LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 84TH LEGISLATIVE REGULAR SESSION May 8, 2015 TO: Honorable Dennis Bonnen, Chair, House Committee on Ways & Means FROM: Ursula Parks, Director, Legislative Budget Board IN RE:HB3174 by Button (relating to the application of the sales and use tax to certain computer program transactions.), Committee Report 1st House, Substituted Estimated Two-year Net Impact to General Revenue Related Funds for HB3174, Committee Report 1st House, Substituted: a negative impact of ($3,300,000) through the biennium ending August 31, 2017, if the effective date of the bill is June 1, 2015; or a negative impact of ($2,800,000) through the biennium ending August 31, 2017, if the effective date of the bill is September 1, 2015.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 84TH LEGISLATIVE REGULAR SESSION
May 8, 2015
TO: Honorable Dennis Bonnen, Chair, House Committee on Ways & Means FROM: Ursula Parks, Director, Legislative Budget Board IN RE:HB3174 by Button (relating to the application of the sales and use tax to certain computer program transactions.), Committee Report 1st House, Substituted
TO: Honorable Dennis Bonnen, Chair, House Committee on Ways & Means
FROM: Ursula Parks, Director, Legislative Budget Board
IN RE: HB3174 by Button (relating to the application of the sales and use tax to certain computer program transactions.), Committee Report 1st House, Substituted
Honorable Dennis Bonnen, Chair, House Committee on Ways & Means
Honorable Dennis Bonnen, Chair, House Committee on Ways & Means
Ursula Parks, Director, Legislative Budget Board
Ursula Parks, Director, Legislative Budget Board
HB3174 by Button (relating to the application of the sales and use tax to certain computer program transactions.), Committee Report 1st House, Substituted
HB3174 by Button (relating to the application of the sales and use tax to certain computer program transactions.), Committee Report 1st House, Substituted
Estimated Two-year Net Impact to General Revenue Related Funds for HB3174, Committee Report 1st House, Substituted: a negative impact of ($3,300,000) through the biennium ending August 31, 2017, if the effective date of the bill is June 1, 2015; or a negative impact of ($2,800,000) through the biennium ending August 31, 2017, if the effective date of the bill is September 1, 2015.
Estimated Two-year Net Impact to General Revenue Related Funds for HB3174, Committee Report 1st House, Substituted: a negative impact of ($3,300,000) through the biennium ending August 31, 2017, if the effective date of the bill is June 1, 2015; or a negative impact of ($2,800,000) through the biennium ending August 31, 2017, if the effective date of the bill is September 1, 2015.
General Revenue-Related Funds, Six-Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds 2015 ($300,000) 2016 ($1,500,000) 2017 ($1,500,000) 2018 ($1,500,000) 2019 ($1,500,000) 2020 ($1,500,000)
2015 ($300,000)
2016 ($1,500,000)
2017 ($1,500,000)
2018 ($1,500,000)
2019 ($1,500,000)
2020 ($1,500,000)
General Revenue-Related Funds, Five-Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds 2016 ($1,300,000) 2017 ($1,500,000) 2018 ($1,500,000) 2019 ($1,500,000) 2020 ($1,500,000)
2016 ($1,300,000)
2017 ($1,500,000)
2018 ($1,500,000)
2019 ($1,500,000)
2020 ($1,500,000)
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 2015 ($300,000) ($100,000) ($20,000) ($10,000) 2016 ($1,500,000) ($280,000) ($90,000) ($50,000) 2017 ($1,500,000) ($280,000) ($90,000) ($50,000) 2018 ($1,500,000) ($280,000) ($90,000) ($50,000) 2019 ($1,500,000) ($280,000) ($90,000) ($50,000) 2020 ($1,500,000) ($280,000) ($90,000) ($50,000) The above table assumes the bill takes effect June 1st, 2015. The table below assumes the bill takes effect September 1st, 2015. Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromCities Probable Revenue (Loss) fromTransit Authorities Probable Revenue (Loss) fromCounties and Special Districts 2016 ($1,300,000) ($240,000) ($80,000) ($40,000) 2017 ($1,500,000) ($280,000) ($90,000) ($50,000) 2018 ($1,500,000) ($280,000) ($90,000) ($50,000) 2019 ($1,500,000) ($280,000) ($90,000) ($50,000) 2020 ($1,500,000) ($280,000) ($90,000) ($50,000) Fiscal Analysis The bill would amend Chapter 151 of the Tax Code, regarding sales and use taxation of certain computer program transactions. The bill would add a Subsection (d) to Section 151.006 to provide that a sale for resale includes a sale of a computer