By: West S.B. No. 1396

A BILL TO BE ENTITLED

AN ACT

relating to the tax on the sale and use of aircraft; imposing a tax; providing civil and criminal penalties.

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

SECTION 1. Section 151.308(a), Tax Code, is amended to read as follows:

(a) The following are exempted from the taxes imposed by this chapter:

(1) oil as taxed by Chapter 202;

(2) sulphur as taxed by Chapter 203;

(3) motor fuels and special fuels as defined, taxed, or exempted by Chapter 162;

(4) cement as taxed by Chapter 181;

(5) motor vehicles, trailers, and semitrailers as defined, taxed, or exempted by Chapter 152, other than a mobile office or an oilfield portable unit, as those terms are defined by Section 152.001;

(6) mixed beverages, ice, or nonalcoholic beverages and the preparation or service of these items if the receipts are taxable by Subchapter B, Chapter 183, or the items are taxable by Subchapter B-1, Chapter 183;

(7) alcoholic beverages when sold to the holder of a private club registration permit or to the agent or employee of the holder of a private club registration permit if the holder or agent or employee is acting as the agent of the members of the club and if the beverages are to be served on the premises of the club;

(8) oil well service as taxed by Subchapter E, Chapter 191; [and]

(9) insurance premiums subject to gross premiums taxes; and

(10) aircraft as taxed by Chapter 163.

SECTION 2. Section 151.3111(b), Tax Code, is amended to read as follows:

(b) Subsection (a) does not apply to the performance of a service on:

(1) tangible personal property that would be exempted solely because of the exempt status of the seller or the property;

(2) tangible personal property that is exempted solely because of the application of Section 151.303, 151.304, or 151.306;

(3) motor vehicles, trailers, or semitrailers as defined, taxed, or exempted by Chapter 152; [or]

(4) a taxable boat or motor as defined by Section 160.001;

(5) aircraft as defined, taxed, or exempted under Chapter 163; or [.]

(6) tangible [Tangible] personal property exempt under Section 151.326.

SECTION 3. Sections 151.328(a), (b), (d), and (e), Tax Code, are amended to read as follows:

(a) In this section, "aircraft" and "certificated carrier" have the meanings assigned by Section 163.001 [Aircraft are exempted from the taxes imposed by this chapter if:

[(1) sold to a person using the aircraft as a certificated or licensed carrier of persons or property;

[(2) sold to a person who:

[(A) has a sales tax permit issued under this chapter; and

[(B) uses the aircraft for the purpose of providing flight instruction that is:

[(i) recognized by the Federal Aviation Administration;

[(ii) under the direct or general supervision of a flight instructor certified by the Federal Aviation Administration; and

[(iii) designed to lead to a pilot certificate or rating issued by the Federal Aviation Administration or otherwise required by a rule or regulation of the Federal Aviation Administration;

[(3) sold to a foreign government;

[(4) sold in this state to a person for use and registration in another state or nation before any use in this state other than flight training in the aircraft and the transportation of the aircraft out of this state; or

[(5) sold in this state to a person for use exclusively in connection with an agricultural use, as defined by Section 23.51, and used for:

[(A) predator control;

[(B) wildlife or livestock capture;

[(C) wildlife or livestock surveys;

[(D) census counts of wildlife or livestock;

[(E) animal or plant health inspection services; or

[(F) crop dusting, pollination, or seeding].

(b) Repair, remodeling, and maintenance services to aircraft, including an engine or other component part of aircraft, that are exempted from tax under Section 163.201, 163.202, 163.206 or 163.207 [operated by a person described by Subsection (a)(1), (a)(2), or (a)(5)] are exempted from the taxes imposed by this chapter.

(d) Machinery, tools, supplies, and equipment used or consumed exclusively in the repair, remodeling, or maintenance of aircraft, aircraft engines, or aircraft component parts by or on behalf of a certificated carrier or a person described by Section 163.202 [Subsection (a)(1) or (a)(2)] are exempted from the taxes imposed by this chapter.

(e) Tangible personal property that is permanently affixed or attached as a component part of an aircraft owned or operated by a certificated carrier or a person described by Section 163.202 [Subsection (a)(1) or (a)(2)], or that is necessary for the normal operations of the aircraft and is pumped, poured, or otherwise placed in the aircraft, is exempted from the taxes imposed by this chapter.

SECTION 4. Subtitle E, Title 2, Tax Code, is amended by adding Chapter 163 to read as follows:

CHAPTER 163. TAXES ON SALE AND USE OF AIRCRAFT

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 163.001. DEFINITIONS. In this chapter:

(1) "Affiliate" means an entity that would be classified as a member of an affiliated group under 26 U.S.C. Section 1504.

(2) "Agricultural use" has the meaning assigned by Section 23.51.

(3) "Aircraft" does not include a balloon, glider, rocket, missile, or unmanned aircraft, but does include:

(A) a fixed-wing, heavier-than-air craft that is driven by propeller or jet and is supported by the dynamic reaction of the air against its wings;

(B) a helicopter; and

(C) an airplane flight simulation training device approved by the Federal Aviation Administration under Appendices A and B, 14 C.F.R. Part 60.

(4) "Aircraft dealer" means a person engaged in the business of selling, exchanging, or acting as a broker of aircraft who holds a Dealer's Aircraft Registration Certificate issued by the Federal Aviation Administration under 14 C.F.R. Part 47.

