By Craddick H.B. No. 4
75R3159
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to school property tax cuts, the distribution of
1-3 replacement revenue, the imposition, administration, rates,
1-4 collection, and enforcement of various taxes, and the allocation of
1-5 revenue from those taxes and other sources for the funding of
1-6 primary and secondary education; providing penalties.
1-7 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-8 ARTICLE 1. SCHOOL PROPERTY TAX CUT
1-9 SECTION 1.01. This Act may be known as the Property Tax Cut
1-10 Act of 1997.
1-11 SECTION 1.02. Chapter 403, Government Code, is amended by
1-12 adding Subchapter N to read as follows:
1-13 SUBCHAPTER N. TEXAS SCHOOL TRUST FUND
1-14 Sec. 403.351. DEFINITION. In this subchapter, "fund" means
1-15 the Texas School Trust Fund created by Section 5-a, Article VII,
1-16 Texas Constitution.
1-17 Sec. 403.352. ADMINISTRATION OF FUND. The comptroller shall
1-18 administer the fund.
1-19 Sec. 403.353. INVESTMENT OF FUND. The comptroller shall
1-20 invest money credited to the fund that is not immediately needed
1-21 for payments under this subchapter in investments authorized by
1-22 Chapter 2256.
1-23 Sec. 403.354. REIMBURSEMENT FOR ADDITIONAL EXEMPTION. (a)
1-24 A school district is entitled to reimbursement from the fund for
2-1 lost ad valorem tax revenue resulting from the $20,000 residence
2-2 homestead exemption required by Section 1-b(g), Article VIII, Texas
2-3 Constitution.
2-4 (b) The comptroller shall compute each school district's
2-5 lost ad valorem tax revenue resulting from the exemption described
2-6 by Subsection (a). The comptroller shall adopt rules under which a
2-7 school district or appraisal district must report information
2-8 relating to property values and tax rates necessary to allow the
2-9 comptroller to make the computation.
2-10 Sec. 403.355. REIMBURSEMENT FOR PROPERTY TAX RATE RELIEF.
2-11 (a) A school district is entitled to reimbursement from the fund
2-12 for lost ad valorem tax revenue resulting from the $0.20 per $100
2-13 valuation reduction in the district's maintenance and operation tax
2-14 rate required by Section 26.048, Tax Code, as added by ___. B. No.
2-15 _____, Acts of the 75th Legislature, Regular Session, 1997.
2-16 (b) Except as provided by Subsection (c), the amount of
2-17 reimbursement under this section is computed by dividing the
2-18 district's taxable value of property for the tax year by 100 and
2-19 multiplying the resulting quotient by 20 cents.
2-20 (c) For purposes of Subsection (b), the reimbursement for a
2-21 district with a wealth per student equal to or greater than the
2-22 equalized wealth level is based on the taxable value of property
2-23 the commissioner of education considers that the district retains
2-24 as a result of actions taken under Chapter 41, Education Code. In
2-25 this subsection, "equalized wealth level" has the meaning assigned
2-26 by Section 41.001, Education Code.
2-27 (d) This section takes effect January 1, 1998, and applies
3-1 only to the 1998 and subsequent tax years. This subsection expires
3-2 January 2, 1998.
3-3 Sec. 403.356. PAYMENT OF REIMBURSEMENTS. (a) The
3-4 comptroller shall pay a reimbursement under Section 403.354 or
3-5 403.355 not later than January 31 of the school year for which the
3-6 reimbursement is made.
3-7 (b) In connection with the payment of reimbursements under
3-8 this subchapter, the comptroller may audit the records of a school
3-9 district and may adjust a payment to a school district under this
3-10 subchapter, Chapter 41 or 42, Education Code, or other law if the
3-11 district has received an amount under Subsection (a) that is less
3-12 than or greater than the reimbursement to which the district is
3-13 entitled.
3-14 SECTION 1.03. Effective January 1, 1998, Section 403.354,
3-15 Government Code, as added by Section 1.02 of this Act, is amended
3-16 to read as follows:
3-17 Sec. 403.354. REIMBURSEMENT FOR ADDITIONAL EXEMPTIONS AND
3-18 LIMITATIONS. (a) A school district is entitled to reimbursement
3-19 from the fund for lost ad valorem tax revenue resulting from:
3-20 (1) the $20,000 residence homestead exemption required
3-21 by Section 1-b(g), Article VIII, Texas Constitution;
3-22 (2) the tax freeze limitation required by Section
3-23 1-b(d), Article VIII, Texas Constitution, but only to the extent of
3-24 the increase in that limitation under Section 1-b(g) of that
3-25 article; and
3-26 (3) the business inventory exemption required by
3-27 Section 11.25, Tax Code.
4-1 (b) The comptroller shall compute each school district's
4-2 lost ad valorem tax revenue resulting from the exemptions and
4-3 limitation described by Subsection (a). The comptroller shall
4-4 adopt rules under which a school district or appraisal district
4-5 must report information relating to property values, tax rates, and
4-6 taxpayer eligibility necessary to allow the comptroller to make the
4-7 computation.
4-8 SECTION 1.04. Section 21.402(b), Education Code, is amended
4-9 to read as follows:
4-10 (b) Not later than June 1 of each year, the commissioner
4-11 shall determine the amount appropriated for purposes of Chapter 42
4-12 for the state fiscal year beginning September 1. The commissioner
4-13 shall exclude from the determination:
4-14 (1) amounts designated solely for use in connection
4-15 with school facilities or for payment of principal of and interest
4-16 on bonds; [and]
4-17 (2) local funds received under Subchapter D, Chapter
4-18 41; and
4-19 (3) amounts received by school districts from the
4-20 Texas School Trust Fund under Subchapter N, Chapter 403, Government
4-21 Code.
4-22 SECTION 1.05. Section 29.008(b), Education Code, is amended
4-23 to read as follows:
4-24 (b) Except as provided by Subsection (c), costs of an
4-25 approved contract for residential placement may be paid from a
4-26 combination of federal, state, and local funds. The local share of
4-27 the total contract cost for each student is that portion of the
5-1 local tax effort that exceeds the district's local fund assignment
5-2 under Section 42.252, divided by the average daily attendance in
5-3 the district. If the contract involves a private facility, the
5-4 state share of the total contract cost is that amount remaining
5-5 after subtracting the local share. If the contract involves a
5-6 public facility, the state share is that amount remaining after
5-7 subtracting the local share from the portion of the contract that
5-8 involves the costs of instructional and related services. For
5-9 purposes of this subsection, "local tax effort" means the total
5-10 amount of money generated by taxes imposed for debt service and
5-11 maintenance and operation plus any amounts received from the Texas
5-12 School Trust Fund under Subchapter N, Chapter 403, Government Code.
5-13 SECTION 1.06. Section 41.002(f), Education Code, is amended
5-14 to read as follows:
5-15 (f) For purposes of Subsections (d) and (e), a school
5-16 district's effective tax rate is determined by dividing the total
5-17 amount of taxes collected by the district for the applicable school
5-18 year plus any amounts received from the Texas School Trust Fund
5-19 under Section 403.354, Government Code, by the quotient of the
5-20 district's taxable value of property, as determined under
5-21 Subchapter M, Chapter 403, Government Code, divided by 100. This
5-22 subsection expires September 1, 1998.
5-23 SECTION 1.07. Section 41.093, Education Code, is amended to
5-24 read as follows:
5-25 Sec. 41.093. COST. (a) The cost of each credit is an
5-26 amount equal to the greater of:
5-27 (1) the amount of the district's total tax revenue per
6-1 student in weighted average daily attendance for the school year
6-2 for which the contract is executed; or
6-3 (2) the amount of the statewide district average of
6-4 total tax revenue per student in weighted average daily attendance
6-5 for the school year preceding the school year for which the
6-6 contract is executed.
6-7 (b) For purposes of this section, total tax revenue includes
6-8 amounts received from the Texas School Trust Fund under Section
6-9 403.354, Government Code.
6-10 SECTION 1.08. Section 41.097(a), Education Code, is amended
6-11 to read as follows:
6-12 (a) The total amount required under Section 41.093 for a
6-13 district to purchase attendance credits under this subchapter for
6-14 any school year is reduced by an amount equal to the product of the
6-15 district's costs under Section 6.06, Tax Code, for the central
6-16 appraisal district in which it participates multiplied by a
6-17 percentage that is computed by dividing the total amount required
6-18 under Section 41.093 by the total amount of taxes imposed in the
6-19 district for that year plus any amounts received from the Texas
6-20 School Trust Fund under Section 403.354, Government Code.
6-21 SECTION 1.09. Section 42.251(b), Education Code, is amended
6-22 to read as follows:
6-23 (b) The program shall be financed by:
6-24 (1) ad valorem tax revenue generated by an equalized
6-25 uniform school district effort;
6-26 (2) ad valorem tax revenue generated by local school
6-27 district effort in excess of the equalized uniform school district
7-1 effort;
7-2 (3) state available school funds distributed in
7-3 accordance with law; [and]
7-4 (4) amounts distributed from the Texas School Trust
7-5 Fund under Subchapter N, Chapter 403, Government Code; and
7-6 (5) state funds appropriated for the purposes of
7-7 public school education and allocated to each district in an amount
7-8 sufficient to finance the cost of each district's Foundation School
7-9 Program not covered by other funds specified in this subsection.
7-10 SECTION 1.10. Section 42.252(d), Education Code, is amended
7-11 to read as follows:
7-12 (d) A school district must raise its total local share of
7-13 the Foundation School Program to be eligible to receive foundation
7-14 school fund payments. For purposes of this chapter, the
7-15 commissioner shall also consider amounts received from the Texas
7-16 School Trust Fund under Subchapter N, Chapter 403, Government Code,
7-17 as money raised by a district to meet its local share.
7-18 SECTION 1.11. Section 42.302(b), Education Code, is amended
7-19 to read as follows:
7-20 (b) In computing the district enrichment and facilities tax
7-21 rate of a school district, the commissioner shall add amounts
7-22 received from the Texas School Trust Fund under Subchapter N,
7-23 Chapter 403, Government Code, to the total amount of taxes
7-24 collected by the district. The [the] total amount of taxes
7-25 collected by the school district does not include the amount of:
7-26 (1) the district's local fund assignment under Section
7-27 42.252; or
8-1 (2) taxes collected to pay the local share of the cost
8-2 of an instructional facility for which the district receives state
8-3 assistance under Subchapter H.
8-4 SECTION 1.12. Section 42.304, Education Code, is amended to
8-5 read as follows:
8-6 Sec. 42.304. COMPUTATION OF AID FOR DISTRICT ON MILITARY
8-7 RESERVATION OR AT STATE SCHOOL. State assistance under this
8-8 subchapter for a school district located on a federal military
8-9 installation or at Moody State School is computed using the average
8-10 effective tax rate computed as provided by Section 42.401(1) and
8-11 property value per student of school districts in the county, as
8-12 determined by the commissioner.
8-13 SECTION 1.13. Section 42.401(1), Education Code, is amended
8-14 to read as follows:
8-15 (1) "Effective tax rate" means a tax rate that is
8-16 determined by adding [dividing] the amount of taxes collected by a
8-17 school district and any amounts received from the Texas School
8-18 Trust Fund under Subchapter N, Chapter 403, Government Code, and
8-19 dividing that total by the quotient of the district's taxable value
8-20 of property, as determined under Subchapter M, Chapter 403,
8-21 Government Code, divided by 100.
8-22 SECTION 1.14. (a) Section 403.302(d), Government Code, is
8-23 amended to read as follows:
8-24 (d) For the purposes of this section, "taxable value" means
8-25 market value less:
8-26 (1) the total dollar amount of any exemptions of part
8-27 but not all of the value of taxable property required by the
9-1 constitution or a statute that a district lawfully granted in the
9-2 year that is the subject of the study, other than the $20,000
9-3 residence homestead exemption required by Section 1-b(g), Article
9-4 VIII, Texas Constitution;
9-5 (2) the total dollar amount of any exemptions granted
9-6 before May 31, 1993, within a reinvestment zone under agreements
9-7 authorized by Chapter 312, Tax Code;
9-8 (3) the total dollar amount of any captured appraised
9-9 value of property that is located in a reinvestment zone and that
9-10 is eligible for tax increment financing under Chapter 311, Tax
9-11 Code;
9-12 (4) the total dollar amount of any exemptions granted
9-13 under Section 11.251, Tax Code;
9-14 (5) the difference between the market value and the
9-15 productivity value of land that qualifies for appraisal on the
9-16 basis of its productive capacity, except that the productivity
9-17 value may not exceed the fair market value of the land;
9-18 (6) the portion of the appraised value of residence
9-19 homesteads of the elderly on which school district taxes are not
9-20 imposed in the year that is the subject of the study, calculated as
9-21 if the residence homesteads were appraised at the full value
9-22 required by law;
9-23 (7) a portion of the market value of property not
9-24 otherwise fully taxable by the district at market value because of
9-25 action required by statute or the constitution of this state that,
9-26 if the tax rate adopted by the district is applied to it, produces
9-27 an amount equal to the difference between the tax that the district
10-1 would have imposed on the property if the property were fully
10-2 taxable at market value and the tax that the district is actually
10-3 authorized to impose on the property; and
10-4 (8) the market value of all tangible personal
10-5 property, other than manufactured homes, owned by a family or
10-6 individual and not held or used for the production of income.
10-7 (b) This section applies only to the computation of school
10-8 district property values for the 1997 tax year.
