85R7382 ADM-F     By: Murphy H.B. No. 4052       A BILL TO BE ENTITLED   AN ACT   relating to the exemption of certain services performed by certain   employees from the sales and use tax.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 151.057, Tax Code, is transferred to   Subchapter H, Chapter 151, Tax Code, redesignated as Section   151.3503, Tax Code, and amended to read as follows:          Sec. 151.3503 [151.057].  SERVICES BY EMPLOYEES. (a) The   following [services] are exempted from the taxes imposed by [not   taxable under] this chapter:                (1)  a service performed by an employee for the   employee's [his] employer in the regular course of business, within   the scope of the employee's duties, and for which the employee is   paid [his] regular wages or salary;                (2)  a service performed by an employee of a temporary   employment service [as defined by Section 93.001, Labor Code,] for   an employer to supplement the employer's existing work force on a   temporary basis, if:                      (A)  [when] the service is normally performed by   the employer's own employees;                      (B)  [,] the employer provides all supplies and   equipment necessary to perform the service;                      (C)  the employer does not rent, lease, purchase,   or otherwise acquire for use the supplies and equipment described   by Paragraph (B) from the temporary employment service or an entity   that is a member of an affiliated group of which the temporary   employment service is also a member;                      (D)  the temporary employment service is not a   member of the employer's affiliated group; and                       (E)  [, and] the employee of the temporary   employment service [help] is under the [direct or general]   supervision of the employer to whom the employee of the temporary   employment service [help] is furnished; or                (3)  a service performed by covered employees of a   professional employer organization, either licensed under Chapter   91, Labor Code, or exempt from the licensing requirements of that   chapter, for a client under a written contract that provides for   shared employment responsibilities between the professional   employer organization and the client for the covered employees,   most of whom must have been previously employed by the client.          (b)  The comptroller shall prescribe by rule the minimum   percentage of covered employees that must have been previously   employed by the client, the minimum time period the covered   employees must have been employed by the client prior to the   commencement of its contract, and such other criteria as the   comptroller may deem necessary to properly implement Subsection   (a)(3) [this section].          (c)  For purposes of this section, an employee of a temporary   employment service is under the supervision of an employer if the   employer has the sole right to direct and control the employee as   necessary to conduct the employer's business or to comply with any   licensing, statutory, or regulatory requirement applicable to the   employer.          (d)  In this section:                (1)  "Affiliated group" has the meaning assigned by   Section 171.0001.                (2)  "Temporary employment service" has the meaning   assigned by Section 93.001, Labor Code.          SECTION 2.  The changes in law made by this Act apply only to   a service commenced on or after the effective date of this Act. A   service commenced before that date is governed by the law in effect   on the date the service was commenced, and the former law is   continued in effect for that purpose.          SECTION 3.  This Act takes effect September 1, 2017.