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A`rTOF 2NLYS AT LAW U <br />Howard Perdue <br />(1933 -2005) <br />Larry Brandon <br />James O. Collins <br />Terry Ann White <br />R. Bruce Medley <br />Robert Mott <br />Kevin Brennen <br />Harold Lerew <br />Jeanmarie Baer <br />David A. Ellison <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 />Carl O. Sandin <br />Jason Bailey <br />Owen M. Sonik <br />David Hudson <br />R. Gregory East <br />Elizabeth Banda Calvo <br />Yolanda M. Humphrey <br />John T. Banks <br />Sandra Griffin <br />Sergio E. Garcia <br />E. Stephen Lee <br />Clients of the Firm <br />1235 North Loop West <br />Suite 600 <br />Houston, Texas 77009 <br />Telephone: 713 -862 -1860 <br />Facsimile: 713- 896 -0030 <br />pbfcm.com <br />September 28, 2011 <br />RE: New Exemption of "Goods -in- Transit" —Local Option to Tax <br />Dear Client: <br />D'Layne Peeples Carter <br />Hiram A. Gutierrez <br />Michael J. Siwierka <br />Thelma Banduch <br />Christopher S. Jackson <br />Eboney Cobb <br />Charles E. Brady <br />Adam J. Walker <br />Alesha L. Williams <br />Leslie M. Schkade <br />Carol Barton <br />D'Arwyn Daniels <br />Galen Gotten, Jr. <br />Pamela Gleason <br />E. Derick Mendoza <br />W. Tracy Crites. Jr. <br />Michael W. Balcezak <br />Veronica Leal Vasquez <br />Guy A. "Tony" Fidelie, Jr. <br />Jonathan Garza <br />Otilia R. Gonzales <br />Elizabeth A. Wiehle <br />George Dowlen* <br />Terry G. Wiseman* <br />C. David Fielder * <br />Gregg M. McLaughlin* <br />*Retired <br />In the 2007 session, the Texas Legislature passed Tax Code section 11.253 or the "Goods -in- <br />Transit" exemption as it is more commonly known. This legislation implemented a constitutional <br />amendment that was passed several years before. This legislation was very similar to the "Freeport <br />exemption" passed many years ago, but it had a potentially larger impact as time passed. At that time, we <br />wrote you and advised you of your option to tax "goods -in- transit" and most of you did. <br />During the 2011 special session, the legislature acted to significantly limit the applicability of <br />section 11.253. This exemption now applies only to goods that are stored in a public warehouse owned by <br />someone other than the owner of the goods. The law no longer exempts goods that are in a location for <br />assembly, manufacturing, fabrication or processing, as was the case under the law passed in 2007. The <br />legislature revised and narrowed the law to address the author's issue: competition between Texas and <br />New Mexico warehouse facilities. New Mexico does not tax such goods at all, so New Mexico <br />warehouse owners had a competitive advantage. <br />This update to the law requires that you act within a narrow window of time if you want to <br />continue to tax these goods for 2012. The update provides that you must take action after October 1, <br />2011 but before December 31, 2011, if you want to continue to tax such goods in 2012. You may later <br />elect to tax such goods for subsequent years if you fail to act this year. <br />AMARILLO ARLINGTON AUSTIN HOUSTON LUBBOCK <br />MCALLEN MIDLAND SAN ANTONIO TYLER WICHITA FALLS <br />