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A BILL TO BE ENTITLED
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AN ACT
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relating to the exemption from the sales and use tax for certain |
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agricultural items. |
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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. EXEMPTION NUMBER REQUIRED FOR CERTAIN |
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AGRICULTURAL PROPERTY. (a) To qualify for an exemption for an item |
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under Section 151.316(a)(3), (6), (7), (10), or (12) or tangible |
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personal property under Section 151.316(b), an exemption number |
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must be stated on the exemption certificate provided by the |
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purchaser. |
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(b) A person is eligible for an exemption number if the |
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person owns or operates a business that uses one or more tracts of |
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land in this state as a farm or ranch, as those terms are defined by |
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Section 151.316(c). |
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(c) A person who is eligible may apply to the comptroller |
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for an exemption number. The application must: |
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(1) be on a form prescribed by the comptroller; |
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(2) state the types of crops, livestock, or other |
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agricultural products that are held for sale in the regular course |
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of the business owned or operated or to be owned or operated by the |
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applicant; |
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(3) state the name and address of the business owned or |
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operated or to be owned or operated by the applicant; and |
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(4) contain any other information required by the |
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comptroller. |
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(d) The comptroller by rule shall develop and implement a |
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procedure by which an applicant may submit an application described |
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by Subsection (c) electronically. |
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(e) The comptroller by rule shall establish a uniform date |
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on which all exemption numbers issued under this section must be |
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renewed, regardless of the date on which an exemption number is |
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initially issued. The rules must require exemption numbers to be |
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renewed every four years. |
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(f) The comptroller, after adequate written notice and a |
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hearing, may suspend or revoke the exemption number issued to a |
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person who fails to comply with this chapter or with a rule adopted |
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under this chapter. At the hearing the person must show cause why |
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the person's exemption number should not be suspended or revoked. |
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(g) The comptroller shall give written notice of the |
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suspension or revocation of an exemption number under Subsection |
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(f) to the person to whom the number was issued. The notice may be |
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personally served on the person or sent by mail to the person's |
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address as shown in the comptroller's records. |
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(h) If the comptroller revokes a person's exemption number |
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under Subsection (f), the person may not be issued a new exemption |
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number unless the comptroller is satisfied that the person will |
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comply with this chapter and the rules adopted under this chapter. |
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The comptroller may prescribe the terms under which a suspended |
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exemption number may be reinstated. |
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(i) A taxpayer may appeal the suspension or revocation of an |
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exemption number in the same manner that appeals are made from a |
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final deficiency determination. |
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(j) The comptroller by rule shall develop and operate an |
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online system to enable a seller of an item or property described by |
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Subsection (a) to search and verify the validity of the exemption |
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number stated on an exemption certificate at the time the |
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certificate is received and to provide documentation of the |
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verification. Documentation provided by the system constitutes |
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proof that the exemption certificate was received in good faith for |
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purposes of Sections 151.054 and 151.104. A seller is not required |
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to use the online system. |
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SECTION 2. 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 3. 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 4. Notwithstanding Section 151.1551, Tax Code, as |
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added by this Act, a person is not required to state an exemption |
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number on an exemption certificate to qualify for an exemption |
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under Section 151.316, Tax Code, that is claimed before January 1, |
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2012. |
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SECTION 5. 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 6. 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 7. This Act takes effect September 1, 2011. |