By Maxey H.B. No. 3464
Line and page numbers may not match official copy.
Bill not drafted by TLC or Senate E&E.
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the reform of the state tax system to provide revenue
1-3 for the support and operation of the general government and the
1-4 public school system.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 ARTICLE 1. SCHOOL PROPERTY TAX CUT
1-7 SECTION 1.01. This Act may be known as the Tax Reform Act of
1-8 2001.
1-9 SECTION 1.02. Chapter 403, Government Code, is amended by
1-10 adding Subchapter N to read as follows:
1-11 SUBCHAPTER N. TEXAS SCHOOL TRUST FUND
1-12 Sec. 403.351. DEFINITION. In this subchapter, "fund" means
1-13 the Texas School Trust Fund created by Section 5-a, Article VII,
1-14 Texas Constitution.
1-15 Sec. 403.352. ADMINISTRATION OF FUND. The comptroller shall
1-16 administer the fund.
1-17 Sec. 403.353. INVESTMENT OF FUND. The comptroller shall
1-18 invest money credited to the fund that is not immediately needed
1-19 for payments under this subchapter in investments authorized by
1-20 Chapter 2256.
1-21 Sec. 403.354. REIMBURSEMENT FOR ADDITIONAL EXEMPTION. (a) A
1-22 school district is entitled to reimbursement from the fund for lost
1-23 ad valorem tax revenue resulting from the $20,000 residence
2-1 homestead exemption required by Section 1-b(g), Article VIII, Texas
2-2 Constitution.
2-3 (b) The comptroller shall compute each school district's
2-4 lost ad valorem tax revenue resulting from the exemption described
2-5 by Subsection (a). The comptroller shall adopt rules under which a
2-6 school district or appraisal district must report information
2-7 relating to property values and tax rates necessary to allow the
2-8 comptroller to make the commutation.
2-9 Sec. 403.355. REIMBURSEMENT FOR PROPERTY TAX RATE RELIEF.
2-10 (a) A school district is entitled to reimbursement from the fund
2-11 for lost ad valorem tax revenue resulting from the $0.20 per $100
2-12 valuation reduction in the district's maintenance and operation tax
2-13 rate required by Section 26.048, Tax Code, as added by ____ B. No.
2-14 ____, Acts of the 75th Legislature, Regular Session, 1997.
2-15 (b) Except as provided by Subsection (c), the amount of
2-16 reimbursement under this section is computed by dividing the
2-17 district's taxable value of property for the tax year by 100 and
2-18 multiplying the resulting quotient by 20 cents.
2-19 (c) For purposes of Subsection (b), the reimbursement for a
2-20 district with a wealth per student equal to or greater than the
2-21 equalized wealth level is based on the taxable value of property
2-22 the commissioner of education considers that the district retains
2-23 as a result of actions taken under Chapter 41, Education Code. In
2-24 this subsection, "equalized wealth level" has the meaning assigned
2-25 by Section 41.001, Education Code.
2-26 (d) This section takes effect January 1, 1998, and applies
3-1 only to the 1998 and subsequent tax years. This subsection expires
3-2 January 2, 1998.
3-3 Sec. 403.356. PAYMENT OF REIMBURSEMENTS. (a) The
3-4 comptroller shall pay a reimbursement under Section 403.354 or
3-5 403.355 not later than January 31 of the school year for which the
3-6 reimbursement is made.
3-7 (b) In connection with the payment of reimbursements under
3-8 this subchapter, the comptroller may audit the records of a school
3-9 district and may adjust a payment to a school district under this
3-10 subchapter, Chapter 41 or 42, Education Code, or other law if the
3-11 district has received an amount under Subsection (a) that is less
3-12 than or greater than the reimbursement to which the district is
3-13 entitled.
3-14 SECTION 1.03. Effective January 1, 1998, Section 403.354,
3-15 Government Code, as added by Section 1.02 of this Act, is amended
3-16 to read as follows:
3-17 Sec. 403.354. REIMBURSEMENT FOR ADDITIONAL EXEMPTIONS AND
3-18 LIMITATIONS. (a) A school district is entitled to reimbursement
3-19 from the fund for lost ad valorem tax revenue resulting from:
3-20 (1) the $20,000 residence homestead exemption required
3-21 by Section 1-b(g), Article VIII, Texas Constitution;
3-22 (2) the tax freeze limitation required by Section
3-23 1-b(d), Article VIII, Texas Constitution, but only to the extent of
3-24 the increase in that limitation under Section 1-b(g) of that
3-25 article; and
3-26 (3) the business inventory exemption required by
4-1 Section 11.25, Tax Code.
4-2 (b) The comptroller shall compute each school district's
4-3 lost ad valorem tax revenue resulting from the exemptions and
4-4 limitation described by Subsection (a). The comptroller shall
4-5 adopt rules under which a school district or appraisal district
4-6 must report information relating to property values, tax rates, and
4-7 taxpayer eligibility necessary to allow the comptroller to make the
4-8 computation.
4-9 SECTION 1.04. Section 21.402(b), Education Code, is amended
4-10 to read as follows:
4-11 (b) Not later than June 1 of each year, the commissioner
4-12 shall determine the amount appropriated for purposes of Chapter 42
4-13 for the state fiscal year beginning September 1. The commissioner
4-14 shall exclude from the determination:
4-15 (1) amounts designated solely for use in connection
4-16 with school facilities or for payment of principal of and interest
4-17 on bonds; [and]
4-18 (2) local funds received under Subchapter D, Chapter
4-19 41; and
4-20 (3) amounts received by school districts from the
4-21 Texas School Trust Fund under Subchapter N, Chapter 403, Government
4-22 Code.
4-23 SECTION 1.05. Section 29.008(b), Education Code, is amended
4-24 to read as follows:
4-25 (b) Except as provided by Subsection (c), costs of an
4-26 approved contract for residential placement may be paid from a
5-1 combination of federal, state, and local funds. The local share of
5-2 the total contract cost for each student is that portion of the
5-3 local tax effort that exceeds the district's local fund assignment
5-4 under Section 42.252, divided by the average daily attendance in
5-5 the district. If the contract involves a private facility, the
5-6 state share of the total contract cost is that amount remaining
5-7 after subtracting the local share. If the contract involves a
5-8 public facility, the state share is that amount remaining after
5-9 subtracting the local share from the portion of the contract that
5-10 involves the costs of instructional and related services. For
5-11 purposes of this subsection, "local tax effort" means the total
5-12 amount of money generated by taxes imposed for debt service and
5-13 maintenance and operation plus any amounts received from the Texas
5-14 School Trust Fund under Subchapter N, Chapter 403, Government Code.
5-15 SECTION 1.06. Section 41.002(f), Education Code, is amended
5-16 to read as follows:
5-17 (f) For purposes of Subsections (d) and (e), a school
5-18 district's effective tax rate is determined by dividing the total
5-19 amount of taxes collected by the district for the applicable school
5-20 year plus any amounts received from the Texas School Trust Fund
5-21 under Section 403.354, Government Code, by the quotient of the
5-22 district's taxable value of property, as determined under
5-23 Subchapter M, Chapter 403, Government Code, divided by 100. This
5-24 subsection expires September 1, 1998.
5-25 SECTION 1.07. Section 41.093, Education Code, is amended to
5-26 read as follows:
6-1 Sec. 41.093. COST. (a) The cost of each credit is an amount
6-2 equal to the greater of:
6-3 (1) the amount of the district's total tax revenue per
6-4 student in weighted average daily attendance for the school year
6-5 for which the contract is executed; or
6-6 (2) the amount of the statewide district average of
6-7 total tax revenue per student in weighted average daily attendance
6-8 for the school year preceding the school year for which the
6-9 contract is executed.
6-10 (b) For purposes of this section, total tax revenue includes
6-11 amounts received from the Texas School Trust Fund under Section
6-12 403.354, Government Code.
6-13 SECTION 1.08. Section 41.097(a), Education Code, is amended
6-14 to read as follows:
6-15 (a) The total amount required under Section 41.093 for a
6-16 district to purchase attendance credits under this subchapter for
6-17 any school year is reduced by an amount equal to the product of the
6-18 district's costs under Section 6.06, Tax Code, for the central
6-19 appraisal district in which it participates multiplied by a
6-20 percentage that is computed by dividing the total amount required
6-21 under Section 41.093 by the total amount of taxes imposed in the
6-22 district for that year plus any amounts received from the Texas
6-23 School Trust Fund under Section 403.354, Government Code.
6-24 SECTION 1.09. Section 42.251(b), Education Code, is amended
6-25 to read as follows:
6-26 (b) The program shall be financed by:
7-1 (1) ad valorem tax revenue generated by an equalized
7-2 uniform school district effort;
7-3 (2) ad valorem tax revenue generated by local school
7-4 district effort in excess of the equalized uniform school district
7-5 effort;
7-6 (3) state available school funds distributed in
7-7 accordance with law; [and]
7-8 (4) amounts distributed from the Texas School Trust
7-9 Fund under Subchapter N, Chapter 403, Government Code; and
7-10 (5) state funds appropriated for the purposes of
7-11 public school education and allocated to each district in an amount
7-12 sufficient to finance the cost of each district's Foundation School
7-13 Program not covered by other funds specified in this subsection.
7-14 SECTION 1.10. Section 42.252(d), Education Code, is amended
7-15 to read as follows:
7-16 (d) A school district must raise its total local share of
7-17 the Foundation School Program to be eligible to receive foundation
7-18 school fund payments. For purposes of this chapter, the
7-19 commissioner shall also consider amounts received from the Texas
7-20 School Trust Fund under Subchapter N, Chapter 403, Government Code,
7-21 as money raised by a district to meet its local share.
7-22 SECTION 1.11. Section 42.302(b), Education Code, is amended
7-23 to read as follows:
7-24 (b) In computing the district enrichment and facilities tax
7-25 rate of a school district, the commissioner shall add amounts
7-26 received from the Texas School Trust Fund under Subchapter N,
8-1 Chapter 403, Government Code, to the total amount of taxes
8-2 collected by the district. The [the] total amount of taxes
8-3 collected by the school district does not include the amount of:
8-4 (1) the district's local fund assignment under Section
8-5 42.252; or
8-6 (2) taxes collected to pay the local share of the cost
8-7 of an instructional facility for which the district receives state
8-8 assistance under Subchapter H.
