By: Parker S.B. No. 554
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the determination and apportionment of taxable capital
1-2 and taxable earned surplus for franchise tax purposes.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Subsection (a), Section 171.101, Tax Code, is
1-5 amended to read as follows:
1-6 (a) Except as provided by Subsections (b) and (c), the net
1-7 taxable capital of a corporation is computed by:
1-8 (1) adding the corporation's stated capital, as
1-9 defined by Article 1.02, Texas Business Corporation Act, and the
1-10 corporation's surplus, to determine the corporation's taxable
1-11 capital;
1-12 (2) apportioning the corporation's taxable capital to
1-13 this state as provided by Section 171.106(a) or (c), as applicable,
1-14 or, if a banking corporation, as provided in Section 171.1065, to
1-15 determine the corporation's apportioned taxable capital; and
1-16 (3) subtracting from the amount computed under
1-17 Subdivision (2) any other allowable deductions to determine the
1-18 corporation's net taxable capital.
1-19 SECTION 2. Section 171.103, Tax Code, is amended to read as
1-20 follows:
1-21 Sec. 171.103. Determination of Gross Receipts From Business
1-22 Done in this State for Taxable Capital. Except as specifically
1-23 provided by Section 171.1031 for a savings and loan association or
1-24 Section 171.1033 for a banking corporation, in <In> apportioning
2-1 taxable capital, the gross receipts of a corporation from its
2-2 business done in this state is the sum of the corporation's
2-3 receipts from:
2-4 (1) each sale of tangible personal property if the
2-5 property is delivered or shipped to a buyer in this state
2-6 regardless of the FOB point or another condition of the sale, and
2-7 each sale of tangible personal property shipped from this state to
2-8 a purchaser in another state in which the seller is not subject to
2-9 taxation;
2-10 (2) each service performed in this state;
2-11 (3) each rental of property situated in this state;
2-12 (4) each royalty for the use of a patent or copyright
2-13 in this state; and
2-14 (5) other business done in this state.
2-15 SECTION 3. Section 171.1031, Tax Code, is amended to read as
2-16 follows:
2-17 Sec. 171.1031. APPORTIONMENT OF TAXABLE CAPITAL AND TAXABLE
2-18 EARNED SURPLUS OF A <BANKING CORPORATION AND> SAVINGS AND LOAN
2-19 ASSOCIATION. (a) Interest and dividends received by <a banking
2-20 corporation or> a savings and loan association are gross receipts
2-21 of the <banking corporation or> savings and loan association from
2-22 its business done in this state if the <banking corporation or>
2-23 savings and loan association has its commercial domicile in this
2-24 state.
2-25 (b) This section does not apply to any corporation other
2-26 than a <banking corporation and a> savings and loan association.
2-27 <(c) To the extent that this subsection does not conflict
3-1 with Article 8, Chapter 9, The Texas Banking Code of 1943 (Article
3-2 342-908, Vernon's Texas Civil Statutes), the Banking Department of
3-3 Texas is required to revoke the chapter of any banking corporation
3-4 certified by the Comptroller as being delinquent in the payment of
3-5 its franchise tax.>
3-6 SECTION 4. Subsection (a), Section 171.1032, Tax Code, is
3-7 amended to read as follows:
3-8 (a) Except as specifically provided under Section 171.1031
3-9 for a savings and loan association or Section 171.1033 for a
3-10 banking corporation, in <In> apportioning taxable earned surplus,
3-11 the gross receipts of a corporation from its business done in this
3-12 state is the sum of the corporation's receipts from:
3-13 (1) each sale of tangible personal property if the
3-14 property is delivered or shipped to a buyer in this state
3-15 regardless of the FOB point or another condition of the sale, and
3-16 each sale of tangible personal property shipped from this state to
3-17 a purchaser in another state in which the seller is not subject to
3-18 taxation;
3-19 (2) each service performed in this state;
3-20 (3) each rental of property situated in this state;
3-21 (4) each royalty for the use of a patent or copyright
3-22 in this state; and
3-23 (5) other business done in this state.