10-9 SECTION 1.15. (a) Effective January 1, 1998, Section
10-10 403.302(d), Government Code, is amended to read as follows:
10-11 (d) For the purposes of this section, "taxable value" means
10-12 market value less:
10-13 (1) the total dollar amount of any exemptions of part
10-14 but not all of the value of taxable property required by the
10-15 constitution or a statute that a district lawfully granted in the
10-16 year that is the subject of the study, other than:
10-17 (A) the $20,000 residence homestead exemption
10-18 required by Section 1-b(g), Article VIII, Texas Constitution; and
10-19 (B) the business inventory exemption required by
10-20 Section 11.25, Tax Code;
10-21 (2) the total dollar amount of any exemptions granted
10-22 before May 31, 1993, within a reinvestment zone under agreements
10-23 authorized by Chapter 312, Tax Code;
10-24 (3) the total dollar amount of any captured appraised
10-25 value of property that is located in a reinvestment zone and that
10-26 is eligible for tax increment financing under Chapter 311, Tax
10-27 Code;
11-1 (4) the total dollar amount of any exemptions granted
11-2 under Section 11.251, Tax Code;
11-3 (5) the difference between the market value and the
11-4 productivity value of land that qualifies for appraisal on the
11-5 basis of its productive capacity, except that the productivity
11-6 value may not exceed the fair market value of the land;
11-7 (6) the portion of the appraised value of residence
11-8 homesteads of the elderly on which school district taxes are not
11-9 imposed in the year that is the subject of the study, because of
11-10 the tax freeze limitation required by Section 1-b(d), Article VIII,
11-11 Texas Constitution, other than that portion of that limitation
11-12 required by Section 1-b(g) of that article, calculated as if the
11-13 residence homesteads were appraised at the full value required by
11-14 law;
11-15 (7) a portion of the market value of property not
11-16 otherwise fully taxable by the district at market value because of
11-17 action required by statute or the constitution of this state that,
11-18 if the tax rate adopted by the district is applied to it, produces
11-19 an amount equal to the difference between the tax that the district
11-20 would have imposed on the property if the property were fully
11-21 taxable at market value and the tax that the district is actually
11-22 authorized to impose on the property; and
11-23 (8) the market value of all tangible personal
11-24 property, other than manufactured homes, owned by a family or
11-25 individual and not held or used for the production of income.
11-26 (b) This section applies only to the computation of school
11-27 district property values for the 1998 and later tax years.
12-1 SECTION 1.16. Section 825.405(h), Government Code, is
12-2 amended to read as follows:
12-3 (h) This section does not apply to state contributions for
12-4 members employed by a school district in a school year if the
12-5 district's effective tax rate for maintenance and operation
12-6 revenues for the tax year that ended in the preceding school year
12-7 equals or exceeds 125 percent of the statewide average effective
12-8 tax rate for school district maintenance and operation revenues for
12-9 that tax year. For a tax year, the statewide average effective tax
12-10 rate for school district maintenance and operation revenues is the
12-11 tax rate that, if applied to the statewide total appraised value of
12-12 taxable property for every school district in the state determined
12-13 under Section 403.302, would produce an amount equal to the
12-14 statewide total amount of maintenance and operation taxes imposed
12-15 in the tax year for every school district in the state. For
12-16 purposes of this section, the statewide total amount of maintenance
12-17 and operations taxes does not include amounts received by school
12-18 districts from the Texas School Trust Fund under Subchapter N,
12-19 Chapter 403.
12-20 SECTION 1.17. Section 403.121, Government Code, is amended
12-21 by adding Subsection (c) to read as follows:
12-22 (c) The comptroller shall include in the reports, estimates,
12-23 and certifications of available funds the estimated amount of
12-24 transfers that may be available for appropriation by the
12-25 legislature under Section 5-a, Article VII, Texas Constitution.
12-26 SECTION 1.18. Except as otherwise provided by this article,
12-27 this article takes effect on the effective date of this Act.
13-1 ARTICLE 2. PROPERTY TAXATION
13-2 SECTION 2.01. Section 1.04, Tax Code, is amended by amending
13-3 Subdivision (10) and adding Subdivision (20) to read as follows:
13-4 (10) "Taxable value" means the amount determined by
13-5 deducting from appraised [assessed] value the amount of any
13-6 applicable partial exemption.
13-7 (20) "Maintenance and operations" means any lawful
13-8 purpose other than debt service for which a taxing unit may spend
13-9 property tax revenues.
13-10 SECTION 2.02. Section 11.13, Tax Code, is amended by
13-11 amending Subsection (b) and adding Subsection (s) to read as
13-12 follows:
13-13 (b) An adult is entitled to an exemption from taxation by a
13-14 school district of $5,000 of the appraised value of his residence
13-15 homestead. An adult is also entitled to exemption from taxation by
13-16 a school district for maintenance and operations of $20,000 of the
13-17 appraised value of his residence homestead.
13-18 (s) If a school district has adopted an exemption from ad
13-19 valorem taxes for elementary and secondary public school purposes
13-20 on homesteads that the district by law may adopt by its own action,
13-21 and that exemption is in effect on the date on which the
13-22 constitutional amendment proposed by _J.R. No. ____, 75th
13-23 Legislature, Regular Session, takes effect, the governing body of
13-24 the school district may not reduce the amount of or repeal that tax
13-25 exemption before the second anniversary of the date on which that
13-26 constitutional amendment takes effect. On or after the second
13-27 anniversary of the date on which that constitutional amendment
14-1 takes effect, the governing body of the school district may not
14-2 reduce the amount of or repeal that tax exemption unless the
14-3 reduction or repeal is approved by a vote of not less than
14-4 two-thirds of the total members of its governing body.
14-5 SECTION 2.03. Subchapter B, Chapter 11, Tax Code, is amended
14-6 by adding Section 11.25 to read as follows:
14-7 Sec. 11.25. TANGIBLE PERSONAL PROPERTY HELD AS INVENTORY.
14-8 (a) This section applies only to ad valorem taxes imposed by a
14-9 school district on tangible personal property for maintenance and
14-10 operations of the district.
14-11 (b) A person is entitled to an exemption from taxation of
14-12 the appraised value of the person's property that consists of
14-13 property held for sale or consumption as inventory.
14-14 (c) A person that receives an exemption on tangible personal
14-15 property held for sale or consumption as inventory under Section
14-16 11.145 or 11.251 is not entitled to an exemption on that property
14-17 under Subsection (b).
14-18 (d) In this section:
14-19 (1) "Inventory" includes goods held for sale, raw
14-20 materials, goods in process, finished goods, supplies, consigned
14-21 goods, bill and hold goods, floor-planned goods, and in-transit
14-22 goods. Except as provided by this section, each of those terms has
14-23 the meaning assigned that term according to generally accepted
14-24 principles of personal property appraisal.
14-25 (2) "School district" means a political subdivision of
14-26 this state that is organized to provide general elementary and
14-27 secondary public education and authorized to impose ad valorem
15-1 taxes. The term does not include:
15-2 (A) a junior college district;
15-3 (B) a political subdivision organized to provide
15-4 special education services; or
15-5 (C) an entity operating under former Chapter 25,
15-6 27, or 28, Education Code, as those chapters existed on May 1,
15-7 1995, as permitted by Section 11.301, Education Code.
15-8 (3) "Supplies" means stocks of goods intended to be
15-9 consumed in a manufacturing process.
15-10 SECTION 2.04. (a) Effective January 1, 1998, Section
15-11 11.26(a), Tax Code, is amended to read as follows:
15-12 (a) The tax officials shall appraise the property to which
15-13 this section applies and calculate taxes as on other property, but
15-14 if the tax so calculated exceeds the limitation imposed by this
15-15 section, the tax imposed is the amount of the tax as limited by
15-16 this subsection, except [Except] as provided by Subsection (b). A
15-17 [of this section, a] school district may not increase the total
15-18 annual amount of ad valorem tax it imposes on the residence
15-19 homestead of an individual 65 years or older above the amount of
15-20 the tax it imposed in the first tax year the individual qualified
15-21 that residence homestead for the exemption provided by Section
15-22 11.13(c) if that tax year is the 1998 tax year or a later tax year.
15-23 If the first tax year the individual qualified that residence
15-24 homestead for the exemption provided by Section 11.13(c) was a tax
15-25 year before the 1997 tax year, the tax limitation is the amount of
15-26 tax the school district imposed for the 1996 tax year less an
15-27 amount equal to the amount determined by multiplying $20,000 times
16-1 the tax rate for maintenance and operations of the school district
16-2 for the 1997 tax year plus any 1997 tax attributable to
16-3 improvements made in 1996, other than improvements made to comply
16-4 with governmental regulations or repairs. If the first tax year
16-5 the individual qualified that residence homestead for the exemption
16-6 provided by Section 11.13(c) is the 1997 tax year, the tax
16-7 limitation is the amount of tax the school district imposed for the
16-8 1997 tax year less an amount equal to the amount determined by
16-9 multiplying $20,000 times the tax rate for maintenance and
16-10 operations of the school district for the 1998 tax year plus:
16-11 (1) any 1998 tax attributable to improvements made in
16-12 1997, other than improvements made to comply with governmental
16-13 regulations or repairs; and
16-14 (2) an amount equal to the amount determined by
16-15 multiplying $20,000 times the tax rate for maintenance and
16-16 operations of the school district for the 1997 tax year.
16-17 [Subsection (c) of Section 11.13 of this code. The tax officials
16-18 shall continue to appraise the property and to calculate taxes as
16-19 on other property, but if the tax so calculated exceeds the
16-20 limitation imposed by this section, the tax imposed is the tax
16-21 imposed in the first year the individual qualified the residence
16-22 homestead for the exemption.]
16-23 (b) Effective beginning with the 1997 tax year, Section
16-24 11.26(e), Tax Code, is amended to read as follows:
16-25 (e) For each school district in an appraisal district, the
16-26 chief appraiser shall determine the portion of the appraised value
16-27 of residence homesteads of the elderly on which school district
17-1 taxes are not imposed in a tax year because of the limitation on
17-2 tax increases imposed by this section. That portion is calculated
17-3 by determining the taxable values [value] that, if multiplied by
17-4 the applicable tax rate for debt or tax rate for maintenance and
17-5 operations adopted by the school district for the tax year and the
17-6 product of those computations added together, would produce an
17-7 amount equal to the amount of tax that would have been imposed by
17-8 the school district on residence homesteads of the elderly if the
17-9 limitation on tax increases imposed by this section were not in
17-10 effect, but that was not imposed because of that limitation. The
17-11 chief appraiser shall determine those [that] taxable values [value]
17-12 and certify them [it] to the comptroller as soon as practicable for
17-13 each tax year.
17-14 SECTION 2.05. Section 25.19(b), Tax Code, is amended to read
17-15 as follows:
17-16 (b) The chief appraiser shall separate real from personal
17-17 property and include in the notice for each:
17-18 (1) a list of the taxing units in which the property
17-19 is taxable;
17-20 (2) the appraised value of the property in the
17-21 preceding year;
17-22 (3) each [the assessed and] taxable value of the
17-23 property in the preceding year for each taxing unit taxing the
17-24 property;
17-25 (4) the appraised value of the property for the
17-26 current year and the kind and amount of each partial exemption, if
17-27 any, approved for the current year;
18-1 (5) if the appraised value is greater than it was in
18-2 the preceding year:
18-3 (A) the effective tax rate or rates that would
18-4 be announced pursuant to Chapter 26 [Section 26.04 of this code] if
18-5 the total values being submitted to the appraisal review board were
18-6 to be approved by the board with an explanation that that rate or
18-7 rates would raise the same amount of revenue from property taxed in
18-8 the preceding year as the unit raised for those purposes in the
18-9 preceding year;
18-10 (B) the amount of tax that would be imposed on
18-11 the property on the basis of the rate or rates described by
18-12 Paragraph (A) [of this subdivision]; and
18-13 (C) a statement that the governing body of the
18-14 unit may not adopt a rate that will increase tax revenues for
18-15 operating purposes from properties taxed in the preceding year
18-16 without publishing notice in a newspaper that it is considering a
18-17 tax increase and holding a hearing for taxpayers to discuss the tax
18-18 increase;
18-19 (6) in italic typeface, the following statement: "The
18-20 Texas Legislature does not set the amount of your local taxes.
18-21 Your property tax burden is decided by your locally elected
18-22 officials, and all inquiries concerning your taxes should be
18-23 directed to those officials";
18-24 (7) a brief explanation of the time and procedure for
18-25 protesting the value;
18-26 (8) the date and place the appraisal review board will
18-27 begin hearing protests; and
19-1 (9) a brief explanation that:
19-2 (A) the governing body of each taxing unit
19-3 decides whether or not taxes on the property will increase and the
19-4 appraisal district only determines the value of the property; and
19-5 (B) a taxpayer who objects to increasing taxes
19-6 and government expenditures should complain to the governing bodies
19-7 of the taxing units and only complaints about value should be
19-8 presented to the appraisal office and the appraisal review board.
19-9 SECTION 2.06. Section 25.24, Tax Code, is amended to read
19-10 as follows:
19-11 Sec. 25.24. APPRAISAL ROLL. The appraisal records, as
19-12 changed by order of the appraisal review board and approved by that
19-13 board, constitute the appraisal roll for the district. The
19-14 appraisal roll for the district for the purpose of a school
19-15 district includes for each property two values: a value for the
19-16 levy of district maintenance and operations taxes and a value for
19-17 the levy of debt service taxes.
19-18 SECTION 2.07. Sections 26.04(a) and (b), Tax Code, are
19-19 amended to read as follows:
19-20 (a) On receipt of the appraisal roll, the assessor for a
19-21 taxing unit shall determine the total appraised value[, the total
19-22 assessed value,] and the total taxable value of property taxable by
19-23 the unit and for a school district the total taxable value for each
19-24 tax rate imposed by the district. He shall also determine, using
19-25 information provided by the appraisal office, the appraised,
19-26 assessed, and taxable values [value] of new property.
19-27 (b) The assessor shall submit the appraisal roll for the
20-1 unit showing the total appraised, assessed, and taxable values of
20-2 all property and the total taxable values [value] of new property
20-3 to the governing body of the unit by August 1 or as soon thereafter
20-4 as practicable. By August 1 or as soon thereafter as practicable,
20-5 the taxing unit's collector shall certify an estimate of the
20-6 collection rate for the current year to the governing body. If the
20-7 collector certified an anticipated collection rate in the preceding
20-8 year and the actual collection rate in that year exceeded the
20-9 anticipated rate, the collector shall also certify the amount of
20-10 debt taxes collected in excess of the anticipated amount in the
20-11 preceding year.
20-12 SECTION 2.08. Chapter 26, Tax Code, is amended by adding
20-13 Section 26.046 to read as follows:
20-14 Sec. 26.046. EFFECTIVE TAX RATES: SCHOOL DISTRICTS. (a)
20-15 Notwithstanding Section 26.04, the officer or employee designated
20-16 under that section to make the calculations for a school district
20-17 shall determine an effective tax rate for the school district for
20-18 maintenance and operations and an effective tax rate for the school
20-19 district for debt service. The effective tax rates shall be
20-20 calculated in the manner provided by Section 26.04, except as
20-21 provided by this section. The effective tax rate for maintenance
20-22 and operations shall be calculated on the value of property on the
20-23 tax roll for maintenance and operations taxation, and the effective
20-24 tax rate for debt service taxation shall be calculated on the value
20-25 of property on the tax roll for debt service taxation.
