By Maxey H.B. No. 3293
77R6727 DAK-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the imposition, collection, administration, and civil
1-3 and criminal enforcement of a tax on the income of certain resident
1-4 and nonresident individuals, trusts and estates, and partnerships.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Title 2, Tax Code, is amended by adding Subtitle
1-7 L to read as follows:
1-8 SUBTITLE L. PERSONAL INCOME TAX
1-9 CHAPTER 261. PERSONAL INCOME TAX
1-10 SUBCHAPTER A. IMPOSITION OF TAX
1-11 Sec. 261.001. Tax Imposed. (a) A tax is imposed for each
1-12 tax year:
1-13 (1) on the taxable income of every resident of this
1-14 state; and
1-15 (2) on the taxable income derived from sources in this
1-16 state of every nonresident.
1-17 (b) The tax rate is four percent of the amount of taxable
1-18 income that exceeds $69,000.
1-19 Sec. 261.002. JOINT RETURN OR RETURN OF SURVIVING SPOUSE.
1-20 If a husband and wife file a joint return, the tax imposed by
1-21 Section 261.001 is twice the tax that would be imposed if the
1-22 taxable income were divided by two.
1-23 Sec. 261.003. MEANING OF TERMS. (a) In this chapter:
1-24 (1) an individual is a resident of this state if the
2-1 individual:
2-2 (A) is domiciled in this state unless the
2-3 individual does not maintain a permanent place of abode in this
2-4 state and does maintain a permanent place of abode elsewhere and
2-5 spends, in the aggregate, not more than 30 days of the tax year in
2-6 this state; or
2-7 (B) is not domiciled in this state but maintains
2-8 a permanent place of abode in this state and spends, in the
2-9 aggregate, more than 183 days of the tax year in this state; and
2-10 (2) an individual is a nonresident if the individual
2-11 is not a resident of this state.
2-12 (b) Any term used in this chapter and not defined by or for
2-13 purposes of this chapter has the same meaning as when used in a
2-14 comparable context in the laws of the United States relating to
2-15 federal income taxes, unless a different meaning is clearly
2-16 required. Any reference in this chapter to federal law means the
2-17 provisions of the Internal Revenue Code of 1986 in effect on
2-18 December 31, 2001, and other provisions of federal laws relating to
2-19 federal income taxes in effect on December 31, 2001.
2-20 (Sections 261.004-261.050 reserved for expansion
2-21 SUBCHAPTER B. COMPUTATION OF TAXABLE INCOME
2-22 Sec. 261.051. Taxable Income. The taxable income of a
2-23 resident of this state is the resident's federal adjusted gross
2-24 income as defined by the federal law.
2-25 Sec. 261.052. Credit for Income Tax Paid to Another State.
2-26 (a) A resident individual is allowed a credit against the tax
2-27 otherwise due under this chapter for the amount of any income tax
3-1 imposed on the individual for the tax year by another state of the
3-2 United States on income that is derived from sources in that state
3-3 and that is subject to tax under this chapter.
3-4 (b) The credit provided by this section may not exceed the
3-5 proportion of the tax otherwise due under this chapter that the
3-6 amount of the taxpayer's adjusted gross income derived from sources
3-7 in the other taxing jurisdiction bears to the taxpayer's entire
3-8 adjusted gross income as modified by this subchapter.
3-9 Sec. 261.053. Dual Residence; Reduction of Tax. If a
3-10 taxpayer is a resident of this state and is regarded as a resident
3-11 of another jurisdiction for purposes of personal income taxation,
3-12 the comptroller shall reduce the tax on that portion of the
3-13 taxpayer's income that is subject to tax in both jurisdictions
3-14 solely by virtue of dual residence. The reduction shall be in an
3-15 amount equal to that portion of the lower of the two taxes
3-16 applicable to the income taxed twice that the tax imposed by this
3-17 state bears to the combined taxes of the two jurisdictions on the
3-18 income taxed twice.
3-19 Sec. 261.054. Nonresident Individuals--Taxable Income. The
3-20 taxable income of a nonresident individual is that part of the
3-21 individual's federal adjusted gross income derived from sources in
3-22 this state determined under Section 261.056.
3-23 Sec. 261.055. Husband and Wife--Nonresident. (a) If the
3-24 federal taxable income of a husband and wife, both of whom are
3-25 nonresidents of this state, is determined on separate federal
3-26 returns, their taxable incomes in this state shall be separately
3-27 determined.
4-1 (b) If the federal taxable income of a husband and wife,
4-2 both of whom are nonresidents, is determined on a joint federal
4-3 return, their tax shall be determined in this state on their
4-4 combined taxable income.
4-5 (c) If one spouse is a nonresident and the other a resident,
4-6 separate taxes shall be determined on their separate taxable
4-7 incomes in this state on forms prescribed by the comptroller unless
4-8 both elect to determine their combined taxable income in this state
4-9 as if both were residents. If a husband and wife file a joint
4-10 federal income tax return but determine their taxable income in
4-11 this state separately, they must compute their taxable incomes in
4-12 this state as if their federal adjusted gross incomes had been
4-13 determined separately.
4-14 Sec. 261.056. Adjusted Gross Income From Sources in This
4-15 State--Nonresident. (a) The adjusted gross income of a
4-16 nonresident derived from sources in this state is the net amount of
4-17 items of income, gain, loss, and deduction entering into the
4-18 nonresident's federal adjusted gross income that are derived from
4-19 or connected with sources in this state including:
4-20 (1) the nonresident's distributive share of
4-21 partnership income and deductions determined under Section 261.403;
4-22 and
4-23 (2) the nonresident's share of estate or trust income
4-24 and deductions derived from sources in this state.
4-25 (b) Items of income, gain, loss, and deduction derived from
4-26 or connected with sources in this state are those items
4-27 attributable to:
5-1 (1) the ownership or disposition of an interest in
5-2 real or tangible personal property in this state; and
5-3 (2) a business, trade, profession, or occupation
5-4 conducted in this state.
5-5 (c) Income from intangible personal property, including
5-6 annuities, dividends, interest, and gains from the disposition of
5-7 intangible personal property, constitutes income derived from
5-8 sources in this state only to the extent that the income is from
5-9 property used in a business, trade, profession, or occupation
5-10 carried on in this state.
