HBA-JRA H.B. 3212 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 3212 By: McCall Ways & Means 4/8/1999 Introduced BACKGROUND AND PURPOSE Each legislative session, the Comptroller of Public Accounts identifies certain aspects of the Tax Code that contain technical errors, ambiguous language, or outdated section references and suggests amendments that would correct, clarify, or conform those provisions. H.B. 3212 amends language regarding general collection and enforcement procedures and the application and administration of certain taxes. This bill affects consolidated court costs, insurance tax, state and local sales and use tax, collection procedures, motor vehicle sales tax, motor fuels tax, tobacco tax, state and local hotel occupancy tax, franchise tax, mixed beverage tax, occupation tax, and sulphur tax, among others. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Comptroller of Public Accounts in SECTION 66 and that rulemaking authority previously delegated to the Comptroller of Public Accounts is modified in SECTION 64 of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Article 102.075(g), Code of Criminal Procedure, to authorize a municipality or county to retain 10 percent of the money collected under this article (Court Costs for Special Services) as a service fee for collection if the municipality or county remits the funds to the Comptroller of Public Accounts (comptroller) by the last day of the month following each calendar quarter. Makes a nonsubstantive change. SECTION 2. Amends Section 12(b), Article 1.14-1, Insurance Code, to provide that the report and tax required by this section (Independently Procured Insurance Tax) are due on or before May 15, rather than March 1, of the calendar year after the calendar year in which the insurance was procured, continued, or renewed or on another date prescribed by the comptroller. SECTION 3. Amends Sections 12(a) and (b), Article 1.14-2, Insurance Code, as follows: (a) Requires a surplus lines agent to file a report and pay taxes to the comptroller on forms prescribed by the comptroller. Requires that the amount of taxes be based on gross premiums written or received during the calendar year ending on the preceding December 31. Requires a tax prepayment to be required any time accrued taxes due equal or exceed $70,000. Requires that the prepayment and the report form be due by the 15th day of the month following the month in which accrued taxes total $70,000. Makes conforming changes. (b) Deletes text requiring the surplus lines agent to maintain surplus lines premium receipt tax funds in a separate account. Makes a nonsubstantive change. SECTION 4. Amends Section 9(b), Article 3.50-3, Insurance Code (Texas State College and University Employees Uniform Insurance Benefits Act), to provide that premiums on policies, insurance contracts, or agreements with health maintenance organizations established under this Act are not subject to any regulatory fee or surcharge, including premium or maintenance taxes or fees. SECTION 5. Amends Section 11(b), Article 3.50-4, Insurance Code (Texas Public School Employees Group Insurance Act), to provide that a premium or contribution on a policy, insurance contract, or agreement authorized as provided by this articles is not subject to any regulatory fee or surcharge, including premium or maintenance taxes or fees. SECTION 6. Amends Section 326.029(a), Local Government Code, to require a commissioners court by resolution or ordinance to declare that a library district is created and declare the amount of the local sales and use tax adopted if a majority of the voters approve such an act. SECTION 7. Amends Section 326.092(a), Local Government Code, to delete Section 323.405, Tax Code, from the list of sections which do not apply to the imposition, computation, administration, and governance of the sales and use tax. SECTION 8. Amends Section 101.003, Tax Code, by adding Subdivision (13), to define "tax." SECTION 9. Amends Section 111.0041(b), Tax Code, to delete the exception of Section 191.024(b), Tax Code, which was previously repealed, from the provision that this section (Records) prevails over any other conflicting provision of this title (State Taxation). SECTION 10. Amends Section 111.104(e), Tax Code, to delete the exception of those taxes that qualify for refund allowed under Section 151.318(g) or (n) (entitling a person engaged in manufacturing, processing, fabricating, or repairing tangible personal property for ultimate sale and a person engaged in overhauling, retrofitting, or repairing jet turbine aircraft engines and their component parts to a refund of sales and use taxes), from the application of this section (Refunds). SECTION 11. Amends Section 111.107, Tax