Floor Packet Page No. 480
Amend CSHB 4 by striking all below the enacting clause and
substituting the following:
ARTICLE 1. SCHOOL PROPERTY TAX CUT
SECTION 1.01. This Act may be known as the Property Tax Cut
Act of 1997.
SECTION 1.02. Chapter 403, Government Code, is amended by
adding Subchapter N to read as follows:
SUBCHAPTER N. TEXAS SCHOOL TRUST FUND
Sec. 403.351. DEFINITION. In this subchapter, "fund" means
the Texas School Trust Fund created by Section 5-a, Article VII,
Texas Constitution.
Sec. 403.352. ADMINISTRATION OF FUND. The comptroller shall
administer the fund.
Sec. 403.353. INVESTMENT OF FUND. The comptroller shall
invest money credited to the fund that is not immediately needed
for payments under this subchapter in investments authorized by
Chapter 2256.
Sec. 403.354. REIMBURSEMENT FOR ADDITIONAL EXEMPTION. (a)
A school district is entitled to reimbursement from the fund for
lost ad valorem tax revenue resulting from the $20,000 residence
homestead exemption required by Section 1-b(g), Article VIII, Texas
Constitution.
(b) The comptroller shall compute each school district's
lost ad valorem tax revenue resulting from the exemption described
by Subsection (a). The comptroller shall adopt rules under which a
school district or appraisal district must report information
relating to property values and tax rates necessary to allow the
comptroller to make the computation.
Sec. 403.355. REIMBURSEMENT FOR PROPERTY TAX RATE RELIEF.
(a) A school district is entitled to reimbursement from the fund
for lost ad valorem tax revenue resulting from the $0.20 per $100
valuation reduction in the district's maintenance and operation tax
rate required by Section 26.048, Tax Code, as added by ___. B. No.
_____, Acts of the 75th Legislature, Regular Session, 1997.
(b) Except as provided by Subsection (c), the amount of
reimbursement under this section is computed by dividing the
district's taxable value of property for the tax year by 100 and
multiplying the resulting quotient by 20 cents.
(c) For purposes of Subsection (b), the reimbursement for a
district with a wealth per student equal to or greater than the
equalized wealth level is based on the taxable value of property
the commissioner of education considers that the district retains
as a result of actions taken under Chapter 41, Education Code. In
this subsection, "equalized wealth level" has the meaning assigned
by Section 41.001, Education Code.
(d) This section takes effect January 1, 1998, and applies
only to the 1998 and subsequent tax years. This subsection expires
January 2, 1998.
Sec. 403.356. PAYMENT OF REIMBURSEMENTS. (a) The
comptroller shall pay a reimbursement under Section 403.354 or
403.355 not later than January 31 of the school year for which the
reimbursement is made.
(b) In connection with the payment of reimbursements under
this subchapter, the comptroller may audit the records of a school
district and may adjust a payment to a school district under this
subchapter, Chapter 41 or 42, Education Code, or other law if the
district has received an amount under Subsection (a) that is less
than or greater than the reimbursement to which the district is
entitled.
SECTION 1.03. Effective January 1, 1998, Section 403.354,
Government Code, as added by Section 1.02 of this Act, is amended
to read as follows:
Sec. 403.354. REIMBURSEMENT FOR ADDITIONAL EXEMPTIONS AND
LIMITATIONS. (a) A school district is entitled to reimbursement
from the fund for lost ad valorem tax revenue resulting from:
(1) the $20,000 residence homestead exemption required
by Section 1-b(g), Article VIII, Texas Constitution;
(2) the tax freeze limitation required by Section
1-b(d), Article VIII, Texas Constitution, but only to the extent of
the increase in that limitation under Section 1-b(g) of that
article; and
(3) the business inventory exemption required by
Section 11.25, Tax Code.
(b) The comptroller shall compute each school district's
lost ad valorem tax revenue resulting from the exemptions and
limitation described by Subsection (a). The comptroller shall
adopt rules under which a school district or appraisal district
must report information relating to property values, tax rates, and
taxpayer eligibility necessary to allow the comptroller to make the
computation.
SECTION 1.04. Section 21.402(b), Education Code, is amended
to read as follows:
(b) Not later than June 1 of each year, the commissioner
shall determine the amount appropriated for purposes of Chapter 42
for the state fiscal year beginning September 1. The commissioner
shall exclude from the determination:
(1) amounts designated solely for use in connection
with school facilities or for payment of principal of and interest
on bonds; <and>
(2) local funds received under Subchapter D, Chapter
41; and
(3) amounts received by school districts from the
Texas School Trust Fund under Subchapter N, Chapter 403, Government
Code.
SECTION 1.05. Section 29.008(b), Education Code, is amended
to read as follows:
(b) Except as provided by Subsection (c), costs of an
approved contract for residential placement may be paid from a
combination of federal, state, and local funds. The local share of
the total contract cost for each student is that portion of the
local tax effort that exceeds the district's local fund assignment
under Section 42.252, divided by the average daily attendance in
the district. If the contract involves a private facility, the
state share of the total contract cost is that amount remaining
after subtracting the local share. If the contract involves a
public facility, the state share is that amount remaining after
subtracting the local share from the portion of the contract that
involves the costs of instructional and related services. For
purposes of this subsection, "local tax effort" means the total
amount of money generated by taxes imposed for debt service and
maintenance and operation plus any amounts received from the Texas
School Trust Fund under Subchapter N, Chapter 403, Government Code.
SECTION 1.06. Section 41.002(f), Education Code, is amended
to read as follows:
(f) For purposes of Subsections (d) and (e), a school
district's effective tax rate is determined by dividing the total
amount of taxes collected by the district for the applicable school
year plus any amounts received from the Texas School Trust Fund
under Section 403.354, Government Code, by the quotient of the
district's taxable value of property, as determined under
Subchapter M, Chapter 403, Government Code, divided by 100. This
subsection expires September 1, 1998.
SECTION 1.07. Section 41.093, Education Code, is amended to
read as follows:
Sec. 41.093. COST. (a) The cost of each credit is an
amount equal to the greater of:
(1) the amount of the district's total tax revenue per
student in weighted average daily attendance for the school year
for which the contract is executed; or
(2) the amount of the statewide district average of
total tax revenue per student in weighted average daily attendance
for the school year preceding the school year for which the
contract is executed.
(b) For purposes of this section, total tax revenue includes
amounts received from the Texas School Trust Fund under Section
403.354, Government Code.
SECTION 1.08. Section 41.097(a), Education Code, is amended
to read as follows:
(a) The total amount required under Section 41.093 for a
district to purchase attendance credits under this subchapter for
any school year is reduced by an amount equal to the product of the
district's costs under Section 6.06, Tax Code, for the central
appraisal district in which it participates multiplied by a
percentage that is computed by dividing the total amount required
under Section 41.093 by the total amount of taxes imposed in the
district for that year plus any amounts received from the Texas
School Trust Fund under Section 403.354, Government Code.
SECTION 1.09. Section 42.251(b), Education Code, is amended
to read as follows:
(b) The program shall be financed by:
(1) ad valorem tax revenue generated by an equalized
uniform school district effort;
(2) ad valorem tax revenue generated by local school
district effort in excess of the equalized uniform school district
effort;
(3) state available school funds distributed in
accordance with law; <and>
(4) amounts distributed from the Texas School Trust
Fund under Subchapter N, Chapter 403, Government Code; and
(5) state funds appropriated for the purposes of
public school education and allocated to each district in an amount
sufficient to finance the cost of each district's Foundation School
Program not covered by other funds specified in this subsection.
SECTION 1.10. Section 42.252(d), Education Code, is amended
to read as follows:
(d) A school district must raise its total local share of
the Foundation School Program to be eligible to receive foundation
school fund payments. For purposes of this chapter, the
commissioner shall also consider amounts received from the Texas
School Trust Fund under Subchapter N, Chapter 403, Government Code,
as money raised by a district to meet its local share.
SECTION 1.11. Section 42.302(b), Education Code, is amended
to read as follows:
(b) In computing the district enrichment and facilities tax
rate of a school district, the commissioner shall add amounts
received from the Texas School Trust Fund under Subchapter N,
Chapter 403, Government Code, to the total amount of taxes
collected by the district. The <the> total amount of taxes
collected by the school district does not include the amount of:
(1) the district's local fund assignment under Section
42.252; or
(2) taxes collected to pay the local share of the cost
of an instructional facility for which the district receives state
assistance under Subchapter H.
SECTION 1.12. Section 42.304, Education Code, is amended to
read as follows:
Sec. 42.304. COMPUTATION OF AID FOR DISTRICT ON MILITARY
RESERVATION OR AT STATE SCHOOL. State assistance under this
subchapter for a school district located on a federal military
installation or at Moody State School is computed using the average
effective tax rate computed as provided by Section 42.401(1) and
property value per student of school districts in the county, as
determined by the commissioner.
SECTION 1.13. Section 42.401(1), Education Code, is amended
to read as follows:
(1) "Effective tax rate" means a tax rate that is
determined by adding <dividing> the amount of taxes collected by a
school district and any amounts received from the Texas School
Trust Fund under Subchapter N, Chapter 403, Government Code, and
dividing that total by the quotient of the district's taxable value
of property, as determined under Subchapter M, Chapter 403,
Government Code, divided by 100.
SECTION 1.14. (a) Section 403.302(d), Government Code, is
amended to read as follows:
(d) For the purposes of this section, "taxable value" means
market value less:
(1) the total dollar amount of any exemptions of part
but not all of the value of taxable property required by the
constitution or a statute that a district lawfully granted in the
year that is the subject of the study, other than the $20,000
residence homestead exemption required by Section 1-b(g), Article
VIII, Texas Constitution;
(2) the total dollar amount of any exemptions granted
before May 31, 1993, within a reinvestment zone under agreements
authorized by Chapter 312, Tax Code;
(3) the total dollar amount of any captured appraised
value of property that is located in a reinvestment zone and that
is eligible for tax increment financing under Chapter 311, Tax
Code;
(4) the total dollar amount of any exemptions granted
under Section 11.251, Tax Code;
(5) the difference between the market value and the
productivity value of land that qualifies for appraisal on the
basis of its productive capacity, except that the productivity
value may not exceed the fair market value of the land;
(6) the portion of the appraised value of residence
homesteads of the elderly on which school district taxes are not
imposed in the year that is the subject of the study, calculated as
if the residence homesteads were appraised at the full value
required by law;
(7) a portion of the market value of property not
otherwise fully taxable by the district at market value because of
action required by statute or the constitution of this state that,
if the tax rate adopted by the district is applied to it, produces
an amount equal to the difference between the tax that the district
would have imposed on the property if the property were fully
taxable at market value and the tax that the district is actually
authorized to impose on the property; and
(8) the market value of all tangible personal
property, other than manufactured homes, owned by a family or
individual and not held or used for the production of income.
(b) This section applies only to the computation of school
district property values for the 1997 tax year.
SECTION 1.15. (a) Effective January 1, 1998, Section
403.302(d), Government Code, is amended to read as follows:
(d) For the purposes of this section, "taxable value" means
market value less:
(1) the total dollar amount of any exemptions of part
but not all of the value of taxable property required by the
constitution or a statute that a district lawfully granted in the
year that is the subject of the study, other than:
(A) the $20,000 residence homestead exemption
required by Section 1-b(g), Article VIII, Texas Constitution; and
(B) the business inventory exemption required by
Section 11.25, Tax Code;
(2) the total dollar amount of any exemptions granted
before May 31, 1993, within a reinvestment zone under agreements
authorized by Chapter 312, Tax Code;
(3) the total dollar amount of any captured appraised
value of property that is located in a reinvestment zone and that
is eligible for tax increment financing under Chapter 311, Tax
Code;
(4) the total dollar amount of any exemptions granted
under Section 11.251, Tax Code;
(5) the difference between the market value and the
productivity value of land that qualifies for appraisal on the
basis of its productive capacity, except that the productivity
value may not exceed the fair market value of the land;
(6) the portion of the appraised value of residence
homesteads of the elderly on which school district taxes are not
imposed in the year that is the subject of the study, because of
the tax freeze limitation required by Section 1-b(d), Article VIII,
Texas Constitution, other than that portion of that limitation
required by Section 1-b(g) of that article, calculated as if the
residence homesteads were appraised at the full value required by
law;
(7) a portion of the market value of property not
otherwise fully taxable by the district at market value because of
action required by statute or the constitution of this state that,
if the tax rate adopted by the district is applied to it, produces
an amount equal to the difference between the tax that the district
would have imposed on the property if the property were fully
taxable at market value and the tax that the district is actually
authorized to impose on the property; and
(8) the market value of all tangible personal
property, other than manufactured homes, owned by a family or
individual and not held or used for the production of income.