5-11 (d) Deductions for capital losses, net long-term capital
5-12 gains, and net operating losses derived from or connected with
5-13 sources in this state, are determined in the same manner as the
5-14 corresponding federal deductions. However, the extent to which the
5-15 deductions are derived from or connected with sources in this state
5-16 is determined under the comptroller's rules.
5-17 (e) For a nonresident individual who is a shareholder of a
5-18 corporation that is an electing small business corporation for
5-19 federal income tax purposes, the undistributed taxable income of
5-20 the corporation does not constitute income derived from sources in
5-21 this state and a net operating loss of the corporation does not
5-22 constitute a loss or deduction connected with sources in this
5-23 state.
5-24 (f) If a business, trade, profession, or occupation is
5-25 carried on partly in and partly outside this state, the items of
5-26 income and deduction derived from or connected with sources in this
5-27 state are determined by apportionment and allocation consistent
6-1 with Chapter 141 under the comptroller's rules.
6-2 (g) Compensation paid by the United States for service in
6-3 the armed forces of the United States performed by a nonresident is
6-4 not income derived from sources in this state.
6-5 (Sections 261.057-261.100 reserved for expansion
6-6 SUBCHAPTER C. WITHHOLDING TAX
6-7 Sec. 261.101. Employer to Withhold Tax From Wages.
6-8 (a) Each employer maintaining an office or doing business in this
6-9 state and making payment of wages taxable under this chapter to a
6-10 resident or nonresident individual shall withhold from those wages
6-11 for each payroll period a tax computed in a manner as to result, so
6-12 far as practicable, in withholding from the employee's wages during
6-13 each calendar year an amount equivalent to the amount of tax
6-14 reasonably estimated to be due from the employee under this chapter
6-15 from the amount of the wages paid by the employer and included in
6-16 the employee's adjusted gross income during the calendar year. The
6-17 method of determining the amount to be withheld shall be prescribed
6-18 by the comptroller's rules. Payments by the United States for
6-19 service in the armed forces of the United States are not subject to
6-20 state withholding.
6-21 (b) The comptroller may enter into agreements with the tax
6-22 departments of other states that require income tax to be withheld
6-23 from the payment of wages and salaries to govern the amounts to be
6-24 withheld from the wages and salaries of residents of those states
6-25 under this chapter. The agreements may provide for recognition of
6-26 anticipated tax credits in determining the amounts to be withheld,
6-27 and the comptroller, by rule, may relieve employers in this state
7-1 from withholding income tax on wages and salaries paid to
7-2 nonresident employees. An agreement authorized by this section is
7-3 subject to the condition that the tax department of the other state
7-4 grants similar treatment to residents of this state.
7-5 Sec. 261.102. Information Statement for Employee. An
7-6 employer required to withhold the tax under Section 261.101 from
7-7 the wages of an employee shall furnish to each employee from whom
7-8 the employer withheld the tax during the calendar year a written
7-9 statement as prescribed by rule showing the amount of wages paid by
7-10 the employer to the employee, the amount deducted and withheld as
7-11 tax, and other information the comptroller prescribes. The
7-12 withholding statement shall be given to the employee from whom the
7-13 tax is withheld on or before February 15 of the year succeeding the
7-14 calendar year in which the withholding occurs or, if the employee's
7-15 employment ends during the calendar year, before the 31st day after
7-16 the last day on which wages are paid to the employee.
7-17 Sec. 261.103. Credit for Tax Withheld. Wages on which the
7-18 withholding tax applies are included fully as taxable income under
7-19 this chapter as if no withholding were required. The amount of
7-20 withholding tax actually withheld under this subchapter in a
7-21 calendar year is considered to have been paid to the comptroller on
7-22 behalf of the person from whom withheld, and the person shall be
7-23 credited with having paid that amount of tax for the tax year in
7-24 which the wages are taxed. For a tax year of less than 12 months,
7-25 the credit shall be made under rules of the comptroller.
7-26 Sec. 261.104. Employer's Return and Payment of Tax Withheld.
7-27 (a) An employer required to deduct and withhold tax under this
8-1 chapter shall, for each calendar quarter, on or before the 15th
8-2 day of the month following the end of the calendar quarter, file a
8-3 withholding return as prescribed by the comptroller and pay to the
8-4 comptroller or to a depository designated by the comptroller, the
8-5 taxes required to be withheld, except that for the fourth quarter
8-6 of the calendar year, the return shall be filed and the taxes paid
8-7 on or before January 31 of the succeeding year. If the amount
8-8 required to be withheld by an employer for a calendar month exceeds
8-9 $500, the employer shall, not later than the 15th day of the
8-10 succeeding month, pay the withheld amount to the comptroller or to
8-11 a depository designated by the comptroller. The amount paid is
8-12 allowed as a credit against the liability shown on the employer's
8-13 quarterly withholding return required by this section. If the
8-14 amount required to be deducted and withheld by an employer is less
8-15 than $100 in a calendar quarter, the comptroller by rule may permit
8-16 an employer to file a withholding return on or before July 31 for
8-17 the semiannual period ending on June 30 and on or before January 31
8-18 of the succeeding year for the semiannual period ending on December
8-19 31. The comptroller may, if it is necessary for the protection of
8-20 the revenue, require an employer to make a return and pay to the
8-21 comptroller the tax withheld at any time. If the amount of wages
8-22 paid by an employer is not sufficient under this chapter to require
8-23 the withholding of tax from the wages of any of the employer's
8-24 employees, the comptroller by rule may permit the employer to file
8-25 an annual return on or before January 31 of the succeeding calendar
8-26 year.
8-27 (b) If an employer fails to collect the tax, truthfully
9-1 account for the tax, pay the tax, or make returns of the tax as
9-2 required by this section, the comptroller may serve a notice
9-3 requiring the employer to collect the taxes that became collectible
9-4 after service of notice, to deposit the taxes in a bank approved by
9-5 the comptroller, in a separate account, in trust for and payable to
9-6 the comptroller, and to keep the amount of the tax in the account
9-7 until paid over to the comptroller. A notice remains in effect
9-8 until a notice of cancellation is served by the comptroller.
