Committee advances bill to add industrial uniform and linen rental to retail trade definition

The Senate Committee on Finance voted to report favorably Senate Bill 2774, a measure to amend the Texas Tax Code definition of retail trade to include industrial uniform and linen rental activities.

Sponsor testimony described the textile rental industry's scale in Texas: Senator Adam Hinojosa told the committee that the Textile Rental Services Association operates more than 63 locations in Texas, employs roughly 8,300 Texans, generates more than $1.3 billion in annual sales and has an annual payroll of about $361 million. "Because these companies typically rent rather than sell their merchandise, they do not fall into the narrow set of SIC codes used to define retail trade for purposes of determining whether a company should pay franchise tax at the retail tax rate," Hinojosa said.

Roger Harris, who identified himself as treasurer of the TRSA and president of Metrolinen, testified in support and described the industry's mix of multi-plant and single-plant businesses operating in the state. He told the committee the industry is capital-intensive and that allowing firms to file at the lower retail rate "would level an uneven playing field and free up much-needed capital allowing us to expand."

The bill would explicitly add industrial uniform and linen rental activities to the list of rental activities already treated as retail for franchise tax purposes (the record notes formal-wear and equipment rentals have previously been included). Committee members asked no recorded questions of the witnesses and there was no recorded opposition during public testimony.

The committee voted to report the bill favorably to the full Senate. Tally: 9 ayes, 0 nays. The committee record shows the committee substitute was adopted and the bill was advanced to the Senate floor.