1-1 By: Craddick, Junell, et al. H.B. No. 4
1-2 (Senate Sponsor - Armbrister, Bivins)
1-3 (In the Senate - Received from the House April 27, 1997;
1-4 April 27, 1997, read first time and referred to Select Committee on
1-5 Tax Reform and Public School Finance; May 8, 1997, reported
1-6 adversely, with favorable Committee Substitute by the following
1-7 vote: Yeas 10, Nays 1; May 8, 1997, sent to printer.)
1-8 COMMITTEE SUBSTITUTE FOR H.B. No. 4 By: Armbrister, Bivins
1-9 A BILL TO BE ENTITLED
1-10 AN ACT
1-11 relating to funding public elementary and secondary schools and
1-12 providing property tax relief and equity and to the imposition,
1-13 administration, enforcement, and collection of, and allocation of
1-14 the revenue from, various state and local taxes; providing
1-15 penalties; making an appropriation.
1-16 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-17 ARTICLE 1. SCHOOL FINANCE
1-18 SECTION 1.01. Section 41.002(a), Education Code, is amended
1-19 to read as follows:
1-20 (a) Except as otherwise provided by this section, a [A]
1-21 school district may not have a wealth per student that exceeds
1-22 $330,000. Beginning with the 1999-2000 school year, the wealth per
1-23 student that a district may have for the school years in a state
1-24 fiscal biennium is increased or decreased by the percentage by
1-25 which the statewide average wealth per student has increased or
1-26 decreased during the preceding biennium [$280,000].
1-27 SECTION 1.02. Section 41.093, Education Code, is amended to
1-28 read as follows:
1-29 Sec. 41.093. COST. The cost of each credit is an amount
1-30 equal to the greater of:
1-31 (1) the amount of the district's maintenance and
1-32 operations [total] tax revenue per student in weighted average
1-33 daily attendance for the school year for which the contract is
1-34 executed; or
1-35 (2) the amount of the statewide district average of
1-36 maintenance and operations [total] tax revenue per student in
1-37 weighted average daily attendance for the school year preceding the
1-38 school year for which the contract is executed.
1-39 SECTION 1.03. Section 42.152, Education Code, is amended by
1-40 amending Subsection (c) and adding Subsections (q) and (r) to read
1-41 as follows:
1-42 (c) Funds allocated under this section, other than an
1-43 indirect cost allotment established under State Board of Education
1-44 rule, which may not exceed 15 percent, may [must] be used only in
1-45 providing compensatory education and accelerated instruction
1-46 programs under Section 29.081 and may only be spent to improve and
1-47 enhance programs and services funded under the regular education
1-48 program. A district's compensatory education allotment may only be
1-49 used for costs supplementary to the regular program, such as costs
1-50 for program and student evaluation, instructional materials and
1-51 equipment and other supplies required for quality instruction,
1-52 supplemental staff expenses, salary supplements for teachers,
1-53 smaller class size, and individualized instruction [, and the
1-54 district must account for the expenditure of state funds by program
1-55 and by campus under existing agency reporting and auditing
1-56 procedures. Funds allocated under this section, other than the
1-57 indirect cost allotment, shall only be expended to improve and
1-58 enhance programs and services funded under the regular education
1-59 program]. A home-rule school district or an open-enrollment
1-60 charter school must use funds allocated under Subsection (a) to
1-61 provide compensatory education services but is not otherwise
1-62 subject to Subchapter C, Chapter 29.
1-63 (q) The State Board of Education, with the assistance of the
1-64 state auditor and the comptroller, shall develop and implement by
2-1 rule a reporting and auditing system for district and campus
2-2 expenditures of compensatory education funds to ensure that
2-3 compensatory education funds, other than the indirect cost
2-4 allotment, are spent only to supplement the regular program. The
2-5 commissioner, in the year following an audit of compensatory
2-6 education expenditures, shall withhold from a district's foundation
2-7 school fund payment an amount equal to the amount of compensatory
2-8 education funds the agency determines were not used in compliance
2-9 with Subsection (c). The commissioner shall release to a district
2-10 funds withheld under this subsection when the district provides to
2-11 the commissioner a detailed plan to spend those funds in compliance
2-12 with Subsection (c).
2-13 (r) Subsection (q) applies beginning with the 1998-1999
2-14 school year. For the 1997-1998 school year, a school district
2-15 shall account for the expenditure of funds allocated under
2-16 Subsection (a) by program and by campus under existing agency
2-17 reporting and auditing procedures. The board, state auditor, and
2-18 comptroller shall develop the reporting and auditing system
2-19 required by Subsection (q) not later than August 1, 1998. This
2-20 subsection expires September 1, 1999.
2-21 SECTION 1.04. Section 42.253, Education Code, is amended by
2-22 adding Subsection (e-1) to read as follows:
2-23 (e-1) Notwithstanding Subsection (e), the amount to which a
2-24 district is entitled under this section for the 1997-1998 and
2-25 1998-1999 school years may not exceed the amount to which the
2-26 district would be entitled at a tax rate equal to the rate
2-27 necessary to generate the same amount of state and local funds
2-28 under the Foundation School Program, exclusive of adjustments under
2-29 Subsection (i), to which the district would have been entitled in
2-30 the 1996-1997 school year, using student counts and property values
2-31 for the 1996-1997 school year and the funding elements in place for
2-32 the 1997-1998 school year. For purposes of this subsection, the
2-33 amount of state and local revenue under the Foundation School
2-34 Program to which a district would have been entitled in the
2-35 1996-1997 school year is computed at the total tax rate of the
2-36 district without regard to the limit under Subsection (e)
2-37 restricting the amount of state aid to the district's tax rate in
2-38 the 1994-1995 school year. The amount of local revenue to which a
2-39 district would have been entitled in the 1996-1997 school year
2-40 under this subsection is computed after a district has exercised
2-41 options to the extent required by Chapter 41. This subsection
2-42 expires September 1, 1999.
2-43 SECTION 1.05. Section 42.302, Education Code, is amended to
2-44 read as follows:
2-45 Sec. 42.302. ALLOTMENT. (a) Each school district is
2-46 guaranteed a specified amount per weighted student in state and
2-47 local funds for each cent of tax effort over that required for the
2-48 district's local fund assignment up to the maximum level specified
2-49 in this subchapter. The amount of state support, subject only to
2-50 the maximum amount under Section 42.303, is determined by the
2-51 formula:
2-52 GYA = (GL X WADA X DTR X 100) - LR
2-53 where:
2-54 "GYA" is the guaranteed yield amount of state funds to be
2-55 allocated to the district;
2-56 "GL" is the dollar amount guaranteed level of state and local
2-57 funds per weighted student per cent of tax effort, which is $29.60
2-58 [$20.55] or a greater amount for any year provided by
2-59 appropriation, or a greater amount adopted by the foundation school
2-60 fund budget committee under Section 42.256(d);
2-61 "WADA" is the number of students in weighted average daily
2-62 attendance, which is calculated by dividing the sum of the school
2-63 district's allotments under Subchapters B and C, less any allotment
2-64 to the district for transportation and 50 percent of the adjustment
2-65 under Section 42.102, by the basic allotment for the applicable
2-66 year;
2-67 "DTR" is the district enrichment and facilities tax rate of
2-68 the school district, which is determined by subtracting the amounts
2-69 specified by Subsection (b) from the total amount of taxes
3-1 collected by the school district for the applicable school year and
3-2 dividing the difference by the quotient of the district's taxable
3-3 value of property as determined under Subchapter M, Chapter 403,
3-4 Government Code, divided by 100; and
3-5 "LR" is the local revenue, which is determined by multiplying
3-6 "DTR" by the quotient of the district's taxable value of property
3-7 as determined under Subchapter M, Chapter 403, Government Code,
3-8 divided by 100.
3-9 (b) In computing the district enrichment and facilities tax
3-10 rate of a school district, the total amount of taxes collected by
3-11 the school district does not include the amount of:
3-12 (1) the district's local fund assignment under Section
3-13 42.252; or
3-14 (2) taxes collected to pay bonds that are being paid
3-15 with state and local funds under Chapter 46 [the local share of the
3-16 cost of an instructional facility for which the district receives
3-17 state assistance under Subchapter H].
3-18 SECTION 1.06. Title 2, Education Code, is amended by adding
3-19 Chapter 46 to read as follows:
3-20 CHAPTER 46. SCHOOL FACILITIES ALLOTMENT
3-21 Sec. 46.001. SCHOOL FACILITIES ALLOTMENT. (a) For each
3-22 year, a school district is guaranteed a specified amount per
3-23 student in state and local funds for each cent of tax effort, up to
3-24 the maximum rate under Subsection (b), to pay the principal of and
3-25 interest on eligible bonds. The amount of state support is
3-26 determined by the formula:
3-27 FYA = (FYL X ADA X BTR X 100) - (BTR X (DPV/100))
3-28 where:
3-29 "FYA" is the guaranteed facilities yield amount of state
3-30 funds allocated to the district for the year;
3-31 "FYL" is the dollar amount guaranteed level of state and
3-32 local funds per student per cent of tax effort, which is $33 or a
3-33 greater amount for any year provided by appropriation;
3-34 "ADA" is the number of students in average daily attendance
3-35 in the district;
3-36 "BTR" is the district's bond tax rate for the current year,
3-37 which is determined by dividing the amount of taxes budgeted to be
3-38 collected by the district for payment of eligible bonds by the
3-39 quotient of the district's taxable value of property as determined
3-40 under Subchapter M, Chapter 403, Government Code, divided by 100;
3-41 and
3-42 "DPV" is the district's taxable value of property as
3-43 determined under Subchapter M, Chapter 403, Government Code.
3-44 (b) For purposes of this section, the bond tax rate under
3-45 Subsection (a) may not exceed the lesser of:
3-46 (1) the rate necessary for the current year, using
3-47 state funds under Subsection (a), to make payments of principal and
3-48 interest on the bonds for which the tax is pledged; or
3-49 (2) $0.20 per $100 of valuation.
3-50 (c) Bonds are eligible to be paid with state and local funds
3-51 under this section if:
3-52 (1) taxes to pay the principal of and interest on the
3-53 bonds were first levied in the 1997-1998 school year or a later
3-54 school year;
3-55 (2) the bonds are guaranteed by the permanent school
3-56 fund as provided by Subchapter C, Chapter 45; and
3-57 (3) the bonds do not have a weighted average maturity
3-58 of less than eight years and may not be called for redemption
3-59 earlier than 10 years after the date of issuance.
3-60 (d) A district may use state funds received under this
3-61 section only to pay the principal of and interest on the bonds for
3-62 which the district received the funds.
3-63 (e) The board of trustees and voters of a school district
3-64 shall determine district needs concerning construction,
3-65 acquisition, renovation, or improvement of school facilities.
3-66 Sec. 46.002. REFUNDING BONDS. A school district may use
3-67 state funds received under this chapter to pay the principal of and
3-68 interest on refunding bonds that:
3-69 (1) are issued to refund bonds eligible under Section
4-1 46.001;
4-2 (2) do not have a final maturity date later than the
4-3 final maturity date of the bonds being refunded;
4-4 (3) may not be called for redemption earlier than the
4-5 earliest call date of the bonds being refunded; and
4-6 (4) result in a present value savings, which is
4-7 determined by computing the net present value of the difference
4-8 between each scheduled payment on the original bonds and each
4-9 scheduled payment on the refunding bonds. The present value
4-10 savings shall be calculated at the true interest cost of the
4-11 refunding bonds.
4-12 Sec. 46.003. PAYMENT OF SCHOOL FACILITIES ALLOTMENTS.
4-13 (a) For each school year, the commissioner shall determine the
4-14 amount of money to which each school district is entitled under
4-15 Section 46.001.
4-16 (b) If the amount appropriated for purposes of Section
4-17 46.001 for a year is less than the total amount determined under
4-18 Subsection (a) for that year, the commissioner shall:
4-19 (1) transfer from the Foundation School Program to the
4-20 school facilities program the amount by which the total amount
4-21 determined under Subsection (a) exceeds the amount appropriated;
4-22 and
4-23 (2) reduce each district's foundation school fund
4-24 allocations in the manner provided by Section 42.253.
4-25 (c) Warrants for payments under this chapter shall be
4-26 approved and transmitted to school district treasurers or
4-27 depositories in the same manner as warrants for payments under
4-28 Chapter 42.
4-29 (d) Payments under this chapter shall be made semiannually
4-30 on dates selected by the school district and approved by the
4-31 commissioner to enable the district to meet scheduled bond
4-32 payments.
4-33 (e) Section 42.258 applies to payments under this chapter.
4-34 Sec. 46.004. SALE OF SCHOOL FACILITY FINANCED WITH SCHOOL
4-35 FACILITIES ALLOTMENT. (a) If a school facility financed by bonds
4-36 paid with state and local funds under Section 46.001 is sold before
4-37 the bonds are fully paid, the school district shall send to the
4-38 comptroller an amount equal to the district's net proceeds from the
4-39 sale multiplied by a percentage determined by dividing the amount
4-40 of state funds under this subchapter used to pay the principal of
4-41 and interest on the bonds by the total amount of principal and
4-42 interest paid on the bonds with funds other than the proceeds of
4-43 the sale.
4-44 (b) In this section, "net proceeds" means the difference
4-45 between the total amount received from the sale less:
4-46 (1) the amount necessary to fully pay the outstanding
4-47 principal of and interest on the bonds; and
4-48 (2) the school district's costs of the sale, as
4-49 approved by the commissioner.
4-50 SECTION 1.07. Section 21.401, Education Code, is amended to
4-51 read as follows:
4-52 Sec. 21.401. MINIMUM SERVICE REQUIRED. (a) A contract
4-53 between a school district and an educator must be for a minimum of
4-54 10 months' service.
4-55 (a-1) For the 1997-1998 and 1998-1999 school years
4-56 [1995-1996 school year], an educator employed under a 10-month
4-57 contract must provide a minimum of 185 [183] days of service. This
4-58 subsection expires September 1, 1999 [1997].
4-59 [(a-2) For the 1996-1997 school year, an educator employed
4-60 under a 10-month contract must provide a minimum of 185 days of
4-61 service. This subsection expires September 1, 1997.]
4-62 (b) An educator employed under a 10-month contract must
4-63 provide a minimum number of days of service as determined by the
4-64 following formula:
4-65 MDS = 185 + (0.33 X (GL1 - GL2)(GL2/185)
4-66 [(R1 - R2)/(R2/183)])
4-67 where:
4-68 "MDS" is the minimum number of days of service;
4-69 "GL1" ["R1"] is equal to the guaranteed level of state and
5-1 local funds per student per cent of tax effort as provided by
5-2 Section 42.302 [FSP/ADA as determined under Section 21.402] for the
5-3 fiscal year; and
5-4 "GL2" ["R2"] is equal to the guaranteed level of state and
5-5 local funds per student per cent of tax effort as provided by
5-6 Section 42.302 [FSP/ADA as determined under Section 21.402] for the
5-7 1998-1999 [1994-1995] school year.
5-8 (b-1) Subsection (b) applies beginning with the 1999-2000
5-9 [1997-1998] school year. This subsection expires January 1, 2000
5-10 [1998].
5-11 (c) The result of the formula prescribed by Subsection (b)
5-12 shall be rounded to the nearest whole number.
5-13 (d) The commissioner, as provided by Section 25.081(b), may
5-14 reduce the number of days of service required by this section. A
5-15 reduction by the commissioner does not reduce an educator's salary.
5-16 SECTION 1.08. Subchapter I, Chapter 21, Education Code, is
5-17 amended by adding Section 21.4011 to read as follows:
5-18 Sec. 21.4011. MINIMUM SALARY SCHEDULE FOR CLASSROOM TEACHERS
5-19 AND FULL-TIME LIBRARIANS FOR 1997-1998 AND 1998-1999 SCHOOL YEARS.
5-20 (a) This section applies only to the 1997-1998 and 1998-1999
5-21 school years.
5-22 (b) Except as provided by Subsection (d), a school district
5-23 must pay each classroom teacher or full-time librarian not less
5-24 than the minimum monthly salary, based on the employee's level of
5-25 experience, as follows:
5-26 Years Experience 0 1 2 3 4
5-27 Minimum Salary 1,995 2,049 2,103 2,157 2,271
5-28 Years Experience 5 6 7 8 9
5-29 Minimum Salary 2,384 2,498 2,604 2,704 2,798
5-30 Years Experience 10 11 12 13 14
5-31 Minimum Salary 2,887 2,972 3,052 3,127 3,198
5-32 Years Experience 15 16 17 18 19
5-33 Minimum Salary 3,265 3,329 3,389 3,446 3,500
5-34 Years Experience 20 and over
5-35 Minimum Salary 3,551
5-36 (c) Placement of a classroom teacher or full-time librarian
5-37 on the minimum salary schedule provided by this section is
5-38 determined in accordance with Section 21.403.
5-39 (d) Notwithstanding Subsection (b), a teacher or librarian
5-40 who received a career ladder supplement on August 31, 1993, is
5-41 entitled to at least the same gross monthly salary the teacher or
5-42 librarian received for the 1994-1995 school year as long as the
5-43 teacher or librarian is employed by the same district.
5-44 (e) In this section, "gross monthly salary" must include the
5-45 amount a teacher or librarian received that represented a career
5-46 ladder salary supplement under Section 16.057, as that section
5-47 existed January 1, 1993.
5-48 (f) This section expires September 1, 1999.
5-49 SECTION 1.09. Section 21.402, Education Code, is amended to
5-50 read as follows:
5-51 Sec. 21.402. MINIMUM SALARY SCHEDULE FOR CLASSROOM TEACHERS
5-52 AND FULL-TIME LIBRARIANS. (a) Except as provided by Subsection
5-53 (c) or (d) [or (e)], a school district must pay each classroom
5-54 teacher or full-time librarian not less than the minimum monthly
5-55 salary, based on the employee's level of experience, determined by
5-56 the following formula:
5-57 MS = SF X GL [(FSP/ADA)]
5-58 where:
5-59 "MS" is the minimum monthly salary;
5-60 "SF" is the applicable salary factor specified by Subsection
5-61 (c); and
5-62 "GL" is the guaranteed level of state and local funds per
5-63 student per cent of tax effort provided by Section 42.302 ["FSP" is
5-64 the amount appropriated in the General Appropriations Act for the
5-65 fiscal year for the Foundation School Program, as determined by the
5-66 commissioner as provided by Subsection (b); and]
5-67 ["ADA" is the total estimated average daily attendance, as
5-68 defined by Section 42.005, used for purposes of the General
5-69 Appropriations Act for the fiscal year].
6-1 (b) [Not later than June 1 of each year, the commissioner
6-2 shall determine the amount appropriated for purposes of Chapter 42
6-3 for the state fiscal year beginning September 1. The commissioner
6-4 shall exclude from the determination:]
6-5 [(1) amounts designated solely for use in connection
6-6 with school facilities or for payment of principal of and interest
6-7 on bonds; and]
6-8 [(2) local funds received under Subchapter D, Chapter
6-9 41.]
6-10 [(c)] The salary factors per step are as follows:
6-11 Years Experience 0 1 2
6-12 Salary Factor 67.3986 [.8470] 69.2230 [.8699] 71.0473 [.8928]
6-13 Years Experience 3 4 5
6-14 Salary Factor 72.8716 [.9156] 76.7230 [.9639] 80.5405 [1.0122]
6-15 Years Experience 6 7 8
6-16 Salary Factor 84.3919 [1.0605] 87.9730 [1.1054] 91.3514 [1.1477]
6-17 Years Experience 9 10 11
6-18 Salary Factor 94.5270 [1.1879] 97.5338 [1.2256] 100.4054 [1.2616]
6-19 Years Experience 12 13 14
6-20 Salary Factor 103.1081 [1.2955] 105.6419 [1.3273] 108.0405 [1.3578]
6-21 Years Experience 15 16 17
6-22 Salary Factor 110.3041 [1.3862] 112.4662 [1.4133] 114.4932 [1.4387]
6-23 Years Experience 18 19 20 and over
6-24 Salary Factor 116.4189 [1.4628] 118.2432 [1.4857] 119.9662 [1.5073]
6-25 (c) [(d)] If the minimum monthly salary determined under
6-26 Subsection (a) for a particular level of experience is less than
6-27 the minimum monthly salary for that level of experience in the
6-28 preceding year, the minimum monthly salary is the minimum monthly
6-29 salary for the preceding year.
6-30 (d) [(e)] Notwithstanding Subsection (a), a teacher or
6-31 librarian who received a career ladder supplement on August 31,
6-32 1993, is entitled to at least the same gross monthly salary the
6-33 teacher or librarian received for the 1994-1995 school year as long
6-34 as the teacher or librarian is employed by the same district.
6-35 (e) [(f)] In this section, "gross monthly salary" must
6-36 include the amount a teacher or librarian received that represented
6-37 a career ladder salary supplement under Section 16.057, as that
6-38 section existed January 1, 1993.
6-39 (f) This section applies beginning with the 1999-2000 school
6-40 year. This subsection expires January 1, 2000.
6-41 SECTION 1.10. Section 45.061, Education Code, is amended to
6-42 read as follows:
6-43 Sec. 45.061. REIMBURSEMENT OF PERMANENT SCHOOL FUND. (a)
6-44 If the commissioner orders payment from the permanent school fund
6-45 on behalf of a school district, the commissioner shall direct the
6-46 comptroller to withhold the amount paid, plus interest, from the
6-47 first state money payable to the school district, other than money
6-48 to which the school district is entitled under Chapter 46. The
6-49 amount withheld shall be deposited to the credit of the permanent
6-50 school fund.
6-51 (b) If the commissioner orders payment from the permanent
6-52 school fund in connection with bonds that were, before default,
6-53 being paid with state and local funds under Chapter 46 and the
6-54 commissioner finds the default is caused by the failure to
6-55 appropriate sufficient funds to make a payment to the district
6-56 under Section 46.003, the commissioner shall:
6-57 (1) withhold under Subsection (a) only that portion of
6-58 the amount paid from the permanent school fund that is
6-59 proportionate to the school district's local share under Chapter
6-60 46; and
6-61 (2) transfer from the foundation school fund to the
6-62 permanent school fund that portion of the amount paid from the
6-63 permanent school fund that is proportionate to the state's share
6-64 under Chapter 46.
6-65 (c) In accordance with the rules of the board, the
6-66 commissioner may authorize reimbursement to the permanent school
6-67 fund with interest in a manner other than that provided by this
6-68 section.
6-69 SECTION 1.11. Section 41.009(b), Education Code, is amended
7-1 to read as follows:
7-2 (b) The commissioner shall determine the wealth per student
7-3 of a school district under this chapter as if any tax abatement
7-4 agreement executed under Chapter 312, Tax Code, by a school
7-5 district on or after May 31, 1993, had not been executed.
7-6 SECTION 1.12. Section 403.302(d), Government Code, is
7-7 amended to read as follows:
7-8 (d) For the purposes of this section, "taxable value" means
7-9 market value less:
7-10 (1) the total dollar amount of any exemptions of part
7-11 but not all of the value of taxable property required by the
7-12 constitution or a statute that a district lawfully granted in the
7-13 year that is the subject of the study;
7-14 (2) the total dollar amount of:
7-15 (A) any exemptions granted before May 31, 1993,
7-16 within a reinvestment zone under agreements authorized by Chapter
7-17 312, Tax Code; and
7-18 (B) any exemptions granted within a reinvestment
7-19 zone under contracts authorized by Chapter 313, Tax Code;
7-20 (3) the total dollar amount of any captured appraised
7-21 value of property that is located in a reinvestment zone and that
7-22 is eligible for tax increment financing under Chapter 311, Tax
7-23 Code;
7-24 (4) the total dollar amount of any exemptions granted
7-25 under Section 11.251, Tax Code;
7-26 (5) the difference between the market value and the
7-27 productivity value of land that qualifies for appraisal on the
7-28 basis of its productive capacity, except that the productivity
7-29 value may not exceed the fair market value of the land;
7-30 (6) the portion of the appraised value of residence
7-31 homesteads of the elderly on which school district taxes are not
7-32 imposed in the year that is the subject of the study, calculated as
7-33 if the residence homesteads were appraised at the full value
7-34 required by law;
7-35 (7) a portion of the market value of property not
7-36 otherwise fully taxable by the district at market value because of
7-37 action required by statute or the constitution of this state that,
7-38 if the tax rate adopted by the district is applied to it, produces
7-39 an amount equal to the difference between the tax that the district
7-40 would have imposed on the property if the property were fully
7-41 taxable at market value and the tax that the district is actually
7-42 authorized to impose on the property; and
7-43 (8) the market value of all tangible personal
7-44 property, other than manufactured homes, owned by a family or
7-45 individual and not held or used for the production of income.
7-46 SECTION 1.13. Subchapter H, Chapter 42, Education Code, is
7-47 repealed.
7-48 SECTION 1.14. This article applies beginning with the
7-49 1997-1998 school year.
7-50 SECTION 1.15. An obligation or entitlement of a school
7-51 district in connection with state funding for the 1996-1997 or an
7-52 earlier school year under Chapters 41 and 42, Education Code, as
7-53 those chapters existed before amendment or repeal by this article,
7-54 is not affected by this Act, and the prior law is continued in
7-55 effect for that purpose.
7-56 SECTION 1.16. (a) For the 1997 tax year, a school district
7-57 may not:
7-58 (1) adopt a tax rate for purposes of maintenance and
7-59 operations before September 1, 1997; or
7-60 (2) levy or collect a tax for purposes of maintenance
7-61 and operations at a rate adopted before September 1, 1997.
7-62 (b) This Act does not affect the validity of a tax imposed
7-63 by a school district for the 1996 tax year or an earlier tax year.
7-64 ARTICLE 2. PROPERTY TAX
7-65 SECTION 2.01. Section 11.26, Tax Code, is amended by
7-66 amending Subsection (b) and adding Subsections (g), (h), and (i) to
7-67 read as follows:
7-68 (b) If an individual makes improvements to the individual's
7-69 [his] residence homestead, other than improvements required to
8-1 comply with governmental requirements or repairs, the school
8-2 district may increase the tax on the homestead in the first year
8-3 the value of the homestead is increased on the appraisal roll
8-4 because of the enhancement of value by the improvements. The
8-5 amount of the tax increase is determined by applying the current
8-6 tax rate to the difference in the assessed value of the homestead
8-7 with the improvements and the assessed value it would have had
8-8 without the improvements. The limitations imposed by Subsection
8-9 (a), (g), or (h), as applicable, [of this section] then apply to
8-10 the increased amount of tax until more improvements, if any, are
8-11 made.
8-12 (g) This subsection applies only to an individual 65 years
8-13 of age or older who qualified the individual's residence homestead
8-14 for the limitation provided by Section 1-b(d), Article VIII, Texas
8-15 Constitution, before January 1, 1998, or to a surviving spouse who
8-16 qualified for the limitation provided by Section 1-b(d) for a
8-17 surviving spouse before that date. Except as provided by
8-18 Subsection (b), the maximum amount of tax that a school district
8-19 may impose in a tax year beginning on or after January 1, 1998, on
8-20 the residence homestead of the individual or surviving spouse is
8-21 the lesser of:
8-22 (1) the total amount of taxes the district imposed on
8-23 the residence homestead in the first year the individual or
8-24 surviving spouse qualified the residence homestead for the
8-25 applicable limitation; or
8-26 (2) the amount computed by multiplying the district's
8-27 1997 tax rate by the 1997 taxable value of the residence homestead.
