SRC-TBR S.B. 1689 77(R)   BILL ANALYSIS


Senate Research Center   S.B. 1689
2001S0808/1 03/08/01By: Ellis, Rodney
Finance
4/18/2001
As Filed


DIGEST AND PURPOSE 

The comptroller of public accounts has encountered legal challenges
involving the construction of tax statutes in  three areas: (1) other
tobacco products tax, (2) franchise tax, and (3) insurance tax and its
effect on other taxes.  As proposed, S.B. 1263 clarifies the existing laws
in these three areas and attempts to eliminate perceived vulnerabilities in
these laws. 

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a
state officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 171.052, Tax Code, to provide that an insurance
organization, title insurance company, or title insurance agent authorized
to engage in insurance business in this state now required to pay an annual
tax under Chapter 4 or 9, Insurance Code, measured by its gross premium
receipts is exempted from the franchise tax.  Provides that an insurance
organization performing management or accounting activities in this state
on behalf of a nonadmitted captive insurance company under Chapter 101,
Insurance Code, that is required to pay a gross premium receipts tax during
a tax year is exempted from the franchise tax for that same tax year. 

SECTION 2.  Amends Section 171.110(e), Tax Code, to provide that a business
loss can be carried forward only by the corporation that incurred the loss
and cannot be transferred to or claimed by any other entity, including the
survivor of a merger if the loss was incurred by the corporation that did
not survive the merger. 

SECTION 3.  Provides that Subsection (e), Section 171.110, Tax Code, as
amended by this Act, is a clarification of existing law and not a
substantive change in law. 

SECTION 4.  (a)  Effective date: September 1, 2001.

(b)  Makes application of this Act prospective.