8-9 SECTION 1.12. Section 42.304, Education Code, is amended to
8-10 read as follows:
8-11 Sec. 42.304. COMPUTATION OF AID FOR DISTRICT ON MILITARY
8-12 RESERVATION OR AT STATE SCHOOL. State assistance under this
8-13 subchapter for a school district located on a federal military
8-14 installation or at Moody State School is computed using the average
8-15 effective tax rate computed as provided by Section 42.401(1) and
8-16 property value per student of school districts in the county, as
8-17 determined by the commissioner.
8-18 SECTION 1.13. Section 42.401(1), Education Code, is amended
8-19 to read as follows:
8-20 (1) "Effective tax rate" means a tax rate that is
8-21 determined by adding [dividing] the amount of taxes collected by a
8-22 school district and any amounts received from the Texas School
8-23 Trust Fund under Subchapter N, Chapter 403, Government Code, and
8-24 dividing that total by the quotient of the district's taxable value
8-25 of property, as determined under Subchapter M, Chapter 403,
8-26 Government Code, divided by 100.
9-1 SECTION 1.14. (a) Section 403.302(d), Government Code, is
9-2 amended to read as follows:
9-3 (d) For the purposes of this section, "taxable value" means
9-4 market value less:
9-5 (1) the total dollar amount of any exemptions of part
9-6 but not all of the value of taxable property required by the
9-7 constitution or a statute that a district lawfully granted in the
9-8 year that is the subject of the study, other than the $20,000
9-9 residence homestead exemption required by Section 1-b(g), Article
9-10 VIII, Texas Constitution;
9-11 (2) the total dollar amount of any exemptions granted
9-12 before May 31, 1993, within a reinvestment zone under agreements
9-13 authorized by Chapter 312, Tax Code;
9-14 (3) the total dollar amount of any captured appraised
9-15 value of property that is located in a reinvestment zone and that
9-16 is eligible for tax increment financing under Chapter 311, Tax
9-17 Code;
9-18 (4) the total dollar amount of any exemptions granted
9-19 under Section 11.251, Tax Code;
9-20 (5) the difference between the market value and the
9-21 productivity value of land that qualifies for appraisal on the
9-22 basis of its productive capacity, except that the productivity
9-23 value may not exceed the fair market value of the land;
9-24 (6) the portion of the appraised value of residence
9-25 homesteads of the elderly on which school district taxes are not
9-26 imposed in the year that is the subject of the study, calculated as
10-1 if the residence homesteads were appraised at the full value
10-2 required by law;
10-3 (7) a portion of the market value of property not
10-4 otherwise fully taxable by the district at market value because of
10-5 action required by statute or the constitution of this state that,
10-6 if the tax rate adopted by the district is applied to it, produces
10-7 an amount equal to the difference between the tax that the district
10-8 would have imposed on the property if the property were fully
10-9 taxable at market value and the tax that the district is actually
10-10 authorized to impose on the property; and
10-11 (8) the market value of all tangible personal
10-12 property, other than manufactured homes, owned by a family or
10-13 individual and not held or used for the production of income.
10-14 (b) This section applies only to the computation of school
10-15 district property values for the 1997 tax year.
10-16 SECTION 1.15. (a) Effective January 1, 1998, Section
10-17 403.302(d), Government Code, is amended to read as follows:
10-18 (d) For the purposes of this section, "taxable value" means
10-19 market value less:
10-20 (1) the total dollar amount of any exemptions of part
10-21 but not all of the value of taxable property required by the
10-22 constitution or a statute that a district lawfully granted in the
10-23 year that is the subject of the study, other than:
10-24 (A) the $20,000 residence homestead exemption
10-25 required by Section 1-b(g), Article VIII, Texas Constitution; and
10-26 (B) the business inventory exemption required by
11-1 Section 11.25, Tax Code;
11-2 (2) the total dollar amount of any exemptions granted
11-3 before May 31, 1993, within a reinvestment zone under agreements
11-4 authorized by Chapter 312, Tax Code;
11-5 (3) the total dollar amount of any captured appraised
11-6 value of property that is located in a reinvestment zone and that
11-7 is eligible for tax increment financing under Chapter 311, Tax
11-8 Code;
11-9 (4) the total dollar amount of any exemptions granted
11-10 under Section 11.251, Tax Code;
11-11 (5) the difference between the market value and the
11-12 productivity value of land that qualifies for appraisal on the
11-13 basis of its productive capacity, except that the productivity
11-14 value may not exceed the fair market value of the land;
11-15 (6) the portion of the appraised value of residence
11-16 homesteads of the elderly on which school district taxes are not
11-17 imposed in the year that is the subject of the study, because of
11-18 the tax freeze limitation required by Section 1-b(d), Article VIII,
11-19 Texas Constitution, other than that portion of that limitation
11-20 required by Section 1-b(g) of that article, calculated as if the
11-21 residence homesteads were appraised at the full value required by
11-22 law;
11-23 (7) a portion of the market value of property not
11-24 otherwise fully taxable by the district at market value because of
11-25 action required by statute or the constitution of this state that,
11-26 if the tax rate adopted by the district is applied to it, produces
12-1 an amount equal to the difference between the tax that the district
12-2 would have imposed on the property if the property were fully
12-3 taxable at market value and the tax that the district is actually
12-4 authorized to impose on the property; and
12-5 (8) the market value of all tangible personal
12-6 property, other than manufactured homes, owned by a family or
12-7 individual and not held or used for the production of income.
12-8 (b) This section applies only to the computation of school
12-9 district property values for the 1998 and later tax years.
12-10 SECTION 1.16. Section 825.405(h), Government Code, is amended
12-11 to read as follows:
12-12 (h) This section does not apply to state contributions for
12-13 members employed by a school district in a school year if the
12-14 district's effective tax rate for maintenance and operation
12-15 revenues for the tax year that ended in the preceding school year
12-16 equals or exceeds 125 percent of the statewide average effective
12-17 tax rate for school district maintenance and operation revenues for
12-18 that tax year. For a tax year, the statewide average effective tax
12-19 rate for school district maintenance and operation revenues is the
12-20 tax rate that, if applied to the statewide total appraised value of
12-21 taxable property for every school district in the state determined
12-22 under Section 403.302, would produce an amount equal to the
12-23 statewide total amount of maintenance and operation taxes imposed
12-24 in the tax year for every school district in the state. For
12-25 purposes of this section, the statewide total amount of maintenance
12-26 and operations taxes does not include amounts received by school
13-1 districts from the Texas School Trust Fund under Subchapter N,
13-2 Chapter 403.
13-3 SECTION 1.17. Section 403.121, Government Code, is amended by
13-4 adding Subsection (c) to read as follows:
13-5 (c) The comptroller shall include in the reports, estimates,
13-6 and certifications of available funds the estimated amount of
13-7 transfers that may be available for appropriation by the
13-8 legislature under Section 5-a, Article VII, Texas Constitution.
13-9 SECTION 1.18. Except as otherwise provided by this article,
13-10 this article takes effect on the effective date of this Act.
13-11 ARTICLE 2. PROPERTY TAXATION
13-12 SECTION 2.01. Section 1.04, Tax Code, is amended by amending
13-13 Subdivision (10) and adding Subdivision (20) to read as follows:
13-14 (10) Taxable value means the amount determined by
13-15 deducting from appraised [assessed] value the amount of any
13-16 applicable partial exemption.
13-17 (20) "Maintenance and operations" means any lawful
13-18 purpose other than debt service for which a taxing unit may spend
13-19 property tax revenues.
13-20 SECTION 2.02. Section 11.13, Tax Code, is amended by amending
13-21 Subsection (b) and adding Subsection (s) to read as follows:
13-22 (b) An adult is entitled to an exemption from taxation by a
13-23 school district of $5,000 of the appraised value of his residence
13-24 homestead. An adult is also entitled to exemption from taxation by
13-25 a school district for maintenance and operations of $20,000 of the
13-26 appraised value of his residence homestead.
14-1 (s) If a school district has adopted an exemption from ad
14-2 valorem taxes for elementary and secondary public school purposes
14-3 on homesteads that the district by law may adopt by its own action,
14-4 and that exemption is in effect on the date on which the
14-5 constitutional amendment proposed by J.R. No._____, 75th
14-6 Legislature, Regular Session, takes effect, the governing body of
14-7 the school district may not reduce the amount of or repeal that tax
14-8 exemption before the second anniversary of the date on which that
14-9 constitutional amendment takes effect. On or after the second
14-10 anniversary of the date on which that constitutional amendment
14-11 takes effect, the governing body of the school district may not
14-12 reduce the amount of or repeal that tax exemption unless the
14-13 reduction or repeal is approved by a vote of not less than
14-14 two-thirds of the total members of its governing body.
14-15 SECTION 2.03. Subchapter B, Chapter 11, Tax Code, is amended
14-16 by adding Section 11.25 to read as follows:
14-17 Sec. 11.25. TANGIBLE PERSONAL PROPERTY HELD AS INVENTORY.
14-18 (a) This section applies only to ad valorem taxes imposed by a
14-19 school district on tangible personal property for maintenance and
14-20 operations of the district.
14-21 (b) A person is entitled to an exemption from taxation of
14-22 the appraised value of the person's property that consists of
14-23 property held for sale or consumption as inventory.
14-24 (c) A person that receives an exemption on tangible personal
14-25 property held for sale or consumption as inventory under Section
14-26 11.145 or 11.251 is not entitled to an exemption on that property
15-1 under Subsection (b).
15-2 (d) In this section:
15-3 (1) "Inventory" includes goods held for sale, raw
15-4 materials, goods in process, finished goods, supplies, consigned
15-5 goods, bill and hold goods, floor-planned goods, and in-transit
15-6 goods. Except as provided by this section, each of those terms has
15-7 the meaning assigned that term according to generally accepted
15-8 principles of personal property appraisal.
15-9 (2) "School district" means a political subdivision of
15-10 this state that is organized to provide general elementary and
15-11 secondary public education and authorized to impose ad valorem
15-12 taxes. The term does not include:
15-13 (A) a junior college district;
15-14 (B) a political subdivision organized to provide
15-15 special education services; or
15-16 (C) an entity operating under former Chapter 25,
15-17 27, or 28, Education Code, as those chapters existed on May 1,
15-18 1995, as permitted by Section 11.301, Education Code.