8-28 (h) Except as provided by Subsection (b), if an individual
8-29 who receives a limitation on tax increases imposed by this section
8-30 subsequently qualifies a different residence homestead for an
8-31 exemption under Section 11.13, a school district may not impose ad
8-32 valorem taxes on the subsequently qualified homestead in a year in
8-33 an amount that exceeds the amount of taxes the school district
8-34 would have imposed on the subsequently qualified homestead in the
8-35 first year in which the individual receives that exemption for the
8-36 subsequently qualified homestead had the limitation on tax
8-37 increases imposed by this section not been in effect, multiplied by
8-38 a fraction the numerator of which is the total amount of school
8-39 district taxes imposed on the former homestead in the last year in
8-40 which the individual received that exemption for the former
8-41 homestead and the denominator of which is the total amount of
8-42 school district taxes that would have been imposed on the former
8-43 homestead in the last year in which the individual received that
8-44 exemption for the former homestead had the limitation on tax
8-45 increases imposed by this section not been in effect.
8-46 (i) An individual who receives a limitation on tax increases
8-47 under this section and who subsequently qualifies a different
8-48 residence homestead for an exemption under Section 11.13, or an
8-49 agent of the individual, is entitled to receive from the chief
8-50 appraiser of the appraisal district in which the former homestead
8-51 was located a written certificate providing the information
8-52 necessary to determine whether the individual may qualify for a
8-53 limitation on the subsequently qualified homestead under Subsection
8-54 (h) and to calculate the amount of taxes the school district may
8-55 impose on the subsequently qualified homestead.
8-56 SECTION 2.02. Section 26.08, Tax Code, is amended to read as
8-57 follows:
8-58 Sec. 26.08. ELECTION TO RATIFY [LIMIT] SCHOOL TAXES.
8-59 (a) If the governing body of a school district adopts a rate that
8-60 exceeds the [sum of the] district's rollback tax [effective
8-61 maintenance] rate, [the rate of $0.08, and the district's current
8-62 debt rate,] the registered voters of the district at an election
8-63 held for that purpose must determine whether to approve the adopted
8-64 [limit the] tax rate [the governing body may adopt for the current
8-65 year to the school district rollback tax rate]. When increased
8-66 expenditure of money by a school district is necessary to respond
8-67 to a disaster, including a tornado, hurricane, flood, or other
8-68 calamity, but not including a drought, that has impacted a school
8-69 district and the governor has requested federal disaster assistance
9-1 for the area in which the school district is located, an election
9-2 is not required under this section to approve [limit] the tax rate
9-3 adopted by the governing body [may adopt] for the year following
9-4 the year in which the disaster occurs.
9-5 (a-1) Subsection (a) does not apply to the 1997 tax year.
9-6 For the 1997 tax year, a school district may not adopt a rate for
9-7 maintenance and operations purposes that exceeds a rate equal to
9-8 the sum of:
9-9 (1) the rate necessary for the district to receive
9-10 and, if the district was required to take action under Chapter 41,
9-11 Education Code, to achieve the equalized wealth level, retain an
9-12 amount of state and local funding per weighted student that is
9-13 equal to the amount of state and local funding per weighted student
9-14 for maintenance and operations to which the district would be
9-15 entitled at the limit for state aid under Section 42.253(e-1),
9-16 Education Code; and
9-17 (2) $0.05 per $100 of taxable value.
9-18 (a-2) For purposes of Subsection (a-1), state and local
9-19 funding for purposes of maintenance and operations:
9-20 (1) includes local tax receipts, subject to the
9-21 provisions of Chapter 41, Education Code, and state aid under
9-22 Chapter 42, Education Code; and
9-23 (2) does not include:
9-24 (A) adjustments under Section 42.253(i),
9-25 Education Code, attributable to the 1996-1997 or an earlier school
9-26 year; or
9-27 (B) funding based on the computation of average
9-28 daily attendance for attendance in an extended year program under
9-29 Section 29.082, Education Code, as provided by Section 42.005(a),
9-30 Education Code.
9-31 (a-3) A formula by which a school district may compute the
9-32 tax rate authorized by Subsection (a-1) adopted jointly by the
9-33 commissioner of education and the comptroller before September 1,
9-34 1997, is valid and shall be used by school districts. The tax rate
9-35 computed under Subsection (a-1) must be included in the items of
9-36 information required to be included in a notice of public hearing
9-37 required under Section 26.06. This subsection and Subsections
9-38 (a-1) and (a-2) expire January 1, 1999.
9-39 (b) The governing body shall order that the [an] election be
9-40 held in the school district on a date not less than 30 or more than
9-41 90 days after the day on which it adopted the tax rate. Section
9-42 41.001, Election Code, does not apply to the election unless a date
9-43 specified by that section falls within the time permitted by this
9-44 section. At the election, the ballots shall be prepared to permit
9-45 voting for or against the proposition: "Approving [Limiting] the
9-46 ad valorem tax rate of $_____ per $100 valuation in (name of school
9-47 district) for the current year, a rate that is $_____ higher per
9-48 $100 valuation than [from (the rate adopted) to (]the school
9-49 district rollback tax rate[)]." The ballot proposition must
9-50 include the adopted tax rate and the difference between that rate
9-51 and the rollback tax rate in the appropriate places.
9-52 (c) If [a majority of the votes cast in the election favor]
9-53 the proposition fails, the [governing body may not adopt a] tax
9-54 rate for the school district for the current year is [that exceeds]
9-55 the school district rollback tax rate [calculated for that year
9-56 using the following formula:]
9-57 [ROLLBACK TAX RATE = (ENROLLMENT ADJUSTMENT) (EFFECTIVE MAINTENANCE
9-58 AND OPERATIONS RATE FOR TAX YEAR) + $0.08 + CURRENT DEBT RATE
9-59 where:]
9-60 [(1) "tax year" denotes amounts used in calculating
9-61 the rollback tax rate in the year immediately preceding the year in
9-62 which the tax increase that initiated the referendum occurred
9-63 rather than the year in which the calculation occurs; and]
9-64 [(2) "enrollment adjustment" is computed by dividing
9-65 the current year's projected fall enrollment, as defined by the
9-66 Texas Education Agency, by last year's enrollment but may not be
9-67 less than 1.0].
9-68 (d) If a majority of the votes cast in the election favor
9-69 the proposition, the tax rate for the current year is the rate
10-1 adopted by the governing body.
10-2 (e) For purposes of this section, local tax funds dedicated
10-3 to a junior college district under Section 45.105(e), Education
10-4 Code, shall be eliminated from the calculation of the tax rate
10-5 adopted by the governing body of the school district. However, the
10-6 funds dedicated to the junior college district are subject to
10-7 Section 26.085.
10-8 (f) [(e)] If a school district is certified by the
10-9 commissioner of education under Section 42.251(c), Education Code,
10-10 to have been subject to a reduction in total revenue for the school
10-11 year ending on August 31 of the tax year:
10-12 (1) the district's effective maintenance and
10-13 operations rate for the tax year is calculated as provided by
10-14 Section 26.012, except that last year's levy is reduced by the
10-15 amount of taxes imposed in the preceding year, if any, to offset
10-16 the amount of the reduction certified by the commissioner; and
10-17 (2) the district's rollback tax rate for the tax year
10-18 [calculated as provided by Section 26.04 or by Subsection (c), as
10-19 applicable,] is increased by the tax rate that, if applied to the
10-20 current total value for the school district, would impose taxes in
10-21 an amount equal to the amount of the reduction certified by the
10-22 commissioner.
10-23 (g) [(f)] In a school district that received distributions
10-24 from an equalization tax imposed under former Chapter 18, Education
10-25 Code, the effective rate of that tax as of the date of the county
10-26 unit system's abolition is added to the district's [effective
10-27 maintenance and operations rate under Subsections (a) and (c) of
10-28 this section in the calculation of the district's] rollback tax
10-29 rate.
10-30 (h) [(i)] For purposes of this section, increases in taxable
10-31 values and tax levies occurring within a reinvestment zone under
10-32 [the provisions of] Chapter 311 (Tax Increment Financing Act), in
10-33 which the district is a participant, shall be eliminated from the
10-34 calculation of the tax rate adopted by the governing body of the
10-35 school district.
10-36 (i) For purposes of this section, the rollback tax rate of a
10-37 school district is the sum of:
10-38 (1) the tax rate that, applied to the current total
10-39 value for the district, would impose taxes in an amount that, when
10-40 added to state funds to be distributed to the district under
10-41 Chapter 42, Education Code, for the school year beginning in the
10-42 current tax year, would provide the same amount of state funds and
10-43 maintenance and operations taxes of the district per student in
10-44 weighted average daily attendance for that school year that was
10-45 available to the district in the preceding year;
10-46 (2) the rate of $0.05 per $100 of taxable value; and
10-47 (3) the district's current debt rate.
10-48 SECTION 2.03. Section 311.002(4), Tax Code, is amended to
10-49 read as follows:
10-50 (4) "Taxing unit" has the meaning assigned by Section
10-51 1.04, except that for a reinvestment zone created on or after
10-52 September 1, 1997, the term does not include a school district that
10-53 is subject to Chapter 42, Education Code, and that is organized
10-54 primarily to provide general elementary and secondary public
10-55 education.
10-56 SECTION 2.04. Sections 311.003(e) and (f), Tax Code, are
10-57 amended to read as follows:
10-58 (e) Not later than the 60th day before the date of the
10-59 public hearing required by Subsection (c), the governing body of
10-60 the municipality must notify in writing the governing body of each
10-61 taxing unit that levies real property taxes in the proposed
10-62 reinvestment zone that it intends to establish the zone. The
10-63 notice must contain a description of the proposed boundaries of the
10-64 zone, the tentative plans for the development or redevelopment of
10-65 the zone, and an estimate of the general impact of the proposed
10-66 zone on property values and tax revenues. The notice may be given
10-67 later than the 60th day before the date of the public hearing if
10-68 the governing body of each county [and school district] that levies
10-69 real property taxes in the proposed zone agrees to waive the
11-1 requirement.
11-2 (f) A taxing unit may request additional information from
11-3 the governing body of the municipality. The governing body of the
11-4 municipality shall provide the information requested to the extent
11-5 practicable. In addition to the notice required by Subsection (e),
11-6 the governing body of the municipality shall make a formal
11-7 presentation to the governing body of each county [or school
11-8 district] that levies real property taxes in the proposed
11-9 reinvestment zone. The presentation must include a description of
11-10 the proposed boundaries of the zone, the tentative plans for the
11-11 development or redevelopment of the zone, and an estimate of the
11-12 general impact of the proposed zone on property values and tax
11-13 revenues. The governing body of the municipality shall notify each
11-14 taxing unit that levies real property taxes in the proposed zone of
11-15 each presentation to be made to a county [or school district] under
11-16 this subsection. Members of the governing body of each taxing unit
11-17 that levies real property taxes in the proposed zone may attend a
11-18 presentation under this subsection. If agreed to by each [the]
11-19 county [or school districts] involved, the governing body of the
11-20 municipality may make a single presentation to more than one county
11-21 [or school district] governing body.
11-22 SECTION 2.05. Section 311.006(c), Tax Code, is amended to
11-23 read as follows:
11-24 (c) A municipality may not create a reinvestment zone or
11-25 change the boundaries of an existing reinvestment zone if the
11-26 proposed zone or proposed boundaries of the zone contain more than
11-27 15 percent of the total appraised value of real property taxable by
11-28 a county [or school district].
11-29 SECTION 2.06. Section 311.009(b), Tax Code, is amended to
11-30 read as follows:
11-31 (b) If the zone was designated under Section 311.005(a)(5),
11-32 the board of directors of the zone consists of nine members. Each
11-33 [school district or] county that levies taxes on real property in
11-34 the zone may appoint one member of the board if the [school
11-35 district or] county has approved the payment of all or part of the
11-36 tax increment produced by the unit. The member of the state senate
11-37 in whose district the zone is located is a member of the board, and
11-38 the member of the state house of representatives in whose district
11-39 the zone is located is a member of the board, except that either
11-40 may designate another individual to serve in the member's place at
11-41 the pleasure of the member. If the zone is located in more than
11-42 one senate or house district, this subsection applies only to the
11-43 senator or representative in whose district a larger portion of the
11-44 zone is located than any other senate or house district, as
11-45 applicable. The remaining members of the board are appointed by
11-46 the governing body of the municipality that created the zone.
11-47 SECTION 2.07. Section 311.011, Tax Code, is amended by
11-48 amending Subsection (c), adding a new Subsection (f), and
11-49 redesignating existing Subsection (f) as Subsection (g) to read as
11-50 follows:
11-51 (c) The reinvestment zone financing plan must include:
11-52 (1) a detailed list describing the estimated project
11-53 costs of the zone, including administrative expenses;
11-54 (2) a statement listing the kind, number, and location
11-55 of all proposed public works or public improvements in the zone;
11-56 (3) an economic feasibility study;
11-57 (4) the estimated amount of bonded indebtedness to be
11-58 incurred;
11-59 (5) the time when related costs or monetary
11-60 obligations are to be incurred;
11-61 (6) a description of the methods of financing all
11-62 estimated project costs and the expected sources of revenue to
11-63 finance or pay project costs, including the percentage of tax
11-64 increment to be derived from the property taxes of each taxing unit
11-65 that levies taxes on real property in the zone, except that a
11-66 project plan or reinvestment zone financing plan approved under
11-67 this section on or after September 1, 1997, may not include a tax
11-68 increment or any other funds derived from a school district as a
11-69 source of revenue to finance or pay project costs;
12-1 (7) the current total appraised value of taxable real
12-2 property in the zone;
12-3 (8) the estimated captured appraised value of the zone
12-4 during each year of its existence; and
12-5 (9) the duration of the zone.
12-6 (f) A project plan or reinvestment zone financing plan
12-7 approved before September 1, 1997, may not be amended on or after
12-8 September 1, 1997, to:
12-9 (1) increase the percentage of a tax increment to be
12-10 contributed by a school district to a tax increment fund;
12-11 (2) increase the duration of time a school district is
12-12 to contribute to a tax increment fund;
12-13 (3) allow a school district that was not included in
12-14 the originally approved project plan or reinvestment zone financing
12-15 plan to contribute a tax increment or any other funds to a tax
12-16 increment fund; or
12-17 (4) allow a school district to pay into a tax
12-18 increment fund any additional tax increment or funds derived from
12-19 property added to the reinvestment zone under this section or
12-20 Section 311.007 or after September 1, 1997.
12-21 (g) In a zone designated under Section 311.005(a)(5) that is
12-22 located in a county with a population of 2.1 million or more, the
12-23 project plan must provide that at least one-third of the surface
12-24 area of the zone, excluding roads, streets, highways, utility
12-25 rights-of-way, and other public areas or areas exempt from ad
12-26 valorem taxation, be dedicated to residential housing and that at
12-27 least one-third of the tax increment of the zone be dedicated to
12-28 providing low-income housing during the term of the zone.
12-29 SECTION 2.08. Section 311.013(g), Tax Code, is amended to
12-30 read as follows:
12-31 (g) A taxing unit is not required to pay into the tax
12-32 increment fund any of its tax increment produced from property
12-33 located in a reinvestment zone designated under Section
12-34 311.005(a)(5) or in an area added to a reinvestment zone under
12-35 Section 311.007(b) unless the taxing unit enters into an agreement
12-36 to do so with the governing body of the municipality that created
12-37 the zone. A taxing unit may enter into an agreement under this
12-38 subsection at any time before or after the zone is created or
12-39 enlarged. The agreement may include conditions for payment of that
12-40 tax increment into the fund and must specify the portion of the tax
12-41 increment to be paid into the fund and the years for which that tax
12-42 increment is to be paid into the fund. A school district may not
12-43 enter into an agreement under this subsection on or after September
12-44 1, 1997. An agreement entered into by a school district under this
12-45 subsection before September 1, 1997, may not be amended on or after
12-46 September 1, 1997, to include any of the conditions prohibited by
12-47 Section 311.011(f). The agreement and the conditions in the
12-48 agreement are binding on the taxing unit, the municipality, and the
12-49 board of directors of the zone.
12-50 SECTION 2.09. Section 312.002, Tax Code, is amended by
12-51 adding Subsections (e) and (f) to read as follows:
12-52 (e) "Taxing unit" has the meaning assigned by Section 1.04,
12-53 except that for a tax abatement agreement executed on or after
12-54 September 1, 1997, the term does not include a school district that
12-55 is subject to Chapter 42, Education Code, and that is organized
12-56 primarily to provide general elementary and secondary public
12-57 education.
12-58 (f) On or after September 1, 1997, a school district may not
12-59 enter into a tax abatement agreement under this chapter.
12-60 SECTION 2.10. Section 312.208, Tax Code, is amended by
12-61 adding Subsection (c) to read as follows:
12-62 (c) A tax abatement agreement entered into by a school
12-63 district before September 1, 1997, may not be modified on or after
12-64 September 1, 1997, to:
12-65 (1) add property to be exempt from taxation by a
12-66 school district under the agreement;
12-67 (2) increase the portion of the value of the property
12-68 exempt from taxation by a school district under the agreement; or
12-69 (3) increase the duration of the participation by a
13-1 school district under the agreement.
13-2 SECTION 2.11. Notwithstanding any other statute, a school
13-3 district may not participate in a new tax abatement or tax
13-4 increment financing agreement or expand an existing tax abatement
13-5 or tax increment financing agreement after the effective date of
13-6 this Act.
13-7 SECTION 2.12. Section 312.005(a), Tax Code, is amended to
13-8 read as follows:
13-9 (a) The comptroller of public accounts [Texas Department of
13-10 Commerce] shall maintain a central registry of reinvestment zones
13-11 designated under this chapter and of ad valorem tax abatement
13-12 agreements executed under this chapter. Each taxing unit that
13-13 designates a reinvestment zone or executes a tax abatement
13-14 agreement under this chapter shall deliver to the department and to
13-15 the comptroller before April 1 of the year following the year in
13-16 which the zone is designated or the agreement is executed a report
13-17 providing the following information:
13-18 (1) for a reinvestment zone, a general description of
13-19 the zone, including its size, the types of property located in it,
13-20 its duration, and the guidelines and criteria established for the
13-21 reinvestment zone under Section 312.002, including subsequent
13-22 amendments and modifications of the guidelines or criteria; and
13-23 (2) a copy of each tax abatement agreement to which
13-24 the taxing unit is a party[; and]
13-25 [(3) any other information required by the comptroller
13-26 to administer Subchapter F, Chapter 111].
13-27 SECTION 2.13. (a) Subchapter F, Chapter 111, Tax Code, is
13-28 repealed.
13-29 (b) The repeal of Subchapter F, Chapter 111, Tax Code, by
13-30 this Act applies only to an application for a refund filed with the
13-31 comptroller on or after the effective date of this Act. An
13-32 application filed with the comptroller before the effective date of
13-33 this Act is covered by the law in effect immediately before the
13-34 effective date of this Act, and that law is continued in effect for
13-35 that purpose.
13-36 SECTION 2.14. Subtitle B, Title 3, Tax Code, is amended by
13-37 adding Chapter 313 to read as follows:
13-38 CHAPTER 313. THE INVEST TEXAS ACT
13-39 Sec. 313.001. SHORT TITLE. This chapter may be cited as the
13-40 Invest Texas Act.
13-41 Sec. 313.002. DEFINITIONS. In this chapter:
13-42 (1) "Affiliate" means a person who is affiliated with
13-43 another by directly or indirectly controlling or being controlled
13-44 by the other person or by being directly or indirectly under common
13-45 control with the other person.
13-46 (2) "Control" means the direct or indirect ownership
13-47 of 75 percent or more of:
13-48 (A) the voting securities of a corporation;
13-49 (B) the equity interests of a partnership; or
13-50 (C) the ownership interests of any other entity.
13-51 (3) "Deferred maintenance" means improvements
13-52 necessary for continued operations which do not improve
13-53 productivity or alter the process technology.
13-54 (4) "Existing value" means the taxable value of the
13-55 property owner's real and personal property located on the property
13-56 January 1 of the year of the execution of the contract plus the
13-57 agreed upon value of real and personal property improvements made
13-58 after January 1 but before execution of the contract.
13-59 (5) "Expand" means the addition of buildings,
13-60 structures, fixed machinery, or equipment for the purpose of
13-61 increasing production capacity.
13-62 (6) "Modernize" means the replacement and upgrading of
13-63 existing facilities which increase the productive input or output,
13-64 update the technology, or substantially lower the cost of operation
13-65 and extend the economic life of the facility. Modernization may
13-66 result from the construction, alteration, or installation of
13-67 buildings, structures, fixed machinery, or equipment, but shall not
13-68 be for the purpose of reconditioning, refurbishing, repairing, or
13-69 deferred maintenance.
14-1 (7) "Project" means one or more buildings, facilities,
14-2 structures, or real property improvements which are either owned or
14-3 leased by the same property owner or owned or leased by property
14-4 owners who are affiliates of each other and located entirely within
14-5 an area that has a radius of two miles or less.
14-6 (8) "Property owner" means an owner or lessee of any
14-7 real property or real property improvements, including any
14-8 affiliate of the owner or lessee.
14-9 (9) "School district" means an entity subject to
14-10 Chapter 42, Education Code, organized primarily to provide general
14-11 elementary and secondary public education.
14-12 Sec. 313.003. EXEMPTIONS. (a) An owner of taxable real
14-13 property located in a school district may enter into a contract
14-14 with the governing body of a school district under this chapter to
14-15 exempt from ad valorem taxation, for a period not to exceed 10
14-16 years, all or a portion of the market value of real property, or
14-17 tangible personal property located on the real property, or both,
14-18 that exceeds:
14-19 (1) $1 billion if the property owner proposes to
14-20 construct a new project on the real property;
14-21 (2) $500 million if the property owner proposes to
14-22 expand or modernize a project on the real property; or
14-23 (3) $0 if the property owner proposes to expand or
14-24 modernize a project on the real property if:
14-25 (A) the taxable value of the existing project is
14-26 at least $1 billion; and
14-27 (B) the property owner will pay ad valorem taxes
14-28 to a school district on the existing project during the term of the
14-29 contract.
14-30 (b) Existing value is not eligible for a tax exemption under
14-31 this chapter.
14-32 Sec. 313.004. AUTHORITY TO ENTER INTO A CONTRACT. An owner
14-33 of taxable real property located in a school district may enter
14-34 into a contract with the governing body of a school district under
14-35 this chapter if:
14-36 (1) the property owner is or will be subject to
14-37 taxation under Chapter 171;
14-38 (2) the property owner has entered into a written
14-39 agreement that will remain in effect until the end of the tax
14-40 exemption period with the local workforce development board or
14-41 other public entity responsible for job placement, to give
14-42 preference in employment to persons served by the local workforce
14-43 development board or other public entity;
14-44 (3) the property owner is not relocating from one
14-45 location in Texas to another;
14-46 (4) the property to be covered by the contract is not
14-47 subject to tax abatement under Chapter 312 or tax increment
14-48 financing under Chapter 311 by a school district;
14-49 (5) the property to be covered by the contract is
14-50 located in a reinvestment zone designated by a municipality under
14-51 Section 312.201 or a county under Section 312.401;
14-52 (6) the governing body of the school district has held
14-53 a public hearing on the proposed contract;
14-54 (7) the governing body of the school district has
14-55 adopted a resolution stating that:
14-56 (A) the property to be covered by the contract
14-57 is located in a reinvestment zone;
14-58 (B) the property to be covered by the contract
14-59 is not subject to tax abatement under Chapter 312 or tax increment
14-60 financing under Chapter 311 by a school district;
14-61 (C) the governing body has held the hearing
14-62 required by Subdivision (6); and
14-63 (D) the governing body is willing to enter into
14-64 the contract; and
14-65 (8) the comptroller has authorized the owner and the
14-66 governing body of the school district to enter into the contract.
14-67 Sec. 313.005. AUTHORIZATION OF COMPTROLLER. (a) A property
14-68 owner must apply to the comptroller for authorization to enter into
14-69 a contract under this chapter on a form prescribed by the
15-1 comptroller. The application must include:
15-2 (1) a copy of the proposed contract between the
15-3 property owner and the school district;
15-4 (2) a copy of the most recent report required by
15-5 Section 171.203 or a written statement that the property owner will
15-6 be subject to taxation under Chapter 171;
15-7 (3) a copy of the agreement described by Section
15-8 313.004(a)(2);
15-9 (4) a copy of the resolution described by Section
15-10 313.004(a)(7);
15-11 (5) an economic impact analysis of the proposed
15-12 project which must include:
15-13 (A) an estimate of the annual amount of state
15-14 sales and use taxes and corporate franchise taxes to be generated
15-15 by the project;
15-16 (B) an estimate of any secondary economic
15-17 benefits to be generated by the project; and
15-18 (C) any other information required by the
15-19 comptroller; and
15-20 (6) a nonrefundable application fee of $10,000.
15-21 (b) The Invest Texas Account is created as a dedicated
15-22 account in the general revenue fund. The application fee collected
15-23 by the comptroller shall be deposited into the Invest Texas Account
15-24 and may only be used to administer this chapter.
15-25 (c) The comptroller shall:
15-26 (1) perform an analysis to determine whether
15-27 implementation of the proposed contract will have a negative fiscal
15-28 impact on state revenue;
15-29 (2) consider the economic impact analysis submitted by
15-30 the property owner under Subsection (a)(5) when determining if the
15-31 implementation of the proposed contract will have a negative fiscal
15-32 impact on state revenue;
15-33 (3) consider the likelihood that the project would
15-34 have located, expanded, or been modernized in Texas without the tax
15-35 exemption authorized by this chapter;
15-36 (4) authorize the property owner and the governing
15-37 body of the school district to enter into the contract unless the
15-38 comptroller determines that implementation of the contract will
15-39 have a negative fiscal impact on state revenue; and
15-40 (5) notify the owner and the governing body of the
15-41 comptroller's action on the application.
15-42 (d) The comptroller may not act on applications made by a
15-43 property owner for more than one location in the state at the same
15-44 time.
15-45 Sec. 313.006. CONFIDENTIALITY OF PROPRIETARY INFORMATION.
15-46 Information that is provided to a school district or the
15-47 comptroller in connection with an application or request for tax
15-48 exemption under this chapter and that describes the specific
15-49 processes or business activities to be conducted or the equipment
15-50 or other property to be located on the property for which tax
15-51 exemption is sought is confidential and not subject to public
15-52 disclosure until the contract is executed. Such information in the
15-53 custody of a school district or the comptroller after the contract
15-54 is executed is not confidential under this section.