(b) This section applies only to the computation of school
district property values for the 1998 and later tax years.
SECTION 1.16. Section 825.405(h), Government Code, is
amended to read as follows:
(h) This section does not apply to state contributions for
members employed by a school district in a school year if the
district's effective tax rate for maintenance and operation
revenues for the tax year that ended in the preceding school year
equals or exceeds 125 percent of the statewide average effective
tax rate for school district maintenance and operation revenues for
that tax year. For a tax year, the statewide average effective tax
rate for school district maintenance and operation revenues is the
tax rate that, if applied to the statewide total appraised value of
taxable property for every school district in the state determined
under Section 403.302, would produce an amount equal to the
statewide total amount of maintenance and operation taxes imposed
in the tax year for every school district in the state. For
purposes of this section, the statewide total amount of maintenance
and operations taxes does not include amounts received by school
districts from the Texas School Trust Fund under Subchapter N,
Chapter 403.
SECTION 1.17. Section 403.121, Government Code, is amended
by adding Subsection (c) to read as follows:
(c) The comptroller shall include in the reports, estimates,
and certifications of available funds the estimated amount of
transfers that may be available for appropriation by the
legislature under Section 5-a, Article VII, Texas Constitution.
SECTION 1.18. Except as otherwise provided by this article,
this article takes effect on the effective date of this Act.
ARTICLE 2. PROPERTY TAXATION
SECTION 2.01. Section 1.04, Tax Code, is amended by amending
Subdivision (10) and adding Subdivision (20) to read as follows:
(10) "Taxable value" means the amount determined by
deducting from appraised <assessed> value the amount of any
applicable partial exemption.
(20) "Maintenance and operations" means any lawful
purpose other than debt service for which a taxing unit may spend
property tax revenues.
SECTION 2.02. Section 11.13, Tax Code, is amended by
amending Subsection (b) and adding Subsection (s) to read as
follows:
(b) An adult is entitled to an exemption from taxation by a
school district of $5,000 of the appraised value of his residence
homestead. An adult is also entitled to exemption from taxation by
a school district for maintenance and operations of $20,000 of the
appraised value of his residence homestead.
(s) If a school district has adopted an exemption from ad
valorem taxes for elementary and secondary public school purposes
on homesteads that the district by law may adopt by its own action,
and that exemption is in effect on the date on which the
constitutional amendment proposed by _J.R. No. ____, 75th
Legislature, Regular Session, takes effect, the governing body of
the school district may not reduce the amount of or repeal that tax
exemption before the second anniversary of the date on which that
constitutional amendment takes effect. On or after the second
anniversary of the date on which that constitutional amendment
takes effect, the governing body of the school district may not
reduce the amount of or repeal that tax exemption unless the
reduction or repeal is approved by a vote of not less than
two-thirds of the total members of its governing body.
SECTION 2.03. Subchapter B, Chapter 11, Tax Code, is amended
by adding Section 11.25 to read as follows:
Sec. 11.25. TANGIBLE PERSONAL PROPERTY HELD AS INVENTORY.
(a) This section applies only to ad valorem taxes imposed by a
school district on tangible personal property for maintenance and
operations of the district.
(b) A person is entitled to an exemption from taxation of
the appraised value of the person's property that consists of
property held for sale or consumption as inventory.
(c) A person that receives an exemption on tangible personal
property held for sale or consumption as inventory under Section
11.145 or 11.251 is not entitled to an exemption on that property
under Subsection (b).
(d) In this section:
(1) "Inventory" includes goods held for sale, raw
materials, goods in process, finished goods, supplies, consigned
goods, bill and hold goods, floor-planned goods, and in-transit
goods. Except as provided by this section, each of those terms has
the meaning assigned that term according to generally accepted
principles of personal property appraisal.
(2) "School district" means a political subdivision of
this state that is organized to provide general elementary and
secondary public education and authorized to impose ad valorem
taxes. The term does not include:
(A) a junior college district;
(B) a political subdivision organized to provide
special education services; or
(C) an entity operating under former Chapter 25,
27, or 28, Education Code, as those chapters existed on May 1,
1995, as permitted by Section 11.301, Education Code.
(3) "Supplies" means stocks of goods intended to be
consumed in a manufacturing process.
SECTION 2.04. (a) Effective January 1, 1998, Section
11.26(a), Tax Code, is amended to read as follows:
(a) The tax officials shall appraise the property to which
this section applies and calculate taxes as on other property, but
if the tax so calculated exceeds the limitation imposed by this
section, the tax imposed is the amount of the tax as limited by
this subsection, except <Except> as provided by Subsection (b). A
<of this section, a> school district may not increase the total
annual amount of ad valorem tax it imposes on the residence
homestead of an individual 65 years or older above the amount of
the tax it imposed in the first tax year the individual qualified
that residence homestead for the exemption provided by Section
11.13(c) if that tax year is the 1998 tax year or a later tax year.
If the first tax year the individual qualified that residence
homestead for the exemption provided by Section 11.13(c) was a tax
year before the 1997 tax year, the tax limitation is the amount of
tax the school district imposed for the 1996 tax year less an
amount equal to the amount determined by multiplying $20,000 times
the tax rate for maintenance and operations of the school district
for the 1997 tax year plus any 1997 tax attributable to
improvements made in 1996, other than improvements made to comply
with governmental regulations or repairs. If the first tax year
the individual qualified that residence homestead for the exemption
provided by Section 11.13(c) is the 1997 tax year, the tax
limitation is the amount of tax the school district imposed for the
1997 tax year less an amount equal to the amount determined by
multiplying $20,000 times the tax rate for maintenance and
operations of the school district for the 1998 tax year plus:
(1) any 1998 tax attributable to improvements made in
1997, other than improvements made to comply with governmental
regulations or repairs; and
(2) an amount equal to the amount determined by
multiplying $20,000 times the tax rate for maintenance and
operations of the school district for the 1997 tax year.
<Subsection (c) of Section 11.13 of this code. The tax officials
shall continue to appraise the property and to calculate taxes as
on other property, but if the tax so calculated exceeds the
limitation imposed by this section, the tax imposed is the tax
imposed in the first year the individual qualified the residence
homestead for the exemption.>
(b) Effective beginning with the 1997 tax year, Section
11.26(e), Tax Code, is amended to read as follows:
(e) For each school district in an appraisal district, the
chief appraiser shall determine the portion of the appraised value
of residence homesteads of the elderly on which school district
taxes are not imposed in a tax year because of the limitation on
tax increases imposed by this section. That portion is calculated
by determining the taxable values <value> that, if multiplied by
the applicable tax rate for debt or tax rate for maintenance and
operations adopted by the school district for the tax year and the
product of those computations added together, would produce an
amount equal to the amount of tax that would have been imposed by
the school district on residence homesteads of the elderly if the
limitation on tax increases imposed by this section were not in
effect, but that was not imposed because of that limitation. The
chief appraiser shall determine those <that> taxable values <value>
and certify them <it> to the comptroller as soon as practicable for
each tax year.
SECTION 2.05. Section 25.19(b), Tax Code, is amended to read
as follows:
(b) The chief appraiser shall separate real from personal
property and include in the notice for each:
(1) a list of the taxing units in which the property
is taxable;
(2) the appraised value of the property in the
preceding year;
(3) each <the assessed and> taxable value of the
property in the preceding year for each taxing unit taxing the
property;
(4) the appraised value of the property for the
current year and the kind and amount of each partial exemption, if
any, approved for the current year;
(5) if the appraised value is greater than it was in
the preceding year:
(A) the effective tax rate or rates that would
be announced pursuant to Chapter 26 <Section 26.04 of this code> if
the total values being submitted to the appraisal review board were
to be approved by the board with an explanation that that rate or
rates would raise the same amount of revenue from property taxed in
the preceding year as the unit raised for those purposes in the
preceding year;
(B) the amount of tax that would be imposed on
the property on the basis of the rate or rates described by
Paragraph (A) <of this subdivision>; and
(C) a statement that the governing body of the
unit may not adopt a rate that will increase tax revenues for
operating purposes from properties taxed in the preceding year
without publishing notice in a newspaper that it is considering a
tax increase and holding a hearing for taxpayers to discuss the tax
increase;
(6) in italic typeface, the following statement: "The
Texas Legislature does not set the amount of your local taxes.
Your property tax burden is decided by your locally elected
officials, and all inquiries concerning your taxes should be
directed to those officials";
(7) a brief explanation of the time and procedure for
protesting the value;
(8) the date and place the appraisal review board will
begin hearing protests; and
(9) a brief explanation that:
(A) the governing body of each taxing unit
decides whether or not taxes on the property will increase and the
appraisal district only determines the value of the property; and
(B) a taxpayer who objects to increasing taxes
and government expenditures should complain to the governing bodies
of the taxing units and only complaints about value should be
presented to the appraisal office and the appraisal review board.
SECTION 2.06. Section 25.24, Tax Code, is amended to read
as follows:
Sec. 25.24. APPRAISAL ROLL. The appraisal records, as
changed by order of the appraisal review board and approved by that
board, constitute the appraisal roll for the district. The
appraisal roll for the district for the purpose of a school
district includes for each property two values: a value for the
levy of district maintenance and operations taxes and a value for
the levy of debt service taxes.
SECTION 2.07. Sections 26.04(a) and (b), Tax Code, are
amended to read as follows:
(a) On receipt of the appraisal roll, the assessor for a
taxing unit shall determine the total appraised value<, the total
assessed value,> and the total taxable value of property taxable by
the unit and for a school district the total taxable value for each
tax rate imposed by the district. He shall also determine, using
information provided by the appraisal office, the appraised,
assessed, and taxable values <value> of new property.
(b) The assessor shall submit the appraisal roll for the
unit showing the total appraised, assessed, and taxable values of
all property and the total taxable values <value> of new property
to the governing body of the unit by August 1 or as soon thereafter
as practicable. By August 1 or as soon thereafter as practicable,
the taxing unit's collector shall certify an estimate of the
collection rate for the current year to the governing body. If the
collector certified an anticipated collection rate in the preceding
year and the actual collection rate in that year exceeded the
anticipated rate, the collector shall also certify the amount of
debt taxes collected in excess of the anticipated amount in the
preceding year.
SECTION 2.08. Chapter 26, Tax Code, is amended by adding
Section 26.046 to read as follows:
Sec. 26.046. EFFECTIVE TAX RATES: SCHOOL DISTRICTS. (a)
Notwithstanding Section 26.04, the officer or employee designated
under that section to make the calculations for a school district
shall determine an effective tax rate for the school district for
maintenance and operations and an effective tax rate for the school
district for debt service. The effective tax rates shall be
calculated in the manner provided by Section 26.04, except as
provided by this section. The effective tax rate for maintenance
and operations shall be calculated on the value of property on the
tax roll for maintenance and operations taxation, and the effective
tax rate for debt service taxation shall be calculated on the value
of property on the tax roll for debt service taxation.
(b) In calculating the effective tax rates for the school
district under Subsection (a), the designated officer or employee
shall:
(1) include in last year's levy only ad valorem taxes
actually generated by the district in the preceding year; and
(2) exclude from last year's levy any state revenue
received by the district in that year, including revenue received
from the Texas School Trust Fund.