20-26 (b) In calculating the effective tax rates for the school
20-27 district under Subsection (a), the designated officer or employee
21-1 shall:
21-2 (1) include in last year's levy only ad valorem taxes
21-3 actually generated by the district in the preceding year; and
21-4 (2) exclude from last year's levy any state revenue
21-5 received by the district in that year, including revenue received
21-6 from the Texas School Trust Fund.
21-7 (c) The designated officer or employee shall adjust the
21-8 effective tax rate for maintenance and operations calculated under
21-9 Subsection (a) by adding or subtracting a rate, that if applied to
21-10 the current value for the levy of district maintenance and
21-11 operations taxes for the district would impose maintenance and
21-12 operations taxes in an amount that, when added or subtracted, as
21-13 applicable, to the sum of the amount of taxes that would be imposed
21-14 by the effective tax rate for maintenance and operations calculated
21-15 under Subsection (a) and the amount of state funds to be received
21-16 by the district under the Foundation School Program for the school
21-17 year that begins in the current tax year, including the amount of
21-18 any state funds projected to be received by the district under
21-19 Section 42.302, Education Code, and that under law may be used for
21-20 maintenance and operations purposes, would provide the same amount
21-21 of those state funds and district maintenance and operations taxes
21-22 per student in weighted average daily attendance for the school
21-23 year that begins in the current tax year that was available to the
21-24 district for the preceding school year.
21-25 SECTION 2.09. Chapter 26, Tax Code, is amended by adding
21-26 Sections 26.047 and 26.048 to read as follows:
21-27 Sec. 26.047. EFFECTIVE MAINTENANCE AND OPERATIONS RATE FOR
22-1 1997 SCHOOL TAXES. (a) For the 1997 tax year, the effective
22-2 maintenance and operations rate of a school district is calculated
22-3 by subtracting from the effective tax rate for maintenance and
22-4 operations calculated under Section 26.046 an amount equal to the
22-5 rate that, if applied to current total value, would impose taxes in
22-6 an amount equal to the 1997 tax year revenue not collected because
22-7 of the tax exemption provided by Section 1-b(g), Article VIII,
22-8 Texas Constitution.
22-9 (b) This section expires December 31, 1998.
22-10 Sec. 26.048. EFFECTIVE MAINTENANCE AND OPERATIONS RATE FOR
22-11 1998 SCHOOL TAXES. (a) Except as provided by Subsection (b), for
22-12 the 1998 tax year, the effective maintenance and operations rate of
22-13 a school district is computed by subtracting from the effective tax
22-14 rate for maintenance and operations computed under Section 26.046
22-15 an amount equal to the rate that, if applied to current total
22-16 value, would impose taxes in an amount equal to the sum of:
22-17 (1) $0.20 per $100 valuation;
22-18 (2) any 1998 tax year revenue not collected because of
22-19 the business inventory tax exemption provided by Section 11.25, Tax
22-20 Code; and
22-21 (3) the rate that, if applied to current total value,
22-22 would impose taxes in an amount equal to the 1998 tax year revenue
22-23 not collected because of the tax limitation provided by Section
22-24 1-b(g), Article VIII, Texas Constitution.
22-25 (b) The rate specified by Subsection (a)(1) is not
22-26 subtracted from the effective tax rate for maintenance and
22-27 operations computed under Section 26.046 if the school district is:
23-1 (1) a political subdivision organized primarily to
23-2 provide special education services; or
23-3 (2) an entity operating under former Chapter 17, 18,
23-4 25, 26, 27, or 28, Education Code, as those chapters existed on May
23-5 1, 1995, as permitted by Section 11.301, Education Code.
23-6 (c) This section expires December 31, 1999.
23-7 SECTION 2.10. Sections 26.05(a) and (d), Tax Code, are
23-8 amended to read as follows:
23-9 (a) Except as provided by Subsection (c), the governing body
23-10 of each taxing unit before September 1 or as soon thereafter as
23-11 practicable shall adopt a tax rate for the current tax year and
23-12 shall notify the assessor for the unit of the rate adopted. The
23-13 tax rate consists of two components, each of which must be approved
23-14 separately. The components are:
23-15 (1) the rate that, if applied to the total taxable
23-16 value or for a school district the total taxable value for debt
23-17 taxation, will impose the total amount published under Section
23-18 26.04(e)(3)(C) [of this code], less any amount of additional sales
23-19 and use tax revenue that will be used to pay debt service; and
23-20 (2) the rate that, if applied to the total taxable
23-21 value or for a school district the total taxable value for
23-22 maintenance and operations taxation, will impose the amount of
23-23 taxes needed to fund maintenance and operation expenditures of the
23-24 unit for the next year.
23-25 (d) The governing body of a taxing unit other than a school
23-26 district may not adopt a tax rate that exceeds the lower of the
23-27 rollback tax rate or 103 percent of the effective tax rate
24-1 calculated as provided by Section 26.04 [of this code] until it has
24-2 held a public hearing on the proposed increase and has otherwise
24-3 complied with Section 26.06 [of this code]. The governing body of
24-4 a school district may not adopt a tax rate for maintenance and
24-5 operations that exceeds the effective tax rate for maintenance and
24-6 operations calculated as provided by Section 26.046 until it has
24-7 held a public hearing on the proposed increase and has otherwise
24-8 complied with Section 26.06. The governing body of a taxing unit
24-9 other than a school district shall reduce a tax rate set under a
24-10 [by] law other than this title or by vote of the electorate to the
24-11 lower of the rollback tax rate or the percentage [103 percent] of
24-12 the effective tax rate provided by this subsection applicable to
24-13 the taxing unit and may not adopt a higher rate unless it first
24-14 complies with Section 26.06 [of this code].
24-15 SECTION 2.11. Chapter 26, Tax Code, is amended by adding
24-16 Section 26.065 to read as follows:
24-17 Sec. 26.065. ADOPTION OF SCHOOL DISTRICT MAINTENANCE AND
24-18 OPERATIONS TAX RATE IN EXCESS OF EFFECTIVE RATE FOR MAINTENANCE AND
24-19 OPERATIONS; ELECTION TO LIMIT RATE. (a) For a year that begins on
24-20 or after January 1, 1997, the governing body of a school district
24-21 may not adopt a maintenance and operations tax rate that exceeds
24-22 the effective maintenance and operations tax rate calculated under
24-23 Section 26.046 for the current year unless the rate is approved by
24-24 a vote of not less than two-thirds of the total members of the
24-25 governing body.
24-26 (b) If the governing body of the school district adopts a
24-27 maintenance and operations tax rate that exceeds the effective tax
25-1 rate for maintenance and operations calculated under Section 26.046
25-2 by $0.02 per $100 taxable value, the registered voters of the
25-3 district at an election held for that purpose must determine
25-4 whether to limit the maintenance and operations tax rate for the
25-5 current year to a rate equal to the sum of the effective tax rate
25-6 for maintenance and operations calculated under Section 26.046 for
25-7 the current year plus $0.02 per $100 taxable value, or a lower rate
25-8 adopted by the governing body after the election.
25-9 (c) The governing body shall order that an election be held
25-10 in the school district on a date not less than 30 or more than 90
25-11 days after the date on which the governing body adopts the tax rate
25-12 that triggers the election. Section 41.001, Election Code, does
25-13 not apply to the election unless a date specified by that section
25-14 falls within the time permitted by this section.
25-15 (d) At the election, the ballot shall be prepared to permit
25-16 voting for or against the proposition: "Limiting the maintenance
25-17 and operations tax rate in _____ (name of district) for the current
25-18 year from _____ (maintenance and operations tax rate adopted by
25-19 governing body) as proposed by the school district to ____ (rate
25-20 equal to sum of effective tax rate for maintenance and operations
25-21 calculated under Section 26.046, Tax Code, plus $0.02 per $100
25-22 taxable value)."
25-23 (e) If a majority of the votes cast in the election favor
25-24 the proposition, the governing body may not adopt a maintenance and
25-25 operations tax rate for the current year that exceeds the effective
25-26 tax rate for maintenance and operations calculated under Section
25-27 26.046 plus $0.02 per $100 taxable value.
26-1 (f) For a tax year beginning on or after January 1, 1999,
26-2 the amount by which the tax rate for maintenance and operations
26-3 adopted for the current tax year exceeds the effective tax rate for
26-4 maintenance and operations calculated under Section 26.046 for that
26-5 year may not exceed the amount that, when added to the amount by
26-6 which the adopted maintenance and operations tax rate for each of
26-7 the two preceding tax years exceeds the applicable effective tax
26-8 rate for maintenance and operations calculated under Section 26.046
26-9 for each of those years, equals $0.04 per $100 taxable value unless
26-10 an election is held under Subsection (g) at which the registered
26-11 voters of the district do not limit the maintenance and operations
26-12 tax rate approved by the governing body.
26-13 (g) An election held under Subsection (f) shall be conducted
26-14 in the manner provided by this section for an election under
26-15 Subsection (b). The ballot shall be prepared to permit voting for
26-16 or against the proposition: "Limiting the maintenance and
26-17 operations tax rate in _____ (name of district) for the current
26-18 year from _____ (maintenance and operations tax rate adopted by
26-19 governing body) as proposed by the school district to _____ (rate
26-20 calculated under Section 26.065(f), Tax Code, in excess of which an
26-21 adopted maintenance and operations tax rate triggers an election
26-22 under that section)."
26-23 (h) If a majority of the votes cast in the election favor
26-24 the proposition, the governing body may not adopt a maintenance and
26-25 operations tax rate for the current year that exceeds the limited
26-26 rate approved by the voters.
26-27 (i) If an election is required under Subsection (f) in any
27-1 tax year, an election under Subsections (b)-(e) is not required to
27-2 be held in that tax year. If an election under Subsections (b)-(e)
27-3 was held at which the voters did not approve the proposition to
27-4 limit the district's tax rate in one of the two preceding tax
27-5 years, an election under Subsection (f) is not required in the
27-6 current year.
27-7 (j) When increased expenditure of money by a school district
27-8 is necessary to respond to a disaster, including a tornado,
27-9 hurricane, flood, or other calamity, but not including a drought,
27-10 that has impacted a school district and the governor has requested
27-11 federal disaster assistance for the area in which the school
27-12 district is located, an election is not required under this section
27-13 to limit the maintenance and operations tax rate the governing body
27-14 may adopt for the year following the year in which the disaster
27-15 occurs.
27-16 (k) For purposes of this section, local tax funds dedicated
27-17 to a junior college district under Section 45.105(e), Education
27-18 Code, shall be eliminated from the calculation of the maintenance
27-19 and operations tax rate adopted by the governing body of the school
27-20 district. However, the funds dedicated to the junior college
27-21 district are subject to Section 26.085.
27-22 (l) In a school district that received distributions from an
27-23 equalization tax imposed under former Chapter 18, Education Code,
27-24 the effective rate of that tax as of the date of the county unit
27-25 system's abolition is added to the district's effective tax rate
27-26 for maintenance and operations for purposes of this section.
27-27 (m) For purposes of this section, increases in taxable
28-1 values and tax levies occurring within a reinvestment zone under
28-2 the provisions of Chapter 311 (Tax Increment Financing Act), in
28-3 which the district is a participant, shall be eliminated from the
28-4 calculation of the effective tax rates adopted by the governing
28-5 body of the school district.
28-6 (n) For purposes of the 1997 and 1998 tax years, the
28-7 effective tax rate for maintenance and operations for a school
28-8 district is the rate calculated under Section 26.047 or 26.048, as
28-9 applicable. This subsection expires January 1, 2000.
28-10 SECTION 2.12. Section 26.08, Tax Code, is repealed.
28-11 SECTION 2.13. Section 26.09(c), Tax Code, is amended to read
28-12 as follows:
28-13 (c) The tax is calculated by:
28-14 (1) subtracting from the appraised value of a property
28-15 as shown on the appraisal roll for the unit the amount of any
28-16 partial exemption allowed the property owner that applies to
28-17 appraised value to determine taxable [net appraised] value; and
28-18 (2) [multiplying the net appraised value by the
28-19 assessment ratio to determine assessed value;]
28-20 [(3) subtracting from the assessed value the amount of
28-21 any partial exemption allowed the property owner to determine
28-22 taxable value; and]
28-23 [(4)] multiplying the taxable value by the tax rate,
28-24 or for a school district as defined by Section 11.13(m)(2),
28-25 multiplying the taxable value for maintenance and operations
28-26 taxation by the maintenance and operations tax rate, multiplying
28-27 the taxable value for debt service taxation by the debt service tax
29-1 rate, and adding the products.
29-2 SECTION 2.14. Section 31.01, Tax Code, is amended by
29-3 amending Subsection (c) and adding Subsection (k) to read as
29-4 follows:
29-5 (c) The tax bill or a separate statement accompanying the
29-6 tax bill shall:
29-7 (1) identify the property subject to the tax;
29-8 (2) state the appraised value[, assessed value,] and
29-9 taxable value of the property for each type of tax levy the taxing
29-10 unit imposes on a different value;
29-11 (3) if the property is land appraised as provided by
29-12 Subchapter C, D, or E, Chapter 23 [of this code], state the market
29-13 value and the taxable value for purposes of deferred or additional
29-14 taxation as provided by Section 23.46, 23.55, or 23.76, as
29-15 applicable[, of this code];
29-16 (4) [state the assessment ratio for the unit;]
29-17 [(5)] state the type and amount of any partial
29-18 exemption applicable to the property[, indicating whether it
29-19 applies to appraised or assessed value];
29-20 (5) [(6)] state the total tax rate or rates for the
29-21 unit;
29-22 (6) [(7)] state the amount of tax due, the due date,
29-23 and the delinquency date;
29-24 (7) [(8)] explain the payment option and discounts
29-25 provided by Sections 31.03 and 31.05 [of this code], if available
29-26 to the unit's taxpayers, and state the date on which each of the
29-27 discount periods provided by Section 31.05 concludes, if the
30-1 discounts are available;
30-2 (8) [(9)] state the rates of penalty and interest
30-3 imposed for delinquent payment of the tax; and
30-4 (9) [(10)] include any other information required by
30-5 the comptroller.
30-6 (k) In addition to the information specified by Subsection
30-7 (c), a tax bill for school district taxes or the separate statement
30-8 accompanying a tax bill for school district taxes shall include an
30-9 explanation of the Property Tax Cut Act of 1997 and the effect on
30-10 the school district's tax rates for the year caused by that Act.
30-11 If a tax bill for school district taxes containing an explanation
30-12 required by this subsection is mailed to a mortgagee of a property,
30-13 the mortgagee shall mail a copy of the tax bill or accompanying
30-14 statement containing the explanation to the owner of the property
30-15 before the 31st day after the date the mortgagee receives the tax
30-16 bill. This subsection expires January 1, 1999.