(5) "Certificated carrier" means a person authorized by the Federal Aviation Administration to operate an aircraft to transport persons or property for hire in compliance with the certification and operation specification requirements of 14 C.F.R. Parts 121, 125, and 135. A letter of authorization, certificate of inspection, or airworthiness certificate is not evidence of authorization by the Federal Aviation Administration to operate as a certificated carrier.

(6) "Flight time" means the period of time beginning when an aircraft moves under its own power for the purpose of flight and ending when the aircraft comes to rest after landing.

(7) "In this state" means within the exterior limits of Texas and includes all territory within these limits ceded to or owned by the United States.

(8) "Sale for resale" means the sale of an aircraft to an aircraft dealer for the sole purpose of reselling it in the United States in the normal course of business.

(9) "Seller" means any person who makes a sale of an aircraft the receipts from the sale of which are included in the measure of the sales or use tax imposed by this chapter. The term includes:

(A) a person in the business of making sales at auction of aircraft owned by the person or another person;

(B) a person regarded by the comptroller as a retailer or seller under Section 151.024; and

(C) a person who, under an agreement with another person who has title to or another ownership interest in an aircraft:

(i) is given possession of the aircraft; and

(ii) is authorized to sell the aircraft without additional action by the person who has title to or another ownership interest in the aircraft.

Sec. 163.002. SALE. (a) "Sale" means the transfer of title to or possession of an aircraft for consideration.

(b) "Sale" includes:

(1) an installment or credit sale;

(2) an exchange of property for property or money;

(3) an exchange in which property is transferred but the seller retains title to the property as security for payment of the purchase price; and

(4) any other closed transaction described by Subsection (a).

(c) "Sale" does not include a rental or an operating lease.

Sec. 163.003. TOTAL CONSIDERATION. (a) "Total consideration" means the amount paid or to be paid for an aircraft, including accessories and component parts attached on or before the sale, without deducting:

(1) the cost of the aircraft;

(2) the cost of material, labor, service, interest, loss, or any other expense;

(3) the cost of transportation and delivery of the aircraft; or

(4) the amount of any manufacturers' or importers' excise tax imposed on the aircraft by the United States.

(b) "Total consideration" does not include an amount separately stated on the bill or contract for:

(1) a cash discount or manufacturer's rebate;

(2) the amount charged for an aircraft returned by a purchaser if the total amount charged is refunded by cash or credit;

(3) a financing, carrying, or service charge or interest on credit extended on the aircraft sold under a conditional sale or other deferred payment contract; or

(4) the value of an aircraft taken by an aircraft dealer as all or part of the consideration for sale of the item.

Sec. 163.004. USE. (a) Except as provided by Subsections (b) and (c), "use" means the exercise of a right or power over an aircraft incidental to ownership of the aircraft.

(b) "Use" includes:

(1) leasing or renting an aircraft to another person;

(2) transferring possession or control of an aircraft to another person through a management agreement or other agreement; and

(3) storing, parking, housing, hangaring, or otherwise attaching or tying down an aircraft on an airport apron, parking ramp, or other location used to secure aircraft.

(c) "Use" does not include:

(1) the storage, retention, demonstration, or display of an aircraft held exclusively for sale by an aircraft dealer; or

(2) the sale of an aircraft in the normal course of business.

(d) For purposes of this chapter, an aircraft is not used during any period in which the aircraft is being manufactured, completed, repaired, remodeled, or restored.

Sec. 163.005. DUTIES OF COMPTROLLER. The comptroller shall collect the taxes imposed by this subchapter as provided by Chapter 111.

Sec. 163.006. RULES. The comptroller may adopt any rules to implement this chapter.

Sec. 163.007. APPLICABILITY OF OTHER LAW. (a) This chapter controls over Chapter 151 to the extent of any conflict.

(b) A reference in this chapter to a provision of federal law means that law as it existed on January 1, 2015.

SUBCHAPTER B. IMPOSITION AND COLLECTION OF SALES TAX

Sec. 163.021. SALES TAX IMPOSED. (a) A tax is imposed on each sale of an aircraft in this state.

(b) The rate of the tax is 6.25 percent of the total consideration.

Sec. 163.022. COLLECTION BY SELLER. A seller who makes a sale subject to the tax imposed by this chapter shall add the amount of the tax to the sales price, and when the amount of the tax is added:

(1) it becomes part of the sales price;

(2) it is a debt of the purchaser to the seller until paid; and

(3) if unpaid, it is recoverable at law in the same manner as the original sales price.

Sec. 163.023. GROSS RECEIPTS PRESUMED SUBJECT TO TAX. (a) All gross receipts of a seller are presumed to be subject to the sales tax under this subchapter unless the seller accepts a properly completed resale or exemption certificate as provided by this section.

(b) A sale is exempt if the seller receives in good faith from an aircraft dealer a resale certificate stating that the aircraft is acquired for the purpose of selling the aircraft in the normal course of business.

(c) A sale is exempt if the seller receives in good faith from a purchaser an exemption certificate that states the qualifications for an exemption under Subchapter F.

