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A BILL TO BE ENTITLED
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AN ACT
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relating to the exemption from sales and use taxes, including the |
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motor vehicle sales and use tax, for timber and certain items used |
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in or on a farm, ranch, timber operation, or agricultural aircraft |
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operation. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter E, Chapter 151, Tax Code, is amended |
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by adding Section 151.1551 to read as follows: |
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Sec. 151.1551. REGISTRATION NUMBER REQUIRED FOR TIMBER AND |
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CERTAIN AGRICULTURAL ITEMS. (a) This section applies to an |
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exemption provided by: |
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(1) Sections 151.316(a)(6), (7), (8), (10), (11), and |
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(12); |
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(2) Section 151.316(b) for tangible personal property |
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used in the production of agricultural products for sale; |
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(3) Section 151.3162(b) for tangible personal |
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property used in the production of timber for sale; |
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(4) Sections 151.317(a)(5) and (10) for electricity |
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used in agriculture or timber operations; and |
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(5) Section 151.3111 for services performed on |
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tangible personal property exempted under Section 151.316(a)(6), |
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(7), (8), (10), (11), or (12), 151.316(b), or 151.3162(b). |
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(b) To claim an exemption to which this section applies, a |
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registration number issued by the comptroller must be stated on the |
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exemption certificate provided by the purchaser of the item. |
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(c) A person is eligible to apply for a registration number |
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if the person is engaged in the production of agricultural products |
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or timber for sale or in an agricultural aircraft operation as |
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defined by 14 C.F.R. Section 137.3. |
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(d) A person who is eligible may apply to the comptroller |
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for a registration number. The application must: |
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(1) be on a form prescribed by the comptroller; |
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(2) if applicable, state the types of crops, |
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livestock, or other agricultural products that are produced for |
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sale on the farm or ranch on which the applicant will use or employ |
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the item described by Subsection (a) or state that the item will be |
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used in relation to a timber operation or an agricultural aircraft |
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operation as defined by 14 C.F.R. Section 137.3; |
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(3) as applicable, state the name and address of the |
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farm, ranch, timber operation, or other business owned or operated |
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by the applicant in relation to which the applicant will use the |
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item; and |
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(4) contain any other information required by the |
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comptroller. |
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(e) The comptroller shall develop and implement a procedure |
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by which an applicant may submit an application described by |
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Subsection (d) electronically. |
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(f) The comptroller by rule shall establish a uniform date |
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on which all registration numbers issued under this section must be |
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renewed, regardless of the date on which a registration number is |
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initially issued. The rules must require registration numbers to |
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be renewed every four years. |
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(g) The comptroller may not issue a registration number that |
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contains an individual's social security number. |
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(h) The comptroller, after written notice and a hearing, may |
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revoke the registration number issued to a person who fails to |
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comply with this chapter or with a rule adopted under this chapter. |
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A person whose registration number the comptroller proposes to |
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revoke under this section is entitled to 20 days' written notice of |
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the time and place of the hearing on the revocation. The notice |
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must state the reason the comptroller is seeking to revoke the |
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person's registration number. At the hearing the person must show |
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cause why the person's registration number should not be revoked. |
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(i) The comptroller shall give written notice of the |
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revocation of a registration number under Subsection (h) to the |
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person to whom the number was issued. The notice may be personally |
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served on the person or sent by mail to the person's address as |
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shown in the comptroller's records. |
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(j) If the comptroller revokes a person's registration |
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number under Subsection (h), the comptroller may not revive the |
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registration number unless the comptroller is satisfied that the |
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person will comply with this chapter and the rules adopted under |
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this chapter. The comptroller may prescribe the terms under which a |
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revoked registration number may be revived. |
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(k) Following the revocation of a registration number by the |
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comptroller, the person who held the registration number must, on |
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the next transaction with each seller to whom the person previously |
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issued a claim for exemption with a registration number, notify |
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that seller that the person's registration number is no longer |
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valid. The failure of a person to notify a seller as required by |
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this subsection is considered a failure and refusal to pay the taxes |
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imposed by this chapter by the person required to make the |
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notification. |
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(l) The comptroller shall develop and operate an online |
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system to enable a seller of an item described by Subsection (a) to |
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search and verify the validity of the registration number stated on |
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an exemption certificate. A seller is not required to use the |
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online system. |
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(m) An exemption certificate that states a registration |
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number issued by the comptroller to claim an exemption to which this |
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section applies is sufficient documentation of the seller's receipt |
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of the certificate in good faith for purposes of Sections 151.054 |