15-19 (3) "Supplies" means stocks of goods intended to be
15-20 consumed in a manufacturing process.
15-21 SECTION 2.04. (a) Effective January 1, 1998, Section
15-22 11.26(a), Tax Code, is amended to read as follows:
15-23 (a) The tax officials shall appraise the property to which
15-24 this section applies and calculate taxes as on other property, but
15-25 if the tax so calculated exceeds the limitation imposed by this
15-26 section, the tax imposed is the amount of the tax as limited by
16-1 this subsection, except [Except] as provided by Subsection (b). A
16-2 [of this section, a] school district may not increase the total
16-3 annual amount of ad valorem tax it imposes on the residence
16-4 homestead of an individual 65 years or older above the amount of
16-5 the tax it imposed in the first tax year the individual qualified
16-6 that residence homestead for the exemption provided by Section
16-7 11.13(c) if that tax year is the 1998 tax year or a later tax year.
16-8 If the first tax year the individual qualified that residence
16-9 homestead for the exemption provided by Section 11.13(c) was a tax
16-10 year before the 1997 tax year, the tax limitation is the amount of
16-11 tax the school district imposed for the 1996 tax year less an
16-12 amount equal to the amount determined by multiplying $20,000 times
16-13 the tax rate for maintenance and operations of the school district
16-14 for the 1997 tax year plus any 1997 tax attributable to
16-15 improvements made in 1996, other than improvements made to comply
16-16 with governmental regulations or repairs. If the first tax year
16-17 the individual qualified that residence homestead for the exemption
16-18 provided by Section 11.13(c) is the 1997 tax year, the tax
16-19 limitation is the amount of tax the school district imposed for the
16-20 1997 tax year less an amount equal to the amount determined by
16-21 multiplying $20,000 times the tax rate for maintenance and
16-22 operations of the school district for the 1998 tax year plus:
16-23 (1) any 1998 tax attributable to improvements made in
16-24 1997, other than improvements made to comply with governmental
16-25 regulations or repairs; and
16-26 (2) an amount equal to the amount determined by
17-1 multiplying $20,000 times the tax rate for maintenance and
17-2 operations of the school district for the 1997 tax year.
17-3 [Subsection (c) of Section 11.13 of this code. The tax officials
17-4 shall continue to appraise the property and to calculate taxes as
17-5 on other property, but if the tax so calculated exceeds the
17-6 limitation imposed by this section, the tax imposed is the tax
17-7 imposed in the first year the individual qualified the residence
17-8 homestead for the exemption.]
17-9 (b) Effective beginning with the 1997 tax year, Section
17-10 11.26(e), Tax Code, is amended to read as follows:
17-11 (e) For each school district in an appraisal district, the
17-12 chief appraiser shall determine the portion of the appraised value
17-13 of residence homesteads of the elderly on which school district
17-14 taxes are not imposed in a tax year because of the limitation on
17-15 tax increases imposed by this section. That portion is calculated
17-16 by determining the taxable values [value] that, if multiplied by
17-17 the applicable tax rate for debt or tax rate for maintenance and
17-18 operations adopted by the school district for the tax year and the
17-19 product of those computations added together, would produce an
17-20 amount equal to the amount of tax that would have been imposed by
17-21 the school district on residence homesteads of the elderly if the
17-22 limitation on tax increases imposed by this section were not in
17-23 effect, but that was not imposed because of that limitation. The
17-24 chief appraiser shall determine those [that] taxable values [value]
17-25 and certify them [it] to the comptroller as soon as practicable for
17-26 each tax year.
18-1 SECTION 2.05. Section 25.19(b), Tax Code, is amended to read
18-2 as follows:
18-3 (b) The chief appraiser shall separate real from personal
18-4 property and include in the notice for each:
18-5 (1) a list of the taxing units in which the property
18-6 is taxable;
18-7 (2) the appraised value of the property in the
18-8 preceding year;
18-9 (3) each [the assessed and] taxable value of the
18-10 property in the preceding year for each taxing unit taxing the
18-11 property;
18-12 (4) the appraised value of the property for the
18-13 current year and the kind and amount of each partial exemption, if
18-14 any, approved for the current year;
18-15 (5) if the appraised value is greater than it was in
18-16 the preceding year:
18-17 (A) the effective tax rate or rates that would
18-18 be announced pursuant to Chapter 26 [Section 26.04 of this code] if
18-19 the total values being submitted to the appraisal review board were
18-20 to be approved by the board with an explanation that that rate or
18-21 rates would raise the same amount of revenue from property taxed in
18-22 the preceding year as the unit raised for those purposes in the
18-23 preceding year;
18-24 (B) the amount of tax that would be imposed on
18-25 the property on the basis of the rate or rates described by
18-26 Paragraph (A) [of this subdivision]; and
19-1 (C) a statement that the governing body of the
19-2 unit may not adopt a rate that will increase tax revenues for
19-3 operating purposes from properties taxed in the preceding year
19-4 without publishing notice in a newspaper that it is considering a
19-5 tax increase and holding a hearing for taxpayers to discuss the tax
19-6 increase;
19-7 (6) in italic typeface, the following statement: "The
19-8 Texas Legislature does not set the amount of your local taxes.
19-9 Your property tax burden is decided by your locally elected
19-10 officials, and all inquiries concerning your taxes should be
19-11 directed to those officials";
19-12 (7) a brief explanation of the time and procedure for
19-13 protesting the value;
19-14 (8) the date and place the appraisal review board will
19-15 begin hearing protests; and
19-16 (9) a brief explanation that:
19-17 (A) the governing body of each taxing unit
19-18 decides whether or not taxes on the property will increase and the
19-19 appraisal district only determines the value of the property; and
19-20 (B) a taxpayer who objects to increasing taxes
19-21 and government expenditures should complain to the governing bodies
19-22 of the taxing units and only complaints about value should be
19-23 presented to the appraisal office and the appraisal review board.
19-24 SECTION 2.06. Section 25.24, Tax Code, is amended to read as
19-25 follows:
19-26 Sec. 25.24. APPRAISAL ROLL. The appraisal records, as
20-1 changed by order of the appraisal review board and approved by that
20-2 board, constitute the appraisal roll for the district. The
20-3 appraisal roll for the district for the purpose of a school
20-4 district includes for each property two values: a value for the
20-5 levy of district maintenance and operations taxes and a value for
20-6 the levy of debt service taxes.
20-7 SECTION 2.07. Sections 26.04(a) and (b), Tax Code, are
20-8 amended to read as follows:
20-9 (a) On receipt of the appraisal roll, the assessor for a
20-10 taxing unit shall determine the total appraised value[, the total
20-11 assessed value,] and the total taxable value of property taxable by
20-12 the unit and for a school district the total taxable value for each
20-13 tax rate imposed by the district. He shall also determine, using
20-14 information provided by the appraisal office, the appraised,
20-15 assessed, and taxable values [value] of new property.
20-16 (b) The assessor shall submit the appraisal roll for the
20-17 unit showing the total appraised, assessed, and taxable values of
20-18 all property and the total taxable values [value] of new property
20-19 to the governing body of the unit by August 1 or as soon thereafter
20-20 as practicable. By August 1 or as soon thereafter as practicable,
20-21 the taxing unit's collector shall certify an estimate of the
20-22 collection rate for the current year to the governing body. If the
20-23 collector certified an anticipated collection rate in the preceding
20-24 year and the actual collection rate in that year exceeded the
20-25 anticipated rate, the collector shall also certify the amount of
20-26 debt taxes collected in excess of the anticipated amount in the
21-1 preceding year.
21-2 SECTION 2.08. Chapter 26, Tax Code, is amended by adding
21-3 Section 26.046 to read as follows:
21-4 Sec. 26.046. EFFECTIVE TAX RATES: SCHOOL DISTRICTS. (a)
21-5 Notwithstanding Section 26.04, the officer or employee designated
21-6 under that section to make the calculations for a school district
21-7 shall determine an effective tax rate for the school district for
21-8 maintenance and operations and an effective tax rate for the school
21-9 district for debt service. The effective tax rates shall be
21-10 calculated in the manner provided by Section 26.04, except as
21-11 provided by this section. The effective tax rate for maintenance
21-12 and operations shall be calculated on the value of property on the
21-13 tax roll for maintenance and operations taxation, and the effective
21-14 tax rate for debt service taxation shall be calculated on the value
21-15 of property on the tax roll for debt service taxation.
21-16 (b) In calculating the effective tax rates for the school
21-17 district under Subsection (a), the designated officer or employee
21-18 shall:
21-19 (1) include in last year's levy only ad valorem taxes
21-20 actually generated by the district in the preceding year; and
21-21 (2) exclude from last year's levy any state revenue
21-22 received by the district in that year, including revenue received
21-23 from the Texas School Trust Fund.
21-24 (c) The designated officer or employee shall adjust the
21-25 effective tax rate for maintenance and operations calculated under
21-26 Subsection (a) by adding or subtracting a rate, that if applied to
22-1 the current value for the levy of district maintenance and
22-2 operations taxes for the district would impose maintenance and
22-3 operations taxes in an amount that, when added or subtracted, as
22-4 applicable, to the sum of the amount of taxes that would be imposed
22-5 by the effective tax rate for maintenance and operations calculated
22-6 under Subsection (a) and the amount of state funds to be received
22-7 by the district under the Foundation School Program for the school
22-8 year that begins in the current tax year, including the amount of
22-9 any state funds projected to be received by the district under
22-10 Section 42.302, Education Code, and that under law may be used for
22-11 maintenance and operations purposes, would provide the same amount
22-12 of those state funds and district maintenance and operations taxes
22-13 per student in weighted average daily attendance for the school
22-14 year that begins in the current tax year that was available to the
22-15 district for the preceding school year.