(d) A seller should have possession of a properly completed resale or exemption certificate at the time the sale occurs. The comptroller shall disallow a deduction from the seller's gross receipts if the seller does not deliver to the comptroller a resale or exemption certificate on which the deduction is based not later than the 60th day after the date the comptroller gives the seller written notice requiring the seller to deliver the certificate. If the seller delivers the certificate to the comptroller before the 60th day after the date the comptroller gives written notice, the comptroller may verify the reason or basis for the exemption claimed in the certificate before allowing a deduction from the seller's gross receipts based on the certificate.

Sec. 163.024. PROCEEDINGS AGAINST PURCHASER. The comptroller may proceed against the purchaser for the amount of a tax imposed by this subchapter but not paid by the purchaser.

SUBCHAPTER C. IMPOSITION AND COLLECTION OF USE TAX

Sec. 163.051. USE TAX ON AIRCRAFT USED IN THIS STATE. (a) Except as provided by Subsection (b), a use tax is imposed on the use in this state of an aircraft brought into this state for use and regularly based in this state.

(b) The tax does not apply to an aircraft brought into this state by a person who has used the aircraft outside of this state for a period of at least one year if during that year:

(1) the aircraft was not regularly based in this state; and

(2) more than 50 percent of this aircraft's flight time was outside of this state.

(c) The rate of the tax is 6.25 percent of the total consideration paid or, if the aircraft was not purchased by the person using the aircraft in this state, of the fair market value of the aircraft.

(d) A person who purchases an aircraft outside of this state and transfers possession of the aircraft to another person for use in this state through an operating lease, management agreement, or other agreement:

(1) uses the aircraft in this state; and

(2) is subject to tax under this section.

Sec. 163.052. USE TAX ON AIRCRAFT BROUGHT BACK INTO THIS STATE. (a) Except as provided by Subsection (b), a use tax is imposed on the purchaser of an aircraft that was purchased tax-free under Section 163.205 and that is brought back into this state for use in this state.

(b) The tax does not apply to an aircraft brought into this state by a person who used the aircraft outside of this state for a period of at least one year if during that year:

(1) the aircraft was not regularly based in this state; and

(2) more than 50 percent of the aircraft's flight time was outside of this state.

(c) The tax is imposed at the time the aircraft is first used in this state.

(d) The rate of the tax is 6.25 percent of the total consideration.

(e) A person is entitled to a credit against the tax for any sales or use tax paid to another state before the aircraft was brought back into this state for use.

Sec. 163.053. REGULARLY BASED IN THIS STATE. For purposes of Sections 163.051 and 163.052, an aircraft is regularly based in this state if:

(1) the owner of the aircraft registers the aircraft with the Federal Aviation Administration or another taxing authority using an address in this state;

(2) the aircraft is used more in this state than in any other state; or

(3) the aircraft is used in this state more than 90 days in a calendar year.

Sec. 163.054. USER LIABLE FOR TAX. (a) The use tax imposed under this subchapter is an obligation of and shall be paid by the person who uses the aircraft in this state.

(b) The purchaser and the person who brings an aircraft into this state for use are jointly and severally liable for the use tax imposed under this subchapter if the person who brings the aircraft into this state for use:

(1) is an affiliate of the purchaser; or

(2) directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with the purchaser.

(c) Except as provided by Subsection (d), liability for the use tax imposed under this subchapter continues until the tax is paid to this state.

(d) A person is not further liable for the use tax imposed under this subchapter if the person pays the tax to a seller engaged in business in this state, as provided by Section 151.107, or to another person authorized by the comptroller to collect the tax and the person receives from the seller or that other person a purchaser's receipt issued in the form and manner prescribed by the comptroller.

Sec. 163.055. SELLER ENGAGED IN BUSINESS IN THIS STATE. A seller engaged in business in this state, as provided by Section 151.107, who makes a sale of an aircraft for use in this state shall collect the use tax due from the purchaser and give the purchaser a receipt for the payment.

SUBCHAPTER D. RESALE AND EXEMPTION CERTIFICATES

Sec. 163.101. RESALE CERTIFICATE. An aircraft dealer may give a resale certificate for the acquisition of an aircraft if the aircraft dealer intends to sell the aircraft in the normal course of business.

Sec. 163.102. RESALE CERTIFICATE: FORM. A resale certificate must:

(1) be signed by the aircraft dealer or contain an electronic form of the aircraft dealer's signature authorized by the comptroller and contain the aircraft dealer's name and address;

(2) state the aircraft dealer's tax permit number or that the aircraft dealer's application for a tax permit is pending before the comptroller; and

(3) identify the aircraft purchased by means of the aircraft's serial number and Federal Aviation Administration registry number.

Sec. 163.103. RESALE CERTIFICATE: LIABILITY OF PURCHASER. If an aircraft dealer who gives a resale certificate for an aircraft subsequently uses the aircraft, the aircraft dealer is liable for payment of the sales tax on the original purchase price of the aircraft.

Sec. 163.104. EXEMPTION CERTIFICATE: FORM. An exemption certificate must:

(1) be signed by the purchaser or contain an electronic form of the purchaser's signature authorized by the comptroller and contain the purchaser's name and address;

(2) state the reason the purchase is exempt from tax;

(3) if the purchase is exempted under Section 163.201 or 163.202, include the number of the certificate issued by the Federal Aviation Administration to the purchaser; and

(4) identify the aircraft purchased by means of the aircraft's serial number and Federal Aviation Administration registry number.

