By Armbrister                                          S.B. No. 742
         76R2170 SMJ-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to settlement of a claim for a tax penalty or interest on
 1-3     a tax.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Section 111.103, Tax Code, is amended by adding
 1-6     Subsection (b) to read as follows:
 1-7           (b)  A taxpayer exercises reasonable diligence to comply with
 1-8     the provisions of this title in relation to a tax item when the
 1-9     taxpayer acts in good faith with respect to that item and:
1-10                 (1)  substantial authority for the tax treatment of
1-11     that item by the taxpayer existed at the time the taxpayer acted or
1-12     at the time the claim is settled; or
1-13                 (2)  the taxpayer adequately discloses the relevant
1-14     facts affecting the item's tax treatment in the report or in a
1-15     statement attached to the report and there is a reasonable basis
1-16     for that tax treatment.
1-17           SECTION 2.  (a)  This Act takes effect on the first day of
1-18     the first calendar quarter beginning on or after the earliest date
1-19     that it may take effect under Section 39, Article III, Texas
1-20     Constitution, and applies to a report filed on or after the
1-21     effective date.
1-22           (b)  A report filed before the effective date of this Act is
1-23     governed by the law applicable to the report when the report was
1-24     filed, and that law is continued in effect for that purpose.
 2-1           SECTION 3.  The importance of this legislation and the
 2-2     crowded condition of the calendars in both houses create an
 2-3     emergency and an imperative public necessity that the
 2-4     constitutional rule requiring bills to be read on three several
 2-5     days in each house be suspended, and this rule is hereby suspended,
 2-6     and that this Act take effect and be in force according to its
 2-7     terms, and it is so enacted.