15-55 Sec. 313.007. MANDATORY CONTRACT PROVISIONS. (a) A
15-56 contract entered into under this chapter must:
15-57 (1) provide for the exemption of the real or personal
15-58 property in each year covered by the contract only to the extent
15-59 that its value for that year exceeds its value for the year in
15-60 which the contract is executed;
15-61 (2) require the property owner to:
15-62 (A) create during the term of the contract
15-63 family wage jobs with a total annual payroll of at least:
15-64 (i) $20 million if the owner proposes to
15-65 construct a new project on the real property; or
15-66 (ii) $10 million if the owner proposes to
15-67 expand a project on the real property; or
15-68 (B) retain, during the term of the contract,
15-69 family wage jobs with a total annual payroll of at least $10
16-1 million if the owner proposes to modernize a project located on the
16-2 real property;
16-3 (3) list the kind, number, and location of all
16-4 proposed improvements of the property to which the contract
16-5 applies;
16-6 (4) list each term of the contract;
16-7 (5) provide access to and authorize inspection of the
16-8 property by the school district and the comptroller to ensure that
16-9 the improvements or repairs are made according to the
16-10 specifications and conditions of the contract;
16-11 (6) state any circumstances under which the property
16-12 owner may be excused by the governing body of the school district
16-13 for failing to comply with the contract;
16-14 (7) require the property owner to certify before
16-15 February 1 of each year to the governing body of the school
16-16 district whether the owner is in compliance with each applicable
16-17 term of the contract and, if not, state the reason for the
16-18 noncompliance;
16-19 (8) provide for recapture by the governing body of the
16-20 school district of property tax revenue lost as a result of the
16-21 contract if the owner of the property fails to make the
16-22 improvements or repairs as provided by the contract or fails to
16-23 comply with any applicable criteria contained in the contract; and
16-24 (9) provide for cancellation or modification of the
16-25 contract by the governing body of the school district if the
16-26 property owner fails to comply with the contract and for written
16-27 notice of the cancellation or modification.
16-28 (b) In this section, "family wage job" has the meaning
16-29 assigned that term by Section 481.151, Government Code.
16-30 Sec. 313.008. OPTIONAL CONTRACT PROVISIONS. A contract
16-31 entered into under this chapter may include:
16-32 (1) the use to be made by the property owner of local
16-33 suppliers during the term of the contract;
16-34 (2) the provision of health benefits and child care
16-35 during the term of the contract by the property owner for employees
16-36 of the property owner who work at the property covered by the
16-37 contract;
16-38 (3) the percent of economically disadvantaged
16-39 employees to be hired by the property owner; and
16-40 (4) any other provision determined appropriate by the
16-41 governing body of the school district.
16-42 Sec. 313.009. DETERMINATION BY SCHOOL DISTRICT OF PROPERTY
16-43 OWNER'S COMPLIANCE WITH CONTRACT. (a) The governing body of the
16-44 school district, before April 1 of each year, shall determine
16-45 whether each property owner is in compliance with each term of the
16-46 contract and, if not, whether the noncompliance is excused.
16-47 (b) The governing body of the school district shall consider
16-48 any certification furnished by the property owner under Section
16-49 313.007(a)(7). The governing body of the school district may
16-50 require the property owner to present additional evidence the
16-51 governing body considers necessary to make the determination. The
16-52 burden of proof is on the property owner to show that the property
16-53 owner is in compliance with each term of the contract.
16-54 (c) The governing body of the school district shall certify
16-55 in writing to the property owner whether the owner is in compliance
16-56 with each term of the contract and, if not, whether the
16-57 noncompliance is excused.
16-58 (d) Each property owner who is a party to a contract under
16-59 this section is entitled to a hearing and to present evidence
16-60 before the governing body of the taxing unit in person or by legal
16-61 or other counsel on the issue of compliance with the contract.
16-62 Sec. 313.010. ACTION BY SCHOOL DISTRICT ON NONCOMPLIANCE.
16-63 (a) Except as provided by Subsection (b), if a property owner
16-64 fails to comply with a contract executed under this chapter, the
16-65 governing body of the school district shall:
16-66 (1) recapture the property tax revenue lost as a
16-67 result of the contract as provided by Section 313.007(a)(8); and
16-68 (2) cancel or modify the contract and give written
16-69 notice of the cancellation or modification as provided by Section
17-1 313.007(a)(9).
17-2 (b) The governing body of the school district may excuse the
17-3 property owner's failure to comply with the agreement under a
17-4 circumstance stated in the contract as provided by Section
17-5 313.007(a)(6).
17-6 Sec. 313.011. DETERMINATION BY COMPTROLLER OF PROPERTY
17-7 OWNER'S COMPLIANCE WITH CONTRACT. (a) As part of the annual study
17-8 required by Section 403.302, Government Code, the comptroller shall
17-9 determine whether a property owner is in compliance with each term
17-10 of a contract entered into under this chapter.
17-11 (b) If the comptroller finds that the property owner is not
17-12 in compliance with each term of the contract, the comptroller, at
17-13 the time the comptroller publishes preliminary findings under
17-14 Section 403.302, Government Code, shall notify the governing body
17-15 of the school district of the finding.
17-16 (c) The school district may protest the comptroller's
17-17 finding in the manner provided by Section 403.303, Government Code.
17-18 (d) If the comptroller determines that the property owner is
17-19 not in compliance with each term of the contract, the comptroller
17-20 may not take the contract into account for purposes of determining
17-21 the total taxable value of all property in the school district
17-22 under Section 403.302, Government Code, for the year covered by the
17-23 study.
17-24 (e) A protesting school district may appeal a determination
17-25 of a protest by the comptroller in the manner provided by Section
17-26 403.303, Government Code.
17-27 (f) A determination by the comptroller under this section
17-28 does not affect the rights of the property owner under the
17-29 contract.
17-30 Sec. 313.012. NOTICE OF CONTRACT. (a) A school district
17-31 that enters into a contract under this chapter shall either, at the
17-32 option of the school district:
17-33 (1) publish notice of the contract in a newspaper that
17-34 is published daily in each county in which the school district is
17-35 located; or
17-36 (2) post notice of the contract at each place where
17-37 the governing body of a school district is required by Chapter 551,
17-38 Government Code, to post notice of its meetings.
17-39 (b) The notice must include:
17-40 (1) the name of each party to the contract;
17-41 (2) a statement of whether the contract applies to
17-42 real property, tangible personal property, or both;
17-43 (3) the portion of the value of the property exempted
17-44 from taxation each year under the contract; and
17-45 (4) a summary of the state economic impact analysis
17-46 required by Section 313.005(a)(5).
17-47 Sec. 313.013. LIMITATIONS ON CONTRACT. (a) A contract
17-48 executed under this chapter may not be modified to extend beyond 10
17-49 years from the first year of the exemption.
17-50 (b) Notwithstanding Subsection (a), a property owner may
17-51 enter into a new contract, for a period not to exceed 10 years,
17-52 with respect to improvements and tangible personal property which
17-53 upgrade or retrofit the operations or equipment located on real
17-54 property already subject to a contract under this chapter.
17-55 Sec. 313.014. MODIFICATION OR TERMINATION OF CONTRACT.
17-56 (a) At any time before the expiration of a contract made under
17-57 this chapter, the contract may be modified by the parties to the
17-58 contract to include other provisions that could have been included
17-59 in the original contract or to delete provisions that were not
17-60 necessary to the original contract. The modification must be made
17-61 by the same procedure by which the original contract was approved
17-62 and executed.
17-63 (b) A contract made under this chapter may be terminated by
17-64 the mutual consent of the parties in the same manner that the
17-65 contract was approved and executed.
17-66 Sec. 313.015. COORDINATION WITH CHAPTER 312. (a) With
17-67 respect to any tax abatement agreement under Chapter 312 which was
17-68 entered into by a school district on or after January 1, 1997, and
17-69 before September 1, 1997, the school district and the property
18-1 owner may agree to terminate such agreement and enter into a new
18-2 contract under this chapter, irrespective of whether improvement or
18-3 repairs to the property subject to the agreement have been
18-4 completed.
18-5 (b) A school district and a property owner that entered into
18-6 a tax abatement agreement under Chapter 312 on or after January 1,
18-7 1997, and on or before September 1, 1997, and then enter into a new
18-8 contract as described above may agree on or before September 1,
18-9 1997, that Chapter 312 shall apply to their new contract for a
18-10 specified number of years and that a contract under this chapter
18-11 shall apply after the expiration of such number of years, provided
18-12 that the total number of years abated under Chapter 312 or exempted
18-13 under this chapter shall not exceed 10 years.
18-14 Sec. 313.016. EVALUATION AND ANNUAL REPORT. (a) On or
18-15 before November 1 of each even-numbered year, the comptroller
18-16 shall:
18-17 (1) prepare a comprehensive report on:
18-18 (A) the use and effectiveness of contracts
18-19 executed under this chapter in encouraging economic development in
18-20 this state;
18-21 (B) the fiscal impact on this state and school
18-22 districts in this state of those tax contracts, including the
18-23 market value of property that is exempt from taxation under this
18-24 chapter; and
18-25 (C) any other relevant information that the
18-26 comptroller determines is applicable to this chapter; and
18-27 (2) deliver a copy of the report to the governor, the
18-28 speaker of the house of representatives, the lieutenant governor,
18-29 and each school district that entered into a contract under this
18-30 chapter during the period covered by the report.
18-31 (b) The comptroller may prescribe a form to collect
18-32 information necessary to compile the report described in this
18-33 section from a property owner that has entered into a contract
18-34 under this chapter.
18-35 Sec. 313.017. PROMOTION AND MARKETING OF INVEST TEXAS
18-36 PROGRAM. The comptroller and the Texas Department of Commerce
18-37 shall jointly promote and market the program created under this
18-38 chapter.
18-39 Sec. 313.018. RULES AND FORMS. The comptroller shall adopt
18-40 rules and forms for the administration of this chapter. The rules
18-41 must include guidelines for the state economic impact analysis to
18-42 be submitted by the property owner under Section 313.005(a)(5).
18-43 Sec. 313.019. EXPIRATION DATE. If not continued in effect,
18-44 this chapter expires September 1, 2001.
18-45 ARTICLE 3. FRANCHISE TAX
18-46 SECTION 3.01. Sections 171.001(a) and (b), Tax Code, are
18-47 amended to read as follows:
18-48 (a) A franchise tax is imposed on[:]
18-49 [(1)] each taxable entity [corporation] that does
18-50 business in this state or that is chartered, organized, or
18-51 authorized to do business in this state[, and]
18-52 [(2) each limited liability company that does business
18-53 in this state or that is organized under the laws of this state or
18-54 is authorized to do business in this state].
18-55 (b) In this chapter:
18-56 (1) "Banking corporation" means each state, national,
18-57 domestic, or foreign bank, including a limited banking association,
18-58 as defined by Section 1.002(a), Texas Banking Act (Article
18-59 342-1.002, Vernon's Texas Civil Statutes), and each bank organized
18-60 under Section 25A [25(a)], Federal Reserve Act (12 U.S.C. Secs.
18-61 611-631) (edge corporations), but does not include a bank holding
18-62 company as that term is defined by Section 2, Bank Holding Company
18-63 Act of 1956 (12 U.S.C. Sec. 1841).
18-64 (2) "Beginning date" means:
18-65 (A) for a taxable entity [corporation] chartered
18-66 or organized in this state, the date on which the taxable entity's
18-67 [corporation's] charter or organization takes effect; and
18-68 (B) for any other taxable entity without regard
18-69 to whether the entity is foreign or domestic or whether it is
19-1 formally organized or chartered [a foreign corporation], the
19-2 earlier of the date on which:
19-3 (i) the corporation's certificate of
19-4 authority takes effect; or
19-5 (ii) the taxable entity [corporation]
19-6 begins doing business in this state.
19-7 (3) "Business trust" means a trust for carrying on a
19-8 business operation. ["Corporation" includes:]
19-9 [(A) a limited liability company, as defined
19-10 under the Texas Limited Liability Company Act; and]
19-11 [(B) a state or federal savings and loan
19-12 association.]
19-13 (4) "Charter" includes a limited liability company's
19-14 certificate of organization, a limited partnership's certificate of
19-15 limited partnership, and the registration of a limited liability
19-16 partnership.
19-17 (5) "Compensation":
19-18 (A) means amounts paid to or for the benefit of
19-19 an officer, director, or owner and that:
19-20 (i) are subject to withholding under the
19-21 Internal Revenue Code; or
19-22 (ii) would be subject to withholding if
19-23 the person were considered an employee and the amounts paid were
19-24 considered salaries; and
19-25 (B) does not include funds that are received by:
19-26 (i) an entity that contracts with one or
19-27 more insurance companies, health maintenance organizations, managed
19-28 care organizations, employers, unions, trusts, or other public or
19-29 private health care payors to arrange for the provision of health
19-30 care services, directly or indirectly through contracts or
19-31 subcontracts, or both, by physicians, providers, or organizations
19-32 of physicians, providers, or organizations and that are retained by
19-33 the entity as part of a withhold, shared fund, risk pool, stop
19-34 loss, fee-for-service, risk-sharing, capitated risk, contingency
19-35 reserve, or similar arrangement to be distributed to the
19-36 participating physicians, providers, or organizations, except to
19-37 the extent the participating physicians, providers, or
19-38 organizations are not taxable under this chapter; or
19-39 (ii) an agent for a principal to the
19-40 extent the funds are to be distributed to the principal.
19-41 (6) "Does business in this state" means the taxable
19-42 entity is subject to taxation by this state without the state
19-43 violating the United States Constitution and the federal law
19-44 adopted under the United States Constitution.
19-45 (7) "Income or equity partner" includes a partner who
19-46 is entitled to a distributive share of the partnership's income or
19-47 loss or who becomes entitled to a share of the partnership's assets
19-48 or liabilities on termination of the partnership.
19-49 (8) "Internal Revenue Code" means the Internal Revenue
19-50 Code of 1986 in effect for the federal tax year beginning on or
19-51 after January 1, 1996 [1994], and before January 1, 1997 [1995],
19-52 and any regulations adopted under that code applicable to that
19-53 period.
19-54 (9) [(6)] "Officer" and "director" include a limited
19-55 liability company's directors and managers, [and] a limited banking
19-56 association's directors and managers and participants if there are
19-57 no directors or managers, and persons holding comparable positions
19-58 of authority in a noncorporate taxable entity.
19-59 (10) "Owner" includes a shareholder, an income or
19-60 equity partner of a partnership, and an owner of equity in any
19-61 other taxable entity.
19-62 (11) "Passive income" means:
19-63 (A) interest;
19-64 (B) dividends;
19-65 (C) rents;
19-66 (D) royalties, including overriding royalties;
19-67 (E) income from the disposition of a capital
19-68 asset or property held for investment;
19-69 (F) income from any of the following entities or
20-1 any entity controlled, directly or indirectly, by any of the
20-2 following entities:
20-3 (i) a real estate investment trust;
20-4 (ii) a regulated investment company;
20-5 (iii) a real estate mortgage investment
20-6 conduit; or
20-7 (iv) a common trust fund; or
20-8 (G) income from oil and gas working interests
20-9 held by the taxable entity if the taxable entity is not an operator
20-10 of oil and gas properties.
20-11 (12) "Passive income asset" means an asset owned by a
20-12 taxable entity if any income generated by the asset, including on
20-13 disposition of the asset, is passive income.
20-14 (13) "Passive income capital" for a taxable entity
20-15 means an amount that is the product of the passive income ratio for
20-16 the taxable entity and the entity's apportioned taxable capital
20-17 under Section 171.101(d)(3).
20-18 (14) "Passive income ratio" means the ratio, expressed
20-19 as a percentage, in which:
20-20 (A) the numerator is the aggregate cost of all
20-21 of the taxable entity's passive income assets; and
20-22 (B) the denominator is the aggregate cost of the
20-23 taxable entity's total assets.
20-24 (15) [(7)] "Savings and loan association" includes a
20-25 state or federal savings bank.
20-26 (16) [(8)] "Shareholder" includes a limited liability
20-27 company's member and a limited banking association's participant.
20-28 (17) "Taxable entity" does not include a sole
20-29 proprietorship. "Taxable entity" means:
20-30 (A) a banking corporation;
20-31 (B) a business trust that is required to file a
20-32 federal tax return as a corporation or a partnership other than a
20-33 self-insurance trust not engaged in the business of insurance and
20-34 formed under Article 21.49-4, Insurance Code;
20-35 (C) a corporation;
20-36 (D) a limited liability company;
20-37 (E) a limited liability partnership;
20-38 (F) a limited partnership;
20-39 (G) a partnership that is required to file a
20-40 federal tax return as a corporation or a partnership;
20-41 (H) a registered limited liability partnership;
20-42 (I) a state or federal savings and loan
20-43 association;
20-44 (J) a professional association;
20-45 (K) a professional corporation; and
20-46 (L) any other kind of business association,
20-47 joint venture, or other combination of entities or persons engaged
20-48 in business, other than an oil and gas joint operating agreement.
20-49 SECTION 3.02. Sections 171.0011(a), (b), and (c), Tax Code,
20-50 are amended to read as follows:
20-51 (a) An additional tax is imposed on a taxable entity
20-52 [corporation] that for any reason becomes no longer subject to the
20-53 earned surplus component of the tax, without regard to whether the
20-54 taxable entity [corporation] remains subject to the taxable
20-55 capital component of the tax.
20-56 (b) The additional tax is equal to 4.5 percent of the
20-57 taxable entity's [corporation's] net taxable earned surplus
20-58 computed on the period beginning on the day after the last day for
20-59 which the tax imposed on net taxable earned surplus was computed
20-60 under Section 171.1532 and ending on the date the taxable entity
20-61 [corporation] is no longer subject to the earned surplus component
20-62 of the tax.
20-63 (c) The additional tax imposed and any report required by
20-64 the comptroller are due on the 60th day after the date the taxable
20-65 entity [corporation] becomes no longer subject to the earned
20-66 surplus component of the tax.
20-67 SECTION 3.03. Sections 171.002(b) and (d), Tax Code, are
20-68 amended to read as follows:
20-69 (b) The amount of franchise tax on each taxable entity
21-1 [corporation], except as provided in Subsection (d), is computed by
21-2 adding the following:
21-3 (1) the amount calculated by applying the tax rate
21-4 prescribed by Subsection (a)(1) to the taxable entity's
21-5 [corporation's] net taxable capital; and
21-6 (2) the difference between:
21-7 (A) the amount calculated by applying the tax
21-8 rate prescribed by Subsection (a)(2) to the taxable entity's
21-9 [corporation's] net taxable earned surplus; and
21-10 (B) the amount determined under Subdivision (1).
21-11 (d) If the amount of tax computed under Subsection (b) for a
21-12 taxable entity [corporation] is less than $500 [$100], the taxable
21-13 entity [corporation] is not required to pay that amount and is not
21-14 considered to owe any tax for that period.
21-15 SECTION 3.04. Subchapter A, Chapter 171, Tax Code, is
21-16 amended by adding Section 171.003 to read as follows:
21-17 Sec. 171.003. TERMINATION, MERGER, AND DIVISION OF
21-18 PARTNERSHIP. (a) For purposes of this chapter, an existing
21-19 partnership shall be considered as continuing if it is not
21-20 terminated.
21-21 (b) A partnership shall be considered as terminated only if:
21-22 (1) no part of any business, financial operation, or
21-23 venture of the partnership continues to be carried on by any of its
21-24 partners in a partnership; or
21-25 (2) within a 12-month period there is a sale or
21-26 exchange of 50 percent or more of the total interest in partnership
21-27 capital and profits.
21-28 (c) In the case of a merger or consolidation of two or more
21-29 partnerships, the resulting partnership shall, for purposes of this
21-30 chapter, be considered the continuation of any merging or
21-31 consolidating partnership whose members own an interest of more
21-32 than 50 percent in the capital and profits of the resulting
21-33 partnership.
21-34 (d) In the case of a division of a partnership into two or
21-35 more partnerships, the resulting partnerships (other than any
21-36 resulting partnership the members of which had an interest of 50
21-37 percent or less in the capital and profits of the prior
21-38 partnership) shall, for purposes of this chapter, be considered a
21-39 continuation of the prior partnership.
21-40 SECTION 3.05. Subchapter B, Chapter 171, Tax Code, is
21-41 amended by adding Section 171.054 to read as follows:
21-42 Sec. 171.054. EXEMPTION--NONCORPORATE TAXABLE ENTITY
21-43 ELIGIBLE FOR CERTAIN EXEMPTIONS. A taxable entity that is not a
21-44 corporation but that, because of its activities, would qualify for
21-45 a specific exemption under this subchapter if it were a
21-46 corporation, qualifies for the exemption and is exempt from the tax
21-47 in the same manner and under the same conditions as a corporation.
21-48 SECTION 3.06. Section 171.101, Tax Code, is amended by
21-49 adding Subsections (d) and (e) to read as follows:
21-50 (d) The net taxable capital of a taxable entity other than a
21-51 corporation, a limited liability company, and a savings and loan
21-52 association is computed by:
21-53 (1) adding the taxable entity's capital accounts,
21-54 undistributed profits, and surplus to determine the taxable
21-55 entity's taxable capital;
21-56 (2) for a taxable entity to which Section 171.1102
21-57 applies, subtracting from the amount computed under Subdivision (1)
21-58 the amount of any passive income capital;
21-59 (3) apportioning the taxable entity's taxable capital
21-60 to this state as provided by Section 171.106(a) or (c), as
21-61 applicable, to determine the entity's apportioned taxable capital;
21-62 and
21-63 (4) subtracting from the amount computed under
21-64 Subdivision (3) any other allowable deductions to determine the
21-65 taxable entity's net taxable capital.
21-66 (e) For purposes of Subsection (d)(1), an amount that
21-67 belongs to the taxable entity's capital accounts, undistributed
21-68 profits, or surplus is excluded if the amount has been added once
21-69 under that subsection in determining the entity's taxable capital.
22-1 SECTION 3.07. Sections 171.1015(a), (b), and (e), Tax Code,
22-2 are amended to read as follows:
22-3 (a) A taxable entity [corporation] that has been designated
22-4 as an enterprise project as provided by Chapter 2303, Government
22-5 Code, may deduct either:
22-6 (1) from its apportioned taxable capital, 50 percent
22-7 of its capital investment in the enterprise zone in which the
22-8 enterprise project is located; or
22-9 (2) from its apportioned taxable earned surplus, five
22-10 percent of its capital investment in the enterprise zone in which
22-11 the enterprise project is located. The deduction may be taken on
22-12 each franchise tax report that is based on a taxable entity's
22-13 [corporation's] fiscal year during all or part of which the taxable
22-14 entity [corporation] is an enterprise project.
22-15 (b) The deduction authorized by this section is limited to
22-16 the depreciated value of capital equipment or other investment that
22-17 qualifies for depreciation for federal income tax purposes and that
22-18 is placed in service in the zone after designation as an enterprise
22-19 project. The depreciated value must be computed by a method which
22-20 is otherwise acceptable for that taxable entity's [corporation's]
22-21 franchise tax report and must be computed for each report on which
22-22 it is taken by the same method of depreciation.
22-23 (e) A taxable entity [corporation] may elect to make the
22-24 deduction authorized by this section either from apportioned
22-25 taxable capital or apportioned taxable earned surplus for each
22-26 separate regular annual period. An election for an initial period
22-27 applies to the second tax period and to the first regular annual
22-28 period.
22-29 SECTION 3.08. Section 171.103, Tax Code, is amended to read
22-30 as follows:
22-31 Sec. 171.103. DETERMINATION OF GROSS RECEIPTS FROM BUSINESS
22-32 DONE IN THIS STATE FOR TAXABLE CAPITAL. (a) In apportioning
22-33 taxable capital, the gross receipts of a taxable entity
22-34 [corporation] from its business done in this state is the sum of
22-35 the taxable entity's [corporation's] receipts from:
22-36 (1) each sale of tangible personal property if the
22-37 property is delivered or shipped to a buyer in this state
22-38 regardless of the FOB point or another condition of the sale, and
22-39 each sale of tangible personal property shipped from this state to
22-40 a purchaser in another state in which the seller is not subject to
22-41 taxation;
22-42 (2) each service performed in this state;
22-43 (3) each rental of property situated in this state;
22-44 (4) each [royalty for the] use of a patent, [or]
22-45 copyright, trademark, franchise, or license in this state not
22-46 including a sale of a computer program or a license of computer
22-47 software; [and]
22-48 (5) each sale of real property located in this state,
22-49 including royalties for oil, gas, or other mineral interests; and
22-50 (6) other business done in this state.
22-51 (b) If a taxable entity sells an investment or capital
22-52 asset, the taxable entity's gross receipts from business done in
22-53 this state include only the gain from the sale.
22-54 (c) In apportioning taxable capital of a telephone company,
22-55 the comptroller shall adopt rules to apportion to this state
22-56 receipts from this state's portion of a transaction within and
22-57 without this state.
22-58 SECTION 3.09. Section 171.1032, Tax Code, is amended to read
22-59 as follows:
22-60 Sec. 171.1032. DETERMINATION OF GROSS RECEIPTS FROM BUSINESS
22-61 DONE IN THIS STATE FOR TAXABLE EARNED SURPLUS. (a) Except for the
22-62 gross receipts of a taxable entity [corporation] that are subject
22-63 to the provisions of Section 171.1061, in apportioning taxable
22-64 earned surplus, the gross receipts of a taxable entity
22-65 [corporation] from its business done in this state is the sum of
22-66 the taxable entity's [corporation's] receipts from:
22-67 (1) each sale of tangible personal property if the
22-68 property is delivered or shipped to a buyer in this state
22-69 regardless of the FOB point or another condition of the sale, and
23-1 each sale of tangible personal property shipped from this state to
23-2 a purchaser in another state in which the seller is not subject to
23-3 any tax on, or measured by, net income, without regard to whether
23-4 the tax is imposed;
23-5 (2) each service performed in this state;
23-6 (3) each rental of property situated in this state;
23-7 (4) each [royalty for the] use of a patent, [or]
23-8 copyright, trademark, franchise, or license in this state not
23-9 including a sale of a computer program or a license of computer
23-10 software; [and]
23-11 (5) each sale of real property located in this state,
23-12 including royalties for oil, gas, or other mineral interests; and
23-13 (6) other business done in this state.
23-14 (b) If a taxable entity sells an investment or capital
23-15 asset, the taxable entity's gross receipts from business done in
23-16 this state include only the gain from the sale [A corporation shall
23-17 deduct from its gross receipts computed under Subsection (a) any
23-18 amount to the extent included under Subsection (a) because of the
23-19 application of Section 78 or Sections 951-964, Internal Revenue
23-20 Code, and dividends received from a subsidiary, associate, or
23-21 affiliated corporation that does not transact a substantial portion
23-22 of its business or regularly maintain a substantial portion of its
23-23 assets in the United States].
23-24 (c) In apportioning taxable earned surplus of a telephone
23-25 company, the comptroller shall adopt rules to apportion to this
23-26 state receipts from this state's portion of a transaction within
23-27 and without this state.