Sec. 163.105. EXEMPTION CERTIFICATE: LIABILITY OF PURCHASER. A purchaser is liable for the payment of the sales tax on the original purchase price of an aircraft if the purchaser:

(1) certifies in writing to a seller that the aircraft will be used in a manner or for a purpose that qualifies for an exemption from the taxes imposed by this chapter; and

(2) uses the aircraft in a manner or for a purpose other than the manner or purpose described by Subdivision (1).

SUBCHAPTER E. ADMINISTRATION AND RECORDS

Sec. 163.151. REGISTRATION OF SELLERS. (a) A seller who sells an aircraft in this state shall register with the comptroller in the same manner as is required of a seller under Subchapter F, Chapter 151.

(b) A seller who is engaged in business in this state, as provided by Section 151.107, and sells an aircraft for use in this state shall register with the comptroller in the same manner as is required of a seller under Subchapter F, Chapter 151.

Sec. 163.152. REPORTS, PAYMENTS, AND METHODS OF REPORTING. Except as inconsistent with this chapter and rules adopted under this chapter, the seller of an aircraft shall report and pay to the comptroller the tax imposed under this chapter on the seller's receipts from the sale of aircraft in the same manner as the sales and use tax is reported and paid by a retailer under Sections 151.401, 151.402, 151.403, 151.405, 151.406, 151.407, 151.408, 151.409, 151.423, 151.424, 151.425, and 151.426.

Sec. 163.153. RECORDS. (a) A seller or a person using an aircraft in this state shall keep the following records in the form the comptroller requires:

(1) records of all gross receipts, including documentation in the form of receipts, shipping manifests, invoices, and other pertinent papers, from each sale occurring during each reporting period;

(2) records in the form of receipts, shipping manifests, invoices, and other pertinent papers that substantiate each claimed deduction or exclusion authorized by law; and

(3) records in the form of sales receipts, invoices, or other equivalent records showing all sales and use tax, and any money represented to be sales and use tax, received or collect on each sale during each reporting period.

(b) A record required by Subsection (a) shall be kept for not less than four years from the date the record is made unless:

(1) the comptroller authorizes in writing destruction of the record at an earlier date; or

(2) Section 111.0041 requires the record to be kept for a longer period.

Sec. 163.154. NON-PERMITTED PURCHASERS. A person who is not registered with the comptroller under Subchapter F, Chapter 151, shall report and pay sales or use tax that is due on the purchase of an aircraft in the manner the comptroller requires when the tax is not collected by the seller.

SUBCHAPTER F. EXEMPTIONS

Sec. 163.201. CERTIFICATED CARRIERS. An aircraft is exempted from the taxes imposed by this chapter if the aircraft is:

(1) sold to a certificated carrier;

(2) identified in the certificated carrier's operations specifications as required by 14 C.F.R. Part 119; and

(3) flown exclusively under the operational control of the certificated carrier to transport persons or property for hire.

Sec. 163.202. FLIGHT SCHOOLS AND INSTRUCTORS. (a) An aircraft is exempted from the taxes imposed by this chapter if the aircraft is sold to a person who:

(1) holds a flight school or flight instructor certificate issued by the Federal Aviation Administration; and

(2) uses the aircraft for the exclusive purpose of providing flight instruction that is:

(A) recognized by the Federal Aviation Administration;

(B) under the direct or general supervision of a flight instructor certified by the Federal Aviation Administrator; and

(C) designed to lead to a pilot certificate or rating issued by the Federal Aviation Administration or otherwise required by a rule or regulation of the Federal Aviation Administration.

(b) For purposes of this section, an aircraft is considered to be used for the exclusive purpose of providing flight instruction if 95 percent of the use of the aircraft is for a purpose described by Subsection (a)(2).

(c) A person who claims an exemption under this section shall maintain and make available to the comptroller flight records and passenger lists for all uses of the aircraft.

Sec. 163.203. GOVERNMENTAL ENTITIES. An aircraft is exempted from the taxes imposed by this chapter if the aircraft is sold to a person who is:

(1) a foreign government;

(2) a governmental entity listed in Section 151.309.

Sec. 163.204. RELIGIOUS, EDUCATION, AND PUBLIC SERVICE ORGANIZATIONS. (a) An aircraft sold to any of the following organizations is exempted from the taxes imposed by this chapter:

(1) an organization created for religious, educational, or charitable purposes if no part of the net earnings of the organization benefits a private shareholder or individual and the aircraft is related to the purpose of the organization;

(2) an organization qualifying for an exemption from federal income taxes under 26 U.S.C. Section 501(c)(3), (4), (8), (10), or (19), if the use of the aircraft relates to the purpose of the exempted organization and the aircraft is not used for the personal benefit of a private stockholder or individual;

(3) a nonprofit organization engaged exclusively in providing athletic competition among persons under 19 years old if no financial benefit goes to an individual or shareholder; or

(4) a company, department, or association organized for the purpose of answering fire alarms and extinguishing fires or for the purpose of answering fire alarms, extinguishing fires, and providing emergency medical services, the members of which receive no compensation or only nominal compensation for their services rendered, if the aircraft is used exclusively by the company, department, or association.