(c) The designated officer or employee shall adjust the
effective tax rate for maintenance and operations calculated under
Subsection (a) by adding or subtracting a rate, that if applied to
the current value for the levy of district maintenance and
operations taxes for the district would impose maintenance and
operations taxes in an amount that, when added or subtracted, as
applicable, to the sum of the amount of taxes that would be imposed
by the effective tax rate for maintenance and operations calculated
under Subsection (a) and the amount of state funds to be received
by the district under the Foundation School Program for the school
year that begins in the current tax year, including the amount of
any state funds projected to be received by the district under
Section 42.302, Education Code, and that under law may be used for
maintenance and operations purposes, would provide the same amount
of those state funds and district maintenance and operations taxes
per student in weighted average daily attendance for the school
year that begins in the current tax year that was available to the
district for the preceding school year.
SECTION 2.09. Chapter 26, Tax Code, is amended by adding
Sections 26.047 and 26.048 to read as follows:
Sec. 26.047. EFFECTIVE MAINTENANCE AND OPERATIONS RATE FOR
1997 SCHOOL TAXES. (a) For the 1997 tax year, the effective
maintenance and operations rate of a school district is calculated
by subtracting from the effective tax rate for maintenance and
operations calculated under Section 26.046 an amount equal to the
rate that, if applied to current total value, would impose taxes in
an amount equal to the 1997 tax year revenue not collected because
of the tax exemption provided by Section 1-b(g), Article VIII,
Texas Constitution.
(b) This section expires December 31, 1998.
Sec. 26.048. EFFECTIVE MAINTENANCE AND OPERATIONS RATE FOR
1998 SCHOOL TAXES. (a) Except as provided by Subsection (b), for
the 1998 tax year, the effective maintenance and operations rate of
a school district is computed by subtracting from the effective tax
rate for maintenance and operations computed under Section 26.046
an amount equal to the rate that, if applied to current total
value, would impose taxes in an amount equal to the sum of:
(1) $0.20 per $100 valuation;
(2) any 1998 tax year revenue not collected because of
the business inventory tax exemption provided by Section 11.25, Tax
Code; and
(3) the rate that, if applied to current total value,
would impose taxes in an amount equal to the 1998 tax year revenue
not collected because of the tax limitation provided by Section
1-b(g), Article VIII, Texas Constitution.
(b) The rate specified by Subsection (a)(1) is not
subtracted from the effective tax rate for maintenance and
operations computed under Section 26.046 if the school district is:
(1) a political subdivision organized primarily to
provide special education services; or
(2) an entity operating under former Chapter 17, 18,
25, 26, 27, or 28, Education Code, as those chapters existed on May
1, 1995, as permitted by Section 11.301, Education Code.
(c) This section expires December 31, 1999.
SECTION 2.10. Sections 26.05(a) and (d), Tax Code, are
amended to read as follows:
(a) Except as provided by Subsection (c), the governing body
of each taxing unit before September 1 or as soon thereafter as
practicable shall adopt a tax rate for the current tax year and
shall notify the assessor for the unit of the rate adopted. The
tax rate consists of two components, each of which must be approved
separately. The components are:
(1) the rate that, if applied to the total taxable
value or for a school district the total taxable value for debt
taxation, will impose the total amount published under Section
26.04(e)(3)(C) <of this code>, less any amount of additional sales
and use tax revenue that will be used to pay debt service; and
(2) the rate that, if applied to the total taxable
value or for a school district the total taxable value for
maintenance and operations taxation, will impose the amount of
taxes needed to fund maintenance and operation expenditures of the
unit for the next year.
(d) The governing body of a taxing unit other than a school
district may not adopt a tax rate that exceeds the lower of the
rollback tax rate or 103 percent of the effective tax rate
calculated as provided by Section 26.04 <of this code> until it has
held a public hearing on the proposed increase and has otherwise
complied with Section 26.06 <of this code>. The governing body of
a school district may not adopt a tax rate for maintenance and
operations that exceeds the effective tax rate for maintenance and
operations calculated as provided by Section 26.046 until it has
held a public hearing on the proposed increase and has otherwise
complied with Section 26.06. The governing body of a taxing unit
other than a school district shall reduce a tax rate set under a
<by> law other than this title or by vote of the electorate to the
lower of the rollback tax rate or the percentage <103 percent> of
the effective tax rate provided by this subsection applicable to
the taxing unit and may not adopt a higher rate unless it first
complies with Section 26.06 <of this code>.
SECTION 2.11. Chapter 26, Tax Code, is amended by adding
Section 26.065 to read as follows:
Sec. 26.065. ADOPTION OF SCHOOL DISTRICT MAINTENANCE AND
OPERATIONS TAX RATE IN EXCESS OF EFFECTIVE RATE FOR MAINTENANCE AND
OPERATIONS; ELECTION TO LIMIT RATE. (a) For a year that begins on
or after January 1, 1997, the governing body of a school district
may not adopt a maintenance and operations tax rate that exceeds
the effective maintenance and operations tax rate calculated under
Section 26.046 for the current year unless the rate is approved by
a vote of not less than two-thirds of the total members of the
governing body.
(b) If the governing body of the school district adopts a
maintenance and operations tax rate that exceeds the effective tax
rate for maintenance and operations calculated under Section 26.046
by $0.02 per $100 taxable value, the registered voters of the
district at an election held for that purpose must determine
whether to limit the maintenance and operations tax rate for the
current year to a rate equal to the sum of the effective tax rate
for maintenance and operations calculated under Section 26.046 for
the current year plus $0.02 per $100 taxable value, or a lower rate
adopted by the governing body after the election.
(c) The governing body shall order that an election be held
in the school district on a date not less than 30 or more than 90
days after the date on which the governing body adopts the tax rate
that triggers the election. Section 41.001, Election Code, does
not apply to the election unless a date specified by that section
falls within the time permitted by this section.
(d) At the election, the ballot shall be prepared to permit
voting for or against the proposition: "Limiting the maintenance
and operations tax rate in _____ (name of district) for the current
year from _____ (maintenance and operations tax rate adopted by
governing body) as proposed by the school district to ____ (rate
equal to sum of effective tax rate for maintenance and operations
calculated under Section 26.046, Tax Code, plus $0.02 per $100
taxable value)."
(e) If a majority of the votes cast in the election favor
the proposition, the governing body may not adopt a maintenance and
operations tax rate for the current year that exceeds the effective
tax rate for maintenance and operations calculated under Section
26.046 plus $0.02 per $100 taxable value.
(f) For a tax year beginning on or after January 1, 1999,
the amount by which the tax rate for maintenance and operations
adopted for the current tax year exceeds the effective tax rate for
maintenance and operations calculated under Section 26.046 for that
year may not exceed the amount that, when added to the amount by
which the adopted maintenance and operations tax rate for each of
the two preceding tax years exceeds the applicable effective tax
rate for maintenance and operations calculated under Section 26.046
for each of those years, equals $0.04 per $100 taxable value unless
an election is held under Subsection (g) at which the registered
voters of the district do not limit the maintenance and operations
tax rate approved by the governing body.
(g) An election held under Subsection (f) shall be conducted
in the manner provided by this section for an election under
Subsection (b). The ballot shall be prepared to permit voting for
or against the proposition: "Limiting the maintenance and
operations tax rate in _____ (name of district) for the current
year from _____ (maintenance and operations tax rate adopted by
governing body) as proposed by the school district to _____ (rate
calculated under Section 26.065(f), Tax Code, in excess of which an
adopted maintenance and operations tax rate triggers an election
under that section)."
(h) If a majority of the votes cast in the election favor
the proposition, the governing body may not adopt a maintenance and
operations tax rate for the current year that exceeds the limited
rate approved by the voters.
(i) If an election is required under Subsection (f) in any
tax year, an election under Subsections (b)-(e) is not required to
be held in that tax year. If an election under Subsections (b)-(e)
was held at which the voters did not approve the proposition to
limit the district's tax rate in one of the two preceding tax
years, an election under Subsection (f) is not required in the
current year.
(j) When increased expenditure of money by a school district
is necessary to respond to a disaster, including a tornado,
hurricane, flood, or other calamity, but not including a drought,
that has impacted a school district and the governor has requested
federal disaster assistance for the area in which the school
district is located, an election is not required under this section
to limit the maintenance and operations tax rate the governing body
may adopt for the year following the year in which the disaster
occurs.
(k) For purposes of this section, local tax funds dedicated
to a junior college district under Section 45.105(e), Education
Code, shall be eliminated from the calculation of the maintenance
and operations tax rate adopted by the governing body of the school
district. However, the funds dedicated to the junior college
district are subject to Section 26.085.
(l) In a school district that received distributions from an
equalization tax imposed under former Chapter 18, Education Code,
the effective rate of that tax as of the date of the county unit
system's abolition is added to the district's effective tax rate
for maintenance and operations for purposes of this section.
(m) For purposes of this section, increases in taxable
values and tax levies occurring within a reinvestment zone under
the provisions of Chapter 311 (Tax Increment Financing Act), in
which the district is a participant, shall be eliminated from the
calculation of the effective tax rates adopted by the governing
body of the school district.
(n) For purposes of the 1997 and 1998 tax years, the
effective tax rate for maintenance and operations for a school
district is the rate calculated under Section 26.047 or 26.048, as
applicable. This subsection expires January 1, 2000.
SECTION 2.12. Section 26.08, Tax Code, is repealed.
SECTION 2.13. Section 26.09(c), Tax Code, is amended to read
as follows:
(c) The tax is calculated by:
(1) subtracting from the appraised value of a property
as shown on the appraisal roll for the unit the amount of any
partial exemption allowed the property owner that applies to
appraised value to determine taxable <net appraised> value; and
(2) <multiplying the net appraised value by the
assessment ratio to determine assessed value;>
<(3) subtracting from the assessed value the amount of
any partial exemption allowed the property owner to determine
taxable value; and>
<(4)> multiplying the taxable value by the tax rate,
or for a school district as defined by Section 11.13(m)(2),
multiplying the taxable value for maintenance and operations
taxation by the maintenance and operations tax rate, multiplying
the taxable value for debt service taxation by the debt service tax
rate, and adding the products.
SECTION 2.14. Section 31.01, Tax Code, is amended by
amending Subsection (c) and adding Subsection (k) to read as
follows:
(c) The tax bill or a separate statement accompanying the
tax bill shall:
(1) identify the property subject to the tax;
(2) state the appraised value<, assessed value,> and
taxable value of the property for each type of tax levy the taxing
unit imposes on a different value;
(3) if the property is land appraised as provided by
Subchapter C, D, or E, Chapter 23 <of this code>, state the market
value and the taxable value for purposes of deferred or additional
taxation as provided by Section 23.46, 23.55, or 23.76, as
applicable<, of this code>;
(4) <state the assessment ratio for the unit;>
<(5)> state the type and amount of any partial
exemption applicable to the property<, indicating whether it
applies to appraised or assessed value>;
(5) <(6)> state the total tax rate or rates for the
unit;
(6) <(7)> state the amount of tax due, the due date,
and the delinquency date;
(7) <(8)> explain the payment option and discounts
provided by Sections 31.03 and 31.05 <of this code>, if available
to the unit's taxpayers, and state the date on which each of the
discount periods provided by Section 31.05 concludes, if the
discounts are available;
(8) <(9)> state the rates of penalty and interest
imposed for delinquent payment of the tax; and
(9) <(10)> include any other information required by
the comptroller.
(k) In addition to the information specified by Subsection
(c), a tax bill for school district taxes or the separate statement
accompanying a tax bill for school district taxes shall include an
explanation of the Property Tax Cut Act of 1997 and the effect on
the school district's tax rates for the year caused by that Act.
If a tax bill for school district taxes containing an explanation
required by this subsection is mailed to a mortgagee of a property,
the mortgagee shall mail a copy of the tax bill or accompanying
statement containing the explanation to the owner of the property
before the 31st day after the date the mortgagee receives the tax
bill. This subsection expires January 1, 1999.
SECTION 2.15. (a) Except as otherwise provided by this
article or Subsection (b) of this section, this article takes
effect on the effective date of this Act and applies to ad valorem
taxes imposed by a school district for and after the 1997 tax year.
