HBA-ALS H.B. 944 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 944 By: Craddick Ways and Means 2/24/1999 Introduced BACKGROUND AND PURPOSE Under the Internet Tax Freedom Act passed by the 105th United States Congress, a state is prohibited from assessing a sales tax for Internet access charges. However, the law contained a "grandfather clause" allowing states such as Texas that were already assessing such a tax to continue to do so. Accordingly, under current Texas law, Internet access is considered an information service which is a taxable service subject to the sales tax. H.B. 944 provides definitions for "Internet" and "Internet access service" and exempts the sales, use, or consumption of Internet access service from the sales tax. H.B. 944 specifies that Internet access service does not include data processing service, information service, telecommunications services, and cable televisions service and that those services are not exempt from the sales tax. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter A, Chapter 151, Tax Code, by adding Sections 151.00393 and 151.00394 to define "Internet" and "Internet access service." SECTION 2. Amends Subchapter H, Chapter 151, Tax Code, by adding Section 151.325, as follows: Sec. 151.325. INTERNET ACCESS SERVICE. Exempts the sale, use, or other consumption of Internet access service in this state from the sales tax imposed by this chapter. Provides that Internet access service does not include and the exemption in Subsection (a) does not apply to data processing service, information service, telecommunications services, and cable television service. SECTION 3. Provides that this Act takes effect on the first day of the first calendar quarter beginning on or after 90 days after adjournment. SECTION 4. Emergency clause.