83R9161 TJB-F

By: Patrick S.B. No. 1252

A BILL TO BE ENTITLED

AN ACT

relating to a sales and use tax exemption for certain tangible personal property and services related to mineral exploration and production.

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

SECTION 1. Section 151.324(a), Tax Code, is amended to read as follows:

(a) The following items are exempted from the sales tax imposed by Subchapter C of this chapter:

(1) drill pipe, casing, tubing, and other pipe used for the exploration for or production of oil, gas, sulphur, or other minerals offshore not in this state; [and]

(2) tangible personal property exclusively used for the exploration for or production of oil, gas, sulphur, or other minerals offshore not in this state;

(3) machinery used to position, place, and hold property exempted under Subdivision (1) or (2) during the assembly, fabrication, restoration, or repair of that property; and

(4) services necessary to install, assemble, disassemble, or reassemble scaffolding used in the assembly, fabrication, restoration, or repair of property exempted under Subdivision (1), (2), or (3).

SECTION 2. Subchapter H, Chapter 151, Tax Code, is amended by adding Section 151.3241 to read as follows:

Sec. 151.3241. DIVERGENT USE OF MACHINERY RELATED TO MINERAL EXPLORATION AND PRODUCTION. (a) In this section, "divergent use" means the use of machinery in a manner or for a purpose other than the manner or purpose that qualified the sale, use, or consumption of the machinery for exemption under Section 151.324(a)(3).

(b) Divergent use of machinery exempted under Section 151.324(a)(3) will not result in sales and use tax being due on the machinery if the divergent use occurs after the fourth anniversary of the date the machinery is purchased.

(c) Divergent use of machinery exempted under Section 151.324(a)(3) that occurs during any month before the fourth anniversary of the date the machinery is purchased results in sales and use tax being due for that month. The amount of the sales and use tax due for a month is equal to 1/48 of the purchase price of the machinery multiplied by the percentage of divergent use during that month multiplied by the sales and use tax rate as of the first day of that month.

(d) The percentage of divergent use for a month is determined by dividing the amount of divergent use during the month by the amount of total use of the machinery during the month. The amount of divergent use during a month is the total time the machinery operates for a divergent use during the month, measured in hours. The total use of the machinery during the month is the total time the machinery is operated during the month, measured in hours.

SECTION 3. The change in law made by this Act does not affect tax liability accruing before the effective date of this Act. That liability continues in effect as if this Act had not been enacted, and the former law is continued in effect for the collection of taxes due and for civil and criminal enforcement of the liability for those taxes.

SECTION 4. This Act takes effect September 1, 2013.