(b) Section 2.03 of this article takes effect January 1,
1998, and applies only to ad valorem taxes imposed by a school
district for a tax year that begins on or after that date.
ARTICLE 3. TEXAS BUSINESS TAX
SECTION 3.01. Subtitle F, Title 2, Tax Code, is amended by
adding Chapter 172 to read as follows:
CHAPTER 172. BUSINESS TAX
SUBCHAPTER A. DEFINITIONS
Sec. 172.001. AFFILIATED GROUP. "Affiliated group" means an
affiliated group of corporations as defined in Section 1504,
Internal Revenue Code.
Sec. 172.002. BUSINESS ACTIVITY. (a) "Business activity"
means an activity that:
(1) is:
(A) a transfer of legal or equitable ownership
of or the right of possession of property; or
(B) the performance of services; and
(2) occurs in this state, without regard to whether
the activity is in interstate or foreign commerce.
(b) The term does not include:
(1) an activity by an individual that is not for
economic gain, benefit, or advantage to the individual or to
others;
(2) a service rendered by an employee to an employer;
(3) a service as a director of a corporation;
(4) income derived from individual investment; or
(5) a casual transaction.
(c) A transaction that otherwise is excluded under
Subsection (b), but that is made or engaged in by a person and that
is incidental to the person's regular business activity, is a
business activity.
(d) For purposes of Subsection (a), a business activity
occurs in this state if the activity has a sufficient nexus, to the
limits of the United States Constitution and the federal law
adopted under the United States Constitution, to this state.
Sec. 172.003. BUSINESS ENTITY. "Business entity" means a
corporation, limited liability company, partnership, limited
partnership, limited liability partnership, banking corporation,
savings and loan association, trust, estate, or sole
proprietorship. The term includes any kind of business
association, joint venture, or any other combination of entities or
persons engaged in a business activity.
Sec. 172.004. CASUAL TRANSACTION. "Casual transaction"
means a transaction made or engaged in other than in the ordinary
course of repeated and successive transactions of a like character,
except that a transaction made or engaged in by a person that is
incidental to that person's regular business activity is considered
to be a business activity.
Sec. 172.005. COMPENSATION. (a) "Compensation" means all
wages, salaries, fees, bonuses, commissions, or other payments made
in the taxable year on behalf of or for the benefit of employees,
officers, or directors of a taxpayer and subject to or specifically
exempt from withholding under Section 3401, Internal Revenue Code.
(b) The term includes the following payments determined on a
cash or accrual system consistent with the taxpayer's method of
accounting for federal income tax purposes:
(1) payments to state and federal unemployment
compensation funds;
(2) under the Federal Insurance Contributions Act
(Chapter 21, Title 26, Internal Revenue Code) and similar social
insurance programs, payments, including self-insurance payments,
for workers' compensation insurance;
(3) payments to individuals not currently working;
(4) payments to dependents and heirs of individuals
because of current or former labor services rendered by those
individuals;
(5) payments to a pension, retirement, or
profit-sharing plan; and
(6) payments for insurance for which employees are the
beneficiaries.
(c) For a partnership, the term includes net earnings of the
partners from self-employment and does not include guaranteed
payments to partners.
(d) The term does not include discounts on the price of the
taxpayer's merchandise or services sold to the taxpayer's
employees, officers, or directors that are not available to other
customers or payments to an independent contractor.
Sec. 172.006. CORPORATION. "Corporation" includes:
(1) a limited liability company as defined by the
Texas Limited Liability Company Act (Article 1528n, Vernon's Texas
Civil Statutes);
(2) a state or federal savings and loan association;
(3) a state or federal savings bank; and
(4) a banking corporation.
Sec. 172.007. EMPLOYEE. (a) "Employee" means an employee
as defined in Section 3401(c), Internal Revenue Code.
(b) A person from whom an employer is required to withhold
for federal income tax purposes is presumed to be an employee.
Sec. 172.008. EMPLOYER. (a) "Employer" means an employer
as defined in Section 3401(d), Internal Revenue Code.
(b) A person required to withhold for federal income tax
purposes is presumed to be an employer.
Sec. 172.009. FEDERAL INCOME TAX TERMS. A term used in this
chapter, and not defined differently, has the same meaning as the
term when used in a comparable context in the Internal Revenue Code
or other federal law relating to federal income taxes.
Sec. 172.010. FEDERAL TAXABLE INCOME. "Federal taxable
income" means taxable income as defined in Section 63, Internal
Revenue Code, increased by the amount, if any, of deductions taken
under Section 172, Internal Revenue Code, and includes the income
of an estate or trust.
Sec. 172.011. FINANCIAL INSTRUMENT. "Financial instrument"
means any share of stock or other legal evidence of equity
ownership in a corporation or other business entity, certificate of
stock or interest in any corporation, stock derivative, note, bond,
debenture, indebtedness derivative and evidence of indebtedness,
including any evidence of an interest in or right to subscribe to
or purchase any of these instruments.
Sec. 172.012. INDIVIDUAL INVESTMENT. "Individual
investment" means investment by an individual:
(1) of funds owned by the individual solely for the
benefit of the individual if the investment is not made in
connection with another activity that is a business activity; or
(2) of funds owned by the individual's relative within
the third degree of consanguinity or the second degree of affinity,
as those relationships are described by Subchapter B, Chapter 573,
Government Code, on behalf of and solely for the benefit of the
owner of the funds if the investment is not made in connection with
another activity that is a business activity.
Sec. 172.013. INTERNAL REVENUE CODE. "Internal Revenue
Code" means the Internal Revenue Code of 1986 in effect on January
1, 1997.
Sec. 172.014. RENTAL. "Rental" includes a lease payment or
other payment for the use of any property to which the taxpayer
does not otherwise have legal or equitable title.
Sec. 172.015. SALE. "Sale" means a transaction from which
the gross receipts constitute consideration:
(1) for the transfer of title to, or possession of,
property:
(A) that is stock in trade;
(B) that is of a kind that would properly be
included in the inventory of the taxpayer if on hand at the close
of the tax period; or
(C) that is held by the taxpayer primarily for
sale to customers in the ordinary course of its trade or business;
(2) for the performance of services that constitute
business activities other than those included in Subdivision (1);
or
(3) from any combination of gross receipts included in
Subdivision (1) or (2).
Sec. 172.016. STATE. "State" means any state of the United
States, the District of Columbia, the Commonwealth of Puerto Rico,
any territory or possession of the United States, or a political
subdivision of any of those entities.
Sec. 172.017. TAX. "Tax" includes interest and penalties
unless the intention to give it a more limited meaning is indicated
by its context.
Sec. 172.018. TAXPAYER. "Taxpayer" means a business entity
liable for a tax, interest, or penalty under this chapter.
Sec. 172.019. TAX YEAR. (a) "Tax year" means the calendar
year or the fiscal year ending during the calendar year for which
the tax base is computed under this chapter.
(b) If a return is made for a fractional part of a year, the
term means the period for which the return is made.
(c) Except for the first return required by this chapter, a
taxpayer's tax year is the same period as that covered by the
taxpayer's federal income tax return.
Sections 172.020-172.100 reserved for expansion
SUBCHAPTER B. IMPOSITION OF TAX
Sec. 172.101. TAX IMPOSED. There is imposed a tax on every
business entity having a business activity in this state that is
allocated or apportioned to this state.
Sec. 172.102. TAX RATE. The tax imposed by this chapter is
at the rate of 1.25 percent of the taxpayer's adjusted tax base.
Sec. 172.103. DETERMINATION OF TAX BASE. (a) A taxpayer
determines the tax base by taking the amount of federal taxable
income, before any of the adjustments provided by Section 172.104,
even if zero or negative, and making the following adjustments:
(1) add, to the extent deducted in arriving at federal
taxable income:
(A) all taxes on or measured by net income; and
(B) except as provided by Section 172.106 any
deduction for depreciation, amortization, or immediate or
accelerated write-off related to the cost of tangible assets;
(2) add compensation;
(3) deduct any capital loss not deducted in arriving
at federal taxable income in the year the loss occurred; and
(4) to the extent included in computing federal
taxable income, deduct:
(A) the dividends and net capital gains arising
from the holding or disposition of a financial instrument of
another entity that is subject to the taxes imposed by this chapter
or that would be subject to the taxes imposed by this chapter if it
had a nexus in this state; and
(B) the net income, not included in Paragraph
(A), received from another entity that is not a corporation and
that is subject to the taxes imposed by this chapter or that would
be subject to the taxes imposed by this chapter if it had a nexus
in this state.
(b) For purposes of Subsection (a), for a taxpayer that is a
partnership, federal taxable income means the income of the
partners reported, as required of the partnership by the Internal
Revenue Service under the Internal Revenue Code, on Schedule K,
Partners' Shares of Income, Credits, Deductions, etc., line 25a, of
Form 1065.
(c) For purposes of Subsection (a), for a taxpayer that is a
sole proprietorship, federal taxable income is the sum of:
(1) the income reported, as required of the sole
proprietorship by the Internal Revenue Service under the Internal
Revenue Code, on the following schedules of Form 1040:
(A) Schedule C, Profit or Loss From Business,
line 31;
(B) Schedule E, Supplemental Income and Loss,
line 26; or
(C) Schedule F, Profit or Loss From Farming,
line 36; and
(2) the following income attributable as income to the
sole proprietorship:
(A) taxable interest income;
(B) dividend income; and
(C) capital gains.
(d) The comptroller by rule shall update references in this
section to schedules and forms of the Internal Revenue Service if
changed by the Internal Revenue Service and shall adopt forms
consistent with the change.
Sec. 172.104. DETERMINATION OF ADJUSTED TAX BASE. A
taxpayer determines the adjusted tax base by making adjustments to
the tax base as provided in Section 172.103 in the following order:
(1) deducting any income derived from a nonbusiness
activity listed in Section 172.002(b) to the extent included in the
tax base;
(2) making the adjustments relating to capital
investment under Section 172.105;
(3) allocating and apportioning the tax base as
provided in Subchapter D; and
(4) deducting the standard deduction allowed under
Section 172.151.
Sec. 172.105. ADJUSTMENTS RELATING TO CAPITAL INVESTMENT.
(a) In determining the adjusted tax base, a taxpayer shall make
the adjustments relating to capital investment required by Section
172.104(2) as provided by this section.
(b) The taxpayer shall deduct the cost, including the cost
of fabrication and installation, paid or accrued in the taxable
year of tangible assets.
(c) The taxpayer shall add the gross proceeds or benefit
derived from the sale or other disposition of tangible assets, less
the gain.
(d) In this section, "tangible assets" means tangible assets
of a type that are, or, under the Internal Revenue Code, will
become, eligible for depreciation or amortization for federal
income tax purposes.
Sec. 172.106. ADJUSTMENTS RELATING TO INVESTMENT IN
ENTERPRISE ZONE. (a) A corporation that has been designated as an
enterprise project as provided by Chapter 2303, Government Code, is
not required to add any deduction for depreciation to its tax base
as provided by Section 172.103(a)(1)(B) as provided by this
section.
(b) The adjustment authorized by this section is limited to
the depreciation related to capital equipment or other investment
that qualifies for depreciation for federal income tax purposes and
that is placed in service in the enterprise zone after designation
as an enterprise project and after September 1, 1991.
(c) To qualify for the adjustment authorized by this
section, an investment must be used in the normal course of
business in the enterprise zone and must not be removed from the
enterprise zone, except for repair or maintenance. Qualifying use
and presence in the zone must occur during the accounting year on
which the report is based.
(d) Only qualified businesses that have been certified as
eligible for an adjustment under this section by the Texas
Department of Commerce to the comptroller and the Legislative
Budget Board are entitled to the adjustment.
(e) In this section:
(1) "Enterprise project" means a person designated by
the Texas Department of Commerce as an enterprise project under
Chapter 2303, Government Code.
(2) "Enterprise zone" has the meaning assigned to that
term by Section 2303.003, Government Code.
Sections 172.107-172.150 reserved for expansion
SUBCHAPTER C. DEDUCTIONS
Sec. 172.151. STANDARD DEDUCTION. (a) The standard
deduction permitted for each tax year for each business entity or
combined entity under Section 172.306 is $500,000.