(b) For purposes of obtaining a refund of or claiming a credit for taxes paid under this chapter on the basis of an exemption under this section, an organization is not eligible for an exemption from the taxes imposed by this chapter before the earlier of:

(1) the date the organization applied for the exemption with the comptroller; or

(2) the date of assessment of the organization's tax liability by the comptroller as a result of an audit, as applicable.

Sec. 163.205. OUT-OF-STATE REGISTRATION AND USE. (a) An aircraft is exempted from the taxes imposed by this chapter if the aircraft is sold in this state to a person for use and registration in another state or nation before any use in this state other than flight training in the aircraft and the transportation of the aircraft out of this state.

(b) To qualify for the exemption, the person purchasing the aircraft must sign at the time of purchase an exemption certificate that:

(1) is designated as an exemption certificate for the purchase of an aircraft for out-of-state registration and use;

(2) is on a form designated by the comptroller;

(3) contains all of the information the comptroller requires;

(4) is signed by the purchaser at the time of purchase; and

(5) provides that the purchaser, by signing the certificate, authorizes the comptroller to provide a copy of the certificate to the state or nation of intended use and registration.

(c) A person commits an offense if the person gives an exemption certificate required under Subsection (b) to a seller for an aircraft that the person knows, at the time of purchase, will be used in a manner other than the manner expressed in the exemption certificate or the person gives an exemption certificate with fraudulent intent or intent to wrongfully evade payment of the taxes imposed under this chapter. An offense under this subsection is a misdemeanor punishable by a fine not to exceed $500.

Sec. 163.206. AGRICULTURAL USE. (a) An aircraft is exempted from the taxes imposed by this chapter if the aircraft is sold to a person for use exclusively in connection with an agricultural use including:

(1) predator control;

(2) wildlife or livestock capture;

(3) wildlife or livestock surveys;

(4) census counts of wildlife or livestock;

(5) animal or plant health inspection services; or

(6) crop dusting, pollination, or seeding.

(b) For purposes of this section, an aircraft is considered to be for use exclusively in connection with an agricultural use if 95 percent of the use of the aircraft is for a purpose described by Subsection (a). Travel from an aircraft's home base of operations to a location to perform a service described by Subsection (a) does not disqualify an aircraft from the exemption under this section.

(c) A person who claims an exemption under this section shall maintain and make available to the comptroller flight records for all uses of the aircraft.

Sec. 163.207. SALE FOR RESALE. A sale for resale as defined by Section 163.001 is exempted from the taxes imposed by this chapter.

Sec. 163.208. PREVIOUSLY TAXED AIRCRAFT: USE TAX EXEMPTION OR CREDIT. (a) The use of an aircraft the sale of which is subject to the sales tax imposed under Subchapter B is exempted from the use tax imposed under Subchapter C.

(b) A person is entitled to a credit against the use tax imposed under Subchapter C on an aircraft in an amount equal to the amount of any similar tax legally due and paid by the person to another state or any subdivision of another state on the sale, purchase, or use of the aircraft.

Sec. 163.209. TRANSFERS OF COMMON INTEREST IN AIRCRAFT. If an interest in an aircraft is sold, under the terms of a good faith, bona fide contractual relationship, to another person who either before or after the sale owned or owns a joint or undivided interest in the aircraft with the seller, and if all applicable taxes imposed by this chapter have previously been paid on the aircraft, the aircraft is exempted from the taxes imposed by this chapter.

Sec. 163.210. TRANSFERS AMONG AFFILIATES. The sale of an aircraft, including the contribution, distribution, or other transfer of the aircraft, to an affiliate of the seller is exempted from the taxes imposed by this chapter if the ultimate ownership of the aircraft remains unchanged and all applicable taxes imposed by this chapter were previously paid by the seller or an affiliate of the seller.

Sec. 163.211. EXEMPTIONS REQUIRED BY PREVAILING LAW. An aircraft that this state is prohibted from taxing by the law of the United States, the Constitution of the United States, or the Texas Constitution is exempted from the taxes imposed by this chapter.

Sec. 163.212. SALES BY OR TO INDIAN TRIBES. An aircraft sold, leased, or rented to, or stored, used, or consumed by, a tribal council or a business owned by a tribal council of the Alabama-Coushatta Indian Tribe, the Tigua Indian Tribe, or the Texas Band of Kickapoo Indians is exempted from the taxes imposed by this chapter.

Sec. 163.213. OCCASIONAL SALES. (a) An occasional sale of an aircraft and the use of a single aircraft that is acquired by means of an occasional sale are exempted from the taxed imposed by this chapter.

(b) In this section, "occasional sale" means the sale of not more than one aircraft during a 12-month period by an individual if:

(1) the aircraft was originally bought by the individual or a member of the individual's immediate family solely for the personal use of the individual or the individual's family;

(2) all applicable taxes imposed on the original acquisition of the aircraft by the individual or the individual's family have been paid;

(3) the individual is not an aircraft dealer; and

(4) the total receipts from the sale of the aircraft do not exceed $200,000.

Sec. 163.214. ELIGIBILITY FOR EXEMPTION. Only the purchaser of an aircraft is eligible to claim an exemption under this subchapter. The purchaser may qualify for an exemption based only on the purchaser's own use of the aircraft. A purchaser who is not otherwise eligible to claim an exemption under this subchapter may not claim an exemption on the basis that the purchaser transferred ownership or possession of the aircraft to a person who would have been eligible to claim an exemption if that person had purchased the aircraft.