30-17 SECTION 2.15. (a) Except as otherwise provided by this
30-18 article or Subsection (b) of this section, this article takes
30-19 effect on the effective date of this Act and applies to ad valorem
30-20 taxes imposed by a school district for and after the 1997 tax year.
30-21 (b) Section 2.03 of this article takes effect January 1,
30-22 1998, and applies only to ad valorem taxes imposed by a school
30-23 district for a tax year that begins on or after that date.
30-24 ARTICLE 3. TEXAS BUSINESS TAX
30-25 SECTION 3.01. Subtitle F, Title 2, Tax Code, is amended by
30-26 adding Chapter 172 to read as follows:
30-27 CHAPTER 172. BUSINESS TAX
31-1 SUBCHAPTER A. DEFINITIONS
31-2 Sec. 172.001. AFFILIATED GROUP. "Affiliated group" means an
31-3 affiliated group of corporations as defined in Section 1504,
31-4 Internal Revenue Code.
31-5 Sec. 172.002. BUSINESS ACTIVITY. (a) "Business activity"
31-6 means an activity that:
31-7 (1) is:
31-8 (A) a transfer of legal or equitable ownership
31-9 of or the right of possession of property; or
31-10 (B) the performance of services; and
31-11 (2) occurs in this state, without regard to whether
31-12 the activity is in interstate or foreign commerce.
31-13 (b) The term does not include:
31-14 (1) an activity by an individual that is not for
31-15 economic gain, benefit, or advantage to the individual or to
31-16 others;
31-17 (2) a service rendered by an employee to an employer;
31-18 (3) a service as a director of a corporation;
31-19 (4) income derived from individual investment; or
31-20 (5) a casual transaction.
31-21 (c) A transaction that otherwise is excluded under
31-22 Subsection (b), but that is made or engaged in by a person and that
31-23 is incidental to the person's regular business activity, is a
31-24 business activity.
31-25 (d) For purposes of Subsection (a), a business activity
31-26 occurs in this state if the activity has a sufficient nexus, to the
31-27 limits of the United States Constitution and the federal law
32-1 adopted under the United States Constitution, to this state.
32-2 Sec. 172.003. BUSINESS ENTITY. "Business entity" means a
32-3 corporation, limited liability company, partnership, limited
32-4 partnership, limited liability partnership, banking corporation,
32-5 savings and loan association, trust, estate, or sole
32-6 proprietorship. The term includes any kind of business
32-7 association, joint venture, or any other combination of entities or
32-8 persons engaged in a business activity.
32-9 Sec. 172.004. CASUAL TRANSACTION. "Casual transaction"
32-10 means a transaction made or engaged in other than in the ordinary
32-11 course of repeated and successive transactions of a like character,
32-12 except that a transaction made or engaged in by a person that is
32-13 incidental to that person's regular business activity is considered
32-14 to be a business activity.
32-15 Sec. 172.005. COMPENSATION. (a) "Compensation" means all
32-16 wages, salaries, fees, bonuses, commissions, or other payments made
32-17 in the taxable year on behalf of or for the benefit of employees,
32-18 officers, or directors of a taxpayer and subject to or specifically
32-19 exempt from withholding under Section 3401, Internal Revenue Code.
32-20 (b) The term includes the following payments determined on a
32-21 cash or accrual system consistent with the taxpayer's method of
32-22 accounting for federal income tax purposes:
32-23 (1) payments to state and federal unemployment
32-24 compensation funds;
32-25 (2) under the Federal Insurance Contributions Act
32-26 (Chapter 21, Title 26, Internal Revenue Code) and similar social
32-27 insurance programs, payments, including self-insurance payments,
33-1 for workers' compensation insurance;
33-2 (3) payments to individuals not currently working;
33-3 (4) payments to dependents and heirs of individuals
33-4 because of current or former labor services rendered by those
33-5 individuals;
33-6 (5) payments to a pension, retirement, or
33-7 profit-sharing plan; and
33-8 (6) payments for insurance for which employees are the
33-9 beneficiaries.
33-10 (c) For a partnership, the term includes net earnings of the
33-11 partners from self-employment and does not include guaranteed
33-12 payments to partners.
33-13 (d) The term does not include discounts on the price of the
33-14 taxpayer's merchandise or services sold to the taxpayer's
33-15 employees, officers, or directors that are not available to other
33-16 customers or payments to an independent contractor.
33-17 Sec. 172.006. CORPORATION. "Corporation" includes:
33-18 (1) a limited liability company as defined by the
33-19 Texas Limited Liability Company Act (Article 1528n, Vernon's Texas
33-20 Civil Statutes);
33-21 (2) a state or federal savings and loan association;
33-22 (3) a state or federal savings bank; and
33-23 (4) a banking corporation.
33-24 Sec. 172.007. EMPLOYEE. (a) "Employee" means an employee
33-25 as defined in Section 3401(c), Internal Revenue Code.
33-26 (b) A person from whom an employer is required to withhold
33-27 for federal income tax purposes is presumed to be an employee.
34-1 Sec. 172.008. EMPLOYER. (a) "Employer" means an employer
34-2 as defined in Section 3401(d), Internal Revenue Code.
34-3 (b) A person required to withhold for federal income tax
34-4 purposes is presumed to be an employer.
34-5 Sec. 172.009. FEDERAL INCOME TAX TERMS. A term used in this
34-6 chapter, and not defined differently, has the same meaning as the
34-7 term when used in a comparable context in the Internal Revenue Code
34-8 or other federal law relating to federal income taxes.
34-9 Sec. 172.010. FEDERAL TAXABLE INCOME. "Federal taxable
34-10 income" means taxable income as defined in Section 63, Internal
34-11 Revenue Code, increased by the amount, if any, of deductions taken
34-12 under Section 172, Internal Revenue Code, and includes the income
34-13 of an estate or trust.
34-14 Sec. 172.011. FINANCIAL INSTRUMENT. "Financial instrument"
34-15 means any share of stock or other legal evidence of equity
34-16 ownership in a corporation or other business entity, certificate of
34-17 stock or interest in any corporation, stock derivative, note, bond,
34-18 debenture, indebtedness derivative and evidence of indebtedness,
34-19 including any evidence of an interest in or right to subscribe to
34-20 or purchase any of these instruments.
34-21 Sec. 172.012. INDIVIDUAL INVESTMENT. "Individual
34-22 investment" means investment by an individual:
34-23 (1) of funds owned by the individual solely for the
34-24 benefit of the individual if the investment is not made in
34-25 connection with another activity that is a business activity; or
34-26 (2) of funds owned by the individual's relative within
34-27 the third degree of consanguinity or the second degree of affinity,
35-1 as those relationships are described by Subchapter B, Chapter 573,
35-2 Government Code, on behalf of and solely for the benefit of the
35-3 owner of the funds if the investment is not made in connection with
35-4 another activity that is a business activity.
35-5 Sec. 172.013. INTERNAL REVENUE CODE. "Internal Revenue
35-6 Code" means the Internal Revenue Code of 1986 in effect on January
35-7 1, 1997.
35-8 Sec. 172.014. RENTAL. "Rental" includes a lease payment or
35-9 other payment for the use of any property to which the taxpayer
35-10 does not otherwise have legal or equitable title.
35-11 Sec. 172.015. SALE. "Sale" means a transaction from which
35-12 the gross receipts constitute consideration:
35-13 (1) for the transfer of title to, or possession of,
35-14 property:
35-15 (A) that is stock in trade;
35-16 (B) that is of a kind that would properly be
35-17 included in the inventory of the taxpayer if on hand at the close
35-18 of the tax period; or
35-19 (C) that is held by the taxpayer primarily for
35-20 sale to customers in the ordinary course of its trade or business;
35-21 (2) for the performance of services that constitute
35-22 business activities other than those included in Subdivision (1);
35-23 or
35-24 (3) from any combination of gross receipts included in
35-25 Subdivision (1) or (2).
35-26 Sec. 172.016. STATE. "State" means any state of the United
35-27 States, the District of Columbia, the Commonwealth of Puerto Rico,
36-1 any territory or possession of the United States, or a political
36-2 subdivision of any of those entities.
36-3 Sec. 172.017. TAX. "Tax" includes interest and penalties
36-4 unless the intention to give it a more limited meaning is indicated
36-5 by its context.
36-6 Sec. 172.018. TAXPAYER. "Taxpayer" means a business entity
36-7 liable for a tax, interest, or penalty under this chapter.
36-8 Sec. 172.019. TAX YEAR. (a) "Tax year" means the calendar
36-9 year or the fiscal year ending during the calendar year for which
36-10 the tax base is computed under this chapter.
36-11 (b) If a return is made for a fractional part of a year, the
36-12 term means the period for which the return is made.
36-13 (c) Except for the first return required by this chapter, a
36-14 taxpayer's tax year is the same period as that covered by the
36-15 taxpayer's federal income tax return.
36-16 (Sections 172.020-172.100 reserved for expansion
36-17 SUBCHAPTER B. IMPOSITION OF TAX
36-18 Sec. 172.101. TAX IMPOSED. There is imposed a tax on every
36-19 business entity having a business activity in this state that is
36-20 allocated or apportioned to this state.
36-21 Sec. 172.102. TAX RATE. The tax imposed by this chapter is
36-22 at the rate of 1.25 percent of the taxpayer's adjusted tax base.
36-23 Sec. 172.103. DETERMINATION OF TAX BASE. (a) A taxpayer
36-24 determines the tax base by taking the amount of federal taxable
36-25 income, before any of the adjustments provided by Section 172.104,
36-26 even if zero or negative, and making the following adjustments:
36-27 (1) add, to the extent deducted in arriving at federal
37-1 taxable income:
37-2 (A) all taxes on or measured by net income; and
37-3 (B) except as provided by Section 172.106 any
37-4 deduction for depreciation, amortization, or immediate or
37-5 accelerated write-off related to the cost of tangible assets;
37-6 (2) add compensation;
37-7 (3) deduct any capital loss not deducted in arriving
37-8 at federal taxable income in the year the loss occurred; and
37-9 (4) to the extent included in computing federal
37-10 taxable income, deduct:
37-11 (A) the dividends and net capital gains arising
37-12 from the holding or disposition of a financial instrument of
37-13 another entity that is subject to the taxes imposed by this chapter
37-14 or that would be subject to the taxes imposed by this chapter if it
37-15 had a nexus in this state; and
37-16 (B) the net income, not included in Paragraph
37-17 (A), received from another entity that is not a corporation and
37-18 that is subject to the taxes imposed by this chapter or that would
37-19 be subject to the taxes imposed by this chapter if it had a nexus
37-20 in this state.
37-21 (b) For purposes of Subsection (a), for a taxpayer that is a
37-22 partnership, federal taxable income means the income of the
37-23 partners reported, as required of the partnership by the Internal
37-24 Revenue Service under the Internal Revenue Code, on Schedule K,
37-25 Partners' Shares of Income, Credits, Deductions, etc., line 25a, of
37-26 Form 1065.
37-27 (c) For purposes of Subsection (a), for a taxpayer that is a
38-1 sole proprietorship, federal taxable income is the sum of:
38-2 (1) the income reported, as required of the sole
38-3 proprietorship by the Internal Revenue Service under the Internal
38-4 Revenue Code, on the following schedules of Form 1040:
38-5 (A) Schedule C, Profit or Loss From Business,
38-6 line 31;
38-7 (B) Schedule E, Supplemental Income and Loss,
38-8 line 26; or
38-9 (C) Schedule F, Profit or Loss From Farming,
38-10 line 36; and
38-11 (2) the following income attributable as income to the
38-12 sole proprietorship:
38-13 (A) taxable interest income;
38-14 (B) dividend income; and
38-15 (C) capital gains.
38-16 (d) The comptroller by rule shall update references in this
38-17 section to schedules and forms of the Internal Revenue Service if
38-18 changed by the Internal Revenue Service and shall adopt forms
38-19 consistent with the change.
38-20 Sec. 172.104. DETERMINATION OF ADJUSTED TAX BASE. A
38-21 taxpayer determines the adjusted tax base by making adjustments to
38-22 the tax base as provided in Section 172.103 in the following order:
38-23 (1) deducting any income derived from a nonbusiness
38-24 activity listed in Section 172.002(b) to the extent included in the
38-25 tax base;
38-26 (2) making the adjustments relating to capital
38-27 investment under Section 172.105;
39-1 (3) allocating and apportioning the tax base as
39-2 provided in Subchapter D; and
39-3 (4) deducting the standard deduction allowed under
39-4 Section 172.151.
39-5 Sec. 172.105. ADJUSTMENTS RELATING TO CAPITAL INVESTMENT.
39-6 (a) In determining the adjusted tax base, a taxpayer shall make
39-7 the adjustments relating to capital investment required by Section
39-8 172.104(2) as provided by this section.
39-9 (b) The taxpayer shall deduct the cost, including the cost
39-10 of fabrication and installation, paid or accrued in the taxable
39-11 year of tangible assets.
39-12 (c) The taxpayer shall add the gross proceeds or benefit
39-13 derived from the sale or other disposition of tangible assets, less
39-14 the gain.
39-15 (d) In this section, "tangible assets" means tangible assets
39-16 of a type that are, or, under the Internal Revenue Code, will
39-17 become, eligible for depreciation or amortization for federal
39-18 income tax purposes.
39-19 Sec. 172.106. ADJUSTMENTS RELATING TO INVESTMENT IN
39-20 ENTERPRISE ZONE. (a) A corporation that has been designated as an
39-21 enterprise project as provided by Chapter 2303, Government Code, is
39-22 not required to add any deduction for depreciation to its tax base
39-23 as provided by Section 172.103(a)(1)(B) as provided by this
39-24 section.
39-25 (b) The adjustment authorized by this section is limited to
39-26 the depreciation related to capital equipment or other investment
39-27 that qualifies for depreciation for federal income tax purposes and
40-1 that is placed in service in the enterprise zone after designation
40-2 as an enterprise project and after September 1, 1991.
40-3 (c) To qualify for the adjustment authorized by this
40-4 section, an investment must be used in the normal course of
40-5 business in the enterprise zone and must not be removed from the
40-6 enterprise zone, except for repair or maintenance. Qualifying use
40-7 and presence in the zone must occur during the accounting year on
40-8 which the report is based.
40-9 (d) Only qualified businesses that have been certified as
40-10 eligible for an adjustment under this section by the Texas
40-11 Department of Commerce to the comptroller and the Legislative
40-12 Budget Board are entitled to the adjustment.