program to a provider of Internet hosting services who sells a license to use the program to an unrelated user of Internet hosting services, provided that the reseller does not retain a right to use the program under that license. A sale for resale is exempt from tax. The bill would take effect immediately upon enactment, assuming that it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect September 1, 2015. Methodology The estimate is based on Comptroller audit experience with respect to sales of software by providers of Internet hosting service. Local Government Impact There would be a proportional loss of sales and use tax revenue from local taxing jurisdictions. Source Agencies:304 Comptroller of Public Accounts LBB Staff: UP, 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 2015 ($300,000) ($100,000) ($20,000) ($10,000) 2016 ($1,500,000) ($280,000) ($90,000) ($50,000) 2017 ($1,500,000) ($280,000) ($90,000) ($50,000) 2018 ($1,500,000) ($280,000) ($90,000) ($50,000) 2019 ($1,500,000) ($280,000) ($90,000) ($50,000) 2020 ($1,500,000) ($280,000) ($90,000) ($50,000)
2015 ($300,000) ($100,000) ($20,000) ($10,000)
2016 ($1,500,000) ($280,000) ($90,000) ($50,000)
2017 ($1,500,000) ($280,000) ($90,000) ($50,000)
2018 ($1,500,000) ($280,000) ($90,000) ($50,000)
2019 ($1,500,000) ($280,000) ($90,000) ($50,000)
2020 ($1,500,000) ($280,000) ($90,000) ($50,000)
The above table assumes the bill takes effect June 1st, 2015. The table below assumes the bill takes effect September 1st, 2015.
Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromCities Probable Revenue (Loss) fromTransit Authorities Probable Revenue (Loss) fromCounties and Special Districts 2016 ($1,300,000) ($240,000) ($80,000) ($40,000) 2017 ($1,500,000) ($280,000) ($90,000) ($50,000) 2018 ($1,500,000) ($280,000) ($90,000) ($50,000) 2019 ($1,500,000) ($280,000) ($90,000) ($50,000) 2020 ($1,500,000) ($280,000) ($90,000) ($50,000) Fiscal Analysis The bill would amend Chapter 151 of the Tax Code, regarding sales and use taxation of certain computer program transactions. The bill would add a Subsection (d) to Section 151.006 to provide that a sale for resale includes a sale of a computer program to a provider of Internet hosting services who sells a license to use the program to an unrelated user of Internet hosting services, provided that the reseller does not retain a right to use the program under that license. A sale for resale is exempt from tax. The bill would take effect immediately upon enactment, assuming that it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect September 1, 2015. Methodology The estimate is based on Comptroller audit experience with respect to sales of software by providers of Internet hosting service.
Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromCities Probable Revenue (Loss) fromTransit Authorities Probable Revenue (Loss) fromCounties and Special Districts 2016 ($1,300,000) ($240,000) ($80,000) ($40,000) 2017 ($1,500,000) ($280,000) ($90,000) ($50,000) 2018 ($1,500,000) ($280,000) ($90,000) ($50,000) 2019 ($1,500,000) ($280,000) ($90,000) ($50,000) 2020 ($1,500,000) ($280,000) ($90,000) ($50,000)
2016 ($1,300,000) ($240,000) ($80,000) ($40,000)
2017 ($1,500,000) ($280,000) ($90,000) ($50,000)
2018 ($1,500,000) ($280,000) ($90,000) ($50,000)
2019 ($1,500,000) ($280,000) ($90,000) ($50,000)
2020 ($1,500,000) ($280,000) ($90,000) ($50,000)
Fiscal Analysis
The bill would amend Chapter 151 of the Tax Code, regarding sales and use taxation of certain computer program transactions. The bill would add a Subsection (d) to Section 151.006 to provide that a sale for resale includes a sale of a computer program to a provider of Internet hosting services who sells a license to use the program to an unrelated user of Internet hosting services, provided that the reseller does not retain a right to use the program under that license. A sale for resale is exempt from tax. The bill would take effect immediately upon enactment, assuming that it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect September 1, 2015.
Methodology
The estimate is based on Comptroller audit experience with respect to sales of software by providers of Internet hosting service.
Local Government Impact
There would be a proportional loss of sales and use tax revenue from local taxing jurisdictions.
Source Agencies: 304 Comptroller of Public Accounts
304 Comptroller of Public Accounts
LBB Staff: UP, KK, SD
UP, KK, SD