By: Dutton H.B. No. 3635

A BILL TO BE ENTITLED

AN ACT

relating to the registration of and taxes and fees imposed on sexually oriented businesses; providing a civil penalty.

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

SECTION 1. Subtitle D, Title 13, Occupations Code, is amended by adding Chapter 2158 to read as follows:

CHAPTER 2158. REGISTRATION OF SEXUALLY ORIENTED BUSINESSES

Sec. 2158.001. DEFINITIONS. In this chapter:

(1) "Commission" means the Texas Commission of Licensing and Regulation.

(2) "Department" means the Texas Department of Licensing and Regulation.

(3) "Financial interest" includes a legal or equitable interest, including the ownership of shares or bonds of a corporation.

(4) "Sexually oriented business" has the meaning assigned by Section 243.002, Local Government Code.

Sec. 2158.002. REGISTRATION CERTIFICATE REQUIRED. (a) Before conducting business in this state, a sexually oriented business shall obtain a registration certificate from the department.

(b) To obtain a registration certificate, a sexually oriented business shall:

(1) file an application that:

(A) contains the name and address of:

(i) the business; and

(ii) each person who has a financial interest in the business, including the nature, type, and extent of the interest;

(B) identifies the category of the business, according to the categories of sexually oriented businesses established by the department; and

(C) fully discloses any litigation or unresolved complaint relating to the operation of the business filed with a governmental authority of this state or contains a notarized statement that there has been no litigation or unresolved complaint of that type; and

(2) pay the required registration fee.

(c) Upon receiving a completed application and the required registration fee, the department shall issue a registration certificate to the sexually oriented business no later than the 30th day after receiving the completed application and registration fee.

(d) A sexually oriented business shall, at all times, prominently display the registration certificate for the business at the registered premises.

(e) A person who submits an application for a registration certificate consents to an inspection of the registered premises by an authorized representative of the department or a peace officer at any time during the hours of operation of the sexually oriented business to ensure compliance with this chapter.

(f) A registration certificate expires on the first anniversary of its date of issuance. A registered sexually oriented business may renew a registration certificate by filing a renewal application, in the form prescribed by the department, and paying the annual registration fee.

(g) The registration certificate required under this chapter is in addition to any license or permit required under the Alcoholic Beverage Code.

Sec. 2158.003. UPDATE OF REGISTRATION CERTIFICATE. (a) If information contained in the registration certificate changes, a sexually oriented business shall file with the department an application to amend the registration certificate and pay any required fee not later than the 90th day after the date on which the information changes.

(b) Upon receipt of a completed application to amend a registration certificate and any required fee, the department shall issue an amended registration certificate to the sexually oriented business no later than the 30th day after receiving the completed application and any required fee.

Sec. 2158.004. FEES. (a) The commission shall adopt rules to charge and collect fees in amounts reasonable and necessary to cover the costs of administering this chapter, including a fee for:

(1) filing an original application for a registration certificate;

(2) annual renewal of a registration certificate; and

(3) filing an application for an amended registration certificate.

(b) The fee for filing an original application for a registration certificate and the fee for annual renewal of a registration certificate is the amount of the fee set by the commission under Subsection (a) and a fee surcharge of $1000.

(c) Of the fee surcharge collected under Subsection (b), $250 shall be deposited to the credit of the foundation school fund and $750 shall be deposited to the credit of the general revenue fund.

Sec. 2158.005. CIVIL PENALTY. (a) Except as provided by Subsection (c), a sexually oriented business that operates without a registration certificate required by this chapter or fails to display the registration certificate for the business is subject to a civil penalty of not less than $50 or more than $1,000 for each act of violation and for each day of violation after notice of a violation is provided to the business by the department.

(b) Revenue from civil penalties collected under this section shall be deposited to the credit of the general revenue fund.

(c) A sexually oriented business is not subject to a civil penalty under this section if:

(1) the business filed an application for a registration certificate and paid the required registration fee; and

(2) the department has not issued the registration certificate.

Sec. 2158.006. RULES. The commission shall adopt rules necessary to implement this chapter.

SECTION 2. Subtitle G, Title 2, Tax Code, is amended by adding Chapter 184 to read as follows:

CHAPTER 184. SEXUALLY ORIENTED BUSINESSES ADMISSIONS TAX

Sec. 184.001. DEFINITIONS. In this chapter:

(1) "Admissions fee" means a fee imposed on a customer for admission into any portion of the premises of a sexually oriented business.

(2) "Sexually oriented business" has the meaning assigned by Section 243.002, Local Government Code.

Sec. 184.002. IMPOSITION AND RATE OF TAX. (a) A tax is imposed on each sexually oriented business.

(b) For a sexually oriented business that charges an admissions fee, the rate of the tax imposed by this chapter is 10 percent of the gross receipts received by the sexually oriented business from admissions fees, except that the tax imposed under this subsection may not exceed the sum of $2 for each entry by each customer admitted to the business during the tax reporting period. For purposes of this subsection, Section 184.005(b), and Section 184.006(2), an incidental exit and reentry by a customer during a daily business cycle of the business does not constitute a separate entry. For purposes of Section 151.007, Tax Code, the amount of the tax imposed under this subsection is not considered part of the sales price of the service for which the sales tax is otherwise imposed or part of the receipts of a sexually oriented business.

