By: Lucio S.B. No. 1504
A BILL TO BE ENTITLED
AN ACT
relating to the imposition of the sales and use tax on taxable items
sold or provided under certain contracts.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION. 1. Section 151.0565, Tax Code, is amended by
amending Subsection (a) and adding Subsection (c) to read as
follows:
(a) In this section:
(1) "Destination management services" means the
following services [when provided under a qualified destination
management services contract]:
(A) transportation management;
(B) booking and managing entertainers;
(C) coordination of tours or recreational
activities;
(D) meeting, conference, or event registration;
(E) meeting, conference, or event staffing;
(F) event or logistics management; and
(G) meal coordination.
(2) "Qualified destination management company" means
a business entity that:
(A) is incorporated or is a limited liability
company;
(B) receives at least 80 percent of the entity's
annual total revenue from providing or arranging for the provision
of destination management services;
(C) maintains a permanent nonresidential office
from which the destination management services are provided or
arranged;
(D) has at least three full-time employees;
(E) spends at least one percent of the entity's
annual gross receipts to market the destinations with respect to
which destination management services are provided, including
gross receipts spent for labor expenses relating to that activity;
(F) has at least 80 percent of the entity's
clients described by Subdivision (3)(A) located outside this state;
(G) other than office equipment used in the
conduct of the entity's business, does not own equipment used to
directly provide destination management services, including motor
coaches, limousines, sedans, dance floors, decorative props,
lighting, podiums, sound or video equipment, or equipment for
catered meals;
(H) is not doing business as a caterer;
(I) does not provide services for weddings;
(J) does not own a venue at which events or
activities for which destination management services are provided
occur; and
(K) is not a subsidiary of another entity that,
and is not a member of an affiliated group, as that term is defined
by Section 171.0001, another member of which:
(i) is doing business as, or owns or
operates another entity doing business as, a caterer; or
(ii) owns or operates a venue described by
Paragraph (J).
(3) "Qualified destination management services
contract" means a contract under which at least three of the
destination management services listed in Subdivision (1) are
provided:
(A) in this state to a client that is not an
individual and that:
(i) is a corporation, partnership, limited
liability company, trade association, or other business entity,
other than a social club or fraternal organization;
(ii) has its principal place of business
outside the county where the destination management services are to
be provided; and
(iii) agrees to pay the qualified
destination management company for all destination management
services provided to the client under the terms of the contract; and
(B) by a qualified destination management
company that pays or accrues liability for the payment of taxes
imposed by this chapter on purchases of taxable items that will be
consumed or used by the company in performing the contract.
(b) A qualified destination management company is the
consumer of taxable items sold or otherwise provided under a
qualified destination management services contract, and the
destination management services provided under the contract are not
considered taxable services, as that term is defined by section
151.0101.
(c) For purposes of this section, the following activities
are considered as marketing a destination:
(1) promoting the destination for prospective
meeting, incentive, and convention clients, regardless of whether
the activity promotes the entity engaging in the activity and
including the following activities:
(A) participating in trade shows;
(B) making sales calls;
(C) conducting site inspections;
(D) participating in familiarization trips; and
(E) marketing license and/or membership fees;
(2) attending or sponsoring an industry conference
while marketing the destination;
(3) creating a destination proposal with respect to
the destination;
(4) disseminating gifts or other materials that
promote the destination; and
(5) promoting the destination by electronic means.
SECTION 2. The change in law made by this Act does not
affect tax liability accruing before the effective date of this
Act. 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 3. This Act takes effect September 1, 2013.