3-24 SECTION 5. Subchapter C, Chapter 171, Tax Code, is amended
3-25 by adding Section 171.1033 to read as follows:
3-26 Sec. 171.1033. APPORTIONMENT OF TAXABLE CAPITAL AND TAXABLE
3-27 EARNED SURPLUS OF A BANKING CORPORATION. (a) A banking
4-1 corporation shall determine the gross receipts factor, property
4-2 factor, and payroll factor for purposes of apportioning taxable
4-3 capital and taxable earned surplus in accordance with this section.
4-4 (b) The gross receipts factor is a fraction, the numerator
4-5 of which is the gross receipts of the banking corporation from its
4-6 business done in this state during the period on which the tax is
4-7 based and the denominator of which is the gross receipts of the
4-8 banking corporation within and without this state during the period
4-9 on which the tax is based. Gross receipts of a banking corporation
4-10 not specifically described under the provisions of Subdivisions (1)
4-11 through (13) are apportioned as business done in this state under
4-12 the rules prescribed by Section 171.103 for taxable capital and
4-13 under the rules prescribed by Section 171.1032 for taxable earned
4-14 surplus. The numerator of the gross receipts factor includes all
4-15 interest and fees or penalties in the nature of interest and all
4-16 net gains (but not below zero), charges, fees, or other receipts of
4-17 the banking corporation from:
4-18 (1) the lease or rental of real property owned by the
4-19 taxpayer if the property is located in this state or the sublease
4-20 of real property if the property is located in this state;
4-21 (2) the lease or rental of tangible personal property
4-22 owned by the taxpayer if the property is located in this state when
4-23 it is first placed in service, other than receipts from the lease
4-24 or rental of movable tangible property, such as rolling stock,
4-25 water vessels, or mobile equipment, included in the numerator of
4-26 the property factor under Subsection (c);
4-27 (3) loans secured by real property if the real
5-1 property securing the loan is primarily located in this state at
5-2 the time the original loan agreement was made, provided that if a
5-3 loan is secured by real property not primarily located in any one
5-4 state at the time the original loan agreement is made, the gross
5-5 receipts from the loan are apportioned to this state if the
5-6 borrower is engaged in a trade or business in this state and
5-7 maintains its commercial domicile in this state or if the borrower
5-8 is not engaged in trade or business in this state but has its
5-9 billing address in this state;
5-10 (4) loans not secured by real property if the borrower
5-11 is engaged in a trade or business in this state and maintains its
5-12 commercial domicile in this state or if the borrower is not engaged
5-13 in a trade or business in this state but has its billing address in
5-14 this state;
5-15 (5) syndication loans or participation loans, provided
5-16 that the taxpayer's portion of the interest, fees, or penalties in
5-17 the nature of interest from syndication loans or participation
5-18 loans is included in the numerator of the gross receipts factor in
5-19 the same manner as gross receipts from loans are included in the
5-20 numerator of the gross receipts factor under Subdivisions (3) and
5-21 (4);
5-22 (6) syndicated lease transactions involving the lease
5-23 of real property or tangible personal property, provided that the
5-24 taxpayer's portion of the interest, fees, or penalties in the
5-25 nature of interest from syndicated lease transactions is included
5-26 in the numerator of the gross receipts factor in the same manner as
5-27 gross receipts from leases of real property or tangible personal
6-1 property are included in the numerator of the receipts factor under
6-2 Subdivisions (1) and (2);
6-3 (7) net gains, including income recorded under the
6-4 coupon stripping rule of Section 1286, Internal Revenue Code, from
6-5 the sale of all loans, including syndication loans, provided that:
6-6 (A) if the gains are from the sale of loans
6-7 secured by real property, the amount of the net gains included as
6-8 business done in this state is determined by multiplying the net
6-9 gains by a fraction, the numerator of which is the amount included
6-10 as business done in this state under Subdivision (3) and the
6-11 denominator of which is the taxpayer's total amount of interest and
6-12 fees or penalties in the nature of interest from loans secured by
6-13 real property; and
6-14 (B) if the gains are from the sale of loans not
6-15 secured by real property, the amount of the net gains included as
6-16 business done in this state is determined by multiplying the net
6-17 gains by a fraction, the numerator of which is the amount included
6-18 as business done in this state under Subdivision (4) and the
6-19 denominator of which is the taxpayer's total amount of interest and
6-20 fees or penalties in the nature of interest from loans not secured
6-21 by real property;
6-22 (8) credit card receivables and credit card fees
6-23 charged to cardholders, such as annual fees, if the billing address
6-24 of the cardholder is in this state;
6-25 (9) credit card issuer's reimbursement fees and any
6-26 net gains from the sale of credit card receivables, provided that
