SRC-PNG S.B. 1065 76(R)   BILL ANALYSIS


Senate Research Center   S.B. 1065
76R6577 CBH-FBy: Fraser
Finance
3/23/1999
As Filed


DIGEST 

Currently, under interstate branch banking, banks may now consolidate their
Texas operations with those in other states.  Under current franchise tax
laws, the interest and dividend income of banks is taxed based on the
location of the bank's commercial domicile.  This bill would amend the
franchise tax law to require taxes on interest and dividend income for
banks to be based on the location of the payor rather than the commercial
domicile of the bank.   

PURPOSE

As proposed, S.B. 1065 amends the franchise tax law to require taxes on
interest and dividend income for banks to be based on the location of the
payor rather than the commercial domicile of the bank. 

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." 

SECTION 2. Amends Sections 171.106(a) and (b), Tax Code, to make conforming
and nonsubstantive changes. 

SECTION 3. Amends Section 171.259, Tax Code, to provide that this chapter
does not apply to a banking corporation that is organized under the laws of
this state or under federal law and has its main office in this state.
Requires the banking commissioner (commissioner) to appoint a conservator
under Title 3A, Finance Code, to pay the franchise tax of a banking
corporation that is organized under the laws of this state and that the
commissioner certifies as being delinquent in the payment of the
corporation's franchise tax.  Deletes text providing that this chapter does
not apply to a savings and loan association. 

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

Sec.  171.260.  SAVINGS AND LOAN ASSOCIATION.  Provides that this
subchapter does not apply to a savings and loan association that is
organized under the laws of this state or under federal law and has its
main office in this state.  Requires the savings and loan commissioner to
appoint a conservator under Subtitle B or C, Title 3, Finance Code, to pay
the franchise tax of a savings and loan corporation that is organized under
the laws of this state, and that the savings and loan commissioner
certifies as being delinquent in the payment of the corporation's franchise
tax. 

SECTION 5. Amends Section 171.316, Tax Code, to provide that this
subchapter does not apply to a banking corporation that is organized under
the laws of this state or under federal law and has its main office in this
state. 

SECTION 6. Amends Section 171.317, Tax Code, to provide that this
subchapter does not apply  to a savings and loan association that is
organized under the laws of this state or under federal law and has its
main office in this state.  Deletes text requiring the savings and loan
commissioner to revoke the charter of a savings and loan association in
certain situations. 

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.