HBA-JLV H.B. 3571 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 3571 By: Raymond Ways & Means 4/12/2001 Introduced BACKGROUND AND PURPOSE Currently, customers who purchase goods for export can redeem state sales taxes at retail locations upon issuance of a certificate by a licensed customs broker specifying that the goods are for export. However, since issuance of these certificates in many instances takes place before the goods actually leave the country, there is no valid mechanism to ensure that these goods are in fact exported. This results in a loss of sales tax revenue that the state would otherwise receive. House Bill 3571 creates of export verification centers to ensure that goods purchased for export actually leave the country. 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 2 (Section 151.1575, Tax Code) of this bill. ANALYSIS House Bill 3571 amends the Tax Code to establish an export verification center (center). The location of the center must be licensed by the comptroller of public accounts (comptroller), be operated by a person licensed by the comptroller, and comply with any rules prescribed by the comptroller to administer these provisions and to prevent evasion of export taxes and local sales and use taxes. The bill requires a customs broker official to work through or with a center to verify that tangible personal property is exported outside the territorial limits of the United States. The bill authorizes the comptroller to revoke or suspend a custom broker's license if a customs broker fails to comply with applicable provisions. The bill requires the customs broker to pay the monthly cost of the center in accordance with the ratio that the number of export vouchers submitted to the location by the broker during the month bears to the total number of export vouchers submitted to that location by all customs brokers during that month. On the receipt of an export voucher, the center is required to verify that the tangible personal property that is listed on the export voucher was actually exported outside the territorial limits of the United States, and attach to the export voucher a certain stamp, and return the stamped export voucher to the customs broker. A customs broker is prohibited from issuing documentation for the purpose of showing the exemption of tangible personal property unless the broker receives a stamped export that verifies exportation of the property. The bill requires the center to make available, on or after the 15th day after the date the center receives notice from the comptroller, certain books and records pertaining to the business of verifying the export of tangible personal property beyond the territorial limits of the United States for purposes of exempting the property from export and local sales and use taxes. The center is also required to make available to the comptroller, without notice from the comptroller, the center's books and records if the comptroller determines that issuing a notice will jeopardize the comptroller's ability to administer and enforce such provisions. The bill requires a customs broker to keep the books and records for at least four years after the date of the last entry that they contain. The bill requires the center to file a report identifying such exported property, the amount of tax for which an export voucher is issued, and any other information the comptroller may require (Secs. 151.157 and 151.1575). The bill authorizes the comptroller to provide stamps only to the person licensed by the comptroller to operate a center or to an authorized representative of that person. The bill provides that a stamp is invalid if transferred to a person other than the person licensed by the comptroller to operate a center to whom the comptroller issued the stamp (Sec. 151.158). The bill provides that when an exemption is claimed because tangible personal property is exported beyond the territorial limits of the United States, proof of export may be shown only by documentation and attached export vouchers from a center (Sec. 151.307). The bill prohibits a person licensed by the comptroller from operating a center or an authorized representative of that person from selling or buying an export voucher or stamps required for the documentation. The bill excludes a person licensed by the comptroller from operating a center that accepts payments and through which customs brokers operate from the prohibition. The bill requires the comptroller to require a person who violates provisions relating to export centers to pay the state any tax revenue that is lost by the state due to that person's actions, with interest, and authorizes the comptroller to suspend or revoke the license of the person licensed by the comptroller to operate a center (Sec. 151.712). The bill prohibits a person from obtaining or attempting to obtain export documentation or an export voucher for the purpose of showing an exemption from a licensed operator of a center or an authorized representative of that person if the person knows that the information is materially false. The comptroller shall require a person to pay to the state any tax revenue lost to this state due to the person's actions (Sec. 151.713). EFFECTIVE DATE January 1, 2002.