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<br />Howard Perdue <br />( 1933-2005) <br />Larry Brandon <br />C. David Fielder <br />James O. Collins <br />Terry Ann White <br />Gregg M. McLaughfin <br />R. Bruce Medley <br />Robert Mott <br />Kevin Brennen <br />Harold Lerew <br />Jeanmarie Baer <br />David A. Elison <br />Laura J. Monroe <br />Tab Beall <br />B. Lynn Stavinoha <br />Michael J. Darlow <br />Joseph T. Longoria <br />David S. Crawford <br />Donald B. Roseman <br />Terry G. Wiseman <br />Carl O. Sandin <br />Jason Bailey <br />Owen M. Sonik <br />David Hudson <br /> <br />PerdueBrandonFielderCollins&Mott LLP <br />ATTORNEYS AT LAW <br /> <br />July 2, 2007 <br /> <br />R. Gregory East <br />Elizabeth Banda <br />W. Tracy Crites Jr. <br />Karen Evertson <br />Yolanda M. Humphrey <br />John T. Banks <br />Sandra Griffin <br />Sergio E. Garcia <br />E. Stephen Lee <br />Eboney Cobb <br />D'Layne Peeples <br />Alesha L. Wiliams <br />Christopher S. Jackson <br />Hiram A. Gutierrez <br />Charles E. Brady <br />Leslie M. Short <br />Carol Barton <br />D'Arwyn Daniels <br />Thelma Banduch <br />George Dowlen' <br />'Retired <br /> <br />1235 North Loop West <br />Suite 600 <br />Houston, Texas 77\JJ9 <br />Telephone: 713-862-1860 <br />Facsimile: 713-896-0030 <br />pbfcm.com <br /> <br />Mchael J. Siwierka <br />Of Counsel <br /> <br />Clients of the Firm <br /> <br />RE: New Exemption of "Goods in Transit"-Local Option to Tax <br /> <br />Dear Client: <br /> <br />In the 2007 session, the Texas Legislature passed HB 621. This bill was the implementing <br />legislation for a constitutional amendment that was passed several years ago. The bill is very similar to <br />the Freeport exemption passed many years ago, but it has a potentially larger impact as time goes on. <br />This letter is to inform you of your options to tax the goods subject to the new exemption and to provide <br />you with the forms and procedure to tax these goods if you choose. Our [um takes no position on the <br />policy question of whether or not to continue to tax the property that is subject to this new exemption. <br />We simply believe that the governing body of each of our clients should have the tools to make an <br />informed decision on behalf of the taxpayers they represent. <br /> <br />This new law passed without much scrutiny because it was a bracket bill that only affected one <br />county in Texas until the closing days of the legislative session. Then an amendment made the exemption <br />applicable statewide. <br /> <br />What is Exempted? <br /> <br />This bill exempts goods, principally inventory, that are stored in a location that is not owned by <br />the owner of the goods and are transferred from that location to another location within 175 days. The <br />goods may be in the location for the purposes of assembling, storing, manufacturing, processing, or <br />fabricating purposes by the person who acquired or imported the property. Certain specific types of <br />goods are presently excluded from this exemption: oil, natural gas, petroleum products, aircraft, dealer's <br />motor vehicle inventory, dealer's vessel and outboard motor inventory, dealer's heavy equipment <br />inventory, or retail manufactured housing inventory. Petroleum products are defined to be only the <br />immediate derivatives of oil and natural gas, so some goods that you might think of as petroleum products <br />may actually be exempted from taxation by this new law. <br /> <br />AMARILLO ARLINGTON AUSTIN HOUSTON LUBBOCK MCALLEN <br /> <br />MIDLAND TYLER WICHITA FALLS <br />