80R9334 BEF-F

By: Goolsby H.B. No. 3615

A BILL TO BE ENTITLED

relating to the regulation, operation, and taxation of certain coin-operated machines; providing a penalty.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 2001.416, Occupations Code, is amended by adding Subsections (e) and (f) to read as follows:

(e) A person on whom a tax is imposed under Section 191.064, Tax Code, may exhibit or display a music or skill or pleasure coin-operated machine that displays a valid tax permit issued under Section 2153.406 for use at a premises in which bingo is conducted by a licensed authorized organization under this chapter.

(f) A person who exhibits or displays a music or skill or pleasure coin-operated machine under Subsection (e) shall pay 10 percent of the net proceeds from the exhibition or display of the machine to the licensed authorized organization conducting bingo at the premises. If more than one organization is conducting bingo at the premises, the person shall pay each organization an amount equal to 10 percent of the net proceeds divided by the number of organizations that conduct bingo at the premises. In calculating net proceeds, the actual cost to the person of any personal property distributed to a patron as a prize may be deducted as a cost.

SECTION 2. Section 2153.005, Occupations Code, is amended by adding Subsection (a-1) to read as follows:

(a-1) Subsection (a) does not apply to a corporation or association that holds a Class B general business license or a Class B import license.

SECTION 3. Section 2153.008, Occupations Code, is amended to read as follows:

Sec. 2153.008. EXEMPT OWNERS OR EXHIBITORS. (a) Except as provided by Subsection (b), a [A] person who owns or exhibits a coin-operated machine is exempt from the licensing and recordkeeping requirements of this chapter if the person:

(1) operates or exhibits the coin-operated machine only on premises occupied by the person and in connection with the person's business;

(2) does not own a coin-operated machine subject to the tax imposed under this chapter and located on the business premises of another person; and

(3) does not have a direct or indirect financial interest in the music or skill or pleasure coin-operated machine industry, except for ownership of the coin-operated machine operated or exhibited on premises occupied by the person.

(b) Subsection (a) does not apply to a person who holds a Class B general business license or a Class B import license.

SECTION 4. Section 2153.152, Occupations Code, is amended by amending Subsections (a), (b), and (c) and adding Subsections (e) and (f) to read as follows:

(a) A license applicant may apply for a general business license, a Class B general business license, an import license, a Class B import license, or a repair license.

(b) Except as provided by Subsection (e), a [A] general business license holder may engage in the business of manufacturing, owning, buying, selling, renting, leasing, trading, maintaining, transporting or exhibiting in this state, or storing a music or skill or pleasure coin-operated machine.

(c) Except as provided by Subsection (f), an [An] import license holder may engage in the business of importing, transporting, owning, buying, repairing, selling, or delivering a music or skill or pleasure coin-operated machine for sale or delivery in this state.

(e) A Class B general business license holder may engage in the business of owning, buying, selling, renting, leasing, trading, maintaining, transporting or exhibiting in this state, or storing a music or skill or pleasure coin-operated machine on which a tax is imposed by Section 191.064, Tax Code. The provisions of this chapter relating to a general business license apply to a Class B general business license, except as otherwise expressly provided.

(f) A Class B import license holder may engage in the business of manufacturing, importing, transporting, owning, buying, repairing, selling, or delivering a music or skill or pleasure coin-operated machine on which a tax is imposed by Section 191.064, Tax Code. The provisions of this chapter relating to import licenses apply to Class B import licenses except as otherwise expressly provided.

SECTION 5. Subchapter G, Chapter 2153, Occupations Code, is amended by adding Section 2153.3021 to read as follows:

Sec. 2153.3021. MANDATORY DENIAL OF CLASS B LICENSE. (a) A person is not eligible for a Class B general business license if the person:

(1) has been convicted of a felony, an offense under Chapter 32 or 47, Penal Code, or a crime of moral turpitude and less than 10 years has elapsed since the termination of a sentence, parole, mandatory supervision, or community supervision served for the offense;

(2) holds a Class B import license or is an owner, officer, director, shareholder, agent, or employee of a person who holds a Class B import license; or

(3) has greater than a 10 percent proprietary, equitable, or credit interest in a person or entity described by Subdivision (1) or (2) or is married or related in the first degree by consanguinity or affinity to a person who has greater than a 10 percent proprietary, equitable, or credit interest in a person or entity described by Subdivision (1) or (2).

(b) A person is not eligible for a Class B import license if the person:

(1) has been convicted of a felony, an offense under Chapter 32 or 47, Penal Code, or a crime of moral turpitude and less than 10 years has elapsed since the termination of a sentence, parole, mandatory supervision, or community supervision served for the offense;

(2) holds a Class B general business license or is an owner, officer, director, shareholder, agent, or employee of a person who holds a Class B general business license; or

(3) has greater than a 10 percent proprietary, equitable, or credit interest in a person or entity described by Subdivision (1) or (2) or is married or related in the first degree by consanguinity or affinity to a person who has greater than a 10 percent proprietary, equitable, or credit interest in a person or entity described by Subdivision (1) or (2).

SECTION 6. Section 2153.305, Occupations Code, is amended by adding Subsection (c) to read as follows:

(c) The comptroller shall refuse to issue or renew and shall suspend or revoke a Class B general business license if the license holder or applicant exhibits or displays a machine that fails to record or transmit the information required by Section 191.067(b), Tax Code.

