85R2154 CJC-D     By: Dale H.B. No. 803       A BILL TO BE ENTITLED   AN ACT   relating to a temporary exemption from the sales and use tax and the   franchise tax for certain businesses engaged in space flight   activities.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Subchapter H, Chapter 151, Tax Code, is amended   by adding Section 151.362 to read as follows:          Sec. 151.362.  TAXABLE ITEMS USED BY BUSINESSES ENGAGED IN   SPACE FLIGHT ACTIVITIES; TEMPORARY EXEMPTION. (a) In this   section:                (1)  "Qualifying business entity" means a person who is   a business that is:                      (A)  primarily engaged in space flight   activities; and                      (B)  first located and begins doing business in   this state on or after January 1, 2018.                (2)  "Space flight activities" has the meaning assigned   by Section 100A.001, Civil Practice and Remedies Code.          (b)  The sale to or storage, use, or other consumption by a   qualifying business entity of a taxable item that will be directly   used or consumed by the entity is exempted from the taxes imposed by   this chapter.          (c)  To claim an exemption under this section, a registration   number issued by the comptroller must be stated on the exemption   certificate provided by the purchaser of the item.          (d)  Subject to Subsection (e), a person may apply to the   comptroller for issuance of a registration number by the   comptroller.  The application must be made on a form prescribed by   the comptroller and include the information required by the   comptroller to establish that the person is a qualifying business   entity.          (e)  A person who meets the requirements of a qualifying   business entity must apply for a registration number not later than   the first anniversary of the date the person begins doing business   in this state.  The comptroller shall deny an application received   after that date.          (f)  A registration number issued under this section expires   on the 10th anniversary of the date of issuance, unless revoked at   an earlier time by the comptroller as provided by Subsection (g).     The registration number may not be renewed.          (g)  The comptroller shall revoke and may not reinstate a   registration number issued to a person if the person ceases to meet   the requirements of a qualifying business entity.  A person whose   registration number is revoked is liable for payment of the taxes   imposed under this chapter on the sales price of each taxable item   for which the person claimed an exemption under this section on or   after the date the registration number was revoked.          (h)  The comptroller shall adopt rules necessary to   implement this section, including rules relating to the:                (1)  qualification of a person for an exemption under   this section;                (2)  issuance and revocation of a registration number   issued under this section; and                (3)  reporting and other procedures necessary to ensure   that a person to whom a registration number is issued under this   section complies with this section and remains entitled to the   exemption authorized by this section.          SECTION 2.  Section 171.0001(4), Tax Code, as effective   until January 1, 2020, is amended to read as follows:                (4)  "Beginning date" means:                      (A)  except as provided by Paragraph (B) or (C):                            (i)  for a taxable entity chartered or   organized in this state, the date on which the taxable entity's   charter or organization takes effect; and                            (ii)  for any other taxable entity, the date   on which the taxable entity begins doing business in this state;   [or]                      (B)  for a taxable entity that qualifies as a new   veteran-owned business as defined by Section 171.0005, the earlier   of:                            (i)  the fifth anniversary of the date on   which the taxable entity begins doing business in this state; or                            (ii)  the date the taxable entity ceases to   qualify as a new veteran-owned business as defined by Section   171.0005; or                      (C)  for a taxable entity that meets the   requirements of a qualifying business entity under Section 151.362,   the earlier of:                            (i)  the 10th anniversary of the date on   which the taxable entity begins doing business in this state; or                            (ii)  the date the taxable entity ceases to   comply with the requirements of a qualifying business entity under   that section.          SECTION 3.  Section 171.0001(4), Tax Code, as effective   January 1, 2020, is amended to read as follows:                (4)  "Beginning date" means:                      (A)  except as provided by Paragraph (B):                            (i)  for a taxable entity chartered or   organized in this state, the date on which the taxable entity's   charter or organization takes effect; and                            (ii) [(B)]  for any other taxable entity,   the date on which the taxable entity begins doing business in this   state; or                      (B)  for a taxable entity that meets the   requirements of a qualifying business entity under Section 151.362,   the earlier of:                            (i)  the 10th anniversary of the date on   which the taxable entity begins doing business in this state; or                            (ii)  the date the taxable entity ceases to   comply with the requirements of a qualifying business entity under   that section.          SECTION 4.  Section 171.001, Tax Code, is amended by adding   Subsection (e) to read as follows:          (e)  Notwithstanding Subsection (a), the tax imposed under   this chapter is not imposed on a taxable entity that meets the   requirements of a qualifying business entity under Section 151.362   until the earlier of:                (1)  the 10th anniversary of the date on which the   taxable entity begins doing business in this state; or                (2)  the date the taxable entity ceases to comply with   the requirements of a qualifying business entity under that   section.          SECTION 5.  Section 171.063(g), Tax Code, as effective until   January 1, 2020, is amended to read as follows:          (g)  If a corporation's federal tax exemption is withdrawn by   the Internal Revenue Service for failure of the corporation to   qualify or maintain its qualification for the exemption, the   corporation's exemption under this section ends on the effective   date of that withdrawal by the Internal Revenue Service.  The   effective date of the withdrawal is considered the corporation's   beginning date for purposes of determining the corporation's   privilege periods and for all other purposes of this chapter,   except that if the corporation would have been subject to Section   171.001(d) or (e) in the absence of the federal tax exemption, and   the effective date of the withdrawal is a date earlier than the date   the corporation would have become subject to the franchise tax as   provided by Section 171.001(d) or (e), as applicable, the date the   corporation would have become subject to the franchise tax under   Section 171.001(d) or (e) [that section] is considered the   corporation's beginning date for those purposes.          SECTION 6.  Section 171.063(g), Tax Code, as effective   January 1, 2020, is amended to read as follows:          (g)  If a corporation's federal tax exemption is withdrawn by   the Internal Revenue Service for failure of the corporation to   qualify or maintain its qualification for the exemption, the   corporation's exemption under this section ends on the effective   date of that withdrawal by the Internal Revenue Service.  The   effective date of the withdrawal is considered the corporation's   beginning date for purposes of determining the corporation's   privilege periods and for all other purposes of this chapter,   except that if the corporation would have been subject to Section   171.001(e) in the absence of the federal tax exemption, and the   effective date of the withdrawal is a date earlier than the date the   corporation would have become subject to the franchise tax as   provided by Section 171.001(e), the date the corporation would have   become subject to the franchise tax under that section is   considered the corporation's beginning date for those purposes.          SECTION 7.  Section 171.204, Tax Code, is amended by adding   Subsection (e) to read as follows:          (e)  The comptroller may require a taxable entity on which   the tax imposed under this chapter is not imposed solely because of   the application of Section 171.001(e) to file an information report   stating the taxable entity's beginning date as determined under   Section 171.0001 and any other information the comptroller   determines necessary.  The comptroller may not require the taxable   entity to report or compute its margin.          SECTION 8.  Not later than December 1, 2017, the comptroller   of public accounts shall adopt rules as required by Section   151.362(h), Tax Code, as added by this Act.          SECTION 9.  Except as otherwise provided by this Act, this   Act takes effect September 1, 2017.