9-9 Sec. 261.105. EMPLOYER'S LIABILITY FOR WITHHELD TAXES. An
9-10 employer required to withhold a tax under this chapter is liable
9-11 for the tax. For purposes of assessment and collection, any amount
9-12 required to be withheld and paid to the comptroller, and any
9-13 additions to tax, penalties, and interest with respect to it, is
9-14 the tax of the employer. Any amount of tax actually deducted and
9-15 withheld under this chapter shall be held to be a special fund in
9-16 trust for the comptroller. An employee does not have a right of
9-17 action against his employer in respect to money withheld from the
9-18 employee's wages and paid over to the comptroller in compliance or
9-19 in intended compliance with this chapter.
9-20 Sec. 261.106. EMPLOYER'S FAILURE TO WITHHOLD. If an
9-21 employer fails to withhold tax as required, and thereafter the tax
9-22 against which that tax may be credited is paid, the tax so required
9-23 to be withheld may not be collected from the employer, but the
9-24 employer is liable for additions to tax penalties or interest
9-25 otherwise applicable resulting from a failure to withhold.
9-26 (Sections 261.107-261.200 reserved for expansion
10-1 SUBCHAPTER D. ACCOUNTING PERIODS AND METHODS
10-2 Sec. 261.201. PERIOD FOR COMPUTATION OF TAXABLE INCOME.
10-3 (a) For purposes of the tax imposed by this chapter, a taxpayer's
10-4 tax year is the same as the taxpayer's tax year for federal income
10-5 tax purposes.
10-6 (b) If a taxpayer's tax year is changed for federal income
10-7 tax purposes, the taxpayer's tax year for purposes of the tax
10-8 imposed by this chapter shall be similarly changed.
10-9 Sec. 261.202. METHODS OF ACCOUNTING. (a) A taxpayer's
10-10 method of accounting is the same as the taxpayer's method of
10-11 accounting for federal income tax purposes. If a single method of
10-12 accounting has not been regularly used by the taxpayer, taxable
10-13 income for purposes of this chapter shall be computed under any
10-14 method that in the opinion of the comptroller fairly reflects
10-15 income.
10-16 (b) If a taxpayer's method of accounting is changed for
10-17 federal income tax purposes, the taxpayer's method of accounting
10-18 for purposes of this chapter is changed in the same manner.
10-19 Sec. 261.203. ADJUSTMENTS. In computing a taxpayer's
10-20 taxable income for any tax year under a method of accounting
10-21 different from the method under which the taxpayer's taxable income
10-22 for the previous year was computed, there shall be taken into
10-23 account those adjustments that are determined, under rules
10-24 prescribed by the comptroller, to be necessary solely by reason of
10-25 the change in order to prevent amounts from being duplicated or
10-26 omitted.
10-27 Sec. 261.204. LIMITATION ON ADDITIONAL TAX. (a) If a
11-1 taxpayer's method of accounting is changed, other than from an
11-2 accrual to an installment method, an additional tax that results
11-3 from adjustments determined to be necessary solely because of the
11-4 change may not be greater than if those adjustments were ratably
11-5 allocated and included for the tax year of the change and not more
11-6 than two preceding tax years during which the taxpayer used the
11-7 method of accounting from which the change is made.
11-8 (b) If a taxpayer's method of accounting is changed from an
11-9 accrual to an installment method, an additional tax for the year of
11-10 the change of method and for a subsequent year that is attributable
11-11 to the receipt of installment payments properly accrued in a prior
11-12 year shall be reduced by the portion of tax for any prior tax year
11-13 attributable to the accrual of the installment payments, under
11-14 rules adopted by the comptroller.
11-15 (Sections 261.205-261.400 reserved for expansion
11-16 SUBCHAPTER E. PARTNERS AND PARTNERSHIPS
11-17 Sec. 261.401. ENTITY NOT TAXABLE. A partnership as an
11-18 entity is not subject to the tax imposed by this chapter. Persons
11-19 carrying on business as partners are liable for the tax imposed by
11-20 this chapter only in their separate or individual capacities.
11-21 Sec. 261.402. RESIDENT PARTNER--ADJUSTED GROSS INCOME.
11-22 (a) Partnership income, gain, loss, or deduction shall be
11-23 allocated in accordance with each partner's distributive share for
11-24 federal income tax purposes.
11-25 (b) Each item of partnership income, gain, loss, or
11-26 deduction has the same character for a partner under this chapter
11-27 as it has for federal income tax purposes. If an item is not
12-1 characterized for federal income tax purposes, it has the same
12-2 character for a partner as if realized directly from the source
12-3 from which realized by the partnership or incurred in the same
12-4 manner as incurred by the partnership.
12-5 (c) If a partner's distributive share of an item of
12-6 partnership income, gain, loss, or deduction is determined for
12-7 federal income tax purposes by a special provision in the
12-8 partnership agreement with respect to the item, and the principal
12-9 purpose of the provision is the avoidance or evasion of tax under
12-10 this chapter, the partner's distributive share of the item and a
12-11 modification required with respect to it is determined in
12-12 accordance with the partner's distributive share of the taxable
12-13 income or loss of the partnership generally, excluding those items
12-14 requiring separate computation under Section 702 of the Internal
12-15 Revenue Code of 1986.
12-16 Sec. 261.403. NONRESIDENT PARTNER--ADJUSTED GROSS INCOME
12-17 FROM SOURCES IN THIS STATE. (a) In determining the adjusted gross
12-18 income of a nonresident partner of any partnership, there shall be
12-19 included only that part derived from or connected with sources in
12-20 this state of the partner's distributive share of items of
12-21 partnership income, gain, loss, and deduction entering into the
12-22 partner's federal adjusted gross income, as that part is determined
12-23 under rules adopted by the comptroller and consistent with the
12-24 rules under Section 261.056.
12-25 (b) Except as authorized in Subsection (c), in determining
12-26 the sources of a nonresident partner's income, no effect is given
12-27 to a provision in the partnership agreement that:
13-1 (1) characterizes payments to the partner as being for
13-2 services or for the use of capital, or allocated to the partner, as
13-3 income or gain from sources outside this state, a greater
13-4 proportion of his distributive share of partnership income or gain
13-5 than the ratio of partnership income or gain from sources outside
13-6 this state to partnership income or gain from all sources; or
13-7 (2) allocates to the partner a greater proportion of a
13-8 partnership item of loss or deduction connected with sources in
13-9 this state than the partner's proportionate share, for federal
13-10 income tax purposes, of partnership loss or deduction generally.
13-11 (c) The comptroller may, on application, authorize the use
13-12 of other methods of determining a nonresident partner's portion of
13-13 partnership items derived from or connected with sources in this
13-14 state, and the modifications related to it, that are appropriate
13-15 and equitable, on terms and conditions the comptroller may require.
