SRC-JXG S.B. 742 76(R)   BILL ANALYSIS


Senate Research Center   S.B. 742
76R2170 SMJ-DBy: Armbrister
Finance
4/8/1999
As Filed


DIGEST 

Currently, Section 111.061, Tax Code, imposes a mandatory penalty on tax
underpayments that do not exceed 10 percent of the tax owed to the
comptroller. Under Section 111.103, Tax Code, a waiver of the penalty is
available, if the taxpayer exercised "reasonable diligence." However, there
is no statutory definition for "reasonable negligence" to comply with the
tax laws. S.B. 742 would  
define the factors to be used in determining the definition of "reasonable
diligence," and would also include a "reasonable cause" provision. 
 
PURPOSE

As proposed, S.B. 742 describes "reasonable negligence" in regard to
settlement of a claim for a tax penalty or interest on a  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 Section 111.103, Tax Code, by adding Subsection (b), to
provide that a taxpayer exercises reasonable diligence to comply with the
provisions of this title in relation to a tax item when the taxpayer acts
in good faith with respect to that item and substantial authority for the
tax treatment of that item by the taxpayer existed at the time the taxpayer
acted or at the time the claim is settled; or the taxpayer adequately
discloses the relevant facts affecting the item's tax treatment in the
report or in a statement attached to the report and there is a reasonable
basis for that tax treatment. 

SECTION 2. Effective date: on the first day of the first calendar quarter
beginning on or after the earliest date that it may take effect under
Section 39, Article III, Texas Constitution. Makes application of this Act
prospective. 

SECTION 3. Emergency clause.