22-16 SECTION 2.09. Chapter 26, Tax Code, is amended by adding
22-17 sections 26.047 and 26.048 to read as follows:
22-18 Sec. 26.047. EFFECTIVE MAINTENANCE AND OPERATIONS RATE FOR
22-19 1997 SCHOOL TAXES. (a) For the 1997 tax year, the effective
22-20 maintenance and operations rate of a school district is calculated
22-21 by subtracting from the effective tax rate for maintenance and
22-22 operations calculated under Section 26.046 an amount equal to the
22-23 rate that, if applied to current total value, would impose taxes in
22-24 an amount equal to the 1997 tax year revenue not collected because
22-25 of the tax exemption provided by Section 1-b(g), Article VIII,
22-26 Texas Constitution.
23-1 (b) This section expires December 31, 1998.
23-2 Sec. 26.048. EFFECTIVE MAINTENANCE AND OPERATIONS RATE FOR
23-3 1998 SCHOOL TAXES. (a) Except as provided by Subsection (b), for
23-4 the 1998 tax year, the effective maintenance and operations rate of
23-5 a school district is computed by subtracting from the effective tax
23-6 rate for maintenance and operations computed under Section 26.046
23-7 an amount equal to the rate that, if applied to current total
23-8 value, would impose taxes in an amount equal to the sum of:
23-9 (1) $0.20 per $100 valuation;
23-10 (2) any 1998 tax year revenue not collected because of
23-11 the business inventory tax exemption provided by Section 11.25, Tax
23-12 Code; and
23-13 (3) the rate that, if applied to current total value,
23-14 would impose taxes in an amount equal to the 1998 tax year revenue
23-15 not collected because of the tax limitation provided by Section
23-16 1-b(g), Article VIII, Texas Constitution.
23-17 (b) The rate specified by Subsection (a)(1) is not
23-18 subtracted from the effective tax rate for maintenance and
23-19 operations computed under Section 26.046 if the school district is:
23-20 (1) a political subdivision organized primarily to
23-21 provide special education services; or
23-22 (2) an entity operating under former Chapter 17, 18,
23-23 25, 26, 27, or 28, Education Code, as those chapters existed on May
23-24 1, 1995, as permitted by Section 11.301, Education Code.
23-25 (c) This section expires December 31, 1999.
23-26 SECTION 2.10. Sections 26.05(a) and (d), Tax Code, are
24-1 amended to read as follows:
24-2 (a) Except as provided by Subsection (c), the governing body
24-3 of each taxing unit before September 1 or as soon thereafter as
24-4 practicable shall adopt a tax rate for the current tax year and
24-5 shall notify the assessor for the unit of the rate adopted. The tax
24-6 rate consists of two components, each of which must be approved
24-7 separately. The components are:
24-8 (1) the rate that, if applied to the total taxable
24-9 value or for a school district the total taxable value for debt
24-10 taxation, will impose the total amount published under Section
24-11 26.04(e)(3)(C) [of this code], less any amount of additional sales
24-12 and use tax revenue that will be used to pay debt service; and
24-13 (2) the rate that, if applied to the total taxable
24-14 value or for a school district the total taxable value for
24-15 maintenance and operations taxation, will impose the amount of
24-16 taxes needed to fund maintenance and operation expenditures of the
24-17 unit for the next year.
24-18 (d) The governing body of a taxing unit other than a school
24-19 district may not adopt a tax rate that exceeds the lower of the
24-20 rollback tax rate or 103 percent of the effective tax rate
24-21 calculated as provided by Section 26.04 [of this code] until it has
24-22 held a public hearing on the proposed increase and has otherwise
24-23 complied with Section 26.06 [of this code]. The governing body of
24-24 a school district may not adopt a tax rate for maintenance and
24-25 operations that exceeds the effective tax rate for maintenance and
24-26 operations calculated as provided by Section 26.046 until it has
25-1 held a public hearing on the proposed increase and has otherwise
25-2 complied with Section 26.06. The governing body of a taxing unit
25-3 other than a school district shall reduce a tax rate set under a
25-4 [by] law other than this title or by vote of the electorate to the
25-5 lower of the rollback tax rate or the percentage [103 percent] of
25-6 the effective tax rate provided by this subsection applicable to
25-7 the taxing unit and may not adopt a higher rate unless it first
25-8 complies with Section 26.06 [of this code].
25-9 SECTION 2.11. Chapter 26, Tax Code, is amended by adding
25-10 Section 26.065 to read as follows:
25-11 Sec. 26.065. ADOPTION OF SCHOOL DISTRICT MAINTENANCE AND
25-12 OPERATIONS TAX RATE IN EXCESS OF EFFECTIVE RATE FOR MAINTENANCE AND
25-13 OPERATIONS; ELECTION TO LIMIT RATE. (a) For a year that begins on
25-14 or after January 1, 1997, the governing body of a school district
25-15 may not adopt a maintenance and operations tax rate that exceeds
25-16 the effective maintenance and operations tax rate calculated under
25-17 Section 26.046 for the current year unless the rate is approved by
25-18 a vote of not less than two-thirds of the total members of the
25-19 governing body.
25-20 (b) If the governing body of the school district adopts a
25-21 maintenance and operations tax rate that exceeds the effective tax
25-22 rate for maintenance and operations calculated under Section 26.046
25-23 by $0.02 per $100 taxable value, the registered voters of the
25-24 district at an election held for that purpose must determine
25-25 whether to limit the maintenance and operations tax rate for the
25-26 current year to a rate equal to the sum of the effective tax rate
26-1 for maintenance and operations calculated under Section 26.046 for
26-2 the current year plus $0.02 per $100 taxable value, or a lower rate
26-3 adopted by the governing body after the election.
26-4 (c) The governing body shall order that an election be held
26-5 in the school district on a date not less than 30 or more than 90
26-6 days after the date on which the governing body adopts the tax rate
26-7 that triggers the election. Section 41.001, Election Code, does not
26-8 apply to the election unless a date specified by that section falls
26-9 within the time permitted by this section.
26-10 (d) At the election, the ballot shall be prepared to permit
26-11 voting for or against the proposition: "Limiting the maintenance
26-12 and operations tax rate in ____ (name of district) for the current
26-13 year from ____ (maintenance and operations tax rate adopted by
26-14 governing body) as proposed by the school district to ____ (rate
26-15 equal to sum of effective tax rate for maintenance and operations
26-16 calculated under Section 26.046, Tax Code, plus $0.02 per $100
26-17 taxable value)."
26-18 (e) If a majority of the votes cast in the election favor
26-19 the proposition, the governing body may not adopt a maintenance and
26-20 operations tax rate for the current year that exceeds the effective
26-21 tax rate for maintenance and operations calculated under Section
26-22 26.046 plus $0.02 per $100 taxable value.
26-23 (f) For a tax year beginning on or after January 1, 1999,
26-24 the amount by which the tax rate for maintenance and operations
26-25 adopted for the current tax year exceeds the effective tax rate for
26-26 maintenance and operations calculated under Section 26.046 for that
27-1 year may not exceed the amount that, when added to the amount by
27-2 which the adopted maintenance and operations tax rate for each of
27-3 the two preceding tax years exceeds the applicable effective tax
27-4 rate for maintenance and operations calculated under Section 26.046
27-5 for each of those years, equals $0.04 per $100 taxable value unless
27-6 an election is held under Subsection (g) at which the registered
27-7 voters of the district do not limit the maintenance and operations
27-8 tax rate approved by the governing body.
27-9 (g) An election held under Subsection (f) shall be conducted
27-10 in the manner provided by this section for an election under
27-11 Subsection (b). The ballot shall be prepared to permit voting for
27-12 or against the proposition: "Limiting the maintenance and
27-13 operations tax rate in ____ (name of district) for the current year
27-14 from ____ (maintenance and operations tax rate adopted by governing
27-15 body) as proposed by the school district to ____ (rate calculated
27-16 under Section 26.065(f), Tax Code, in excess of which an adopted
27-17 maintenance and operations tax rate triggers an election under that
27-18 section)."
27-19 (h) If a majority of the votes cast in the election favor
27-20 the proposition, the governing body may not adopt a maintenance and
27-21 operations tax rate for the current year that exceeds the limited
27-22 rate approved by the voters.
27-23 (i) If an election is required under Subsection (f) in any
27-24 tax year, an election under Subsections (b)-(e) is not required to
27-25 be held in that tax year. If an election under Subsections (b)-(e)
27-26 was held at which the voters did not approve the proposition to
28-1 limit the district's tax rate in one of the two preceding tax
28-2 years, an election under Subsection (f) is not required in the
28-3 current year.
28-4 (j) When increased expenditure of money by a school district
28-5 is necessary to respond to a disaster, including a tornado,
28-6 hurricane, flood, or other calamity, but not including a drought,
28-7 that has impacted a school district and the governor has requested
28-8 federal disaster assistance for the area in which the school
28-9 district is located, an election is not required under this section
28-10 to limit the maintenance and operations tax rate the governing body
28-11 may adopt for the year following the year in which the disaster
28-12 occurs.
28-13 (k) For purposes of this section, local tax funds dedicated
28-14 to a junior college district under Section 45.105(e), Education
28-15 Code, shall be eliminated from the calculation of the maintenance
28-16 and operations tax rate adopted by the governing body of the school
28-17 district. However, the funds dedicated to the junior college
28-18 district are subject to Section 26.085.
28-19 (l) In a school district that received distributions from an
28-20 equalization tax imposed under former Chapter 18, Education Code,
28-21 the effective rate of that tax as of the date of the county unit
28-22 system's abolition is added to the district's effective tax rate
28-23 for maintenance and operations for purposes of this section.
28-24 (m) For purposes of this section, increases in taxable
28-25 values and tax levies occurring within a reinvestment zone under
28-26 the provisions of Chapter 311 (Tax Increment Financing Act), in
29-1 which the district is a participant, shall be eliminated from the
29-2 calculation of the effective tax rates adopted by the governing
29-3 body of the school district.
29-4 (n) For purposes of the 1997 and 1998 tax years, the
29-5 effective tax rate for maintenance and operations for a school
29-6 district is the rate calculated under Section 26.047 or 26.048, as
29-7 applicable. This subsection expires January 1, 2000.
29-8 SECTION 2.12. Section 26.08, Tax Code, is repealed.