13-16 (d) A nonresident partner's distributive share of items of
13-17 income, gain, loss, or deduction is determined under Section
13-18 261.402(a). The character of partnership items for a nonresident
13-19 partner is determined under Section 261.402(b). The effect of a
13-20 special provision in a partnership agreement, other than a
13-21 provision referred to in Subsection (b), having as a principal
13-22 purpose the avoidance or evasion of tax under this chapter is
13-23 determined under Section 261.402(c).
13-24 (Sections 261.404-261.500 reserved for expansion
13-25 SUBCHAPTER F. TAX RETURNS AND PAYMENTS
13-26 Sec. 261.501. PERSONS REQUIRED TO MAKE RETURNS OF INCOME. A
13-27 state income tax return shall be made by every individual who has
14-1 adjusted gross income from sources in this state of more than
14-2 $69,000.
14-3 Sec. 261.502. JOINT RETURNS BY HUSBAND AND WIFE. (a) A
14-4 husband and wife may make a joint state income tax return even
14-5 though one of the spouses has no gross income or deductions except
14-6 that:
14-7 (1) a joint return may not be made if the spouses are
14-8 not permitted to file a joint federal income tax return;
14-9 (2) if the federal income tax liability of either
14-10 spouse is determined on a separate federal return, their income tax
14-11 liabilities under this chapter shall be determined on separate
14-12 returns;
14-13 (3) if the federal income tax liabilities of husband
14-14 and wife, other than a husband and wife described in Subsection
14-15 (b), are determined on a joint federal return, the husband and wife
14-16 shall file a joint return under this chapter, and their tax
14-17 liabilities are joint and several; and
14-18 (4) if neither spouse is required to file a federal
14-19 income tax return and either or both are required to file an income
14-20 tax return under this chapter, they may elect to file separate
14-21 returns or a joint return, and, according to their election, their
14-22 liabilities are separate or joint and several.
14-23 (b) If either husband or wife is a resident and the other is
14-24 a nonresident, they shall file on forms required by the comptroller
14-25 separate income tax returns in this state if either spouse has
14-26 income that is not community property, and in that case their tax
14-27 liabilities are separate; but they may elect to determine their
15-1 joint taxable income as if both were residents, and in that case
15-2 their liabilities are joint and several.
15-3 Sec. 261.503. RETURNS BY FIDUCIARIES. (a) An income tax
15-4 return for a deceased individual shall be made and filed by the
15-5 executor, administrator, or other person charged with the care of
15-6 the property of the decedent. A final return of a decedent is due
15-7 when it would have been due if the decedent had not died.
15-8 (b) An income tax return for an individual who is unable to
15-9 make a return because of minority or other disability shall be made
15-10 and filed by the individual's duly authorized agent, guardian,
15-11 conservator, fiduciary, or other person charged with the care of
15-12 the individual or the individual's property other than a receiver
15-13 in possession of only a part of the individual's property.
15-14 (c) If two or more fiduciaries are acting jointly, the
15-15 return may be made by any one of them.
15-16 Sec. 261.504. NOTICE OF QUALIFICATION AS RECEIVER. A
15-17 receiver, trustee in bankruptcy, assignee for benefit of creditors,
15-18 or other similar fiduciary shall give notice of his or her
15-19 qualification to the comptroller, as may be required by rule.
15-20 Sec. 261.505. CHANGE OF STATUS AS RESIDENT OR NONRESIDENT
15-21 DURING YEAR. (a) If the status of an individual changes during
15-22 the individual's tax year from resident to nonresident or from
15-23 nonresident to resident, the comptroller by rule may require the
15-24 individual to file one return for the portion of the year during
15-25 which the individual is a resident and one for the portion of the
15-26 year during which the individual is a nonresident.
15-27 (b) Except as provided in Subsection (c), the taxable income
16-1 of an individual is determined as provided in Section 261.051 for
16-2 residents and Section 261.054 for nonresidents as if the
16-3 individual's tax year for federal income tax purposes were limited
16-4 to the period of the individual's resident and nonresident status
16-5 respectively.
16-6 (c) There shall be included in determining taxable income
16-7 from sources in or outside this state, as the case may be, income,
16-8 gain, loss, or deduction accrued prior to the change of status even
16-9 though not otherwise includable or allowable in respect to the
16-10 period before the change, but the taxation or deduction of items
16-11 accrued before the change of status is not affected by the change.
16-12 (d) If two returns are required to be filed under this
16-13 section, the total of the taxes due may not be less than would be
16-14 due if the total of the taxable incomes reported on the two returns
16-15 were includable in one return.
16-16 Sec. 261.506. TIME AND PLACE FOR FILING RETURNS AND PAYING
16-17 TAX. The income tax return required by this chapter shall be filed
16-18 not later than the 15th day of the fourth month following the end
16-19 of the taxpayer's tax year. A person required to make and file a
16-20 return under this chapter shall pay a tax due to the comptroller
16-21 not later than the last day that the filing of the return is
16-22 allowed without penalty, excluding an extension of time for filing
16-23 the return. The comptroller by rule shall prescribe the place for
16-24 filing a return, statement, or other document required by this
16-25 chapter and for the payment of a tax.
16-26 Sec. 261.507. ESTIMATED TAX. (a) An individual subject to
16-27 the income tax imposed by this chapter shall make estimated
17-1 payments of the tax. The provisions of Section 6654, Internal
17-2 Revenue Code of 1986, other than Subsections (a), (b), (d)(2), and
17-3 (e) of that section, governing the payment of estimated federal
17-4 income taxes on individuals apply to the payments required by this
17-5 section, including exemptions from the estimated tax payment
17-6 requirement. A reference in that section to the federal income tax
17-7 imposed on individuals is construed as a reference to the tax
17-8 imposed by this chapter as required to administer this section. A
17-9 power or duty given by Section 6654 to the United States secretary
17-10 of the treasury is assigned to the comptroller for purposes of the
17-11 estimated payments required by this section.
17-12 (b) The comptroller shall adopt rules for the administration
17-13 of this section.
17-14 (c) Payment of the estimated tax or an installment is
17-15 considered payment on account of the tax imposed by this chapter.