6-27 the amount of credit card issuer's reimbursement fees or net gains
7-1 from the sale of credit card receivables included as business done
7-2 in this state is determined by multiplying such credit card
7-3 reimbursement fees or net gains from the sale of credit card
7-4 receivables, respectively, by a fraction, the numerator of which is
7-5 the amount included as business done in this state from credit card
7-6 receivables and credit card fees under Subdivision (8) and the
7-7 denominator of which is the taxpayer's total amount of gross
7-8 receipts from credit card receivables and credit card fees charged
7-9 to cardholders;
7-10 (10) merchant discounts, if the commercial domicile of
7-11 the merchant is in this state;
7-12 (11) loan servicing fees from loans secured by real
7-13 property, provided that:
7-14 (A) if the loan servicing fees are derived from
7-15 loans secured by real property, the amount of the loan servicing
7-16 fees included as business done in this state is determined by
7-17 multiplying the loan servicing fees by a fraction, the numerator of
7-18 which is the amount included as business done in this state under
7-19 Subdivision (3) and the denominator of which is the taxpayer's
7-20 total amount of gross receipts from loans secured by real property;
7-21 and
7-22 (B) if the loan servicing fees are derived from
7-23 loans not secured by real property, the amount of the loan
7-24 servicing fees included as business done in this state is
7-25 determined by multiplying such loan servicing fees by a fraction,
7-26 the numerator of which is the amount included as business done in
7-27 this state under Subdivision (4) and the denominator of which is
8-1 the taxpayer's total amount of gross receipts from loans not
8-2 secured by real property;
8-3 (12) all other fees or charges for services not
8-4 otherwise apportioned under this subsection, if the service is
8-5 performed in this state; and
8-6 (13) investments in securities and from trading
8-7 activities, including investment securities, assets held in trading
8-8 accounts, federal funds, securities purchased or sold under
8-9 agreements to resell or repurchase, options, futures contracts,
8-10 forward contracts, notional principal contracts such as swaps, and
8-11 foreign currency transactions, provided that:
8-12 (A) if the income is from investments in
8-13 securities in the investment portfolio, the amount of the income
8-14 included as business done in this state shall be determined by
8-15 multiplying all the income by a fraction, the numerator of which is
8-16 the average value of such investments that are booked at a regular
8-17 place of business of the taxpayer in this state and the denominator
8-18 of which is the average value of all such investments; and
8-19 (B) if the income is from investments in
8-20 securities not in the investment portfolio and from trading
8-21 activities, the amount of the income included as business done in
8-22 this state shall be determined by multiplying all the income by a
8-23 fraction, the numerator of which is the average value of such
8-24 investments and trading activities that are booked at a regular
8-25 place of business of the taxpayer in this state and the denominator
8-26 of which is the average value of all such investments.
8-27 (c) The property factor is a fraction that represents the
9-1 percentage of the taxpayer's real property, tangible personal
9-2 property, loans, and credit card receivables apportioned to this
9-3 state during the period on which the tax is based. The numerator
9-4 of the fraction is the average value of such property located in
9-5 this state, and the denominator of the fraction is the average
9-6 value of all such property located both within and without this
9-7 state. The numerator of the property factor includes:
9-8 (1) real property owned or rented to the taxpayer, if
9-9 the property is physically located or situated in this state;
9-10 (2) movable tangible property, such as rolling stock,
9-11 water vessels, or mobile equipment, to the extent that the property
9-12 is used in this state;
9-13 (3) loans and all credit card receivables that are:
9-14 (A) booked at a regular place of business of the
9-15 taxpayer in this state; or
9-16 (B) if the taxpayer is organized under the laws
9-17 of the United States or of any state, booked at a place of business
9-18 in this state that is not a regular place of business of the
9-19 taxpayer if the taxpayer's commercial domicile is in this state; or
9-20 (C) if the taxpayer is organized under the laws
9-21 of a foreign country, booked at a place of business in this state
9-22 that is not a regular place of business of the taxpayer if the
9-23 taxpayer has declared this state to be its home state under the
9-24 International Banking Act of 1978 (12 U.S.C. Section 3101 et seq.),
9-25 provided that if that declaration has not been made or is not
9-26 required, the loan is presumed to be located at the place in the
9-27 United States where the taxpayer has the most employees; and
10-1 (4) any other loan that is demonstrated to have a
10-2 preponderance of substantive contact with this state under rules
10-3 established by the comptroller taking into consideration such
10-4 actions as solicitation, investigation, negotiation, approval, and
10-5 administration of the loan in this state.
