1-1     By:  Armbrister                                        S.B. No. 742
 1-2           (In the Senate - Filed February 26, 1999; March 1, 1999, read
 1-3     first time and referred to Committee on Finance; April 27, 1999,
 1-4     reported adversely, with favorable Committee Substitute by the
 1-5     following vote:  Yeas 9, Nays 0; April 27, 1999, sent to printer.)
 1-6     COMMITTEE SUBSTITUTE FOR S.B. No. 742                 By:  Moncrief
 1-7                            A BILL TO BE ENTITLED
 1-8                                   AN ACT
 1-9     relating to settlement of a claim for a tax penalty or interest on
1-10     a tax.
1-11           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12           SECTION 1.  Section 111.103, Tax Code, is amended by adding
1-13     Subsections (b) and (c) to read as follows:
1-14           (b)  A taxpayer exercises reasonable diligence to comply with
1-15     the provisions of this title in relation to a tax item when the
1-16     taxpayer acts in good faith with respect to that item and:
1-17                 (1)  substantial authority for the tax treatment of
1-18     that item by the taxpayer existed at the time the claim is settled;
1-19     or
1-20                 (2)  the taxpayer adequately discloses the relevant
1-21     facts affecting the item's tax treatment in the report or in a
1-22     statement attached to the report and there is a reasonable basis
1-23     for that tax treatment.
1-24           (c)  The terms "substantial authority" and "reasonable basis"
1-25     shall be further defined in rules issued by the comptroller, but
1-26     are intended to be generally consistent with the manner such terms
1-27     have been implemented and interpreted for federal tax purposes.
1-28           SECTION 2.  (a)  This Act takes effect on the first day of
1-29     the first calendar quarter beginning on or after the earliest date
1-30     that it may take effect under Section 39, Article III, Texas
1-31     Constitution, and applies to tax penalty or interest proposed on or
1-32     after the effective date.
1-33           (b)  A report filed before the effective date of this Act is
1-34     governed by the law applicable to the report when the report was
1-35     filed, and that law is continued in effect for that purpose.
1-36           SECTION 3.  The importance of this legislation and the
1-37     crowded condition of the calendars in both houses create an
1-38     emergency and an imperative public necessity that the
1-39     constitutional rule requiring bills to be read on three several
1-40     days in each house be suspended, and this rule is hereby suspended.
1-41                                  * * * * *