29-9 SECTION 2.13. Section 26.09(c), Tax Code, is amended to read
29-10 as follows:
29-11 (c) The tax is calculated by:
29-12 (1) subtracting from the appraised value of a property
29-13 as shown on the appraisal roll for the unit the amount of any
29-14 partial exemption allowed the property owner that applies to
29-15 appraised value to determine taxable [net appraised] value; and
29-16 (2) [multiplying the net appraised value by the
29-17 assessment ratio to determine assessed value;]
29-18 [(3) subtracting from the assessed value the amount
29-19 any partial exemption allowed the property owner to determine
29-20 taxable value; and]
29-21 [(4)] multiplying the taxable value by the tax rate,
29-22 or for a school district as defined by Section 11.13(m)(2),
29-23 multiplying the taxable value for maintenance and operations
29-24 taxation by the maintenance and operations tax rate, multiplying
29-25 the taxable value for debt service taxation by the debt service tax
29-26 rate, and adding the products.
30-1 SECTION 2.14. Section 31.01, Tax Code, is amended by amending
30-2 Subsection (c) and adding Subsection (k) to read as follows:
30-3 (c) The tax bill or a separate statement accompanying the
30-4 tax bill shall:
30-5 (1) identify the property subject to the tax;
30-6 (2) state the appraised value[, assessed value,] and
30-7 taxable value of the property for each type of tax levy the taxing
30-8 unit imposes on a different value;
30-9 (3) if the property is land appraised as provided by
30-10 Subchapter C, D, or E, Chapter 23 [of this code], state the market
30-11 value and the taxable value for purposes of deferred or additional
30-12 taxation as provided by Section 23.46, 23.55, or 23.76, as
30-13 applicable[, of this code];
30-14 (4) [state the assessment ratio for the unit;]
30-15 [(5)] state the type and amount of any partial
30-16 exemption applicable to the property[, indicating whether it
30-17 applies to appraised or assessed value];
30-18 (5) [(6)] state the total tax rate or rates for the
30-19 unit;
30-20 (6) [(7)] state the amount of tax due, the due date,
30-21 and the delinquency date;
30-22 (7) [(8)] explain the payment option and discounts
30-23 provided by Sections 31.03 and 31.05 [of this code], if available
30-24 to the unit's taxpayers, and state the date on which each of the
30-25 discount periods provided by Section 31.05 concludes, if the
30-26 discounts are available;
31-1 (8) [(9)] state the rates of penalty and interest
31-2 imposed for delinquent payment of the tax; and
31-3 (9) [(10)] include any other information required by
31-4 the comptroller.
31-5 (k) In addition to the information specified by Subsection
31-6 (c), a tax bill for school district taxes or the separate statement
31-7 accompanying a tax bill for school district taxes shall include an
31-8 explanation of the Property Tax Cut Act of 1997 and the effect on
31-9 the school district's tax rates for the year caused by that Act.
31-10 If a tax bill for school district taxes containing an explanation
31-11 required by this subsection is mailed to a mortgagee of a property,
31-12 the mortgagee shall mail a copy of the tax bill or accompanying
31-13 statement containing the explanation to the owner of the property
31-14 before the 31st day after the date the mortgagee receives the tax
31-15 bill. This subsection expires January 1, 1999.
31-16 SECTION 2.15. (a) Except as otherwise provided by this
31-17 article or Subsection (b) of this section, this article takes
31-18 effect on the effective date of this Act and applies to ad valorem
31-19 taxes imposed by a school district for and after the 1997 tax year.
31-20 (b) Section 2.03 of this article takes effect January 1,
31-21 1998, and applies only to ad valorem taxes imposed by a school
31-22 district for a tax year that begins on or after that date.
31-23 ARTICLE 3. TEXAS BUSINESS TAX
31-24 SECTION 3.01. Subtitle F, Title 2, Tax Code, is amended by
31-25 adding Chapter 172 to read as follows:
31-26 CHAPTER 172. BUSINESS TAX
32-1 SUBCHAPTER A. DEFINITIONS
32-2 Sec. 172.001. AFFILIATED GROUP. "Affiliated group" means an
32-3 affiliated group of corporations as defined in Section 1504,
32-4 Internal Revenue Code.
32-5 Sec. 172.002. BUSINESS ACTIVITY. (a) "Business activity"
32-6 means an activity that:
32-7 (1) is:
32-8 (A) a transfer of legal or equitable ownership
32-9 of or the right of possession of property; or
32-10 (B) the performance of services; and
32-11 (2) occurs in this state, without regard to whether
32-12 the activity is in interstate or foreign commerce.
32-13 (b) The term does not include:
32-14 (1) an activity by an individual that is not for
32-15 economic gain, benefit, or advantage to the individual or to
32-16 others;
32-17 (2) a service rendered by an employee to an employer;
32-18 (3) a service as a director of a corporation;
32-19 (4) income derived from individual investment; or
32-20 (5) a casual transaction.
32-21 (c) A transaction that otherwise is excluded under
32-22 Subsection (b), but that is made or engaged in by a person and that
32-23 is incidental to the person's regular business activity, is a
32-24 business activity.
32-25 (d) For purposes of Subsection (a), a business activity
32-26 occurs in this state if the activity has a sufficient nexus, to the
33-1 limits of the United States Constitution and the federal law
33-2 adopted under the United States Constitution, to this state.
33-3 Sec. 172.003. BUSINESS ENTITY. "Business entity" means a
33-4 corporation, limited liability company, partnership, limited
33-5 partnership, limited liability partnership, banking corporation,
33-6 savings and loan association, trust, estate, or sole
33-7 proprietorship. The term includes any kind of business association,
33-8 joint venture, or any other combination of entities or persons
33-9 engaged in a business activity.
33-10 Sec. 172.004. CASUAL TRANSACTION. "Casual transaction" means
33-11 a transaction made or engaged in other than in the ordinary course
33-12 of repeated and successive transactions of a like character, except
33-13 that a transaction made or engaged in by a person that is
33-14 incidental to that person's regular business activity is considered
33-15 to be a business activity.
33-16 Sec. 172.005. COMPENSATION. (a) "Compensation" means all
33-17 wages, salaries, fees, bonuses, commissions, or other payments made
33-18 in the taxable year on behalf of or for the benefit of employees,
33-19 officers, or directors of a taxpayer and subject to or specifically
33-20 exempt from withholding under Section 3401, Internal Revenue Code.
33-21 (b) The term includes the following payments determined on a
33-22 cash or accrual system consistent with the taxpayer's method of
33-23 accounting for federal income tax purposes:
33-24 (1) payments to state and federal unemployment
33-25 compensation funds;
33-26 (2) under the Federal Insurance Contributions Act
34-1 (Chapter 21, Title 26, Internal Revenue Code) and similar social
34-2 insurance programs, payments, including self-insurance payments,
34-3 for workers' compensation insurance;
34-4 (3) payments to individuals not currently working;
34-5 (4) payments to dependents and heirs of individuals
34-6 because of current or former labor services rendered by those
34-7 individuals;
34-8 (5) payments to a pension, retirement, or
34-9 profit-sharing plan; and
34-10 (6) payments for insurance for which employees are the
34-11 beneficiaries.
34-12 (c) For a partnership, the term includes net earnings of the
34-13 partners from self-employment and does not include guaranteed
34-14 payments to partners.
34-15 (d) The term does not include discounts on the price of the
34-16 taxpayer's merchandise or services sold to the taxpayer's
34-17 employees, officers, or directors that are not available to other
34-18 customers or payments to an independent contractor.
34-19 Sec. 172.006. CORPORATION. "Corporation" includes:
34-20 (1) a limited liability company as defined by the
34-21 Texas Limited Liability Company Act (Article 1528n, Vernon's Texas
34-22 Civil Statutes);
34-23 (2) a state or federal savings and loan association;
34-24 (3) a state or federal savings bank; and
34-25 (4) a banking corporation.
34-26 Sec. 172.007. EMPLOYEE. (a) "Employee" means an employee as
35-1 defined in Section 3401(c), Internal Revenue Code.
35-2 (b) A person from whom an employer is required to withhold
35-3 for federal income tax purposes is presumed to be an employee.
35-4 Sec. 172.008. EMPLOYER. (a) "Employer" means an employer as
35-5 defined in Section 3401(d), Internal Revenue Code.
35-6 (b) A person required to withhold for federal income tax
35-7 purposes is presumed to be an employer.
35-8 Sec. 172.009. FEDERAL INCOME TAX TERMS. A term used in this
35-9 chapter, and not defined differently, has the same meaning as the
35-10 term when used in a comparable context in the Internal Revenue Code
35-11 or other federal law relating to federal income taxes.
35-12 Sec. 172.010. FEDERAL TAXABLE INCOME. "Federal taxable
35-13 income" means taxable income as defined in Section 63, Internal
35-14 Revenue Code, increased by the amount, if any, of deductions taken
35-15 under Section 172, Internal Revenue Code, and includes the income
35-16 of an estate or trust.
35-17 Sec. 172.011. FINANCIAL INSTRUMENT. "Financial instrument"
35-18 means any share of stock or other legal evidence of equity
35-19 ownership in a corporation or other business entity, certificate of
35-20 stock or interest in any corporation, stock derivative, note, bond,
35-21 debenture, indebtedness derivative and evidence of indebtedness,
35-22 including any evidence of an interest in or right to subscribe to
35-23 or purchase any of these instruments.
35-24 Sec. 172.012. INDIVIDUAL INVESTMENT. "Individual investment"
35-25 means investment by an individual:
35-26 (1) of funds owned by the individual solely for the
36-1 benefit of the individual if the investment is not made in
36-2 connection with another activity that is a business activity; or
36-3 (2) of funds owned by the individual's relative within
36-4 the third degree of consanguinity or the second degree of affinity,
36-5 as those relationships are described by Subchapter B, Chapter 573,
36-6 Government Code, on behalf of and solely for the benefit of the
36-7 owner of the funds if the investment is not made in connection with
36-8 another activity that is a business activity.
36-9 Sec. 172.013. INTERNAL REVENUE CODE. "Internal Revenue Code"
36-10 means the Internal Revenue Code of 1986 in effect on January 1,
36-11 1997.
36-12 Sec. 172.014. RENTAL. "Rental" includes a lease payment or
36-13 other payment for the use of any property to which the taxpayer
36-14 does not otherwise have legal or equitable title.
