| 1 | 1 | | By: Perry S.B. No. 2280 |
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| 2 | 2 | | |
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| 3 | 3 | | |
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| 4 | 4 | | A BILL TO BE ENTITLED |
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| 5 | 5 | | AN ACT |
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| 6 | 6 | | relating to the exclusion of services provided by a marketplace |
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| 7 | 7 | | provider from the definition of data processing services. |
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| 8 | 8 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 9 | 9 | | SECTION 1. Sections 151.0035(b) and (c), Tax Code, are |
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| 10 | 10 | | amended to read as follows: |
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| 11 | 11 | | (b) "Data processing service" does not include: |
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| 12 | 12 | | (1) the transcription of medical dictation by a |
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| 13 | 13 | | medical transcriptionist; |
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| 14 | 14 | | (2) services exclusively to encrypt electronic |
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| 15 | 15 | | payment information for acceptance onto a payment card network |
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| 16 | 16 | | described by Subdivision (3)(E) to comply with standards set by the |
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| 17 | 17 | | Payment Card Industry Security Standards Council; or |
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| 18 | 18 | | (3) settling of an electronic payment transaction by: |
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| 19 | 19 | | (A) a downstream payment processor or point of |
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| 20 | 20 | | sale payment processor that routes electronic payment information |
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| 21 | 21 | | to an entity described by Paragraph (C) or (E); |
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| 22 | 22 | | (B) a person who is engaged in the business of |
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| 23 | 23 | | money transmission and required to obtain a license under Section |
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| 24 | 24 | | 151.302(a), Finance Code; |
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| 25 | 25 | | (C) a federally insured financial institution, |
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| 26 | 26 | | as defined by Section 201.101, Finance Code, that is organized |
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| 27 | 27 | | under the laws of this state, another state, or the United States, |
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| 28 | 28 | | or an affiliate of the institution; |
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| 29 | 29 | | (D) a person who has entered into a sponsorship |
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| 30 | 30 | | agreement with an entity described by Paragraph (C) for the purpose |
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| 31 | 31 | | of settling that entity's electronic payment transactions through a |
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| 32 | 32 | | payment card network; or |
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| 33 | 33 | | (E) a payment card network that allows a person |
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| 34 | 34 | | to accept a specific brand of debit or credit card by routing |
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| 35 | 35 | | information and data to settle an electronic payment transaction. |
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| 36 | 36 | | (4) services provided by a marketplace provider in |
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| 37 | 37 | | relation to the processing of a sale or payment for a marketplace |
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| 38 | 38 | | seller, as those terms are defined in Section 151.0242. |
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| 39 | 39 | | (c) For purposes of Subsection (b)(3): |
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| 40 | 40 | | (1) "Downstream payment processor" means a person |
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| 41 | 41 | | described by 7 T.A.C. Section 33.4(c), as that provision existed on |
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| 42 | 42 | | January 1, 2021. |
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| 43 | 43 | | (2) "Point of sale payment processor" means a person |
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| 44 | 44 | | described by 7 T.A.C. Section 33.4(d), as that provision existed on |
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| 45 | 45 | | January 1, 2021. |
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| 46 | 46 | | (3) "Settling of an electronic payment transaction" |
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| 47 | 47 | | means the authorization, clearing, or funding of a payment made by |
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| 48 | 48 | | credit card, debit card, gift card, stored value card, electronic |
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| 49 | 49 | | check, virtual currency, loyalty program currency such as points or |
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| 50 | 50 | | miles, or a similar method. The term does not include charges by a |
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| 51 | 51 | | marketplace provider, as that term is defined by Section 151.0242. |
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| 52 | 52 | | SECTION 2. APPLICABILITY OF FORMER LAW. The change in law |
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| 53 | 53 | | made by this Act does not affect tax liability accruing before the |
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| 54 | 54 | | effective date of this Act. That liability continues in effect as if |
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| 55 | 55 | | this Act had not been enacted, and the former law is continued in |
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| 56 | 56 | | effect for the collection of taxes due and for civil and criminal |
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| 57 | 57 | | enforcement of the liability for those taxes. |
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| 58 | 58 | | SECTION 3. This Act takes effect October 1, 2023. |
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