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and 151.104. |
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(n) The comptroller by rule shall establish procedures by |
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which a seller may accept a blanket exemption certificate with a |
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registration number issued by the comptroller to claim exemptions |
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to which this section applies. |
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(o) A use of an item purchased using an exemption |
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certificate with a registration number issued under this section in |
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a manner or for a purpose other than the manner or purpose that |
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qualified the sale, lease, rental, or other consumption of the item |
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for the exemption may result in the revocation of the number. |
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(p) A person eligible for a registration number who, at the |
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time of purchasing, leasing, renting, or otherwise consuming an |
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item for which the person may otherwise claim an exemption to which |
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this section applies, has not obtained a registration number from |
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the comptroller must pay the tax on the item to the seller at the |
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time of the transaction. The person may then apply for a |
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registration number and, on receipt of the number, may apply to the |
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comptroller for a refund of the tax paid, subject to the statute of |
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limitations. The comptroller by rule shall establish procedures |
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for processing the refund requests. Tax collected by a seller under |
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this subsection is not tax collected in error, and Section 111.104 |
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does not apply to a refund request submitted under this subsection. |
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SECTION 2. Section 151.3111(a), Tax Code, is amended to |
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read as follows: |
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(a) Subject to Section 151.1551, a [A] service that is |
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performed on tangible personal property that, if sold, leased, or |
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rented, at the time of the performance of the service, would be |
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exempted under this chapter because of the nature of the property, |
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its use, or a combination of its nature and use, is exempted from |
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this chapter. |
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SECTION 3. Section 151.316(a), Tax Code, as amended by |
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Chapters 1162 (H.B. 3144) and 1373 (S.B. 958), Acts of the 81st |
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Legislature, Regular Session, 2009, is reenacted and amended to |
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read as follows: |
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(a) Subject to Section 151.1551, the [The] following items |
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are exempted from the taxes imposed by this chapter: |
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(1) horses, mules, and work animals; |
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(2) animal life the products of which ordinarily |
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constitute food for human consumption; |
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(3) feed for farm and ranch animals; |
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(4) feed for animals that are held for sale in the |
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regular course of business; |
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(5) seeds and annual plants the products of which: |
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(A) ordinarily constitute food for human |
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consumption; |
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(B) are to be sold in the regular course of |
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business; or |
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(C) are used to produce feed for animals exempted |
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by this section; |
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(6) fertilizers, fungicides, insecticides, |
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herbicides, defoliants, and desiccants exclusively used or |
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employed on a farm or ranch in the production of: |
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(A) food for human consumption; |
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(B) feed for animal life; or |
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(C) other agricultural products to be sold in the |
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regular course of business; |
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(7) machinery and equipment exclusively used or |
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employed on a farm or ranch in the building or maintaining of roads |
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or water facilities or in the production of: |
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(A) food for human consumption; |
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(B) grass; |
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(C) feed for animal life; or |
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(D) other agricultural products to be sold in the |
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regular course of business; |
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(8) machinery and equipment exclusively used in, and |
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pollution control equipment required as a result of, the |
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processing, packing, or marketing of agricultural products by an |
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original producer at a location operated by the original producer |
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for processing, packing, or marketing the producer's own products |
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if: |
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(A) 50 percent or more of the products processed, |
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packed, or marketed at or from the location are produced by the |
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original producer and not purchased or acquired from others; and |
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(B) the producer does not process, pack, or |
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market for consideration any agricultural products that belong to |
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other persons in an amount greater than five percent of the total |
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agricultural products processed, packed, or marketed by the |
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producer; |
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(9) ice exclusively used by commercial fishing boats |
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in the storing of aquatic species including but not limited to |
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shrimp, other crustaceans, finfish, mollusks, and other similar |
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creatures; |
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(10) tangible personal property, including a tire, |
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sold or used to be installed as a component part of a motor vehicle, |
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machinery, or other equipment exclusively used or employed on a |
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farm or ranch in the building or maintaining of roads or water |
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facilities or in the production of: |
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(A) food for human consumption; |
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(B) grass; |
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(C) feed for animal life; or |
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(D) other agricultural products to be sold in the |
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regular course of business; |
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(11) machinery and equipment exclusively used in an |
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agricultural aircraft operation, as defined by 14 C.F.R. Section |
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137.3; and |
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(12) tangible personal property incorporated into a |
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structure that is used for the disposal of poultry carcasses in |
