By: Perry, et al. S.B. No. 153
A BILL TO BE ENTITLED
AN ACT
relating to the exclusion of certain payment processing services
from the definition of "data processing service" for purposes of
sales and use taxes.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 151.0035, Tax Code, is amended to read as
follows:
Sec. 151.0035. "DATA PROCESSING SERVICE". (a) "Data
processing service" includes:
(1) word processing, data entry, data retrieval, data
search, information compilation, payroll and business accounting
data production, and other computerized data and information
storage or manipulation;
(2) the performance of a totalisator service with the
use of computational equipment required by Subtitle A-1, Title 13,
Occupations Code (Texas Racing Act); and
(3) [, and other computerized data and information
storage or manipulation. "Data processing service" also includes]
the use of a computer or computer time for data processing whether
the processing is performed by the provider of the computer or
computer time or by the purchaser or other beneficiary of the
service.
(b) "Data processing service" does not include:
(1) the transcription of medical dictation by a
medical transcriptionist;
(2) services exclusively to encrypt electronic
payment information for acceptance onto a payment card network
described by Subdivision (3)(D) to comply with standards set by the
Payment Card Industry Security Standards Council; or
(3) settling of an electronic payment transaction by:
(A) a downstream payment processor or point of
sale payment processor that routes electronic payment information
to an entity described by Paragraph (B) or (D) or to a person who is
engaged in the business of money transmission and required to
obtain a license under Section 151.302(a), Finance Code;
(B) a federally insured financial institution,
as defined by Section 201.101, Finance Code, that is organized
under the laws of this state, another state, or the United States,
or an affiliate of the institution;
(C) a person who has entered into a sponsorship
agreement with an entity described by Paragraph (B) for the purpose
of processing that entity's electronic payment transactions
through a payment card network; or
(D) a payment card network that allows a person
to accept a specific brand of debit or credit card by routing
information and data to settle an electronic payment transaction.
(c) For purposes of Subsection (b)(3):
(1) "Downstream payment processor" means a person
described by 7 T.A.C. Section 33.4(c), as that provision existed on
January 1, 2021.
(2) "Point of sale payment processor" means a person
described by 7 T.A.C. Section 33.4(d), as that provision existed on
January 1, 2021.
(3) "Settling of an electronic payment transaction"
means the authorization, clearing, or funding of a payment made by
credit card, debit card, gift card, stored value card, electronic
check, virtual currency, loyalty program currency such as points or
miles, or a similar method. The term does not include charges by a
marketplace provider, as that term is defined by Section 151.0242.
(d) "Data storage," as used in this section, does not
include a classified advertisement, banner advertisement, vertical
advertisement, or link when the item is displayed on an Internet
website owned by another person.
SECTION 2. The changes in law made by this Act do 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 October 1, 2021.