23-28 SECTION 3.10. Section 171.105, Tax Code, is amended to read
23-29 as follows:
23-30 Sec. 171.105. DETERMINATION OF GROSS RECEIPTS FROM ENTIRE
23-31 BUSINESS FOR TAXABLE CAPITAL. (a) In apportioning taxable
23-32 capital, the gross receipts of a taxable entity [corporation] from
23-33 its entire business is the sum of the taxable entity's
23-34 [corporation's] receipts from:
23-35 (1) each sale of the taxable entity's [corporation's]
23-36 tangible personal property;
23-37 (2) each service, rental, or royalty; and
23-38 (3) other business.
23-39 (b) If a taxable entity [corporation] sells an investment or
23-40 capital asset, the taxable entity's [corporation's] gross receipts
23-41 from its entire business for taxable capital include only the net
23-42 gain from the sale.
23-43 SECTION 3.11. Section 171.1051, Tax Code, is amended to read
23-44 as follows:
23-45 Sec. 171.1051. DETERMINATION OF GROSS RECEIPTS FROM ENTIRE
23-46 BUSINESS FOR TAXABLE EARNED SURPLUS. (a) Except for the gross
23-47 receipts of a taxable entity [corporation] that are subject to the
23-48 provisions of Section 171.1061, in apportioning taxable earned
23-49 surplus, the gross receipts of a taxable entity [corporation] from
23-50 its entire business is the sum of the taxable entity's
23-51 [corporation's] receipts from:
23-52 (1) each sale of the taxable entity's [corporation's]
23-53 tangible personal property;
23-54 (2) each service, rental, or royalty; and
23-55 (3) other business.
23-56 (b) If a taxable entity [corporation] sells an investment or
23-57 capital asset, the taxable entity's [corporation's] gross receipts
23-58 from its entire business for taxable earned surplus includes only
23-59 the net gain from the sale.
23-60 [(c) A corporation shall deduct from its gross receipts
23-61 computed under Subsection (a) any amount to the extent included in
23-62 Subsection (a) because of the application of Section 78 or Sections
23-63 951-964, Internal Revenue Code, and dividends received from a
23-64 subsidiary, associate, or affiliated corporation that does not
23-65 transact a substantial portion of its business or regularly
23-66 maintain a substantial portion of its assets in the United States.]
23-67 SECTION 3.12. Section 171.106, Tax Code, is amended to read
23-68 as follows:
23-69 Sec. 171.106. APPORTIONMENT OF TAXABLE CAPITAL AND TAXABLE
24-1 EARNED SURPLUS TO THIS STATE. (a) Except as provided by
24-2 Subsection (c), a taxable entity's [corporation's] taxable capital
24-3 is apportioned to this state to determine the amount of the tax
24-4 imposed under Section 171.002(b)(1) by multiplying the taxable
24-5 entity's [corporation's] taxable capital by a fraction, the
24-6 numerator of which is the taxable entity's [corporation's] gross
24-7 receipts from business done in this state, as determined under
24-8 Section 171.103 or 171.1031, as applicable, and the denominator of
24-9 which is the taxable entity's [corporation's] gross receipts from
24-10 its entire business, as determined under Section 171.105.
24-11 (b) Except as provided by Subsection (c), a taxable entity's
24-12 [corporation's] taxable earned surplus is apportioned to this state
24-13 to determine the amount of tax imposed under Section 171.002(b)(2)
24-14 by multiplying the taxable earned surplus by a fraction, the
24-15 numerator of which is the taxable entity's [corporation's] gross
24-16 receipts from business done in this state, as determined under
24-17 Section 171.1031 or 171.1032, as applicable, and the denominator of
24-18 which is the taxable entity's [corporation's] gross receipts from
24-19 its entire business, as determined under Section 171.1051.
24-20 (c) A taxable entity's [corporation's] taxable capital or
24-21 earned surplus that is derived, directly or indirectly, from the
24-22 sale of management, distribution, or administration services to or
24-23 on behalf of a regulated investment company, including a taxable
24-24 entity [corporation] that includes trustees or sponsors of employee
24-25 benefit plans that have accounts in a regulated investment company,
24-26 is apportioned to this state to determine the amount of the tax
24-27 imposed under Section 171.002 by multiplying the taxable entity's
24-28 [corporation's] total taxable capital or earned surplus from the
24-29 sale of services to or on behalf of a regulated investment company
24-30 by a fraction, the numerator of which is the average of the sum of
24-31 shares owned at the beginning of the year and the sum of shares
24-32 owned at the end of the year by the investment company shareholders
24-33 who are commercially domiciled in this state, and the denominator
24-34 of which is the average of the sum of shares owned at the beginning
24-35 of the year and the sum of shares owned at the end of the year by
24-36 all investment company shareholders. The taxable entity
24-37 [corporation] shall make a separate computation to allocate taxable
24-38 capital and earned surplus. In this subsection, "regulated
24-39 investment company" has the meaning assigned by Section 851(a),
24-40 Internal Revenue Code.
24-41 SECTION 3.13. Section 171.1061, Tax Code, is amended to read
24-42 as follows:
24-43 Sec. 171.1061. ALLOCATION OF CERTAIN TAXABLE EARNED SURPLUS
24-44 TO THIS STATE. An item of income included in a taxable entity's
24-45 [corporation's] taxable earned surplus, except that portion derived
24-46 from dividends and interest, that a state, other than this state,
24-47 or a country, other than the United States, cannot tax because the
24-48 activities generating that item of income do not have sufficient
24-49 unitary connection with the taxable entity's [corporation's] other
24-50 activities conducted within that state or country under the United
24-51 States Constitution, is allocated to this state if the taxable
24-52 entity's [corporation's] commercial domicile is in this state.
24-53 Income that can only be allocated to the state of commercial
24-54 domicile because the income has insufficient unitary connection
24-55 with any other state or country shall be allocated to this state or
24-56 another state or country net of expenses related to that income. A
24-57 portion of a taxable entity's [corporation's] taxable earned
24-58 surplus allocated to this state under this section may not be
24-59 apportioned under Section 171.110(a)(2).
24-60 SECTION 3.14. Section 171.109, Tax Code, as amended by
24-61 Chapters 801 and 1198, Acts of the 71st Legislature, Regular
24-62 Session, 1989, is amended to read as follows:
24-63 Sec. 171.109. SURPLUS. (a) In this chapter:
24-64 (1) "Surplus" means the net assets of a taxable entity
24-65 [corporation] minus its stated capital. For a limited liability
24-66 company, "surplus" means the net assets of the company minus its
24-67 members' contributions. Surplus includes unrealized, estimated, or
24-68 contingent losses or obligations or any writedown of assets other
24-69 than those listed in Subsection (i) of this section net of
25-1 appropriate income tax provisions. The definition under this
25-2 subdivision does not apply to earned surplus.
25-3 (2) "Net assets" means the total assets of a taxable
25-4 entity [corporation] minus its total debts.
25-5 (3) "Debt" means any legally enforceable obligation
25-6 measured in a certain amount of money which must be performed or
25-7 paid within an ascertainable period of time or on demand.
25-8 (b) Except as otherwise provided in this section, a taxable
25-9 entity [corporation] must compute its surplus, assets, and debts
25-10 according to generally accepted accounting principles. If
25-11 generally accepted accounting principles are unsettled or do not
25-12 specify an accounting practice for a particular purpose related to
25-13 the computation of surplus, assets, or debts, the comptroller by
25-14 rule may establish rules to specify the applicable accounting
25-15 practice for that purpose.
25-16 (c) A taxable entity [corporation] whose taxable capital is
25-17 less than $1 million may report its surplus according to the
25-18 method used in the taxable entity's [corporation's] most recent
25-19 federal income tax return originally due on or before the date on
25-20 which the taxable entity's [corporation's] franchise tax report is
25-21 originally due. In determining if taxable capital is less than $1
25-22 million, the taxable entity [corporation] shall apply the methods
25-23 the taxable entity [corporation] used in computing that federal
25-24 income tax return unless another method is required under this
25-25 chapter.
25-26 (d) A taxable entity [corporation] shall report its surplus
25-27 based solely on its own financial condition. Consolidated
25-28 reporting of the surplus of related taxable entities [corporations]
25-29 is prohibited.
25-30 (e) A taxable entity [Unless the provisions of Section
25-31 171.111 apply due to an election under that section, a corporation]
25-32 may not change the accounting methods used to compute its surplus
25-33 more often than once every four years without the written consent
25-34 of the comptroller. A change in accounting methods is not
25-35 justified solely because it results in a reduction of tax
25-36 liability.
25-37 (f) A taxable entity making a distribution [corporation
25-38 declaring dividends] shall exclude the distribution [those
25-39 dividends] from its taxable capital, and a taxable entity
25-40 [corporation] receiving a distribution [dividends] shall include
25-41 the distribution [those dividends] in its gross receipts and
25-42 taxable capital as of the earlier of:
25-43 (1) the date the distribution is [dividends are]
25-44 declared, if the distribution is [dividends are] actually paid
25-45 within one year after the declaration date; or
25-46 (2) the date the distribution is [dividends are]
25-47 actually paid.
25-48 (g) All oil and gas exploration and production activities
25-49 conducted by a taxable entity [corporation] that reports its
25-50 surplus according to generally accepted accounting principles as
25-51 required or permitted by this chapter must be reported according to
25-52 the successful efforts or the full cost method of accounting.
25-53 (h) A parent or investor taxable entity [corporation] must
25-54 use the cost method of accounting in reporting and calculating the
25-55 franchise tax on its investments in subsidiary taxable entities
25-56 [corporations] or other investees. The retained earnings of a
25-57 subsidiary corporation or other investee before acquisition by the
25-58 parent or investor taxable entity [corporation] may not be excluded
25-59 from the cost of the subsidiary corporation or investee to the
25-60 parent or investor taxable entity [corporation] and must be
25-61 included by the parent or investor taxable entity [corporation] in
25-62 calculating its surplus.
25-63 (i) The following accounts may also be excluded from
25-64 surplus, to the extent they are in conformance with generally
25-65 accepted accounting principles or the appropriate federal income
25-66 tax method, whichever is applicable:
25-67 (1) a reserve or allowance for uncollectable accounts;
25-68 and
25-69 (2) a contra-asset account for depletion,
26-1 depreciation, or amortization.
26-2 (j) A taxable entity [corporation] may not exclude from
26-3 surplus:
26-4 (1) liabilities for compensation and other benefits
26-5 provided to employees, other than wages, that are not debt as of
26-6 the end of the accounting period on which the taxable capital
26-7 component is based, including retirement, medical, insurance,
26-8 postretirement, and other similar benefits; and
26-9 (2) deferred investment tax credits.
26-10 (k) Notwithstanding any other provision in this chapter, a
26-11 taxable entity [corporation] subject to the tax imposed by this
26-12 chapter shall use double entry bookkeeping to account for all
26-13 transactions that affect the computation of that tax.
26-14 (l) The "first in-first out" and "last in-first out" methods
26-15 of accounting are acceptable methods for computing surplus.
26-16 (m) A taxable entity [corporation] may not use the push-down
26-17 method of accounting in computing or reporting its surplus.
26-18 SECTION 3.15. Section 171.110, Tax Code, is amended to read
26-19 as follows:
26-20 Sec. 171.110. DETERMINATION OF NET TAXABLE EARNED SURPLUS.
26-21 (a) Except as provided by Section 171.1101, the [The] net taxable
26-22 earned surplus of a taxable entity [corporation] is computed by:
26-23 (1) determining the taxable entity's [corporation's]
26-24 reportable federal taxable income and making the following
26-25 adjustments:
26-26 (A) [,] subtracting [from that amount] any
26-27 amount included in reportable federal taxable income under Section
26-28 78 or Sections 951-964, Internal Revenue Code;
26-29 (B) except for an entity described in Section
26-30 171.001(b)(5)(B)(i), subtracting any taxable income or deductions
26-31 included under the provisions of Section 702(a) or 1366(a),
26-32 Internal Revenue Code, to the extent included in computing federal
26-33 taxable income from an S corporation or a partnership that is
26-34 subject to the earned surplus component of the tax imposed under
26-35 this chapter;
26-36 (C) adding, for each other taxable entity owned
26-37 in whole or part by the taxable entity, in proportion to the amount
26-38 of that ownership, any amount of passive income subtracted from
26-39 reportable federal taxable income under Section 171.1102 by the
26-40 other taxable entity;
26-41 (D) subtracting [, and] dividends received from
26-42 a subsidiary, associate, or affiliated corporation that does not
26-43 transact a substantial portion of its business or regularly
26-44 maintain a substantial portion of its assets in the United States;
26-45 (E) [, and] adding, for a taxable entity with 35
26-46 or fewer owners, directly or indirectly, 100 percent of
26-47 compensation, to the extent excluded in determining reportable
26-48 federal taxable income, of each officer, director, and owner who
26-49 owns 0.1 percent or more of the taxable entity [to that amount any
26-50 compensation of officers or directors, or if a bank, any
26-51 compensation of directors and executive officers, to the extent
26-52 excluded in determining federal taxable income to determine the
26-53 corporation's taxable earned surplus];
26-54 (F) subtracting, for a taxable entity with 35 or
26-55 fewer owners, directly or indirectly, an amount up to $100,000 in
26-56 compensation paid to each officer, director, and owner who owns 0.1
26-57 percent or more of the taxable entity;
26-58 (G) adding, for a taxable entity with more than
26-59 35 owners, directly or indirectly, to the extent excluded in
26-60 determining reportable federal taxable income:
26-61 (i) 100 percent of the 35 highest amounts
26-62 of compensation of each officer, director, and owner who owns 0.1
26-63 percent or more of the taxable entity; and
26-64 (ii) 50 percent of compensation of each
26-65 officer, director, and owner who owns 0.1 percent or more of the
26-66 taxable entity for which compensation is not added under
26-67 Subparagraph (i); and
26-68 (H) subtracting, for a taxable entity with more
26-69 than 35 owners, directly or indirectly, an amount up to $100,000 in
27-1 compensation paid to each officer, director, and owner for which
27-2 100 percent of compensation is added under Paragraph (G)(i);
27-3 (2) apportioning the taxable entity's [corporation's]
27-4 taxable earned surplus to this state as provided by Section
27-5 171.106(b) or (c), as applicable, to determine the taxable entity's
27-6 [corporation's] apportioned taxable earned surplus;
27-7 (3) adding the taxable entity's [corporation's]
27-8 taxable earned surplus allocated to this state as provided by
27-9 Section 171.1061; and
27-10 (4) subtracting from that amount any allowable
27-11 deductions and any business loss that is carried forward to the tax
27-12 reporting period and deductible under Subsection (e).
27-13 (b) For purposes of Subsection (a)(1):
27-14 (1) an amount may not be subtracted from reportable
27-15 federal taxable income more than once; and
27-16 (2) an amount may not be added to reportable federal
27-17 taxable income more than once. [A corporation is not required to
27-18 add the compensation of officers or directors as required by
27-19 Subsection (a)(1) if the corporation is:]
27-20 [(1) a corporation that has not more than 35
27-21 shareholders; or]
27-22 [(2) an S corporation, as that term is defined by
27-23 Section 1361, Internal Revenue Code.]
27-24 (c) [Subsection (b) does not apply to a subsidiary
27-25 corporation unless it applies to the subsidiary's parent
27-26 corporation.]
27-27 [(d)] A corporation's reportable federal taxable income is
27-28 the corporation's federal taxable income after Schedule C special
27-29 deductions and before net operating loss deductions as computed
27-30 under the Internal Revenue Code, except that an S corporation's
27-31 reportable federal taxable income is the amount of the income
27-32 reportable to the Internal Revenue Service as taxable to the
27-33 corporation's shareholders.
27-34 (d) Reportable federal taxable income shall be determined
27-35 before adjustment for distributions to owners and includes all
27-36 income taxable to the entity or the owners for federal income tax
27-37 purposes.
27-38 (e) For purposes of this section, a business loss is any
27-39 negative amount after apportionment and allocation. The business
27-40 loss shall be carried forward to the year succeeding the loss year
27-41 as a deduction to net taxable earned surplus, then successively to
27-42 the succeeding four taxable years after the loss year or until the
27-43 loss is exhausted, whichever occurs first, but for not more than
27-44 five taxable years after the loss year. Notwithstanding the
27-45 preceding sentence, a business loss from a tax year that ends
27-46 before January 1, 1991, may not be used to reduce net taxable
27-47 earned surplus. A business loss incurred before January 1, 1997,
27-48 may not be used to reduce the net taxable earned surplus of a
27-49 taxable entity not subject to this chapter before January 1, 1998.
27-50 (f) A taxable entity [corporation] may use either the "first
27-51 in-first out" or "last in-first out" method of accounting to
27-52 compute its net taxable earned surplus, but only to the extent that
27-53 the taxable entity [corporation] used that method on its most
27-54 recent federal income tax report originally due on or before the
27-55 date on which the taxable entity's [corporation's] franchise tax
27-56 report is originally due.
27-57 (g) For purposes of this section, an approved Employee Stock
27-58 Ownership Plan controlling a minority interest and voted through a
27-59 single trustee shall be considered one owner [shareholder].
27-60 (h) In this section, "officer" means, for a taxable entity
27-61 that is a bank, an executive officer.
27-62 SECTION 3.16. Subchapter C, Chapter 171, Tax Code, is
27-63 amended by adding Section 171.1101 to read as follows:
27-64 Sec. 171.1101. DETERMINATION OF NET TAXABLE EARNED SURPLUS
27-65 OF PARTNERSHIPS. (a) The net taxable earned surplus of a
27-66 partnership is computed by:
27-67 (1) determining the partnership's reportable federal
27-68 taxable income and making the following adjustments:
27-69 (A) except for an entity described in Section
28-1 171.001(b)(5)(B)(i), subtracting any taxable income or deductions
28-2 included under the provisions of Section 702(a) or 1366(a),
28-3 Internal Revenue Code, to the extent included in computing
28-4 reportable federal taxable income from a partnership that is
28-5 subject to the earned surplus component of the tax imposed under
28-6 this chapter;
28-7 (B) adding, for a partnership with 35 or fewer
28-8 partners, directly or indirectly, 100 percent of compensation, to
28-9 the extent excluded in determining reportable federal taxable
28-10 income, of each officer, director, and partner who owns 0.1 percent
28-11 or more of the partnership;
28-12 (C) subtracting, for a partnership with 35 or
28-13 fewer partners, directly or indirectly, an amount up to $100,000 in
28-14 compensation paid to each officer, director, and partner who owns
28-15 0.1 percent or more of the taxable entity;
28-16 (D) adding, for a partnership with more than 35
28-17 partners, directly or indirectly, to the extent excluded in
28-18 determining reportable federal taxable income:
28-19 (i) 100 percent of the 35 highest amounts
28-20 of compensation of each officer, director, and partner who owns 0.1
28-21 percent or more of the partnership; and
28-22 (ii) 50 percent of compensation of each
28-23 officer, director, and partner who owns 0.1 percent or more of the
28-24 taxable entity for which compensation is not added under
28-25 Subparagraph (i); and
28-26 (E) subtracting, for a partnership with more
28-27 than 35 partners, directly or indirectly, an amount up to $100,000
28-28 in compensation paid to each officer, director, and partner for
28-29 which 100 percent of compensation is added under Paragraph (D)(i);
28-30 (2) apportioning the partnership's taxable earned
28-31 surplus to this state as provided by Section 171.106(b) or (c), as
28-32 applicable, to determine the partnership's apportioned taxable
28-33 earned surplus;
28-34 (3) adding the partnership's taxable earned surplus
28-35 allocated to this state as provided by Section 171.1061; and
28-36 (4) subtracting from that amount any allowable
28-37 deductions and any business loss that is carried forward to the tax
28-38 reporting period and deductible under Subsection (d).
28-39 (b) For purposes of Subsection (a)(1):
28-40 (1) an amount may not be subtracted from reportable
28-41 federal taxable income more than once;
28-42 (2) an amount may not be added to reportable federal
28-43 taxable income more than once; and
28-44 (3) in determining whether a partnership has 35 or
28-45 fewer partners, husband and wife are treated as one partner.
28-46 (c) A partnership's reportable federal taxable income is the
28-47 amount of the income reportable to the Internal Revenue Service as
28-48 taxable to the partners, except for guaranteed payments, if taxed
28-49 as a partnership for federal income tax purposes.
28-50 (d) For purposes of this section, a business loss is
28-51 any negative amount after apportionment and allocation. The
28-52 business loss shall be carried forward to the year succeeding the
28-53 loss year as a deduction to net taxable earned surplus, then
28-54 successively to the succeeding four taxable years after the loss
28-55 year or until the loss is exhausted, whichever occurs first, but
28-56 for not more than five taxable years after the loss year.
28-57 Notwithstanding the preceding sentence, a business loss incurred
28-58 before January 1, 1997, may not be used to reduce net taxable
28-59 earned surplus.
28-60 (e) In this section, "compensation" includes guaranteed
28-61 payments and distributions to a partner.
28-62 SECTION 3.17. Subchapter C, Chapter 171, Tax Code, is
28-63 amended by adding Section 171.1102 to read as follows:
28-64 Sec. 171.1102. ADDITIONAL ADJUSTMENT OF NET TAXABLE EARNED
28-65 SURPLUS FOR PASSIVE INCOME OF CERTAIN TAXABLE ENTITIES. (a) In
28-66 addition to the applicable adjustments to a taxable entity's
28-67 reportable federal taxable income provided by Section 171.110(a)(1)
28-68 or 171.1101(a)(1), the net taxable earned surplus of a taxable
28-69 entity to which this section applies is computed by subtracting any
29-1 amount of passive income included in reportable federal taxable
29-2 income.
29-3 (b) This section applies to a taxable entity other than:
29-4 (1) a corporation, including a banking corporation;
29-5 (2) a limited liability company;
29-6 (3) a state or federal savings and loan association;
29-7 or
29-8 (4) a lending institution.
29-9 (c) In this section, "lending institution" means an entity:
29-10 (1) that is regularly engaged in the business of
29-11 extending credit, making loans, or providing other forms of
29-12 financing; and
29-13 (2) that, as a result of engaging in the activity
29-14 described by Subdivision (1), is required to register or become
29-15 licensed under state law, including registration with the Office of
29-16 Consumer Credit Commissioner under Title 79, Revised Statutes, by
29-17 another state under similar law, or by the federal government.
29-18 SECTION 3.18. Sections 171.112(b), (c), (d), (e), (f), and
29-19 (h), Tax Code, are amended to read as follows:
29-20 (b) Except as otherwise provided in this section, a taxable
29-21 entity [corporation] must compute gross receipts in accordance with
29-22 generally accepted accounting principles. If generally accepted
29-23 accounting principles are unsettled or do not specify an accounting
29-24 practice for a particular purpose related to the computation of
29-25 gross receipts, the comptroller by rule may establish rules to
29-26 specify the applicable accounting practice.
29-27 (c) A taxable entity [corporation] whose taxable capital is
29-28 less than $1 million may report its gross receipts according to the
29-29 method used in the taxable entity's [corporation's] most recent
29-30 federal income tax return originally due on or before the date on
29-31 which the taxable entity's [corporation's] franchise tax report is
29-32 originally due. In determining if taxable capital is less than $1
29-33 million, the taxable entity [corporation] shall apply the methods
29-34 the taxable entity [corporation] used in computing that federal
29-35 income tax return unless another method is required under this
29-36 chapter.
29-37 (d) A taxable entity [corporation] shall report its gross
29-38 receipts based solely on its own financial condition. Consolidated
29-39 reporting of related taxable entities [corporations] is prohibited.
29-40 (e) A taxable entity [Unless the provisions of Section
29-41 171.111 apply due to an election under that section, a corporation]
29-42 may not change its accounting methods used to calculate gross
29-43 receipts more often than once every four years without the express
29-44 written consent of the comptroller. A change in accounting methods
29-45 is not justified solely because it results in a reduction of tax
29-46 liability.
29-47 (f) Notwithstanding any other provision in this chapter, a
29-48 taxable entity [corporation] subject to the tax imposed by this
29-49 chapter shall use double entry bookkeeping to account for all
29-50 transactions that affect the computation of that tax.
29-51 (h) Except as otherwise provided by this section, a taxable
29-52 entity [corporation] shall use the same accounting methods to
29-53 apportion its taxable capital as it used to compute its taxable
29-54 capital.
29-55 SECTION 3.19. Section 171.1121, Tax Code, is amended to read
29-56 as follows:
29-57 Sec. 171.1121. GROSS RECEIPTS FOR TAXABLE EARNED SURPLUS.
29-58 (a) For purposes of this section, "gross receipts" means all
29-59 revenues reportable by a taxable entity [corporation] on its
29-60 federal tax return, without deduction for the cost of property
29-61 sold, materials used, labor performed, or other costs incurred,
29-62 unless otherwise specifically provided in this chapter. "Gross
29-63 receipts" does not include revenues that are not included in
29-64 taxable earned surplus. For example, Schedule C special deductions
29-65 and any amounts subtracted from reportable federal taxable income
29-66 under Section 171.110(a)(1) are not included in taxable earned
29-67 surplus and therefore are not considered gross receipts.
29-68 (b) Except as otherwise provided by this section, a taxable
29-69 entity [corporation] shall use the same accounting methods to
30-1 apportion taxable earned surplus as used in computing reportable
30-2 federal taxable income.
30-3 (c) A taxable entity [corporation] shall report its gross
30-4 receipts based solely on its own financial condition. Consolidated
30-5 reporting of related taxable entities [corporations] is prohibited.
30-6 (d) A taxable entity [Unless the provisions of Section
30-7 171.111 apply due to an election under that section, a corporation]
30-8 may not change its accounting methods used to calculate gross
30-9 receipts more often than once every four years without the express
30-10 written consent of the comptroller. A change in accounting methods
30-11 is not justified solely because it results in a reduction of tax
30-12 liability.
30-13 SECTION 3.20. Section 171.151, Tax Code, is amended to read
30-14 as follows:
30-15 Sec. 171.151. PRIVILEGE PERIOD COVERED BY TAX. The
30-16 franchise tax shall be paid for each of the following:
30-17 (1) an initial period beginning on the taxable
30-18 entity's [corporation's] beginning date and ending on the day
30-19 before the first anniversary of the beginning date;
30-20 (2) a second period beginning on the first anniversary
30-21 of the beginning date and ending on December 31 following that
30-22 date; and
30-23 (3) after the initial and second periods have expired,
30-24 a regular annual period beginning each year on January 1 and ending
30-25 the following December 31.
30-26 SECTION 3.21. Section 171.152(c), Tax Code, is amended to
30-27 read as follows:
30-28 (c) Payment of the tax covering the regular annual period is
30-29 due May 15, of each year after the beginning of the regular annual
30-30 period. However, if the first anniversary of the taxable entity's
30-31 [corporation's] beginning date is after October 3 and before
30-32 January 1, the payment of the tax covering the first regular annual
30-33 period is due on the same date as the tax covering the initial
30-34 period.