SUBCHAPTER G. PENALTIES

Sec. 163.301. PROHIBITED ACTS AND CIVIL AND CRIMINAL PENALTIES. The provisions of Subchapter L, Chapter 151, apply to the taxes imposed under this chapter.

SECTION 5. Section 321.002(a), Tax Code, is amended by adding Subdivision (4) to read as follows:

(4) "Taxable item" has the meaning assigned by Section 151.010 and includes aircraft, as defined by Section 163.001.

SECTION 6. Section 321.003, Tax Code, is amended to read as follows:

Sec. 321.003. OTHER PORTIONS OF TAX APPLICABLE. Subtitles A and B, Title 2, and Chapters 142, [and] 151, and 163 apply to the taxes and to the administration and enforcement of the taxes imposed by this chapter in the same manner that those laws apply to state taxes, unless modified by this chapter.

SECTION 7. Section 321.201(a), Tax Code, is amended to read as follows:

(a) Each retailer in a municipality that has adopted a tax authorized by this chapter shall add each sales tax imposed by the municipality under this chapter and by Chapter 151 or 163 to the sales price, and the sum of the taxes is a part of the price, a debt of the purchaser to the retailer until paid, and recoverable at law in the same manner as the purchase price. If the municipality imposes the tax on gas and electricity for residential use, only the municipal tax is added to the sales price of sales of gas and electricity for residential use.

SECTION 8. Section 321.204(a), Tax Code, is amended to read as follows:

(a) In each municipality that has adopted the taxes authorized by this chapter, the taxes imposed by Section 321.104(a) and the tax imposed by Subchapter D, Chapter 151, or Subchapter C, Chapter 163, are added together to form a single combined tax rate, except:

(1) in a municipality that imposes the tax on gas and electricity for residential use only the rate of the municipal tax is used to determine the amount of tax on the use, storage, or other consumption of gas and electricity for residential use; and

(2) only the rate of the municipal tax is used in a situation described by Section 321.205(b).

SECTION 9. Section 321.205(a), Tax Code, is amended to read as follows:

(a) In determining the incidence of the use tax authorized by this chapter the name of the municipality adopting the tax is substituted in Subchapter D, Chapter 151, or Subchapter C, Chapter 163, for "this state" where those words are used to designate the taxing entity or delimit the tax imposed. However, the excise tax authorized by this chapter on the use, storage, or consumption of a taxable item does not apply if the item is first used, stored, or consumed in a municipality or area that has not adopted the taxes authorized by this chapter.

SECTION 10. Sections 321.207(a) and (b), Tax Code, are amended to read as follows:

(a) The sales tax authorized by this chapter does not apply to the sale of a taxable item unless the sales tax imposed by Subchapter C, Chapter 151, or Subchapter B, Chapter 163, also applies to the sale.

(b) The excise tax authorized by this chapter on the use, storage, or consumption of a taxable item does not apply to the use, storage, or consumption of a taxable item unless the tax imposed by Subchapter D, Chapter 151, or Subchapter C, Chapter 163, also applies to the use, storage, or consumption.

SECTION 11. Section 321.208, Tax Code, is amended to read as follows:

Sec. 321.208. STATE EXEMPTIONS APPLICABLE. The exemptions provided by Subchapter H, Chapter 151, and Subchapter F, Chapter 163, apply to the taxes authorized by this chapter, except as provided by Sections 151.359(j) and 151.317(b).

SECTION 12. Section 321.301, Tax Code, is amended to read as follows:

Sec. 321.301. COMPTROLLER TO COLLECT AND ADMINISTER TAXES. The comptroller shall administer, collect, and enforce any tax imposed by a municipality under this chapter. The taxes imposed under this chapter and the taxes [tax] imposed under Chapters [Chapter] 151 and 163 shall be collected together, if [both] taxes are imposed under more than one chapter.

SECTION 13. Section 321.302(b), Tax Code, is amended to read as follows:

(b) If a municipality requests an additional report, the comptroller shall make an additional quarterly report to the municipality including the name, address, and account number, if any, of, and the amount of tax due from, each person doing business in the municipality who has failed to pay the tax under this chapter to the municipality or under Chapter 151 or 163. The additional report must also include statements:

(1) showing whether or not there has been a partial tax payment by the delinquent taxpayer;

(2) showing whether or not the taxpayer is delinquent in the payment of sales and use taxes to the state; and

(3) describing the steps taken by the comptroller to collect the delinquent taxes.

SECTION 14. Section 321.303(b), Tax Code, is amended to read as follows:

(b) Except as otherwise provided by this section for aircraft, the [The] same sales tax permit, exemption certificate, and resale certificate required by Chapter 151 for the administration and collection of the taxes imposed by that chapter satisfy the requirements of this chapter. For aircraft, as defined by Section 163.001, the same exemption certificate and resale certificate required by Chapter 163 for the administration and collection of the taxes imposed by that chapter satisfy the requirements of this chapter. No additional permit or exemption or resale certificate may be required except that the comptroller may prescribe a separate exemption certificate form for the transition exemption for prior contracts and bids under Section 321.209.