17-16 Sec. 261.508. Extension of Time for Filing and Payment. (a)
17-17 The comptroller, on terms and conditions the comptroller may
17-18 require, may grant a reasonable extension of time for payment of
17-19 tax or an installment, or for filing a return, statement, or other
17-20 document required under this chapter. Except for an extension for
17-21 a taxpayer who is outside the United States, an extension for
17-22 filing any return, statement, or document may not exceed six
17-23 months.
17-24 (b) If the time for the payment of an amount of tax is
17-25 extended, the comptroller may require the taxpayer to furnish a
17-26 bond or other security in an amount not exceeding twice the amount
17-27 of tax for which the extension of time for payment is granted, on
18-1 terms and conditions the comptroller may require.
18-2 Sec. 261.509. Change of Election. An election expressly
18-3 authorized by this chapter may be changed as authorized by the
18-4 comptroller or by the comptroller's rule.
18-5 Sec. 261.510. Signing of Returns and Other Documents. (a)
18-6 A return, statement, or other document required to be made or filed
18-7 under this chapter shall be signed as provided by the comptroller.
18-8 An individual's name signed to a return, statement, or other
18-9 document is prima facie evidence that the individual signed the
18-10 return, statement, or other document.
18-11 (b) A return, statement, or other document required of a
18-12 partnership must be signed by at least one partner. A partner's
18-13 name signed to a return, statement, or other document is prima
18-14 facie evidence that the partner is authorized to sign on behalf of
18-15 the partnership.
18-16 (c) The making or filing of a return, statement, or other
18-17 document or copy required to be made or filed under this chapter,
18-18 including a copy of a federal return, constitutes a certification
18-19 by the person making or filing the return, statement, or other
18-20 document or copy that the statements contained in it are true and
18-21 that a copy filed is a true copy.
18-22 (Sections 261.511-261.520 reserved for expansion
18-23 SUBCHAPTER G. INFORMATION RETURNS
18-24 Sec. 261.521. General Requirements. The comptroller by rule
18-25 may require the keeping of records, the content and form of returns
18-26 and statements, and the filing of copies of federal income returns
18-27 and determinations. The comptroller may require a person, by rule
19-1 or by notice served on the person, to make returns, render
19-2 statements, or keep records, as the comptroller considers
19-3 sufficient to show whether the person is liable under this chapter
19-4 for tax or for the collection of tax.
19-5 Sec. 261.522. Partnership Return. Each partnership having a
19-6 resident partner or having income derived from sources in this
19-7 state, determined in accordance with the applicable rules of
19-8 Section 261.056 as in the case of a nonresident individual, shall
19-9 make a return for the tax year setting forth all items of income,
19-10 gain, loss, and deduction, and the names and addresses of the
19-11 individuals, whether residents or nonresidents, who would be
19-12 entitled to share in the net income if distributed and the amount
19-13 of the distributive share of each individual, and other relevant
19-14 information the comptroller requires by rules or instructions. The
19-15 return must be filed not later than the 15th day of the fourth
19-16 month following the end of each tax year. For purposes of this
19-17 section, "tax year" means a year or period that would be a tax year
19-18 of the partnership if it were subject to tax under this chapter.
19-19 Sec. 261.523. Information Returns. The comptroller by rule
19-20 may require returns of information to be made and filed not later
19-21 than February 28 of each year by a person making payment or
19-22 crediting in a calendar year the amount of $600 or more ($10 or
19-23 more in the case of interest or dividends) to a person who may be
19-24 subject to the tax imposed under this chapter. The returns may be
19-25 required of any person, including a lessee or mortgagor of real or
19-26 personal property, a fiduciary, an employer, and an officer or
19-27 employee of this state, or of any municipality or other political
20-1 subdivision of this state, having the control, receipt, custody,
20-2 disposal, or payment of dividends, interest, rents, salaries,
20-3 wages, premiums, annuities, compensations, remunerations,
20-4 emoluments, or other fixed or determinable gains, profits, or
20-5 income, except interest coupons payable to bearer. A copy of the
20-6 withholding statement required to be furnished by an employer to an
20-7 employee constitutes the return of information required to be made
20-8 under this section for wages.
20-9 Sec. 261.524. Report of Change in Federal Taxable Income.
20-10 (a) If the amount of a taxpayer's federal taxable income reported
20-11 on the taxpayer's federal income tax return for a tax year is
20-12 changed or corrected by the United States Internal Revenue Service
20-13 or other competent authority, or as the result of a renegotiation
20-14 of a contract or subcontract with the United States, the taxpayer
20-15 shall:
20-16 (1) report the change or correction in federal taxable
20-17 income not later than the 90th day after the final determination of
20-18 the change, correction, or renegotiation, or as required by the
20-19 comptroller; and
20-20 (2) concede the accuracy of the determination or state
20-21 in what way it is erroneous.
20-22 (b) A taxpayer filing an amended federal income tax return
20-23 shall also file, not later than the 90th day after filing, an
20-24 amended return under this chapter, and shall give any information
20-25 required by the comptroller.
20-26 (c) The comptroller by rule may prescribe exceptions to the
20-27 requirements of this section.
21-1 (Sections 261.525-261.600 reserved for expansion
21-2 SUBCHAPTER H. ADDITIONS TO TAX; PENALTIES
21-3 Sec. 261.601. Failure to File Tax Return. (a) A person who
21-4 does not file a return required under this chapter on or before the
21-5 prescribed date is subject to the following penalty based on a
21-6 percentage of the full amount of tax owed on the prescribed day:
21-7 (1) if the return is filed not later than the 30th day
21-8 after the prescribed date, five percent;
21-9 (2) if the return is filed later than the 30th day
21-10 after the prescribed date, but not later than the 60th day after
21-11 the prescribed date, 10 percent;
21-12 (3) if the return is filed later than the 60th day
21-13 after the prescribed date, but not later than the 90th day after
21-14 the prescribed date, 15 percent;
21-15 (4) if the return is filed later than the 90th day
21-16 after the prescribed date, but not later than the 120th day after
21-17 the prescribed date, 20 percent; or
21-18 (5) if the return is filed later than the 120th day
21-19 after the prescribed date, 25 percent.
21-20 (b) The prescribed date is determined with regard to an
21-21 extension of time for filing.
21-22 (c) In determining the amount owed on the prescribed date,
21-23 the taxpayer is entitled to credit for a portion of the tax paid on
21-24 or before the prescribed date and other credit that may be claimed
21-25 on the return.