30-35 SECTION 3.22. Sections 171.153(a) and (c), Tax Code, are
30-36 amended to read as follows:
30-37 (a) The tax covering the initial period is reported on the
30-38 initial report and is based on the business done by the taxable
30-39 entity [corporation] during the period beginning on the taxable
30-40 entity's [corporation's] beginning date and:
30-41 (1) ending on the last accounting period ending date
30-42 that is at least six months after the beginning date and at least
30-43 60 days before the original due date of the initial report; or
30-44 (2) if there is no such period ending date in
30-45 Subdivision (1) of this subsection, then ending on the day that is
30-46 the last day of a calendar month and that is nearest to the end of
30-47 the taxable entity's [corporation's] first year of business; or
30-48 (3) ending on the day after the merger occurs, for the
30-49 survivor of a merger which occurs after the day on which the tax is
30-50 based in Subdivision (1) or Subdivision (2), whichever is
30-51 applicable, of Subsection (a) and before January 1, of the year an
30-52 initial report is due by the survivor.
30-53 (c) The tax covering the regular annual period is based on
30-54 the business done by the taxable entity [corporation] during its
30-55 last accounting period that ends in the year before the year in
30-56 which the tax is due; unless a taxable entity [corporation] is the
30-57 survivor of a merger which occurs between the end of its last
30-58 accounting period in the year before the report year and January 1
30-59 of the report year, in which case the tax will be based on the
30-60 financial condition of the surviving taxable entity [corporation]
30-61 for the 12-month period ending on the day after the merger.
30-62 However, if the first anniversary of the taxable entity's
30-63 [corporation's] beginning date is after October 3 and before
30-64 January 1, the tax covering the first regular annual period is
30-65 based on the same business on which the tax covering the initial
30-66 period is based and is reported on the initial report.
30-67 SECTION 3.23. Section 171.1532, Tax Code, is amended to read
30-68 as follows:
30-69 Sec. 171.1532. BUSINESS ON WHICH TAX ON NET TAXABLE EARNED
31-1 SURPLUS IS BASED. (a) The tax covering the privilege periods
31-2 included on the initial report, as required by Section 171.153, is
31-3 based on the business done by the taxable entity [corporation]
31-4 during the period beginning on the taxable entity's [corporation's]
31-5 beginning date and:
31-6 (1) ending on the last accounting period ending date
31-7 for federal income tax purposes that is at least 60 days before the
31-8 original due date of the initial report; or
31-9 (2) if there is no such period ending date in
31-10 Subdivision (1) of this subsection, then ending on the day that is
31-11 the last day of a calendar month and that is nearest to the end of
31-12 the taxable entity's [corporation's] first year of business.
31-13 (b) The tax covering the regular annual period, other than a
31-14 regular annual period included on the initial report, is based on
31-15 the business done by the taxable entity [corporation] during the
31-16 period beginning with the day after the last date upon which net
31-17 taxable earned surplus on a previous report was based and ending
31-18 with its last accounting period ending date for federal income tax
31-19 purposes in the year before the year in which the report is
31-20 originally due.
31-21 SECTION 3.24. Section 171.154, Tax Code, is amended to read
31-22 as follows:
31-23 Sec. 171.154. PAYMENT TO COMPTROLLER. A taxable entity
31-24 [corporation] on which a tax is imposed by this chapter shall pay
31-25 the tax to the comptroller.
31-26 SECTION 3.25. Section 171.201, Tax Code, is amended to read
31-27 as follows:
31-28 Sec. 171.201. INITIAL REPORT. (a) Except as provided by
31-29 Section 171.2022, a taxable entity [corporation] on which the
31-30 franchise tax is imposed shall file an initial report with the
31-31 comptroller containing:
31-32 (1) information showing the financial condition of the
31-33 taxable entity [corporation] on the day that is the last day of a
31-34 calendar month and that is nearest to the end of the taxable
31-35 entity's [corporation's] first year of business;
31-36 (2) the name and address of each officer and director
31-37 of the taxable entity [corporation];
31-38 (3) the name and address of the agent of the taxable
31-39 entity [corporation] designated under Section 171.354; and
31-40 (4) other information required by the comptroller.
31-41 (b) The taxable entity [corporation] shall file the report
31-42 on or before the date the payment is due under Subsection (a) of
31-43 Section 171.152.
31-44 SECTION 3.26. Sections 171.202(a), (b), (c), (e), and (f),
31-45 Tax Code, are amended to read as follows:
31-46 (a) Except as provided by Section 171.2022, a taxable entity
31-47 [corporation] on which the franchise tax is imposed shall file an
31-48 annual report with the comptroller containing:
31-49 (1) financial information of the taxable entity
31-50 [corporation] necessary to compute the tax under this chapter;
31-51 (2) the name and address of each officer and director
31-52 of the taxable entity [corporation];
31-53 (3) the name and address of the agent of the taxable
31-54 entity [corporation] designated under Section 171.354; and
31-55 (4) other information required by the comptroller.
31-56 (b) The taxable entity [corporation] shall file the report
31-57 before May 16 of each year after the beginning of the regular
31-58 annual period. The report shall be filed on forms supplied by the
31-59 comptroller.
31-60 (c) The comptroller shall grant an extension of time to a
31-61 taxable entity [corporation] that is not required by rule to make
31-62 its tax payments by electronic funds transfer for the filing of a
31-63 report required by this section to any date on or before the next
31-64 November 15, if a taxable entity [corporation]:
31-65 (1) requests the extension, on or before May 15, on a
31-66 form provided by the comptroller; and
31-67 (2) remits with the request:
31-68 (A) not less than 90 percent of the amount of
31-69 tax reported as due on the report filed on or before November 15;
32-1 or
32-2 (B) 100 percent of the tax paid in the previous
32-3 year.
32-4 (e) The comptroller shall grant an extension of time for the
32-5 filing of a report required by this section by a taxable entity
32-6 [corporation] required by rule to make its tax payments by
32-7 electronic funds transfer to any date on or before the next August
32-8 15, if the taxable entity [corporation]:
32-9 (1) requests the extension, on or before May 15, on a
32-10 form provided by the comptroller; and
32-11 (2) remits with the request:
32-12 (A) not less than 90 percent of the amount of
32-13 tax reported as due on the report filed on or before August 15; or
32-14 (B) 100 percent of the tax paid in the previous
32-15 year.
32-16 (f) The comptroller shall grant an extension of time to a
32-17 taxable entity [corporation] required by rule to make its tax
32-18 payments by electronic funds transfer for the filing of a report
32-19 due on or before August 15 to any date on or before the next
32-20 November 15, if the taxable entity [corporation]:
32-21 (1) requests the extension, on or before August 15, on
32-22 a form provided by the comptroller; and
32-23 (2) remits with the request the difference between the
32-24 amount remitted under Subsection (e) and 100 percent of the amount
32-25 of tax reported as due on the report filed on or before November
32-26 15.
32-27 SECTION 3.27. Section 171.2022, Tax Code, is amended to read
32-28 as follows:
32-29 Sec. 171.2022. EXEMPTION FROM REPORTING REQUIREMENTS. A
32-30 taxable entity [corporation] that does not owe any tax under this
32-31 chapter for any period is not required to file a report under
32-32 Section 171.201, 171.202, or 171.2021. The exemption applies only
32-33 to a period for which no tax is due.
32-34 SECTION 3.28. Section 171.204, Tax Code, is amended to read
32-35 as follows:
32-36 Sec. 171.204. INFORMATION REPORT. To determine eligibility
32-37 for the exemption provided by Section 171.2022, or to determine the
32-38 amount of the franchise tax or the correctness of a franchise tax
32-39 report, the comptroller may require [an officer of] a taxable
32-40 entity [corporation] that may be subject to the tax imposed under
32-41 this chapter to file an information report with the comptroller
32-42 stating the amount of the taxable entity's [corporation's] taxable
32-43 capital and earned surplus, or any other information the
32-44 comptroller may request.
32-45 SECTION 3.29. Section 171.205, Tax Code, is amended to read
32-46 as follows:
32-47 Sec. 171.205. ADDITIONAL INFORMATION REQUIRED BY
32-48 COMPTROLLER. The comptroller may require a taxable entity
32-49 [corporation] on which the franchise tax is imposed to furnish to
32-50 the comptroller information from the taxable entity's
32-51 [corporation's] books and records that has not been filed
32-52 previously and that is necessary for the comptroller to determine
32-53 the amount of the tax.
32-54 SECTION 3.30. Section 171.206, Tax Code, is amended to read
32-55 as follows:
32-56 Sec. 171.206. CONFIDENTIAL INFORMATION. Except as provided
32-57 by Section 171.207 of this code, the following information is
32-58 confidential and may not be made open to public inspection:
32-59 (1) information that is obtained from a record or
32-60 other instrument that is required by this chapter to be filed with
32-61 the comptroller; or
32-62 (2) information, including information about the
32-63 business affairs, operations, profits, losses, or expenditures of a
32-64 taxable entity [corporation], obtained by an examination of the
32-65 books and records, officers, or employees of a taxable entity
32-66 [corporation] on which a tax is imposed by this chapter.
32-67 SECTION 3.31. Section 171.208, Tax Code, is amended to read
32-68 as follows:
32-69 Sec. 171.208. PROHIBITION OF DISCLOSURE OF INFORMATION. A
33-1 person, including a state officer or employee or a shareholder of a
33-2 taxable entity [corporation], who has access to a report filed
33-3 under this chapter may not make known in a manner not permitted by
33-4 law the amount or source of the taxable entity's [corporation's]
33-5 income, profits, losses, expenditures, or other information in the
33-6 report relating to the financial condition of the taxable entity
33-7 [corporation].
33-8 SECTION 3.32. Section 171.209, Tax Code, is amended to read
33-9 as follows:
33-10 Sec. 171.209. RIGHT OF OWNER [SHAREHOLDER] TO EXAMINE OR
33-11 RECEIVE REPORTS. If an owner in [a person owning at least one
33-12 share of outstanding stock of] a taxable entity [corporation] on
33-13 whom the franchise tax is imposed presents evidence of the
33-14 ownership to the comptroller, the person is entitled to examine or
33-15 receive a copy of an initial or annual report that is filed under
33-16 Section 171.201 or 171.202 of this code and that relates to the
33-17 taxable entity [corporation].
33-18 SECTION 3.33. Section 171.211, Tax Code, is amended to read
33-19 as follows:
33-20 Sec. 171.211. EXAMINATION OF [CORPORATE] RECORDS. To
33-21 determine the franchise tax liability of a taxable entity
33-22 [corporation], the comptroller may investigate or examine the
33-23 records of the taxable entity [corporation].
33-24 SECTION 3.34. The heading to Subchapter F, Chapter 171, Tax
33-25 Code, is amended to read as follows:
33-26 SUBCHAPTER F. FORFEITURE OF CORPORATE AND BUSINESS PRIVILEGES
33-27 SECTION 3.35. Subchapter F, Chapter 171, Tax Code, is
33-28 amended by adding Sections 171.260-171.275 to read as follows:
33-29 Sec. 171.260. FORFEITURE OF RIGHT TO TRANSACT BUSINESS:
33-30 LIMITED PARTNERSHIPS. The comptroller shall forfeit the right of a
33-31 domestic or foreign limited partnership subject to the tax imposed
33-32 by this chapter to transact business in this state if the limited
33-33 partnership:
33-34 (1) does not file, in accordance with this chapter and
33-35 before the 45th day after the date notice of forfeiture is mailed,
33-36 a report required by this chapter;
33-37 (2) does not pay, before the 45th day after the date
33-38 notice of forfeiture is mailed, a tax imposed by this chapter or
33-39 does not pay, before that date, a penalty imposed by this chapter
33-40 relating to that tax; or
33-41 (3) does not permit the comptroller to investigate or
33-42 examine the records of the limited partnership to determine the
33-43 limited partnership's liability under this chapter.
33-44 Sec. 171.261. EFFECTS OF FORFEITURE: LIMITED PARTNERSHIPS.
33-45 If the limited partnership's right to transact business is
33-46 forfeited under this subchapter:
33-47 (1) the limited partnership is denied the right to sue
33-48 in a court of this state; and
33-49 (2) each partner, whether a limited or general
33-50 partner, of the limited partnership is liable for a debt of the
33-51 limited partnership as provided by Section 171.264.
33-52 Sec. 171.262. SUIT ON CAUSE OF ACTION ARISING BEFORE
33-53 FORFEITURE: LIMITED PARTNERSHIPS. In a suit against a limited
33-54 partnership on a cause of action arising before the forfeiture of
33-55 the limited partnership's right to transact business, a court may
33-56 not grant affirmative relief to the limited partnership unless its
33-57 right to transact business is revived under this chapter.
33-58 Sec. 171.263. EXCEPTION TO FORFEITURE: LIMITED
33-59 PARTNERSHIPS. The forfeiture of a limited partnership's right to
33-60 transact business does not apply to the privilege to defend in a
33-61 suit to forfeit the limited partnership's certificate of limited
33-62 partnership or registration of foreign limited partnership.
33-63 Sec. 171.264. LIABILITY OF PARTNERS: LIMITED PARTNERSHIPS.
33-64 (a) If the right to transact business of a limited partnership is
33-65 forfeited for the failure to file a report or pay a tax or penalty,
33-66 each partner of the limited partnership, whether a limited or
33-67 general partner, is liable for each debt of the limited partnership
33-68 that is created or incurred in this state after the date on which
33-69 the report, tax, or penalty is due and before the right to transact
34-1 business is revived. The liability includes liability for any tax
34-2 or penalty imposed by this chapter on the limited partnership that
34-3 becomes due and payable after the date of the forfeiture.
34-4 (b) All partners are liable jointly and severally for the
34-5 liability imposed under this subchapter.
34-6 (c) If a limited partnership's certificate of limited
34-7 partnership or registration of foreign limited partnership and its
34-8 right to transact business are forfeited and revived under this
34-9 chapter, the liability under this section of a partner of the
34-10 limited partnership is not affected by the revival of the
34-11 certificate or registration and the right to transact business.
34-12 Sec. 171.265. NOTICE OF FORFEITURE: LIMITED PARTNERSHIPS.
34-13 (a) To forfeit the right to transact business of a limited
34-14 partnership, the comptroller must notify the limited partnership
34-15 that the forfeiture will occur without a judicial proceeding unless
34-16 the limited partnership:
34-17 (1) files, within the time established by Section
34-18 171.260, the report to which that section refers; or
34-19 (2) pays, within the time established by Section
34-20 171.260, the delinquent tax and penalty to which that section
34-21 refers.
34-22 (b) The notice must be written or printed and be verified by
34-23 the seal of the comptroller's office.
34-24 (c) The comptroller shall mail the notice to the limited
34-25 partnership at least 45 days before the forfeiture of the right to
34-26 transact business. The comptroller shall address the notice to the
34-27 limited partnership and mail it to the registered office of the
34-28 limited partnership, the last known address of the limited
34-29 partnership, or to any other place of business of the limited
34-30 partnership.
34-31 (d) The comptroller shall keep at the comptroller's office a
34-32 record of the date on which the notice is mailed. For the purposes
34-33 of this chapter, the notice and the record of the mailing date
34-34 constitute legal and sufficient notice of the forfeiture.
34-35 Sec. 171.266. JUDICIAL PROCEEDING NOT REQUIRED FOR
34-36 FORFEITURE: LIMITED PARTNERSHIPS. The forfeiture of the right to
34-37 transact business of a limited partnership is effected by the
34-38 comptroller without a judicial proceeding.
34-39 Sec. 171.267. REVIVAL OF RIGHT TO TRANSACT BUSINESS:
34-40 LIMITED PARTNERSHIPS. The comptroller shall revive the right to
34-41 transact business of a limited partnership if the limited
34-42 partnership, before the forfeiture of its certificate of limited
34-43 partnership or registration of foreign limited partnership, pays
34-44 any tax, penalty, or interest due under this chapter.
34-45 Sec. 171.268. REVOCATION OF REGISTRATION: LIMITED LIABILITY
34-46 PARTNERSHIPS. The comptroller shall certify to the secretary of
34-47 state for revocation and the secretary of state shall revoke the
34-48 registration of a limited liability partnership on which the tax
34-49 imposed by this chapter is imposed if the limited liability
34-50 partnership:
34-51 (1) does not file, in accordance with this chapter and
34-52 before the 45th day after the date notice of revocation is mailed,
34-53 a report required by this chapter;
34-54 (2) does not pay, before the 45th day after the date
34-55 notice of revocation is mailed, a tax imposed by this chapter or
34-56 does not pay, before that date, a penalty imposed by this chapter
34-57 relating to that tax; or
34-58 (3) does not permit the comptroller to investigate or
34-59 examine the records of the limited liability partnership to
34-60 determine the limited liability partnership's liability under this
34-61 chapter.
34-62 Sec. 171.269. EFFECTS OF REVOCATION: LIMITED LIABILITY
34-63 PARTNERSHIPS. If the limited liability partnership's registration
34-64 is revoked under this subchapter:
34-65 (1) the limited liability partnership is denied the
34-66 right to sue in a court of this state; and
34-67 (2) each partner of the limited liability partnership
34-68 is liable for a debt of the limited liability partnership as
34-69 provided by Section 171.272.
35-1 Sec. 171.270. SUIT ON CAUSE OF ACTION ARISING BEFORE
35-2 REVOCATION: LIMITED LIABILITY PARTNERSHIP. In a suit against a
35-3 limited liability partnership on a cause of action arising before
35-4 the revocation of the limited liability partnership's registration,
35-5 a court may not grant affirmative relief to the limited liability
35-6 partnership unless its registration is revived under this chapter.
35-7 Sec. 171.271. EXCEPTION TO REVOCATION: LIMITED LIABILITY
35-8 PARTNERSHIP. The revocation of a limited liability partnership's
35-9 registration does not apply to the privilege to defend in a suit to
35-10 revoke the limited liability partnership's registration.
35-11 Sec. 171.272. LIABILITY OF PARTNERS: LIMITED LIABILITY
35-12 PARTNERSHIP. (a) If the registration of a limited liability
35-13 partnership is revoked for the failure to file a report or pay a
35-14 tax or penalty, each partner of the limited liability partnership
35-15 is liable for each debt of the limited liability partnership that
35-16 is created or incurred in this state after the date on which the
35-17 report, tax, or penalty is due and before the registration is
35-18 revived. The liability includes liability for any tax or penalty
35-19 imposed by this chapter on the limited liability partnership that
35-20 becomes due and payable after the date of the revocation.
35-21 (b) All partners are liable jointly and severally for the
35-22 liability imposed under this subchapter.
35-23 (c) If a limited liability partnership's registration is
35-24 revoked and revived under this chapter, the liability under this
35-25 section of a partner of the limited liability partnership is not
35-26 affected by the revival of the certificate or registration and the
35-27 registration.
35-28 Sec. 171.273. NOTICE OF REVOCATION: LIMITED LIABILITY
35-29 PARTNERSHIPS. (a) To forfeit the registration of a limited
35-30 liability partnership, the comptroller must notify the limited
35-31 liability partnership that the revocation will occur without a
35-32 judicial proceeding unless the limited liability partnership:
35-33 (1) files, within the time established by Section
35-34 171.268, the report to which that section refers; or
35-35 (2) pays, within the time established by Section
35-36 171.268, the delinquent tax and penalty to which that section
35-37 refers.
35-38 (b) The notice must be written or printed and be verified by
35-39 the seal of the comptroller's office.
35-40 (c) The comptroller shall mail the notice to the limited
35-41 liability partnership at least 45 days before the revocation of the
35-42 registration. The comptroller shall address the notice to the
35-43 limited liability partnership and mail it to the last known address
35-44 of the limited liability partnership, or to any other place of
35-45 business of the limited liability partnership.
35-46 (d) The comptroller shall keep at the comptroller's office a
35-47 record of the date on which the notice is mailed. For the purposes
35-48 of this chapter, the notice and the record of the mailing date
35-49 constitute legal and sufficient notice of the revocation.
35-50 Sec. 171.274. JUDICIAL PROCEEDING NOT REQUIRED FOR
35-51 REVOCATION: LIMITED LIABILITY PARTNERSHIPS. The revocation of the
35-52 registration of a limited liability partnership is effected by the
35-53 comptroller without a judicial proceeding.
35-54 Sec. 171.275. REVIVAL OF REGISTRATION: LIMITED LIABILITY
35-55 PARTNERSHIPS. The comptroller shall revive the registration of a
35-56 limited liability partnership if the limited liability partnership
35-57 pays any tax, penalty, or interest due under this chapter.
35-58 SECTION 3.36. Subchapter G, Chapter 171, Tax Code, is
35-59 amended by adding Sections 171.318-171.326 to read as follows:
35-60 Sec. 171.318. GROUNDS FOR FORFEITURE OF CERTIFICATE OF
35-61 LIMITED PARTNERSHIPS OR REGISTRATION OF FOREIGN LIMITED
35-62 PARTNERSHIPS. It is a ground for the forfeiture of a limited
35-63 partnership's certificate or registration if:
35-64 (1) the right to transact business of the limited
35-65 partnership is forfeited under this chapter and the limited
35-66 partnership does not pay, before the 120th day after the date the
35-67 right to transact business is forfeited, the amount necessary for
35-68 the limited partnership to revive under this chapter its right to
35-69 transact business; or
36-1 (2) the limited partnership does not permit the
36-2 comptroller to investigate or examine the records of the limited
36-3 partnership to determine the limited partnership's liability under
36-4 this chapter.
36-5 Sec. 171.319. CERTIFICATION BY COMPTROLLER: LIMITED
36-6 PARTNERSHIPS. After the 120th day after the date that the right to
36-7 transact business of a limited partnership is forfeited under this
36-8 chapter, the comptroller shall certify the name of the limited
36-9 partnership to the secretary of state.
36-10 Sec. 171.320. FORFEITURE BY SECRETARY OF STATE: LIMITED
36-11 PARTNERSHIPS. The secretary of state shall forfeit the certificate
36-12 or registration of a limited partnership if:
36-13 (1) the secretary receives the comptroller's
36-14 certification under Section 171.319;
36-15 (2) the limited partnership does not revive its
36-16 forfeited right to transact business before the 120th day after the
36-17 date that the right to transact business was forfeited; and
36-18 (3) the limited partnership does not have assets from
36-19 which a judgment for any tax, penalty, or court costs imposed by
36-20 this chapter may be satisfied.
36-21 Sec. 171.321. JUDICIAL PROCEEDING NOT REQUIRED FOR
36-22 FORFEITURE BY SECRETARY OF STATE: LIMITED PARTNERSHIPS. The
36-23 forfeiture by the secretary of state of a limited partnership's
36-24 certificate or registration under this chapter is effected without
36-25 a judicial proceeding.
36-26 Sec. 171.322. RECORD OF FORFEITURE BY SECRETARY OF STATE:
36-27 LIMITED PARTNERSHIPS. The secretary of state shall effect a
36-28 forfeiture of a limited partnership's certificate or registration
36-29 under this chapter by inscribing on the limited partnership's
36-30 record in the secretary's office the words "Certificate Forfeited"
36-31 or "Registration Forfeited," the date on which this inscription is
36-32 made, and a citation to this chapter as authority for the
36-33 forfeiture.
36-34 Sec. 171.323. REVIVAL OF CERTIFICATE OF LIMITED PARTNERSHIPS
36-35 OR REGISTRATION OF FOREIGN LIMITED PARTNERSHIPS AFTER FORFEITURE BY
36-36 SECRETARY OF STATE. A limited partnership whose certificate or
36-37 registration is forfeited under this chapter by the secretary of
36-38 state is entitled to have its certificate or registration revived
36-39 and to have its right to transact business revived if:
36-40 (1) the limited partnership files each report that is
36-41 required by this chapter and that is delinquent;
36-42 (2) the limited partnership pays the tax, penalty, and
36-43 interest that is imposed by this chapter and that is due at the
36-44 time the request under Section 171.324 to set aside forfeiture is
36-45 made; and
36-46 (3) the forfeiture of the limited partnership's
36-47 certificate or registration is set aside in a proceeding under
36-48 Section 171.324.
36-49 Sec. 171.324. PROCEEDING TO SET ASIDE FORFEITURE BY
36-50 SECRETARY OF STATE: LIMITED PARTNERSHIPS. (a) If a limited
36-51 partnership's certificate or registration is forfeited under this
36-52 chapter by the secretary of state, a partner of the limited
36-53 partnership at the time of the forfeiture of the certificate or
36-54 registration or of the right to transact business of the limited
36-55 partnership may request in the name of the limited partnership that
36-56 the secretary of state set aside the forfeiture of the certificate
36-57 or registration.
36-58 (b) If a request is made, the secretary of state shall
36-59 determine if each delinquent report has been filed and any
36-60 delinquent tax, penalty, or interest has been paid. If each report
36-61 has been filed and the tax, penalty, or interest has been paid, the
36-62 secretary shall set aside the forfeiture of the limited
36-63 partnership's certificate or registration.
36-64 Sec. 171.325. RIGHT TO TRANSACT BUSINESS AFTER FORFEITURE BY
36-65 SECRETARY OF STATE IS SET ASIDE: LIMITED PARTNERSHIPS. If the
36-66 secretary of state sets aside under this chapter the forfeiture of
36-67 a limited partnership's certificate or registration, the
36-68 comptroller shall revive the right to transact business of the
36-69 limited partnership.
37-1 Sec. 171.326. USE OF LIMITED PARTNERSHIP NAME AFTER REVIVAL
37-2 OF CERTIFICATE OR REGISTRATION. If a limited partnership's
37-3 certificate or registration is forfeited under this chapter by the
37-4 secretary of state and if the limited partnership requests the
37-5 secretary to set aside the forfeiture under Section 171.324, the
37-6 limited partnership shall determine from the secretary whether the
37-7 limited partnership's name is available for use. If the name is
37-8 not available, the limited partnership shall file an amendment to
37-9 its certificate or application or adopt a new name for use in this
37-10 state as a precondition to reinstatement.
37-11 SECTION 3.37. Section 171.351, Tax Code, is amended to read
37-12 as follows:
37-13 Sec. 171.351. VENUE OF SUIT TO ENFORCE CHAPTER. Venue of a
37-14 civil suit against a taxable entity [corporation] to enforce this
37-15 chapter is either in a county where the taxable entity's
37-16 [corporation's] principal office is located according to its
37-17 charter or certificate of authority or in Travis County.
37-18 SECTION 3.38. Section 171.353, Tax Code, is amended to read
37-19 as follows:
37-20 Sec. 171.353. APPOINTMENT OF RECEIVER. If a court forfeits
37-21 a taxable entity's [corporation's] charter or certificate of
37-22 authority, the court may appoint a receiver for the taxable entity
37-23 [corporation] and may administer the receivership under the laws
37-24 relating to receiverships.
37-25 SECTION 3.39. Section 171.354, Tax Code, is amended to read
37-26 as follows:
37-27 Sec. 171.354. AGENT FOR SERVICE OF PROCESS. Each taxable
37-28 entity [corporation] on which a tax is imposed by this chapter
37-29 shall designate a resident of this state as the taxable entity's
37-30 [corporation's] agent for the service of process.
37-31 SECTION 3.40. Sections 171.362(a), (d), and (e), Tax Code,
37-32 are amended to read as follows:
37-33 (a) If a taxable entity [corporation] on which a tax is
37-34 imposed by this chapter fails to pay the tax when it is due and
37-35 payable or fails to file a report required by this chapter when it
37-36 is due, the taxable entity [corporation] is liable for a penalty of
37-37 five percent of the amount of the tax due.
