By: Watson  S.B. No. 1525
         (In the Senate - Filed March 5, 2019; March 14, 2019, read
  first time and referred to Committee on Finance; April 17, 2019,
  reported adversely, with favorable Committee Substitute by the
  following vote:  Yeas 13, Nays 0; April 17, 2019, sent to printer.)
Click here to see the committee vote
 
  COMMITTEE SUBSTITUTE FOR S.B. No. 1525 By:  Watson
 
 
A BILL TO BE ENTITLED
 
AN ACT
 
  relating to the application of the sales and use tax to certain
  property and services.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 151.0028, Tax Code, is amended by adding
  Subsection (c) to read as follows:
         (c)  "Amusement services" does not include services provided
  through coin-operated machines that are operated by the consumer.
         SECTION 2.  Section 151.0045, Tax Code, is amended to read as
  follows:
         Sec. 151.0045.  "PERSONAL SERVICES". "Personal services"
  means those personal services listed as personal services under
  Group 721, Major Group 72 of the Standard Industrial Classification
  Manual, 1972, and includes massage parlors, escort services, and
  Turkish baths under Group 729 of said manual but does not include
  any other services listed under Group 729 unless otherwise covered
  under this chapter [Act], prepared by the statistical policy
  division of the office on management and budget, office of the
  president of the United States. The term does not include services
  provided through coin-operated machines that are operated by the
  consumer.
         SECTION 3.  Section 151.006, Tax Code, is amended by
  amending Subsections (a) and (c) and adding Subsection (e) to read
  as follows:
         (a)  "Sale for resale" means a sale of:
               (1)  tangible personal property or a taxable service to
  a purchaser who acquires the property or service for the purpose of
  reselling it [with or] as a taxable item as defined by Section
  151.010 in the United States of America or a possession or territory
  of the United States of America or in the United Mexican States in
  the normal course of business in the form or condition in which it
  is acquired or as an attachment to or integral part of other
  tangible personal property or taxable service;
               (2)  tangible personal property to a purchaser for the
  sole purpose of the purchaser's leasing or renting it in the United
  States of America or a possession or territory of the United States
  of America or in the United Mexican States in the normal course of
  business to another person, but not if incidental to the leasing or
  renting of real estate;
               (3)  tangible personal property to a purchaser who
  acquires the property for the purpose of transferring it in the
  United States of America or a possession or territory of the United
  States of America or in the United Mexican States as an integral
  part of a taxable service;
               (4)  a taxable service performed on tangible personal
  property that is held for sale by the purchaser of the taxable
  service; or
               (5)  [except as provided by Subsection (c),] tangible
  personal property or a taxable service to a purchaser who acquires
  the property or service for the purpose of transferring it as an
  integral part of performing a contract, or a subcontract of a
  contract, for the sale, other than the lease or rental, of tangible
  personal property with an entity or organization exempted from the
  taxes imposed by this chapter under Section 151.309 or 151.310 [the
  federal government] only if the purchaser:
                     (A)  allocates and bills to the contract the cost
  of the property or service as a direct or indirect cost; and
                     (B)  transfers title to the property to the exempt
  entity or organization [federal government] under the contract and
  any applicable [federal] acquisition regulations.
         (c)  A sale for resale does not include the sale of tangible
  personal property or a taxable service to a purchaser who acquires
  the property or service for the purpose of performing a service not
  listed as a taxable service under Section 151.0101 [service that is
  not taxed under this chapter], regardless of whether title
  transfers to the service provider's customer, unless the tangible
  personal property or taxable service is purchased for the purpose
  of performing [reselling it to the United States in] a contract, or
  a subcontract of a contract, for a service, including a taxable
  service under Section 151.0101, with any branch of the Department
  of Defense, Department of Homeland Security, Department of Energy,
  National Aeronautics and Space Administration, Central
  Intelligence Agency, National Security Agency, National Oceanic
  and Atmospheric Administration, or National Reconnaissance Office
  to the extent allocated and billed to the contract with the federal
  government.
         (e)  A sale for resale does not include the sale of tangible
  personal property to a purchaser who acquires the property for the
  purpose of using, consuming, or expending it in, or incorporating
  it into, an oil or gas well in the performance of an oil well service
  taxable under Chapter 191.
         SECTION 4.  Section 151.338, Tax Code, is amended to read as
  follows:
         Sec. 151.338.  ENVIRONMENT AND CONSERVATION SERVICES.
  (a)  Subject to Subsections (b) and (c), labor to [The services
  involved in the] repair, remodel, maintain, or restore [remodeling,
  maintenance, or restoration of] tangible personal property is
  exempted from the taxes imposed by [are not taxable under] this
  chapter if:
               (1)  the repair, remodeling, maintenance, or
  restoration is required by statute, ordinance, order, rule, or
  regulation of any commission, agency, court, or political,
  governmental, or quasi-governmental entity in order to protect the
  environment or to conserve energy; and
               (2)  the charge for the labor is itemized separately
  from the charge for materials furnished.
         (b)  The exemption provided by Subsection (a) does not apply
  to the charge for materials furnished by the service provider to the
  purchaser as part of the service.
         (c)  Sixty-five percent of a lump-sum charge for labor and
  materials to repair, remodel, maintain, or restore tangible
  personal property is exempted from the taxes imposed by this
  chapter if: 
               (1)  the repair, remodeling, maintenance, or
  restoration is required under the circumstances described by
  Subsection (a)(1); and
               (2)  the labor and materials are purchased for a health
  care facility, as defined by Section 108.002, Health and Safety
  Code, or for an oncology center.
         SECTION 5.  Section 151.335, Tax Code, is repealed.
         SECTION 6.  The amendments made by this Act are a
  clarification of existing law and do not imply that existing law may
  be construed as inconsistent with the law as amended by this Act.
         SECTION 7.  This Act takes effect immediately if it receives
  a vote of two-thirds of all the members elected to each house, as
  provided by Section 39, Article III, Texas Constitution.  If this
  Act does not receive the vote necessary for immediate effect, this
  Act takes effect October 1, 2019.
 
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