LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 82ND LEGISLATIVE REGULAR SESSION April 11, 2011 TO: Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means FROM: John S O'Brien, Director, Legislative Budget Board IN RE:HB3120 by Thompson (Relating to the treatment of certain exempt organizations as agents of suppliers or distributors of taxable items for purposes of the sales and use tax.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for HB3120, As Introduced: a negative impact of ($9,600,000) through the biennium ending August 31, 2013, if the bill takes immediate effect; or a negative impact of ($8,800,000) through the biennium ending August 31, 2013, if the effective date of the bill is September 1, 2011.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 82ND LEGISLATIVE REGULAR SESSION
April 11, 2011
TO: Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means FROM: John S O'Brien, Director, Legislative Budget Board IN RE:HB3120 by Thompson (Relating to the treatment of certain exempt organizations as agents of suppliers or distributors of taxable items for purposes of the sales and use tax.), As Introduced
TO: Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means
FROM: John S O'Brien, Director, Legislative Budget Board
IN RE: HB3120 by Thompson (Relating to the treatment of certain exempt organizations as agents of suppliers or distributors of taxable items for purposes of the sales and use tax.), As Introduced
Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means
Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means
John S O'Brien, Director, Legislative Budget Board
John S O'Brien, Director, Legislative Budget Board
HB3120 by Thompson (Relating to the treatment of certain exempt organizations as agents of suppliers or distributors of taxable items for purposes of the sales and use tax.), As Introduced
HB3120 by Thompson (Relating to the treatment of certain exempt organizations as agents of suppliers or distributors of taxable items for purposes of the sales and use tax.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB3120, As Introduced: a negative impact of ($9,600,000) through the biennium ending August 31, 2013, if the bill takes immediate effect; or a negative impact of ($8,800,000) through the biennium ending August 31, 2013, if the effective date of the bill is September 1, 2011.
Estimated Two-year Net Impact to General Revenue Related Funds for HB3120, As Introduced: a negative impact of ($9,600,000) through the biennium ending August 31, 2013, if the bill takes immediate effect; or a negative impact of ($8,800,000) through the biennium ending August 31, 2013, if the effective date of the bill is September 1, 2011.
General Revenue-Related Funds, Six-Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds 2011 ($400,000) 2012 ($4,500,000) 2013 ($4,700,000) 2014 ($4,900,000) 2015 ($5,100,000) 2016 ($5,400,000)
2011 ($400,000)
2012 ($4,500,000)
2013 ($4,700,000)
2014 ($4,900,000)
2015 ($5,100,000)
2016 ($5,400,000)
General Revenue-Related Funds, Five-Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds 2012 ($4,100,000) 2013 ($4,700,000) 2014 ($4,900,000) 2015 ($5,100,000) 2016 ($5,400,000)
2012 ($4,100,000)
2013 ($4,700,000)
2014 ($4,900,000)
2015 ($5,100,000)
2016 ($5,400,000)
