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A BILL TO BE ENTITLED
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AN ACT
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relating to a temporary exemption from the sales and use tax and the |
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franchise tax for certain businesses engaged in space flight |
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activities. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter H, Chapter 151, Tax Code, is amended |
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by adding Section 151.362 to read as follows: |
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Sec. 151.362. TAXABLE ITEMS USED BY BUSINESSES ENGAGED IN |
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SPACE FLIGHT ACTIVITIES; TEMPORARY EXEMPTION. (a) In this |
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section: |
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(1) "Qualifying business entity" means a person who is |
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a business that is: |
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(A) primarily engaged in space flight |
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activities; and |
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(B) first located and begins doing business in |
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this state on or after January 1, 2018. |
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(2) "Space flight activities" has the meaning assigned |
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by Section 100A.001, Civil Practice and Remedies Code. |
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(b) The sale to or storage, use, or other consumption by a |
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qualifying business entity of a taxable item that will be directly |
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used or consumed by the entity is exempted from the taxes imposed by |
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this chapter. |
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(c) 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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(d) Subject to Subsection (e), 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 qualifying business |
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entity. |
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(e) A person who meets the requirements of a qualifying |
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business entity must apply for a registration number not later than |
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the first anniversary of the date the person begins doing business |
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in this state. The comptroller shall deny an application received |
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after that date. |
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(f) 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 (g). |
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The registration number may not be renewed. |
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(g) 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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the requirements of a qualifying business entity. 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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(h) 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 2. Section 171.0001(4), Tax Code, as effective |
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until January 1, 2020, is amended to read as follows: |
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(4) "Beginning date" means: |
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(A) except as provided by Paragraph (B) or (C): |
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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) for any other taxable entity, the date |
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on which the taxable entity begins doing business in this state; |
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[or] |
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(B) for a taxable entity that qualifies as a new |
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veteran-owned business as defined by Section 171.0005, the earlier |
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of: |
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(i) the fifth 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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qualify as a new veteran-owned business as defined by Section |
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171.0005; or |
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(C) for a taxable entity that meets the |
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requirements of a qualifying business entity under Section 151.362, |
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the earlier 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 qualifying business entity under |
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that section. |
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SECTION 3. Section 171.0001(4), Tax Code, as effective |
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January 1, 2020, is amended to 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 qualifying business entity under Section 151.362, |
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the earlier 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 qualifying business entity under |
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that section. |
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SECTION 4. Section 171.001, Tax Code, is amended by adding |
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Subsection (e) to read as follows: |
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(e) 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 qualifying business entity under Section 151.362 |
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until the 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 qualifying business entity under that |
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section. |
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SECTION 5. Section 171.063(g), Tax Code, as effective until |
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January 1, 2020, is amended to read 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) or (e) in the absence of the federal tax exemption, and |
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the effective date of the withdrawal is a date earlier than the date |
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the corporation would have become subject to the franchise tax as |
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provided by Section 171.001(d) or (e), as applicable, the date the |
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corporation would have become subject to the franchise tax under |
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Section 171.001(d) or (e) [that section] is considered the |
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corporation's beginning date for those purposes. |
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SECTION 6. Section 171.063(g), Tax Code, as effective |
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January 1, 2020, is amended to read 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(e) 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(e), 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 7. Section 171.204, Tax Code, is amended by adding |
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Subsection (e) to read as follows: |
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(e) 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(e) 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 and any other information the comptroller |
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determines necessary. The comptroller may not require the taxable |
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entity to report or compute its margin. |
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SECTION 8. Not later than December 1, 2017, the comptroller |
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of public accounts shall adopt rules as required by Section |
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151.362(h), Tax Code, as added by this Act. |
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SECTION 9. Except as otherwise provided by this Act, this |
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Act takes effect September 1, 2017. |