This website will be unavailable from Thursday, May 30, 2024 at 6:00 p.m. through Monday, June 3, 2024 at 7:00 a.m. due to data center maintenance.

 
 
  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