All Funds, Six-Year Impact: Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromCities Probable Revenue (Loss) fromTransit Authorities Probable Revenue (Loss) fromCounties and Special Districts 2011 ($400,000) ($100,000) $0 $0 2012 ($4,500,000) ($900,000) ($300,000) ($200,000) 2013 ($4,700,000) ($900,000) ($300,000) ($200,000) 2014 ($4,900,000) ($1,000,000) ($300,000) ($200,000) 2015 ($5,100,000) ($1,000,000) ($300,000) ($200,000) 2016 ($5,400,000) ($1,100,000) ($300,000) ($200,000) The table above reflects the revenue loss if the bill took immediate effect. The table below reflects the revenue loss if the bill took effect September 1, 2011. Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromCities Probable Revenue (Loss) fromTransit Authorities Probable Revenue (Loss) fromCounties and Special Districts 2012 ($4,100,000) ($800,000) ($200,000) ($100,000) 2013 ($4,700,000) ($900,000) ($300,000) ($200,000) 2014 ($4,900,000) ($1,000,000) ($300,000) ($200,000) 2015 ($5,100,000) ($1,000,000) ($300,000) ($200,000) 2016 ($5,400,000) ($1,100,000) ($300,000) ($200,000) Fiscal Analysis The bill would amend Chapter 151 of the Tax Code, regarding the sales and use tax and the treatment of certain exempt organizations as agents of suppliers or distributors of taxable items. The bill would amend Section 151.024 to provide that neither an organization described in Section 151.310(a)(1) or (a)(2) nor an individual acting on behalf of the organization is an agent of a retailer or seller under whom the organization or individual operates or from whom is obtained tangible personal property sold by the organization or individual. Organizations described in Section 151.310(a)(1) and (a)(2) include certain religious, educational, and charitable organizations as well as organizations exempt from federal income tax under various subdivisions of Section 501(c), Internal Revenue Code. The bill would amend Section 151.310 by adding a new Subsection (f) to provide that a Section 151.310(a)(1) or (a)(2) organization is the seller of a taxable item if the organization purchased the item, and to provide what types of documentation are evidence of a purchase by the organization. The bill would take immediate effect if it receives the requisite two-thirds votes in each house, otherwise it would take effect September 1, 2011. Methodology Currently, certain firms are considered sellers of taxable items and the two-day tax-free sale exemption provided for exempt organizations in Section 151.310 does not apply when orders are taken through an exempt organization. Such firms are responsible for collection and remittance of sales tax. This bill would shift tax collection responsibility to the exempt organizations, and it is expected that affected organizations would hold fundraisers in a manner so as to maximize sales during tax-free sale days. Taxable sales of fundraising firms were estimated from Comptroller tax files and other data, multiplied by the state sales tax rate, extrapolated through the forecast period, and adjusted for the potential effective dates. Local Government Impact The bill would cause a proportional loss of sales and use tax revenue to local taxing jurisdictions. Source Agencies:304 Comptroller of Public Accounts LBB Staff: JOB, KK, SD
Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromCities Probable Revenue (Loss) fromTransit Authorities Probable Revenue (Loss) fromCounties and Special Districts 2011 ($400,000) ($100,000) $0 $0 2012 ($4,500,000) ($900,000) ($300,000) ($200,000) 2013 ($4,700,000) ($900,000) ($300,000) ($200,000) 2014 ($4,900,000) ($1,000,000) ($300,000) ($200,000) 2015 ($5,100,000) ($1,000,000) ($300,000) ($200,000) 2016 ($5,400,000) ($1,100,000) ($300,000) ($200,000)
2011 ($400,000) ($100,000) $0 $0
2012 ($4,500,000) ($900,000) ($300,000) ($200,000)
2013 ($4,700,000) ($900,000) ($300,000) ($200,000)
2014 ($4,900,000) ($1,000,000) ($300,000) ($200,000)
2015 ($5,100,000) ($1,000,000) ($300,000) ($200,000)
2016 ($5,400,000) ($1,100,000) ($300,000) ($200,000)
The table above reflects the revenue loss if the bill took immediate effect. The table below reflects the revenue loss if the bill took effect September 1, 2011.
Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromCities Probable Revenue (Loss) fromTransit Authorities Probable Revenue (Loss) fromCounties and Special Districts 2012 ($4,100,000) ($800,000) ($200,000) ($100,000) 2013 ($4,700,000) ($900,000) ($300,000) ($200,000) 2014 ($4,900,000) ($1,000,000) ($300,000) ($200,000) 2015 ($5,100,000) ($1,000,000) ($300,000) ($200,000) 2016 ($5,400,000) ($1,100,000) ($300,000) ($200,000) Fiscal Analysis The bill would amend Chapter 151 of the Tax Code, regarding the sales and use tax and the treatment of certain exempt organizations as agents of suppliers or distributors of taxable items. The bill would amend Section 151.024 to provide that neither an organization described in Section 151.310(a)(1) or (a)(2) nor an individual acting on behalf of the organization is an agent of a retailer or seller under whom the organization or individual operates or from whom is obtained tangible personal property sold by the organization or individual. Organizations described in Section 151.310(a)(1) and (a)(2) include certain religious, educational, and charitable organizations as well as organizations exempt from federal income tax under various subdivisions of Section 501(c), Internal Revenue Code. The bill would amend Section 151.310 by adding a new Subsection (f) to provide that a Section 151.310(a)(1) or (a)(2) organization is the seller of a taxable item if the organization purchased the item, and to provide what types of documentation are evidence of a purchase by the organization. The bill would take immediate effect if it receives the requisite two-thirds votes in each house, otherwise it would take effect September 1, 2011. Methodology Currently, certain firms are considered sellers of taxable items and the two-day tax-free sale exemption provided for exempt organizations in Section 151.310 does not apply when orders are taken through an exempt organization. Such firms are responsible for collection and remittance of sales tax. This bill would shift tax collection responsibility to the exempt organizations, and it is expected that affected organizations would hold fundraisers in a manner so as to maximize sales during tax-free sale days. Taxable sales of fundraising firms were estimated from Comptroller tax files and other data, multiplied by the state sales tax rate, extrapolated through the forecast period, and adjusted for the potential effective dates.
Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromCities Probable Revenue (Loss) fromTransit Authorities Probable Revenue (Loss) fromCounties and Special Districts 2012 ($4,100,000) ($800,000) ($200,000) ($100,000) 2013 ($4,700,000) ($900,000) ($300,000) ($200,000) 2014 ($4,900,000) ($1,000,000) ($300,000) ($200,000) 2015 ($5,100,000) ($1,000,000) ($300,000) ($200,000) 2016 ($5,400,000) ($1,100,000) ($300,000) ($200,000)
2012 ($4,100,000) ($800,000) ($200,000) ($100,000)
2013 ($4,700,000) ($900,000) ($300,000) ($200,000)
2014 ($4,900,000) ($1,000,000) ($300,000) ($200,000)
2015 ($5,100,000) ($1,000,000) ($300,000) ($200,000)
2016 ($5,400,000) ($1,100,000) ($300,000) ($200,000)
Fiscal Analysis
The bill would amend Chapter 151 of the Tax Code, regarding the sales and use tax and the treatment of certain exempt organizations as agents of suppliers or distributors of taxable items. The bill would amend Section 151.024 to provide that neither an organization described in Section 151.310(a)(1) or (a)(2) nor an individual acting on behalf of the organization is an agent of a retailer or seller under whom the organization or individual operates or from whom is obtained tangible personal property sold by the organization or individual. Organizations described in Section 151.310(a)(1) and (a)(2) include certain religious, educational, and charitable organizations as well as organizations exempt from federal income tax under various subdivisions of Section 501(c), Internal Revenue Code. The bill would amend Section 151.310 by adding a new Subsection (f) to provide that a Section 151.310(a)(1) or (a)(2) organization is the seller of a taxable item if the organization purchased the item, and to provide what types of documentation are evidence of a purchase by the organization. The bill would take immediate effect if it receives the requisite two-thirds votes in each house, otherwise it would take effect September 1, 2011.
Methodology
Currently, certain firms are considered sellers of taxable items and the two-day tax-free sale exemption provided for exempt organizations in Section 151.310 does not apply when orders are taken through an exempt organization. Such firms are responsible for collection and remittance of sales tax. This bill would shift tax collection responsibility to the exempt organizations, and it is expected that affected organizations would hold fundraisers in a manner so as to maximize sales during tax-free sale days. Taxable sales of fundraising firms were estimated from Comptroller tax files and other data, multiplied by the state sales tax rate, extrapolated through the forecast period, and adjusted for the potential effective dates.
Local Government Impact
The bill would cause a proportional loss of sales and use tax revenue to local taxing jurisdictions.
Source Agencies: 304 Comptroller of Public Accounts
304 Comptroller of Public Accounts
LBB Staff: JOB, KK, SD
JOB, KK, SD