HBA-SEB C.S.H.B. 209 76(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 209 By: Cuellar Ways & Means 4/9/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE Currently, a sales tax is imposed on school supplies. C.S.H.B. 209 exempts school supplies from the tax if they are required by a student in a public or private elementary or secondary school, appear on a list issued by the teacher before the school year begins, cost less than $25, and are purchased during the month of August. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the comptroller of public accounts in SECTION 1 (Section 151.326, Tax Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter H, Chapter 151, Tax Code, by adding Section 151.326, as follows: Sec. 151.326. SCHOOL SUPPLIES PRIOR TO START OF SCHOOL. (a) Provides that a tangible item is exempted from the taxes imposed by this chapter (Limited Sales, Excise, and Use Tax) if the item is required for use by a student in a class in a public or private elementary or secondary school, is on a list issued before the beginning of the school year by the teacher or school, has a value of less than $25, and is purchased during August. (b) Establishes that the exemption does not apply to clothing or footwear. (c) Provides that the purchaser must give the seller an exemption certificate verifying that the tangible item qualifies as exempt from taxes, except as provided by Subsection (d). (d) Specifies that an exemption certificate is not required if the seller of the item maintains a separate section or display that contains only tax-exempt items or if the item that qualifies as tax-exempt is sold by the student's school or a parent-teacher organization of the student's school. (e) Authorizes the comptroller, by rule, to specify examples of tangible items typically required for use by a student in a class in a public or private elementary school and, if the requirements of this section are met, eligible for exemption. SECTION 2. Provides that this Act takes effect on the first day of the first calendar quarter beginning on or after 90 days after adjournment. Makes application of this Act prospective. SECTION 3. Emergency clause. Effective date: upon passage. COMPARISON OF ORIGINAL TO SUBSTITUTE The substitute modifies proposed Subsection (a) to specify that an item is exempt from taxes if it has a value of less than $25. The substitute redesignates Subdivision (3) of the original to Subdivision (4). The substitute creates a new Subsection (b), redesignates proposed Subsections (b) and (c) as Subsections (c) and (d), and adds Subsection (e). The new subsection (b) establishes that the tax exemption does not apply to clothing or footwear. Subsection (c), as redesignated, makes a conforming change. Subsection (d), as redesignated, specifies that an exemption certificate for the seller of the item is not required if the item that qualifies as tax-exempt is sold by the student's school or a parent-teacher organization of the student's school. The substitute makes conforming changes. Subsection (e) expressly delegates rulemaking authority to the comptroller. It authorizes the comptroller, by rule, to specify examples of tangible items typically required for use by a student in a class in a public or private elementary school and, if the requirements of this section are met, eligible for exemption.