40-13 (e) In this section:
40-14 (1) "Enterprise project" means a person designated by
40-15 the Texas Department of Commerce as an enterprise project under
40-16 Chapter 2303, Government Code.
40-17 (2) "Enterprise zone" has the meaning assigned to that
40-18 term by Section 2303.003, Government Code.
40-19 (Sections 172.107-172.150 reserved for expansion
40-20 SUBCHAPTER C. DEDUCTIONS
40-21 Sec. 172.151. STANDARD DEDUCTION. (a) The standard
40-22 deduction permitted for each tax year for each business entity or
40-23 combined entity under Section 172.306 is $500,000.
40-24 (b) For a taxpayer whose business activity is for a
40-25 fractional part of a year, the deduction is prorated for the period
40-26 of the taxpayer's business activity.
40-27 (Sections 172.152-172.200 reserved for expansion
41-1 SUBCHAPTER D. ALLOCATION AND APPORTIONMENT OF TAX BASE
41-2 Sec. 172.201. BUSINESS ACTIVITIES CONFINED TO TEXAS. The
41-3 entire tax base of a taxpayer whose business activity is confined
41-4 solely to this state is allocated to this state except as provided
41-5 by Sections 172.206 and 172.207.
41-6 Sec. 172.202. BUSINESS ACTIVITIES IN TEXAS AND ELSEWHERE. A
41-7 taxpayer whose business activity is taxable both in and outside
41-8 this state shall apportion the taxpayer's tax base as provided by
41-9 this subchapter.
41-10 Sec. 172.203. TAXABLE IN ANOTHER STATE. For purposes of
41-11 apportionment of the tax base from business activity under this
41-12 subchapter, a taxpayer is taxable in another state if:
41-13 (1) in that state the taxpayer is subject to a
41-14 business privilege tax, a net income tax, a franchise tax measured
41-15 by net income, a franchise tax for the privilege of doing business,
41-16 a corporate stock tax, or a tax of the type imposed by this
41-17 chapter; or
41-18 (2) that state has jurisdiction to subject the
41-19 taxpayer to one or more of the taxes without regard to whether the
41-20 state does so.
41-21 Sec. 172.204. APPORTIONMENT FACTOR. All of the tax base is
41-22 apportioned to this state by multiplying the tax base by the gross
41-23 receipts factor.
41-24 Sec. 172.205. GROSS RECEIPTS FACTOR. The gross receipts
41-25 factor is a fraction, the numerator of which is the total gross
41-26 receipts of the taxpayer in this state during the tax year, and the
41-27 denominator of which is the total gross receipts of the taxpayer
42-1 during the tax year.
42-2 Sec. 172.206. NUMERATOR: GROSS RECEIPTS OF TAXPAYER IN THIS
42-3 STATE. (a) The gross receipts of a taxpayer in this state is the
42-4 sum of the taxpayer's receipts from:
42-5 (1) each sale of tangible personal property if the
42-6 property is delivered or shipped to a buyer in this state
42-7 regardless of the FOB point or another condition of the sale, and
42-8 each sale of tangible personal property shipped from this state to
42-9 a purchaser in another state in which the seller is not subject to
42-10 taxation;
42-11 (2) each service performed in this state;
42-12 (3) each rental of property situated in this state;
42-13 (4) each royalty for the use of a patent or copyright
42-14 in this state; and
42-15 (5) other business done in this state.
42-16 (b) A taxpayer shall deduct from its gross receipts any
42-17 amount to the extent included in Subsection (a) because of the
42-18 application of Section 78 or Sections 951-964, Internal Revenue
42-19 Code, and dividends received from a subsidiary, associate, or
42-20 affiliated business group that does not transact a substantial
42-21 portion of its business or regularly maintain a substantial portion
42-22 of its assets in the United States.
42-23 (c) Interest and dividends received by a banking corporation
42-24 or a savings and loan association are gross receipts of the banking
42-25 corporation or savings and loan association from its business done
42-26 in this state if the banking corporation or savings and loan
42-27 association has its commercial domicile in this state.
43-1 Sec. 172.207. DENOMINATOR: TOTAL GROSS RECEIPTS OF
43-2 TAXPAYER. (a) The total gross receipts of a taxpayer is the sum
43-3 of the taxpayer's receipts from:
43-4 (1) each sale of the taxpayer's tangible personal
43-5 property;
43-6 (2) each service, rental, or royalty; and
43-7 (3) other business.
43-8 (b) If a taxpayer sells an investment or capital asset, the
43-9 taxpayer's gross receipts from its entire business include only the
43-10 net gain from the sale.
43-11 (c) A taxpayer shall deduct from its gross receipts any
43-12 amount to the extent included in Subsection (a) because of the
43-13 application of Section 78 or Sections 951-964, Internal Revenue
43-14 Code, and dividends received from a subsidiary, associate, or
43-15 affiliated business group that does not transact a substantial
43-16 portion of its business or regularly maintain a substantial portion
43-17 of its assets in the United States.
43-18 (Sections 172.208-172.250 reserved for expansion
43-19 SUBCHAPTER E. EXEMPTIONS
43-20 Sec. 172.251. APPLICATION FOR EXEMPTION. Except as
43-21 otherwise provided, a taxpayer may apply for an exemption under
43-22 this subchapter by filing with the comptroller, as provided by the
43-23 rules of the comptroller, evidence of the taxpayer's qualifications
43-24 for the exemption.
43-25 Sec. 172.252. EXEMPTION: GOVERNMENTAL ENTITIES. There are
43-26 exempted from the taxes imposed by this chapter the United States,
43-27 this state and other states, and agencies, political subdivisions,
44-1 and enterprises of the United States, this state, and other states.
44-2 Sec. 172.253. EXEMPTION: INSURANCE COMPANIES. There is
44-3 exempted from the taxes imposed by this chapter a corporation that
44-4 is an insurance company, surety, guaranty, or fidelity company
44-5 required to pay an annual tax measured by gross receipts.
44-6 Sec. 172.254. EXEMPTION: NONPROFIT CORPORATION EXEMPT FROM
44-7 FEDERAL INCOME TAX. (a) There are exempted from the taxes imposed
44-8 by this chapter:
44-9 (1) subject to Subsection (b), a nonprofit corporation
44-10 exempted from the federal income tax under Section 501(c)(3), (4),
44-11 (5), (6), (7), (8), (10), or (19), Internal Revenue Code;
44-12 (2) a corporation exempted under Section 501(c)(2) or
44-13 (25), Internal Revenue Code, if the corporation or corporations for
44-14 which it holds title to property is either exempt from or not
44-15 subject to the franchise tax;
44-16 (3) a corporation exempted from federal income tax
44-17 under Section 501(c)(16), Internal Revenue Code; and
44-18 (4) a nonprofit corporation exempted from the federal
44-19 income tax under Section 501(c)(3), Internal Revenue Code, that
44-20 does not receive any payment for providing health care services to
44-21 inpatients or outpatients from any source including a patient or
44-22 person legally obligated to support the patient, third-party
44-23 payors, Medicare, Medicaid, or any other state or local indigent
44-24 health care program but not including charitable donations,
44-25 legacies, bequests, or grants or payments for research.
44-26 (b) A nonprofit hospital qualifies under Subsection (a)(1)
44-27 if the hospital provides charity care and community benefits in the
45-1 following manner:
45-2 (1) charity care and government-sponsored indigent
45-3 health care are provided at a level that is reasonable in relation
45-4 to the community needs as determined through the community needs
45-5 assessment, the available resources of the hospital or hospital
45-6 system, and the tax-exempt benefits received by the hospital or
45-7 hospital system;
45-8 (2) charity care and government-sponsored indigent
45-9 health care are provided in an amount equal to at least four
45-10 percent of the hospital's or hospital system's net patient revenue;
45-11 (3) charity care and government-sponsored indigent
45-12 health care are provided in an amount equal to at least 100 percent
45-13 of the hospital's or hospital system's tax-exempt benefits,
45-14 excluding federal income tax;
45-15 (4) charity care and community benefits are provided
45-16 in a combined amount equal to at least five percent of the
45-17 hospital's or hospital system's net patient revenue, provided that
45-18 charity care and government-sponsored indigent health care are
45-19 provided in an amount equal to at least four percent of net patient
45-20 revenue;
45-21 (5) a nonprofit hospital that has been designated as a
45-22 disproportionate share hospital under the state Medicaid program in
45-23 the current year or in either of the previous two fiscal years is
45-24 considered to have provided a reasonable amount of charity care and
45-25 government-sponsored indigent health care and is considered in
45-26 compliance with the standards provided by this subsection; or
45-27 (6) a hospital operated on a nonprofit basis that is
46-1 located in a county with a population of less than 50,000 and in
46-2 which the entire county or the population of the entire county has
46-3 been designated as a health professionals shortage area is
46-4 considered in compliance with the standards provided by this
46-5 subsection.
46-6 (c) For purposes of Subsection (b), a hospital that
46-7 satisfies Subsection (b)(1), (5), or (6) shall be excluded in
46-8 determining a hospital system's compliance with the standards
46-9 provided by Subsection (b)(2), (3), or (4). A determination of the
46-10 amount of community benefits and charity care and
46-11 government-sponsored indigent health care provided by a hospital or
46-12 hospital system and the hospital's or hospital system's compliance
46-13 with the requirements of Section 311.045, Health and Safety Code,
46-14 shall be based on the most recently completed and audited prior
46-15 fiscal year of the hospital or hospital system. The providing of
46-16 charity care and government-sponsored indigent health care in
46-17 accordance with Subsection (b)(1) shall be guided by the prudent
46-18 business judgment of the hospital, which will ultimately determine
46-19 the appropriate level of charity care and government-sponsored
46-20 indigent health care based on the community needs, the available
46-21 resources of the hospital, the tax-exempt benefits received by the
46-22 hospital, and other factors that may be unique to the hospital,
46-23 such as the hospital's volume of Medicare and Medicaid patients.
46-24 These criteria shall not be determinative factors but shall be
46-25 guidelines contributing to the hospital's decision along with other
46-26 factors that may be unique to the hospital. The formulas contained
46-27 in Subsections (b)(2), (3), and (4) shall also not be considered
47-1 determinative of a reasonable amount of charity care and
47-2 government-sponsored indigent health care. The requirements of
47-3 Subsection (b) shall not apply if a hospital or hospital system
47-4 demonstrates that reductions in the amount of community benefits,
47-5 charity care, and government-sponsored indigent health care are
47-6 necessary to maintain financial reserves at a level required by a
47-7 bond covenant, are necessary to prevent the hospital or hospital
47-8 system from endangering its ability to continue operations, or are
47-9 necessary because the hospital, as a result of a natural or other
47-10 disaster, is required to substantially curtail its operations. In
47-11 any fiscal year that a hospital or hospital system, through
47-12 unintended miscalculation, fails to meet any of the standards in
47-13 Subsection (b), the hospital or hospital system shall not lose its
47-14 tax-exempt status without the opportunity to cure the
47-15 miscalculation in the fiscal year following the fiscal year the
47-16 failure is discovered by meeting one of the standards and providing
47-17 an additional amount of charity care and government-sponsored
47-18 indigent health care that is equal to the shortfall from the
47-19 previous fiscal year. A hospital or hospital system may apply this
47-20 provision only once every five years.
47-21 (d) A corporation is entitled to an exemption under this
47-22 section based on the corporation's exemption from the federal
47-23 income tax if the corporation files with the comptroller evidence
47-24 establishing the corporation's exemption.
47-25 (e) A corporation's exemption under this section may be
47-26 established by furnishing the comptroller with a copy of the
47-27 Internal Revenue Service's letter of exemption issued to the
48-1 corporation. The copy of the letter may be filed with the
48-2 comptroller within 15 months after the day that is the last day of
48-3 a calendar month and that is nearest to the date of the
48-4 corporation's charter or certificate of authority.
48-5 (f) If the Internal Revenue Service has not timely issued to
48-6 a corporation a letter of exemption, evidence establishing the
48-7 corporation's exemption under this section is sufficient if the
48-8 corporation files with the comptroller within the 15-month period
48-9 established by Subsection (e) evidence that the corporation has
48-10 applied in good faith for the federal tax exemption.
48-11 (g) An exemption established under Subsection (e) or (f) is
48-12 to be recognized, after it is finally established, as of the date
48-13 of the corporation's charter or certificate of authority.
48-14 (h) If a corporation timely files evidence with the
48-15 comptroller under Subsection (f) that it has applied for a federal
48-16 tax exemption and if the application is finally denied by the
48-17 Internal Revenue Service, this chapter does not impose a penalty on
48-18 the corporation from the date of its charter or certificate of
48-19 authority to the date of the final denial.
48-20 (i) If a corporation's federal tax exemption is withdrawn by
48-21 the Internal Revenue Service for failure of the corporation to
48-22 qualify or maintain its qualification for the exemption, the
48-23 corporation's exemption under this section ends on the effective
48-24 date of that withdrawal by the Internal Revenue Service. The
48-25 effective date of the withdrawal is considered the corporation's
48-26 beginning date for purposes of this chapter.
48-27 (j) In this section, "charity care," "government-sponsored
49-1 indigent health care," "health care organization," "hospital
49-2 system," "net patient revenue," "nonprofit hospital," and
49-3 "tax-exempt benefits" have the meanings assigned those terms in
49-4 Sections 311.031 and 311.042, Health and Safety Code.
49-5 Sec. 172.255. EXEMPTION: NONPROFIT CORPORATION ORGANIZED TO
49-6 PROVIDE WATER SUPPLY OR SEWER SERVICES. There is exempted from the
49-7 taxes imposed by this chapter a nonprofit water supply or sewer
49-8 service corporation organized on behalf of a municipality under
49-9 Chapter 76, Acts of the 43rd Legislature, 1st Called Session, 1933
49-10 (Article 1434a, Vernon's Texas Civil Statutes).
49-11 Sec. 172.256. EXEMPTION: RAILWAY TERMINAL CORPORATION. A
49-12 corporation organized as a railway terminal corporation and having
49-13 no annual net income from its business is exempted from the tax
49-14 under this chapter.
49-15 Sec. 172.257. EXEMPTION: OPEN-END INVESTMENT COMPANY. An
49-16 open-end investment company, as defined by the Investment Company
49-17 Act of 1940 (15 U.S.C. Section 80a-1 et seq.), that is subject to
49-18 that Act and that is registered under The Securities Act (Article
49-19 581-1 et seq., Vernon's Texas Civil Statutes), is exempted from the
49-20 tax under this chapter.
