Bill Text: TX HB268 | 2011-2012 | 82nd Legislature | Enrolled

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Bill Title: Relating to the exemption from sales and use taxes, including the motor vehicle sales and use tax, for timber and certain items used in or on a farm, ranch, timber operation, or agricultural aircraft operation.

Sponsorship: Partisan Bill (Republican 2)

Status: (Passed) 2011-06-17 - Effective on 9/1/11 [HB268 Detail]

Download: Texas-2011-HB268-Enrolled.html

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H.B. No. 268

AN ACT
relating to the exemption from sales and use taxes, including the
motor vehicle sales and use tax, for timber and certain items used
in or on a farm, ranch, timber operation, or agricultural aircraft
operation.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter E, Chapter 151, Tax Code, is amended
by adding Section 151.1551 to read as follows:
Sec. 151.1551. REGISTRATION NUMBER REQUIRED FOR TIMBER AND
CERTAIN AGRICULTURAL ITEMS. (a) This section applies to an
exemption provided by:
(1) Sections 151.316(a)(6), (7), (8), (10), (11), and
(12);
(2) Section 151.316(b) for tangible personal property
used in the production of agricultural products for sale;
(3) Section 151.3162(b) for tangible personal
property used in the production of timber for sale;
(4) Sections 151.317(a)(5) and (10) for electricity
used in agriculture or timber operations; and
(5) Section 151.3111 for services performed on
tangible personal property exempted under Section 151.316(a)(6),
(7), (8), (10), (11), or (12), 151.316(b), or 151.3162(b).
(b) To claim an exemption to which this section applies, a
registration number issued by the comptroller must be stated on the
exemption certificate provided by the purchaser of the item.
(c) A person is eligible to apply for a registration number
if the person is engaged in the production of agricultural products
or timber for sale or in an agricultural aircraft operation as
defined by 14 C.F.R. Section 137.3.
(d) A person who is eligible may apply to the comptroller
for a registration number. The application must:
(1) be on a form prescribed by the comptroller;
(2) if applicable, state the types of crops,
livestock, or other agricultural products that are produced for
sale on the farm or ranch on which the applicant will use or employ
the item described by Subsection (a) or state that the item will be
used in relation to a timber operation or an agricultural aircraft
operation as defined by 14 C.F.R. Section 137.3;
(3) as applicable, state the name and address of the
farm, ranch, timber operation, or other business owned or operated
by the applicant in relation to which the applicant will use the
item; and
(4) contain any other information required by the
comptroller.
(e) The comptroller shall develop and implement a procedure
by which an applicant may submit an application described by
Subsection (d) electronically.
(f) The comptroller by rule shall establish a uniform date
on which all registration numbers issued under this section must be
renewed, regardless of the date on which a registration number is
initially issued. The rules must require registration numbers to
be renewed every four years.
(g) The comptroller may not issue a registration number that
contains an individual's social security number.
(h) The comptroller, after written notice and a hearing, may
revoke the registration number issued to a person who fails to
comply with this chapter or with a rule adopted under this chapter.
A person whose registration number the comptroller proposes to
revoke under this section is entitled to 20 days' written notice of
the time and place of the hearing on the revocation. The notice
must state the reason the comptroller is seeking to revoke the
person's registration number. At the hearing the person must show
cause why the person's registration number should not be revoked.
(i) The comptroller shall give written notice of the
revocation of a registration number under Subsection (h) to the
person to whom the number was issued. The notice may be personally
served on the person or sent by mail to the person's address as
shown in the comptroller's records.
(j) If the comptroller revokes a person's registration
number under Subsection (h), the comptroller may not revive the
registration number unless the comptroller is satisfied that the
person will comply with this chapter and the rules adopted under
this chapter. The comptroller may prescribe the terms under which a
revoked registration number may be revived.
(k) Following the revocation of a registration number by the
comptroller, the person who held the registration number must, on
the next transaction with each seller to whom the person previously
issued a claim for exemption with a registration number, notify
that seller that the person's registration number is no longer
valid. The failure of a person to notify a seller as required by
this subsection is considered a failure and refusal to pay the taxes
imposed by this chapter by the person required to make the
notification.
(l) The comptroller shall develop and operate an online
system to enable a seller of an item described by Subsection (a) to
search and verify the validity of the registration number stated on
an exemption certificate. A seller is not required to use the
online system.
(m) An exemption certificate that states a registration
number issued by the comptroller to claim an exemption to which this
section applies is sufficient documentation of the seller's receipt
of the certificate in good faith for purposes of Sections 151.054
and 151.104.
(n) The comptroller by rule shall establish procedures by
which a seller may accept a blanket exemption certificate with a
registration number issued by the comptroller to claim exemptions
