LEGISLATIVE BUDGET BOARD
Austin, Texas
 
FISCAL NOTE, 84TH LEGISLATIVE REGULAR SESSION
 
May 8, 2015

TO:
Honorable Dennis Bonnen, Chair, House Committee on Ways & Means
 
FROM:
Ursula Parks, Director, Legislative Budget Board
 
IN RE:
HB3174 by Button (relating to the application of the sales and use tax to certain computer program transactions.), Committee Report 1st House, Substituted



Estimated Two-year Net Impact to General Revenue Related Funds for HB3174, Committee Report 1st House, Substituted: a negative impact of ($3,300,000) through the biennium ending August 31, 2017, if the effective date of the bill is June 1, 2015; or a negative impact of ($2,800,000) through the biennium ending August 31, 2017, if the effective date of the bill is September 1, 2015.



Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2015 ($300,000)
2016 ($1,500,000)
2017 ($1,500,000)
2018 ($1,500,000)
2019 ($1,500,000)
2020 ($1,500,000)




Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2016 ($1,300,000)
2017 ($1,500,000)
2018 ($1,500,000)
2019 ($1,500,000)
2020 ($1,500,000)




Fiscal Year Probable Revenue (Loss) from
General Revenue Fund
1 		Probable Revenue (Loss) from
Cities		 Probable Revenue (Loss) from
Transit Authorities		 Probable Revenue (Loss) from
Counties and Special Districts
2015 ($300,000) ($100,000) ($20,000) ($10,000)
2016 ($1,500,000) ($280,000) ($90,000) ($50,000)
2017 ($1,500,000) ($280,000) ($90,000) ($50,000)
2018 ($1,500,000) ($280,000) ($90,000) ($50,000)
2019 ($1,500,000) ($280,000) ($90,000) ($50,000)
2020 ($1,500,000) ($280,000) ($90,000) ($50,000)

The above table assumes the bill takes effect June 1st, 2015.  The table below assumes the bill takes effect September 1st, 2015.



Fiscal Year Probable Revenue (Loss) from
General Revenue Fund
1 		Probable Revenue (Loss) from
Cities		 Probable Revenue (Loss) from
Transit Authorities		 Probable Revenue (Loss) from
Counties and Special Districts
2016 ($1,300,000) ($240,000) ($80,000) ($40,000)
2017 ($1,500,000) ($280,000) ($90,000) ($50,000)
2018 ($1,500,000) ($280,000) ($90,000) ($50,000)
2019 ($1,500,000) ($280,000) ($90,000) ($50,000)
2020 ($1,500,000) ($280,000) ($90,000) ($50,000)

Fiscal Analysis

The bill would amend Chapter 151 of the Tax Code, regarding sales and use taxation of certain computer program transactions.
 
The bill would add a Subsection (d) to Section 151.006 to provide that a sale for resale includes a sale of a computer program to a provider of Internet hosting services who sells a license to use the program to an unrelated user of Internet hosting services, provided that the reseller does not retain a right to use the program under that license.  A sale for resale is exempt from tax.
 
The bill would take effect immediately upon enactment, assuming that it received the requisite two-thirds majority votes in both houses of the Legislature.  Otherwise, it would take effect September 1, 2015.

Methodology

The estimate is based on Comptroller audit experience with respect to sales of software by providers of Internet hosting service.

Local Government Impact

There would be a proportional loss of sales and use tax revenue from local taxing jurisdictions.


Source Agencies:
304 Comptroller of Public Accounts
LBB Staff:
UP, KK, SD