SRC-AXB H.B. 2067 76(R)   BILL ANALYSIS


Senate Research Center   H.B. 2067
76R6577  CBH-FBy: Marchant (Fraser)
Finance
4/28/1999
Engrossed


DIGEST 

Currently, Texas franchise law treats banks differently than other
corporations.  For banks, interest and divided income returns to the state
of the bank's headquarters; for other corporations, this money is allocated
to the state where the payor is located.  Therefore, banks which only have
branches in Texas return all their interest and divided income to another
"headquarter" state.  As a result of local banks' consolidation with large
interstate banks, franchise taxes paid to Texas will decrease.  H.B. 2067
redefines and expands terms identifying entities which are currently
subject to a franchise tax. 

PURPOSE

As proposed, H.B. 2067 redefines terms identifying entities which are
currently subject to a franchise tax. 

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Sections 171.001(b)(1), (3), and (7), Tax Code, to
redefine "banking corporation," "corporation," and "savings and loan
association (S&L)." 

SECTION 2.  Amends Sections 171.106(a) and (b), Tax Code, to delete
references to Section 171.1031, Tax Code. 

SECTION 3.  Amends Section 171.259, Tax Code, to provide that this
subchapter does not apply to a banking corporation organized under certain
laws, and which has its main office in Texas. Requires the banking
commissioner to appoint a conservator to pay a franchise tax, and that the
commissioner certifies as being delinquent in the payment of the franchise
tax. 

SECTION 4.  Amends Chapter 171F, Tax Code, by adding Section 171.260, as
follows: 

Sec.  171.260.  SAVINGS AND LOAN ASSOCIATION.  Provides that this section
does not apply to an S&L that is organized under certain laws and has its
main office in Texas. Requires the S&L commissioner to pay a franchise tax,
and that the commissioner certifies as being delinquent in the payment of
the franchise tax. 

SECTION 5.  Amends Section 171.316, Tax Code, to make a conforming change.

SECTION 6.  Amends Section 171.317, Tax Code, to delete text regarding the
revocation of a charter, and make a conforming change.  

SECTION 7.  Repealer:  Section 171.1031, Tax Code (Apportionment of Taxable
Capital and Taxable Earned Surplus of Banking Corporation and Savings And
Loan Association).  

SECTION 8.  Effective date:  January 1, 2000.
  Makes application of this Act prospective.

 SECTION 9.   Emergency clause.