to which this section applies.
(o) A use of an item purchased using an exemption
certificate with a registration number issued under this section in
a manner or for a purpose other than the manner or purpose that
qualified the sale, lease, rental, or other consumption of the item
for the exemption may result in the revocation of the number.
(p) A person eligible for a registration number who, at the
time of purchasing, leasing, renting, or otherwise consuming an
item for which the person may otherwise claim an exemption to which
this section applies, has not obtained a registration number from
the comptroller must pay the tax on the item to the seller at the
time of the transaction. The person may then apply for a
registration number and, on receipt of the number, may apply to the
comptroller for a refund of the tax paid, subject to the statute of
limitations. The comptroller by rule shall establish procedures
for processing the refund requests. Tax collected by a seller under
this subsection is not tax collected in error, and Section 111.104
does not apply to a refund request submitted under this subsection.
SECTION 2. Section 151.3111(a), Tax Code, is amended to
read as follows:
(a) Subject to Section 151.1551, a [A] service that is
performed on tangible personal property that, if sold, leased, or
rented, at the time of the performance of the service, would be
exempted under this chapter because of the nature of the property,
its use, or a combination of its nature and use, is exempted from
this chapter.
SECTION 3. Section 151.316(a), Tax Code, as amended by
Chapters 1162 (H.B. 3144) and 1373 (S.B. 958), Acts of the 81st
Legislature, Regular Session, 2009, is reenacted and amended to
read as follows:
(a) Subject to Section 151.1551, the [The] following items
are exempted from the taxes imposed by this chapter:
(1) horses, mules, and work animals;
(2) animal life the products of which ordinarily
constitute food for human consumption;
(3) feed for farm and ranch animals;
(4) feed for animals that are held for sale in the
regular course of business;
(5) seeds and annual plants the products of which:
(A) ordinarily constitute food for human
consumption;
(B) are to be sold in the regular course of
business; or
(C) are used to produce feed for animals exempted
by this section;
(6) fertilizers, fungicides, insecticides,
herbicides, defoliants, and desiccants exclusively used or
employed on a farm or ranch in the production of:
(A) food for human consumption;
(B) feed for animal life; or
(C) other agricultural products to be sold in the
regular course of business;
(7) machinery and equipment exclusively used or
employed on a farm or ranch in the building or maintaining of roads
or water facilities or in the production of:
(A) food for human consumption;
(B) grass;
(C) feed for animal life; or
(D) other agricultural products to be sold in the
regular course of business;
(8) machinery and equipment exclusively used in, and
pollution control equipment required as a result of, the
processing, packing, or marketing of agricultural products by an
original producer at a location operated by the original producer
for processing, packing, or marketing the producer's own products
if:
(A) 50 percent or more of the products processed,
packed, or marketed at or from the location are produced by the
original producer and not purchased or acquired from others; and
(B) the producer does not process, pack, or
market for consideration any agricultural products that belong to
other persons in an amount greater than five percent of the total
agricultural products processed, packed, or marketed by the
producer;
(9) ice exclusively used by commercial fishing boats
in the storing of aquatic species including but not limited to
shrimp, other crustaceans, finfish, mollusks, and other similar
creatures;
(10) tangible personal property, including a tire,
sold or used to be installed as a component part of a motor vehicle,
machinery, or other equipment exclusively used or employed on a
farm or ranch in the building or maintaining of roads or water
facilities or in the production of:
(A) food for human consumption;
(B) grass;
(C) feed for animal life; or
(D) other agricultural products to be sold in the
regular course of business;
(11) machinery and equipment exclusively used in an
agricultural aircraft operation, as defined by 14 C.F.R. Section
137.3; [and]
(12) tangible personal property incorporated into a
structure that is used for the disposal of poultry carcasses in
accordance with Section 26.303, Water Code; and
(13) tangible personal property incorporated into or
attached to a structure that is located on a commercial dairy farm,
is used or employed exclusively for the production of milk, and is:
(A) a free-stall dairy barn; or
(B) a dairy structure used solely for maternity
purposes.
SECTION 4. Section 151.316(b), Tax Code, is amended to read
as follows:
(b) Subject to Section 151.1551, tangible [Tangible]
personal property sold or used to be installed as a component of an
underground irrigation system is exempt from the taxes imposed by
this chapter if the system is exclusively used or employed on a farm
or ranch in the production of:
(1) food for human consumption;
(2) grass;
(3) feed or forage for:
(A) animal life the products of which ordinarily
constitute food for human consumption; or
(B) horses, mules, and work animals; or
(4) other agricultural products to be sold in the
regular course of business.
SECTION 5. Section 151.3162(b), Tax Code, is amended to
read as follows:
(b) Subject to Section 151.1551, the [The] following items
are exempted from the tax imposed by this chapter:
(1) seedlings of trees grown for commercial timber;
(2) defoliants, desiccants, equipment, fertilizers,
fungicides, herbicides, insecticides, and machinery exclusively