10-6 (d) The average value of property owned by the taxpayer is
10-7 determined on an annual basis by adding the value of the property
10-8 on the first day of the taxable year and the value on the last day
10-9 of the taxable year and dividing the sum by two. The average of
10-10 real property and tangible personal property that the taxpayer has
10-11 leased from another and that is not treated as owned by the
10-12 taxpayer for federal income tax purposes is determined on an annual
10-13 basis by multiplying the gross rents payable during the taxable
10-14 year by eight. The value of the property is determined as follows:
10-15 (1) real property and tangible personal property owned
10-16 by the taxpayer is valued at the cost or other basis of the
10-17 property for federal income tax purposes without regard to
10-18 depletion, depreciation, or amortization;
10-19 (2) loans are valued at their outstanding principal
10-20 balances without regard to any reserve for bad debts, provided that
10-21 if a loan is charged off in whole or in part for federal income tax
10-22 purposes, the portion of the loan charged off is not considered
10-23 part of the outstanding balance and any specifically allocated
10-24 reserve established under regulatory or financial accounting
10-25 guidelines that is treated as charged off for federal income tax
10-26 purposes shall be treated as charged off for purposes of this
10-27 subsection;
11-1 (3) credit card receivables are valued at their
11-2 outstanding principal balance without regard to any reserve for bad
11-3 debts, provided that if a credit card receivable is charged off in
11-4 whole or in part for federal income tax purposes, the portion of
11-5 the receivable charged off is not considered part of the
11-6 outstanding balance.
11-7 (e) The payroll factor is a fraction, the numerator of which
11-8 is the total amount paid in this state by the taxpayer for
11-9 compensation during the period on which the tax is based and the
11-10 denominator of which is the total amount paid by the taxpayer as
11-11 compensation within and without this state during the period on
11-12 which the tax is based. The amount paid to an employee for
11-13 services or activities connected to the production of nonbusiness
11-14 income and the amount paid to an independent contractor or a person
11-15 not deemed to be an employee of the taxpayer under Section 3401,
11-16 Internal Revenue Code, is excluded from both the numerator and
11-17 denominator of the factor. In this subsection:
11-18 (1) "Compensation" includes all wages, all salaries,
11-19 all commissions, and any other forms of remuneration paid to an
11-20 employee for personal services that are considered income under the
11-21 Internal Revenue Code.
11-22 (2) "Employee" means an officer of a corporation or an
11-23 individual who, under the usual common-law rules applicable in
11-24 determining the employer-employee relationship, has the status of
11-25 an employee. For an employee not subject to the Internal Revenue
11-26 Code, for example, a person employed in a foreign country, the
11-27 determination of whether a payment to the employee constitutes
12-1 income paid to the employee is made as though the employee were
12-2 subject to the Internal Revenue Code. Compensation paid in this
12-3 state shall equal the total compensation taken from the federal
12-4 payroll tax reports for the period on which the tax is based that
12-5 is attributable to this state. Compensation is paid in this state
12-6 if any one of the following tests, applied consecutively, is met:
12-7 (A) the employee's service is performed entirely
12-8 within this state;
12-9 (B) the employee's service is performed both
12-10 within and without this state, but the service performed without
12-11 this state is incidental to the employee's service within this
12-12 state because it is temporary or transitory in nature or is
12-13 rendered in connection with an isolated transaction;
12-14 (C) if the employee's services are performed
12-15 both within and without this state, the employee's compensation is
12-16 attributed to this state:
12-17 (i) if the employee's base of operations
12-18 is within this state;
12-19 (ii) if there is no base of operations in
12-20 any state in which some part of the service is performed, but the
12-21 place from which the service is directed or controlled is in this
12-22 state; or
12-23 (iii) if the base of operations or the
12-24 place from which the service is directed or controlled is not in
12-25 any state in which some part of the service is performed, but the
12-26 employee's residence is in this state.
