S.B. No. 745

	AN ACT
	relating to the exemption of certain services performed by certain
	employees from the sales and use tax.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Section 151.057, Tax Code, is transferred to
	Subchapter H, Chapter 151, Tax Code, redesignated as Section
	151.3503, Tax Code, and amended to read as follows:
	Sec. 151.3503 [151.057].  SERVICES BY EMPLOYEES.  (a)  The
	following [services] are exempted from the taxes imposed by [not
	taxable under] this chapter:
	(1)  a service performed by an employee for the
	employee's [his] employer in the regular course of business, within
	the scope of the employee's duties, and for which the employee is
	paid [his] regular wages or salary;
	(2)  a service performed by an employee of a temporary
	employment service [as defined by Section 93.001, Labor Code,] for
	a host [an] employer to supplement the host employer's existing
	work force on a temporary basis, if:
	(A)  [when] the service is normally performed by
	the host employer's own employees;
	(B)  [,] the host employer provides all supplies
	and equipment necessary to perform the service, other than personal
	protective equipment provided by the temporary employment service
	pursuant to a federal law or regulation;
	(C)  the host employer does not rent, lease,
	purchase, or otherwise acquire for use the supplies and equipment
	described by Paragraph (B), other than the personal protective
	equipment described by that paragraph, from the temporary
	employment service or an entity that is a member of an affiliated
	group of which the temporary employment service is also a member;
	[,] and
	(D)  the host employer has the sole right to
	supervise, direct, and control the work performed by the employee
	of the temporary employment service as necessary to conduct the
	host employer's business or to comply with any licensing,
	statutory, or regulatory requirement applicable to the host [help
	is under the direct or general supervision of the] employer [to whom
	the help is furnished]; or
	(3)  a service performed by covered employees of a
	professional employer organization, either licensed under Chapter
	91, Labor Code, or exempt from the licensing requirements of that
	chapter, for a client under a written contract that provides for
	shared employment responsibilities between the professional
	employer organization and the client for the covered employees,
	most of whom must have been previously employed by the client.
	(b)  The comptroller shall prescribe by rule the minimum
	percentage of covered employees that must have been previously
	employed by the client, the minimum time period the covered
	employees must have been employed by the client prior to the
	commencement of its contract, and such other criteria as the
	comptroller may deem necessary to properly implement Subsection
	(a)(3) [this section].
	(c)  In this section:
	(1)  "Affiliated group" has the meaning assigned by
	Section 171.0001.
	(2)  "Host employer" means the employer who owns,
	manages, or controls the property or worksite where an employee of a
	temporary employment service performs a service.
	(3)  "Temporary employment service" has the meaning
	assigned by Section 93.001, Labor Code.
	SECTION 2.  The changes in law made by this Act apply only to
	a service commenced on or after the effective date of this Act. A
	service commenced before that date is governed by the law in effect
	on the date the service was commenced, and the former law is
	continued in effect for that purpose.
	SECTION 3.  This Act takes effect September 1, 2017.
	______________________________	______________________________
	President of the Senate	Speaker of the House
	I hereby certify that S.B. No. 745 passed the Senate on
	April 3, 2017, by the following vote:  Yeas 31, Nays 0.
	______________________________
	Secretary of the Senate
	I hereby certify that S.B. No. 745 passed the House on
	May 24, 2017, by the following vote:  Yeas 146, Nays 0, two
	present not voting.
	______________________________
	Chief Clerk of the House
	Approved:
	______________________________
	Date
	______________________________
	Governor