37-38 (d) If a taxable entity [corporation] electing to remit
37-39 under Paragraph (A) of Subdivision (2) of Subsection (c) of Section
37-40 171.202 of this code remits less than the amount required, the
37-41 penalties imposed by this section and the interest imposed under
37-42 Section 111.060 of this code are assessed against the difference
37-43 between the amount required to be remitted under Paragraph (A) of
37-44 Subdivision (2) of Subsection (c) of Section 171.202 and the amount
37-45 actually remitted on or before May 15.
37-46 (e) If a taxable entity [corporation] remits the entire
37-47 amount required by Subsection (c) of Section 171.202 of this code,
37-48 no penalties will be imposed against the amount remitted on or
37-49 before November 15.
37-50 SECTION 3.41. Sections 171.363(a) and (b), Tax Code, are
37-51 amended to read as follows:
37-52 (a) A taxable entity [corporation] commits an offense if the
37-53 taxable entity [corporation] is subject to the provisions of this
37-54 chapter and the taxable entity [corporation] wilfully:
37-55 (1) fails to file a report;
37-56 (2) fails to keep books and records as required by
37-57 this chapter;
37-58 (3) files a fraudulent report;
37-59 (4) violates any rule of the comptroller for the
37-60 administration and enforcement of the provisions of this chapter;
37-61 or
37-62 (5) attempts in any other manner to evade or defeat
37-63 any tax imposed by this chapter or the payment of the tax.
37-64 (b) A person commits an offense if the person is an
37-65 accountant or an agent for or an officer or employee of a taxable
37-66 entity [corporation] and the person knowingly enters or provides
37-67 false information on any report, return, or other document filed by
37-68 the taxable entity [corporation] under this chapter.
37-69 SECTION 3.42. Section 171.401, Tax Code, is amended to read
38-1 as follows:
38-2 Sec. 171.401. REVENUE DEPOSITED IN GENERAL REVENUE FUND.
38-3 The revenue from the tax imposed by this chapter [on corporations]
38-4 shall be deposited to the credit of the general revenue fund.
38-5 SECTION 3.43. Section 171.501(a), Tax Code, is amended to
38-6 read as follows:
38-7 (a) A taxable entity [corporation] that has been certified a
38-8 qualified business as provided by Chapter 2303, Government Code,
38-9 may apply for and be granted a refund of franchise tax paid with an
38-10 initial or annual report if the governing body or bodies certify to
38-11 the Texas Department of Commerce that the business has created 10
38-12 or more new jobs in its enterprise zone held by qualified employees
38-13 during the calendar year that contains the end of the accounting
38-14 period on which the report is based. The Texas Department of
38-15 Commerce shall certify eligibility for any refund to the
38-16 comptroller.
38-17 SECTION 3.44. Section 171.652, Tax Code, is amended to read
38-18 as follows:
38-19 Sec. 171.652. CREDIT. A taxable entity [corporation] that
38-20 meets the eligibility requirements under this subchapter is
38-21 entitled to a credit in the amount allowed by this subchapter
38-22 against the tax imposed under this chapter.
38-23 SECTION 3.45. Section 171.653, Tax Code, is amended to read
38-24 as follows:
38-25 Sec. 171.653. CREDIT FOR WAGES PAID TO INMATE. (a) The
38-26 amount of the credit for wages paid by a taxable entity
38-27 [corporation] to an inmate is equal to 10 percent of that portion
38-28 of the wages paid that the department apportions to the state under
38-29 Section 497.004(b)(3), Government Code, as reimbursement for the
38-30 cost of the inmate's confinement.
38-31 (b) A taxable entity [corporation] is eligible for the
38-32 credit under this section only if it receives before the due date
38-33 of its franchise tax report for the privilege period for which the
38-34 credit is claimed a written certification from the department
38-35 stating the amount of the wages that the taxable entity
38-36 [corporation] paid to an inmate during the privilege period and the
38-37 amount of those wages that the department apportioned to the state
38-38 as reimbursement for the cost of the inmate's confinement.
38-39 (c) A taxable entity [corporation] is eligible for the
38-40 credit under this section only if the inmate for whom it is paid
38-41 has been continuously employed for not less than six months.
38-42 SECTION 3.46. Section 171.654, Tax Code, is amended to read
38-43 as follows:
38-44 Sec. 171.654. CREDIT FOR WAGES PAID TO EMPLOYEE WHO WAS AN
38-45 INMATE. (a) The amount of the credit for wages paid by a taxable
38-46 entity [corporation] to an employee who was employed by the taxable
38-47 entity [corporation] when the employee was an inmate is equal to 10
38-48 percent of that portion of the wages paid that, were the employee
38-49 still an inmate, the department would apportion to the state under
38-50 Section 497.004(b)(3), Government Code, as reimbursement for the
38-51 cost of the inmate's confinement.
38-52 (b) A taxable entity [corporation] is eligible for the
38-53 credit under this section only if:
38-54 (1) the employee who was formerly an inmate was
38-55 continuously employed for not less than six months while an inmate
38-56 and has been continuously employed by the taxable entity
38-57 [corporation] for at least one year after the date that the
38-58 employee was released from prison;
38-59 (2) the nature of the employment is substantially
38-60 similar to the employment the employee had with the taxable entity
38-61 [corporation] when the employee was an inmate or the employment
38-62 requires more skills or provides greater opportunities for the
38-63 employee;
38-64 (3) the taxable entity [corporation] has provided the
38-65 department a statement of the amount of wages paid the employee
38-66 during the accounting period on which the credit is computed; and
38-67 (4) the taxable entity [corporation] receives before
38-68 the due date of its franchise tax report for the privilege period
38-69 for which the credit is claimed a written certification from the
39-1 department stating the amount of the wages that, were the employee
39-2 still an inmate, the department would have apportioned to the state
39-3 as reimbursement for the cost of the inmate's confinement.
39-4 (c) A taxable entity [corporation] may claim a credit under
39-5 this section only for:
39-6 (1) wages paid an employee after the employee has been
39-7 employed by the taxable entity [corporation] for more than one year
39-8 after the date of the employee's release from prison; and
39-9 (2) wages paid the employee for not longer than one
39-10 year.
39-11 SECTION 3.47. Section 171.656, Tax Code, is amended to read
39-12 as follows:
39-13 Sec. 171.656. APPLICATION FOR CREDIT. (a) A taxable entity
39-14 [corporation] must apply for a credit under this subchapter on or
39-15 with the tax report for the period for which the credit is claimed.
39-16 (b) The comptroller shall promulgate a form for the
39-17 application for the credit. A taxable entity [corporation] must
39-18 use this form in applying for the credit.
39-19 SECTION 3.48. Section 171.657, Tax Code, is amended to read
39-20 as follows:
39-21 Sec. 171.657. PERIOD FOR WHICH CREDIT MAY BE CLAIMED. A
39-22 taxable entity [corporation] may claim a credit under this
39-23 subchapter for wages paid during an accounting period only against
39-24 the tax owed for the corresponding privilege period.
39-25 SECTION 3.49. Section 171.682, Tax Code, is amended to read
39-26 as follows:
39-27 Sec. 171.682. CREDIT. A taxable entity [corporation] that
39-28 meets the eligibility requirements under this subchapter is
39-29 entitled to a credit in the amount allowed by this subchapter
39-30 against the tax imposed under this chapter.
39-31 SECTION 3.50. Section 171.683, Tax Code, is amended to read
39-32 as follows:
39-33 Sec. 171.683. CREDIT FOR WAGES PAID TO ELIGIBLE CHILD.
39-34 (a) The amount of the credit for wages paid by a taxable entity
39-35 [corporation] to an eligible child is equal to 10 percent of that
39-36 portion of the wages the taxable entity [corporation] paid to the
39-37 eligible child or the commission for the benefit of the child.
39-38 (b) A taxable entity [corporation] is eligible for the
39-39 credit under this section only if it files, on or before the due
39-40 date of its franchise tax report for the privilege period for
39-41 which the credit is claimed, a written certification issued by the
39-42 commission stating the amount of the wages that the taxable entity
39-43 [corporation] paid to an eligible child or to the commission for
39-44 the benefit of the child during:
39-45 (1) the privilege period; and
39-46 (2) not more than six months of the preceding
39-47 privilege period for wages for which a credit has not previously
39-48 been claimed.
39-49 (c) A taxable entity [corporation] is eligible for the
39-50 credit under this section only if the eligible child to whom or for
39-51 whose benefit it pays wages has been continuously employed by the
39-52 taxable entity [corporation] for not less than six months.
39-53 SECTION 3.51. Section 171.684, Tax Code, is amended to read
39-54 as follows:
39-55 Sec. 171.684. CREDIT FOR WAGES PAID TO EMPLOYEE WHO WAS AN
39-56 ELIGIBLE CHILD. (a) The amount of the credit for wages paid by a
39-57 taxable entity [corporation] to an employee who was first employed
39-58 by the taxable entity [corporation] when the employee was an
39-59 eligible child is equal to 10 percent of the wages paid the
39-60 employee.
39-61 (b) A taxable entity [corporation] is eligible for the
39-62 credit under this section only if:
39-63 (1) the employee who was formerly an eligible child
39-64 was continuously employed for not less than six months while an
39-65 eligible child and has been continuously employed by the taxable
39-66 entity [corporation] for at least one year after the date that the
39-67 employee was released from commitment to the commission or released
39-68 under supervision by the commission; and
39-69 (2) the nature of the employment is substantially
40-1 similar to the employment the employee had with the taxable entity
40-2 [corporation] when the employee was an eligible child or the
40-3 employment requires more skills or provides greater opportunities
40-4 for the employee.
40-5 (c) A taxable entity [corporation] may claim a credit under
40-6 this section only for:
40-7 (1) wages paid an employee after the employee has been
40-8 employed by the taxable entity [corporation] for more than one year
40-9 after the earlier of the date of the employee's release from
40-10 commitment to the commission or release under supervision by the
40-11 commission; and
40-12 (2) wages paid the employee for not longer than one
40-13 year.
40-14 SECTION 3.52. Section 171.686, Tax Code, is amended to read
40-15 as follows:
40-16 Sec. 171.686. APPLICATION FOR CREDIT. (a) A taxable entity
40-17 [corporation] must apply for a credit under this subchapter on or
40-18 with the tax report for the period for which the credit is claimed.
40-19 (b) The comptroller shall promulgate a form for the
40-20 application for the credit. A taxable entity [corporation] must
40-21 use this form in applying for the credit.
40-22 SECTION 3.53. Section 171.687, Tax Code, is amended to read
40-23 as follows:
40-24 Sec. 171.687. PERIOD FOR WHICH CREDIT MAY BE CLAIMED. A
40-25 taxable entity [corporation] may claim a credit under this
40-26 subchapter for wages paid during an accounting period only against
40-27 the tax owed for the corresponding privilege period.
40-28 SECTION 3.54. Chapter 171, Tax Code, is amended by adding
40-29 Subchapter N to read as follows:
40-30 SUBCHAPTER N. TAX CREDIT FOR CONTRIBUTIONS TO
40-31 QUALIFIED EDUCATIONAL ORGANIZATIONS
40-32 Sec. 171.751. DEFINITIONS. In this subchapter:
40-33 (1) "Qualified educational organization" means a
40-34 nonprofit corporation organized for educational purposes in public
40-35 schools that is exempt from the franchise tax pursuant to Section
40-36 171.061, and that utilizes at least 80 percent of its total funds
40-37 for direct assistance to economically disadvantaged children
40-38 enrolled in Texas public schools.
40-39 (2) "Economically disadvantaged children" means
40-40 children enrolled or eligible for enrollment in the national school
40-41 lunch program for free or reduced-price lunch and enrolled in Texas
40-42 public schools.
40-43 Sec. 171.752. CREDIT. A taxable entity is entitled to a
40-44 credit in the amount allowed by this subchapter against the tax
40-45 imposed by this chapter for contributions made to a qualified
40-46 educational organization.
40-47 Sec. 171.753. AMOUNT OF CREDIT. The amount of the credit
40-48 for contributions made to a qualified educational organization is
40-49 25 percent of such contributions made during the privilege period.
40-50 Sec. 171.754. LIMITATIONS. (a) The amount of credit
40-51 allowable under this subchapter shall not exceed $25,000 for the
40-52 taxable entity claiming the credit.
40-53 (b) A taxable entity may claim a credit under this
40-54 subchapter only against the tax owed for the corresponding
40-55 privilege period. A credit allowed under this subchapter may not
40-56 be carried forward or backward or used to create a business loss
40-57 carryover.
40-58 Sec. 171.755. APPLICATION FOR CREDIT. (a) A corporation
40-59 must apply for the credit under this subchapter on or with the tax
40-60 report for the period for which the credit is claimed.
40-61 (b) The comptroller shall promulgate a form for the
40-62 application for the credit. A taxable entity must use this form in
40-63 applying for the credit.
40-64 Sec. 171.756. REGISTER OF QUALIFIED EDUCATIONAL
40-65 ORGANIZATIONS. (a) The comptroller shall promulgate a form to be
40-66 completed by educational organizations to determine whether such
40-67 organizations satisfy the requirements of Section 171.751(1).
40-68 (b) The comptroller shall maintain a registry of qualified
40-69 educational organizations.
41-1 (c) The comptroller may require any information necessary to
41-2 determine whether an educational organization satisfies the
41-3 requirements of Section 171.751(1).
41-4 SECTION 3.55. Section 3.03(a), Texas Revised Limited
41-5 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
41-6 is amended to read as follows:
41-7 (a) Except as provided by Subsection (d) of this section and
41-8 Subtitle F, Title 2, Tax Code, a limited partner is not liable for
41-9 the obligations of a limited partnership unless the limited
41-10 partner is also a general partner or, in addition to the exercise
41-11 of the limited partner's rights and powers as a limited partner,
41-12 the limited partner participates in the control of the business.
41-13 However, if the limited partner does participate in the control of
41-14 the business, the limited partner is liable only to persons who
41-15 transact business with the limited partnership reasonably
41-16 believing, based on the limited partner's conduct, that the limited
41-17 partner is a general partner.
41-18 SECTION 3.56. Section 9.01(a), Texas Revised Limited
41-19 Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes),
41-20 is amended to read as follows:
41-21 (a) Except as provided by Subtitles F and G, Title 2, Tax
41-22 Code, the [The] laws of the state under which a foreign limited
41-23 partnership is formed govern its organization and internal affairs
41-24 and the liability of its partners.
41-25 SECTION 3.57. Chapter 13, Texas Revised Limited Partnership
41-26 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended by
41-27 adding Section 13.10 to read as follows:
41-28 Sec. 13.10. FORFEITURE OF RIGHT TO TRANSACT BUSINESS OR
41-29 CANCELLATION OF CERTIFICATE OR REGISTRATION. (a) A limited
41-30 partnership that does not comply with Subtitle F, Title 2, Tax
41-31 Code, forfeits the right to transact business and is subject to
41-32 cancellation of its certificate or registration.
41-33 (b) Subject to Subtitles F and G, Title 2, Tax Code, the
41-34 comptroller may specify procedures for effecting the forfeiture or
41-35 cancellation and providing for relief from the forfeiture and
41-36 cancellation.
41-37 SECTION 3.58. Section 15(2), Texas Uniform Partnership Act
41-38 (Article 6132b, Vernon's Texas Civil Statutes), is amended to read
41-39 as follows:
41-40 (2) Except as provided by Subtitle F, Title 2, Tax
41-41 Code, a [A] partner in a registered limited liability partnership
41-42 is not individually liable for debts and obligations of the
41-43 partnership arising from errors, omissions, negligence,
41-44 incompetence, or malfeasance committed in the course of the
41-45 partnership business by another partner or a representative of the
41-46 partnership not working under the supervision or direction of the
41-47 first partner at the time the errors, omissions, negligence,
41-48 incompetence, or malfeasance occurred, unless the first partner:
41-49 (a) was directly involved in the specific
41-50 activity in which the errors, omissions, negligence, incompetence,
41-51 or malfeasance were committed by the other partner or
41-52 representative; or
41-53 (b) had notice or knowledge of the errors,
41-54 omissions, negligence, incompetence, or malfeasance by the other
41-55 partner or representative at the time of occurrence.
41-56 SECTION 3.59. Section 45-A, Texas Uniform Partnership Act
41-57 (Article 6132b, Vernon's Texas Civil Statutes), is amended by
41-58 adding Subsection (7) to read as follows:
41-59 (7) The secretary of state shall revoke registration on
41-60 notice from the comptroller that a registered limited liability
41-61 partnership has not complied with Subtitle F, Title 2, Tax Code.
41-62 SECTION 3.60. Section 3.08(a)(1), Texas Revised Partnership
41-63 Act (Article 6132b-3.08, Vernon's Texas Civil Statutes), is amended
41-64 to read as follows:
41-65 (1) Except as provided by Subtitle F, Title 2, Tax
41-66 Code, a [A] partner in a registered limited liability partnership
41-67 is not individually liable for debts and obligations of the
41-68 partnership arising from errors, omissions, negligence,
41-69 incompetence, or malfeasance committed while the partnership is a
42-1 registered limited liability partnership and in the course of the
42-2 partnership business by another partner or a representative of the
42-3 partnership not working under the supervision or direction of the
42-4 first partner unless the first partner:
42-5 (A) was directly involved in the specific
42-6 activity in which the errors, omissions, negligence, incompetence,
42-7 or malfeasance were committed by the other partner or
42-8 representative; or
42-9 (B) had notice or knowledge of the errors,
42-10 omissions, negligence, incompetence, or malfeasance by the other
42-11 partner or representative at the time of occurrence and then failed
42-12 to take reasonable steps to prevent or cure the errors, omissions,
42-13 negligence, incompetence, or malfeasance.
42-14 SECTION 3.61. Section 3.08(b), Texas Revised Partnership Act
42-15 (Article 6132b-3.08, Vernon's Texas Civil Statutes), is amended by
42-16 adding Subdivision (16) to read as follows:
42-17 (16) The secretary of state shall revoke registration
42-18 on notice from the comptroller that a registered limited liability
42-19 partnership has not complied with Subtitle F, Title 2, Tax Code.
42-20 SECTION 3.62. The following provisions of the Tax Code are
42-21 repealed:
42-22 (1) Section 171.056;
42-23 (2) Section 171.104;
42-24 (3) Section 171.107;
42-25 (4) Section 171.111; and
42-26 (5) Section 171.113.
42-27 SECTION 3.63. (a) Subject to other provisions of this
42-28 section, this article takes effect for initial or annual reports
42-29 originally due January 1, 1998, or later, and for final reports
42-30 originally due on the effective date of this Act or later.
42-31 (b) For an entity becoming subject to the franchise tax
42-32 under this article:
42-33 (1) no income or losses occurring before January 1,
42-34 1997, which would have been included in federal taxable income on a
42-35 federal period ending December 31, 1996, or earlier had the entity
42-36 been required to file a return for federal income tax purposes
42-37 through December 31, 1996, shall be considered for purposes of the
42-38 earned surplus component;
42-39 (2) for entities in existence on January 1, 1997,
42-40 which would have been subject to the franchise tax had this article
42-41 been in effect on January 1, 1997, the first report due under this
42-42 article will be either a final report, if applicable, or an annual
42-43 report due May 15, 1998; and
42-44 (3) for entities which would have become subject to
42-45 the franchise tax after January 1, 1997, even if this article had
42-46 been effective on January 1, 1997, the first report due under this
42-47 article will be an initial report or a final report, if applicable.
42-48 (c) For purposes of this article, an existing partnership
42-49 shall be considered as continuing if it is not terminated.
42-50 (d) A partnership shall be considered as terminated only if:
42-51 (1) no part of any business, financial operation, or
42-52 venture of the partnership continues to be carried on by any of its
42-53 partners in a partnership; or
42-54 (2) within a 12-month period there is a sale or
42-55 exchange of 50 percent or more of the total interest in partnership
42-56 capital and profits.
42-57 (e) In the case of a merger or consolidation of two or more
42-58 partnerships, the resulting partnership shall, for purposes of this
42-59 article, be considered the continuation of any merging or
42-60 consolidating partnership whose members own an interest of more
42-61 than 50 percent in the capital and profits of the resulting
42-62 partnership.
42-63 (f) In the case of a division of a partnership into two or
42-64 more partnerships, the resulting partnerships (other than any
42-65 resulting partnership the members of which had an interest of 50
42-66 percent or less in the capital and profits of the prior
42-67 partnership) shall, for purposes of this article, be considered a
42-68 continuation of the prior partnership.
43-1 ARTICLE 4. SALES TAX
43-2 SECTION 4.01. Section 151.0028, Tax Code, is amended by
43-3 adding Subsection (c) to read as follows:
43-4 (c) "Amusement services" includes the provision of a sports
43-5 or athletic event.
43-6 SECTION 4.02. Section 151.008, Tax Code, is amended to read
43-7 as follows:
43-8 Sec. 151.008. "SELLER" OR "RETAILER". (a) "Seller" or
43-9 "retailer" means a person engaged in the business of making sales
43-10 of taxable items of a kind the receipts from the sale of which are
43-11 included in the measure of the sales or use tax imposed by this
43-12 chapter.
43-13 (b) "Seller" and "retailer" include:
43-14 (1) a person in the business of making sales at
43-15 auction of tangible personal property owned by the person or by
43-16 another;
43-17 (2) a person who makes more than two sales of taxable
43-18 items during a 12-month period, including sales made in the
43-19 capacity of an assignee for the benefit of creditors or receiver or
43-20 trustee in bankruptcy;
43-21 (3) a person regarded by the comptroller as a seller
43-22 or retailer under Section 151.024 of this code;
43-23 (4) a hotel, motel, or owner or lessor of an office or
43-24 residential building or development that contracts and pays for
43-25 telecommunications services for resale to guests or tenants; and
43-26 (5) a person that has a physical presence in this
43-27 state and that purposefully avails itself of the benefits of this
43-28 state's market by soliciting sales from customers located in this
43-29 state by any means, including the distribution of catalogs,
43-30 periodicals, advertising flyers, electronic images, or other means
43-31 of advertising through print, billboard, radio, television, mail,
43-32 telegraphy, telephone, computer database, cable, optic, microwave,
43-33 or other communication system.
43-34 (c) A person has a physical presence in this state for
43-35 purposes of this chapter if any of the following conditions are
43-36 met:
43-37 (1) the person directly or indirectly owns real or
43-38 tangible property located in this state that is used for business
43-39 purposes, if the property has a value in excess of $1,000 and is
43-40 present in this state for more than 30 days during any 12-month
43-41 period; other than real or tangible property temporarily in this
43-42 state for the purpose of fabricating, processing, printing,
43-43 imprinting, or similar activities;
43-44 (2) the person or the person's representative
43-45 maintains a place of business in this state, including an office,
43-46 place of distribution, sales or sample room, warehouse, workshop,
43-47 or stock of goods or samples;
43-48 (3) the person or the person's representative permits
43-49 the person's customers to return their purchases to a location in
43-50 this state;
43-51 (4) the person or the person's representative makes
43-52 the person's catalogs, brochures, circulars, pamphlets, samples, or
43-53 other advertising material available at a fixed place of business
43-54 of the person or the person's representative located in this state;
43-55 (5) the person has a representative in this state who
43-56 regularly or systematically solicits or sells on the person's
43-57 behalf;
43-58 (6) the person has a representative in this state that
43-59 regularly or systematically engages in activities on the person's
43-60 behalf that:
43-61 (A) are significantly associated with the
43-62 person's ability to establish or maintain its market in this state;
43-63 (B) make possible the realization and
43-64 continuation of valuable relations between the person and its
43-65 customers;
43-66 (C) are directed at resolving problems regarding
43-67 the use of a product or service sold by the person to customers in
43-68 this state;
43-69 (D) are directed at obtaining or retaining the
44-1 good-will of the person's customers; or
44-2 (E) provide assistance to an in-state service
44-3 department in repairing a product sold by the person in this state;
44-4 (7) the person has a representative in this state that
44-5 regularly or systematically repairs, installs, services, or
44-6 maintains products sold by the person to customers located in this
44-7 state, or that offers technical advice or support with respect to
44-8 those products, or that holds out to be available to perform these
44-9 activities in accordance with a warranty provided by the person to
44-10 the person's customers located in this state; or
44-11 (8) the person regularly or systematically uses
44-12 trucks, cars, trailers, or other means of transportation that the
44-13 person owns or controls, directly or indirectly, to deliver in this
44-14 state products sold to customers.
44-15 (d) For purposes of this chapter, a person is considered as
44-16 owning property located in this state that is owned by any
44-17 corporation in which the person directly or constructively owns 50
44-18 percent or more of the total combined voting power of all classes
44-19 of stock of the corporation entitled to vote, ownership "by vote,"
44-20 or 50 percent or more of the total value of the stock of that
44-21 corporation, ownership "by value."
44-22 (e) In determining its ownership interests in a corporation,
44-23 the person shall apply, as adjusted, the constructive ownership
44-24 rules provided in Section 267(c) or Section 318(a), Internal
44-25 Revenue Code of 1986, as amended, employing whichever of those
44-26 sections results in the higher ownership percentage. The rules
44-27 provided in those sections shall be adjusted by replacing the term
44-28 "50 percent or more in value" with "50 percent or more in value or
44-29 50 percent or more of the total combined voting power of all
44-30 classes of stock entitled to vote."
44-31 (f) A person is considered as indirectly owning any real or
44-32 tangible property located in this state that is owned by any
44-33 partnership of which the person is a partner.
44-34 (g) A person is considered as indirectly owning any real or
44-35 tangible property located in this state that is owned by any trust
44-36 or estate of which it is a beneficiary.
44-37 (h) In determining whether a person indirectly owns real or
44-38 tangible property located within the state, Section 267(c) or
44-39 Section 318(a), Internal Revenue Code of 1986, as amended, shall be
44-40 applied by substituting the phrase "real or tangible property
44-41 located in the state" for the word "stock." Notwithstanding the
44-42 preceding substitution, Section 318(a)(2)(C), Internal Revenue Code
44-43 of 1986, as amended, shall be read as follows: "If 50 percent or
44-44 more of the stock of a corporation, by vote or value under
44-45 Subsection (e), is owned directly or indirectly by or for any
44-46 person, the corporation is considered as owning the property
44-47 located in this state that is owned directly or indirectly by or
44-48 for the person.
44-49 (i) In this section:
44-50 (1) "Representative" of a person includes an employee,
44-51 independent contractor, or agent of that person, other than an
44-52 independent agent acting as a freight forwarder or common carrier
44-53 in its own business, acting on behalf of that person, or any person
44-54 that is obligated to provide services or warranty repairs to the
44-55 customers of that person in accordance with a contractual
44-56 arrangement with that person.
