2023 Texas Statutes › Tax Code › Title 2 - State Taxation › Subtitle E - Sales, Excise, and Use Taxes › Chapter 151 - Limited Sales, Excise, and Use Tax › Subchapter H. Exemptions › Section 151.3162. Timber Items

Sec. 151.3162.  TIMBER ITEMS.  (a)  In this section, "original producer" means a person who:
(1)  harvests timber that the person owns and continues to own until the timber is processed, packed, or marketed;  or
(2)  grows timber, exercises predominant operational control over the growth of the timber, and bears the risk of loss of investment in the timber.
(b)  Subject to Section 151.1551, the following items are exempted from the tax imposed by this chapter:
(1)  seedlings of trees grown for commercial timber;
(2)  defoliants, desiccants, equipment, fertilizers, fungicides, herbicides, insecticides, and machinery exclusively used in the production of timber to be sold in the regular course of business;
(3)  machinery and equipment used in, and pollution control equipment required as a result of, the processing, packing, or marketing of timber products by an original producer if:
(A)  the processing, packing, or marketing occurs at or from a location operated by the original producer;
(B)  at least 50 percent of the value of the timber products processed, packed, or marketed at or from the location is attributable to products produced by the original producer and not purchased or acquired from others; and
(C)  the original producer does not process, pack, or market for consideration timber products that belong to another person with a value greater than five percent of the total value of the timber products processed, packed, or marketed by the producer; and
(4)  tangible personal property sold or used to be installed as a component of an underground irrigation system exclusively used in the production of timber to be sold in the regular course of business.
(c)  Two or more corporations that operate timber activities on the same or adjacent tracts of land and that are entirely owned by the same individual or a combination of the individual and the individual's spouse or children are considered to be a single original producer for the purposes of Subsection (b)(3).
(d)  The exemption provided by Subsection (b) takes effect January 1, 2008.  Until that date, a person is entitled to a credit or refund of a portion of the taxes paid under this chapter on an item that after January 1, 2008, will be exempted from the taxes imposed by this chapter under Subsection (b).  The amount of the credit or refund is determined as follows:
(1)  for an item for which the taxable event occurs on or after October 1, 2001, and before January 1, 2004, the taxpayer is entitled to a refund or credit in an amount equal to 33 percent of the tax paid on the item;
(2)  for an item for which the taxable event occurs on or after January 1, 2004, and before January 1, 2006, the taxpayer is entitled to a refund or credit in an amount equal to 50 percent of the tax paid on the item;  and
(3)  for an item for which the taxable event occurs on or after January 1, 2006, and before January 1, 2008, the taxpayer is entitled to a refund or credit in an amount equal to 75 percent of the tax paid on the item.
(e)  A taxpayer entitled to a credit or refund under Subsection (d) may elect to receive either a credit or a refund.  A taxpayer who elects to receive a credit must claim the credit on the return for a period that ends not later than the first anniversary of the date on which the taxable event occurred.  A taxpayer who elects to receive a refund must apply to the comptroller for the refund before or during the calendar year following the year in which the tax on the item was paid.
Added by Acts 1999, 76th Leg., ch. 631, Sec. 14, eff. Oct. 1, 2001.
Amended by:
Acts 2007, 80th Leg., R.S., Ch. 1266 (H.B. 3319), Sec. 5, eff. September 1, 2007.
Acts 2011, 82nd Leg., R.S., Ch. 225 (H.B. 268), Sec. 5, eff. September 1, 2011.