H.B. No. 3319
 
 
 
 
AN ACT
  relating to the sales and use tax.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 151.0048, Tax Code, is amended by adding
  Subsection (b-1) to read as follows:
         (b-1) "Real property service" does not include a service
  listed under Subsection (a) if the service is performed by a landman
  and is necessary to negotiate or secure land or mineral rights for
  acquisition or trade, including:
               (1)  determining ownership;
               (2)  negotiating a trade or agreement regarding land or
  mineral rights;
               (3)  drafting and administering contractual
  agreements;
               (4)  ensuring that all governmental regulations are
  complied with; and
               (5)  any other action necessary to complete the
  transaction related to a service described by this subsection,
  other than an information service described by Section 151.0038.
         SECTION 2.  Section 151.006, Tax Code, is amended to read as
  follows:
         Sec. 151.006.  "SALE FOR RESALE."  (a)  "Sale for resale"
  means a sale of:
               (1)  tangible personal property or a taxable service to
  a purchaser who acquires the property or service for the purpose of
  reselling it in the United States of America or a possession or
  territory of the United States of America or in the United Mexican
  States in the normal course of business in the form or condition in
  which it is acquired or as an attachment to or integral part of
  other tangible personal property or taxable service;
               (2)  tangible personal property to a purchaser for the
  sole purpose of the purchaser's leasing or renting it in the United
  States of America or a possession or territory of the United States
  of America or in the United Mexican States in the normal course of
  business to another person, but not if incidental to the leasing or
  renting of real estate;
               (3)  tangible personal property to a purchaser who
  acquires the property for the purpose of transferring it in the
  United States of America or a possession or territory of the United
  States of America or in the United Mexican States as an integral
  part of a taxable service; or
               (4)  a taxable service performed on tangible personal
  property that is held for sale by the purchaser of the taxable
  service.
         (b)  Subsection (a)(3) applies to a transfer of a wireless
  voice communication device as an integral part of a taxable
  service, regardless of whether there is a separate charge for the
  wireless voice communication device or whether the purchaser is the
  provider of the taxable service, if payment for the service is a
  condition for receiving the wireless voice communication device.
         SECTION 3.  Section 151.056, Tax Code, is amended by adding
  Subsection (g) to read as follows:
         (g)  In this subsection, "ready mix concrete contractor"
  means a person who manufactures or produces ready mixed concrete
  for construction purposes and incorporates the ready mixed concrete
  in the property improved. A ready mix concrete contractor
  performing a contract must separate and individually invoice the
  customer for each yard of ready mixed concrete produced and
  consumed for the improvement of real property and collect and remit
  the tax imposed under this chapter on the ready mixed concrete
  produced and consumed. The tax rate is applied to the price of the
  materials determined by the greater of the invoice price or fair
  market value of ready mixed concrete incorporated into the project.  
  This subsection does not apply to an invoice submitted by a ready
  mix concrete contractor for a public works project.
         SECTION 4.  Sections 151.313(a) and (c), Tax Code, are
  amended to read as follows:
         (a)  The following items are exempted from the taxes imposed
  by this chapter:
               (1)  a drug or medicine, other than insulin, if
  prescribed or dispensed for a human or animal by a licensed
  practitioner of the healing arts;
               (2)  insulin;
               (3)  [subject to Subsection (c),] a drug or medicine
  that is required to be labeled with a "Drug Facts" panel in
  accordance with regulations of the federal Food and Drug
  Administration, without regard to whether it is prescribed or
  dispensed by a licensed practitioner of the healing arts;
               (4)  a hypodermic syringe or needle;
               (5)  a brace; hearing aid or audio loop; orthopedic,
  dental, or prosthetic device; ileostomy, colostomy, or ileal
  bladder appliance; or supplies or replacement parts for the listed
  items;
               (6)  a therapeutic appliance, device, and any related
  supplies specifically designed for those products, if dispensed or
  prescribed by a licensed practitioner of the healing arts, when
  those items are purchased and used by an individual for whom the
  items listed in this subdivision were dispensed or prescribed;
               (7)  corrective lens and necessary and related
  supplies, if dispensed or prescribed by an ophthalmologist or
  optometrist;
               (8)  specialized printing or signalling equipment used
  by the deaf for the purpose of enabling the deaf to communicate
  through the use of an ordinary telephone and all materials, paper,
  and printing ribbons used in that equipment;
               (9)  a braille wristwatch, braille writer, braille
  paper and braille electronic equipment that connects to computer
  equipment, and the necessary adaptive devices and adaptive computer
  software;
               (10)  each of the following items if purchased for use
  by the blind to enable them to function more independently: a slate
  and stylus, print enlarger, light probe, magnifier, white cane,
  talking clock, large print terminal, talking terminal, or harness
  for guide dog;
               (11)  hospital beds;
               (12)  blood glucose monitoring test strips;
               (13)  an adjustable eating utensil used to facilitate
  independent eating if purchased for use by a person, including a
  person who is elderly or physically disabled, has had a stroke, or
  is a burn victim, who does not have full use or control of the
  person's hands or arms;
               (14)  subject to Subsection (d), a dietary supplement;
  and
               (15)  intravenous systems, supplies, and replacement
  parts used in the treatment of humans.