Code, to delete a refund made or credit issued under a court order under Sections 151.318(g) or (n) from the list of refunds which a person is authorized to request after the expiration of the period during which the comptroller is authorized to assess a deficiency for the tax. SECTION 12. Amends Sections 151.310(c) and (e), Tax Code, as follows: (c) Authorizes a taxable item manufactured by or donated to a qualified organization or chapter of the organization to be sold tax free regardless of the sales price to any purchaser other than the donor. (e) Requires a nonprofit hospital or hospital system that qualifies for an exemption from federal income taxes under certain provisions of Section 501, Internal Revenue Code, to provide community benefits that include charity care and government-sponsored indigent health care as set forth in Subchapter D (Duties of Nonprofit Hospitals), Chapter 311 (Powers and Duties of Hospitals), Health and Safety Code, rather than as set forth in this section. Deletes text setting forth the charity care and community benefits to be provided. SECTION 13. Amends Section 151.312, Tax Code, to include periodicals and writings presented on audio tape, video tape, and computer disk among the periodicals and writings that are exempt from limited sales, excise, and use taxes. SECTION 14. Amends Sections 151.318(a), (c), (g), (o), (q), and (s), Tax Code, as follows: (a) Provides that the property and services listed in this section are exempt from limited sales, excise, and use taxes if they are sold, leased, or rented to, or stored, used, or consumed by a manufacturer. (c) Provides that certain types of piping remain eligible for the exemption. Deletes text relating to property not used in an actual manufacturing, processing, or fabrication operation. Redesignates existing Subdivision (4) to Subdivision (3). Makes conforming and nonsubstantive changes. (g) Deletes existing subsection and moves text substantially to Subsection (a). (o) Provides that the production of a publication for the dissemination of general news of general interest printed on newsprint and distributed to the general public free of charge at a daily, weekly, or other short interval is considered "manufacturing" for purposes of this section, rather than of Subsections (d)-(m) of this section. (q) Makes conforming changes. (s) Makes a conforming change. SECTION 15. Amends Section 151.321(a), Tax Code, to exempt a taxable item manufactured or donated to a qualified student organization from sales tax regardless of sales price unless sold to the donor. SECTION 16. Amends Section 151.350(d), Tax Code, to redefine "restore." SECTION 17. Amends Sections 151.429(d) and (g), Tax Code, to change references to the Texas Department of Commerce to the Texas Department of Economic Development. SECTION 18. Amends Section 151.429(e)(1), Tax Code, to change a reference to the Texas Department of Commerce to the Texas Department of Economic Development. SECTION 19. Amends Sections 151.4291(d) and (g), Tax Code, to change references to the Texas Department of Commerce to the Texas Department of Economic Development. SECTION 20. Amends Section 151.4291(e)(1), Tax Code, to change a reference to the Texas Department of Commerce to the Texas Department of Economic Development. SECTION 21. Amends Section 151.431(a), Tax Code, to change a reference to the Texas Department of Commerce to the Texas Department of Economic Development. SECTION 22. Amends Section 152.041, Tax Code, by adding Subsection (e), as follows: (e) Authorizes the county tax assessor-collector to accept an application for title to a motor vehicle without the payment of additional tax by a motor vehicle title applicant if the applicant has paid the tax to the seller who is required by this chapter (Taxes on Sale, Rental, And Use of Motor Vehicles) to collect the tax and the seller has failed to remit the tax to the tax assessor-collector. Provides that the applicant must present satisfactory documentation to the tax assessor-collector that the tax was paid before title to the motor vehicle may be issued. Requires the tax assessor-collector to notify the comptroller in writing of the seller's failure to remit the tax. Sets forth information the notice must contain. SECTION 23. Amends Sections 153.117(a), (b), (d), and (h), Tax Code, to include the number of gallons of gasoline lost by theft among the records which a distributor, a dealer, an aviation fuel dealer, and a gasoline jobber are required to keep. SECTION 24. Amends Sections 153.119(a) and (e), Tax Code, to include the loss of gasoline by theft among the circumstances for which a tax refund may be claimed. SECTION 25. Amends Section 153.121(a), Tax Code, to make a conforming change. SECTION 