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.