronic equipment that connects to computer |
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equipment, and the necessary adaptive devices and adaptive computer |
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software; |
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(10) each of the following items if purchased for use |
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by the blind to enable them to function more independently: a slate |
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and stylus, print enlarger, light probe, magnifier, white cane, |
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talking clock, large print terminal, talking terminal, or harness |
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for guide dog; |
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(11) hospital beds; |
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(12) blood glucose monitoring test strips; |
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(13) an adjustable eating utensil used to facilitate |
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independent eating if purchased for use by a person, including a |
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person who is elderly or physically disabled, has had a stroke, or |
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is a burn victim, who does not have full use or control of the |
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person's hands or arms; |
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(14) subject to Subsection (d), a dietary supplement; |
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and |
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(15) intravenous systems, supplies, and replacement |
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parts used in the treatment of humans. |
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(c) A product is a drug or medicine for purposes of this |
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section if[:
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[(1)] the product: |
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(1) [(A)] is intended for use in the diagnosis, cure, |
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mitigation, treatment, or prevention of disease, illness, injury, |
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or pain; |
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(2) [(B)] is applied to the human body or is a product |
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that a human ingests or inhales; |
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(3) [(C)] is not an appliance or device; and |
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(4) [(D)] is not food[; or
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[(2)
the product is labeled or required to be labeled
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with a "Drug Facts" panel in accordance with regulations of the
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federal Food and Drug Administration]. |
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SECTION 5. Section 151.3162(b), Tax Code, is amended to |
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read as follows: |
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(b) The following items are exempted from the tax imposed by |
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this chapter: |
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(1) seedlings of trees [commonly] grown for commercial |
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timber; |
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(2) defoliants, desiccants, equipment, fertilizers, |
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fungicides, herbicides, insecticides, and machinery exclusively |
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used in the production of timber to be sold in the regular course of |
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business; |
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(3) machinery and equipment used in, and pollution |
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control equipment required as a result of, the processing, packing, |
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or marketing of timber products by an original producer if: |
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(A) the processing, packing, or marketing occurs |
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at or from a location operated by the original producer; |
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(B) at least 50 percent of the value of the timber |
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products processed, packed, or marketed at or from the location is |
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attributable to products produced by the original producer and not |
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purchased or acquired from others; and |
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(C) the original producer does not process, pack, |
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or market for consideration timber products that belong to another |
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person with a value greater than five percent of the total value of |
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the timber products processed, packed, or marketed by the producer; |
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and |
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(4) tangible personal property sold or used to be |
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installed as a component of an underground irrigation system |
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exclusively used in the production of timber to be sold in the |
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regular course of business. |
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SECTION 6. (a) Section 151.318(b), Tax Code, is amended to |
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read as follows: |
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(b) The exemption includes: |
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(1) chemicals, catalysts, and other materials that are |
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used during a manufacturing, processing, or fabrication operation |
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to produce or induce a chemical or physical change, to remove |
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impurities, or to make the product more marketable; |
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(2) semiconductor fabrication cleanrooms and |
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equipment; and |
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(3) pharmaceutical biotechnology cleanrooms and |
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equipment that are installed as part of the construction of a new |
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facility [with a value of at least $150 million and] on which |
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construction began after July 1, 2003[, and before August 31,
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2004]. |
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(b) Notwithstanding any other provision of this Act, this |
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section takes effect July 1, 2007, if this Act receives a vote of |
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two-thirds of all members elected to each house, as provided by |
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Section 39, Article III, Texas Constitution. If this Act does not |
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receive the vote necessary for effect on that date, this section |
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takes effect September 1, 2007. |
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SECTION 7. Section 151.326, Tax Code, is amended to read as |
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follows: |
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Sec. 151.326. CLOTHING AND FOOTWEAR FOR LIMITED |
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PERIOD. (a) The sale of an article of clothing or footwear |
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designed to be worn on or about the human body is exempted from the |
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taxes imposed by this chapter if: |
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(1) the sales price of the article is less than $100; |
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and |
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(2) the sale takes place during a period beginning at |
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12:01 a.m. on the third [first] Friday in August and ending at 12 |
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midnight on the following Sunday. |
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(b) This section does not apply to: |
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(1) any special clothing or footwear that is primarily |
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designed for athletic activity or protective use and that is not |
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normally worn except when used for the athletic activity or |
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protective use for which it is designed; |
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(2) accessories, including jewelry, handbags, |
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luggage, umbrellas, wallets, watches, and similar items carried on |
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or about the human body, without regard to whether worn on the body |
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in a manner characteristic of clothing; and |
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(3) the rental of clothing or footwear. |
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SECTION 8. Subchapter H, Chapter 151, Tax Code, is amended |
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by adding Section 151.327 to read as follows: |
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Sec. 151.327. SCHOOL BACKPACKS BEFORE START OF SCHOOL. (a) |
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The sale or storage, use, or other consumption of a school backpack |
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is exempted from the taxes imposed by this chapter if the backpack |
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is purchased: |
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(1) for use by a student in a public or private |
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elementary or secondary school; |