SECTION 15. Section 321.308, Tax Code, is amended to read as follows:

Sec. 321.308. SEIZURE AND SALE OF PROPERTY. If the comptroller lawfully seizes property for the payment of the taxes imposed under Chapter 151 or 163 and the property owner is delinquent in the payment of taxes under this chapter, the comptroller shall sell sufficient property to pay the delinquent taxes and penalties of both taxes. The proceeds of a sale of seized property shall first be applied to the payment of amounts due the state and the remainder, if any, to the amounts due to the municipality to which the taxes are due.

SECTION 16. Section 321.310(a), Tax Code, is amended to read as follows:

(a) The comptroller or the attorney general may disapprove of the institution of a suit by a municipality under Section 321.309(b) if:

(1) negotiations between the state and the taxpayer are being conducted for the purpose of the collection of delinquent taxes owed to the state and the municipality seeking to bring suit;

(2) the taxpayer owes substantial taxes to the state and there is a reasonable possibility that the taxpayer may be unable to pay the total amount owed;

(3) the state will bring suit against the taxpayer for all taxes due under Chapter 151 or 163 and this chapter; or

(4) the suit involves a critical legal question relating to the interpretation of state law or a provision of the Texas or United States constitution in which the state has an overriding interest.

SECTION 17. Section 322.101, Tax Code, is amended to read as follows:

Sec. 322.101. SALES TAX. There is imposed in a taxing entity a sales tax at the rate authorized and set as provided by the law authorizing the creation of the taxing entity and applied to the receipts from the sale within the entity area of all taxable items that are subject to the sales tax under Chapter 151 or 163.

SECTION 18. Section 322.103(a), Tax Code, is amended to read as follows:

(a) Each retailer in an entity area shall add the sales tax imposed under this chapter, the sales taxes imposed under Chapter 151 or 163, and, if applicable, any sales taxes imposed under Chapter 321 or 323 to the sales price, and the sum of the taxes is a part of the price, a debt of the purchaser to the retailer until paid, and recoverable at law in the same manner as the purchase price.

SECTION 19. Section 322.104(a), Tax Code, is amended to read as follows:

(a) In each taxing entity the tax imposed by Subchapter D, Chapter 151, the taxes imposed by Subchapter C, Chapter 163, the tax imposed under Section 321.104(a), if applicable, and the tax imposed under Section 322.102 are added together to form a single combined tax rate, except in a situation described by Section 322.105(b).

SECTION 20. Section 322.105(a), Tax Code, is amended to read as follows:

(a) In determining the incidence of the use tax of a taxing entity, the name of the taxing entity is substituted in Subchapter D, Chapter 151, and Subchapter C, Chapter 163, for "this state" where those words are used to designate the taxing entity or delimit the tax imposed. However, the excise tax of a taxing entity on the use, storage, or other consumption of a taxable item does not apply if the item is first used, stored, or consumed in an area other than an entity area.

SECTION 21. Sections 322.106(a) and (b), Tax Code, are amended to read as follows:

(a) The sales tax of a taxing entity does not apply to the sale of a taxable item unless the sales tax imposed under Subchapter C, Chapter 151, or Subchapter B, Chapter 163, also applies to the sale.

(b) The excise tax of a taxing entity on the use, storage, or consumption of a taxable item does not apply to the use, storage, or consumption of an item unless the tax imposed by Subchapter D, Chapter 151, or Subchapter C, Chapter 163, also applies to the use, storage, or consumption of the item.

SECTION 22. Section 322.201(b), Tax Code, is amended to read as follows:

(b) The sales and use taxes imposed under this chapter, the taxes imposed under Chapters 321 and 323, and the taxes imposed under Chapters [Chapter] 151 and 163 shall be collected together to the extent that each is imposed in an entity area.

SECTION 23. Section 322.205(a), Tax Code, is amended to read as follows:

(a) If the comptroller lawfully seizes property for the payment of the taxes imposed under Chapter 151 or 163 and the property owner is delinquent in the payment of taxes under this chapter, the comptroller shall sell sufficient property to pay the delinquent taxes and penalties under this chapter, Chapter 151, Chapter 163, and Chapter 321.

SECTION 24. Section 322.207(a), Tax Code, is amended to read as follows:

(a) The comptroller or the attorney general may disapprove of the institution of a suit by a taxing entity under Section 322.206(b) if:

(1) negotiations between the state and the taxpayer are being conducted for the purpose of the collection of delinquent taxes owed to the state and the taxing entity seeking to bring suit;

(2) the taxpayer owes substantial taxes to the state and there is a reasonable possibility that the taxpayer may be unable to pay the total amount owed;

(3) the state will bring suit against the taxpayer for all taxes due under Chapter 151 or 163 and this chapter; or

(4) the suit involves a critical legal question relating to the interpretation of state law or a provision of the Texas or United States constitution in which the state has an overriding interest.

SECTION 25. Section 323.003, Tax Code, is amended to read as follows:

Sec. 323.003. OTHER PORTIONS OF TAX APPLICABLE. Subtitles A and B, Title 2, and Chapters 142, [and] 151, and 163 apply to the taxes and to the administration and enforcement of the taxes imposed by this chapter in the same manner that those laws apply to state taxes unless modified by this chapter.

