84th Legislature: Sales Tax Changes

There were numerous press reports over Ways and Means Chairman Dennis Bonnen’s proposal to reduce the sales tax rate in lieu of increasing the school property tax exemption.  Bonnen’s proposal was dropped during the final conference committee deliberations of the final tax cuts which included a 25% franchise tax cut and a $15,000 increase in the school property tax exemption.

There were a few sales tax bills passed during the session,  Here are excerpts for Texas Taxpayer and Research Association’s 84th Legislative Session Wrap-up describing the sales tax bills those bills:

SB 904 by Sen. Hinojosa (D-McAllen) creates a new sales tax holiday for purchases of “emergency preparation supplies” during the last weekend in April.  Exempt items include:  portable generators costing less than $3,000; window protection devices and rescue ladders priced under $300; and a list of thirteen items selling for less then $75, including batteries, fuel containers, ice chests, tarpaulins, portable radios, fire extinguishers, smoke detectors, hatchets, first aid kits and nonelectric can openers.

SB 1356 by Sen. Hinojosa provides for tax-free purchases during Memorial Day weekend holiday for certain water-efficient products used on residential property for  water conservation or retention, water table recharge, or water evaporation limitation. Listed items include: mulch, rain barrels, soaker hoses, sprinkler system moisture controls, permeable ground covers, and “WaterSense” products certified by the U.S. Environmental Protection Agency.

HB 2712 by Rep. Charlie Geren (R-Fort Worth) provides a 20-year state and local sales tax exemption for the purchase of a long list  of items necessary and essential to operating a “qualifying” large data center, including for example:  electricity, electrical, cooling, mechanical and plumbing systems; mainframe computers or servers; software; and data storage devices.  Principal requirements include:  a five-year capital investment of $500 million; a new or refurbished facility of at least 250,000 square feet that may include multiple buildings; and creation of at least 40 new full time jobs paying at least 120 percent of the average county wage.

HB 2507 by Rep. Kacal (R-College Station) clarifies that the current exemption for purchases of digital transmission equipment required to comply with federal regulations applies to radio as well as television broadcast stations.

HB 1841 by Rep. Greg Bonnen (R-Friendswood) removes services performed by public insurance adjusters from the definition of taxable insurance services.

SB 140 [by CPA and TSCPA member] Sen. Charles Perry (R-Lubbock) exempts telecom services used to navigate machinery and equipment used on a farm or ranch to produce agricultural products or to build and maintain roads or water facilities.

HB 2313 by Rep. Bohac (R-Houston) exempts the vending machine sales of nonprofit organizations operating independent life skills programs for individuals with special needs.

SB 1396 by Sen. West (D-Dallas) to resolve many of the difficulties attendant to the taxation of aircraft  that have been a continuing vexation for both the Comptroller and taxpayers.  The bill was the outcome of discussions between the Comptroller and some affected taxpayers and is intended, in general, to ensure tax is only paid once, eliminate the double taxation of aircraft leases, conform to federal regulations, and close loopholes for aircraft purchased out-of-state for in-state use.  A new Tax code Chapter 163 entitled “Sales and Use Taxation of Aircraft” is created.  It preserves all current exemptions and included new provisions to: treat the transfer for operational control as defined by federal regulations as a lease or rental; establish joint tax liability for a purchaser and an affiliated entity that uses aircraft in-state; make transfers between affiliated entities tax-free; and impose no tax liability for aircraft operated under fractional ownership programs.

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