26. Amends Section 153.206, Tax Code, by adding Subsection (j), as follows: (j) Requires that, in each subsequent sale of diesel fuel on which the tax has been collected, the amount of the tax be added to the selling price so that the tax is paid ultimately by the person using or consuming the diesel fuel for the purpose of propelling a vehicle on the public highways of this state. SECTION 27. Amends Sections 153.219(a), (b), (c), (d), and (i), Tax Code, to include the number of gallons of diesel fuel lost by theft among the records which a supplier, a dealer, a bonded user or other user with nonhighway equipment uses who files a claim for a refund, an aviation fuel dealer, and a diesel fuel jobber are required to keep. SECTION 28. Amends Section 153.222(e), Tax Code, to include the loss of diesel by theft among the circumstance for which a tax refund may be claimed. SECTION 29. Amends Section 153.224(a), Tax Code, to make a conforming change. SECTION 30. Amends Sections154.114(c) and (g), Tax Code, as follows: (c) Requires the comptroller to deliver, rather than mail, the written notice of intention to revoke or suspend a cigarette distributor's, wholesaler's, bonded agent's, or retailer's permit by personal service or by mail, rather than certified mail, return receipt requested, to the permit holder's mailing address as it appears in the comptroller's records. Makes a conforming change. (g) Limits the notice requirements to distributor and wholesaler permit holders. SECTION 31. Amends Section 154.210(a), Tax Code, to require a distributor to deliver a report for the preceding month to the comptroller by the last, rather than 15th, day of each month. SECTION 32. Amends Section 154.308(b), Tax Code, to require the comptroller to notify a person of a deficiency determination by mail or personal service, rather than certified mail, return receipt requested. Makes a conforming change. SECTION 33. Amends Sections 154.309(b) and (d), Tax Code, to provide that a written request for redetermination must be filed with the comptroller by the 30th, rather than the 15th working, day after the date notice of deficiency is issued, rather than received. Requires the comptroller to give notice of a redetermination hearing by personal service or by mail, rather than certified mail, return receipt requested. SECTION 34. Amends Section 155.059(c), Tax Code, require the comptroller to deliver written notice by personal service or by mail, rather than certified mail, return receipt requested, to the permit holder's mailing address as it appears in the comptroller's records. Makes a conforming change. SECTION 35. Amends Section 155.103(b), Tax Code, to require a manufacturer who sells tobacco products to a permit holder in this state to file the required report for the previous month with the comptroller by the last, rather than the 15th, day of each month. SECTION 36. Amends Section 155.111(a), Tax Code, to require a distributor to file a report for the preceding month with the comptroller by the last, rather than 30th, day of each month. SECTION 37. Amends Section 155.185(b), Tax Code, to require the comptroller to notify a person of a deficiency determination by mail or personal service, rather than certified mail, return receipt requested. Makes a conforming change. SECTION 38. Amends Sections 155.186(b) and (d), Tax Code, to provide that a written request for redetermination must be filed with the comptroller by the 30th, rather than the 15th working, day after the date notice of deficiency is issued, rather than received. Requires the comptroller to give notice of a redetermination hearing by personal service or by mail, rather than certified mail, return receipt requested. SECTION 39. Amends Section 156.102, Tax Code, to provide that this chapter (Hotel Occupancy Tax) does not impose a tax on a corporation or association that qualifies for exemption from federal income taxes under Section 501(c)(3), Internal Revenue Code of 1986. SECTION 40. Amends Sections 156.103(a), (b), (c), and (d), Tax Code, to provide that this chapter does not impose a tax on a governmental entity of the United States. Deletes all exceptions to this subsection. Requires this state, or an agency, institution, board, or commission of this state other than an institution of higher education to pay the hotel occupancy tax and entitles it to a refund of the amount of tax paid. Makes conforming changes. SECTION 41. Amends Section 171.063, Tax Code, by amending Subsection (a) and adding Subsection (h), as follows: (a) Makes conforming changes. (h) Authorizes a requirement that a nonprofit hospital provide charity care and community benefits to be satisfied by donation of money to the Texas Healthy Kid Corporation established by Chapter 