21-26 (d) The penalty required by this section does not apply if
21-27 the taxpayer shows that the failure to file a return was not the
22-1 result of wilful neglect before the prescribed date or at any time
22-2 during the delinquency and that good cause for the failure existed
22-3 at all times before filing.
22-4 Sec. 261.602. Failure to File Information Return. (a) A
22-5 person who does not file a statement of payment to another person
22-6 required under the authority of this chapter or a duplicate
22-7 statement of tax withheld on wages on or before the prescribed date
22-8 for filing shall, after notice and demand by the comptroller, pay a
22-9 penalty of $5 for each statement not timely filed.
22-10 (b) The total amount of penalties imposed under this section
22-11 on any person during a single calendar year may not exceed $2,000.
22-12 (c) The prescribed date for filing is determined with regard
22-13 to any extension of time for filing.
22-14 (d) The penalty required by this section is not applicable
22-15 if the person required to file the statement shows that the failure
22-16 to file did not result from wilful neglect and that there was good
22-17 cause for the failure.
22-18 Sec. 261.603. Failure to Pay Tax. (a) A person who does
22-19 not pay any amount of tax owed by the person on the prescribed date
22-20 shall pay, in addition to all other penalties and additions, a
22-21 penalty of 10 percent of the amount of the tax due and owing on the
22-22 prescribed date.
22-23 (b) The prescribed date is determined with regard to
22-24 extensions of time allowed by the comptroller.
22-25 (c) A failure to pay all or part of an estimated tax is
22-26 considered to be an underpayment of estimated tax. The comptroller
22-27 by rule shall prescribe the method of determining the amount and
23-1 period of underpayment.
23-2 Sec. 261.604. Failure to Pay Over Withholding Tax. (a) An
23-3 employer who fails to pay the tax withheld by the employer or
23-4 required to be withheld by the employer at the time required under
23-5 this chapter is liable for the amount of the unpaid tax in addition
23-6 to the amount of the penalty prescribed in Section 261.603 together
23-7 with interest on the full amount of tax and penalty due.
23-8 (b) Interest and addition assessed under this section may
23-9 not be collected from the employee by the employer.
23-10 (c) The comptroller has the same rights and powers for the
23-11 collection of the tax, addition, and interest against an employer
23-12 as are prescribed for the collection of the tax against an
23-13 individual.
23-14 Sec. 261.605. Penalties and Additions Treated as Tax. The
23-15 penalties and additions provided by this subchapter shall be paid
23-16 on notice and demand and shall be assessed, collected, and paid in
23-17 the same manner as other taxes. The comptroller may issue a
23-18 deficiency notice for all or part of a penalty or addition along
23-19 with or separate from the amount of tax owed in absence of
23-20 additions or penalties.
23-21 (Sections 261.606-261.630 reserved for expansion
23-22 SUBCHAPTER I. CREDITS AND REFUNDS
23-23 Sec. 261.631. Credits and Refunds. (a) Within the
23-24 applicable period of limitations the comptroller may credit an
23-25 overpayment of income tax and interest on the overpayment against a
23-26 liability of a tax imposed by the tax laws of this state on the
23-27 person who made the overpayment, and the balance shall be refunded
24-1 by the comptroller out of the proceeds of the tax retained by the
24-2 comptroller.
24-3 (b) If the amount allowable as a credit for tax withheld
24-4 from the taxpayer exceeds the tax to which the credit relates, the
24-5 excess is an overpayment.
24-6 (c) If there has been an overpayment of tax required to be
24-7 deducted and withheld under Section 261.101, refund shall be made
24-8 to the employer only to the extent that the amount of the
24-9 overpayment was not deducted and withheld by the employer.
24-10 (d) The comptroller may prescribe rules providing for
24-11 crediting against the estimated tax for a tax year the amount
24-12 determined to be an overpayment of the income tax for a preceding
24-13 tax year.
24-14 (e) If an amount of income tax is assessed and collected
24-15 after the expiration of the period of limitations properly
24-16 applicable, the amount is an overpayment.
24-17 Sec. 261.632. Abatements. (a) The comptroller may abate
24-18 any unpaid portion of a tax or a tax liability that is excessive in
24-19 amount, assessed after the expiration of the applicable period of
24-20 limitations, or erroneously or illegally assessed.
24-21 (b) The comptroller may abate the unpaid portion of a tax or
24-22 a tax liability if the comptroller determines under uniform rules
24-23 prescribed by the comptroller that the administration and
24-24 collection costs involved would not warrant collection of the
24-25 amount due.
24-26 Sec. 261.633. EXTENDED LIMITATION PERIOD. (a) If a
24-27 taxpayer is required by Section 261.524 to report a change or
25-1 correction in federal taxable income reported on a federal income
25-2 tax return, or to report a change or correction that is treated in
25-3 the same manner as if it were an overpayment for federal income tax
25-4 purposes, or to file an amended return with the comptroller, a
25-5 claim for credit or refund of a resulting overpayment of tax must
25-6 be filed by the taxpayer not later than two years after the notice
25-7 of the change or correction or the amended return was required to
25-8 be filed with the comptroller. If the report or amended return
25-9 required by Section 261.524 is not filed within the period
25-10 specified by that section, interest on a resulting refund or credit
25-11 ceases to accrue after the period. The amount of credit or refund
25-12 may not exceed the amount of the reduction in tax attributable to
25-13 the federal change, correction, or items amended on the taxpayer's
25-14 amended federal income tax return. This subsection does not affect
25-15 the time within which or the amount for which a claim for credit or
25-16 refund may be filed apart from this section.
25-17 (b) If a claim for credit or refund relates to an
25-18 overpayment of tax on account of the deductibility by the taxpayer
25-19 of a debt as a debt that became worthless or a loss from
25-20 worthlessness of a security or the effect that the deductibility of
25-21 a debt or of a loss has on the application to the taxpayer of a
25-22 carryover, the claim may be made, under rules adopted by the
25-23 comptroller, not later than the seventh year after the date
25-24 prescribed by law for filing the return for the year with respect
25-25 to which the claim is made.
25-26 (c) If a claim for credit or refund relates to an
25-27 overpayment attributable to a net operating loss carryback, the
26-1 claim may be made, under rules adopted by the comptroller, not
26-2 later than the 15th day of the 40th month following the end of the
26-3 tax year of the net operating loss that resulted in the carryback
26-4 or the period prescribed by Section 111.104, whichever expires
26-5 later.