36-15 Sec. 172.015. SALE. "Sale" means a transaction from which
36-16 the gross receipts constitute consideration:
36-17 (1) for the transfer of title to, or possession of,
36-18 property:
36-19 (A) that is stock in trade;
36-20 (B) that is of a kind that would properly be
36-21 included in the inventory of the taxpayer if on hand at the close
36-22 of the tax period; or
36-23 (C) that is held by the taxpayer primarily for
36-24 sale to customers in the ordinary course of its trade or business;
36-25 (2) for the performance of services that constitute
36-26 business activities other than those included in Subdivision (1);
37-1 or
37-2 (3) from any combination of gross receipts included in
37-3 Subdivision (1) or (2).
37-4 Sec. 172.016. STATE. "State" means any state of the United
37-5 States, the District of Columbia, the Commonwealth of Puerto Rico,
37-6 any territory or possession of the United States, or a political
37-7 subdivision of any of those entities.
37-8 Sec. 172.017. TAX. "Tax" includes interest and penalties
37-9 unless the intention to give it a more limited meaning is indicated
37-10 by its context.
37-11 Sec. 172.018. TAXPAYER. "Taxpayer" means a business entity
37-12 liable for a tax, interest, or penalty under this chapter.
37-13 Sec. 172.019. TAX YEAR. (a) "Tax year" means the calendar
37-14 year or the fiscal year ending during the calendar year for which
37-15 the tax base is computed under this chapter.
37-16 (b) If a return is made for a fractional part of a year, the
37-17 term means the period for which the return is made.
37-18 (c) Except for the first return required by this chapter, a
37-19 taxpayer's tax year is the same period as that covered by the
37-20 taxpayer's federal income tax return.
37-21 (Sections 172.020-172.100 reserved for expansion
37-22 SUBCHAPTER B. IMPOSITION OF TAX
37-23 Sec. 172.101. TAX IMPOSED. There is imposed a tax on every
37-24 business entity having a business activity in this state that is
37-25 allocated or apportioned to this state.
37-26 Sec. 172.102. TAX RATE. The tax imposed by this chapter is
38-1 at the rate of 1.25 percent of the taxpayer's adjusted tax base.
38-2 Sec. 172.103. DETERMINATION OF TAX BASE. (a) A taxpayer
38-3 determines the tax base by taking the amount of federal taxable
38-4 income, before any of the adjustments provided by Section 172.104,
38-5 even if zero or negative, and making the following adjustments:
38-6 (1) add, to the extent deducted in arriving at federal
38-7 taxable income:
38-8 (A) all taxes on or measured by net income; and
38-9 (B) except as provided by Section 172.106 any
38-10 deduction for depreciation, amortization, or immediate or
38-11 accelerated write-off related to the cost of tangible assets;
38-12 (2) add compensation;
38-13 (3) deduct any capital loss not deducted in arriving
38-14 at federal taxable income in the year the loss occurred; and
38-15 (4) to the extent included in computing federal
38-16 taxable income, deduct:
38-17 (A) the dividends and net capital gains arising
38-18 from the holding or disposition of a financial instrument of
38-19 another entity that is subject to the taxes imposed by this chapter
38-20 or that would be subject to the taxes imposed by this chapter if it
38-21 had a nexus in this state; and
38-22 (B) the net income, not included in Paragraph
38-23 (A), received from another entity that is not a corporation and
38-24 that is subject to the taxes imposed by this chapter or that would
38-25 be subject to the taxes imposed by this chapter if it had a nexus
38-26 in this state.
39-1 (b) For purposes of Subsection (a), for a taxpayer that is a
39-2 partnership, federal taxable income means the income of the
39-3 partners reported, as required of the partnership by the Internal
39-4 Revenue Service under the Internal Revenue Code, on Schedule K,
39-5 Partners' Shares of Income, Credits, Deductions, etc., line 25a of
39-6 Form 1065.
39-7 (c) For purposes of Subsection (a), for a taxpayer that is a
39-8 sole proprietorship, federal taxable income is the sum of:
39-9 (1) the income reported, as required of the sole
39-10 proprietorship by the Internal Revenue Service under the Internal
39-11 Revenue Code, on the following schedules of Form 1040:
39-12 (A) Schedule C, Profit or Loss From Business,
39-13 line 31;
39-14 (B) Schedule E, Supplemental Income and Loss,
39-15 line 26; or
39-16 (C) Schedule F, Profit or Loss From Farming,
39-17 line 36; and
39-18 (2) the following income attributable as income to the
39-19 sole proprietorship:
39-20 (A) taxable interest income;
39-21 (B) dividend income; and
39-22 (C) capital gains.
39-23 (d) The comptroller by rule shall update references in this
39-24 section to schedules and forms of the Internal Revenue Service if
39-25 changed by the Internal Revenue Service and shall adopt forms
39-26 consistent with the change.
40-1 Sec. 172.104. DETERMINATION OF ADJUSTED TAX BASE. A taxpayer
40-2 determines the adjusted tax base by making adjustments to the tax
40-3 base as provided in Section 172.103 in the following order:
40-4 (1) deducting any income derived from a nonbusiness
40-5 activity listed in Section 172.002(b) to the extent included in the
40-6 tax base;
40-7 (2) making the adjustments relating to capital
40-8 investment under Section 172.105;
40-9 (3) allocating and apportioning the tax base as
40-10 provided in Subchapter D; and
40-11 (4) deducting the standard deduction allowed under
40-12 Section 172.151.
40-13 Sec. 172.105. ADJUSTMENTS RELATING TO CAPITAL INVESTMENT.
40-14 (a) In determining the adjusted tax base, a taxpayer shall make
40-15 the adjustments relating to capital investment required by Section
40-16 172.104(2) as provided by this section.
40-17 (b) The taxpayer shall deduct the cost, including the cost
40-18 of fabrication and installation, paid or accrued in the taxable
40-19 year of tangible assets.
40-20 (c) The taxpayer shall add the gross proceeds or benefit
40-21 derived from the sale or other disposition of tangible assets, less
40-22 the gain.
40-23 (d) In this section, "tangible assets" means tangible assets
40-24 of a type that are, or, under the Internal Revenue Code, will
40-25 become, eligible for depreciation or amortization for federal
40-26 income tax purposes.
41-1 Sec. 172.106. ADJUSTMENTS RELATING TO INVESTMENT IN
41-2 ENTERPRISE ZONE. (a) A corporation that has been designated as an
41-3 enterprise project as provided by Chapter 2303, Government Code, is
41-4 not required to add any deduction for depreciation to its tax base
41-5 as provided by Section 172.103(a)(1)(B) as provided by this
41-6 section.
41-7 (b) The adjustment authorized by this section is limited to
41-8 the depreciation related to capital equipment or other investment
41-9 that qualifies for depreciation for federal income tax purposes and
41-10 that is placed in service in the enterprise zone after designation
41-11 as an enterprise project and after September 1, 1991.
41-12 (c) To qualify for the adjustment authorized by this
41-13 section, an investment must be used in the normal course of
41-14 business in the enterprise zone and must not be removed from the
41-15 enterprise zone, except for repair or maintenance. Qualifying use
41-16 and presence in the zone must occur during the accounting year on
41-17 which the report is based.
41-18 (d) Only qualified businesses that have been certified as
41-19 eligible for an adjustment under this section by the Texas
41-20 Department of Commerce to the comptroller and the Legislative
41-21 Budget Board are entitled to the adjustment.
41-22 (e) In this section:
41-23 (1) "Enterprise project" means a person designated by
41-24 the Texas Department of Commerce as an enterprise project under
41-25 Chapter 2303, Government Code.
41-26 (2) "Enterprise zone" has the meaning assigned to that
42-1 term by Section 2303.003, Government Code.
42-2 (Sections 172.107-172.150 reserved for expansion
42-3 SUBCHAPTER C. DEDUCTIONS
42-4 Sec. 172.151. STANDARD DEDUCTION. (a) The standard
42-5 deduction permitted for each tax year for each business entity or
42-6 combined entity under Section 172.306 is $500,000.
42-7 (b) For a taxpayer whose business activity is for a
42-8 fractional part of a year, the deduction is prorated for the period
42-9 of the taxpayer's business activity.
42-10 (Sections 172.152-172.200 reserved for expansion
42-11 SUBCHAPTER D. ALLOCATION AND APPORTIONMENT OF TAX BASE
42-12 Sec. 172.201. BUSINESS ACTIVITIES CONFINED TO TEXAS. The
42-13 entire tax base of a taxpayer whose business activity is confined
42-14 solely to this state is allocated to this state except as provided
42-15 by Sections 172.206 and 172.207.
42-16 Sec. 172.202. BUSINESS ACTIVITIES IN TEXAS AND ELSEWHERE. A
42-17 taxpayer whose business activity is taxable both in and outside
42-18 this state shall apportion the taxpayer's tax base as provided by
42-19 this subchapter.
42-20 Sec. 172.203. TAXABLE IN ANOTHER STATE. For purposes of
42-21 apportionment of the tax base from business activity under this
42-22 subchapter, a taxpayer is taxable in another state if:
42-23 (1) in that state the taxpayer is subject to a
42-24 business privilege tax, a net income tax, a franchise tax measured
42-25 by net income, a franchise tax for the privilege of doing business,
42-26 a corporate stock tax, or a tax of the type imposed by this
43-1 chapter; or
43-2 (2) that state has jurisdiction to subject the
43-3 taxpayer to one or more of the taxes without regard to whether the
43-4 state does so.
43-5 Sec. 172.204. APPORTIONMENT FACTOR. All of the tax base is
43-6 apportioned to this state by multiplying the tax base by the gross
43-7 receipts factor.
43-8 Sec. 172.205. GROSS RECEIPTS FACTOR. The gross receipts
43-9 factor is a fraction, the numerator of which is the total gross
43-10 receipts of the taxpayer in this state during the tax year, and the
43-11 denominator of which is the total gross receipts of the taxpayer
43-12 during the tax year.
43-13 Sec. 172.206. NUMERATOR: GROSS RECEIPTS OF TAXPAYER IN THIS
43-14 STATE. (a) The gross receipts of a taxpayer in this state is the
43-15 sum of the taxpayer's receipts from:
43-16 (1) each sale of tangible personal property if the
43-17 property is delivered or shipped to a buyer in this state
43-18 regardless of the FOB point or another condition of the sale, and
43-19 each sale of tangible personal property shipped from this state to
43-20 a purchaser in another state in which the seller is not subject to
43-21 taxation;
43-22 (2) each service performed in this state;
43-23 (3) each rental of property situated in this state;
43-24 (4) each royalty for the use of a patent or copyright
43-25 in this state; and
43-26 (5) other business done in this state.