109, Health and Safety Code if the money is donated to be used for health benefits for certain children, as specified in Section 109.033(c), Health and Safety Code, and prohibits more than 10 percent of the charity care required under any provision of Section 311.045 (Community Benefits and Charity Care Requirements), Health and Safety Code, from being satisfied by the donation. SECTION 42. Amends Sections 171.063(c) and (d), Tax Code, to provide that evidence establishing the corporation's provisional exemption under this section (Exemption-Nonprofit Corporation Exempt From Federal Income Tax) must be filed by the 15th month after the day that is the last day of a calendar month and this is nearest to the date of the corporation's charter or certificate of authority. Deletes the provision that a corporation must file a copy of the Internal Revenue Service's exemption letter with the comptroller by the 15th month after the day that is the last day of a calendar month and that is nearest to the date of the corporation's charter or certificate of authority. Makes conforming changes. SECTION 43. Amends the heading of Subchapter C, Chapter 171, Tax Code, to read as follows: SUBCHAPTER C. DETERMINATION OF TAXABLE CAPITAL AND TAXABLE EARNED SURPLUS; ALLOCATION AND APPORTIONMENT SECTION 44. Amends the heading of Section 171.1015, Tax Code, to read as follows: Sec. 171.1015. REDUCTION OF TAXABLE CAPITAL OR TAXABLE EARNED SURPLUS FOR INVESTMENT IN AN ENTERPRISE ZONE. SECTION 45. Amends Section 171.1015(f)(1), Tax Code, to change a reference to the Texas Department of Commerce to the Texas Department of Economic Development. SECTION 46. Amends Section 171.1015(g), Tax Code, to change a reference to the Texas Department of Commerce to the Texas Department of Economic Development. SECTION 47. Amends the heading of Section 171.1016, Tax Code, to read as follows: Sec. 171.1016. REDUCTION OF TAXABLE CAPITAL OR TAXABLE EARNED SURPLUS FOR INVESTMENT IN A READJUSTMENT ZONE. SECTION 48. Amends Section 171.1016(f)(1), Tax Code, to change a reference to the Texas Department of Commerce to the Texas Department of Economic Development. SECTION 49. Amends Section 171.1016(g), Tax Code, to change a reference to the Texas Department of Commerce to the Texas Department of Economic Development. SECTION 50. Amends the heading of Section 171.107, Tax Code, to read as follow: Sec. 171.107. DEDUCTION OF COST OF SOLAR ENERGY DEVICE FROM TAXABLE CAPITAL OR TAXABLE EARNED SURPLUS APPORTIONED TO THIS STATE. SECTION 51. Amends Section 171.110, Tax Code, by adding Subsections (i) and (j), as follows: (i) Provides that any person designated as an officer is presumed to be an officer if that person holds an office created by the board of directors or pursuant to the corporate charter or bylaws and has legal authority to bind the corporation with third parties by executing contracts or other legal documents. (j) Authorizes a corporation to rebut the presumption described in Subsection (i) that a person is an officer if it conclusively shows, through the person's job description or other documentation, that the person does not participate or have authority to participate in significant policymaking aspects of the corporate operations. SECTION 52. Amends Section 171.501(a), Tax Code, to change references to the Texas Department of Commerce to the Texas Department of Economic Development. SECTION 53. Amends the heading of Subchapter C, Chapter 183, Tax Code, to read as follows: SUBCHAPTER C. MIXED BEVERAGE TAX CLEARANCE SECTION 54. Amends the heading of Section 183.051, Tax Code, as follows: Sec. 183.501. MIXED BEVERAGE TAX CLEARANCE SECTION 55. Amends Section 183.051(b), Tax Code, to require the comptroller to issue to each county or incorporated municipality a warrant drawn on the general revenue, rather than the mixed beverage tax clearance, fund in the amount of 10.7143 percent of mixed beverage receipts from permittees within the county or incorporated municipality during the quarter . Makes conforming changes. SECTION 56. Amends Section 191.085(b), Tax Code, to require a person subject to the tax to keep a complete record of business transacted and any other information the comptroller requires open for four, rather than two, years for inspection by the comptroller or the attorney general. SECTION 57. Amends Section 203.051(a), Tax Code, to authorize a producer to destroy the record of all sulphur the producer produces in this state four, rather than three, years after the last entry in the record. SECTION 58. Amends Section 321.103, Tax Code, by adding Subsections (e), (f), and (g), as follows: (e) Provides that a local government entity's sales and use tax that exceeds two percent as a result of overlapping local