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accordance with Section 26.303, Water Code. |
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SECTION 4. Section 151.316(b), Tax Code, is amended to read |
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as follows: |
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(b) Subject to Section 151.1551, tangible [Tangible] |
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personal property sold or used to be installed as a component of an |
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underground irrigation system is exempt from the taxes imposed by |
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this chapter if the system is exclusively used or employed on a farm |
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or ranch in the production of: |
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(1) food for human consumption; |
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(2) grass; |
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(3) feed or forage for: |
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(A) animal life the products of which ordinarily |
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constitute food for human consumption; or |
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(B) horses, mules, and work animals; or |
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(4) other agricultural products to be sold in the |
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regular course of business. |
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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) Subject to Section 151.1551, the [The] following items |
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are exempted from the tax imposed by this chapter: |
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(1) seedlings of trees grown for commercial 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. Section 151.317(a), Tax Code, is amended to read |
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as follows: |
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(a) Subject to Section 151.1551 and Subsection (d) of this |
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section, gas and electricity are exempted from the taxes imposed by |
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this chapter when sold for: |
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(1) residential use; |
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(2) use in powering equipment exempt under Section |
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151.318 or 151.3185 by a person processing tangible personal |
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property for sale as tangible personal property, other than |
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preparation or storage of prepared food described by Section |
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151.314(c-2); |
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(3) use in lighting, cooling, and heating in the |
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manufacturing area during the actual manufacturing or processing of |
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tangible personal property for sale as tangible personal property, |
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other than preparation or storage of prepared food described by |
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Section 151.314(c-2); |
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(4) use directly in exploring for, producing, or |
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transporting, a material extracted from the earth; |
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(5) use in agriculture, including dairy or poultry |
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operations and pumping for farm or ranch irrigation; |
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(6) use directly in electrical processes, such as |
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electroplating, electrolysis, and cathodic protection; |
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(7) use directly in the off-wing processing, overhaul, |
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or repair of a jet turbine engine or its parts for a certificated or |
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licensed carrier of persons or property; |
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(8) use directly in providing, under contracts with or |
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on behalf of the United States government or foreign governments, |
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defense or national security-related electronics, classified |
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intelligence data processing and handling systems, or |
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defense-related platform modifications or upgrades; |
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(9) a direct or indirect use, consumption, or loss of |
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electricity by an electric utility engaged in the purchase of |
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electricity for resale; or |
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(10) use in timber operations, including pumping for |
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irrigation of timberland. |
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SECTION 7. Section 152.091, Tax Code, is amended by adding |
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Subsection (b-1) and amending Subsection (c) to read as follows: |
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(b-1) In addition to the other requirements prescribed by |
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this section, to claim an exemption provided by Subsection (a) or |
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(b) the person purchasing, using, or leasing the machine, trailer, |
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or semitrailer must provide an exemption certificate with a |
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registration number issued by the comptroller under Section |
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151.1551. |
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(c) The taxes imposed by this chapter do not apply to the |
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rental of a farm machine, a trailer, or a semitrailer for use |
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primarily for farming and ranching, including the rearing of |
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poultry, and use in feedlots, or a machine, a trailer, or a |
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semitrailer for use primarily for timber operations. The tax that |
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would have been remitted on gross rental receipts without this |
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exemption shall be deemed to have been remitted for the purpose of |
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calculating the minimum gross rental receipts imposed by Section |
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152.026. The exemption provided by this subsection applies only if |
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the owner of the motor vehicle obtains in good faith an exemption |
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certificate from the person to whom the vehicle is being rented. To |
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claim the exemption, the person renting the vehicle must also |
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provide on the certificate a registration number issued by the |
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comptroller under Section 151.1551. |
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SECTION 8. Notwithstanding Section 151.1551, Tax Code, as |
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added by this Act, a person is not required to state a registration |
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number on an exemption certificate or on a form prescribed by the |
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comptroller of public accounts to claim an exemption to which |
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Section 151.1551, Tax Code, as added by this Act, applies or an item |
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under Section 152.091, Tax Code, that is claimed before January 1, |
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2012. |
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SECTION 9. The change in law made by this Act does not |
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affect tax liability accruing before January 1, 2012. That |
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liability continues in effect as if this Act had not been enacted, |
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and the former law is continued in effect for the collection of |
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taxes due and for civil and criminal enforcement of the liability |
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for those taxes. |
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SECTION 10. To the extent of any conflict, this Act prevails |
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over another Act of the 82nd Legislature, Regular Session, 2011, |
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relating to nonsubstantive additions to and corrections in enacted |
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codes. |
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SECTION 11. This Act takes effect September 1, 2011. |
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