44-57 (2) "Person" includes an individual, corporation,
44-58 limited liability company, partnership, firm, joint venture,
44-59 association, estate, trust, receiver, trustee in bankruptcy,
44-60 syndicate, or any other entity having legal status under the laws
44-61 of this state. [who engages in regular or systematic solicitation
44-62 of sales of taxable items in this state by the distribution of
44-63 catalogs, periodicals, advertising flyers, or other advertising, by
44-64 means of print, radio, or television media, or by mail, telegraphy,
44-65 telephone, computer data base, cable, optic, microwave, or other
44-66 communication system for the purpose of effecting sales of taxable
44-67 items.]
44-68 SECTION 4.03. Section 151.009, Tax Code, is amended to read
44-69 as follows:
45-1 Sec. 151.009. "TANGIBLE PERSONAL PROPERTY". "Tangible
45-2 personal property" means personal property that can be seen,
45-3 weighed, measured, felt, or touched or that is perceptible to the
45-4 senses in any other manner, and, for the purposes of this chapter,
45-5 the term includes a computer program and a telephone prepaid
45-6 calling card.
45-7 SECTION 4.04. Section 151.0103, Tax Code, is amended to read
45-8 as follows:
45-9 Sec. 151.0103. TELECOMMUNICATIONS SERVICES. (a) For the
45-10 purposes of this title only, "telecommunications services" means
45-11 the electronic or electrical transmission, conveyance, routing, or
45-12 reception of sounds, signals, data, or information utilizing wires,
45-13 cable, radio waves, microwaves, satellites, fiber optics, or any
45-14 other method now in existence or that may be devised, including but
45-15 not limited to long-distance telephone service. The term does not
45-16 include:
45-17 (1) the [The] storage of data or information for
45-18 subsequent retrieval or the processing, or reception and
45-19 processing, of data or information intended to change its form or
45-20 content; or
45-21 (2) the sale or use of a telephone prepaid calling
45-22 card.
45-23 (b) The sale or use of a telephone prepaid calling card is
45-24 considered to be a sale or use of tangible personal property. [are
45-25 not included in "telecommunications services."]
45-26 SECTION 4.05. Subchapter A, Chapter 151, Tax Code, is
45-27 amended by adding Section 151.01032 to read as follows:
45-28 Sec. 151.01032. "TELEPHONE PREPAID CALLING CARD".
45-29 "Telephone prepaid calling card" means a card or other item,
45-30 including an access code, that represents the right to make one or
45-31 more telephone calls for which payment is made in incremental
45-32 amounts and before the call is initiated.
45-33 SECTION 4.06. Subchapter B, Chapter 151, Tax Code, is
45-34 amended by adding Sections 151.0231 and 151.0232 to read as
45-35 follows:
45-36 Sec. 151.0231. PRODUCTION OF CUSTOMERS LIST. If the
45-37 comptroller has reason to believe that a seller or retailer does
45-38 not have a physical presence in this state as provided by Section
45-39 151.008, the comptroller may require the seller or retailer to
45-40 provide a report of all persons in this state to whom the seller or
45-41 retailer sold taxable goods or services during the previous
45-42 calendar year. The comptroller may set forth the conditions under
45-43 which the report is to be made, taking into account the manner in
45-44 which the seller or retailer normally maintains its records. The
45-45 report must include each purchaser's name and address and the
45-46 amount of the taxable goods or services purchased. The comptroller
45-47 may request a report by contacting the seller or retailer at the
45-48 seller's or retailer's last known business address. The
45-49 comptroller may share information obtained in a report filed under
45-50 this section with other tax authorities on a confidential basis.
45-51 Sec. 151.0232. REPORTING CONTRACTUAL ARRANGEMENTS. Any
45-52 vendor that has made arrangements for the service, maintenance, or
45-53 installation of its products in this state or for the performance
45-54 of warranty work on goods sold to customers located in this state
45-55 shall notify the comptroller of these arrangements within 30 days
45-56 of making those arrangements unless the vendor has registered as a
45-57 retailer engaged in business in this state within the meaning of
45-58 Section 151.106.
45-59 SECTION 4.07. Section 151.107(a), Tax Code, is amended to
45-60 read as follows:
45-61 (a) For the purpose of this subchapter and in relation to
45-62 the use tax, a retailer is engaged in business in this state if the
45-63 retailer:
45-64 (1) maintains, occupies, or uses in this state
45-65 permanently, temporarily, directly, or indirectly or through a
45-66 representative, [subsidiary or agent] by whatever name, an office,
45-67 place of distribution, sales or sample room or place, warehouse,
45-68 storage place, or any other place of business;
45-69 (2) has a representative[, agent, salesman, canvasser,
46-1 or solicitor] operating in this state [under the authority of the
46-2 retailer or its subsidiary] for the purpose of selling or
46-3 delivering or the taking of orders for a taxable item;
46-4 (3) derives rentals from a lease of tangible personal
46-5 property situated in this state;
46-6 (4) engages in regular or systematic solicitation of
46-7 sales of taxable items in this state by the distribution of
46-8 catalogs, periodicals, advertising flyers, electronic images, or
46-9 other advertising, by means of print, radio, or television media,
46-10 or by mail, telegraphy, telephone, computer data base, cable,
46-11 optic, microwave, or other communication system for the purpose of
46-12 effecting sales of taxable items, and has a physical presence in
46-13 this state as provided by Section 151.008(c);
46-14 (5) [solicits orders for taxable items by mail or
46-15 through other media and under federal law is subject to or
46-16 permitted to be made subject to the jurisdiction of this state for
46-17 purposes of collecting the taxes imposed by this chapter;]
46-18 [(6)] has a franchisee or licensee operating under its
46-19 trade name if the franchisee or licensee is required to collect the
46-20 tax under this section; or
46-21 (6) [(7)] otherwise does business in this state and
46-22 under federal law, as interpreted in the year the tax is imposed on
46-23 the retailer, is subject to or permitted to be made subject to the
46-24 jurisdiction of this state for purposes of collecting the taxes
46-25 imposed by this chapter.
46-26 SECTION 4.08. Section 151.3101, Tax Code, is amended by
46-27 adding Subsection (c) to read as follows:
46-28 (c) This section does not exempt:
46-29 (1) a sports or athletic event provided by an
46-30 institution of higher education or a private or independent
46-31 institution of higher education, as those terms are defined by
46-32 Section 61.003, Education Code; or
46-33 (2) a musical concert performance or other amusement
46-34 that is not solely for educational purposes if an institution of
46-35 higher education or a private or independent institution of higher
46-36 education, as those terms are defined by Section 61.003, Education
46-37 Code, contracts with an entity other than another institution of
46-38 higher education or a private or independent institution of higher
46-39 education for the provision of the amusement.
46-40 SECTION 4.09. Section 151.317(c)(2), Tax Code, is amended to
46-41 read as follows:
46-42 (2) "Commercial use" means use by a person engaged in
46-43 selling, warehousing, or distributing a commodity or a professional
46-44 or personal service, but does not include:
46-45 (A) use by a person engaged in:
46-46 (i) processing tangible personal property
46-47 for sale as tangible personal property, other than preparation or
46-48 storage of food for immediate consumption;
46-49 (ii) exploring for, producing, or
46-50 transporting, a material extracted from the earth;
46-51 (iii) agriculture, including dairy or
46-52 poultry operations and pumping for farm or ranch irrigation;
46-53 (iv) electrical processes such as
46-54 electroplating, electrolysis, and cathodic protection; [or]
46-55 (v) the off-wing processing, overhaul, or
46-56 repair of a jet turbine engine or its parts for a certificated or
46-57 licensed carrier of persons or property; or
46-58 (vi) providing, under contracts with or on
46-59 behalf of the United States government or foreign governments,
46-60 defense or national security-related electronics, classified
46-61 intelligence data processing and handling systems, or
46-62 defense-related platform modifications or upgrades; or
46-63 (B) a direct or indirect use, consumption, or
46-64 loss of electricity by an electric utility engaged in the purchase
46-65 of electricity for resale.
46-66 SECTION 4.10. Subchapter L, Chapter 151, Tax Code, is
46-67 amended by adding Sections 151.7091, 151.7092, and 151.7093 to read
46-68 as follows:
46-69 Sec. 151.7091. PENALTY FOR FAILING TO SUBMIT REPORT ON
47-1 REQUEST. (a) A seller or retailer commits an offense if the
47-2 seller or retailer fails to provide the report required by Section
47-3 151.0231 within 30 days after receiving the comptroller's request
47-4 for that information.
47-5 (b) An offense under this section is a Class C misdemeanor.
47-6 A separate offense is committed each day that this section is
47-7 violated.
47-8 Sec. 151.7092. PENALTY FOR FAILING TO NOTIFY COMPTROLLER.
47-9 (a) A seller or retailer commits an offense if the seller or
47-10 retailer fails to notify the comptroller as required by Section
47-11 151.0231 within 30 days after making arrangements for the service,
47-12 maintenance, or installation of its products in this state, or for
47-13 the performance of warranty work on goods sold to customers located
47-14 in this state.
47-15 (b) An offense under this section is a Class C misdemeanor.
47-16 A separate offense is committed each day that this section is
47-17 violated.
47-18 Sec. 151.7093. ENFORCEMENT. (a) The comptroller or
47-19 attorney general may file suit against a seller or retailer to
47-20 require the seller or retailer to file a report required by Section
47-21 151.0231 if the seller or retailer has failed to file a report as
47-22 required by Section 151.0231 within 30 days after receiving the
47-23 comptroller's request for that information.
47-24 (b) The comptroller or attorney general may file suit
47-25 against a vendor required to notify the comptroller under Section
47-26 151.0232 if the vendor does not notify the comptroller of
47-27 arrangements for the service, maintenance, or installation of its
47-28 products in this state or for the performance of warranty work on
47-29 goods sold to customers located in this state within 30 days of
47-30 making those arrangements.
47-31 SECTION 4.11. Subchapter M, Chapter 151, Tax Code, is
47-32 amended by adding Section 151.8015 to read as follows:
47-33 Sec. 151.8015. DISPOSITION OF CERTAIN REVENUE. (a) Not
47-34 later than the last day of the first month of each calendar
47-35 quarter, the comptroller shall compute the total amount of the
47-36 increased sales tax revenue that, during the preceding calendar
47-37 quarter, resulted from the amendments to Sections 151.008 and
47-38 151.107, and by the addition of Sections 151.0231, 151.0232,
47-39 151.7091, 151.7092, and 151.7093 by H.B. No. 4, Acts of the 75th
47-40 Legislature, Regular Session, 1997.
47-41 (b) The comptroller shall credit 50 percent of the amount
47-42 computed under Subsection (a) into a special account of the general
47-43 revenue fund. Money credited to the account may be used only by
47-44 the Texas Education Agency to provide grants for community based
47-45 adult literacy services.
47-46 SECTION 4.12. There is appropriated to the Texas Education
47-47 Agency the amounts deposited to the credit of the special account
47-48 described by Section 151.8015(b), Tax Code, as added by this
47-49 article, for use in providing grants for community based adult
47-50 literacy services.
47-51 SECTION 4.13. (a) Subchapter F, Chapter 111, Tax Code, is
47-52 repealed.
47-53 (b) The repeal of Subchapter F, Chapter 111, Tax Code, made
47-54 by this Act applies only to an application for a refund filed with
47-55 the comptroller on or after the effective date of this Act. An
47-56 application filed with the comptroller before the effective date of
47-57 this Act is covered by the law in effect immediately before the
47-58 effective date of this Act, and that law is continued in effect for
47-59 that purpose.
47-60 SECTION 4.14. (a) There are exempted from the taxes imposed
47-61 by Chapter 151, Tax Code, the receipts from the sale, use, storage,
47-62 rental, or other consumption in this state of items or services
47-63 that became subject to the taxes because of the terms of this
47-64 article and that are the subject of a written contract or bid
47-65 entered into on or before March 1, 1997.
47-66 (b) The exemption provided by this section expires January
47-67 1, 2000.
47-68 SECTION 4.15. Except as provided by this article, this
47-69 article takes effect October 1, 1997.
48-1 ARTICLE 5. LOTTERY REVENUE
48-2 SECTION 5.01. Section 466.015, Government Code, is amended
48-3 by amending Subsection (c) and adding Subsection (d) to read as
48-4 follows:
48-5 (c) The commission may adopt rules governing the
48-6 establishment and operation of the lottery, including rules
48-7 governing:
48-8 (1) the type of lottery games to be conducted;
48-9 (2) the price of each ticket;
48-10 (3) the number of winning tickets and amount of the
48-11 prize paid on each winning ticket, except that the total amount of
48-12 prizes awarded under this chapter may not exceed the amount
48-13 described in Subsection (d);
48-14 (4) the frequency of the drawing or selection of a
48-15 winning ticket;
48-16 (5) the number and types of locations at which a
48-17 ticket may be sold;
48-18 (6) the method to be used in selling a ticket;
48-19 (7) the use of vending machines or electronic or
48-20 mechanical devices of any kind, other than machines or devices that
48-21 dispense currency or coins as prizes;
48-22 (8) the manner of paying a prize to the holder of a
48-23 winning ticket;
48-24 (9) the investigation of possible violations of this
48-25 chapter or any rule adopted under this chapter;
48-26 (10) the means of advertising to be used for the
48-27 lottery;
48-28 (11) the qualifications of vendors of lottery services
48-29 or equipment;
48-30 (12) the confidentiality of information relating to
48-31 the operation of the lottery, including:
48-32 (A) trade secrets;
48-33 (B) security measures, systems, or procedures;
48-34 (C) security reports;
48-35 (D) bids or other information regarding the
48-36 commission's contracts, if disclosure of the information would
48-37 impair the commission's ability to contract for facilities, goods,
48-38 or services on terms favorable to the commission;
48-39 (E) personnel information unrelated to
48-40 compensation, duties, qualifications, or responsibilities; and
48-41 (F) information obtained by commission security
48-42 officers or investigators;
48-43 (13) the development and availability of a model
48-44 agreement governing the division of a prize among multiple
48-45 purchasers of a winning ticket purchased through a group purchase
48-46 or pooling arrangement;
48-47 (14) the criteria to be used in evaluating bids for
48-48 contracts for lottery facilities, goods, and services; [or]
48-49 (15) a competitive bidding process that complies with
48-50 Section 2155.132 and rules adopted under that section to award a
48-51 contract with a duration of not more than four years under Section
48-52 466.014(b); or
48-53 (16) any other matter necessary or desirable as
48-54 determined by the commission, to promote and ensure:
48-55 (A) the integrity, security, honesty, and
48-56 fairness of the operation and administration of the lottery; and
48-57 (B) the convenience of players and holders of
48-58 winning tickets.
48-59 (d) The total amount of lottery prizes that the commission
48-60 may award for all lottery games in any fiscal year may not exceed
48-61 an amount equal to the gross revenue from the sale of tickets in
48-62 that fiscal year multiplied by the percentage amount of lottery
48-63 prizes awarded for all lottery games in fiscal year 1997 as
48-64 determined by the comptroller minus an amount equal to five percent
48-65 of gross lottery revenue for the fiscal year in which the prizes
48-66 are being awarded.
48-67 SECTION 5.02. Section 466.355(b), Government Code, is
48-68 amended to read as follows:
48-69 (b) Money in the state lottery account may be used only for
49-1 the following purposes and shall be distributed as follows:
49-2 (1) the payment of prizes to the holders of winning
49-3 tickets;
49-4 (2) the payment of costs incurred in the operation and
49-5 administration of the lottery, including any fees received by a
49-6 lottery operator, provided that the costs incurred in a fiscal
49-7 biennium may not exceed an amount equal to 15 percent of the gross
49-8 revenue accruing from the sale of tickets in that biennium;
49-9 (3) the establishment of a pooled bond fund, lottery
49-10 prize reserve fund, unclaimed prize fund, and prize payment
49-11 account; and
49-12 (4) the balance, after creation of a reserve
49-13 sufficient to pay the amounts needed or estimated to be needed
49-14 under Subdivisions (1) through (3), to be transferred to the
49-15 foundation school [unobligated portion of the general revenue]
49-16 fund, on or before the 15th day of each month.
49-17 SECTION 5.03. This article takes effect September 1, 1997.
49-18 SECTION 5.04. (a) Except as provided by Subsection (b) of
49-19 this section, the change in law made to Section 466.015, Government
49-20 Code, by this article, applies to a game distributed to a lottery
49-21 sales agent on or after the effective date of this article. A game
49-22 distributed to a lottery sales agent before that date is governed
49-23 by the law in effect when the game was distributed to a lottery
49-24 sales agent, and that law is continued in effect for that purpose.
49-25 (b) In fiscal year 1998, the total amount of lottery prizes
49-26 that the Texas Lottery Commission may award under Section
49-27 466.015(d), Government Code, as added by this article, may not
49-28 exceed an amount equal to the gross revenue from the sale of
49-29 lottery tickets multiplied by the percentage amount of lottery
49-30 prizes awarded for all lottery games in fiscal year 1997 as
49-31 determined by the comptroller minus an amount equal to four and
49-32 one-half percent of gross lottery revenue for the 1998 fiscal year.
49-33 SECTION 5.05. The change in law made to Section 466.355,
49-34 Government Code, by this article applies only to a transfer from
49-35 the state lottery account made on or after the effective date of
49-36 this article.
49-37 ARTICLE 6. ALCOHOLIC BEVERAGE TAXES
49-38 SECTION 6.01. Sections 201.03, 201.04, and 201.09, Alcoholic
49-39 Beverage Code, are amended to read as follows:
49-40 Sec. 201.03. Tax on Distilled Spirits. (a) A tax is
49-41 imposed on the first sale of distilled spirits at the rate of $2.64
49-42 [$2.40] per gallon.
49-43 (b) The minimum tax imposed on packages of distilled spirits
49-44 containing two ounces or less is 5.5 [five] cents per package.
49-45 (c) Should packages containing less than one-half pint but
49-46 more than two ounces ever be legalized in this state, the minimum
49-47 tax imposed on each of these packages is $0.134 [$0.122].
49-48 Sec. 201.04. Tax on Vinous Liquor. (a) A tax is imposed on
49-49 the first sale of vinous liquor that does not contain over 14
49-50 percent of alcohol by volume at the rate of 22.44 [20.4] cents per
49-51 gallon.
49-52 (b) A tax is imposed on vinous liquor that contains more
49-53 than 14 percent of alcohol by volume at the rate of 44.88 [40.8]
49-54 cents per gallon.
49-55 (c) A tax is imposed on artificially carbonated and natural
49-56 sparkling vinous liquor at the rate of 56.76 [51.6] cents per
49-57 gallon.
49-58 Sec. 201.09. REFUND DUE ON DISPOSITION OUTSIDE OF STATE.
49-59 The holder of any permit authorizing the transportation of liquor
49-60 out of this state may apply to the commission for a refund of the
49-61 excise tax on liquor on which the state tax has been paid on proper
49-62 proof that the liquor was sold or disposed of outside of this
49-63 state. This section does not apply to the holder of an airline
49-64 beverage permit or passenger train permit.
49-65 SECTION 6.02. Section 201.42, Alcoholic Beverage Code, is
49-66 amended to read as follows:
49-67 Sec. 201.42. Tax on Ale and Malt Liquor. A tax is imposed
49-68 on the first sale of ale and malt liquor at the rate of $0.2178
49-69 [$0.198] per gallon.
50-1 SECTION 6.03. Section 203.01, Alcoholic Beverage Code, is
50-2 amended to read as follows:
50-3 Sec. 203.01. Tax on Beer. A tax is imposed on the first
50-4 sale of beer manufactured in this state or imported into this state
50-5 at the rate of $6.60 [six dollars] per barrel.
50-6 SECTION 6.04. (a) This article takes effect September 1,
50-7 1997.
50-8 (b) In addition to the holders of any alcoholic beverage
50-9 license or permit, the provisions of this article also apply to the
50-10 holder of a food and beverage certificate issued by the Texas
50-11 Alcoholic Beverage Commission.
50-12 ARTICLE 7. CIGARETTE AND TOBACCO PRODUCTS TAX
50-13 SECTION 7.01. Section 154.021(b), Tax Code, is amended to
50-14 read as follows:
50-15 (b) The tax rates are:
50-16 (1) $30.50 [$20.50] per thousand on cigarettes
50-17 weighing three pounds or less per thousand; and
50-18 (2) the rate provided by Subdivision (1) plus $2.10
50-19 per thousand on cigarettes weighing more than three pounds per
50-20 thousand.
50-21 SECTION 7.02. Section 155.0211(b), Tax Code, is amended to
50-22 read as follows:
50-23 (b) The tax rate for tobacco products other than cigars is
50-24 52.820 [35.213] percent of the manufacturer's list price, exclusive
50-25 of any trade discount, special discount, or deal.
50-26 SECTION 7.03. This article takes effect September 1, 1997.
50-27 ARTICLE 8. INTERSTATE MOTOR CARRIER SALES AND USE TAX
50-28 SECTION 8.01. Subtitle E, Title 2, Tax Code, is amended by
50-29 adding Chapter 157 to read as follows:
50-30 CHAPTER 157. INTERSTATE MOTOR CARRIER SALES AND USE TAX
50-31 SUBCHAPTER A. GENERAL PROVISIONS
50-32 Sec. 157.001. DEFINITIONS. In this chapter:
50-33 (1) "Person" includes an individual, firm,
50-34 partnership, joint venture, corporation, association, organization,
50-35 or group or combination acting as a unit.
50-36 (2) "Motor carrier" means:
50-37 (A) a person who transports persons or property
50-38 for hire or who holds himself out to the public as willing to
50-39 transport persons or property for hire by motor vehicle;
50-40 (B) a person who leases, rents, or otherwise
50-41 provides a motor vehicle for the use of others and who in
50-42 connection therewith in the regular course of business provides,
50-43 procures, or arranges for, directly, indirectly, or by course of
50-44 dealing, a driver or operator therefor;
50-45 (C) a person who operates a motor vehicle over
50-46 the public highways of this state for the purpose of transporting
50-47 persons or property when the transportation is incidental to a
50-48 primary business enterprise, other than transportation, in which
50-49 such person is engaged; or
50-50 (D) a person who engages in transportation by
50-51 motor vehicle of persons or property for compensation, other than
50-52 transportation referred to in Paragraph (A) of this subdivision,
50-53 under continuing contracts with one person or a limited number of
50-54 persons either:
50-55 (i) for the furnishing of transportation
50-56 services through the assignment of motor vehicles for a continuing
50-57 period of time to the exclusive use of each person served; or
50-58 (ii) for the furnishing of transportation
50-59 services designed to meet the distinct and peculiar needs of each
50-60 individual customer which are not normally provided by a common
50-61 carrier.
50-62 (3) "Interstate motor vehicle" means a motor vehicle
50-63 whose registration fees could be apportioned if the motor vehicle
50-64 were registered in a state or province of a country which was a
50-65 member of the International Registration Plan. For the purposes of
50-66 this chapter, a bus used in transportation of chartered parties
50-67 shall be considered an interstate motor vehicle if it meets all the
50-68 standards required of other motor vehicles for apportioned
50-69 registration fees.
51-1 (4) "Truck-tractor" means every motor vehicle designed
51-2 or used primarily for drawing other vehicles, and not so
51-3 constructed as to carry a load other than a part of the weight of
51-4 the vehicle and load so drawn.
51-5 (5) "Commercial motor vehicle" means any motor vehicle
51-6 (other than a motorcycle or passenger car) designed or used
51-7 primarily for the transportation of property or persons.
51-8 (6) "Trailer" means every vehicle designed or used to
51-9 carry its load wholly on its own structure and to be drawn by a
51-10 motor vehicle.
51-11 (7) "Semitrailer" means a vehicle of the trailer type
51-12 so designed or used in conjunction with a motor vehicle that some
51-13 part of its own weight and that of its load rests upon or is
51-14 carried by another vehicle, including a van, flatbed, tank,
51-15 dumpster, dolly, jeep, stinger, auxiliary axle, or converter gear.
51-16 (8) "Trip-lease equipment" means a motor vehicle
51-17 leased between any person and a motor carrier on a single trip
51-18 basis and driven by the lessor or an employee of the lessor.
51-19 (9) "Purchase" means a lease of or a transfer of title
51-20 to a motor vehicle, trailer, or semitrailer for consideration.
51-21 (10) "Preceding year" means the period of 12
51-22 consecutive calendar months immediately prior to January 1 or any
51-23 other day that the comptroller may designate.
51-24 (11) "Lease" means an agreement by an owner of a motor
51-25 vehicle, trailer, or semitrailer to give to another for longer than
51-26 180 days under a single agreement exclusive use of the vehicle
51-27 without a driver for consideration.
51-28 (Sections 157.002-157.100 reserved for expansion
51-29 SUBCHAPTER B. IMPOSITION OF TAX
51-30 Sec. 157.101. TAXES IMPOSED. Sales and use taxes are
51-31 imposed on interstate motor vehicles, trailers, and semitrailers:
51-32 (1) purchased in this state or purchased outside this
51-33 state and brought into this state by a motor carrier that is a
51-34 resident of this state or is domiciled or doing business in this
51-35 state;
51-36 (2) hired with a driver by a motor carrier that is a
51-37 resident of this state or is domiciled or doing business in this
51-38 state to transport persons or property over the carrier's routes
51-39 and under the authority of the carrier's permits; or
51-40 (3) contracted by a motor carrier that is a resident
51-41 of this state or is domiciled or doing business in this state for
51-42 use as trip-leased equipment.
51-43 Sec. 157.102. TAX RATE. (a) Except as provided in
51-44 Subsections (c), (d), and (e) of this section, the payment of the
51-45 tax is the responsibility of the motor carrier operating the motor
51-46 vehicle and the tax rate on an interstate motor vehicle shall be
51-47 calculated as follows:
51-48 (1) The carrier's total miles operated in Texas by
51-49 interstate truck-tractors and interstate commercial motor vehicles
51-50 during the preceding year is divided by the total miles operated by
51-51 the same interstate truck-tractors and interstate commercial motor
51-52 vehicles operated in Texas during the preceding year;
51-53 (2) The percentage calculated in Subdivision (1) of
51-54 this subsection is multiplied by 6-1/4 percent of the purchase
51-55 price of each interstate motor vehicle purchased in Texas or first
51-56 brought into the State of Texas during the reporting period. If a
51-57 lease price is used in this formula, charges for gasoline,
51-58 maintenance, insurance, and pass-through charges, such as federal
51-59 highway use tax and fees for licensing and registration, may be
51-60 excluded from the lease price;
51-61 (3)(A) From the amount computed in Subdivision (2) of
51-62 this subsection may be deducted the amount of sales and use tax
51-63 paid on the interstate motor vehicle multiplied by the formula in
51-64 Subdivision (1) of this subsection;
51-65 (B) If an operator is paying sales or use tax on
51-66 lease payments, he may take the credit allowed by Paragraph (A) of
51-67 this subdivision on a quarterly basis.
51-68 (b) If a motor carrier has not operated in Texas during the
51-69 preceding year, it shall estimate the miles it will drive during
52-1 the year and use the estimate in the calculations set forth in
52-2 Subsection (a) of this section. The carrier shall adjust any
52-3 overpayments or underpayments of tax based on actual mileage in the
52-4 first reporting period after a year of operation.