SECTION 7. Section 2153.352(a), Occupations Code, is amended to read as follows:

(a) The comptroller or an authorized representative of the comptroller may seal a coin-operated machine in a manner that prevents the full operation of the machine if:

(1) the license or registration certificate of the person exhibiting or displaying the machine is suspended or revoked;

(2) the owner fails to pay a tax on the machine; [or]

(3) the machine is not registered with the comptroller under this chapter; or

(4) the machine does not record or transmit the information required by Section 191.067(b), Tax Code.

SECTION 8. Section 2153.406, Occupations Code, is amended by adding Subsection (e) to read as follows:

(e) The comptroller may not issue a tax permit for any machine that does not comply with the requirements of Section 191.067(b), Tax Code.

SECTION 9. Section 2153.451(b), Occupations Code, is amended to read as follows:

(b) The [rate of the] tax may not exceed one-fourth of the total of the taxes [rate of the tax] imposed under Section 2153.401 and Section 191.064, Tax Code.

SECTION 10. Chapter 191, Tax Code, is amended by adding Subchapter D to read as follows: SUBCHAPTER D. COIN-OPERATED AMUSEMENTS

Sec. 191.061. DEFINITION. In this subchapter, "coin-operated amusement" means a music or skill or pleasure coin-operated machine as defined by Section 2153.002, Occupations Code.

Sec. 191.062. APPLICABILITY OF SUBCHAPTER. This subchapter applies only to a coin-operated amusement that:

(1) is not a gambling device, as defined in Section 47.01, Penal Code;

(2) awards a prize that is not money, as defined in Section 2002.002, Occupations Code; and

(3) awards only value on a stored value card as a prize.

Sec. 191.063. STORED VALUE CARDS. (a) A stored value card used in a coin-operated amusement under this chapter must:

(1) serve as evidence of a promise made by the person who issued the card that the person will provide to the card owner goods or services with a value equal to the amount of value stored on the card;

(2) be refunded and allow for the redemption of the amount of value stored on the card;

(3) be issued in the name of the card owner;

(4) not be capable of being exchanged for money;

(5) be capable of tracking the owner's usage of the card;

(6) be issued by a financial institution, as defined in Section 201.101, Finance Code; and

(7) be issued and activated at the location where the coin-operated amusement prize will be awarded.

(b) A financial institution is liable for the amount of value stored on each stored value card used in the operation of a coin-operated amusement.

(c) A coin-operated amusement operator may not issue a stored value card to a person unless the person:

(1) presents a valid government-issued identification card or document that is immediately verified under applicable federal law by the organization; and

(2) complies with all state and federal laws governing the issuance of the card.

Sec. 191.064. TAX IMPOSED. (a) A tax is imposed on each person holding a Class B license who engages in the business of exhibiting or displaying a coin-operated amusement at a premises in which bingo is conducted under Chapter 2001, Occupations Code.

(b) The tax imposed by this subchapter is in addition to any other tax imposed by law.

Sec. 191.065. TAX RATE. (a) The rate of the tax imposed by this subchapter is five percent of the net revenue of all coin-operated amusements operated at a single premises or enclosure.

(b) In calculating net revenue, the actual cost to the operator of any personal property distributed to a patron as a prize may be deducted from revenue.

Sec. 191.066. REPORT AND TAX PAYMENT. (a) A person subject to the tax shall report the amount received from taxable services during the preceding calendar month.

(b) The comptroller shall prescribe and furnish the form for the report.

(c) A person subject to the tax shall pay the tax to the comptroller at the comptroller's office in Austin not later than the 20th day of each month.

Sec. 191.067. RECORD. (a) A person subject to the tax shall keep a complete record of business transacted and any other information the comptroller requires.

(b) A coin-operated amusement must:

(1) electronically record all operational information, including all receipts and the value of all prizes awarded; and

(2) instantaneously transmit the information required in Subdivision (1) to the comptroller.

(c) The person shall keep all records open for inspection by the comptroller for four years.

(d) The comptroller shall maintain a central data facility to receive all information required to be transmitted under Subsection (b) and shall adopt rules that establish technical standards for the recording and transmission of the information.

Sec. 191.068. PENALTY. A person who violates this subchapter forfeits and shall pay to the state a penalty of not less than $500 or more than $5,000 in addition to any other tax, charge, or penalty that may apply. Each day a violation occurs constitutes a separate violation.

Sec. 191.069. FAILURE TO FILE REPORT OR PAY TAX. (a) If a person taxed under this subchapter fails to file a report required by this subchapter or to pay the tax imposed by this subchapter when due, the person forfeits an amount equal to five percent of the amount of tax due as a penalty. If the person fails to file the report or pay the tax not later than the 30th day after the date on which the tax or report is due, the person forfeits an additional penalty equal to five percent of the amount of the tax.

(b) The minimum penalty imposed by this section is $1.

Sec. 191.070. STATE TAX LIEN. The taxes, penalties, interests, and costs that a person owes to this state under this subchapter are secured by a preferred lien, first and prior to other existing liens, contract or statutory, legal or equitable, on all coin-operated amusements subject to the tax at the premises.

SECTION 11. As soon as practicable after the effective date of this Act, the comptroller shall adopt rules necessary to implement this Act and shall establish the central data facility required under Section 191.067(d), Tax Code, as added by this Act.

SECTION 12. This Act takes effect September 1, 2007.