         (c)  A product is a drug or medicine for purposes of this
  section if[:
               [(1)] the product:
               (1) [(A)] is intended for use in the diagnosis, cure,
  mitigation, treatment, or prevention of disease, illness, injury,
  or pain;
               (2) [(B)] is applied to the human body or is a product
  that a human ingests or inhales;
               (3) [(C)] is not an appliance or device; and
               (4) [(D)] is not food[; or
               [(2)     the product is labeled or required to be labeled
  with a "Drug Facts" panel in accordance with regulations of the
  federal Food and Drug Administration].
         SECTION 5.  Section 151.3162(b), Tax Code, is amended to
  read as follows:
         (b)  The following items are exempted from the tax imposed by
  this chapter:
               (1)  seedlings of trees [commonly] grown for commercial
  timber;
               (2)  defoliants, desiccants, equipment, fertilizers,
  fungicides, herbicides, insecticides, and machinery exclusively
  used in the production of timber to be sold in the regular course of
  business;
               (3)  machinery and equipment used in, and pollution
  control equipment required as a result of, the processing, packing,
  or marketing of timber products by an original producer if:
                     (A)  the processing, packing, or marketing occurs
  at or from a location operated by the original producer;
                     (B)  at least 50 percent of the value of the timber
  products processed, packed, or marketed at or from the location is
  attributable to products produced by the original producer and not
  purchased or acquired from others; and
                     (C)  the original producer does not process, pack,
  or market for consideration timber products that belong to another
  person with a value greater than five percent of the total value of
  the timber products processed, packed, or marketed by the producer;
  and
               (4)  tangible personal property sold or used to be
  installed as a component of an underground irrigation system
  exclusively used in the production of timber to be sold in the
  regular course of business.
         SECTION 6.  (a)  Section 151.318(b), Tax Code, is amended to
  read as follows:
         (b)  The exemption includes:
               (1)  chemicals, catalysts, and other materials that are
  used during a manufacturing, processing, or fabrication operation
  to produce or induce a chemical or physical change, to remove
  impurities, or to make the product more marketable;
               (2)  semiconductor fabrication cleanrooms and
  equipment; and
               (3)  pharmaceutical biotechnology cleanrooms and
  equipment that are installed as part of the construction of a new
  facility [with a value of at least $150 million and] on which
  construction began after July 1, 2003[, and before August 31,
  2004].
         (b)  Notwithstanding any other provision of this Act, this
  section takes effect July 1, 2007, if this Act receives a vote of
  two-thirds of all members elected to each house, as provided by
  Section 39, Article III, Texas Constitution. If this Act does not
  receive the vote necessary for effect on that date, this section
  takes effect September 1, 2007.
         SECTION 7.  Section 151.326, Tax Code, is amended to read as
  follows:
         Sec. 151.326.  CLOTHING AND FOOTWEAR FOR LIMITED
  PERIOD.  (a)  The sale of an article of clothing or footwear
  designed to be worn on or about the human body is exempted from the
  taxes imposed by this chapter if:
               (1)  the sales price of the article is less than $100;
  and
               (2)  the sale takes place during a period beginning at
  12:01 a.m. on the third [first] Friday in August and ending at 12
  midnight on the following Sunday.
         (b)  This section does not apply to:
               (1)  any special clothing or footwear that is primarily
  designed for athletic activity or protective use and that is not
  normally worn except when used for the athletic activity or
  protective use for which it is designed;
               (2)  accessories, including jewelry, handbags,
  luggage, umbrellas, wallets, watches, and similar items carried on
  or about the human body, without regard to whether worn on the body
  in a manner characteristic of clothing; and
               (3)  the rental of clothing or footwear.
         SECTION 8.  Subchapter H, Chapter 151, Tax Code, is amended
  by adding Section 151.327 to read as follows:
         Sec. 151.327.  SCHOOL BACKPACKS BEFORE START OF SCHOOL.  (a)
  The sale or storage, use, or other consumption of a school backpack
  is exempted from the taxes imposed by this chapter if the backpack
  is purchased:
               (1)  for use by a student in a public or private
  elementary or secondary school;
               (2)  during the period described by Section
  151.326(a)(2); and
               (3)  for a sales price of less than $100.