(c) For a sexually oriented business that does not charge an admissions fee, the rate of the tax imposed by this chapter is $1 for each entry by each customer admitted to the business. For purposes of this subsection, Section 184.005(c), and Section 184.006(2), an incidental exit and reentry by a customer during a daily business cycle of the business does not constitute a separate entry. For purposes of Section 151.007, Tax Code, the amount of the tax imposed under this subsection is not considered part of the sales price of the service for which the sales tax is otherwise imposed or part of the receipts of a sexually oriented business.

Sec. 184.003. CREDIT. (a) A sexually oriented business that paid a fee under Subchapter B, Chapter 102, Business & Commerce Code, before the repeal of that subchapter by the Act that added this chapter is entitled to a credit against the tax imposed by this chapter in an amount equal to the amount of the fee paid.

(b) The total credit claimed on a tax report may not exceed the amount of tax due for the report.

(c) If a person is eligible for a credit that exceeds the limitation under Subsection (b), the person may carry the credit forward for subsequent reporting periods.

Sec. 184.004. TAX DUE DATES. The tax imposed by this chapter is due and payable to the comptroller on or before the last day of the first month following the end of each calendar quarter.

Sec. 184.005. REPORT. (a) A person required to pay a tax under this chapter shall file a tax report with the comptroller on a form prescribed by the comptroller. The tax report is due on the date the tax is due under Section 184.004.

(b) A tax report from a sexually oriented business subject to Section 184.002(b) must include a statement of the gross receipts received from admissions fees and the sum of each entry by each customer admitted to the business during the quarterly period to which the report applies.

(c) A tax report from a sexually oriented business subject to Section 184.002(c) must include the sum of each entry by each customer admitted to the business during the quarterly period to which the report applies.

(d) The tax report must also include any other information required by the comptroller.

Sec. 184.006. RECORDS. A person on whom the tax is imposed by this chapter shall keep a record of:

(1) the gross receipts received each day from admissions fees, for a sexually oriented business subject to Section 184.002(b);

(2) each entry by each customer admitted to the business each day, for a sexually oriented business subject to Section 184.002(b) or (c); and

(3) any other information required by the comptroller.

Sec. 184.007. PENALTY FOR FAILURE TO FILE REPORT OR PAY TAX. (a) A person who fails to file a report as required by this chapter or who fails to pay a tax imposed by this chapter when due forfeits five percent of the amount of the tax due as a penalty, and if the person fails to file the report or pay the tax within 30 days after the day on which the tax or report is due, the person forfeits an additional five percent.

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

Sec. 184.008. NATURE OF TAX. A tax imposed by this chapter is an occupation tax.

Sec. 184.009. ALLOCATION OF TAX REVENUE. (a) The net revenue from the tax collected under this chapter is allocated as follows:

(1) one-fourth to the foundation school fund; and

(2) three-fourths to the general revenue fund.

(b) The comptroller shall transfer to the sexual assault program fund established under Section 420.008, Government Code, the net revenue collected under this chapter that is allocated to the general revenue fund under Subsection (a)(2) in any state fiscal biennium.

SECTION 3. Section 420.008(b), Government Code, is amended to read as follows:

(b) The fund consists of fees or revenue collected under:

(1) Section 19(e), Article 42.12, Code of Criminal Procedure;

(2) Section 508.189, Government Code; and

(3) Chapter 184, Tax Code, and deposited under Section 184.009(b), Tax Code [Subchapter B, Chapter 102, Business & Commerce Code, and deposited under Section 102.054].

SECTION 4. Subchapter B, Chapter 102, Business & Commerce Code, is repealed.

SECTION 5. (a) If this Act takes effect July 1, 2011:

(1) the first report and tax payment required under Chapter 184, Tax Code, as added by this Act, are due on or before October 31, 2011; and

(2) a sexually oriented business in operation before the effective date of this Act is required to file an application for a registration certificate and pay the annual registration fee pursuant to Chapter 2158, Occupations Code, as added by this Act on or before July 31, 2011. The department may not assess a civil penalty under Chapter 2158, Occupations Code, as added by this Act, against a sexually oriented business that was operating prior to July 1, 2011 if the business filed the required application and paid the required registration fee by the deadline established by this subsection.

(b) If this Act takes effect on October 1, 2011:

(1) the first report and tax payment required under Chapter 184, Tax Code, as added by this Act, are due on January 31, 2012; and

(2) a sexually oriented business in operation before the effective date of this Act is required to file an application for a registration certificate and pay the annual registration fee pursuant to Chapter 2158, Occupations Code, as added by this Act on or before October 31, 2011. The department may not assess a civil penalty under Chapter 2158, Occupations Code, as added by this Act, against a sexually oriented business that was operating prior to October 1, 2011 if the business filed the required application and paid the required registration fee by the deadline established by this subsection.

SECTION 6. This Act takes effect on July 1, 2011, if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary to become effective on July 1, 2011, this Act takes effect October 1, 2011.