SRC-JBJ S.B. 148 76(R)   BILL ANALYSIS


Senate Research Center   S.B. 148 (Revised)
76R3838 CBH-DBy: Fraser
Finance
2/18/1999
As Filed


DIGEST 

Currently, the Tax Code exempts a Texas business from paying the franchise
tax if the business owes less than $100 in tax.  The exemption benefits a
small business, which  operates on small profit margins, by allowing the
business to redirect the tax costs, the actual tax and the incurred cost in
filing the report, into business expansion and additional employment, in
turn benefitting the Texas economy.  Introducing a new exemption threshold
based on $200,000 in gross receipts, according to the Comptroller's Office,
would cost $112.2 million for the 2001-01 biennium, but would relieve
45,000 companies of their current franchise tax liability and, thus, would
benefit the Texas economy.  S.B. 148 would broaden the threshold for an
exemption to the franchise tax. 

PURPOSE

As proposed, S.B. 148 introduces a new threshold for an exemption to the
franchise tax based on $200,000 or less in gross receipts. 

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 Section 171.002(d), Tax Code, to exempt a corporation
from the levied tax if the amount is less than $100, or the corporation's
gross receipts from its entire business under Sections 171.105 and
171.1051, including the amount excepted under 171.1051(a), are less than
$200,000. Makes conforming changes. 

SECTION 2.  Amends Section 171.204, Tax Code, to prohibit the comptroller
from requiring an officer of a corporation owing no tax to file an
information report.  Makes conforming changes. 

SECTION 3.  Effective date:  January 1, 2000.
  Makes application of this Act prospective.

SECTION 4.Emergency clause.