By Berlanga H.C.R. No. 315 75R13846 DWS-F HOUSE CONCURRENT RESOLUTION 1-1 WHEREAS, The 73rd Texas Legislature amended the Texas Banking 1-2 Code to permit state banks to be organized as limited banking 1-3 associations; and 1-4 WHEREAS, Limited banking associations were created by the 1-5 legislature to permit state banks to be organized as unincorporated 1-6 business organizations eligible to be treated as flow-through 1-7 entities for federal income tax purposes in the same manner as the 1-8 limited liability company authorized under the Texas Limited 1-9 Liability Company Act (Article 1528n, Vernon's Texas Civil 1-10 Statutes); and 1-11 WHEREAS, The Texas Department of Banking issued a legal 1-12 opinion concluding that limited banking associations are not 1-13 required by the Texas Constitution to be incorporated as 1-14 corporations and explaining the history and background of Texas law 1-15 relating to limited banking associations and the state bank system 1-16 under the Texas Constitution; and 1-17 WHEREAS, The Internal Revenue Service has issued a ruling 1-18 denying "pass-through" tax treatment for Texas limited banking 1-19 associations that ignored the conclusion of the Texas Department of 1-20 Banking and has concluded on its own that the Texas Constitution 1-21 requires all state banks to be incorporated as corporations and 1-22 therefore in the view of the Internal Revenue Service limited 1-23 banking associations could not qualify as unincorporated business 1-24 entities; and 2-1 WHEREAS, The legislature desires to make clear its purpose 2-2 and intent in authorizing state banks to be organized as limited 2-3 banking associations; now, therefore, be it 2-4 RESOLVED by the 75th Legislature of the State of Texas, That 2-5 it is the joint sense of the senate and the house of 2-6 representatives that Section 16, Article XVI, Texas Constitution, 2-7 does not mandate that all state banks must be incorporated as 2-8 corporate bodies and that limited banking associations are state 2-9 banks that are not incorporated as corporate entities but are 2-10 organized, chartered, and regulated by the banking commissioner; 2-11 and, be it further 2-12 RESOLVED, That limited banking associations are intended by 2-13 the legislature to have all the other benefits to which state banks 2-14 are entitled, including federal deposit insurance and eligibility 2-15 for membership in the Federal Reserve System.