         (b)  A retailer is not required to obtain an exemption
  certificate stating that school backpacks are purchased for use by
  students in a public or private elementary or secondary school
  unless the backpacks are purchased in a quantity that indicates
  that the backpacks are not purchased for use by students in a public
  or private elementary or secondary school.
         SECTION 9.  Sections 151.328(a) and (c), Tax Code, are
  amended to read as follows:
         (a)  Aircraft are exempted from the taxes imposed by this
  chapter if:
               (1)  sold to a person using the aircraft as a
  certificated or licensed carrier of persons or property;
               (2)  sold to a person who:
                     (A)  has a sales tax permit issued under this
  chapter; and
                     (B)  uses the aircraft for the purpose of
  providing flight instruction that is:
                           (i)  recognized by the Federal Aviation
  Administration;
                           (ii)  under the direct or general
  supervision of a flight instructor certified by the Federal
  Aviation Administration; and
                           (iii)  designed to lead to a pilot
  certificate or rating issued by the Federal Aviation Administration
  or otherwise required by a rule or regulation of the Federal
  Aviation Administration;
               (3)  sold to a foreign government; or
               (4)  sold in this state to a person for use and
  registration in another state or nation before any use in this state
  other than flight training in the aircraft and the transportation
  of the aircraft out of this state.
         (c)  In this section, "aircraft" does not include a rocket or
  missile, but does include:
               (1)  a fixed wing, heavier-than-air craft that is
  driven by propeller or jet and supported by the dynamic reaction of
  the air against its wings;
               (2)  a helicopter; and
               (3)  an airplane flight simulation training device 
  [simulator] approved by the Federal Aviation Administration [for
  use as a Phase II or higher flight simulator] under Appendices A and
  B [Appendix H], 14 C.F.R. Part 60 [121].
  SECTION 10.  Subchapter E, Chapter 152, Tax Code, is amended
  by adding Section 152.090 to read as follows:
         Sec. 152.090.  CERTAIN HYDROGEN-POWERED MOTOR VEHICLES. (a)  
  In this section, "hydrogen-powered motor vehicle" means a vehicle
  that meets the Phase II standards established by the California Air
  Resources Board as of September 1, 2007, for an ultra low-emission
  vehicle II or stricter Phase II emission standards established by
  that board and:
               (1)  is hydrogen power capable and has a fuel economy
  rating of at least 45 miles per gallon; or
               (2)  is fully hydrogen-powered.
         (b)  The taxes imposed by this chapter do not apply to the
  sale or use of a hydrogen-powered motor vehicle.
         SECTION 11.  Section 321.203, Tax Code, is amended by
  amending Subsections (b), (c), (d), and (e) and adding Subsection
  (n) to read as follows:
         (b)  If a retailer has only one place of business in this
  state, all of the retailer's retail sales of taxable items
  [tangible personal property] are consummated at that place of
  business except as provided by Subsection (e).
         (c)  If a retailer has more than one place of business in this
  state, a sale of a taxable item [tangible personal property] by the
  retailer is consummated at the retailer's place of business:
               (1)  from which the retailer ships or delivers the item
  [property], if the retailer ships or delivers the item [property]
  to a point designated by the purchaser or lessee; or
               (2)  where the purchaser or lessee takes possession of
  and removes the item [property], if the purchaser or lessee takes
  possession of and removes the item [property] from a place of
  business of the retailer.
         (d)  If neither the possession of a taxable item [tangible
  personal property] is taken at nor shipment or delivery of the item
  [property] is made from the retailer's place of business in this
  state, the sale is consummated at:
               (1)  the retailer's place of business in this state
  where the order is received; or
               (2)  if the order is not received at a place of business
  of the retailer, the place of business from which the retailer's
  agent or employee [salesman] who took the order operates.
         (e)  A sale of a taxable item [tangible personal property] is
  consummated at the location in this state to which the item
  [property] is shipped or delivered or at which possession is taken
  by the customer if transfer of possession of the item [property]
  occurs at, or shipment or delivery of the item [property]
  originates from, a location in this state other than a place of
  business of the retailer and if:
               (1)  the retailer is an itinerant vendor who has no
  place of business in this state;
               (2)  the retailer's place of business where the
  purchase order is initially received or from which the retailer's
  agent or employee [salesman] who took the order operates is outside
  this state; or
               (3)  the purchaser places the order directly with the
  retailer's supplier and the item [property] is shipped or delivered
  directly to the purchaser by the supplier.
         (n)  A sale of a service described by Section 151.0047 to
  remodel, repair, or restore nonresidential real property is
  consummated at the location of the job site.