52-5 (c)(1) The payment of the tax is the responsibility of the
52-6 motor carriers operating the motor vehicle, and the tax rate on an
52-7 interstate trailer or semitrailer being purchased or first brought
52-8 into Texas during a reporting period shall be calculated as
52-9 follows:
52-10 (A) The number of truck-tractors operated in
52-11 Texas by the motor carrier during the reporting period is divided
52-12 by the total number of truck-tractors operated by a motor carrier
52-13 in the reporting period;
52-14 (B) The percentage calculated in Paragraph (A)
52-15 of this subdivision is multiplied by 6-1/4 percent of the purchase
52-16 price of all trailers and semitrailers purchased during the
52-17 reporting period;
52-18 (C) The amount calculated in Paragraph (B) of
52-19 this subdivision is multiplied by the formula in Subsection (a)(1)
52-20 of this section;
52-21 (D) From the amount calculated in Paragraph (C)
52-22 of this subdivision shall be deducted the amount of sales and use
52-23 taxes paid on all trailers and semitrailers purchased in the
52-24 reporting period multiplied by the percentages calculated in
52-25 Paragraph (A) of this subdivision and in Subsection (a)(1) of this
52-26 section;
52-27 (2) However, if the motor carrier can prove that the
52-28 actual number of trailers or semitrailers being purchased in Texas
52-29 or first brought into Texas during a reporting period is less than
52-30 the number under the formula in Subsection (c)(1) of this section,
52-31 the motor carrier may pay tax on the lesser number using the
52-32 formula in Subsection (a) of this section. If a motor carrier
52-33 chooses to use the actual number of trailers or semitrailers
52-34 purchased in Texas or first brought into Texas during a reporting
52-35 period and then uses the formula for other reporting periods, the
52-36 motor carrier must remit tax on trailers and semitrailers purchased
52-37 during the period it used the actual count when the trailers or
52-38 semitrailers are first brought into the state.
52-39 (d) If a motor carrier contracts to hire an interstate motor
52-40 vehicle with a driver to transport persons or property over the
52-41 carrier's routes and under the authority of the carrier's permits,
52-42 the tax rate is $25 per truck-tractor per contract and $25 per
52-43 trailer or semitrailer per contract and is the responsibility of
52-44 the motor carrier operating the motor vehicle. However, if a sales
52-45 and use tax of at least 6-1/4 percent of the purchase price of the
52-46 motor vehicle has been paid or if tax under Subsection (a), (b), or
52-47 (c) of this section has been paid, no tax is due on the vehicle
52-48 under this subsection. This subsection may not be utilized by a
52-49 motor carrier contracting with a person being controlled or having
52-50 controlling interest in the motor carrier. Controlling interest is
52-51 defined as 50 percent of ownership.
52-52 (e) If a motor carrier contracts to use trip-leased
52-53 equipment, the tax rate is $5 per motor vehicle per contract and is
52-54 the responsibility of the motor carrier operating the motor
52-55 vehicle. However, if a sales and use tax of at least 6-1/4 percent
52-56 of the purchase price of the motor vehicle has been paid or if tax
52-57 under Subsection (a) of this section has been paid, no tax is due
52-58 on the vehicle under this subsection. This subsection may not be
52-59 utilized by a motor carrier contracting with a person being
52-60 controlled or having controlling interest in the motor carrier.
52-61 Controlling interest is defined as 50 percent of ownership.
52-62 (Sections 157.103-157.200 reserved for expansion)
52-63 SUBCHAPTER C. ENFORCEMENT AND COLLECTION
52-64 Sec. 157.201. PERMITS. (a) Motor carriers required to pay
52-65 tax under this chapter shall be permitted by the comptroller.
52-66 (b) The permit may be used by the motor carrier to register
52-67 motor vehicles, trailers, and semitrailers with the county tax
52-68 assessor-collector without paying the motor vehicle sales and use
52-69 tax under Chapter 152 of this code if the motor vehicle is being
53-1 registered as an apportioned motor vehicle or if the motor vehicle
53-2 is a bus used in the interstate transportation of chartered
53-3 parties.
53-4 (c) Lessors may title an interstate motor vehicle, trailer,
53-5 and semitrailer leased for periods in excess of 180 days under the
53-6 permit authority of the motor carrier operating the vehicle without
53-7 payment of taxes imposed by Chapter 152 of this code, if the motor
53-8 vehicle is being registered as an apportioned motor vehicle or if
53-9 the motor vehicle is a bus used in the interstate transportation of
53-10 chartered parties.
53-11 Sec. 157.202. REPORTS. (a) The motor carriers subject to
53-12 the provisions of this chapter shall report and pay the tax to the
53-13 comptroller quarterly on or before the last day of the month
53-14 succeeding each calendar quarter.
53-15 (b) Notwithstanding the provisions of Subsection (a) of this
53-16 section, the comptroller may prescribe the date and period for
53-17 filing reports and payments in order to facilitate the collection
53-18 of the tax including a longer reporting period for motor carriers
53-19 owing a minimal amount of tax.
53-20 Sec. 157.203. RECORDS. Motor carriers are required to keep
53-21 records and supporting documents including mileage records
53-22 regarding the payment of motor carrier sales and use tax in such
53-23 form as the comptroller may reasonably require. The motor carriers
53-24 must keep the records for at least three years.
53-25 Sec. 157.204. PENALTY AND INTEREST. Any person who fails to
53-26 timely pay the tax required by this chapter forfeits five percent
53-27 of the amount due as a penalty, and after the first 30 days,
53-28 forfeits an additional five percent. The penalty may never be less
53-29 than $1. Delinquent taxes shall draw interest at the rate provided
53-30 by Section 111.060, beginning 60 days from the date due.
53-31 Sec. 157.205. ENFORCEMENT BY COMPTROLLER; RULES AND
53-32 REGULATIONS. (a) The comptroller shall enforce the provisions of
53-33 this chapter and may prescribe, adopt, and enforce rules relating
53-34 to the administration and enforcement of this chapter.
53-35 (b) The comptroller may promulgate such forms as are
53-36 necessary for the administration and enforcement of this chapter.
53-37 SECTION 8.02. It is the intent of the legislature that
53-38 Chapter 157, Tax Code, be reenacted to continue that chapter in
53-39 effect without interruption as it exists on August 31, 1997,
53-40 notwithstanding the repeal of that chapter by Section 31(b),
53-41 Chapter 705, Acts of the 74th Legislature, Regular Session, 1995.
53-42 SECTION 8.03. This article takes effect September 1, 1997.
53-43 ARTICLE 9. INTERIOR DESIGN PROFESSIONAL FEE
53-44 SECTION 9.01. Article 249e, Revised Statutes, is amended by
53-45 adding Section 6A to read as follows:
53-46 Sec. 6A. INCREASE IN FEES. (a) Each of the following fees
53-47 imposed by Section 6 of this article is increased by $200:
53-48 (1) registration application fee;
53-49 (2) annual registration renewal fee; and
53-50 (3) reciprocal registration fee.
53-51 (b) Of the fee increase collected, $50 shall be deposited to
53-52 the credit of the foundation school fund and $150 shall be
53-53 deposited to the credit of the general revenue fund. This
53-54 subsection applies to the disposition of each fee increase
53-55 regardless of any other provision of law providing for a different
53-56 disposition of funds.
53-57 SECTION 9.02. This article takes effect September 1, 1997,
53-58 and applies to a fee imposed on or after that date. A fee imposed
53-59 before the effective date of this article is governed by the law in
53-60 effect on that date, and that law is continued in effect for that
53-61 purpose.
53-62 ARTICLE 10. COIN-OPERATED MACHINES
53-63 SECTION 10.01. Article 8801, Revised Statutes, is amended by
53-64 amending Subdivisions (3) and (6) and adding Subdivision (8) to
53-65 read as follows:
53-66 (3) The term "coin-operated machine" means every
53-67 machine or device of any kind or character that [which] is operated
53-68 by or with coins, or metal slugs, tokens or checks, "music
53-69 coin-operated machines," "service coin-operated machines,"
54-1 "cash-dispensing machines," and "skill or pleasure coin-operated
54-2 machines" as those terms are hereinafter defined, shall be included
54-3 in such terms.
54-4 (6) The term "service coin-operated machines" means
54-5 [every pay toilet, pay telephone and all other] machines or devices
54-6 which dispense service only and not merchandise, music, skill or
54-7 pleasure and includes coin-operated lockers.
54-8 (8) The term "cash-dispensing machine" means an
54-9 automated or electronic machine that, on insertion of a properly
54-10 coded card, the entry of data through a keyboard, or both,
54-11 dispenses currency or cash. The term does not include a machine
54-12 used in the retail purchase of tangible personal property without
54-13 regard to whether the purchase includes an amount, received in
54-14 cash, over and above the sales price of the items purchased.
54-15 SECTION 10.02. Article 8802(1), Revised Statutes, is amended
54-16 to read as follows:
54-17 (1) Every "owner", save an owner holding an import
54-18 license and holding coin-operated machines solely for re-sale, who
54-19 exhibits, displays, or who permits to be exhibited or displayed in
54-20 this State any "coin-operated machine" shall pay, and there is
54-21 hereby levied on each "coin-operated machine", as defined herein in
54-22 Article 8801, except as are exempt herein, an annual occupation tax
54-23 of $60.00. In lieu of the $60.00 occupation tax, an annual
54-24 occupation tax of $30.00 is imposed on each coin-operated locker.
54-25 An annual occupation tax of $100 is imposed on "cash-dispensing
54-26 machines." The tax shall be paid to the comptroller by cashier's
54-27 check or money order. The annual tax levied by this chapter may be
54-28 collected by the comptroller on a quarterly basis. The comptroller
54-29 may establish procedures for quarterly collection and set due dates
54-30 for the tax payments. The tax due from the owner of a
54-31 coin-operated machine first exhibited or displayed in this State
54-32 later than March 31 shall be prorated on a quarterly basis, with
54-33 one-fourth of the annual tax due for each quarter or portion of a
54-34 quarter remaining in the calendar year. No refund or credit of the
54-35 annual tax levied by this chapter may be allowed to any owner who
54-36 ceases the exhibition or display of any coin-operated machine prior
54-37 to the end of any calendar year. Subtitle B, Title 2, Tax Code,
54-38 applies to the administration, collection, and enforcement of the
54-39 taxes, penalties, and interest imposed by this chapter.
54-40 SECTION 10.03. Article 8803, Revised Statutes, is amended to
54-41 read as follows:
54-42 Art. 8803. EXEMPTIONS FROM TAX. The following machines are
54-43 exempt from the tax under this chapter:
54-44 (1) machines selling newspapers;
54-45 (2) pay toilets;
54-46 (3) a machine the sales of which are exempted by
54-47 Section 151.305, Tax Code;
54-48 (4) machines that provide change only if no charge is
54-49 made for the service;
54-50 (5) machines dispensing pressurized air;
54-51 (6) coin-operated vacuum cleaners;
54-52 (7) laundromat machines used to wash or dry clothes;
54-53 and
54-54 (8) any machine dispensing an item or providing a
54-55 service that is subject to:
54-56 (A) the sales and use tax under Chapter 151, Tax
54-57 Code;
54-58 (B) the cigarette tax under Chapter 154, Tax
54-59 Code;
54-60 (C) the cigars and tobacco products tax under
54-61 Chapter 155, Tax Code; or
54-62 (D) any other state tax excluding ad valorem
54-63 taxes and franchise taxes [Gas meters, pay telephones, pay toilets,
54-64 food vending machines, confection vending machines, beverage
54-65 vending machines, merchandise vending machines, and cigarette
54-66 vending machines which are now subject to an occupation or gross
54-67 receipts tax, stamp vending machines, and "service coin-operated
54-68 machines," as that term is defined, are expressly exempt from the
54-69 tax levied herein, and the other provisions of this Chapter].
55-1 SECTION 10.04. This article takes effect October 1, 1997.
55-2 ARTICLE 11. COST CONTROL COMMITTEE
55-3 SECTION 11.01. Subtitle B, Title 10, Government Code, is
55-4 amended by adding Chapter 2059 to read as follows:
55-5 CHAPTER 2059. GOVERNOR'S COMMITTEE ON COST CONTROL
55-6 Sec. 2059.001. DEFINITION. In this chapter, "state agency":
55-7 (1) means an office, department, commission, or other
55-8 agency in the executive branch of state government that is created
55-9 by the constitution or a state statute and that has statewide
55-10 jurisdiction; and
55-11 (2) does not include the office of the lieutenant
55-12 governor.
55-13 Sec. 2059.002. COMMITTEE COMPOSITION. (a) The Governor's
55-14 Private Sector Committee on Cost Control in State Government is
55-15 established under Section 31a, Article III, Texas Constitution.
55-16 The committee is composed of nine members appointed by the
55-17 governor. A member of the committee must have the qualifications
55-18 determined by the governor to be of benefit to the committee in
55-19 administering its duties. As soon as possible after September 1,
55-20 1997, the governor shall appoint a number of members to the
55-21 committee that is sufficient to allow the committee to begin its
55-22 work.
55-23 (b) A member of the committee serves at the will of the
55-24 governor.
55-25 (c) A person may not serve as a member of the committee if
55-26 the person is required to register as a lobbyist under Chapter 305
55-27 because of the person's activities for compensation on behalf of a
55-28 profession related to the operation of the committee.
55-29 Sec. 2059.003. OFFICERS; COMPENSATION; MEETINGS. (a) The
55-30 governor shall designate a presiding officer from among the members
55-31 of the committee. The committee may elect other officers from its
55-32 members as the committee considers appropriate.
55-33 (b) A member of the committee may not receive compensation
55-34 for service on the committee.
55-35 (c) The committee shall meet at the call of the governor or
55-36 of the presiding officer or as provided by rule of the governor's
55-37 office. The committee shall hold its first meeting not later than
55-38 October 1, 1997.
55-39 Sec. 2059.004. DUTIES. (a) The committee shall study how
55-40 to control costs in state agencies and consider cost-control
55-41 methods used in the private sector. The committee shall then advise
55-42 the governor, the legislature, and the governing bodies of state
55-43 agencies about improving management and reducing costs.
55-44 (b) The committee shall conduct in-depth reviews of the
55-45 operations of state agencies, and assess state agencies' functions
55-46 using activity-based costing, as a basis for evaluating potential
55-47 improvements in state agency operations.
55-48 (c) In performing its duties, the committee shall consider
55-49 providing recommendations about:
55-50 (1) opportunities for increased efficiency and reduced
55-51 costs in state agencies that can be accomplished through
55-52 legislation or through executive branch action;
55-53 (2) situations in which managerial accountability can
55-54 be enhanced and administrative control can be improved;
55-55 (3) opportunities for short-term and long-term
55-56 managerial improvements;
55-57 (4) governmental expenditures, indebtedness, and
55-58 personnel management; and
55-59 (5) specific situations in which further study would
55-60 be justified by the potential savings.
55-61 (d) The committee shall hold at least five public meetings
55-62 in various locations around the state.
55-63 Sec. 2059.005. AGENCY COOPERATION. The administrative head
55-64 of a state agency shall provide to the committee information that
55-65 is not excepted from required public disclosure under Chapter 552
55-66 that the committee requests in performing its duties, including
55-67 information relating to the structure, organization, personnel, and
55-68 operations of the agency.
55-69 Sec. 2059.006. GIFTS AND GRANTS; STAFF; RESOURCES. (a) The
56-1 governor's office may accept gifts and grants, including the
56-2 donation of labor or in-kind resources, on behalf of the committee
56-3 to accomplish the objectives of this chapter.
56-4 (b) The governor's office and, at the request of the
56-5 governor, a state agency may provide staff support and other
56-6 resources to support the work of the committee.
56-7 Sec. 2059.007. APPLICABILITY OF ADVISORY COMMITTEE LAW.
56-8 Article 6252-33, Revised Statutes, does not apply to the committee
56-9 except for the provisions of Section 4 of that law.
56-10 Sec. 2059.008. FINAL REPORT; LEGISLATIVE ACTION. (a) Not
56-11 later than June 1, 1998, the committee shall submit its final
56-12 report to the governor and to the presiding officer of each house
56-13 of the legislature. The report may include one or more specific
56-14 recommendations to be submitted to the legislature as provided by
56-15 Section 31a, Article III, Texas Constitution.
56-16 (b) The speaker of the house of representatives and the
56-17 lieutenant governor shall have prepared and introduced into each
56-18 house of the legislature identical bills to enact the committee's
56-19 recommendations. Each bill shall be submitted to the committee for
56-20 its revisions and approval before the bill is introduced.
56-21 (c) An amendment to a bill introduced under this section is
56-22 not in order unless approved by the committee.
56-23 (d) The legislature may but is not required to enact a bill
56-24 introduced under this section.
56-25 Sec. 2059.009. ABOLITION OF COMMITTEE. (a) The committee
56-26 is abolished on the submission of its final report.
56-27 (b) This chapter expires January 1, 2000.
56-28 SECTION 11.02. This article takes effect September 1, 1997.
56-29 ARTICLE 12. TAX INCIDENCE AND TAX EXPENDITURE REPORTS;
56-30 SUNSET OF TAX EXEMPTIONS
56-31 SECTION 12.01. TAX INCIDENCE REPORT. Subchapter B, Chapter
56-32 403, Government Code, is amended by adding Section 403.0141 to read
56-33 as follows:
56-34 Sec. 403.0141. REPORT ON INCIDENCE OF TAX. (a) Before each
56-35 regular session of the legislature, the comptroller shall report to
56-36 the legislature and the governor on the overall incidence of school
56-37 district property taxes and any state tax generating more than 2.5
56-38 percent of state tax revenue in the fiscal year preceding the
56-39 beginning of the regular session. The report shall include
56-40 information on the distribution of the tax burden for the taxes
56-41 included in the report.
56-42 (b) At the request of the chair of a committee of the senate
56-43 or house of representatives to which has been referred a bill or
56-44 resolution that would change the tax system and that would
56-45 increase, decrease, or redistribute tax by more than $20 million,
56-46 the Legislative Budget Board with the assistance, as requested, of
56-47 the comptroller shall prepare a tax incidence impact analysis of
56-48 the bill or resolution. The analysis shall report on the incidence
56-49 effects that would result if the bill or resolution were enacted.
56-50 (c) To the extent data is available, the incidence impact
56-51 analysis under Subsections (a) and (b):
56-52 (1) must evaluate the tax burden:
56-53 (A) on the overall income distribution, using a
56-54 systemwide incidence measure or other appropriate measure of
56-55 equality and inequality; and
56-56 (B) on income classes, including, at a minimum,
56-57 quintiles of the income distribution, on renters and homeowners and
56-58 on industry or business classes, as appropriate, as well as on
56-59 various types of business organizations;
56-60 (2) may evaluate the tax burden:
56-61 (A) by other appropriate taxpayer
56-62 characteristics, such as whether the taxpayer is a farmer, rancher,
56-63 retired elderly person, or resident or nonresident of the state;
56-64 and
56-65 (B) by distribution of impact on consumers,
56-66 labor, capital, and out-of-state persons and entities; and
56-67 (3) must:
56-68 (A) use the broadest measure of economic income
56-69 for which reliable data is available; and
57-1 (B) include a statement of the incidence
57-2 assumptions that were used in making the analysis.
57-3 SECTION 12.02. TAX EXPENDITURE REPORT. Section 403.014,
57-4 Government Code, is amended to read as follows:
57-5 Sec. 403.014. REPORT ON EFFECT OF CERTAIN TAX PROVISIONS.
57-6 (a) Before each regular session of the legislature, the
57-7 comptroller shall report to the legislature and the governor on the
57-8 effect, if it is possible to assess, of exemptions, discounts,
57-9 exclusions, special valuations, special accounting treatments,
57-10 special rates, and special methods of reporting relating to:
57-11 (1) the sales, excise, and use tax under Chapter 151,
57-12 Tax Code;
57-13 (2) the[, and exemptions from and special rates
57-14 relating to] franchise tax under Chapter 171, Tax Code;
57-15 (3) school district property taxes under Title 1, Tax
57-16 Code; and
57-17 (4) any other tax generating more than five percent of
57-18 state tax revenue in the fiscal year preceding the beginning of the
57-19 regular session.
57-20 (b) The report must include:
57-21 (1) an analysis of each special provision that reduces
57-22 the amount of tax payable to include [and] an estimate of the loss
57-23 of revenue for a six-year period including the current fiscal
57-24 biennium and a citation of the statutory or legal authority for the
57-25 provision; and
57-26 (2) for provisions reducing revenue by more than one
57-27 percent of total revenue for a tax covered by this section, the
57-28 effect of each provision on the distribution of the tax burden by
57-29 income class and industry or business class, as appropriate.
57-30 (c) The report may include:
57-31 (1) an assessment of the intended purpose of the
57-32 provision and whether the provision is achieving that objective;
57-33 and
57-34 (2) a recommendation for retaining, eliminating, or
57-35 amending the provision.
57-36 (d) The report may be included in any other report made by
57-37 the comptroller.
57-38 (e) At the request of the chair of a committee of the senate
57-39 or house of representatives to which has been referred a bill or
57-40 resolution establishing, extending, or restricting an exemption,
57-41 discount, exclusion, special valuation, special accounting
57-42 treatment, special rate, or special method of reporting relating to
57-43 any state tax, the Legislative Budget Board with the assistance, as
57-44 requested, of the comptroller shall prepare a letter analysis of
57-45 the effect on the state's tax revenues that would result from the
57-46 passage of the bill or resolution. The letter analysis shall
57-47 contain the same information as provided in Subsection (b), as
57-48 appropriate.
57-49 (f) [(c)] The comptroller and Legislative Budget Board may
57-50 request from any state officer or agency information necessary to
57-51 complete the report. Each state officer or agency shall cooperate
57-52 with the comptroller and Legislative Budget Board in providing
57-53 information or analysis for the report or letter analysis.
57-54 SECTION 12.03. EFFECTIVE DATE. This article takes effect
57-55 September 1, 1997.
57-56 ARTICLE 13. CEMENT PRODUCTION TAX
57-57 SECTION 13.01. Section 181.002, Tax Code, is amended to
57-58 read as follows:
57-59 Sec. 181.002. RATE OF TAX. The rate of the tax imposed by
57-60 this chapter is $0.05 [$0.0275] for each 100 pounds or fraction of
57-61 100 pounds of taxable cement.
57-62 SECTION 13.02. This article takes effect September 1, 1997,
57-63 and applies to cement distributed, sold, or used on or after that
57-64 date. Cement distributed, sold, or used before that date is
57-65 governed by the law in effect when the distribution, sale, or use
57-66 was made, and that law is continued in effect for that purpose.
57-67 ARTICLE 14. LANDSCAPE ARCHITECT PROFESSIONAL FEE
57-68 SECTION 14.01. Chapter 457, Acts of the 61st Legislature,
57-69 Regular Session, 1969 (Article 249c, Vernon's Texas Civil
58-1 Statutes), is amended by adding Section 4A to read as follows:
58-2 Sec. 4A. INCREASE IN FEES. (a) Each of the following fees
58-3 imposed by Section 4 of this Act is increased by $200:
58-4 (1) registration application fee;
58-5 (2) annual registration renewal fee; and
58-6 (3) reciprocal registration fee.
58-7 (b) Of each fee increase collected, $50 shall be deposited
58-8 to the credit of the foundation school fund and $150 shall be
58-9 deposited to the credit of the general revenue fund. This
58-10 subsection applies to the disposition of each fee increase
58-11 regardless of any other provision of law providing for a different
58-12 disposition of funds.
58-13 SECTION 14.02. This article takes effect September 1, 1997,
58-14 and applies to a fee imposed on or after that date. A fee imposed
58-15 before the effective date of this article is governed by the law in
58-16 effect on that date, and that law is continued in effect for that
58-17 purpose.
58-18 ARTICLE 15. EFFECTIVE DATE; CONTINGENCY; EMERGENCY
58-19 SECTION 15.01. (a) Except as otherwise provided by this
58-20 Act, this Act takes effect September 1, 1997, but only if the
58-21 constitutional amendment proposed by H.J.R. No. 4, 75th
58-22 Legislature, Regular Session, 1997, is approved by the voters. If
58-23 that amendment is not approved by the voters, this Act has no
58-24 effect.
58-25 (b) The change in law made by this Act to a tax or fee does
58-26 not affect the liability for a tax or fee. The liability for a tax
58-27 or fee is governed by the law in effect when the tax or fee became
58-28 due, and that law is continued in effect for the collection of the
58-29 tax or fee and for civil and criminal enforcement of the liability
58-30 for that tax or fee.
58-31 (c) Notwithstanding Subsection (a) of this section, Sections
58-32 2.03-2.11 of this Act take effect September 1, 1997, and are not
58-33 contingent upon the approval by the voters of the constitutional
58-34 amendment proposed by H.J.R. No. 4, 75th Legislature, Regular
58-35 Session, 1997.
58-36 (d) The changes in law made by Sections 2.03-2.11 of this
58-37 Act apply to a reinvestment zone created, enlarged, or modified
58-38 under Chapter 311 or 312, Tax Code, as amended by this Act, on or
58-39 after September 1, 1997. The creation of a reinvestment zone
58-40 before September 1, 1997, and the administration of a reinvestment
58-41 zone that was created, enlarged, or modified before September 1,
58-42 1997, are covered by the law in effect immediately before September
58-43 1, 1997, and the former law is continued in effect for that
58-44 purpose.
58-45 (e) The changes in law made by Sections 2.03-2.11 of this
58-46 Act apply to a project plan or reinvestment zone financing plan
58-47 approved or amended under Chapter 311, Tax Code, as amended by this
58-48 Act, on or after September 1, 1997. The approval or amendment of a
58-49 project plan or reinvestment zone financing plan before September
58-50 1, 1997, is covered by the law in effect immediately before
58-51 September 1, 1997, and the former law is continued in effect for
58-52 that purpose.
58-53 (f) The changes in law made by Sections 2.03-2.11 of this
58-54 Act apply to an agreement entered into under Section 311.013(g),
58-55 Tax Code, as amended by this Act, or a tax abatement agreement
58-56 executed or modified under Chapter 312, Tax Code, as amended by
58-57 this Act, on or after September 1, 1997. The execution or
58-58 modification of an agreement under Section 311.013(g), Tax Code, as
58-59 amended by this Act, or a tax abatement agreement under Chapter
58-60 312, Tax Code, as amended by this Act, before September 1, 1997, is
58-61 covered by the law in effect immediately before September 1, 1997,
58-62 and the former law is continued in effect for that purpose.
58-63 (g) Notwithstanding Subsection (a) of this section, Sections
58-64 1.11 and 1.12 of this Act, and Sections 2.12, 2.13, and 2.14 of
58-65 this Act, take effect September 1, 1997, and are not contingent
58-66 upon the approval by the voters of the constitutional amendment
58-67 proposed by H.J.R. No. 4, 75th Legislature, Regular Session, 1997.
58-68 SECTION 15.02. The importance of this legislation and the
58-69 crowded condition of the calendars in both houses create an
59-1 emergency and an imperative public necessity that the
59-2 constitutional rule requiring bills to be read on three several
59-3 days in each house be suspended, and this rule is hereby suspended.
59-4 * * * * *