49-21 Sec. 172.258. EXEMPTION: BUSINESS ENTITY WITH BUSINESS
49-22 INTEREST IN SOLAR ENERGY DEVICES. (a) A business entity engaged
49-23 solely in the business of manufacturing, selling, or installing
49-24 solar energy devices is exempted from the tax under this chapter.
49-25 (b) In this section, "solar energy device" means a system or
49-26 series of mechanisms designed primarily to provide heating or
49-27 cooling or to produce electrical or mechanical power by collecting
50-1 and transferring solar-generated energy. The term includes a
50-2 mechanical or chemical device that has the ability to store
50-3 solar-generated energy for use in heating or cooling or in the
50-4 production of power.
50-5 Sec. 172.259. EXEMPTION: NONPROFIT CORPORATION ORGANIZED TO
50-6 PROMOTE COUNTY, CITY, OR ANOTHER AREA. A nonprofit corporation
50-7 organized solely to promote the public interest of a county, city,
50-8 town, or another area in the state is exempted from the tax under
50-9 this chapter.
50-10 Sec. 172.260. EXEMPTION: NONPROFIT CORPORATION ORGANIZED FOR
50-11 RELIGIOUS PURPOSES. A nonprofit corporation organized for the
50-12 purpose of religious worship is exempted from the tax under this
50-13 chapter.
50-14 Sec. 172.261. EXEMPTION: NONPROFIT CORPORATION ORGANIZED TO
50-15 PROVIDE BURIAL PLACES. A nonprofit corporation organized to
50-16 provide places of burial is exempted from the tax under this
50-17 chapter.
50-18 Sec. 172.262. EXEMPTION: NONPROFIT CORPORATION ORGANIZED FOR
50-19 AGRICULTURAL PURPOSES. A nonprofit corporation organized to hold
50-20 agricultural fairs and encourage agricultural pursuits is exempted
50-21 from the tax under this chapter.
50-22 Sec. 172.263. EXEMPTION: NONPROFIT CORPORATION ORGANIZED FOR
50-23 EDUCATIONAL PURPOSES. A nonprofit corporation organized solely for
50-24 educational purposes is exempted from the tax under this chapter.
50-25 Sec. 172.264. EXEMPTION: NONPROFIT CORPORATION ORGANIZED FOR
50-26 PUBLIC CHARITY. A nonprofit corporation organized for purely
50-27 public charity is exempted from the tax under this chapter.
51-1 Sec. 172.265. EXEMPTION: NONPROFIT CORPORATION ORGANIZED FOR
51-2 CONSERVATION PURPOSES. A nonprofit corporation organized solely to
51-3 educate the public about the protection and conservation of fish,
51-4 game, other wildlife, grasslands, or forests is exempted from the
51-5 tax under this chapter.
51-6 Sec. 172.266. EXEMPTION: NONPROFIT CORPORATION INVOLVED WITH
51-7 CITY NATURAL GAS FACILITY. A nonprofit corporation organized to
51-8 construct, acquire, own, lease, or operate a natural gas facility
51-9 on behalf and for the benefit of a municipality or residents of a
51-10 municipality is exempted from the tax under this chapter.
51-11 Sec. 172.267. EXEMPTION: NONPROFIT CORPORATION ORGANIZED TO
51-12 PROVIDE CONVALESCENT HOMES FOR ELDERLY. A nonprofit corporation
51-13 organized to provide a convalescent home or other housing for
51-14 persons who are at least 62 years old or who are handicapped or
51-15 disabled is exempted from the tax under this chapter, whether or
51-16 not the corporation is organized for purely public charity.
51-17 Sec. 172.268. EXEMPTION: NONPROFIT CORPORATION ORGANIZED TO
51-18 PROVIDE COOPERATIVE HOUSING. A nonprofit corporation engaged
51-19 solely in the business of owning residential property for the
51-20 purpose of providing cooperative housing for persons is exempted
51-21 from the tax under this chapter.
51-22 Sec. 172.269. EXEMPTION: MARKETING ASSOCIATIONS. A
51-23 marketing association incorporated under Chapter 52, Agriculture
51-24 Code, is exempted from the tax under this chapter.
51-25 Sec. 172.270. EXEMPTION: LODGES. A lodge incorporated under
51-26 Article 1399 et seq., Revised Statutes, is exempted from the tax
51-27 under this chapter.
52-1 Sec. 172.271. EXEMPTION: FARMERS' COOPERATIVE SOCIETY. A
52-2 farmers' cooperative society incorporated under Chapter 51,
52-3 Agriculture Code, is exempted from the tax under this chapter.
52-4 Sec. 172.272. EXEMPTION: HOUSING FINANCE CORPORATION. A
52-5 housing finance corporation incorporated under Chapter 394, Local
52-6 Government Code, is exempted from the tax under this chapter.
52-7 Sec. 172.273. EXEMPTION: DEVELOPMENT CORPORATION. A
52-8 nonprofit corporation organized under the Development Corporation
52-9 Act of 1979 (Article 5190.6, Vernon's Texas Civil Statutes) is
52-10 exempted from the tax under this chapter.
52-11 Sec. 172.274. EXEMPTION: COOPERATIVE ASSOCIATION. A
52-12 cooperative association incorporated under Subchapter B, Chapter
52-13 301, Health and Safety Code, or under the Cooperative Association
52-14 Act (Article 1396-50.01, Vernon's Texas Civil Statutes) is exempted
52-15 from the tax under this chapter.
52-16 Sec. 172.275. EXEMPTION: COOPERATIVE CREDIT ASSOCIATION. A
52-17 cooperative credit association incorporated under Chapter 55,
52-18 Agriculture Code, is exempted from the tax under this chapter.
52-19 Sec. 172.276. EXEMPTION: ELECTRIC COOPERATIVE CORPORATION.
52-20 An electric cooperative corporation incorporated under the Electric
52-21 Cooperative Corporation Act (Article 1528b, Vernon's Texas Civil
52-22 Statutes) that is not a participant in a joint powers agency is
52-23 exempted from the tax under this chapter.
52-24 Sec. 172.277. EXEMPTION: TELEPHONE COOPERATIVE CORPORATIONS.
52-25 A telephone cooperative corporation incorporated under the
52-26 Telephone Cooperative Act (Article 1528c, Vernon's Texas Civil
52-27 Statutes) is exempted from the tax under this chapter.
53-1 Sec. 172.278. EXEMPTION: CERTAIN HOMEOWNERS' ASSOCIATIONS.
53-2 (a) A nonprofit corporation is exempted from the tax under this
53-3 chapter if:
53-4 (1) the corporation is organized and operated
53-5 primarily to obtain, manage, construct, and maintain the property
53-6 in or of a residential condominium or residential real estate
53-7 development; and
53-8 (2) the owners of individual lots, residences, or
53-9 residential units control at least 51 percent of the votes of the
53-10 corporation and that voting control, however acquired, is not held
53-11 by:
53-12 (A) a single individual or family; or
53-13 (B) one or more developers, declarants, banks,
53-14 investors, or other similar parties.
53-15 (b) For purposes of this section, a condominium project is
53-16 considered residential if the project is legally restricted for use
53-17 as residences. A real estate development is considered residential
53-18 if the property is legally restricted for use as residences.
53-19 Sec. 172.279. EXEMPTION: EMERGENCY MEDICAL SERVICE
53-20 CORPORATION. A nonprofit corporation that is organized for the
53-21 sole purpose of and engages exclusively in providing emergency
53-22 medical services, including rescue and ambulance services, is
53-23 exempted from the tax under this chapter.
53-24 Sec. 172.280. EXEMPTION: CERTAIN TRADE SHOW PARTICIPANTS.
53-25 (a) A business entity is exempted from the tax under this chapter
53-26 if:
53-27 (1) the only business activity conducted by or on
54-1 behalf of the business entity in this state is related to the
54-2 solicitation of orders conducted by representatives of the business
54-3 entity who:
54-4 (A) solicit orders of personal property to be
54-5 sent outside this state for approval or rejection by the business
54-6 entity and, if approved, to be filled by shipment or delivery from
54-7 a point outside this state; or
54-8 (B) solicit orders in the name of or for the
54-9 benefit of a customer or prospective customer of the business
54-10 entity, if the orders are filled or intended to be filled by the
54-11 customer or prospective customer of the business entity by making
54-12 orders to the business entity described by Paragraph (A); and
54-13 (2) the solicitation of orders is conducted on an
54-14 occasional basis at trade shows:
54-15 (A) promoted by wholesale centers;
54-16 (B) promoted by nonprofit trade or professional
54-17 associations for the purpose of facilitating the solicitation of
54-18 orders from members of the trade or profession; or
54-19 (C) held at municipally owned or county-owned
54-20 convention centers or meeting facilities.
54-21 (b) For purposes of this section, the solicitation of orders
54-22 is conducted on an occasional basis only if the solicitation is
54-23 conducted during not more than five periods during the business
54-24 period of the business entity to which a tax report applies and if
54-25 no single period during which solicitation is conducted is longer
54-26 than 120 hours.
54-27 (c) In this section, "wholesale center" means a permanent
55-1 wholesale facility that has permanent tenants and that promotes at
55-2 least four national or regional trade shows in a calendar year.
55-3 Sec. 172.281. EXEMPTION: RECYCLING OPERATION. A business
55-4 entity engaged solely in the business of recycling sludge, as
55-5 defined by Section 361.003, Health and Safety Code, is exempted
55-6 from the tax under this chapter.
55-7 Sec. 172.282. EXEMPTION: NONPROFIT CORPORATION ORGANIZED FOR
55-8 STUDENT LOAN FUNDS OR STUDENT SCHOLARSHIP PURPOSES. A nonprofit
55-9 corporation organized solely to provide a student loan fund or
55-10 student scholarships is exempted from the tax under this chapter.
55-11 Sec. 172.283. EXEMPTION: CREDIT UNION. There is exempted
55-12 from the taxes imposed by this chapter a credit union incorporated
55-13 under the Texas Credit Union Act (Article 2461-1.01 et seq.,
55-14 Vernon's Texas Civil Statutes).
55-15 (Sections 172.284-172.300 reserved for expansion
55-16 SUBCHAPTER F. TAX REPORTS AND PAYMENTS
55-17 Sec. 172.301. ESTIMATED TAX REPORTS FOR CORPORATIONS. (a)
55-18 This section applies only to a taxpayer who is a corporation.
55-19 (b) A taxpayer who reasonably expects liability for the tax
55-20 year to exceed $500 shall file an estimated report and pay an
55-21 estimated tax for each quarter of the taxpayer's tax year.
55-22 (c) For a taxpayer whose tax year is the calendar year, the
55-23 quarterly reports and estimated payments shall be made on or before
55-24 April 15, June 15, September 15, and December 15. A taxpayer whose
55-25 tax year is not the calendar year shall file quarterly reports and
55-26 make estimated payments on or before the due dates that in the
55-27 taxpayer's fiscal year correspond to the date required by the
56-1 Internal Revenue Service, or if that date does not apply to a
56-2 taxpayer, to the calendar year dates provided by this subsection.
56-3 (d) The estimated payment made with each quarterly report of
56-4 each tax year is for the estimated tax base for the quarter or
56-5 one-fourth of the estimated annual liability. The second, third,
56-6 and fourth estimated payments in each tax year shall include
56-7 adjustments, if necessary, to correct underpayments or overpayments
56-8 from previous quarterly payments in the tax year to a revised
56-9 estimate of the annual tax liability.
56-10 (e) The comptroller may not assess interest for tax that is
56-11 delinquent if:
56-12 (1) the sum of the estimated payments equals at least
56-13 90 percent of the liability or one percent of the gross receipts in
56-14 this state, as described by Section 172.206, for the tax year and
56-15 the amount of each estimated payment reasonably approximates the
56-16 tax liability incurred during the quarter for which the estimated
56-17 payment was made; or
56-18 (2) the preceding year's tax liability was submitted
56-19 by the taxpayer in four equal installments the sum of which equals
56-20 the previous year's tax liability.
56-21 (f) A taxpayer shall make each estimated report on a form
56-22 prescribed by the comptroller and shall include an estimate of the
56-23 annual tax liability and other information required by the
56-24 comptroller. The form may be combined with any other tax reporting
56-25 form prescribed by the comptroller.
56-26 (g) A taxpayer who files an estimated tax report for the
56-27 taxpayer's first tax year of less than 12 months shall pay amounts
57-1 with each report that are proportional to the number of payments
57-2 made in the first tax year.
57-3 (h) Payments made under this section are a credit against
57-4 the payment required with the annual tax report.
57-5 (i) The comptroller may require filing of the reports and
57-6 payment of the tax for other than quarterly or annual periods if
57-7 the comptroller considers it necessary to ensure payment of the tax
57-8 or to provide a more efficient administration of the tax.
57-9 (j) A taxpayer who elects under the Internal Revenue Code to
57-10 file an annual federal income tax return by March 1 in the year
57-11 following the taxpayer's tax year and does not make a quarterly
57-12 estimate or payment, or does not make a quarterly estimate or
57-13 payment and files a tentative annual return with a tentative
57-14 payment by January 15 in the year following the taxpayer's tax year
57-15 and a final return by April 15 in the year following the taxpayer's
57-16 tax year, has the same option in filing the estimated and annual
57-17 reports required by this chapter.
57-18 Sec. 172.302. REPORT FOR FIRST TAX YEAR. A taxpayer may
57-19 elect to compute the tax for the first taxable year, if less than
57-20 12 months by determining the amount of the tax as if this chapter
57-21 were effective on the first day of the taxpayer's annual accounting
57-22 period and multiply the amount by a fraction, the numerator of
57-23 which is the number of months in the taxpayer's first taxable year,
57-24 and the denominator of which is 12.
57-25 Sec. 172.303. ANNUAL TAX REPORT. (a) A taxpayer shall file
57-26 an annual or final report with the comptroller, in the form and
57-27 content prescribed by the comptroller, on or before the date the
58-1 taxpayer's federal income tax return is due, or if that date does
58-2 not apply to a taxpayer, the last day of the fourth month after the
58-3 end of the taxpayer's tax year.
58-4 (b) A taxpayer shall pay any final tax liability with the
58-5 final report.
58-6 (c) When a taxpayer is granted an extension of time to file
58-7 the taxpayer's federal income tax return for a taxable year, the
58-8 filing of a copy of the request for the federal extension with a
58-9 preliminary report and payment of the estimated tax with the
58-10 comptroller by the due date provided in Subsection (a)
58-11 automatically extends the due date for the filing of a final report
58-12 under this chapter for a period equivalent to the federal extension
58-13 plus 60 days. Interest at the rate that applies to delinquent
58-14 taxes under Section 111.060 shall be added to the amount of the tax
58-15 unpaid for the period of the extension.
