HBA-RBT H.B. 2406 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 2406
By: Cuellar
Ways & Means
3/19/1999
Introduced



BACKGROUND AND PURPOSE 

Export items are exempt from the sales and use tax.  Currently, many
brokers are executing export documentation forms and delivering them to the
customers prior to export.  The form is not supposed to be executed until
after visual verification of export.  Customers can take these invalid
certificates to the store and redeem their tax even though they have never
left the country.  Stores are allowed to refund the tax if the customer has
a valid certificate.  

H.B. 2406 eliminates the broker's individual responsibility to verify
exports by empowering them as a group to collectively verify exports.
Under H.B. 2406, brokers may organize and rent locations approved by the
comptroller to verify exports.  This bill implements distinctions between
retailers located in counties that do or do not border the United Mexican
States and the different time periods that must elapse before the retailers
may refund the tax paid. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the comptroller in SECTION 2 (Section
151.1575, Tax Code) of this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Sections 151.157(c), (e), (g), and (h), Tax Code, as
follows: 

(c) Prohibits a customs broker from having more than five places of
business in this state. 

(e) Requires the customs broker to keep the books and records described by
this subsection for at least three years, rather than two. 

(g) Deletes existing text of Subsection (g) relating to a customs broker's
authorization of an independent contractor to certify that tangible
personal property has been exported outside of the United States.
Redesignates Subsection (h) to Subsection (g). 

SECTION 2.  Amends Subchapter E, Chapter 151, Tax Code, by adding Section
151.1575, as follows: 

Sec.  151.1575.  OFFICIAL VERIFICATION LOCATION.  (a) Authorizes a person
to apply for designation as an official verification location under
specified conditions.   

(b) Requires the comptroller to request a municipality to designate one
person in the municipality that the municipality considers appropriate to
be the only official verification location in that municipality.
Authorizes the comptroller to designate the person approved by the
municipality as the only official verification location in that
municipality. Requires the comptroller by rule to prescribe qualifications
for designation and the procedures for designation.  Requires the
comptroller to give priority to applicants who propose locating at an
airport or close to the border between this state and the United Mexican
States.  Provides that if the comptroller designates one location under
this subsection, the contract required by Subsection (c) between the
location and each customs broker must provide that the customs broker will
pay the monthly costs of the location in  accordance with the ratio that
the number of export vouchers submitted to that location by the broker
during that month bears to the total number of export vouchers submitted to
that location by all brokers during that month.  

(c) Requires each customs broker doing business in a municipality to
contract with an official verification location in the municipality to
verify that tangible personal property is exported outside this state.
Provides that the comptroller must approve the contract in writing. 

(d) Requires the comptroller to assign each customs broker in a
municipality a unique color or other designation that the broker must use
in printing export vouchers.  Sets forth the duties of the official
verification location upon receipt of a voucher. 

(e) Prohibits the customs broker from issuing documentation to show
exemption of tangible personal property unless the broker receives a
stamped export voucher verifying exportation of that property in accordance
with Subsection (d).  Requires the customs broker to attach the stamped
export voucher to the documentation. 

(f) Requires an official verification location to make available to the
comptroller, within 15 days of receiving written notice from the
comptroller, the location's books and records relating to the business of
verifying the export of tangible personal property beyond the territorial
limits of the United States for the purpose of exempting the property from
the taxes imposed by this chapter.  Requires the location to make the
location's books and records available to the comptroller without notice if
the comptroller determines that providing notice will jeopardize the
comptroller's ability to administer and effectively enforce the provisions
of this chapter relating to verification of the exemption of tangible
personal property.  Requires the location to keep the books and records
described by this subsection for at least three years after the date of the
last entry that they contain. 

(g) Requires each customs broker doing business in a municipality in which
the comptroller does not designate an official verification location to
perform the duties of an official verification location in relation to that
broker's business in that municipality. 

SECTION 3.  Amends Sections 151.158(c), (e), and (f), Tax Code, to require
the comptroller to require that the stamps be manufactured so that a stamp
may be easily and securely attached to an export voucher, rather than
export documentation.  Authorizes the comptroller to provide stamps only to
an official verification location, rather than a licensed customs broker.
Makes conforming changes. 

SECTION 4.  Amends Section 151.159(b), Tax Code, to make a conforming
change. 

SECTION 5.  Amends Sections 151.307, Tax Code, by amending Subsections (b),
(c), and (d), and adding Subsections (e) and (f), to set forth the
circumstances under which a retailer who receives documentation is
prohibited from refunding tax paid under this chapter.  Provides that a
retailer who makes a refund before the prescribed time, makes an
undocumented refund, or makes a refund that is improperly documented is
liable for the amount of the tax refunded with interest.  Redesignates
Subsection (d) to (f).  Makes conforming changes. 

SECTION 6.  Amends Sections 151.712(a), (b), (f), (g), and (i), Tax Code,
as follows:  

(a) Makes a conforming change.

(b) Makes conforming and nonsubstantive changes.

(f) Requires the comptroller to require a person to pay to the state any
tax revenue lost to this state due to the person's action with interest.
Authorizes the comptroller to suspend or revoke the designation of an
official verification location. 

(g) Makes a conforming change.
 
(i) Defines "authorized," "customs broker," and "official verification
location." 

SECTION 7.  Amends Sections 151.713(a), (g), and (h), Tax Code, as follows:

(a) Makes conforming changes.

(g) Requires the comptroller to require a person to pay to the state any
tax revenue lost to this state due to the person's actions.  Makes a
conforming change. 

(h) Defines "authorized," "customs broker," and "official verification
location." 

SECTION 8.  Effective date: September 1, 1999.
            Makes application of this Act prospective to exemptions to the
sales and use  
                       tax imposed under Chapter 151, Tax Code, claimed on
or after January 1, 2000. 

SECTION 9.  Emergency clause.