used in the production of timber to be sold in the regular course of
business;
(3) machinery and equipment used in, and pollution
control equipment required as a result of, the processing, packing,
or marketing of timber products by an original producer if:
(A) the processing, packing, or marketing occurs
at or from a location operated by the original producer;
(B) at least 50 percent of the value of the timber
products processed, packed, or marketed at or from the location is
attributable to products produced by the original producer and not
purchased or acquired from others; and
(C) the original producer does not process, pack,
or market for consideration timber products that belong to another
person with a value greater than five percent of the total value of
the timber products processed, packed, or marketed by the producer;
and
(4) tangible personal property sold or used to be
installed as a component of an underground irrigation system
exclusively used in the production of timber to be sold in the
regular course of business.
SECTION 6. Section 151.317(a), Tax Code, is amended to read
as follows:
(a) Subject to Section 151.1551 and Subsection (d) of this
section, gas and electricity are exempted from the taxes imposed by
this chapter when sold for:
(1) residential use;
(2) use in powering equipment exempt under Section
151.318 or 151.3185 by a person processing tangible personal
property for sale as tangible personal property, other than
preparation or storage of prepared food described by Section
151.314(c-2);
(3) use in lighting, cooling, and heating in the
manufacturing area during the actual manufacturing or processing of
tangible personal property for sale as tangible personal property,
other than preparation or storage of prepared food described by
Section 151.314(c-2);
(4) use directly in exploring for, producing, or
transporting, a material extracted from the earth;
(5) use in agriculture, including dairy or poultry
operations and pumping for farm or ranch irrigation;
(6) use directly in electrical processes, such as
electroplating, electrolysis, and cathodic protection;
(7) use directly in the off-wing processing, overhaul,
or repair of a jet turbine engine or its parts for a certificated or
licensed carrier of persons or property;
(8) use directly in providing, under contracts with or
on behalf of the United States government or foreign governments,
defense or national security-related electronics, classified
intelligence data processing and handling systems, or
defense-related platform modifications or upgrades;
(9) a direct or indirect use, consumption, or loss of
electricity by an electric utility engaged in the purchase of
electricity for resale; or
(10) use in timber operations, including pumping for
irrigation of timberland.
SECTION 7. Section 152.091, Tax Code, is amended by adding
Subsection (b-1) and amending Subsection (c) to read as follows:
(b-1) In addition to the other requirements prescribed by
this section, to claim an exemption provided by Subsection (a) or
(b) the person purchasing, using, or leasing the machine, trailer,
or semitrailer must provide an exemption certificate with a
registration number issued by the comptroller under Section
151.1551.
(c) The taxes imposed by this chapter do not apply to the
rental of a farm machine, a trailer, or a semitrailer for use
primarily for farming and ranching, including the rearing of
poultry, and use in feedlots, or a machine, a trailer, or a
semitrailer for use primarily for timber operations. The tax that
would have been remitted on gross rental receipts without this
exemption shall be deemed to have been remitted for the purpose of
calculating the minimum gross rental receipts imposed by Section
152.026. The exemption provided by this subsection applies only if
the owner of the motor vehicle obtains in good faith an exemption
certificate from the person to whom the vehicle is being rented. To
claim the exemption, the person renting the vehicle must also
provide on the certificate a registration number issued by the
comptroller under Section 151.1551.
SECTION 8. Notwithstanding Section 151.1551, Tax Code, as
added by this Act, a person is not required to state a registration
number on an exemption certificate or on a form prescribed by the
comptroller of public accounts to claim an exemption to which
Section 151.1551, Tax Code, as added by this Act, applies or an item
under Section 152.091, Tax Code, that is claimed before January 1,
2012.
SECTION 9. (a) Except as provided by Subsection (b) of this
section, the change in law made by this Act does not affect tax
liability accruing before January 1, 2012. 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.
(b) Section 151.316(a)(13), Tax Code, as added by this Act,
does not affect tax liability accruing before the effective date of
this Act. That liability continues in effect as if that section 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 10. To the extent of any conflict, this Act prevails
over another Act of the 82nd Legislature, Regular Session, 2011,
relating to nonsubstantive additions to and corrections in enacted
codes.
SECTION 11. This Act takes effect September 1, 2011.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 268 was passed by the House on April
20, 2011, by the following vote: Yeas 145, Nays 1, 2 present, not
voting; and that the House concurred in Senate amendments to H.B.
No. 268 on May 23, 2011, by the following vote: Yeas 142, Nays 0, 2
present, not voting.
______________________________
Chief Clerk of the House
I certify that H.B. No. 268 was passed by the Senate, with
amendments, on May 19, 2011, by the following vote: Yeas 31, Nays
0.
______________________________
Secretary of the Senate
APPROVED: __________________
Date
__________________
Governor