58-16 Sec. 172.304. FILING OF FEDERAL TAX RETURNS. (a) A
58-17 taxpayer required to file a report under this chapter may be
58-18 required to furnish a copy of any return or portion of any return
58-19 that the taxpayer has filed under the Internal Revenue Code.
58-20 (b) A taxpayer shall file an amended report with the
58-21 comptroller showing any alteration in or modification of the
58-22 taxpayer's federal income tax return that affects the taxpayer's
58-23 tax base under this chapter not later than 120 days after the date
58-24 of the final determination by the Internal Revenue Service.
58-25 (c) At the request of the comptroller, a person required by
58-26 the Internal Revenue Code to file or submit an information return
58-27 of income paid to others shall, to the extent the information is
59-1 applicable to residents of this state, at the same time file or
59-2 submit information required by the comptroller in the form
59-3 prescribed by the comptroller.
59-4 Sec. 172.305. REPORTS OF TAXPAYERS OTHER THAN CORPORATIONS.
59-5 (a) This section applies only to a taxpayer who is not a
59-6 corporation.
59-7 (b) A taxpayer to which this section applies, including a
59-8 business entity, such as a partnership, business association, or
59-9 joint venture, that has more than one owner, shall file a tax
59-10 report that represents the business activities of the entire entity
59-11 for the relevant accounting period.
59-12 (c) A taxpayer to which this section applies is required
59-13 only to file an annual report under Section 172.304.
59-14 (d) Each owner of a business entity or a business activity
59-15 in which general liability is not otherwise limited by law is
59-16 jointly and severally liable for the amount of the taxes imposed by
59-17 this chapter on the business entity or business activity.
59-18 Sec. 172.306. COMBINED ENTITY REPORTS. (a) A controlled
59-19 group of corporations or an entity under common control, as defined
59-20 by the Internal Revenue Code, or an affiliated group shall file a
59-21 combined report.
59-22 (b) A corporation that has less than 80 percent of its
59-23 tangible assets located in a state or states may not be included in
59-24 any combined report but must file as a separate entity.
59-25 Sec. 172.307. INFORMATION REPORTS. The comptroller by rule
59-26 may require, at the time and in the manner specified by rule, the
59-27 filing of an information report of any taxpayer who has business
60-1 activity in or allocated to this state and who for a tax period has
60-2 gross receipts, as described by Section 172.207, of $500,000 or
60-3 more.
60-4 (Sections 172.308-172.350 reserved for expansion
60-5 SUBCHAPTER G. ADMINISTRATION, COLLECTION, AND ENFORCEMENT
60-6 Sec. 172.351. PROHIBITION OF DISCLOSURE OF INFORMATION. (a)
60-7 A person, including a state officer or employee, who has access to
60-8 a report filed under this chapter commits an offense if the person
60-9 makes known in a manner not permitted by law the amount or source
60-10 of the taxpayer's income, profits, losses, expenditures, or other
60-11 information in the report relating to the financial condition of
60-12 the taxpayer.
60-13 (b) An offense under this section is punishable by a fine of
60-14 not more than $1,000, confinement in jail for not more than one
60-15 year, or both.
60-16 Sec. 172.352. PENALTY FOR FAILURE TO PAY TAX OR FILE REPORT.
60-17 (a) If a taxpayer on which a tax is imposed by this chapter fails
60-18 to pay the tax when it is due and payable or fails to file a report
60-19 required by this chapter when it is due, the taxpayer is liable for
60-20 a penalty of five percent of the amount of the tax due.
60-21 (b) If the tax is not paid or the report is not filed before
60-22 the 31st day after the due date, a penalty of an additional five
60-23 percent of the tax due is imposed.
60-24 (c) The minimum penalty under this section is $1.
60-25 Sec. 172.353. WILFUL AND FRAUDULENT ACTS. (a) A taxpayer
60-26 commits an offense if the taxpayer is subject to the provisions of
60-27 this chapter and the taxpayer wilfully:
61-1 (1) fails to file a report;
61-2 (2) fails to keep books and records as required by
61-3 this chapter;
61-4 (3) files a fraudulent report;
61-5 (4) violates any rule of the comptroller for the
61-6 administration and enforcement of the provisions of this chapter;
61-7 or
61-8 (5) attempts in any other manner to evade or defeat
61-9 any tax imposed by this chapter or the payment of the tax.
61-10 (b) A person commits an offense if the person is an
61-11 accountant or an agent for or an officer or employee of a taxpayer
61-12 and the person knowingly enters or provides false information on
61-13 any report, return, or other document filed by the taxpayer under
61-14 this chapter.
61-15 (c) A person who commits an offense under this section may
61-16 also, in addition to the punishment provided by this section, be
61-17 liable for a penalty under this chapter.
61-18 (d) An offense under this section is a Class A misdemeanor.
61-19 (e) A person whose commercial domicile or whose residence is
61-20 in this state may be prosecuted under this section only in the
61-21 county in which the person's commercial domicile or residence is
61-22 located unless the person asserts a right to be prosecuted in
61-23 another county.
61-24 (f) A prosecution for a violation of this section must be
61-25 commenced before the fifth anniversary of the date of the
61-26 violation.
61-27 Sec. 172.354. RECIPROCAL AGREEMENTS. The comptroller may
62-1 enter into reciprocal agreements with the United States Department
62-2 of the Treasury or taxing officials of other states or nations for
62-3 the enforcement, collection, and exchange of data in connection
62-4 with the administration of this chapter.
62-5 (Sections 172.355-172.400 reserved for expansion
62-6 SUBCHAPTER H. FORFEITURE OF CORPORATE PRIVILEGES
62-7 Sec. 172.401. FORFEITURE OF CORPORATE PRIVILEGES. The
62-8 comptroller shall forfeit the corporate privileges of a corporation
62-9 on which the tax imposed by this chapter is imposed if the
62-10 corporation:
62-11 (1) does not file, in accordance with this chapter and
62-12 before the 45th day after the date notice of forfeiture is mailed,
62-13 a report required by this chapter; or
62-14 (2) does not pay, before the 45th day after the date
62-15 notice of forfeiture is mailed, a tax imposed by this chapter or
62-16 does not pay, before that date, a penalty imposed by this chapter
62-17 relating to that tax.
62-18 Sec. 172.402. EFFECTS OF FORFEITURE. If the corporate
62-19 privileges of a corporation are forfeited under this subchapter:
62-20 (1) the corporation is denied the right to sue or
62-21 defend in a court of this state; and
62-22 (2) each director or officer of the corporation is
62-23 liable for a debt of the corporation as provided by Section
62-24 172.405.
62-25 Sec. 172.403. SUIT ON CAUSE OF ACTION ARISING BEFORE
62-26 FORFEITURE. In a suit against a corporation on a cause of action
62-27 arising before the forfeiture of the corporate privileges of the
63-1 corporation, affirmative relief may not be granted to the
63-2 corporation unless its corporate privileges are revived under this
63-3 chapter.
63-4 Sec. 172.404. EXCEPTION TO FORFEITURE. The forfeiture of
63-5 the corporate privileges of a corporation does not apply to the
63-6 privilege to defend in a suit to forfeit the corporation's charter
63-7 or certificate of authority.
63-8 Sec. 172.405. LIABILITY OF DIRECTOR AND OFFICERS. (a) If
63-9 the corporate privileges of a corporation are forfeited for the
63-10 failure to file a report or pay a tax or penalty, each director or
63-11 officer of the corporation is liable for each debt of the
63-12 corporation that is created or incurred in this state after the
63-13 date on which the report, tax, or penalty is due and before the
63-14 corporate privileges are revived. The liability includes liability
63-15 for any tax or penalty imposed by this chapter on the corporation
63-16 that becomes due and payable after the date of the forfeiture.
63-17 (b) The liability of a director or officer is in the same
63-18 manner and to the same extent as if the director or officer were a
63-19 partner and the corporation were a partnership.
63-20 (c) A director or officer is not liable for a debt of the
63-21 corporation if the director or officer shows that the debt was
63-22 created or incurred:
63-23 (1) over the director's objection; or
63-24 (2) without the director's knowledge and that the
63-25 exercise of reasonable diligence to become acquainted with the
63-26 affairs of the corporation would not have revealed the intention to
63-27 create the debt.
64-1 (d) If a corporation's charter or certificate of authority
64-2 and its corporate privileges are forfeited and revived under this
64-3 chapter, the liability under this section of a director or officer
64-4 of the corporation is not affected by the revival of the charter or
64-5 certificate and the corporate privileges.
64-6 Sec. 172.406. NOTICE OF FORFEITURE. (a) To forfeit the
64-7 corporate privileges of a corporation, the comptroller must notify
64-8 the corporation that the forfeiture will occur without a judicial
64-9 proceeding unless the corporation:
64-10 (1) files, within the time established by Section
64-11 172.401, the report to which that section refers; or
64-12 (2) pays, within the time established by Section
64-13 172.401, the delinquent tax and penalty to which that section
64-14 refers.
64-15 (b) The notice must be written or printed and be verified by
64-16 the seal of the comptroller's office.
64-17 (c) The comptroller shall mail the notice to the corporation
64-18 at least 45 days before the forfeiture of corporate privileges.
64-19 The comptroller shall address the notice to the corporation and
64-20 mail it to the address named in the corporation's charter as its
64-21 principal place of business or to another known place of business
64-22 of the corporation.
64-23 (d) The comptroller shall keep at the comptroller's office a
64-24 record of the date on which the notice is mailed. For the purposes
64-25 of this chapter, the notice and the record of the mailing date
64-26 constitute legal and sufficient notice of the forfeiture.
64-27 Sec. 172.407. JUDICIAL PROCEEDING NOT REQUIRED FOR
65-1 FORFEITURE. The forfeiture of the corporate privileges of a
65-2 corporation is effected by the comptroller without a judicial
65-3 proceeding.
65-4 Sec. 172.408. REVIVAL OF CORPORATE PRIVILEGES. The
65-5 comptroller shall revive the corporate privileges of a corporation
65-6 if the corporation, before the forfeiture of its charter or
65-7 certificate of authority, pays any tax, penalty, or interest due
65-8 under this chapter.
65-9 (Sections 172.409-172.450 reserved for expansion
65-10 SUBCHAPTER I. FORFEITURE OF CHARTER OR CERTIFICATE OF AUTHORITY
65-11 Sec. 172.451. GROUNDS FOR FORFEITURE OF CHARTER OR
65-12 CERTIFICATE OF AUTHORITY. It is a ground for the forfeiture of a
65-13 corporation's charter or certificate of authority if the corporate
65-14 privileges of the corporation are forfeited under this chapter and
65-15 the corporation does not pay, before the 120th day after the date
65-16 the corporate privileges are forfeited, the amount necessary for
65-17 the corporation to revive under this chapter its corporate
65-18 privileges.
65-19 Sec. 172.452. CERTIFICATION BY COMPTROLLER. After the 120th
65-20 day after the date that the corporate privileges of a corporation
65-21 are forfeited under this chapter, the comptroller shall certify the
65-22 name of the corporation to the attorney general and the secretary
65-23 of state.
65-24 Sec. 172.453. SUIT FOR JUDICIAL FORFEITURE. On receipt of
65-25 the comptroller's certification, the attorney general shall bring
65-26 suit to forfeit the charter or certificate of authority of the
65-27 corporation if a ground exists for the forfeiture of the charter or
66-1 certificate.
66-2 Sec. 172.454. RECORD OF JUDICIAL FORFEITURE. (a) If a
66-3 district court forfeits a corporation's charter or certificate of
66-4 authority under this chapter, the clerk of the court shall promptly
66-5 mail to the secretary of state a certified copy of the court's
66-6 judgment. On receipt of the copy of the judgment, the secretary of
66-7 state shall inscribe on the corporation's record at the secretary's
66-8 office the words "Judgment of Forfeiture" and the date of the
66-9 judgment.
66-10 (b) If an appeal of the judgment is perfected, the clerk of
66-11 the court shall promptly certify to the secretary of state that the
66-12 appeal has been perfected. On receipt of the certification, the
66-13 secretary of state shall inscribe on the corporation's record at
66-14 the secretary's office the word "Appealed" and the date on which
66-15 the appeal was perfected.
66-16 (c) If final disposition of an appeal is made, the clerk of
66-17 the court making the disposition shall promptly certify to the
66-18 secretary of state the type of disposition made and the date of the
66-19 disposition. On receipt of the certification, the secretary of
66-20 state shall inscribe on the corporation's record at the secretary's
66-21 office a brief note of the type of final disposition made and the
66-22 date of the disposition.
66-23 Sec. 172.455. REVIVAL OF CHARTER OR CERTIFICATE OF AUTHORITY
66-24 AFTER JUDICIAL FORFEITURE. A corporation whose charter or
66-25 certificate of authority is judicially forfeited under this chapter
66-26 is entitled to have its charter or certificate revived and to have
66-27 its corporate privileges revived if:
67-1 (1) the corporation files each report that is required
67-2 by this chapter and that is delinquent;
67-3 (2) the corporation pays the tax, penalty, and
67-4 interest that is imposed by this chapter and that is due at the
67-5 time the suit under Section 172.456 to set aside forfeiture is
67-6 filed; and
67-7 (3) the forfeiture of the corporation's charter or
67-8 certificate is set aside in a suit under Section 172.456.
67-9 Sec. 172.456. SUIT TO SET ASIDE JUDICIAL FORFEITURE. If a
67-10 corporation's charter or certificate of authority is judicially
67-11 forfeited under this chapter, a stockholder, director, or officer
67-12 of the corporation at the time of the forfeiture of the charter or
67-13 certificate or of the corporate privileges of the corporation may
67-14 bring suit in a district court of Travis County in the name of the
67-15 corporation to set aside the forfeiture of the charter or
67-16 certificate. The suit must be in the nature of a bill of review.
67-17 The secretary of state and attorney general must be made defendants
67-18 in the suit.
67-19 Sec. 172.457. RECORD OF SUIT TO SET ASIDE JUDICIAL
67-20 FORFEITURE. If a court under this chapter sets aside the
67-21 forfeiture of a corporation's charter or certificate of authority,
67-22 the secretary of state shall inscribe on the corporation's record
67-23 in the secretary's office the words "Charter Revived by Court
67-24 Order" or "Certificate Revived by Court Order," a citation to the
67-25 suit, and the date of the court's judgment.
