|(a) Definitions. The following words and terms, when
used in this section, shall have the following meanings, unless the
context clearly indicates otherwise.
(1) Audio recording--The fixation of signals representing
a series of musical, spoken, or other sounds, but not including motion
pictures, by any method now known or later developed.
(2) Broadcast--For the purposes of this section only,
the dissemination of audio signals, video signals, or a combination
of both audio and video signals in the form of radio or television
programming to the public over the segment of the radio spectrum used
for broadcasting, and the exhibition of video programming with or
without the use of wires to subscribing or paying customers.
(3) C.F.R.--Code of Federal Regulations.
(4) C.F.R.-compliant digital audio broadcast equipment--Tangible
personal property that is sold to the permittee or licensee of an
AM or FM station that commences interim hybrid In-band On-Channel
(IBOC) digital audio broadcast (DAB) pursuant to 47 C.F.R. §73.404(a)
(Interim Hybrid IBOC DAB Operation), if the tangible personal property
is necessary for the licensee or permittee to provide the broadcast
services described by 47 C.F.R. §73.403 (Digital Audio Broadcasting
Service Requirements) or 47 C.F.R. §73.404.
(5) C.F.R.-compliant digital television transmission
equipment--Tangible personal property that is sold to a digital television
broadcast station permittee or licensee to which 47 C.F.R. §73.624(b)
applies, if the tangible personal property is necessary for the permittee
or licensee to comply with 47 C.F.R. §73.682(d) (Digital Broadcast
Television Transmission Standard).
(6) Distribute--For purposes of this section only,
to supply copies of a master recording to persons who will sell, license,
further distribute, broadcast, or exhibit copies of the master recording.
For example, copies of a motion picture are distributed to movie theaters
which exhibit the motion pictures to the public for consideration.
(A) To play or perform a master recording or live program
at a place open to the public or at any place where a substantial
number of persons, outside of a normal circle of a family and its
social acquaintances, is gathered; or
(B) to transmit or otherwise communicate a performance
of the master recording or live program to the public by any means,
whether the members of the public capable of receiving the performance
receive it in the same place or in separate places and at the same
or different times.
(8) License--To authorize or otherwise grant legal
permission to use a copy of a master recording in a limited manner,
for a limited purpose, or both. For example, the owner of a master
audio recording may license a copy of the master audio recording for
use as part of an advertising campaign in a specific geographic area
for a specified period of time.
(9) Live program--Radio or television content that
is not pre-recorded and that is broadcast by a producer of cable programs
or a radio or television station licensed by the Federal Communications
(10) Master recording--The principal media on which
images, sound, or a combination of images and sound are first fixed,
and from which copies are intended to be reproduced for the purpose
of obtaining consideration from the ultimate sale, license, distribution,
broadcast, or exhibition of the copies. A master recording may be
an audio recording, motion picture recording, video recording, or
a combination of these.
(A) Master recordings include feature films, television
programs, television commercials, corporate films, infomercials, recordings
of live performances, musical albums, and other projects that are
intended for commercial distribution, even if commercial distribution
is very limited, such as the distribution of training or industrial
(B) Master recordings do not include training videos
for in-house use, student films, wedding videos, recordings exhibited
on social media, and other recordings not intended to be copied for
commercial distribution or commercial exhibition.
(C) A master recording may contain interactive software
that allows a viewer to locate, see, or hear a segment of the master
recording without having to see or hear the master recording in full.
(D) A master recording does not include video games
even if the games contain recorded audio or visual sequences.
(11) Media production facility--A structure, building,
or room used for the specific purpose of creating a moving image project.
The term includes but is not limited to:
(A) a soundstage and scoring stage;
(B) a production office;
(C) an editing facility, an animation production facility,
and a video game production facility;
(D) a storage and construction space; and
(E) a sound recording studio and motion capture studio.
(12) Motion picture recording--A series of related
images stored in any method now known or later developed which, when
shown in succession, together with any accompanying sounds, impart
an impression of motion.
(13) Moving image project--A visual and sound production,
including a film, television program, national or multistate commercial,
or digital interactive media production. The term does not include
a production that is obscene, as defined by Penal Code, §43.21
(14) Producer--A person who owns the original rights
to a master recording.
(15) Qualified media production location--A location
in a media production zone that has been designated by the Texas Film
Commission as a qualified media production location in accordance
with Government Code, Chapter 485A (Media Production Development Zones).
(16) Qualified person--A person certified by the Texas
Film Commission as a qualified person under Government Code, §485A.201
(17) Texas Film Commission--The division of the Office
of the Governor of Texas, by whatever name called, that is assigned
to administer and monitor the implementation of the Media Production
Development Zone Act as provided in Government Code, Chapter 485A.
(18) Video game--An electronic game in which a player
controls images on a video screen, television, or computer monitor.
(19) Video recording--A series of related images intended
to be shown by the use of machines or devices such as projectors,
viewers, or electronic equipment, together with any accompanying sounds,
stored in any method now known or later developed.