12-27 (3) "Place from which the service is directed or
13-1 controlled" means the place from which the power to direct or
13-2 control is exercised by the taxpayer.
13-3 (4) "Base of operations" means the place of a more or
13-4 less permanent nature from which the employee starts the employee's
13-5 work and to which the employee customarily returns to:
13-6 (A) receive instructions from the taxpayer or
13-7 communications from the employee's customers or other persons; or
13-8 (B) perform any other functions necessary to the
13-9 exercise of the employee's trade or profession at some other point
13-10 or points.
13-11 (f) In this section:
13-12 (1) "Billing address" means the location indicated in
13-13 the books and records of the taxpayer as the address where any
13-14 notice, statement, or bill relating to a customer's account is
13-15 mailed.
13-16 (2) "Commercial domicile" means the headquarters of
13-17 the trade or business, that is, the place from which the trade or
13-18 business is principally managed and directed.
13-19 (3) "Credit card" means a credit, travel, or
13-20 entertainment card.
13-21 (4) "Credit card issuer's reimbursement fee" means the
13-22 receipts a taxpayer receives from a merchant's bank because one of
13-23 the persons to whom the taxpayer has issued a credit card has
13-24 charged merchandise or services to the credit card.
13-25 (5) "Gross rents" means the actual sum of money or
13-26 other consideration payable, directly or indirectly, by or on
13-27 behalf of the taxpayer for the use or possession of the property.
14-1 The term:
14-2 (A) includes any amount payable for the use or
14-3 possession of real property or tangible property whether designated
14-4 as a fixed sum of money or as a percentage of receipts, as profits,
14-5 or otherwise;
14-6 (B) includes any amount payable as additional
14-7 rent or in lieu of rent, such as interest, taxes, insurance,
14-8 repairs, or any other amount required to be paid by the terms of a
14-9 lease or other arrangement;
14-10 (C) includes a proportionate part of the cost of
14-11 any improvement to real property made by or on behalf of the
14-12 taxpayer that reverts to the owner or lessor on termination of a
14-13 lease or other arrangement determined by computing the amount of
14-14 amortization or depreciation allowed in computing the taxable
14-15 income base for the taxable year; except that if a building is
14-16 erected on leased land by or on behalf of the taxpayer, the value
14-17 of the land is determined by multiplying the gross rent by eight
14-18 and the value of the building is determined in the same manner as
14-19 if owned by the taxpayer; and
14-20 (D) does not include:
14-21 (i) amounts payable as separate charges
14-22 for water and electric service furnished by the lessor;
14-23 (ii) amounts payable as service charges,
14-24 such as janitorial services provided by the lessor;
14-25 (iii) amounts payable for storage,
14-26 provided the amounts are payable for space not designated and not
14-27 under the control of the taxpayer; and
15-1 (iv) that portion of any rental payment
15-2 that is applicable to the space subleased from the taxpayer and not
15-3 used by it.
15-4 (6) "Loan" means any extension of credit resulting
15-5 from direct negotiations between the taxpayer and its customer or
15-6 the purchase, in whole or in part, of the extension of credit from
15-7 another, or both. The term includes leases treated as loans for
15-8 federal income tax purposes but shall not include:
15-9 (A) loans representing property acquired in lieu
15-10 of or pursuant to a foreclosure under Section 595, Internal Revenue
15-11 Code;
15-12 (B) futures or forward contracts, options, and
15-13 notional principal contracts, such as swaps;
15-14 (C) credit card receivables, including purchased
15-15 credit card relationships;
15-16 (D) non-interest-bearing balances due from other
15-17 depository institutions;
15-18 (E) cash items in the process of collection;
15-19 (F) federal funds sold;
15-20 (G) securities purchased under agreements to
15-21 resell;
15-22 (H) assets held in a trading account; and
15-23 (I) securities held for investment.