67-26 Sec. 172.458. CORPORATE PRIVILEGES AFTER JUDICIAL FORFEITURE
67-27 IS SET ASIDE. If a court under this chapter sets aside the
68-1 forfeiture of a corporation's charter or certificate of authority,
68-2 the comptroller shall revive the corporate privileges of the
68-3 corporation and shall inscribe on the corporation's record in the
68-4 comptroller's office a note of the revival.
68-5 Sec. 172.459. FORFEITURE BY SECRETARY OF STATE. The
68-6 secretary of state may forfeit the charter or certificate of
68-7 authority of a corporation if:
68-8 (1) the secretary receives the comptroller's
68-9 certification under Section 172.452;
68-10 (2) the corporation does not revive its forfeited
68-11 corporate privileges before the 120th day after the date that the
68-12 corporate privileges were forfeited; and
68-13 (3) the corporation does not have assets from which a
68-14 judgment for any tax, penalty, or court costs imposed by this
68-15 chapter may be satisfied.
68-16 Sec. 172.460. JUDICIAL PROCEEDING NOT REQUIRED FOR
68-17 FORFEITURE BY SECRETARY OF STATE. The forfeiture by the secretary
68-18 of state of a corporation's charter or certificate of authority
68-19 under this chapter is effected without a judicial proceeding.
68-20 Sec. 172.461. RECORD OF FORFEITURE BY SECRETARY OF STATE.
68-21 The secretary of state shall effect a forfeiture of a corporation's
68-22 charter or certificate of authority under this chapter by
68-23 inscribing on the corporation's record in the secretary's office
68-24 the words "Charter Forfeited" or "Certificate Forfeited," the date
68-25 on which this inscription is made, and a citation to this chapter
68-26 as authority for the forfeiture.
68-27 Sec. 172.462. REVIVAL OF CHARTER OR CERTIFICATE OF AUTHORITY
69-1 AFTER FORFEITURE BY SECRETARY OF STATE. A corporation whose
69-2 charter or certificate of authority is forfeited under this chapter
69-3 by the secretary of state is entitled to have its charter or
69-4 certificate revived and to have its corporate privileges revived
69-5 if:
69-6 (1) the corporation files each report that is required
69-7 by this chapter and that is delinquent;
69-8 (2) the corporation pays the tax, penalty, and
69-9 interest that is imposed by this chapter and that is due at the
69-10 time the request under Section 172.463 to set aside forfeiture is
69-11 made; and
69-12 (3) the forfeiture of the corporation's charter or
69-13 certificate is set aside in a proceeding under Section 172.463.
69-14 Sec. 172.463. PROCEEDING TO SET ASIDE FORFEITURE BY
69-15 SECRETARY OF STATE. (a) If a corporation's charter or certificate
69-16 of authority is forfeited under this chapter by the secretary of
69-17 state, a stockholder, director, or officer of the corporation at
69-18 the time of the forfeiture of the charter or certificate or of the
69-19 corporate privileges of the corporation may request in the name of
69-20 the corporation that the secretary of state set aside the
69-21 forfeiture of the charter or certificate.
69-22 (b) If a request is made, the secretary of state shall
69-23 determine if each delinquent report has been filed and any
69-24 delinquent tax, penalty, or interest has been paid. If each report
69-25 has been filed and the tax, penalty, or interest has been paid, the
69-26 secretary shall set aside the forfeiture of the corporation's
69-27 charter or certificate of authority.
70-1 Sec. 172.464. CORPORATE PRIVILEGES AFTER FORFEITURE BY
70-2 SECRETARY OF STATE IS SET ASIDE. If the secretary of state sets
70-3 aside under this chapter the forfeiture of a corporation's charter
70-4 or certificate of authority, the comptroller shall revive the
70-5 corporate privileges of the corporation.
70-6 Sec. 172.465. USE OF CORPORATE NAME AFTER REVIVAL OF CHARTER
70-7 OR CERTIFICATE OF AUTHORITY. If a corporation's charter or
70-8 certificate of authority is forfeited under this chapter by the
70-9 secretary of state and if the corporation requests the secretary to
70-10 set aside the forfeiture under Section 172.463, the corporation
70-11 shall determine from the secretary whether the corporation's name
70-12 is available for use. If the name is not available, the
70-13 corporation shall amend its charter or certificate to change its
70-14 name.
70-15 (Sections 172.466-172.500 reserved for expansion
70-16 SUBCHAPTER J. DISPOSITION OF REVENUE
70-17 Sec. 172.501. TEXAS SCHOOL TRUST FUND. The revenue from the
70-18 tax imposed by this chapter shall be deposited to the credit of the
70-19 Texas School Trust Fund.
70-20 SECTION 3.02. Section 101.003(8), Tax Code, as amended by
70-21 Section 1.01, Chapter 486, and Section 3.27, Chapter 685, Acts of
70-22 the 73rd Legislature, Regular Session, 1993, is amended to read as
70-23 follows:
70-24 (8) "Taxpayer" means a person liable for a tax, fee,
70-25 assessment, or other amount imposed by a statute or under the
70-26 authority of a statutory function administered by the comptroller.
70-27 The term includes a business entity subject to the tax under
71-1 Chapter 172, Tax Code.
71-2 SECTION 3.03. (a) Chapter 171, Tax Code, is repealed
71-3 January 1, 1998.
71-4 (b) Chapter 171, Tax Code, and Subtitle B, Title 2, Tax
71-5 Code, continue to apply to audits, deficiencies, redeterminations,
71-6 and refunds of any tax due or collected under Chapter 171 until
71-7 barred by limitations.
71-8 (c) Any corporation that is subject to the franchise tax
71-9 imposed by Chapter 171, Tax Code, before the date of its repeal
71-10 shall pay an additional tax equal to 4.5 percent of the
71-11 corporation's net taxable earned surplus computed on the period
71-12 beginning on the day after the last day for which the tax imposed
71-13 on net taxable earned surplus was computed under Section 171.1532,
71-14 Tax Code, and ending on December 31, 1997. The comptroller by rule
71-15 shall provide for the payment of tax due for an initial or second
71-16 period that does not expire before January 1, 1998. A franchise
71-17 tax return is not required for any initial or second period as
71-18 described by Chapter 171, Tax Code, that begins on or after January
71-19 1, 1998.
71-20 (d) The repeal of Chapter 171, Tax Code, does not affect:
71-21 (1) the status of a corporation that has had its
71-22 corporate privileges, certificate of authority, or corporate
71-23 charter revoked, suit filed against it, or a receiver appointed
71-24 under Subchapter F, G, or H of that chapter;
71-25 (2) the ability of the comptroller, secretary of
71-26 state, or attorney general to take action against a corporation
71-27 under Subchapter F, G, or H for actions that took place before the
72-1 repeal; or
72-2 (3) the right of a corporation to contest a
72-3 forfeiture, revocation, lawsuit, or appointment of a receiver under
72-4 Subchapter F, G, or H.
72-5 SECTION 3.04. (a) Chapter 172, Tax Code, as added by this
72-6 article, applies to any business activity taking place on or after
72-7 July 1, 1998.
72-8 (b) Tax owed under Chapter 172, Tax Code, as added by this
72-9 article, for 1998, shall be proportionately reduced, in the manner
72-10 provided by Section 172.302, as added by this article, for the
72-11 report for the first tax year of a taxpayer, to reflect that the
72-12 1998 tax year is not a full calendar year.
72-13 (c) A corporation, as that term is defined by Section
72-14 172.006, Tax Code, as added by this article, shall make its first
72-15 estimated quarterly business tax payment under Chapter 172, as
72-16 added by this article, on or before October 31, 1998.
72-17 (d) A taxpayer, as that term is defined by Chapter 172, as
72-18 added by this article, other than a corporation, as that term is
72-19 defined by Section 172.006, Tax Code, as added by this article,
72-20 shall file its first tax year report and make its business tax
72-21 payment under Chapter 172, as added by this article, for business
72-22 activity taking place in 1998, beginning on July 1, 1998, on or
72-23 before April 15, 1999.
72-24 (e) In 1998, the comptroller may by rule extend the deadline
72-25 for estimated tax payments of the tax under Chapter 172, Tax Code,
72-26 as added by this article.
72-27 SECTION 3.05. Subject to Sections 3.03 and 3.04 of this
73-1 article, this article takes effect when this Act takes effect.
73-2 ARTICLE 4. SALES, EXCISE, AND USE TAX
73-3 SECTION 4.01. Section 151.051(b), Tax Code, is amended to
73-4 read as follows:
73-5 (b) The sales tax rate is 6 3/4 [6 1/4] percent of the sales
73-6 price of the taxable item sold.
73-7 SECTION 4.02. Subchapter M, Chapter 151, Tax Code, is
73-8 amended by adding Section 151.802 to read as follows:
73-9 Sec. 151.802. DEDICATION TO TEXAS SCHOOL TRUST FUND. (a)
73-10 The net revenue derived from the imposition of the taxes imposed by
73-11 this chapter at the rate of one-half of one percent of the sales
73-12 price of taxable items under this chapter shall be credited to the
73-13 Texas School Trust Fund.
73-14 (b) The comptroller shall determine the amount described by
73-15 Subsection (a) according to available statistical data indicating
73-16 the estimated or actual total receipts in this state from taxable
73-17 sales.
73-18 SECTION 4.03. (a) This article takes effect January 1,
73-19 1998.
73-20 (b) The change in law made by this article does not affect
73-21 taxes imposed before the effective date of this article, and the
73-22 law in effect before the effective date of this article is
73-23 continued in effect for purposes of the liability for and
73-24 collection of those taxes.
73-25 ARTICLE 5. MOTOR VEHICLE SALES, RENTAL, AND USE TAX
73-26 SECTION 5.01. Section 152.021, Tax Code, is amended to read
73-27 as follows:
74-1 Sec. 152.021. RETAIL SALES TAX. (a) A tax is imposed on
74-2 every retail sale of every motor vehicle sold in this state.
74-3 Except as provided by this chapter, the tax is an obligation of and
74-4 shall be paid by the purchaser of the motor vehicle.
74-5 (b) The tax rate is 6 3/4 [6 1/4] percent of the total
74-6 consideration.
74-7 SECTION 5.02. Section 152.022, Tax Code, is amended to read
74-8 as follows:
74-9 Sec. 152.022. TAX ON MOTOR VEHICLE PURCHASED OUTSIDE THIS
74-10 STATE. (a) A use tax is imposed on a motor vehicle purchased at
74-11 retail sale outside this state and used on the public highways of
74-12 this state by a Texas resident or other person who is domiciled or
74-13 doing business in this state.
74-14 (b) The tax rate is 6 3/4 [6 1/4] percent of the total
74-15 consideration.
74-16 SECTION 5.03. Sections 152.026(a) and (b), Tax Code, are
74-17 amended to read as follows:
74-18 (a) A tax is imposed on the gross rental receipts from the
74-19 rental of a rented motor vehicle.
74-20 (b) The tax rate is 10 percent of the gross rental receipts
74-21 from the rental of a rented motor vehicle for 30 days or less and
74-22 6 3/4 [6 1/4] percent of the gross rental receipts from the rental
74-23 of a rented motor vehicle for longer than 30 days.
74-24 SECTION 5.04. Section 152.028, Tax Code, is amended to read
74-25 as follows:
74-26 Sec. 152.028. USE TAX ON MOTOR VEHICLE BROUGHT BACK INTO
74-27 STATE. (a) A use tax is imposed on the operator of a motor
75-1 vehicle that was purchased tax-free under Section 152.090 of this
75-2 code and that is brought back into this state for use on the public
75-3 highways of this state. The tax is imposed at the time the motor
75-4 vehicle is brought back into this state.
75-5 (b) The tax rate is 6 3/4 [6 1/4] percent of the total
75-6 consideration.
75-7 SECTION 5.05. Section 152.122, Tax Code, is amended to read
75-8 as follows:
75-9 Sec. 152.122. ALLOCATION OF TAX. The comptroller shall
75-10 deposit the funds received under Section 152.121 of this code as
75-11 follows:
75-12 (1) 25 percent [1/4] to the credit of the foundation
75-13 school fund; [and]
75-14 (2) 7.4 percent to the Texas School Trust Fund; and
75-15 (3) the remaining funds to the credit of the general
75-16 revenue fund.
75-17 SECTION 5.06. This article takes effect January 1, 1998.
75-18 ARTICLE 6. STATE LOTTERY ACCOUNT
75-19 SECTION 6.01. Section 466.355(b), Government Code, is
75-20 amended to read as follows:
75-21 (b) Money in the state lottery account may be used only for
75-22 the following purposes and shall be distributed as follows:
75-23 (1) the payment of prizes to the holders of winning
75-24 tickets;
75-25 (2) the payment of costs incurred in the operation and
75-26 administration of the lottery, including any fees received by a
75-27 lottery operator, provided that the costs incurred in a fiscal
76-1 biennium may not exceed an amount equal to 15 percent of the gross
76-2 revenue accruing from the sale of tickets in that biennium;
76-3 (3) the establishment of a pooled bond fund, lottery
76-4 prize reserve fund, unclaimed prize fund, and prize payment
76-5 account; and
76-6 (4) the balance, after creation of a reserve
76-7 sufficient to pay the amounts needed or estimated to be needed
76-8 under Subdivisions (1) through (3), to be transferred to the Texas
76-9 School Trust Fund [unobligated portion of the general revenue
76-10 fund], on or before the 15th day of each month.
76-11 SECTION 6.02. This article takes effect September 1, 1997.
76-12 SECTION 6.03. Section 466.355, Government Code, as amended
76-13 by this article, applies only to revenue from the sale of a lottery
76-14 ticket that occurs on or after the effective date of this article.
76-15 Revenue from the sale of a lottery ticket that occurs before the
76-16 effective date of this article is governed by the law in effect on
76-17 the date of the sale, and the former law is continued in effect for
76-18 that purpose.
76-19 ARTICLE 7. CONTINGENCY; EMERGENCY
76-20 SECTION 7.01. (a) This Act takes effect on the date on
76-21 which the constitutional amendment proposed by ___ J.R. No. ____,
76-22 75th Legislature, Regular Session, 1997, takes effect. If that
76-23 amendment is not approved by the voters, this Act has no effect.
76-24 (b) Each article of this Act takes effect as provided by the
76-25 terms of the article.
76-26 SECTION 7.02. The importance of this legislation and the
76-27 crowded condition of the calendars in both houses create an
77-1 emergency and an imperative public necessity that the
77-2 constitutional rule requiring bills to be read on three several
77-3 days in each house be suspended, and this rule is hereby suspended.