26-6 (Sections 261.634-261.650 reserved for expansion
26-7 SUBCHAPTER J. MISCELLANEOUS ENFORCEMENT PROVISIONS
26-8 Sec. 261.651. Taxpayer not Resident. If notice and demand
26-9 for the payment of a tax is given to a nonresident and it appears
26-10 to the comptroller that it is not practicable to locate property of
26-11 the taxpayer sufficient in amount to cover the amount of tax due,
26-12 the comptroller may authorize the institution of any available
26-13 action or proceeding to collect or enforce the claim in any place
26-14 by any procedure by which a civil judgment of a court of record of
26-15 this state could be collected or enforced. The comptroller may
26-16 designate agents or retain counsel outside this state for the
26-17 purpose of collecting taxes due under this chapter and require of
26-18 them bonds or other security for the faithful performance of their
26-19 duties. The comptroller may enter into agreements with the tax
26-20 department of another state for the collection of taxes from
26-21 persons found in this state who are delinquent in the payment of
26-22 income taxes imposed by that state on condition that the agreeing
26-23 state afford similar assistance in the collection of taxes from
26-24 persons found in that state who are delinquent in the payment of
26-25 taxes imposed by this chapter.
26-26 Sec. 261.652. Income Tax Claims of Other States. The courts
26-27 of this state shall recognize and enforce liabilities for personal
27-1 income taxes lawfully imposed by another state that extends a like
27-2 comity to this state, and the duly authorized officer of the other
27-3 state may sue for the collection of personal income tax in the
27-4 courts of this state. A certificate by the secretary of state of
27-5 the other state that an officer suing for the collection of the tax
27-6 is duly authorized to collect the tax is conclusive proof of the
27-7 officer's authority. For the purposes of this section, "taxes"
27-8 includes additions to tax, interest, and penalties.
27-9 Sec. 261.653. Order to Compel Compliance. (a) On
27-10 application of the attorney general, a judge of a court of
27-11 appropriate jurisdiction for the county in which a taxpayer or
27-12 other person who intentionally or knowingly refuses to file a tax
27-13 return required by this chapter may, by order, direct the person to
27-14 file the return. A person who fails or refuses to obey the order
27-15 is guilty of contempt of court.
27-16 (b) If any person intentionally or knowingly refuses to make
27-17 available any books, papers, records, or memorandums for
27-18 examination by the comptroller or wilfully refuses to attend and
27-19 testify, pursuant to the powers conferred on the comptroller by
27-20 Chapter 111, on application of the comptroller, a judge in the
27-21 court of appropriate jurisdiction for the county where the person
27-22 resides may by order direct the person to comply with the
27-23 comptroller's request for books, papers, records, or memorandums or
27-24 for the person's attendance and testimony. If the books, papers,
27-25 records, or memorandums required by the comptroller are in the
27-26 custody of a corporation, the order of the court may be directed to
27-27 any principal officer of the corporation. A person who fails or
28-1 refuses to obey the order is guilty of contempt of court.
28-2 Sec. 261.654. Transferees. (a) The liability, at law or in
28-3 equity, of a transferee of property of a taxpayer for any tax,
28-4 addition to tax, penalty, or interest due under this chapter, is
28-5 assessed, paid, and collected in the same manner and subject to the
28-6 same provisions and limitations as in the case of the tax to which
28-7 the liability relates except as otherwise provided in this section.
28-8 "Transferee" includes an heir or a recipient of a donation, legacy,
28-9 devise, or distribution.
28-10 (b) The period of limitation for assessment of liability of
28-11 a transferee is:
28-12 (1) one year after the expiration of the period of
28-13 limitation against the initial transferor if the transferee is the
28-14 initial transferee;
28-15 (2) one year after the expiration of the period of
28-16 limitation against the preceding transferee, but not more than
28-17 three years after the expiration of the period of limitation for
28-18 assessment against the initial transferor, if the transferee is not
28-19 the initial transferee; or
28-20 (3) notwithstanding Subdivisions (1) and (2), if
28-21 before the expiration of the period of limitation under Subdivision
28-22 (1) or (2) a proceeding for the collection of the liability has
28-23 been begun against the initial transferor or the last preceding
28-24 transferee, respectively, one year after the proceeding is
28-25 terminated.
28-26 (c) If, before the expiration of the period of limitation
28-27 applicable to a transferee, the comptroller and the transferee
29-1 consent in writing to an assessment after that time, the liability
29-2 may be assessed at any time before the expiration of the agreed
29-3 period. The period of limitation on credit or refund to the
29-4 transferee of overpayments of tax made by the transferee or of
29-5 overpayments of tax made by the transferor of which the transferee
29-6 is legally entitled to credit or refund is extended by an agreement
29-7 under this subsection and any extension of the agreement.
29-8 (d) If a person dies, the period of limitation for
29-9 assessment against that person is the period that would be in
29-10 effect had death not occurred.
29-11 Sec. 261.655. Jeopardy Determinations. (a) If the
29-12 comptroller issues a jeopardy determination for a tax for a current
29-13 period, the comptroller shall terminate the tax period of the
29-14 taxpayer immediately, and the notice and demand for a return and
29-15 immediate payment of the tax shall apply to the terminated period
29-16 and to income accrued and deductions incurred on or before
29-17 termination date if not otherwise properly includable or deductible
29-18 for the period.
29-19 (b) The comptroller may abate the jeopardy determination if
29-20 he finds that jeopardy does not exist.
29-21 Sec. 261.656. Bankruptcy or Receivership. (a) On the
29-22 adjudication of bankruptcy of any taxpayer in any bankruptcy
29-23 proceeding or the appointment of a receiver for any taxpayer in any
29-24 receivership proceeding before any court of the United States or
29-25 any state or territory, any deficiency, together with additions to
29-26 tax and interest provided by law, determined by the comptroller may
29-27 be immediately assessed.
30-1 (b) Claims for the deficiency and additions to tax and
30-2 interest may be presented, for adjudication in accordance with law,
30-3 to the court before which the bankruptcy or receivership proceeding
30-4 is pending, despite the pendency of any protest before the
30-5 comptroller. A protest against a proposed assessment may not be
30-6 filed with the comptroller after the adjudication of bankruptcy or
30-7 appointment of the receiver.