sales and use taxes is automatically reduced to a rate that when added to the combined rate of local sales and use taxes equals two percent. (f) Requires the comptroller to withhold from the municipality's monthly sales and use tax allocation an amount equal to the amount that would have been collected by the entity had overlapping local sales and use taxes not exceeded two percent. Requires the comptroller to withhold and pay the amount withheld to the entity under policies or procedures that the comptroller considers reasonable. (g) Provides that a transit authority is not a local government entity for the purposes of Subsections (e) and (f). SECTION 59. Amends Section 323.102(c), Tax Code, to provide that a tax imposed under Chapter 326 (Library Districts), Local Government Code, takes effect on the first day of the first calendar quarter after the expiration of the first complete calendar quarter occurring after the date on which the comptroller receives a notice of the action as required by Section 323.405(b), which requires the county judge to notify the comptroller of any resolution that changes the application of the taxes that may be imposed in this chapter. SECTION 60. Amends Section 323.105(e), Tax Code, to require the comptroller to remit to the county amounts collected at the rate imposed under this section as part of the regular allocation of county tax revenue collected by the comptroller if the district is composed of the entire county. Requires the comptroller, rather than the county, to remit the amount to the district if the district is composed of an area less than the entire county. SECTION 61. Amends Section 351.006, Tax Code, to exempt a United States governmental entity described in Section 156.103(a) from the payment of the municipal hotel occupancy tax, rather than requiring such an entity to pay the refund and entitling it to a refund. Requires a state governmental entity described in Section 156.103(b) to pay the municipal hotel occupancy tax and entitles it to a refund of the tax. Redesignates existing Subsections (b)-(e) to Subsection (c)-(f). SECTION 62. Amends Section 352.007, Tax Code, to exempt a United States governmental entity described in Section 156.103(a) from the payment of the county hotel occupancy tax, rather than requiring such an entity to pay the refund and entitling it to a refund. Requires a state governmental entity described in Section 156.103(b) to pay the county hotel occupancy tax and entitles it to a refund of the tax. Redesignates existing Subsections (b)-(e) to Subsection (c)-(f). SECTION 63. Reenacts Subsection 4B(e), Article 5190.6, V.T.C.S. (Development Corporation Act of 1970), as amended by Section 3, Chapter 1022, and Section 12, Chapter 1031, Acts of the 73rd Legislature, Regular Session, 1993. SECTION 64. Repealer: Section 152.062(d), Tax Code, which required the comptroller to promulgate rules to govern the enforcement of this section (Required Statements), including standard value guidelines to assist a tax assessor-collector in determining the truth and accuracy of material facts in a joint statement. SECTION 65. Provides that the following provisions of this Act are clarifications of existing law and do not imply that existing law may be construed as inconsistent with the law as amended by this Act: Section 102.075, Code of Criminal Procedure; Section 9, Article 3.50-3, Insurance Code (Texas State College and University Employees Uniform Insurance Benefits Act); Section 11, Article 3.50-4, Insurance Code (Texas Public School Employees Group Insurance Act); Section 326.029, Local Government Code; Section 326.092, Local Government Code; Section 151.350(d), Tax Code; Section 152.041, Tax Code; Section 153.117, Tax Code; Section 153.119, Tax Code; Section 153.206, Tax Code; Section 153.219, Tax Code; Section 171.063, Tax Code; The heading of Subchapter C, Chapter 171, Tax Code; The headings of Sections 171.1015, 171.1016, and 171.107, Tax Code; Section 171.110, Tax Code; Section 191.085, Tax Code; and Section 203.051, Tax Code. SECTION 66. Authorizes the comptroller to adopt rules and take other actions before October 1, 1999, as the comptroller deems necessary or advisable to prepare for the taking effect of this Act. SECTION 67. Provides that this Act takes effect October 1, 1999, except as provided by Subsections (b), (c), and (d). (b) Provides that Section 3 of this Act takes effect January 1, 2000, and applies to reporting periods beginning on or after than date. (c) Provides that Sections 41 through 52 of this Act take effect January 1, 2000, and apply to a report originally due on or after that date. (d) Provides that Sections 59 and 66 of this Act take effect 90 days after adjournment. SECTION 68. Emergency clause.