15-24 (7) "Merchant discount" means the fee or negotiated
15-25 discount charged to a merchant by the taxpayer for the privilege of
15-26 participating in a program in which a credit card is accepted in
15-27 payment for merchandise or services sold to the cardholder. The
16-1 fee is computed net of any cardholder charge-backs but is not
16-2 reduced by any interchange transaction fee or by a credit card
16-3 issuer's reimbursement fee paid to another for charges made by its
16-4 cardholders.
16-5 (8) "Real property owned" and "tangible personal
16-6 property owned" mean real and tangible personal property,
16-7 respectively:
16-8 (A) on which the taxpayer may claim depreciation
16-9 for federal income tax purposes; or
16-10 (B) to which the taxpayer holds legal title and
16-11 on which no other person may claim depreciation for federal income
16-12 tax purposes or could claim depreciation if subject to federal
16-13 income tax. Real and tangible personal property includes land,
16-14 stocks in goods, and real and tangible personal property rented to
16-15 the taxpayer. Real and tangible personal property does not include
16-16 coin, currency, or property acquired in lieu of or pursuant to a
16-17 foreclosure.
16-18 (9) "Regular place of business" means an office at
16-19 which the taxpayer carries on the taxpayer's business in a regular
16-20 and systematic manner and that is continuously maintained,
16-21 occupied, and used by employees of the taxpayer.
16-22 (g) This section does not apply to any corporation other
16-23 than a banking corporation.
16-24 SECTION 6. Chapter 171, Tax Code, is amended by adding
16-25 Section 171.1065 to read as follows:
16-26 Sec. 171.1065. APPORTIONMENT OF TAXABLE CAPITAL AND TAXABLE
16-27 EARNED SURPLUS OF BANKING CORPORATION TO THIS STATE. (a) Except
17-1 as provided by Section 171.106(c), the taxable capital and the
17-2 taxable earned surplus of a banking corporation is apportioned to
17-3 this state by multiplying the taxable capital and taxable earned
17-4 surplus, respectively, of the banking corporation by the
17-5 apportionment percentage. The apportionment percentage is
17-6 determined by adding the following three factors and dividing the
17-7 sum by three:
17-8 (1) the gross receipts factor computed as prescribed
17-9 by Section 171.1033(b);
17-10 (2) the property factor computed as prescribed by
17-11 Sections 171.1033(c) and (d); and
17-12 (3) the payroll factor computed as prescribed by
17-13 Section 171.1033(e).
17-14 (b) If one of the factors is missing, the two remaining
17-15 factors are added and the sum is divided by two. If two of the
17-16 factors are missing, the remaining factor is the apportionment
17-17 percentage. A factor is missing if both its numerator and
17-18 denominator are zero, but it is not missing merely because its
17-19 numerator is zero.
17-20 (c) Each factor shall be computed on a cash or accrual basis
17-21 according to the method of accounting required or allowed to be
17-22 used by the taxpayer in determining taxable capital or earned
17-23 surplus for the period on which the tax is based.
17-24 (d) The receipts factor includes only receipts that are
17-25 included in the computation of the taxable income base for the
17-26 period on which the tax is based.
17-27 (e) The payroll factor includes only expenses that are
18-1 included in the computation of the taxable income base for the
18-2 period on which the tax is based.
18-3 (f) The property factor includes only property the income or
18-4 expenses of which are included or would have been included if not
18-5 fully depreciated or expensed or depreciated or expensed to a
18-6 nominal amount in the computation of the taxable income base for
18-7 the period on which the tax is based.
18-8 (g) If the apportionment percentage, computed on the basis
18-9 of all or any of the three factors of gross receipts, property, or
18-10 payroll, does not properly reflect the activity, business, or
18-11 income of the taxpayer in this state, the taxpayer may request an
18-12 adjustment or the comptroller may adjust the apportionment
18-13 percentage by:
18-14 (1) excluding one or more factors;
18-15 (2) including one or more other factors; or
18-16 (3) using any other method calculated to effect a fair
18-17 and proper apportionment to this state.
