By Junell                                             H.B. No. 2817
         76R9153 DAK-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the settlement and collection of taxes and penalties
 1-3     and interest on taxes, refunds, and credits.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Section 111.060, Tax Code, is amended to read as
 1-6     follows:
 1-7           Sec. 111.060.  INTEREST ON DELINQUENT TAX.  (a)  The yearly
 1-8     interest rate on all delinquent taxes imposed by this title is at
 1-9     the rate of 12 percent for report periods originally due on or
1-10     before December 31, 1999, after which the rate of interest is
1-11     variable and determined as provided in Subsection (b).
1-12           (b)  The rate of interest to be charged to the taxpayer is
1-13     the prime rate plus one percent, as published in the Wall Street
1-14     Journal on the first day of each calendar year that is not a
1-15     Saturday, Sunday, or legal holiday.
1-16           (c) [(b)]  Except as provided by Subsection (d) [(c) of this
1-17     section], delinquent taxes draw interest beginning 60 days after
1-18     [from] the date due.
1-19           (d) [(c)]  Subsection (c) [(b) of this section] does not
1-20     apply to the taxes imposed by Chapters 152 and 211 [of this code]
1-21     or under an agreement made under Section 153.017 [of this code].
1-22           SECTION 2.  Subchapter B, Chapter 111, Tax Code, is amended
1-23     by adding Section 111.064 to read as follows:
1-24           Sec. 111.064.  INTEREST ON REFUND OR CREDIT.  (a)  Except as
 2-1     provided by Subsections (b) and (c), in a comptroller's final
 2-2     decision on a claim for refund or in an audit, interest is at the
 2-3     rate set in Section 111.060 on the amount found to be erroneously
 2-4     paid for a period:
 2-5                 (1)  beginning on the later of 60 days after the date
 2-6     of payment or the due date of the tax report; and
 2-7                 (2)  ending on, as determined by the comptroller,
 2-8     either the date of allowance of credit on account of the
 2-9     comptroller's final decision or audit or a date not more than 10
2-10     days before the date of the refund warrant.
2-11           (b)  A credit taken by a taxpayer on the taxpayer's return
2-12     does not accrue interest.
2-13           (c)  For a refund granted for a report period due on or after
2-14     January 1, 2000, the rate of interest is the rate set in Section
2-15     111.060.  A refund for a report period due before January 1, 2000,
2-16     does not accrue interest.
2-17           (d)  This section does not apply to an amount paid to the
2-18     comptroller under Title 6, Property Code, or under an agreement
2-19     made under Section 153.017.
2-20           (e)  All warrants for interest payments shall be drawn
2-21     against the fund or account into which the erroneously paid tax was
2-22     deposited.  The interest shall be paid from funds appropriated for
2-23     that purpose.
2-24           SECTION 3.  Section 111.101, Tax Code, is amended to read as
2-25     follows:
2-26           Sec. 111.101.  SETTLEMENT [BEFORE REDETERMINATION].  (a)  The
2-27     [After the comptroller examines a taxpayer's records and before a
 3-1     petition for redetermination of the tax is filed, the] comptroller
 3-2     may settle a claim for a tax, penalty, or interest imposed by this
 3-3     title if the total costs [cost] of collection, as conclusively
 3-4     determined by the comptroller, of the total amount due would exceed
 3-5     the total amount [of tax] due [and if the amount due is not more
 3-6     than $300].
 3-7           (b)  The comptroller may settle a claim for a refund of tax,
 3-8     penalty, or interest imposed by this title if the total costs of
 3-9     defending a denial of the claim, as conclusively determined by the
3-10     comptroller, would exceed the total amount claimed.
3-11           SECTION 4.  Section 111.102, Tax Code, is amended to read as
3-12     follows:
3-13           Sec. 111.102.  SETTLEMENT ON REDETERMINATION.  As a part of a
3-14     redetermination order, the comptroller may settle a claim for a
3-15     tax, penalty, or interest imposed by this title if:
3-16                 (1)  [the cost of collection of the amount of tax due
3-17     would exceed the amount of tax due and the amount of tax due is not
3-18     more than $1,000;]
3-19                 [(2)]  collection of the total amount [of tax] due
3-20     would make the taxpayer insolvent and the taxpayer has submitted to
3-21     the comptroller all financial records, including income tax reports
3-22     and an inventory of all property owned wherever located; or
3-23                 (2) [(3)]  the taxpayer is insolvent, is in
3-24     liquidation, or has ceased to do business and:
3-25                       (A)  the taxpayer has no property that may be
3-26     seized by the courts of this or another state; or
3-27                       (B)  the value of the taxpayer's property is less
 4-1     than the total amount [of tax] due and the amount of debts against
 4-2     the property.
 4-3           SECTION 5.  The comptroller may adopt rules and take other
 4-4     actions before January 1, 2000, as the comptroller considers
 4-5     necessary or advisable to prepare for Sections 3 and 4 of this Act
 4-6     taking effect.
 4-7           SECTION 6.  (a)  Sections 3, 4, and 5 of this Act take effect
 4-8     on the first date on which they may take effect under Section 39,
 4-9     Article III, Texas Constitution.
4-10           (b)  Sections 1 and 2 of this Act take effect January 1,
4-11     2000.
4-12           SECTION 7.  The importance of this legislation and the
4-13     crowded condition of the calendars in both houses create an
4-14     emergency and an imperative public necessity that the
4-15     constitutional rule requiring bills to be read on three several
4-16     days in each house be suspended, and this rule is hereby suspended,
4-17     and that this Act take effect and be in force according to its
4-18     terms, and it is so enacted.