30-8 Sec. 261.657. EVIDENCE OF RELATED FEDERAL DETERMINATION.
30-9 Evidence of a federal determination relevant to the taxes imposed
30-10 by this chapter is admissible in an administrative or judicial
30-11 proceeding relating to those taxes.
30-12 (Sections 261.658-261.670 reserved for expansion
30-13 SUBCHAPTER K. OFFENSES
30-14 Sec. 261.671. Attempt to Evade or Defeat Tax. (a) A person
30-15 commits an offense if the person intentionally or knowingly
30-16 attempts in any manner to evade or defeat a tax imposed by this
30-17 chapter or the payment of tax imposed by this chapter.
30-18 (b) An offense under this section is a felony of the third
30-19 degree.
30-20 Sec. 261.672. Failure to Collect or Pay Over. (a) A person
30-21 commits an offense if the person is required under this chapter to
30-22 collect, truthfully account for, and pay over a tax imposed by this
30-23 chapter and the person intentionally or knowingly fails to collect
30-24 or truthfully account for and pay over the tax.
30-25 (b) An offense under this section is a felony of the third
30-26 degree.
30-27 Sec. 261.673. Failure to File Return, Supply Information, or
31-1 Pay Tax. (a) A person commits an offense if the person is
31-2 required under this chapter to pay a tax, or required by this
31-3 chapter or rule adopted under this chapter to make a return, to
31-4 keep records, or to supply information, and the person
31-5 intentionally or knowingly fails to pay the tax, make the return,
31-6 keep the records, or supply the information at the time or times
31-7 required by law.
31-8 (b) An offense under this section is a Class A misdemeanor.
31-9 (Sections 261.674-261.680 reserved for expansion
31-10 SUBCHAPTER L. POWERS OF COMPTROLLER
31-11 Sec. 261.681. Cooperation with Other Jurisdictions. The
31-12 comptroller may permit the United States secretary of the treasury
31-13 or the secretary's delegate, or the proper officer of any state or
31-14 other jurisdiction imposing an income tax on the incomes of
31-15 individuals, or the authorized representative of either officer, to
31-16 inspect the income tax returns of an individual, or may furnish to
31-17 the officer or authorized representative an abstract of the return
31-18 of income of an individual or supply the officer with information
31-19 concerning an item of income contained in a return, or disclosed by
31-20 the report of an investigation of the income or return of income of
31-21 an individual, but permission may be granted only if the statutes
31-22 of the United States or of the other jurisdiction, as applicable,
31-23 grant substantially similar privileges to the comptroller.
31-24 Sec. 261.682. Cooperation with Other Tax Officials of This
31-25 State. The comptroller may permit other tax officials of this
31-26 state to inspect tax returns and reports filed under this chapter
31-27 but the inspection shall be permitted only for purposes of
32-1 enforcing a tax law and only to the extent and under the conditions
32-2 prescribed by rule of the comptroller.
32-3 Sec. 261.683. Contract with Secretary of Treasury for
32-4 Collection of Tax. The comptroller may enter into an agreement
32-5 with the United States secretary of the treasury or the secretary's
32-6 delegate, under which, to the extent provided by the terms of the
32-7 agreement, the secretary or delegate will administer, enforce, and
32-8 collect a tax imposed by this chapter on behalf of this state. The
32-9 cost of the services performed by the secretary or delegate in
32-10 administering, enforcing, or collecting the tax under the terms of
32-11 the agreement may be paid from the appropriations for the general
32-12 operations of the comptroller.
32-13 Sec. 261.684. Armed Forces Relief Provisions. (a) The
32-14 period of service in the armed forces of the United States in a
32-15 combat zone plus a period of continuous hospitalization outside
32-16 this state attributable to that service plus the next 180 days
32-17 shall be disregarded in determining, under rules of the
32-18 comptroller, whether an act required by this chapter was performed
32-19 by a taxpayer or the taxpayer's representative within the time
32-20 prescribed.
32-21 (b) In the case of an individual who dies during an
32-22 induction period while in active service as a member of the armed
32-23 forces of the United States, if the death occurred while the
32-24 individual was serving in a combat zone or as a result of wounds,
32-25 disease, or injury incurred while so serving, the tax imposed by
32-26 this chapter does not apply to the tax year in which the individual
32-27 dies or to any prior tax year ending on or after the first day the
33-1 individual so served in a combat zone.
33-2 Sec. 261.685. Disposition of Proceeds. The revenue from the
33-3 tax imposed by this chapter shall be deposited to the credit of the
33-4 general revenue fund.
33-5 SECTION 2. Section 111.201, Tax Code, is amended to read as
33-6 follows:
33-7 Sec. 111.201. ASSESSMENT LIMITATION. (a) No tax imposed by
33-8 this title may be assessed after four years from the date that the
33-9 tax becomes due and payable except as provided by Subsection (b).
33-10 (b) A tax imposed by Chapter 261 may not be assessed after
33-11 six years from the date the tax becomes due and payable.
33-12 SECTION 3. A referendum as required by Section 24, Article
33-13 VIII, Texas Constitution, on the adoption of the income tax under
33-14 this Act shall be submitted to the voters at an election to be held
33-15 November 6, 2001. The ballot for the referendum shall be printed
33-16 to permit voting for or against the proposition: "The adoption of
33-17 an income tax at a rate of four percent on individuals with net
33-18 incomes greater than $69,000."
33-19 SECTION 4. (a) If the proposition in Section 3 of this Act
33-20 is approved, this Act takes effect January 1, 2002.
33-21 (b) If the proposition in Section 3 of this Act is not
33-22 approved, this Act has no effect.
33-23 SECTION 5. (a) Except as provided by Subsection (b) of this
33-24 section, this Act applies to income earned, accrued, or received on
33-25 or after the effective date of this Act.
33-26 (b) Income, deductions, losses, credits against income, or
33-27 other adjustment allowed in determining the amount of tax under
34-1 this Act or the amount of federal adjusted gross income under this
34-2 Act, including carryovers, are not prohibited in computing the
34-3 taxes for a tax period beginning on January 1, 2002, because those
34-4 adjustments may have accrued or otherwise originated before the
34-5 effective date of this Act.
34-6 (c) In 2002, the comptroller by rule may suspend the
34-7 application of Section 261.507, Tax Code, as added by this Act, in
34-8 whole or in part, and may extend the deadlines for estimated tax
34-9 payments under that section.