(b) For a taxpayer whose business activity is for a
fractional part of a year, the deduction is prorated for the period
of the taxpayer's business activity.
Sections 172.152-172.200 reserved for expansion
SUBCHAPTER D. ALLOCATION AND APPORTIONMENT OF TAX BASE
Sec. 172.201. BUSINESS ACTIVITIES CONFINED TO TEXAS. The
entire tax base of a taxpayer whose business activity is confined
solely to this state is allocated to this state except as provided
by Sections 172.206 and 172.207.
Sec. 172.202. BUSINESS ACTIVITIES IN TEXAS AND ELSEWHERE. A
taxpayer whose business activity is taxable both in and outside
this state shall apportion the taxpayer's tax base as provided by
this subchapter.
Sec. 172.203. TAXABLE IN ANOTHER STATE. For purposes of
apportionment of the tax base from business activity under this
subchapter, a taxpayer is taxable in another state if:
(1) in that state the taxpayer is subject to a
business privilege tax, a net income tax, a franchise tax measured
by net income, a franchise tax for the privilege of doing business,
a corporate stock tax, or a tax of the type imposed by this
chapter; or
(2) that state has jurisdiction to subject the
taxpayer to one or more of the taxes without regard to whether the
state does so.
Sec. 172.204. APPORTIONMENT FACTOR. All of the tax base is
apportioned to this state by multiplying the tax base by the gross
receipts factor.
Sec. 172.205. GROSS RECEIPTS FACTOR. The gross receipts
factor is a fraction, the numerator of which is the total gross
receipts of the taxpayer in this state during the tax year, and the
denominator of which is the total gross receipts of the taxpayer
during the tax year.
Sec. 172.206. NUMERATOR: GROSS RECEIPTS OF TAXPAYER IN THIS
STATE. (a) The gross receipts of a taxpayer in this state is the
sum of the taxpayer's receipts from:
(1) each sale of tangible personal property if the
property is delivered or shipped to a buyer in this state
regardless of the FOB point or another condition of the sale, and
each sale of tangible personal property shipped from this state to
a purchaser in another state in which the seller is not subject to
taxation;
(2) each service performed in this state;
(3) each rental of property situated in this state;
(4) each royalty for the use of a patent or copyright
in this state; and
(5) other business done in this state.
(b) A taxpayer shall deduct from its gross receipts any
amount to the extent included in Subsection (a) because of the
application of Section 78 or Sections 951-964, Internal Revenue
Code, and dividends received from a subsidiary, associate, or
affiliated business group that does not transact a substantial
portion of its business or regularly maintain a substantial portion
of its assets in the United States.
(c) Interest and dividends received by a banking corporation
or a savings and loan association are gross receipts of the banking
corporation or savings and loan association from its business done
in this state if the banking corporation or savings and loan
association has its commercial domicile in this state.
Sec. 172.207. DENOMINATOR: TOTAL GROSS RECEIPTS OF
TAXPAYER. (a) The total gross receipts of a taxpayer is the sum
of the taxpayer's receipts from:
(1) each sale of the taxpayer's tangible personal
property;
(2) each service, rental, or royalty; and
(3) other business.
(b) If a taxpayer sells an investment or capital asset, the
taxpayer's gross receipts from its entire business include only the
net gain from the sale.
(c) A taxpayer shall deduct from its gross receipts any
amount to the extent included in Subsection (a) because of the
application of Section 78 or Sections 951-964, Internal Revenue
Code, and dividends received from a subsidiary, associate, or
affiliated business group that does not transact a substantial
portion of its business or regularly maintain a substantial portion
of its assets in the United States.
Sections 172.208-172.250 reserved for expansion
SUBCHAPTER E. EXEMPTIONS
Sec. 172.251. APPLICATION FOR EXEMPTION. Except as
otherwise provided, a taxpayer may apply for an exemption under
this subchapter by filing with the comptroller, as provided by the
rules of the comptroller, evidence of the taxpayer's qualifications
for the exemption.
Sec. 172.252. EXEMPTION: GOVERNMENTAL ENTITIES. There are
exempted from the taxes imposed by this chapter the United States,
this state and other states, and agencies, political subdivisions,
and enterprises of the United States, this state, and other states.
Sec. 172.253. EXEMPTION: INSURANCE COMPANIES. There is
exempted from the taxes imposed by this chapter a corporation that
is an insurance company, surety, guaranty, or fidelity company
required to pay an annual tax measured by gross receipts.
Sec. 172.254. EXEMPTION: NONPROFIT CORPORATION EXEMPT FROM
FEDERAL INCOME TAX. (a) There are exempted from the taxes imposed
by this chapter:
(1) subject to Subsection (b), a nonprofit corporation
exempted from the federal income tax under Section 501(c)(3), (4),
(5), (6), (7), (8), (10), or (19), Internal Revenue Code;
(2) a corporation exempted under Section 501(c)(2) or
(25), Internal Revenue Code, if the corporation or corporations for
which it holds title to property is either exempt from or not
subject to the franchise tax;
(3) a corporation exempted from federal income tax
under Section 501(c)(16), Internal Revenue Code; and
(4) a nonprofit corporation exempted from the federal
income tax under Section 501(c)(3), Internal Revenue Code, that
does not receive any payment for providing health care services to
inpatients or outpatients from any source including a patient or
person legally obligated to support the patient, third-party
payors, Medicare, Medicaid, or any other state or local indigent
health care program but not including charitable donations,
legacies, bequests, or grants or payments for research.
(b) A nonprofit hospital qualifies under Subsection (a)(1)
if the hospital provides charity care and community benefits in the
following manner:
(1) charity care and government-sponsored indigent
health care are provided at a level that is reasonable in relation
to the community needs as determined through the community needs
assessment, the available resources of the hospital or hospital
system, and the tax-exempt benefits received by the hospital or
hospital system;
(2) charity care and government-sponsored indigent
health care are provided in an amount equal to at least four
percent of the hospital's or hospital system's net patient revenue;
(3) charity care and government-sponsored indigent
health care are provided in an amount equal to at least 100 percent
of the hospital's or hospital system's tax-exempt benefits,
excluding federal income tax;
(4) charity care and community benefits are provided
in a combined amount equal to at least five percent of the
hospital's or hospital system's net patient revenue, provided that
charity care and government-sponsored indigent health care are
provided in an amount equal to at least four percent of net patient
revenue;
(5) a nonprofit hospital that has been designated as a
disproportionate share hospital under the state Medicaid program in
the current year or in either of the previous two fiscal years is
considered to have provided a reasonable amount of charity care and
government-sponsored indigent health care and is considered in
compliance with the standards provided by this subsection; or
(6) a hospital operated on a nonprofit basis that is
located in a county with a population of less than 50,000 and in
which the entire county or the population of the entire county has
been designated as a health professionals shortage area is
considered in compliance with the standards provided by this
subsection.
(c) For purposes of Subsection (b), a hospital that
satisfies Subsection (b)(1), (5), or (6) shall be excluded in
determining a hospital system's compliance with the standards
provided by Subsection (b)(2), (3), or (4). A determination of the
amount of community benefits and charity care and
government-sponsored indigent health care provided by a hospital or
hospital system and the hospital's or hospital system's compliance
with the requirements of Section 311.045, Health and Safety Code,
shall be based on the most recently completed and audited prior
fiscal year of the hospital or hospital system. The providing of
charity care and government-sponsored indigent health care in
accordance with Subsection (b)(1) shall be guided by the prudent
business judgment of the hospital, which will ultimately determine
the appropriate level of charity care and government-sponsored
indigent health care based on the community needs, the available
resources of the hospital, the tax-exempt benefits received by the
hospital, and other factors that may be unique to the hospital,
such as the hospital's volume of Medicare and Medicaid patients.
These criteria shall not be determinative factors but shall be
guidelines contributing to the hospital's decision along with other
factors that may be unique to the hospital. The formulas contained
in Subsections (b)(2), (3), and (4) shall also not be considered
determinative of a reasonable amount of charity care and
government-sponsored indigent health care. The requirements of
Subsection (b) shall not apply if a hospital or hospital system
demonstrates that reductions in the amount of community benefits,
charity care, and government-sponsored indigent health care are
necessary to maintain financial reserves at a level required by a
bond covenant, are necessary to prevent the hospital or hospital
system from endangering its ability to continue operations, or are
necessary because the hospital, as a result of a natural or other
disaster, is required to substantially curtail its operations. In
any fiscal year that a hospital or hospital system, through
unintended miscalculation, fails to meet any of the standards in
Subsection (b), the hospital or hospital system shall not lose its
tax-exempt status without the opportunity to cure the
miscalculation in the fiscal year following the fiscal year the
failure is discovered by meeting one of the standards and providing
an additional amount of charity care and government-sponsored
indigent health care that is equal to the shortfall from the
previous fiscal year. A hospital or hospital system may apply this
provision only once every five years.
(d) A corporation is entitled to an exemption under this
section based on the corporation's exemption from the federal
income tax if the corporation files with the comptroller evidence
establishing the corporation's exemption.
(e) A corporation's exemption under this section may be
established by furnishing the comptroller with a copy of the
Internal Revenue Service's letter of exemption issued to the
corporation. The copy of the letter may be filed with the
comptroller within 15 months after the day that is the last day of
a calendar month and that is nearest to the date of the
corporation's charter or certificate of authority.
(f) If the Internal Revenue Service has not timely issued to
a corporation a letter of exemption, evidence establishing the
corporation's exemption under this section is sufficient if the
corporation files with the comptroller within the 15-month period
established by Subsection (e) evidence that the corporation has
applied in good faith for the federal tax exemption.
(g) An exemption established under Subsection (e) or (f) is
to be recognized, after it is finally established, as of the date
of the corporation's charter or certificate of authority.
(h) If a corporation timely files evidence with the
comptroller under Subsection (f) that it has applied for a federal
tax exemption and if the application is finally denied by the
Internal Revenue Service, this chapter does not impose a penalty on
the corporation from the date of its charter or certificate of
authority to the date of the final denial.
(i) If a corporation's federal tax exemption is withdrawn by
the Internal Revenue Service for failure of the corporation to
qualify or maintain its qualification for the exemption, the
corporation's exemption under this section ends on the effective
date of that withdrawal by the Internal Revenue Service. The
effective date of the withdrawal is considered the corporation's
beginning date for purposes of this chapter.
(j) In this section, "charity care," "government-sponsored
indigent health care," "health care organization," "hospital
system," "net patient revenue," "nonprofit hospital," and
"tax-exempt benefits" have the meanings assigned those terms in
Sections 311.031 and 311.042, Health and Safety Code.
Sec. 172.255. EXEMPTION: NONPROFIT CORPORATION ORGANIZED TO
PROVIDE WATER SUPPLY OR SEWER SERVICES. There is exempted from the
taxes imposed by this chapter a nonprofit water supply or sewer
service corporation organized on behalf of a municipality under
Chapter 76, Acts of the 43rd Legislature, 1st Called Session, 1933
(Article 1434a, Vernon's Texas Civil Statutes).
Sec. 172.256. EXEMPTION: RAILWAY TERMINAL CORPORATION. A
corporation organized as a railway terminal corporation and having
no annual net income from its business is exempted from the tax
under this chapter.
Sec. 172.257. EXEMPTION: OPEN-END INVESTMENT COMPANY. An
open-end investment company, as defined by the Investment Company
Act of 1940 (15 U.S.C. Section 80a-1 et seq.), that is subject to
that Act and that is registered under The Securities Act (Article
581-1 et seq., Vernon's Texas Civil Statutes), is exempted from the
tax under this chapter.
Sec. 172.258. EXEMPTION: BUSINESS ENTITY WITH BUSINESS
INTEREST IN SOLAR ENERGY DEVICES. (a) A business entity engaged
solely in the business of manufacturing, selling, or installing
solar energy devices is exempted from the tax under this chapter.
