By Goolsby, Oliveira, Culberson, et al.                H.B. No. 551
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to exempting certain small corporations from the franchise
 1-3     tax and to the reporting requirements for those corporations.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5                                  ARTICLE 1
 1-6           SECTION 1.01.  Section 171.002(d), Tax Code, is amended to
 1-7     read as follows:
 1-8           (d)  A [If the amount of tax computed for a corporation is
 1-9     less than $100, the] corporation is not required to pay any tax
1-10     [that amount] and is not considered to owe any tax for a [that]
1-11     period if:
1-12                 (1)  the amount of tax computed for the corporation is
1-13     less than $100; or
1-14                 (2)  the amount of the corporation's gross receipts:
1-15                       (A)  from its entire business under Section
1-16     171.105 is less than $250,000; and
1-17                       (B)  from its entire business under Section
1-18     171.1051, including the amount excepted under Section 171.1051(a),
1-19     is less than $250,000.
1-20           SECTION 1.02.  Section 171.203(a), Tax Code, is amended to
1-21     read as follows:
1-22           (a)  A corporation on which the franchise tax is imposed,
1-23     regardless of whether the corporation is  required to pay any tax,
1-24     shall file a report with the comptroller containing:
 2-1                 (1)  the name of each corporation in which the
 2-2     corporation filing the report owns a 10 percent or greater interest
 2-3     and the percentage owned by the corporation;
 2-4                 (2)  the name of each corporation that owns a 10
 2-5     percent or greater interest in the corporation filing the report;
 2-6                 (3)  the name, title, and mailing address of each
 2-7     person who is an officer or director of the corporation on the date
 2-8     the report is filed and the expiration date of each person's term
 2-9     as an officer or director, if any;
2-10                 (4)  the name and address of the agent of the
2-11     corporation designated under Section 171.354 of this code; and
2-12                 (5)  the address of the corporation's principal office
2-13     and principal place of business.
2-14           SECTION 1.03.  Section 171.204, Tax Code, is amended to read
2-15     as follows:
2-16           Sec. 171.204.  INFORMATION REPORT.  (a)  Except as provided
2-17     by Subsection (b), to [To] determine eligibility for the exemption
2-18     provided by Section 171.2022, or to determine the amount of the
2-19     franchise tax or the correctness of a franchise tax report, the
2-20     comptroller may require an officer of a corporation that may be
2-21     subject to the tax imposed under this chapter to file an
2-22     information report with the comptroller stating the amount of the
2-23     corporation's taxable capital and earned surplus, or any other
2-24     information the comptroller may request.
2-25           (b)  The comptroller may require an officer of a corporation
2-26     that does not owe any tax because of the application of Section
2-27     171.002(d)(2) to file an abbreviated information report with the
 3-1     comptroller stating the amount of the corporation's gross receipts
 3-2     from its entire business.  The comptroller may not require a
 3-3     corporation described by this subsection to file an information
 3-4     report that requires the corporation to report or compute its
 3-5     earned surplus or taxable capital.
 3-6           SECTION 1.04.  (a)  This Article takes effect January 1,
 3-7     2000, and applies to a report originally due on or after that
 3-8     date.
 3-9           (b)  The change in law made by this Article does not affect
3-10     taxes imposed before the effective date of this Article, and the
3-11     law in effect before that date is continued in effect for purposes
3-12     of the liability for and collection of those taxes.
3-13                                  ARTICLE 2
3-14           SECTION 2.01.  Section 171.002(d), Tax Code, is amended to
3-15     read as follows:
3-16           (d)  If the amount of tax computed for a corporation is less
3-17     than $100, the corporation is not required to pay that amount and
3-18     is not considered to owe any tax for that period.
3-19           SECTION 2.02.  Section 171.204, Tax Code, is amended to read
3-20     as follows:
3-21           Sec. 171.204.  INFORMATION REPORT.  To determine eligibility
3-22     for the exemption provided by Section 171.2022, or to determine the
3-23     amount of the franchise tax or the correctness of a franchise tax
3-24     report, the comptroller may require an officer of a corporation
3-25     that may be subject to the tax imposed under this chapter to file
3-26     an information report with the comptroller stating the amount of
3-27     the corporation's taxable capital and earned surplus, or any other
 4-1     information the comptroller may request.
 4-2           SECTION 2.03.  (a)  This Article takes effect January 1,
 4-3     2006, and applies to a report originally due on or after that date.
 4-4           (b)  The change in law made by this Article does not affect
 4-5     taxes imposed before the effective date of this Article, and the
 4-6     law in effect before that date is continued in effect for purposes
 4-7     of the liability for and collection of those taxes.
 4-8                                  ARTICLE 3
 4-9           SECTION 3.01.  (a)  Before the beginning of the 79th
4-10     Legislature, Regular Session, the comptroller of public accounts
4-11     shall report to the legislature and the governor on the effect that
4-12     exempting small corporations from the franchise tax under Section
4-13     171.002, Tax Code, as amended by this Act, and limiting the
4-14     reporting requirements of those corporations have on the economy of
4-15     this state, including on the creation of new jobs in this state.
4-16           (b)  The report must include:
4-17                 (1)  an assessment of the intended purposes of the
4-18     changes in law and whether the changes are achieving those
4-19     objectives;
4-20                 (2)  an assessment of whether the changes in law have
4-21     created any problems in the administration of the franchise tax;
4-22     and
4-23                 (3)  a recommendation for retaining, eliminating, or
4-24     amending the changes.
4-25           (c)  The comptroller of public accounts may include the
4-26     report in any other report made to the legislature.
4-27           SECTION 3.02.  The importance of this legislation and the
 5-1     crowded condition of the calendars in both houses create an
 5-2     emergency and an imperative public necessity that the
 5-3     constitutional rule requiring bills to be read on three several
 5-4     days in each house be suspended, and this rule is hereby suspended.