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 * * * * *