18-18 SECTION 7. Section 171.110, Tax Code, is amended by amending
18-19 Subsection (a) and adding Subsection (h) to read as follows:
18-20 (a) The net taxable earned surplus of a corporation is
18-21 computed by:
18-22 (1) determining the corporation's reportable federal
18-23 taxable income, subtracting from that amount any amount included in
18-24 reportable federal taxable income under Section 78 or Sections
18-25 951-964, Internal Revenue Code, and dividends received from a
18-26 subsidiary, associate, or affiliated corporation that does not
18-27 transact a substantial portion of its business or regularly
19-1 maintain a substantial portion of its assets in the United States,
19-2 and adding to that amount any compensation of officers or
19-3 directors, or if a bank, any compensation of directors and
19-4 executive officers, to the extent excluded in determining federal
19-5 taxable income to determine the corporation's taxable earned
19-6 surplus;
19-7 (2) apportioning the corporation's taxable earned
19-8 surplus to this state as provided by Section 171.106(b) or (c), as
19-9 applicable, or, if a banking corporation, as provided in Section
19-10 171.1065, to determine the corporation's apportioned taxable earned
19-11 surplus; and
19-12 (3) subtracting from that amount any allowable
19-13 deductions and any business loss that is carried forward to the tax
19-14 reporting period and deductible under Subsection (e).
19-15 (h) Dividends and interest received from federal obligations
19-16 are not included in earned surplus or gross receipts for earned
19-17 surplus purposes.
19-18 (1) For purposes of this subsection, the term "federal
19-19 obligations" means:
19-20 (A) stocks and other direct obligations of and
19-21 obligations unconditionally guaranteed by the United States
19-22 government and United States government agencies; and
19-23 (B) direct obligations of United States
19-24 government-sponsored agencies.
19-25 (2) For purposes of this subsection:
19-26 (A) "Obligation" means any bond, debenture,
19-27 security, mortgage-backed security, pass-through certificate, or
20-1 other evidence of indebtedness of the issuing entity. The term
20-2 does not include a deposit, a repurchase agreement, a loan, a
20-3 lease, a participation in a loan or pool of loans, a loan
20-4 collateralized by an obligation of an agency of the United States,
20-5 or a loan guaranteed by an agency of the United States government.
20-6 (B) "United States government" means any
20-7 department or ministry of the federal government including the 12
20-8 federal reserve banks. The term does not include state or local
20-9 governments or commercial enterprises owned in whole or part by the
20-10 United States government.
20-11 (C) "United States government agency" means an
20-12 instrumentality of the United States government whose obligations
20-13 are fully and explicitly guaranteed as to the timely payment of
20-14 principal and interest by the full faith and credit of the United
20-15 States government. These agencies include the Government National
20-16 Mortgage Association (GNMA), the Veterans' Administration (VA), the
20-17 Federal Housing Administration (FHA), the Farmers Home
20-18 Administration (FmHA), the Export-Import Bank (Exim Bank), the
20-19 Overseas Private Investment Corporation (OPIC), the Commodity
20-20 Credit Corporation (CCC), and the Small Business Administration
20-21 (SBA).
20-22 (D) "United States government-sponsored agency"
20-23 means agencies originally established or chartered by the United
20-24 States government to serve public purposes specified by the United
20-25 States Congress but whose obligations are not explicitly guaranteed
20-26 by the full faith and credit of the United States government.
20-27 These agencies include the Federal Home Loan Mortgage Corporation
21-1 (FHLMC), the Federal National Mortgage Association (FNMA), the
21-2 Federal Farm Credit System, the Federal Home Loan Bank System, and
21-3 the Student Loan Marketing Association (SLMA).
21-4 SECTION 8. Section 171.316, Tax Code, is amended to read as
21-5 follows:
21-6 Sec. 171.316. Banking Corporations. (a) Except as
21-7 prohibited by Article 8, Chapter 9, The Texas Banking Code of 1943
21-8 (Article 342-908, Vernon's Texas Civil Statutes), the Banking
21-9 Department of Texas shall revoke the charter of a banking
21-10 corporation that the comptroller certifies is delinquent in the
21-11 payment of the tax imposed under this chapter.
21-12 (b) Except as provided by Subsection (a), this <This>
21-13 subchapter does not apply to a banking corporation.
21-14 SECTION 9. This Act takes effect and applies to reports
21-15 originally due on or after January 1, 1994.
21-16 SECTION 10. The importance of this legislation and the
21-17 crowded condition of the calendars in both houses create an
21-18 emergency and an imperative public necessity that the
21-19 constitutional rule requiring bills to be read on three several
21-20 days in each house be suspended, and this rule is hereby suspended.