SECTION 26. Section 323.201(a), Tax Code, is amended to read as follows:

(a) Each retailer in a county that has adopted the tax authorized by this chapter shall add the sales tax imposed by this chapter and by Chapter 151 or 163, plus any other applicable sales tax, to the sales price, and the sum of the taxes is a part of the price, a debt of the purchaser to the retailer until paid, and recoverable at law in the same manner as the purchase price.

SECTION 27. Section 323.204, Tax Code, is amended to read as follows:

Sec. 323.204. COMPUTATION OF USE TAX. In each county that has adopted the taxes authorized by this chapter, the tax imposed by Section 323.104, by other applicable local taxes, and by Subchapter D, Chapter 151, or Subchapter C, Chapter 163, are added together to form a single combined tax rate, except only the rate of the county tax is used in a situation described by Section 323.205(b).

SECTION 28. Section 323.205(a), Tax Code, is amended to read as follows:

(a) In determining the incidence of the use tax authorized by this chapter, the name of the county adopting the tax is substituted in Subchapter D, Chapter 151, and Subchapter C, Chapter 163, for "this state" where those words are used to designate the taxing entity or delimit the tax imposed. However, the excise tax authorized by this chapter on the use, storage, or consumption of a taxable item does not apply if the taxable item is first used, stored, or consumed in a county that has not adopted the taxes authorized by this chapter.

SECTION 29. Sections 323.206(a) and (b), Tax Code, are amended to read as follows:

(a) The sales tax authorized by this chapter does not apply to the sale of a taxable item unless the sales tax imposed by Subchapter C, Chapter 151, or Subchapter B, Chapter 163, also applies to the sale.

(b) The excise tax authorized by this chapter on the use, storage, or consumption of a taxable item does not apply to the use, storage, or consumption of an item unless the tax imposed by Subchapter D, Chapter 151, or Subchapter C, Chapter 163, also applies to the use, storage, or consumption.

SECTION 30. Section 323.207, Tax Code, is amended to read as follows:

Sec. 323.207. STATE EXEMPTIONS APPLICABLE. The exemptions provided by Subchapter H, Chapter 151, and Subchapter F, Chapter 163, apply to the taxes authorized by this chapter, except as provided by Sections 151.359(j) and 151.317(b).

SECTION 31. Section 323.301, Tax Code, is amended to read as follows:

Sec. 323.301. COMPTROLLER TO COLLECT AND ADMINISTER TAXES. The comptroller shall administer, collect, and enforce any tax imposed by a county under this chapter. The tax imposed under this chapter and the taxes [tax] imposed under Chapters [Chapter] 151 and 163 shall be collected together, if [both] taxes are imposed under more than one chapter.

SECTION 32. Section 323.302(b), Tax Code, is amended to read as follows:

(b) If a county requests an additional report, the comptroller shall make an additional quarterly report to the county including the name, address, and account number, if any, of, and the amount of tax due from, each person doing business in the county who has failed to pay the tax under this chapter to the county or under Chapter 151 or 163. The additional report must also include statements:

(1) showing whether or not there has been a partial tax payment by the delinquent taxpayer;

(2) showing whether or not the taxpayer is delinquent in the payment of sales and use taxes to the state; and

(3) describing the steps taken by the comptroller to collect the delinquent taxes.

SECTION 33. Section 323.303(b), Tax Code, is amended to read as follows:

(b) Except as provided by this section for aircraft, the [The] same sales tax permit, exemption certificate, and resale certificate required by Chapter 151 for the administration and collection of the taxes imposed by that chapter satisfy the requirements of this chapter. For aircraft, as defined by Section 163.001, the same exemption certificate and resale certificate required by Chapter 163 for the administration and collection of the taxes imposed by that chapter satisfy the requirements of this chapter. No additional permit or exemption or resale certificate may be required.

SECTION 34. Section 323.308, Tax Code, is amended to read as follows:

Sec. 323.308. SEIZURE AND SALE OF PROPERTY. If the comptroller lawfully seizes property for the payment of the taxes imposed under Chapter 151 or 163 and the property owner is delinquent in the payment of taxes under this chapter, the comptroller shall sell sufficient property to pay the delinquent taxes and penalties of both taxes. The proceeds of a sale of seized property shall first be applied to the payment of amounts due the state, any remainder to the amounts due to a municipality to which the taxes are due under Chapter 321, and any remainder to the amounts due to a county to which taxes are due.

SECTION 35. Section 323.310(a), Tax Code, is amended to read as follows:

(a) The comptroller or the attorney general may disapprove of the institution of a suit by a county under Section 323.309(b) if:

(1) negotiations between the state and the taxpayer are being conducted for the purpose of the collection of delinquent taxes owed to the state and the county seeking to bring suit;

(2) the taxpayer owes substantial taxes to the state and there is a reasonable possibility that the taxpayer may be unable to pay the total amount owed;

(3) the state will bring suit against the taxpayer for all taxes due under Chapter 151 or 163 and this chapter; or

(4) the suit involves a critical legal question relating to the interpretation of state law or a provision of the Texas or United States constitution in which the state has an overriding interest.

SECTION 36. Sections 151.328(c), (f), (g), and (h), Tax Code, are repealed.

SECTION 37. 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 38. This Act takes effect September 1, 2015.