(b) In this section, "solar energy device" means a system or
series of mechanisms designed primarily to provide heating or
cooling or to produce electrical or mechanical power by collecting
and transferring solar-generated energy. The term includes a
mechanical or chemical device that has the ability to store
solar-generated energy for use in heating or cooling or in the
production of power.
Sec. 172.259. EXEMPTION: NONPROFIT CORPORATION ORGANIZED TO
PROMOTE COUNTY, CITY, OR ANOTHER AREA. A nonprofit corporation
organized solely to promote the public interest of a county, city,
town, or another area in the state is exempted from the tax under
this chapter.
Sec. 172.260. EXEMPTION: NONPROFIT CORPORATION ORGANIZED FOR
RELIGIOUS PURPOSES. A nonprofit corporation organized for the
purpose of religious worship is exempted from the tax under this
chapter.
Sec. 172.261. EXEMPTION: NONPROFIT CORPORATION ORGANIZED TO
PROVIDE BURIAL PLACES. A nonprofit corporation organized to
provide places of burial is exempted from the tax under this
chapter.
Sec. 172.262. EXEMPTION: NONPROFIT CORPORATION ORGANIZED FOR
AGRICULTURAL PURPOSES. A nonprofit corporation organized to hold
agricultural fairs and encourage agricultural pursuits is exempted
from the tax under this chapter.
Sec. 172.263. EXEMPTION: NONPROFIT CORPORATION ORGANIZED FOR
EDUCATIONAL PURPOSES. A nonprofit corporation organized solely for
educational purposes is exempted from the tax under this chapter.
Sec. 172.264. EXEMPTION: NONPROFIT CORPORATION ORGANIZED FOR
PUBLIC CHARITY. A nonprofit corporation organized for purely
public charity is exempted from the tax under this chapter.
Sec. 172.265. EXEMPTION: NONPROFIT CORPORATION ORGANIZED FOR
CONSERVATION PURPOSES. A nonprofit corporation organized solely to
educate the public about the protection and conservation of fish,
game, other wildlife, grasslands, or forests is exempted from the
tax under this chapter.
Sec. 172.266. EXEMPTION: NONPROFIT CORPORATION INVOLVED WITH
CITY NATURAL GAS FACILITY. A nonprofit corporation organized to
construct, acquire, own, lease, or operate a natural gas facility
on behalf and for the benefit of a municipality or residents of a
municipality is exempted from the tax under this chapter.
Sec. 172.267. EXEMPTION: NONPROFIT CORPORATION ORGANIZED TO
PROVIDE CONVALESCENT HOMES FOR ELDERLY. A nonprofit corporation
organized to provide a convalescent home or other housing for
persons who are at least 62 years old or who are handicapped or
disabled is exempted from the tax under this chapter, whether or
not the corporation is organized for purely public charity.
Sec. 172.268. EXEMPTION: NONPROFIT CORPORATION ORGANIZED TO
PROVIDE COOPERATIVE HOUSING. A nonprofit corporation engaged
solely in the business of owning residential property for the
purpose of providing cooperative housing for persons is exempted
from the tax under this chapter.
Sec. 172.269. EXEMPTION: MARKETING ASSOCIATIONS. A
marketing association incorporated under Chapter 52, Agriculture
Code, is exempted from the tax under this chapter.
Sec. 172.270. EXEMPTION: LODGES. A lodge incorporated under
Article 1399 et seq., Revised Statutes, is exempted from the tax
under this chapter.
Sec. 172.271. EXEMPTION: FARMERS' COOPERATIVE SOCIETY. A
farmers' cooperative society incorporated under Chapter 51,
Agriculture Code, is exempted from the tax under this chapter.
Sec. 172.272. EXEMPTION: HOUSING FINANCE CORPORATION. A
housing finance corporation incorporated under Chapter 394, Local
Government Code, is exempted from the tax under this chapter.
Sec. 172.273. EXEMPTION: DEVELOPMENT CORPORATION. A
nonprofit corporation organized under the Development Corporation
Act of 1979 (Article 5190.6, Vernon's Texas Civil Statutes) is
exempted from the tax under this chapter.
Sec. 172.274. EXEMPTION: COOPERATIVE ASSOCIATION. A
cooperative association incorporated under Subchapter B, Chapter
301, Health and Safety Code, or under the Cooperative Association
Act (Article 1396-50.01, Vernon's Texas Civil Statutes) is exempted
from the tax under this chapter.
Sec. 172.275. EXEMPTION: COOPERATIVE CREDIT ASSOCIATION. A
cooperative credit association incorporated under Chapter 55,
Agriculture Code, is exempted from the tax under this chapter.
Sec. 172.276. EXEMPTION: ELECTRIC COOPERATIVE CORPORATION.
An electric cooperative corporation incorporated under the Electric
Cooperative Corporation Act (Article 1528b, Vernon's Texas Civil
Statutes) that is not a participant in a joint powers agency is
exempted from the tax under this chapter.
Sec. 172.277. EXEMPTION: TELEPHONE COOPERATIVE CORPORATIONS.
A telephone cooperative corporation incorporated under the
Telephone Cooperative Act (Article 1528c, Vernon's Texas Civil
Statutes) is exempted from the tax under this chapter.
Sec. 172.278. EXEMPTION: CERTAIN HOMEOWNERS' ASSOCIATIONS.
(a) A nonprofit corporation is exempted from the tax under this
chapter if:
(1) the corporation is organized and operated
primarily to obtain, manage, construct, and maintain the property
in or of a residential condominium or residential real estate
development; and
(2) the owners of individual lots, residences, or
residential units control at least 51 percent of the votes of the
corporation and that voting control, however acquired, is not held
by:
(A) a single individual or family; or
(B) one or more developers, declarants, banks,
investors, or other similar parties.
(b) For purposes of this section, a condominium project is
considered residential if the project is legally restricted for use
as residences. A real estate development is considered residential
if the property is legally restricted for use as residences.
Sec. 172.279. EXEMPTION: EMERGENCY MEDICAL SERVICE
CORPORATION. A nonprofit corporation that is organized for the
sole purpose of and engages exclusively in providing emergency
medical services, including rescue and ambulance services, is
exempted from the tax under this chapter.
Sec. 172.280. EXEMPTION: CERTAIN TRADE SHOW PARTICIPANTS.
(a) A business entity is exempted from the tax under this chapter
if:
(1) the only business activity conducted by or on
behalf of the business entity in this state is related to the
solicitation of orders conducted by representatives of the business
entity who:
(A) solicit orders of personal property to be
sent outside this state for approval or rejection by the business
entity and, if approved, to be filled by shipment or delivery from
a point outside this state; or
(B) solicit orders in the name of or for the
benefit of a customer or prospective customer of the business
entity, if the orders are filled or intended to be filled by the
customer or prospective customer of the business entity by making
orders to the business entity described by Paragraph (A); and
(2) the solicitation of orders is conducted on an
occasional basis at trade shows:
(A) promoted by wholesale centers;
(B) promoted by nonprofit trade or professional
associations for the purpose of facilitating the solicitation of
orders from members of the trade or profession; or
(C) held at municipally owned or county-owned
convention centers or meeting facilities.
(b) For purposes of this section, the solicitation of orders
is conducted on an occasional basis only if the solicitation is
conducted during not more than five periods during the business
period of the business entity to which a tax report applies and if
no single period during which solicitation is conducted is longer
than 120 hours.
(c) In this section, "wholesale center" means a permanent
wholesale facility that has permanent tenants and that promotes at
least four national or regional trade shows in a calendar year.
Sec. 172.281. EXEMPTION: RECYCLING OPERATION. A business
entity engaged solely in the business of recycling sludge, as
defined by Section 361.003, Health and Safety Code, is exempted
from the tax under this chapter.
Sec. 172.282. EXEMPTION: NONPROFIT CORPORATION ORGANIZED FOR
STUDENT LOAN FUNDS OR STUDENT SCHOLARSHIP PURPOSES. A nonprofit
corporation organized solely to provide a student loan fund or
student scholarships is exempted from the tax under this chapter.
Sec. 172.283. EXEMPTION: CREDIT UNION. There is exempted
from the taxes imposed by this chapter a credit union incorporated
under the Texas Credit Union Act (Article 2461-1.01 et seq.,
Vernon's Texas Civil Statutes).
Sections 172.284-172.300 reserved for expansion
SUBCHAPTER F. TAX REPORTS AND PAYMENTS
Sec. 172.301. ESTIMATED TAX REPORTS FOR CORPORATIONS. (a)
This section applies only to a taxpayer who is a corporation.
(b) A taxpayer who reasonably expects liability for the tax
year to exceed $500 shall file an estimated report and pay an
estimated tax for each quarter of the taxpayer's tax year.
(c) For a taxpayer whose tax year is the calendar year, the
quarterly reports and estimated payments shall be made on or before
April 15, June 15, September 15, and December 15. A taxpayer whose
tax year is not the calendar year shall file quarterly reports and
make estimated payments on or before the due dates that in the
taxpayer's fiscal year correspond to the date required by the
Internal Revenue Service, or if that date does not apply to a
taxpayer, to the calendar year dates provided by this subsection.
(d) The estimated payment made with each quarterly report of
each tax year is for the estimated tax base for the quarter or
one-fourth of the estimated annual liability. The second, third,
and fourth estimated payments in each tax year shall include
adjustments, if necessary, to correct underpayments or overpayments
from previous quarterly payments in the tax year to a revised
estimate of the annual tax liability.
(e) The comptroller may not assess interest for tax that is
delinquent if:
(1) the sum of the estimated payments equals at least
90 percent of the liability or one percent of the gross receipts in
this state, as described by Section 172.206, for the tax year and
the amount of each estimated payment reasonably approximates the
tax liability incurred during the quarter for which the estimated
payment was made; or
(2) the preceding year's tax liability was submitted
by the taxpayer in four equal installments the sum of which equals
the previous year's tax liability.
(f) A taxpayer shall make each estimated report on a form
prescribed by the comptroller and shall include an estimate of the
annual tax liability and other information required by the
comptroller. The form may be combined with any other tax reporting
form prescribed by the comptroller.
(g) A taxpayer who files an estimated tax report for the
taxpayer's first tax year of less than 12 months shall pay amounts
with each report that are proportional to the number of payments
made in the first tax year.
(h) Payments made under this section are a credit against
the payment required with the annual tax report.
(i) The comptroller may require filing of the reports and
payment of the tax for other than quarterly or annual periods if
the comptroller considers it necessary to ensure payment of the tax
or to provide a more efficient administration of the tax.
(j) A taxpayer who elects under the Internal Revenue Code to
file an annual federal income tax return by March 1 in the year
following the taxpayer's tax year and does not make a quarterly
estimate or payment, or does not make a quarterly estimate or
payment and files a tentative annual return with a tentative
payment by January 15 in the year following the taxpayer's tax year
and a final return by April 15 in the year following the taxpayer's
tax year, has the same option in filing the estimated and annual
reports required by this chapter.
Sec. 172.302. REPORT FOR FIRST TAX YEAR. A taxpayer may
elect to compute the tax for the first taxable year, if less than
12 months by determining the amount of the tax as if this chapter
were effective on the first day of the taxpayer's annual accounting
period and multiply the amount by a fraction, the numerator of
which is the number of months in the taxpayer's first taxable year,
and the denominator of which is 12.
Sec. 172.303. ANNUAL TAX REPORT. (a) A taxpayer shall file
an annual or final report with the comptroller, in the form and
content prescribed by the comptroller, on or before the date the
taxpayer's federal income tax return is due, or if that date does
not apply to a taxpayer, the last day of the fourth month after the
end of the taxpayer's tax year.
(b) A taxpayer shall pay any final tax liability with the
final report.
(c) When a taxpayer is granted an extension of time to file
the taxpayer's federal income tax return for a taxable year, the
filing of a copy of the request for the federal extension with a
preliminary report and payment of the estimated tax with the
comptroller by the due date provided in Subsection (a)
automatically extends the due date for the filing of a final report
under this chapter for a period equivalent to the federal extension
plus 60 days. Interest at the rate that applies to delinquent
taxes under Section 111.060 shall be added to the amount of the tax
unpaid for the period of the extension.
