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A BILL TO BE ENTITLED
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AN ACT
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relating to exemptions from the sales and use tax and the franchise |
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tax for certain businesses during an initial period of operation in |
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the state. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. This Act may be cited as the Texas Open for |
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Business Act. |
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SECTION 2. Subchapter H, Chapter 151, Tax Code, is amended |
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by adding Section 151.3183 to read as follows: |
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Sec. 151.3183. TAXABLE ITEMS USED BY CERTAIN NEW BUSINESSES |
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DURING INITIAL PERIOD OF OPERATION. (a) In this section: |
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(1) "Internal Revenue Code" means the Internal Revenue |
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Code of 1986 in effect on December 31, 2014, excluding any changes |
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made by federal law after that date, but including any regulations |
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adopted under that code applicable to the tax year to which the |
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provisions of the code in effect on that date applied. |
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(2) "Qualifying job" means an employment position that |
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is: |
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(A) new to and located in the state; |
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(B) permanent and full-time; and |
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(C) held by an employee for at least 10 months |
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during each 12-month period. |
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(b) The sale to or storage, use, or other consumption by a |
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new business of a taxable item that will be directly used or |
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consumed by the business is exempted from the taxes imposed by this |
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chapter. |
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(c) A person is a new business for purposes of this section |
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if the person is a business that: |
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(1) is primarily located in a county with a population |
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of 250,000 or less; |
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(2) is first located and begins doing business in this |
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state on or after January 1, 2016, regardless of whether the |
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business is chartered or organized in this state or outside this |
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state; |
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(3) is not substantially similar in operation and in |
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ownership to another business located in this state during any part |
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of the preceding five years; |
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(4) is primarily engaged in: |
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(A) a manufacturing activity described in |
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categories 2011-3999 of the 1987 Standard Industrial |
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Classification Manual published by the United States Department of |
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Labor; or |
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(B) qualified research, as defined by Section 41, |
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Internal Revenue Code; and |
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(5) creates, on or after January 1, 2016, and not later |
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than the 30th day after the date the business first locates in this |
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state, at least one qualifying job. |
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(d) To claim an exemption under this section, a registration |
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number issued by the comptroller must be stated on the exemption |
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certificate provided by the purchaser of the item. |
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(e) Subject to Subsection (f), a person may apply to the |
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comptroller for issuance of a registration number by the |
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comptroller. The application must be made on a form prescribed by |
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the comptroller and include the information required by the |
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comptroller to establish that the person is a new business as |
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described by Subsection (c). |
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(f) A person who meets the requirements of a new business as |
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described by Subsection (c) must apply for a registration number |
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not later than the first anniversary of the date the person begins |
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doing business in this state. The comptroller shall deny an |
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application received after that date. |
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(g) A registration number issued under this section expires |
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on the 10th anniversary of the date of issuance, unless revoked at |
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an earlier time by the comptroller as provided by Subsection (h). |
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The registration number may not be renewed. |
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(h) The comptroller shall revoke and may not reinstate a |
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registration number issued to a person if the person ceases to meet |
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a requirement prescribed by Subsection (c). A person whose |
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registration number is revoked is liable for payment of the taxes |
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imposed under this chapter on the sales price of each taxable item |
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for which the person claimed an exemption under this section on or |
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after the date the registration number was revoked. |
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(i) The comptroller shall adopt rules necessary to |
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implement this section, including rules relating to the: |
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(1) qualification of a person for an exemption under |
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this section; |
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(2) issuance and revocation of a registration number |
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issued under this section; and |
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(3) reporting and other procedures necessary to ensure |
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that a person to whom a registration number is issued under this |
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section complies with this section and remains entitled to the |
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exemption authorized by this section. |
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SECTION 3. Section 171.0001(4), Tax Code, is amended to |
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read as follows: |
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(4) "Beginning date" means: |
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(A) except as provided by Paragraph (B): |
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(i) for a taxable entity chartered or |
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organized in this state, the date on which the taxable entity's |
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charter or organization takes effect; and |
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(ii) [(B)] for any other taxable entity, |
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the date on which the taxable entity begins doing business in this |
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state; or |
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(B) for a taxable entity that meets the |
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requirements of a new business under Section 151.3183, the earlier |
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of: |
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(i) the 10th anniversary of the date on |
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which the taxable entity begins doing business in this state; or |
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(ii) the date the taxable entity ceases to |
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comply with the requirements of a new business under Section |
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151.3183. |
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SECTION 4. Section 171.001, Tax Code, is amended by adding |
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Subsection (d) to read as follows: |
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(d) Notwithstanding Subsection (a), the tax imposed under |
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this chapter is not imposed on a taxable entity that meets the |
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requirements of a new business under Section 151.3183 until the |
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earlier of: |
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(1) the 10th anniversary of the date on which the |
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taxable entity begins doing business in this state; or |
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(2) the date the taxable entity ceases to comply with |
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the requirements of a new business under Section 151.3183. |
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SECTION 5. Section 171.063(g), Tax Code, is amended to read |
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as follows: |
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(g) If a corporation's federal tax exemption is withdrawn by |
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the Internal Revenue Service for failure of the corporation to |
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qualify or maintain its qualification for the exemption, the |
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corporation's exemption under this section ends on the effective |
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date of that withdrawal by the Internal Revenue Service. The |
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effective date of the withdrawal is considered the corporation's |
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beginning date for purposes of determining the corporation's |
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privilege periods and for all other purposes of this chapter, |
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except that if the corporation would have been subject to Section |
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171.001(d) in the absence of the federal tax exemption, and the |
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effective date of the withdrawal is a date earlier than the date the |
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corporation would have become subject to the franchise tax as |
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provided by Section 171.001(d), the date the corporation would have |
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become subject to the franchise tax under that section is |
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considered the corporation's beginning date for those purposes. |
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SECTION 6. Section 171.204, Tax Code, is amended by adding |
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Subsection (d) to read as follows: |
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(d) The comptroller may require a taxable entity on which |
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the tax imposed under this chapter is not imposed solely because of |
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the application of Section 171.001(d) to file an information report |
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stating the taxable entity's beginning date as determined under |
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Section 171.0001(4)(B). The comptroller may require the report to |
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include other information the comptroller determines necessary, |
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except that the comptroller may not require the taxable entity to |
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report or compute its margin. |
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SECTION 7. Not later than December 1, 2015, the comptroller |
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of public accounts shall adopt rules as provided by Section |
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151.3183(i), Tax Code, as added by this Act. |
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SECTION 8. This Act takes effect September 1, 2015. |