(b) Master recordings.
(1) The sale of a master recording by the producer
of the master recording is exempt from sales and use tax under this
(2) The sale of a copy of a master recording is taxable
under Tax Code, Chapter 151 (Limited Sales, Excise, and Use Tax) as
the sale of tangible personal property.
(3) A license of all or part of the rights to a master
recording is not subject to tax under Tax Code, Chapter 151.
(c) Exempt items used in production.
(1) Except as provided in subsections (d) and (e) of
this section, sales and use tax is not due on the purchase or use
of the following items:
(A) tangible personal property that will become an
ingredient or component part of a master recording or a live program;
(B) tangible personal property or taxable services
that are necessary or essential to, and used or consumed in or during,
the production of a master recording or live program.
(i) Tangible personal property that is leased or rented
is eligible for exemption described in this subparagraph regardless
of the length of the lease or rental.
(ii) Taxable items used in pre-production activities
do not qualify for the exemption under this section because they are
not used or consumed in or during the production of the master recording
or live program. Examples of equipment used in pre-production include
equipment used in gathering news prior to the beginning of a television
production and computers and software used in authoring or editing
(2) The exemption in this subsection includes, but
is not limited to:
(A) cameras, film, and film developing chemicals that
are necessary and essential to and used or consumed in the production
of a master recording or a live program;
(B) lights, props, sets, teleprompters, microphones,
digital equipment, special effects equipment and supplies, and other
equipment that is necessary and essential to and used or consumed
directly in the production of a master recording or a live program;
(C) audio or video routing switchers located in a production
or recording studio that are necessary and essential to and used or
consumed directly in the production of a master recording or a live
(d) Nonexempt items used in production.
(1) The following items do not qualify for exemption
under this section even when used in the production of a master recording
or a live program:
(A) office equipment or supplies;
(B) maintenance or janitorial equipment or supplies;
(C) machinery, equipment, or supplies used in sales
or transportation activities;
(D) machinery, equipment, or supplies used in distribution
activities, unless otherwise exempted by this section;
(E) taxable items that are used incidentally in the
production of a master recording or a live program;
(F) telecommunications equipment and services;
(G) transmission equipment, other than qualifying C.F.R.-compliant
digital television transmission equipment and qualifying C.F.R.-compliant
digital audio broadcast equipment;
(H) security services;
(I) motor vehicle parking services; and
(J) food ready for immediate consumption.
(2) Examples of nonexempt items used in production
include, but are not limited to: tents for catering or staging areas;
office furniture; crew jackets; flowers for dressing rooms; catering
or other food ready for immediate consumption; bodyguard services;
script typing; landscape maintenance; director's chairs; gas cans;
ladders; shipping cases; battery chargers; mobile offices; pagers,
cellular phones, and other communication equipment (except those used
exclusively on the set); telecommunications services such as mobile
phone service; waste removal (including waste that will be recycled);
wardrobe racks; and alcoholic and non-alcoholic beverages.
(3) Taxable items are not exempt under this section
when used in the production of a master recording for broadcast, or
in the production of a live program for broadcast, if the master recording
or live program is not intended to be broadcast to either the general
public or to cable television service subscribers or paying customers.
(e) Transportation equipment. Motor vehicles, including
trailers and semitrailers, are subject to motor vehicle sales tax
and are exempt from sales and use tax imposed by Tax Code, Chapter
151 (Limited Sales, Excise, and Use Tax). For more information on
the taxes due on motor vehicles, see Subchapter F, of this chapter
(Motor Vehicle Sales Tax). Other types of machinery, equipment, or
supplies used in transportation activities, such as helicopters, do
not qualify for exemption from sales and use tax under this section.
(f) C.F.R.-compliant digital television transmission.
(1) The purchase of C.F.R.-compliant digital television
transmission equipment by a digital television broadcast station permittee
or licensee is exempt from sales and use tax. The exemption applies
whether the equipment is used for television transmission in high
or standard definition.
(2) Equipment that may be used for both analog and
digital television transmission is exempt if it is necessary to comply
with 47 C.F.R. §73.682(d) (TV transmission standards). Transmission
equipment that is not necessary for digital television transmission,
or that can be used only for analog transmission, is not exempt under
(3) An Advanced Television Systems Committee (ATSC)
encoder is exempt.
(4) Entities that are not subject to the relevant provisions
of 47 C.F.R. Part 73 (Radio Broadcast Services), such as cable and
satellite television providers, may not make exempt purchases under
(g) C.F.R.-compliant digital audio broadcast equipment.
(1) The purchase of C.F.R.-compliant digital audio
broadcast equipment by a radio broadcast station permittee or licensee
is exempt from sales and use tax.
(2) Equipment used to transmit both over-the-air digital
audio programming at no direct charge to listeners and over-the-air
digital audio programming for a fee to listeners is exempt.
(3) Equipment used solely to transmit over-the-air
digital audio programming for a fee to listeners is not exempt.