Sec. 172.304. FILING OF FEDERAL TAX RETURNS. (a) A
taxpayer required to file a report under this chapter may be
required to furnish a copy of any return or portion of any return
that the taxpayer has filed under the Internal Revenue Code.
(b) A taxpayer shall file an amended report with the
comptroller showing any alteration in or modification of the
taxpayer's federal income tax return that affects the taxpayer's
tax base under this chapter not later than 120 days after the date
of the final determination by the Internal Revenue Service.
(c) At the request of the comptroller, a person required by
the Internal Revenue Code to file or submit an information return
of income paid to others shall, to the extent the information is
applicable to residents of this state, at the same time file or
submit information required by the comptroller in the form
prescribed by the comptroller.
Sec. 172.305. REPORTS OF TAXPAYERS OTHER THAN CORPORATIONS.
(a) This section applies only to a taxpayer who is not a
corporation.
(b) A taxpayer to which this section applies, including a
business entity, such as a partnership, business association, or
joint venture, that has more than one owner, shall file a tax
report that represents the business activities of the entire entity
for the relevant accounting period.
(c) A taxpayer to which this section applies is required
only to file an annual report under Section 172.304.
(d) Each owner of a business entity or a business activity
in which general liability is not otherwise limited by law is
jointly and severally liable for the amount of the taxes imposed by
this chapter on the business entity or business activity.
Sec. 172.306. COMBINED ENTITY REPORTS. (a) A controlled
group of corporations or an entity under common control, as defined
by the Internal Revenue Code, or an affiliated group shall file a
combined report.
(b) A corporation that has less than 80 percent of its
tangible assets located in a state or states may not be included in
any combined report but must file as a separate entity.
Sec. 172.307. INFORMATION REPORTS. The comptroller by rule
may require, at the time and in the manner specified by rule, the
filing of an information report of any taxpayer who has business
activity in or allocated to this state and who for a tax period has
gross receipts, as described by Section 172.207, of $500,000 or
more.
Sections 172.308-172.350 reserved for expansion
SUBCHAPTER G. ADMINISTRATION, COLLECTION, AND ENFORCEMENT
Sec. 172.351. PROHIBITION OF DISCLOSURE OF INFORMATION. (a)
A person, including a state officer or employee, who has access to
a report filed under this chapter commits an offense if the person
makes known in a manner not permitted by law the amount or source
of the taxpayer's income, profits, losses, expenditures, or other
information in the report relating to the financial condition of
the taxpayer.
(b) An offense under this section is punishable by a fine of
not more than $1,000, confinement in jail for not more than one
year, or both.
Sec. 172.352. PENALTY FOR FAILURE TO PAY TAX OR FILE REPORT.
(a) If a taxpayer on which a tax is imposed by this chapter fails
to pay the tax when it is due and payable or fails to file a report
required by this chapter when it is due, the taxpayer is liable for
a penalty of five percent of the amount of the tax due.
(b) If the tax is not paid or the report is not filed before
the 31st day after the due date, a penalty of an additional five
percent of the tax due is imposed.
(c) The minimum penalty under this section is $1.
Sec. 172.353. WILFUL AND FRAUDULENT ACTS. (a) A taxpayer
commits an offense if the taxpayer is subject to the provisions of
this chapter and the taxpayer wilfully:
(1) fails to file a report;
(2) fails to keep books and records as required by
this chapter;
(3) files a fraudulent report;
(4) violates any rule of the comptroller for the
administration and enforcement of the provisions of this chapter;
or
(5) attempts in any other manner to evade or defeat
any tax imposed by this chapter or the payment of the tax.
(b) A person commits an offense if the person is an
accountant or an agent for or an officer or employee of a taxpayer
and the person knowingly enters or provides false information on
any report, return, or other document filed by the taxpayer under
this chapter.
(c) A person who commits an offense under this section may
also, in addition to the punishment provided by this section, be
liable for a penalty under this chapter.
(d) An offense under this section is a Class A misdemeanor.
(e) A person whose commercial domicile or whose residence is
in this state may be prosecuted under this section only in the
county in which the person's commercial domicile or residence is
located unless the person asserts a right to be prosecuted in
another county.
(f) A prosecution for a violation of this section must be
commenced before the fifth anniversary of the date of the
violation.
Sec. 172.354. RECIPROCAL AGREEMENTS. The comptroller may
enter into reciprocal agreements with the United States Department
of the Treasury or taxing officials of other states or nations for
the enforcement, collection, and exchange of data in connection
with the administration of this chapter.
Sections 172.355-172.400 reserved for expansion
SUBCHAPTER H. FORFEITURE OF CORPORATE PRIVILEGES
Sec. 172.401. FORFEITURE OF CORPORATE PRIVILEGES. The
comptroller shall forfeit the corporate privileges of a corporation
on which the tax imposed by this chapter is imposed if the
corporation:
(1) does not file, in accordance with this chapter and
before the 45th day after the date notice of forfeiture is mailed,
a report required by this chapter; or
(2) does not pay, before the 45th day after the date
notice of forfeiture is mailed, a tax imposed by this chapter or
does not pay, before that date, a penalty imposed by this chapter
relating to that tax.
Sec. 172.402. EFFECTS OF FORFEITURE. If the corporate
privileges of a corporation are forfeited under this subchapter:
(1) the corporation is denied the right to sue or
defend in a court of this state; and
(2) each director or officer of the corporation is
liable for a debt of the corporation as provided by Section
172.405.
Sec. 172.403. SUIT ON CAUSE OF ACTION ARISING BEFORE
FORFEITURE. In a suit against a corporation on a cause of action
arising before the forfeiture of the corporate privileges of the
corporation, affirmative relief may not be granted to the
corporation unless its corporate privileges are revived under this
chapter.
Sec. 172.404. EXCEPTION TO FORFEITURE. The forfeiture of
the corporate privileges of a corporation does not apply to the
privilege to defend in a suit to forfeit the corporation's charter
or certificate of authority.
Sec. 172.405. LIABILITY OF DIRECTOR AND OFFICERS. (a) If
the corporate privileges of a corporation are forfeited for the
failure to file a report or pay a tax or penalty, each director or
officer of the corporation is liable for each debt of the
corporation that is created or incurred in this state after the
date on which the report, tax, or penalty is due and before the
corporate privileges are revived. The liability includes liability
for any tax or penalty imposed by this chapter on the corporation
that becomes due and payable after the date of the forfeiture.
(b) The liability of a director or officer is in the same
manner and to the same extent as if the director or officer were a
partner and the corporation were a partnership.
(c) A director or officer is not liable for a debt of the
corporation if the director or officer shows that the debt was
created or incurred:
(1) over the director's objection; or
(2) without the director's knowledge and that the
exercise of reasonable diligence to become acquainted with the
affairs of the corporation would not have revealed the intention to
create the debt.
(d) If a corporation's charter or certificate of authority
and its corporate privileges are forfeited and revived under this
chapter, the liability under this section of a director or officer
of the corporation is not affected by the revival of the charter or
certificate and the corporate privileges.
Sec. 172.406. NOTICE OF FORFEITURE. (a) To forfeit the
corporate privileges of a corporation, the comptroller must notify
the corporation that the forfeiture will occur without a judicial
proceeding unless the corporation:
(1) files, within the time established by Section
172.401, the report to which that section refers; or
(2) pays, within the time established by Section
172.401, the delinquent tax and penalty to which that section
refers.
(b) The notice must be written or printed and be verified by
the seal of the comptroller's office.
(c) The comptroller shall mail the notice to the corporation
at least 45 days before the forfeiture of corporate privileges.
The comptroller shall address the notice to the corporation and
mail it to the address named in the corporation's charter as its
principal place of business or to another known place of business
of the corporation.
(d) The comptroller shall keep at the comptroller's office a
record of the date on which the notice is mailed. For the purposes
of this chapter, the notice and the record of the mailing date
constitute legal and sufficient notice of the forfeiture.
Sec. 172.407. JUDICIAL PROCEEDING NOT REQUIRED FOR
FORFEITURE. The forfeiture of the corporate privileges of a
corporation is effected by the comptroller without a judicial
proceeding.
Sec. 172.408. REVIVAL OF CORPORATE PRIVILEGES. The
comptroller shall revive the corporate privileges of a corporation
if the corporation, before the forfeiture of its charter or
certificate of authority, pays any tax, penalty, or interest due
under this chapter.
Sections 172.409-172.450 reserved for expansion
SUBCHAPTER I. FORFEITURE OF CHARTER OR CERTIFICATE OF AUTHORITY
Sec. 172.451. GROUNDS FOR FORFEITURE OF CHARTER OR
CERTIFICATE OF AUTHORITY. It is a ground for the forfeiture of a
corporation's charter or certificate of authority if the corporate
privileges of the corporation are forfeited under this chapter and
the corporation does not pay, before the 120th day after the date
the corporate privileges are forfeited, the amount necessary for
the corporation to revive under this chapter its corporate
privileges.
Sec. 172.452. CERTIFICATION BY COMPTROLLER. After the 120th
day after the date that the corporate privileges of a corporation
are forfeited under this chapter, the comptroller shall certify the
name of the corporation to the attorney general and the secretary
of state.
Sec. 172.453. SUIT FOR JUDICIAL FORFEITURE. On receipt of
the comptroller's certification, the attorney general shall bring
suit to forfeit the charter or certificate of authority of the
corporation if a ground exists for the forfeiture of the charter or
certificate.
Sec. 172.454. RECORD OF JUDICIAL FORFEITURE. (a) If a
district court forfeits a corporation's charter or certificate of
authority under this chapter, the clerk of the court shall promptly
mail to the secretary of state a certified copy of the court's
judgment. On receipt of the copy of the judgment, the secretary of
state shall inscribe on the corporation's record at the secretary's
office the words "Judgment of Forfeiture" and the date of the
judgment.
(b) If an appeal of the judgment is perfected, the clerk of
the court shall promptly certify to the secretary of state that the
appeal has been perfected. On receipt of the certification, the
secretary of state shall inscribe on the corporation's record at
the secretary's office the word "Appealed" and the date on which
the appeal was perfected.
(c) If final disposition of an appeal is made, the clerk of
the court making the disposition shall promptly certify to the
secretary of state the type of disposition made and the date of the
disposition. On receipt of the certification, the secretary of
state shall inscribe on the corporation's record at the secretary's
office a brief note of the type of final disposition made and the
date of the disposition.
Sec. 172.455. REVIVAL OF CHARTER OR CERTIFICATE OF AUTHORITY
AFTER JUDICIAL FORFEITURE. A corporation whose charter or
certificate of authority is judicially forfeited under this chapter
is entitled to have its charter or certificate revived and to have
its corporate privileges revived if:
(1) the corporation files each report that is required
by this chapter and that is delinquent;
(2) the corporation pays the tax, penalty, and
interest that is imposed by this chapter and that is due at the
time the suit under Section 172.456 to set aside forfeiture is
filed; and
(3) the forfeiture of the corporation's charter or
certificate is set aside in a suit under Section 172.456.
Sec. 172.456. SUIT TO SET ASIDE JUDICIAL FORFEITURE. If a
corporation's charter or certificate of authority is judicially
forfeited under this chapter, a stockholder, director, or officer
of the corporation at the time of the forfeiture of the charter or
certificate or of the corporate privileges of the corporation may
bring suit in a district court of Travis County in the name of the
corporation to set aside the forfeiture of the charter or
certificate. The suit must be in the nature of a bill of review.
The secretary of state and attorney general must be made defendants
in the suit.
Sec. 172.457. RECORD OF SUIT TO SET ASIDE JUDICIAL
FORFEITURE. If a court under this chapter sets aside the
forfeiture of a corporation's charter or certificate of authority,
the secretary of state shall inscribe on the corporation's record
in the secretary's office the words "Charter Revived by Court
Order" or "Certificate Revived by Court Order," a citation to the
suit, and the date of the court's judgment.