44-1 (b) A taxpayer shall deduct from its gross receipts any
44-2 amount to the extent included in Subsection (a) because of the
44-3 application of Section 78 or Sections 951-964, Internal Revenue
44-4 Code, and dividends received from a subsidiary, associate, or
44-5 affiliated business group that does not transact a substantial
44-6 portion of its business or regularly maintain a substantial portion
44-7 of its assets in the United States.
44-8 (c) Interest and dividends received by a banking corporation
44-9 or a savings and loan association are gross receipts of the banking
44-10 corporation or savings and loan association from its business done
44-11 in this state if the banking corporation or savings and loan
44-12 association has its commercial domicile in this state.
44-13 Sec. 172.207. DENOMINATOR: TOTAL GROSS RECEIPTS OF TAXPAYER.
44-14 (a) The total gross receipts of a taxpayer is the sum of the
44-15 taxpayer's receipts from:
44-16 (1) each sale of the taxpayer's tangible personal
44-17 property;
44-18 (2) each service, rental, or royalty; and
44-19 (3) other business.
44-20 (b) If a taxpayer sells an investment or capital asset, the
44-21 taxpayer's gross receipts from its entire business include only the
44-22 net gain from the sale.
44-23 (c) A taxpayer shall deduct from its gross receipts any
44-24 amount to the extent included in Subsection (a) because of the
44-25 application of Section 78 or Sections 951-964, Internal Revenue
44-26 Code, and dividends received from a subsidiary, associate, or
45-1 affiliated business group that does not transact a substantial
45-2 portion of its business or regularly maintain a substantial portion
45-3 of its assets in the United States.
45-4 (Sections 172.208-172.250 reserved for expansion
45-5 SUBCHAPTER E. EXEMPTIONS
45-6 Sec. 172.251. APPLICATION FOR EXEMPTION. Except as otherwise
45-7 provided, a taxpayer may apply for an exemption under this
45-8 subchapter by filing with the comptroller, as provided by the rules
45-9 of the comptroller, evidence of the taxpayer's qualifications for
45-10 the exemption.
45-11 Sec. 172.252. EXEMPTION: GOVERNMENTAL ENTITIES. There are
45-12 exempted from the taxes imposed by this chapter the United States,
45-13 this state and other states, and agencies, political subdivisions,
45-14 and enterprises of the United States, this state, and other states.
45-15 Sec. 172.253. EXEMPTION: INSURANCE COMPANIES. There is
45-16 exempted from the taxes imposed by this chapter a corporation that
45-17 is an insurance company, surety, guaranty, or fidelity company
45-18 required to pay an annual tax measured by gross receipts.
45-19 Sec. 172.254. EXEMPTION: NONPROFIT CORPORATION EXEMPT FROM
45-20 FEDERAL INCOME TAX. (a) There are exempted from the taxes imposed
45-21 by this chapter:
45-22 (1) subject to Subsection (b), a nonprofit corporation
45-23 exempted from the federal income tax under Section 501(c)(3), (4),
45-24 (5), (6), (7), (8), (10), or (19), Internal Revenue Code;
45-25 (2) a corporation exempted under Section 501(c)(2) or
45-26 (25), Internal Revenue Code, if the corporation or corporations for
46-1 which it holds title to property is either exempt from or not
46-2 subject to the franchise tax;
46-3 (3) a corporation exempted from federal income tax
46-4 under Section 501(c)(16), Internal Revenue Code; and
46-5 (4) a nonprofit corporation exempted from the federal
46-6 income tax under Section 501(c)(3), Internal Revenue Code, that
46-7 does not receive any payment for providing health care services to
46-8 inpatients or outpatients from any source including a patient or
46-9 person legally obligated to support the patient, third-party
46-10 payors, Medicare, Medicaid, or any other state or local indigent
46-11 health care program but not including charitable donations,
46-12 legacies, bequests, or grants or payments for research.
46-13 (b) A nonprofit hospital qualifies under Subsection (a)(1)
46-14 if the hospital provides charity care and community benefits in the
46-15 following manner:
46-16 (1) charity care and government-sponsored indigent
46-17 health care are provided at a level that is reasonable in relation
46-18 to the community needs as determined through the community needs
46-19 assessment, the available resources of the hospital or hospital
46-20 system, and the tax-exempt benefits received by the hospital or
46-21 hospital system;
46-22 (2) charity care and government-sponsored indigent
46-23 health care are provided in an amount equal to at least four
46-24 percent of the hospital's or hospital system's net patient revenue;
46-25 (3) charity care and government-sponsored indigent
46-26 health care are provided in an amount equal to at least 100 percent
47-1 of the hospital's or hospital system's tax-exempt benefits,
47-2 excluding federal income tax;
47-3 (4) charity care and community benefits are provided
47-4 in a combined amount equal to at least five percent of the
47-5 hospital's or hospital system's net patient revenue, provided that
47-6 charity care and government-sponsored indigent health care are
47-7 provided in an amount equal to at least four percent of net patient
47-8 revenue;
47-9 (5) a nonprofit hospital that has been designated as a
47-10 disproportionate share hospital under the state Medicaid program in
47-11 the current year or in either of the previous two fiscal years is
47-12 considered to have provided a reasonable amount of charity care and
47-13 government-sponsored indigent health care and is considered in
47-14 compliance with the standards provided by this subsection; or
47-15 (6) a hospital operated on a nonprofit basis that is
47-16 located in a county with a population of less than 50,000 and in
47-17 which the entire county or the population of the entire county has
47-18 been designated as a health professionals shortage area is
47-19 considered in compliance with the standards provided by this
47-20 subsection.
47-21 (c) For purposes of Subsection (b), a hospital that
47-22 satisfies Subsection (b)(1), (5), or (6) shall be excluded in
47-23 determining a hospital system's compliance with the standards
47-24 provided by Subsection (b)(2), (3), or (4). A determination of the
47-25 amount of community benefits and charity care and
47-26 government-sponsored indigent health care provided by a hospital or
48-1 hospital system and the hospital's or hospital system's compliance
48-2 with the requirements of Section 311.045, Health and Safety Code,
48-3 shall be based on the most recently completed and audited prior
48-4 fiscal year of the hospital or hospital system. The providing of
48-5 charity care and government-sponsored indigent health care in
48-6 accordance with Subsection (b)(1) shall be guided by the prudent
48-7 business judgment of the hospital, which will ultimately determine
48-8 the appropriate level of charity care and government-sponsored
48-9 indigent health care based on the community needs, the available
48-10 resources of the hospital, the tax-exempt benefits received by the
48-11 hospital, and other factors that may be unique to the hospital,
48-12 such as the hospital's volume of Medicare and Medicaid patients.
48-13 These criteria shall not be determinative factors but shall be
48-14 guidelines contributing to the hospital's decision along with other
48-15 factors that may be unique to the hospital. The formulas contained
48-16 in Subsections (b)(2), (3), and (4) shall also not be considered
48-17 determinative of a reasonable amount of charity care and
48-18 government-sponsored indigent health care. The requirements of
48-19 Subsection (b) shall not apply if a hospital or hospital system
48-20 demonstrates that reductions in the amount of community benefits,
48-21 charity care, and government-sponsored indigent health care are
48-22 necessary to maintain financial reserves at a level required by a
48-23 bond covenant, are necessary to prevent the hospital or hospital
48-24 system from endangering its ability to continue operations, or are
48-25 necessary because the hospital, as a result of a natural or other
48-26 disaster, is required to substantially curtail its operations. In
49-1 any fiscal year that a hospital or hospital system, through
49-2 unintended miscalculation, fails to meet any of the standards in
49-3 Subsection (b), the hospital or hospital system shall not lose its
49-4 tax-exempt status without the opportunity to cure the
49-5 miscalculation in the fiscal year following the fiscal year the
49-6 failure is discovered by meeting one of the standards and providing
49-7 an additional amount of charity care and government-sponsored
49-8 indigent health care that is equal to the shortfall from the
49-9 previous fiscal year. A hospital or hospital system may apply this
49-10 provision only once every five years.
49-11 (d) A corporation is entitled to an exemption under this
49-12 section based on the corporation's exemption from the federal
49-13 income tax if the corporation files with the comptroller evidence
49-14 establishing the corporation's exemption.
49-15 (e) A corporation's exemption under this section may be
49-16 established by furnishing the comptroller with a copy of the
49-17 Internal Revenue Service's letter of exemption issued to the
49-18 corporation. The copy of the letter may be filed with the
49-19 comptroller within 15 months after the day that is the last day of
49-20 a calendar month and that is nearest to the date of the
49-21 corporation's charter or certificate of authority.
49-22 (f) If the Internal Revenue Service has not timely issued to
49-23 a corporation a letter of exemption, evidence establishing the
49-24 corporation's exemption under this section is sufficient if the
49-25 corporation files with the comptroller within the 15-month period
49-26 established by Subsection (e) evidence that the corporation has
50-1 applied in good faith for the federal tax exemption.
50-2 (g) An exemption established under Subsection (e) or (f) is
50-3 to be recognized, after it is finally established, as of the date
50-4 of the corporation's charter or certificate of authority.
50-5 (h) If a corporation timely files evidence with the
50-6 comptroller under Subsection (f) that it has applied for a federal
50-7 tax exemption and if the application is finally denied by the
50-8 Internal Revenue Service, this chapter does not impose a penalty on
50-9 the corporation from the date of its charter or certificate of
50-10 authority to the date of the final denial.
50-11 (i) If a corporation's federal tax exemption is withdrawn by
50-12 the Internal Revenue Service for failure of the corporation to
50-13 qualify or maintain its qualification for the exemption, the
50-14 corporation's exemption under this section ends on the effective
50-15 date of that withdrawal by the Internal Revenue Service. The
50-16 effective date of the withdrawal is considered the corporation's
50-17 beginning date for purposes of this chapter.