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(2) during the period described by Section |
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151.326(a)(2); and |
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(3) for a sales price of less than $100. |
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(b) A retailer is not required to obtain an exemption |
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certificate stating that school backpacks are purchased for use by |
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students in a public or private elementary or secondary school |
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unless the backpacks are purchased in a quantity that indicates |
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that the backpacks are not purchased for use by students in a public |
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or private elementary or secondary school. |
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SECTION 9. Sections 151.328(a) and (c), Tax Code, are |
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amended to read as follows: |
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(a) Aircraft are exempted from the taxes imposed by this |
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chapter if: |
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(1) sold to a person using the aircraft as a |
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certificated or licensed carrier of persons or property; |
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(2) sold to a person who: |
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(A) has a sales tax permit issued under this |
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chapter; and |
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(B) uses the aircraft for the purpose of |
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providing flight instruction that is: |
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(i) recognized by the Federal Aviation |
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Administration; |
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(ii) under the direct or general |
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supervision of a flight instructor certified by the Federal |
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Aviation Administration; and |
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(iii) designed to lead to a pilot |
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certificate or rating issued by the Federal Aviation Administration |
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or otherwise required by a rule or regulation of the Federal |
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Aviation Administration; |
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(3) sold to a foreign government; or |
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(4) sold in this state to a person for use and |
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registration in another state or nation before any use in this state |
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other than flight training in the aircraft and the transportation |
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of the aircraft out of this state. |
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(c) In this section, "aircraft" does not include a rocket or |
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missile, but does include: |
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(1) a fixed wing, heavier-than-air craft that is |
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driven by propeller or jet and supported by the dynamic reaction of |
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the air against its wings; |
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(2) a helicopter; and |
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(3) an airplane flight simulation training device |
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[simulator] approved by the Federal Aviation Administration [for
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use as a Phase II or higher flight simulator] under Appendices A and |
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B [Appendix H], 14 C.F.R. Part 60 [121]. |
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SECTION 10. Subchapter E, Chapter 152, Tax Code, is amended |
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by adding Section 152.090 to read as follows: |
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Sec. 152.090. CERTAIN HYDROGEN-POWERED MOTOR VEHICLES. (a) |
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In this section, "hydrogen-powered motor vehicle" means a vehicle |
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that meets the Phase II standards established by the California Air |
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Resources Board as of September 1, 2007, for an ultra low-emission |
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vehicle II or stricter Phase II emission standards established by |
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that board and: |
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(1) is hydrogen power capable and has a fuel economy |
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rating of at least 45 miles per gallon; or |
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(2) is fully hydrogen-powered. |
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(b) The taxes imposed by this chapter do not apply to the |
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sale or use of a hydrogen-powered motor vehicle. |
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SECTION 11. Section 321.203, Tax Code, is amended by |
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amending Subsections (b), (c), (d), and (e) and adding Subsection |
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(n) to read as follows: |
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(b) If a retailer has only one place of business in this |
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state, all of the retailer's retail sales of taxable items |
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[tangible personal property] are consummated at that place of |
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business except as provided by Subsection (e). |
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(c) If a retailer has more than one place of business in this |
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state, a sale of a taxable item [tangible personal property] by the |
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retailer is consummated at the retailer's place of business: |
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(1) from which the retailer ships or delivers the item |
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[property], if the retailer ships or delivers the item [property] |
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to a point designated by the purchaser or lessee; or |
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(2) where the purchaser or lessee takes possession of |
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and removes the item [property], if the purchaser or lessee takes |
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possession of and removes the item [property] from a place of |
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business of the retailer. |
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(d) If neither the possession of a taxable item [tangible
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personal property] is taken at nor shipment or delivery of the item |
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[property] is made from the retailer's place of business in this |
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state, the sale is consummated at: |
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(1) the retailer's place of business in this state |
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where the order is received; or |
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(2) if the order is not received at a place of business |
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of the retailer, the place of business from which the retailer's |
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agent or employee [salesman] who took the order operates. |
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(e) A sale of a taxable item [tangible personal property] is |
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consummated at the location in this state to which the item |
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[property] is shipped or delivered or at which possession is taken |
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by the customer if transfer of possession of the item [property] |
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occurs at, or shipment or delivery of the item [property] |
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originates from, a location in this state other than a place of |
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business of the retailer and if: |
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(1) the retailer is an itinerant vendor who has no |
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place of business in this state; |
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(2) the retailer's place of business where the |
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purchase order is initially received or from which the retailer's |
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agent or employee [salesman] who took the order operates is outside |
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this state; or |
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(3) the purchaser places the order directly with the |
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retailer's supplier and the item [property] is shipped or delivered |
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directly to the purchaser by the supplier. |
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(n) A sale of a service described by Section 151.0047 to |
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remodel, repair, or restore nonresidential real property is |
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consummated at the location of the job site. |
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SECTION 12. Section 323.102(c), Tax Code, is amended to |
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read as follows: |
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(c) A tax imposed under Section 323.105 of this code or |
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Chapter 326 or 383, Local Government Code, takes effect on the first |
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day of the first calendar quarter after the expiration of the first |
