S.B. No. 153
  relating to the exclusion of certain payment processing services
  from the definition of "data processing service" for purposes of
  sales and use taxes.
         SECTION 1.  Section 151.0035, Tax Code, is amended to read as
         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
         (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)(E) 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 (C) or (E);
                     (B)  a person who is engaged in the business of
  money transmission and required to obtain a license under Section
  151.302(a), Finance Code;
                     (C)  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;
                     (D)  a person who has entered into a sponsorship
  agreement with an entity described by Paragraph (C) for the purpose
  of settling that entity's electronic payment transactions through a
  payment card network; or
                     (E)  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.
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
         I hereby certify that S.B. No. 153 passed the Senate on
  April 19, 2021, by the following vote: Yeas 31, Nays 0; and that
  the Senate concurred in House amendment on May 27, 2021, by the
  following vote: Yeas 31, Nays 0.
  Secretary of the Senate    
         I hereby certify that S.B. No. 153 passed the House, with
  amendment, on May 18, 2021, by the following vote: Yeas 144,
  Nays 0, one present not voting.
  Chief Clerk of the House