HBA-LJP H.B. 3594 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 3594 By: Oliveira Ways & Means 4/12/2001 Introduced BACKGROUND AND PURPOSE If Texas is to develop the communications infrastructure necessary for Texas businesses to compete in the Internet age, over hundreds of millions of dollars may be needed to invest in broadband equipment and services. A tax exemption may help make money available to invest in this equipment and in services to help Texas build a competitive communications infrastructure. House Bill 3594 provides a sales and use tax exemption for machinery and equipment used in providing broadband service. 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. ANALYSIS House Bill 3594 amends the Tax Code to provide for an exemption from limited sales, excise, and use tax for qualifying equipment that is placed in service in a strategic investment area and is used to provide broadband service if the equipment is sold, leased, or rented to, or stored, used, or consumed by a broadband service provider or a subsidiary, affiliate or partner of such provider in the conduct of providing broadband service. The bill also provides for an exemption from limited sales, excise, and use tax for equipment that is not placed in service in a strategic investment area and is used to provide broadband service if the equipment is sold, leased, or rented to, or stored, used, or consumed by a broadband service provider or a subsidiary, affiliate or partner of such provider in the conduct of providing broadband service, such equipment is subject to taxes imposed by city under the Local Sales and Use Tax Act and a county under the County Sales and Use Tax Act. This exemption begins for property purchased in 2003 with a 25 percent refund of the tax paid to this state for the property and increasing in 25 percent increments every year until there is a tax exemption for property purchased on or after January 1, 2006. To receive a refund, the bill provides that a taxpayer must apply to the comptroller of public accounts (comptroller) for the refund during the calendar year immediately following the year in which the taxes were paid and provide the comptroller with any information the comptroller requires to determine the validity of the refund claim. The bill provides that after the comptroller determines that a person is eligible for a refund, the refund must be paid to that person. EFFECTIVE DATE On passage, or if the Act does not receive the necessary vote, the Act takes effect September 1, 2001.