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complete calendar quarter occurring after the date on which the |
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comptroller receives a notice of the action as required by Section |
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323.405(b). |
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SECTION 13. Section 323.203, Tax Code, is amended by |
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amending Subsections (b), (c), (d), and (e) and adding Subsection |
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(m) to read as follows: |
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(b) If a retailer has only one place of business in this |
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state, all of the retailer's retail sales of taxable items |
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[tangible personal property] are consummated at that place of |
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business except as provided by Subsection (e). |
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(c) If a retailer has more than one place of business in this |
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state, a sale of a taxable item [tangible personal property] by the |
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retailer is consummated at the retailer's place of business: |
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(1) from which the retailer ships or delivers the item |
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[property], if the retailer ships or delivers the item [property] |
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to a point designated by the purchaser or lessee; or |
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(2) where the purchaser or lessee takes possession of |
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and removes the item [property], if the purchaser or lessee takes |
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possession of and removes the item [property] from a place of |
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business of the retailer. |
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(d) If neither the possession of a taxable item [tangible
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personal property] is taken at nor shipment or delivery of the item |
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[property] is made from the retailer's place of business in this |
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state, the sale is consummated at: |
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(1) the retailer's place of business in this state |
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where the order is received; or |
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(2) if the order is not received at a place of business |
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of the retailer, the place of business from which the retailer's |
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agent or employee [salesman] who took the order operates. |
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(e) A sale of a taxable item [tangible personal property] is |
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consummated at the location in this state to which the item |
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[property] is shipped or delivered or at which possession is taken |
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by the customer if transfer of possession of the item [property] |
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occurs at, or shipment or delivery of the item [property] |
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originates from, a location in this state other than a place of |
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business of the retailer and if: |
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(1) the retailer is an itinerant vendor who has no |
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place of business in this state; |
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(2) the retailer's place of business where the |
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purchase order is initially received or from which the retailer's |
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agent or employee [salesman] who took the order operates is outside |
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this state; or |
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(3) the purchaser places the order directly with the |
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retailer's supplier and the item [property] is shipped or delivered |
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directly to the purchaser by the supplier. |
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(m) A sale of a service described by Section 151.0047 to |
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remodel, repair, or restore nonresidential real property is |
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consummated at the location of the job site. |
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SECTION 14. Section 403.014(a), Government Code, is amended |
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to read as follows: |
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(a) Before each regular session of the legislature, the |
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comptroller shall report to the legislature and the governor on the |
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effect, if it is possible to assess, of exemptions, discounts, |
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exclusions, special valuations, special accounting treatments, |
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special rates, and special methods of reporting relating to: |
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(1) sales, excise, and use tax under Chapter 151, Tax |
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Code; |
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(2) franchise tax under Chapter 171, Tax Code; |
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(3) school district property taxes under Title 1, Tax |
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Code; |
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(4) motor vehicle tax under Section 152.090; and |
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(5) [(4)] any other tax generating more than five |
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percent of state tax revenue in the prior fiscal year. |
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SECTION 15. The following sections of the Tax Code are |
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repealed: |
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(1) Section 151.0232; |
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(2) Section 151.103(d); |
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(3) Section 151.202(c); |
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(4) Section 321.203(l); and |
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(5) Section 323.203(l). |
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SECTION 16. The change in law made by this Act does not |
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affect tax liability accruing before the effective date of this |
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Act. That liability continues in effect as if this Act had not been |
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enacted, and the former law is continued in effect for the |
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collection of taxes due and for civil and criminal enforcement of |
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the liability for those taxes. |
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SECTION 17. (a) Except as provided by Subsection (b), this |
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Act takes effect September 1, 2007. |
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(b) Sections 7 and 8 of this Act take effect immediately, if |
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the Act receives a vote of two-thirds of all the members elected to |
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each house, as provided by Section 39, Article III, Texas |
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Constitution. |
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______________________________ |
______________________________ |
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President of the Senate |
Speaker of the House |
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I certify that H.B. No. 3319 was passed by the House on May 9, |
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2007, by the following vote: Yeas 142, Nays 0, 2 present, not |
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voting; that the House refused to concur in Senate amendments to |
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H.B. No. 3319 on May 25, 2007, and requested the appointment of a |
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conference committee to consider the differences between the two |
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houses; and that the House adopted the conference committee report |
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on H.B. No. 3319 on May 27, 2007, by the following vote: Yeas 143, |
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Nays 0, 2 present, not voting. |
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______________________________ |
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Chief Clerk of the House |
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I certify that H.B. No. 3319 was passed by the Senate, with |
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amendments, on May 23, 2007, by the following vote: Yeas 30, Nays |
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0; at the request of the House, the Senate appointed a conference |
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committee to consider the differences between the two houses; and |
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that the Senate adopted the conference committee report on H.B. No. |
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3319 on May 27, 2007, by the following vote: Yeas 30, Nays 0. |
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______________________________ |
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Secretary of the Senate |
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APPROVED: __________________ |
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Date |
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__________________ |
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Governor |