         SECTION 12.  Section 323.102(c), Tax Code, is amended to
  read as follows:
         (c)  A tax imposed under Section 323.105 of this code or
  Chapter 326 or 383, Local Government Code, takes effect on the first
  day of the first calendar quarter after the expiration of the first
  complete calendar quarter occurring after the date on which the
  comptroller receives a notice of the action as required by Section
  323.405(b).
         SECTION 13.  Section 323.203, Tax Code, is amended by
  amending Subsections (b), (c), (d), and (e) and adding Subsection
  (m) to read as follows:
         (b)  If a retailer has only one place of business in this
  state, all of the retailer's retail sales of taxable items
  [tangible personal property] are consummated at that place of
  business except as provided by Subsection (e).
         (c)  If a retailer has more than one place of business in this
  state, a sale of a taxable item [tangible personal property] by the
  retailer is consummated at the retailer's place of business:
               (1)  from which the retailer ships or delivers the item
  [property], if the retailer ships or delivers the item [property]
  to a point designated by the purchaser or lessee; or
               (2)  where the purchaser or lessee takes possession of
  and removes the item [property], if the purchaser or lessee takes
  possession of and removes the item [property] from a place of
  business of the retailer.
         (d)  If neither the possession of a taxable item [tangible
  personal property] is taken at nor shipment or delivery of the item
  [property] is made from the retailer's place of business in this
  state, the sale is consummated at:
               (1)  the retailer's place of business in this state
  where the order is received; or
               (2)  if the order is not received at a place of business
  of the retailer, the place of business from which the retailer's
  agent or employee [salesman] who took the order operates.
         (e)  A sale of a taxable item [tangible personal property] is
  consummated at the location in this state to which the item
  [property] is shipped or delivered or at which possession is taken
  by the customer if transfer of possession of the item [property]
  occurs at, or shipment or delivery of the item [property]
  originates from, a location in this state other than a place of
  business of the retailer and if:
               (1)  the retailer is an itinerant vendor who has no
  place of business in this state;
               (2)  the retailer's place of business where the
  purchase order is initially received or from which the retailer's
  agent or employee [salesman] who took the order operates is outside
  this state; or
               (3)  the purchaser places the order directly with the
  retailer's supplier and the item [property] is shipped or delivered
  directly to the purchaser by the supplier.
         (m)  A sale of a service described by Section 151.0047 to
  remodel, repair, or restore nonresidential real property is
  consummated at the location of the job site.
         SECTION 14.  Section 403.014(a), Government Code, is amended
  to read as follows:
         (a)  Before each regular session of the legislature, the
  comptroller shall report to the legislature and the governor on the
  effect, if it is possible to assess, of exemptions, discounts,
  exclusions, special valuations, special accounting treatments,
  special rates, and special methods of reporting relating to:
               (1)  sales, excise, and use tax under Chapter 151, Tax
  Code;
               (2)  franchise tax under Chapter 171, Tax Code;
               (3)  school district property taxes under Title 1, Tax
  Code;
               (4)  motor vehicle tax under Section 152.090; and
               (5) [(4)]  any other tax generating more than five
  percent of state tax revenue in the prior fiscal year.
         SECTION 15.  The following sections of the Tax Code are
  repealed:
               (1)  Section 151.0232;
               (2)  Section 151.103(d);
               (3)  Section 151.202(c);
               (4)  Section 321.203(l); and
               (5)  Section 323.203(l).
         SECTION 16.  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 17.  (a)  Except as provided by Subsection (b), this
  Act takes effect September 1, 2007.
         (b)  Sections 7 and 8 of this Act take effect immediately, if
  the Act receives a vote of two-thirds of all the members elected to
  each house, as provided by Section 39, Article III, Texas
  Constitution.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 3319 was passed by the House on May 9,
  2007, by the following vote:  Yeas 142, Nays 0, 2 present, not
  voting; that the House refused to concur in Senate amendments to
  H.B. No. 3319 on May 25, 2007, and requested the appointment of a
  conference committee to consider the differences between the two
  houses; and that the House adopted the conference committee report
  on H.B. No. 3319 on May 27, 2007, by the following vote:  Yeas 143,
  Nays 0, 2 present, not voting.
 
  ______________________________
  Chief Clerk of the House   
 
         I certify that H.B. No. 3319 was passed by the Senate, with
  amendments, on May 23, 2007, by the following vote:  Yeas 30, Nays
  0; at the request of the House, the Senate appointed a conference
  committee to consider the differences between the two houses; and
  that the Senate adopted the conference committee report on H.B. No.
  3319 on May 27, 2007, by the following vote:  Yeas 30, Nays 0.
 
  ______________________________
  Secretary of the Senate   
  APPROVED: __________________
                  Date       
   
           __________________
                Governor