Sec. 172.458. CORPORATE PRIVILEGES AFTER JUDICIAL FORFEITURE
IS SET ASIDE. If a court under this chapter sets aside the
forfeiture of a corporation's charter or certificate of authority,
the comptroller shall revive the corporate privileges of the
corporation and shall inscribe on the corporation's record in the
comptroller's office a note of the revival.
Sec. 172.459. FORFEITURE BY SECRETARY OF STATE. The
secretary of state may forfeit the charter or certificate of
authority of a corporation if:
(1) the secretary receives the comptroller's
certification under Section 172.452;
(2) the corporation does not revive its forfeited
corporate privileges before the 120th day after the date that the
corporate privileges were forfeited; and
(3) the corporation does not have assets from which a
judgment for any tax, penalty, or court costs imposed by this
chapter may be satisfied.
Sec. 172.460. JUDICIAL PROCEEDING NOT REQUIRED FOR
FORFEITURE BY SECRETARY OF STATE. The forfeiture by the secretary
of state of a corporation's charter or certificate of authority
under this chapter is effected without a judicial proceeding.
Sec. 172.461. RECORD OF FORFEITURE BY SECRETARY OF STATE.
The secretary of state shall effect a forfeiture of a corporation's
charter or certificate of authority under this chapter by
inscribing on the corporation's record in the secretary's office
the words "Charter Forfeited" or "Certificate Forfeited," the date
on which this inscription is made, and a citation to this chapter
as authority for the forfeiture.
Sec. 172.462. REVIVAL OF CHARTER OR CERTIFICATE OF AUTHORITY
AFTER FORFEITURE BY SECRETARY OF STATE. A corporation whose
charter or certificate of authority is forfeited under this chapter
by the secretary of state is entitled to have its charter or
certificate revived and to have its corporate privileges revived
if:
(1) the corporation files each report that is required
by this chapter and that is delinquent;
(2) the corporation pays the tax, penalty, and
interest that is imposed by this chapter and that is due at the
time the request under Section 172.463 to set aside forfeiture is
made; and
(3) the forfeiture of the corporation's charter or
certificate is set aside in a proceeding under Section 172.463.
Sec. 172.463. PROCEEDING TO SET ASIDE FORFEITURE BY
SECRETARY OF STATE. (a) If a corporation's charter or certificate
of authority is forfeited under this chapter by the secretary of
state, a stockholder, director, or officer of the corporation at
the time of the forfeiture of the charter or certificate or of the
corporate privileges of the corporation may request in the name of
the corporation that the secretary of state set aside the
forfeiture of the charter or certificate.
(b) If a request is made, the secretary of state shall
determine if each delinquent report has been filed and any
delinquent tax, penalty, or interest has been paid. If each report
has been filed and the tax, penalty, or interest has been paid, the
secretary shall set aside the forfeiture of the corporation's
charter or certificate of authority.
Sec. 172.464. CORPORATE PRIVILEGES AFTER FORFEITURE BY
SECRETARY OF STATE IS SET ASIDE. If the secretary of state sets
aside under this chapter the forfeiture of a corporation's charter
or certificate of authority, the comptroller shall revive the
corporate privileges of the corporation.
Sec. 172.465. USE OF CORPORATE NAME AFTER REVIVAL OF CHARTER
OR CERTIFICATE OF AUTHORITY. If a corporation's charter or
certificate of authority is forfeited under this chapter by the
secretary of state and if the corporation requests the secretary to
set aside the forfeiture under Section 172.463, the corporation
shall determine from the secretary whether the corporation's name
is available for use. If the name is not available, the
corporation shall amend its charter or certificate to change its
name.
Sections 172.466-172.500 reserved for expansion
SUBCHAPTER J. DISPOSITION OF REVENUE
Sec. 172.501. TEXAS SCHOOL TRUST FUND. The revenue from the
tax imposed by this chapter shall be deposited to the credit of the
Texas School Trust Fund.
SECTION 3.02. Section 101.003(8), Tax Code, as amended by
Section 1.01, Chapter 486, and Section 3.27, Chapter 685, Acts of
the 73rd Legislature, Regular Session, 1993, is amended to read as
follows:
(8) "Taxpayer" means a person liable for a tax, fee,
assessment, or other amount imposed by a statute or under the
authority of a statutory function administered by the comptroller.
The term includes a business entity subject to the tax under
Chapter 172, Tax Code.
SECTION 3.03. (a) Chapter 171, Tax Code, is repealed
January 1, 1998.
(b) Chapter 171, Tax Code, and Subtitle B, Title 2, Tax
Code, continue to apply to audits, deficiencies, redeterminations,
and refunds of any tax due or collected under Chapter 171 until
barred by limitations.
(c) Any corporation that is subject to the franchise tax
imposed by Chapter 171, Tax Code, before the date of its repeal
shall pay an additional tax equal to 4.5 percent of the
corporation's net taxable earned surplus computed on the period
beginning on the day after the last day for which the tax imposed
on net taxable earned surplus was computed under Section 171.1532,
Tax Code, and ending on December 31, 1997. The comptroller by rule
shall provide for the payment of tax due for an initial or second
period that does not expire before January 1, 1998. A franchise
tax return is not required for any initial or second period as
described by Chapter 171, Tax Code, that begins on or after January
1, 1998.
(d) The repeal of Chapter 171, Tax Code, does not affect:
(1) the status of a corporation that has had its
corporate privileges, certificate of authority, or corporate
charter revoked, suit filed against it, or a receiver appointed
under Subchapter F, G, or H of that chapter;
(2) the ability of the comptroller, secretary of
state, or attorney general to take action against a corporation
under Subchapter F, G, or H for actions that took place before the
repeal; or
(3) the right of a corporation to contest a
forfeiture, revocation, lawsuit, or appointment of a receiver under
Subchapter F, G, or H.
SECTION 3.04. (a) Chapter 172, Tax Code, as added by this
article, applies to any business activity taking place on or after
July 1, 1998.
(b) Tax owed under Chapter 172, Tax Code, as added by this
article, for 1998, shall be proportionately reduced, in the manner
provided by Section 172.302, as added by this article, for the
report for the first tax year of a taxpayer, to reflect that the
1998 tax year is not a full calendar year.
(c) A corporation, as that term is defined by Section
172.006, Tax Code, as added by this article, shall make its first
estimated quarterly business tax payment under Chapter 172, as
added by this article, on or before October 31, 1998.
(d) A taxpayer, as that term is defined by Chapter 172, as
added by this article, other than a corporation, as that term is
defined by Section 172.006, Tax Code, as added by this article,
shall file its first tax year report and make its business tax
payment under Chapter 172, as added by this article, for business
activity taking place in 1998, beginning on July 1, 1998, on or
before April 15, 1999.
(e) In 1998, the comptroller may by rule extend the deadline
for estimated tax payments of the tax under Chapter 172, Tax Code,
as added by this article.
SECTION 3.05. Subject to Sections 3.03 and 3.04 of this
article, this article takes effect when this Act takes effect.
ARTICLE 4. SALES, EXCISE, AND USE TAX
SECTION 4.01. Section 151.051(b), Tax Code, is amended to
read as follows:
(b) The sales tax rate is 6 3/4 <6 1/4> percent of the sales
price of the taxable item sold.
SECTION 4.02. Subchapter M, Chapter 151, Tax Code, is
amended by adding Section 151.802 to read as follows:
Sec. 151.802. DEDICATION TO TEXAS SCHOOL TRUST FUND. (a)
The net revenue derived from the imposition of the taxes imposed by
this chapter at the rate of one-half of one percent of the sales
price of taxable items under this chapter shall be credited to the
Texas School Trust Fund.
(b) The comptroller shall determine the amount described by
Subsection (a) according to available statistical data indicating
the estimated or actual total receipts in this state from taxable
sales.
SECTION 4.03. (a) This article takes effect January 1,
1998.
(b) The change in law made by this article does not affect
taxes imposed before the effective date of this article, and the
law in effect before the effective date of this article is
continued in effect for purposes of the liability for and
collection of those taxes.
ARTICLE 5. MOTOR VEHICLE SALES, RENTAL, AND USE TAX
SECTION 5.01. Section 152.021, Tax Code, is amended to read
as follows:
Sec. 152.021. RETAIL SALES TAX. (a) A tax is imposed on
every retail sale of every motor vehicle sold in this state.
Except as provided by this chapter, the tax is an obligation of and
shall be paid by the purchaser of the motor vehicle.
(b) The tax rate is 6 3/4 <6 1/4> percent of the total
consideration.
SECTION 5.02. Section 152.022, Tax Code, is amended to read
as follows:
Sec. 152.022. TAX ON MOTOR VEHICLE PURCHASED OUTSIDE THIS
STATE. (a) A use tax is imposed on a motor vehicle purchased at
retail sale outside this state and used on the public highways of
this state by a Texas resident or other person who is domiciled or
doing business in this state.
(b) The tax rate is 6 3/4 <6 1/4> percent of the total
consideration.
SECTION 5.03. Sections 152.026(a) and (b), Tax Code, are
amended to read as follows:
(a) A tax is imposed on the gross rental receipts from the
rental of a rented motor vehicle.
(b) The tax rate is 10 percent of the gross rental receipts
from the rental of a rented motor vehicle for 30 days or less and
6 3/4 <6 1/4> percent of the gross rental receipts from the rental
of a rented motor vehicle for longer than 30 days.
SECTION 5.04. Section 152.028, Tax Code, is amended to read
as follows:
Sec. 152.028. USE TAX ON MOTOR VEHICLE BROUGHT BACK INTO
STATE. (a) A use tax is imposed on the operator of a motor
vehicle that was purchased tax-free under Section 152.090 of this
code and that is brought back into this state for use on the public
highways of this state. The tax is imposed at the time the motor
vehicle is brought back into this state.
(b) The tax rate is 6 3/4 <6 1/4> percent of the total
consideration.
SECTION 5.05. Section 152.122, Tax Code, is amended to read
as follows:
Sec. 152.122. ALLOCATION OF TAX. The comptroller shall
deposit the funds received under Section 152.121 of this code as
follows:
(1) 25 percent <1/4> to the credit of the foundation
school fund; <and>
(2) 7.4 percent to the Texas School Trust Fund; and
(3) the remaining funds to the credit of the general
revenue fund.
SECTION 5.06. This article takes effect January 1, 1998.
ARTICLE 6. STATE LOTTERY ACCOUNT
SECTION 6.01. Section 466.355(b), Government Code, is
amended to read as follows:
(b) Money in the state lottery account may be used only for
the following purposes and shall be distributed as follows:
(1) the payment of prizes to the holders of winning
tickets;
(2) the payment of costs incurred in the operation and
administration of the lottery, including any fees received by a
lottery operator, provided that the costs incurred in a fiscal
biennium may not exceed an amount equal to 15 percent of the gross
revenue accruing from the sale of tickets in that biennium;
(3) the establishment of a pooled bond fund, lottery
prize reserve fund, unclaimed prize fund, and prize payment
account; and
(4) the balance, after creation of a reserve
sufficient to pay the amounts needed or estimated to be needed
under Subdivisions (1) through (3), to be transferred to the Texas
School Trust Fund <unobligated portion of the general revenue
fund>, on or before the 15th day of each month.
SECTION 6.02. This article takes effect September 1, 1997.
SECTION 6.03. Section 466.355, Government Code, as amended
by this article, applies only to revenue from the sale of a lottery
ticket that occurs on or after the effective date of this article.
Revenue from the sale of a lottery ticket that occurs before the
effective date of this article is governed by the law in effect on
the date of the sale, and the former law is continued in effect for
that purpose.
ARTICLE 7. CONTINGENCY; EMERGENCY
SECTION 7.01. (a) This Act takes effect on the date on
which the constitutional amendment proposed by ___ J.R. No. ____,
75th Legislature, Regular Session, 1997, takes effect. If that
amendment is not approved by the voters, this Act has no effect.
(b) Each article of this Act takes effect as provided by the
terms of the article.
SECTION 7.02. The importance of this legislation and the
crowded condition of the calendars in both houses create an
emergency and an imperative public necessity that the
constitutional rule requiring bills to be read on three several
days in each house be suspended, and this rule is hereby suspended.
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