82R10619 ALL-F
By: Seliger S.B. No. 1602
A BILL TO BE ENTITLED
AN ACT
relating to the exemption from the sales and use tax for certain
agricultural items.
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. EXEMPTION NUMBER REQUIRED FOR CERTAIN
AGRICULTURAL PROPERTY. (a) To qualify for an exemption for an item
under Section 151.316(a)(3), (6), (7), (10), or (12) or tangible
personal property under Section 151.316(b), an exemption number
must be stated on the exemption certificate provided by the
purchaser.
(b) A person is eligible for an exemption number if the
person owns or operates a business that uses one or more tracts of
land in this state as a farm or ranch, as those terms are defined by
Section 151.316(c).
(c) A person who is eligible may apply to the comptroller
for an exemption number. The application must:
(1) be on a form prescribed by the comptroller;
(2) state the types of crops, livestock, or other
agricultural products that are held for sale in the regular course
of the business owned or operated or to be owned or operated by the
applicant;
(3) state the name and address of the business owned or
operated or to be owned or operated by the applicant; and
(4) contain any other information required by the
comptroller.
(d) The comptroller by rule shall develop and implement a
procedure by which an applicant may submit an application described
by Subsection (c) electronically.
(e) The comptroller by rule shall establish a uniform date
on which all exemption numbers issued under this section must be
renewed, regardless of the date on which an exemption number is
initially issued. The rules must require exemption numbers to be
renewed every four years.
(f) The comptroller, after adequate written notice and a
hearing, may suspend or revoke the exemption number issued to a
person who fails to comply with this chapter or with a rule adopted
under this chapter. At the hearing the person must show cause why
the person's exemption number should not be suspended or revoked.
(g) The comptroller shall give written notice of the
suspension or revocation of an exemption number under Subsection
(f) 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.
(h) If the comptroller revokes a person's exemption number
under Subsection (f), the person may not be issued a new exemption
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 suspended
exemption number may be reinstated.
(i) A taxpayer may appeal the suspension or revocation of an
exemption number in the same manner that appeals are made from a
final deficiency determination.
(j) The comptroller by rule shall develop and operate an
online system to enable a seller of an item or property described by
Subsection (a) to search and verify the validity of the exemption
number stated on an exemption certificate at the time the
certificate is received and to provide documentation of the
verification. Documentation provided by the system constitutes
proof that the exemption certificate was received in good faith for
purposes of Sections 151.054 and 151.104. A seller is not required
to use the online system.
SECTION 2. 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.
SECTION 3. 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 4. Notwithstanding Section 151.1551, Tax Code, as
added by this Act, a person is not required to state an exemption
number on an exemption certificate to qualify for an exemption
under Section 151.316, Tax Code, that is claimed before January 1,
2012.
SECTION 5. 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.
SECTION 6. 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 7. This Act takes effect September 1, 2011.