50-18 (j) In this section, "charity care," "government-sponsored
50-19 indigent health care," "health care organization," "hospital
50-20 system," "net patient revenue," "nonprofit hospital," and
50-21 "tax-exempt benefits" have the meanings assigned those terms in
50-22 Sections 311.031 and 311.042, Health and Safety Code.
50-23 Sec. 172.255. EXEMPTION: NONPROFIT CORPORATION ORGANIZED TO
50-24 PROVIDE WATER SUPPLY OR SEWER SERVICES. There is exempted from the
50-25 taxes imposed by this chapter a nonprofit water supply or sewer
50-26 service corporation organized on behalf of a municipality under
51-1 Chapter 76, Acts of the 43rd Legislature, 1st Called Session, 1933
51-2 (Article 1434a, Vernon's Texas Civil Statutes).
51-3 Sec. 172.256. EXEMPTION: RAILWAY TERMINAL CORPORATION. A
51-4 corporation organized as a railway terminal corporation and having
51-5 no annual net income from its business is exempted from the tax
51-6 under this chapter.
51-7 Sec. 172.257. EXEMPTION: OPEN-END INVESTMENT COMPANY. An
51-8 open-end investment company, as defined by the Investment Company
51-9 Act of 1940 (15 U.S.C. Section 80a-1 et seq.), that is subject to
51-10 that Act and that is registered under The Securities Act (Article
51-11 581-1 et seq., Vernon's Texas Civil Statutes), is exempted from the
51-12 tax under this chapter.
51-13 Sec. 172.258. EXEMPTION: BUSINESS ENTITY WITH BUSINESS
51-14 INTEREST IN SOLAR ENERGY DEVICES. (a) A business entity engaged
51-15 solely in the business of manufacturing, selling, or installing
51-16 solar energy devices is exempted from the tax under this chapter.
51-17 (b) In this section, "solar energy device" means a system or
51-18 series of mechanisms designed primarily to provide heating or
51-19 cooling or to produce electrical or mechanical power by collecting
51-20 and transferring solar-generated energy. The term includes a
51-21 mechanical or chemical device that has the ability to store
51-22 solar-generated energy for use in heating or cooling or in the
51-23 production of power.
51-24 Sec. 172.259. EXEMPTION: NONPROFIT CORPORATION ORGANIZED TO
51-25 PROMOTE COUNTY, CITY, OR ANOTHER AREA. A nonprofit corporation
51-26 organized solely to promote the public interest of a county, city,
52-1 town, or another area in the state is exempted from the tax under
52-2 this chapter.
52-3 Sec. 172.260. EXEMPTION: NONPROFIT CORPORATION ORGANIZED
52-4 FOR RELIGIOUS PURPOSES. A nonprofit corporation organized for the
52-5 purpose of religious worship is exempted from the tax under this
52-6 chapter.
52-7 Sec. 172.261. EXEMPTION: NONPROFIT CORPORATION ORGANIZED TO
52-8 PROVIDE BURIAL PLACES. A nonprofit corporation organized to provide
52-9 places of burial is exempted from the tax under this chapter.
52-10 Sec. 172.262. EXEMPTION: NONPROFIT CORPORATION ORGANIZED
52-11 FOR AGRICULTURAL PURPOSES. A nonprofit corporation organized to
52-12 hold agricultural fairs and encourage agricultural pursuits is
52-13 exempted from the tax under this chapter.
52-14 Sec. 172.263. EXEMPTION: NONPROFIT CORPORATION ORGANIZED
52-15 FOR EDUCATIONAL PURPOSES. A nonprofit corporation organized solely
52-16 for educational purposes is exempted from the tax under this
52-17 chapter.
52-18 Sec. 172.264. EXEMPTION: NONPROFIT CORPORATION ORGANIZED
52-19 FOR PUBLIC CHARITY. A nonprofit corporation organized for purely
52-20 public charity is exempted from the tax under this chapter.
52-21 Sec. 172.265. EXEMPTION: NONPROFIT CORPORATION ORGANIZED
52-22 FOR CONSERVATION PURPOSES. A nonprofit corporation organized solely
52-23 to educate the public about the protection and conservation of
52-24 fish, game, other wildlife, grasslands, or forests is exempted from
52-25 the tax under this chapter.
52-26 Sec. 172.266. EXEMPTION: NONPROFIT CORPORATION INVOLVED
53-1 WITH CITY NATURAL GAS FACILITY. A nonprofit corporation organized
53-2 to construct, acquire, own, lease, or operate a natural gas
53-3 facility on behalf and for the benefit of a municipality or
53-4 residents of a municipality is exempted from the tax under this
53-5 chapter.
53-6 Sec. 172.267. EXEMPTION: NONPROFIT CORPORATION ORGANIZED TO
53-7 PROVIDE CONVALESCENT HOMES FOR ELDERLY. A nonprofit corporation
53-8 organized to provide a convalescent home or other housing for
53-9 persons who are at least 62 years old or who are handicapped or
53-10 disabled is exempted from the tax under this chapter, whether or
53-11 not the corporation is organized for purely public charity.
53-12 Sec. 172.268. EXEMPTION: NONPROFIT CORPORATION ORGANIZED TO
53-13 PROVIDE COOPERATIVE HOUSING. A nonprofit corporation engaged solely
53-14 in the business of owning residential property for the purpose of
53-15 providing cooperative housing for persons is exempted from the tax
53-16 under this chapter.
53-17 Sec. 172.269. EXEMPTION: MARKETING ASSOCIATIONS. A
53-18 marketing association incorporated under Chapter 52, Agriculture
53-19 Code, is exempted from the tax under this chapter.
53-20 Sec. 172.270. EXEMPTION: LODGES. A lodge incorporated under
53-21 Article 1399 et seq., Revised Statutes, is exempted from the tax
53-22 under this chapter.
53-23 Sec. 172.271. EXEMPTION: FARMERS' COOPERATIVE SOCIETY. A
53-24 farmers' cooperative society incorporated under Chapter 51,
53-25 Agriculture Code, is exempted from the tax under this chapter.
53-26 Sec. 172.272. EXEMPTION: HOUSING FINANCE CORPORATION. A
54-1 housing finance corporation incorporated under Chapter 394, Local
54-2 Government Code, is exempted from the tax under this chapter.
54-3 Sec. 172.273. EXEMPTION: DEVELOPMENT CORPORATION. A
54-4 nonprofit corporation organized under the Development Corporation
54-5 Act of 1979 (Article 5190.6, Vernon's Texas Civil Statutes) is
54-6 exempted from the tax under this chapter.
54-7 Sec. 172.274. EXEMPTION: COOPERATIVE ASSOCIATION. A
54-8 cooperative association incorporated under Subchapter B, Chapter
54-9 301, Health and Safety Code, or under the Cooperative Association
54-10 Act (Article 1396-50.01, Vernon's Texas Civil Statutes) is exempted
54-11 from the tax under this chapter.
54-12 Sec. 172.275. EXEMPTION: COOPERATIVE CREDIT ASSOCIATION. A
54-13 cooperative credit association incorporated under Chapter 55,
54-14 Agriculture Code, is exempted from the tax under this chapter.
54-15 Sec. 172.276. EXEMPTION: ELECTRIC COOPERATIVE CORPORATION.
54-16 An electric cooperative corporation incorporated under the Electric
54-17 Cooperative Corporation Act (Article 1528b, Vernon's Texas Civil
54-18 Statutes) that is not a participant in a joint powers agency is
54-19 exempted from the tax under this chapter.
54-20 Sec. 172.277. EXEMPTION: TELEPHONE COOPERATIVE
54-21 CORPORATIONS. A telephone cooperative corporation incorporated
54-22 under the Telephone Cooperative Act (Article 1528c, Vernon's Texas
54-23 Civil Statutes) is exempted from the tax under this chapter.
54-24 Sec. 172.278. EXEMPTION: CERTAIN HOMEOWNERS' ASSOCIATIONS.
54-25 (a) A nonprofit corporation is exempted from the tax under this
54-26 chapter if:
55-1 (1) the corporation is organized and operated
55-2 primarily to obtain, manage, construct, and maintain the property
55-3 in or of a residential condominium or residential real estate
55-4 development; and
55-5 (2) the owners of individual lots, residences, or
55-6 residential units control at least 51 percent of the votes of the
55-7 corporation and that voting control, however acquired, is not held
55-8 by:
55-9 (A) a single individual or family; or
55-10 (B) one or more developers, declarants, banks,
55-11 investors, or other similar parties.
55-12 (b) For purposes of this section, a condominium project is
55-13 considered residential if the project is legally restricted for use
55-14 as residences. A real estate development is considered residential
55-15 if the property is legally restricted for use as residences.
55-16 Sec. 172.279. EXEMPTION: EMERGENCY MEDICAL SERVICE
55-17 CORPORATION. A nonprofit corporation that is organized for the sole
55-18 purpose of and engages exclusively in providing emergency medical
55-19 services, including rescue and ambulance services, is exempted from
55-20 the tax under this chapter.
55-21 Sec. 172.280. EXEMPTION: CERTAIN TRADE SHOW PARTICIPANTS.
55-22 (a) A business entity is exempted from the tax under this chapter
55-23 if:
55-24 (1) the only business activity conducted by or on
55-25 behalf of the business entity in this state is related to the
55-26 solicitation of orders conducted by representatives of the business
56-1 entity who:
56-2 (A) solicit orders of personal property to be
56-3 sent outside this state for approval or rejection by the business
56-4 entity and, if approved, to be filled by shipment or delivery
56-5 from a point outside this state; or
56-6 (B) solicit orders in the name of or for the
56-7 benefit of a customer or prospective customer of the business
56-8 entity, if the orders are filled or intended to be filled by the
56-9 customer or prospective customer of the business entity by making
56-10 orders to the business entity described by Paragraph (A); and
56-11 (2) the solicitation of orders is conducted on an
56-12 occasional basis at trade shows:
56-13 (A) promoted by wholesale centers;
56-14 (B) promoted by nonprofit trade or professional
56-15 associations for the purpose of facilitating the solicitation of
56-16 orders from members of the trade or profession; or
56-17 (C) held at municipally owned or county-owned
56-18 convention centers or meeting facilities.
56-19 (b) For purposes of this section, the solicitation of orders
56-20 is conducted on an occasional basis only if the solicitation is
56-21 conducted during not more than five periods during the business
56-22 period of the business entity to which a tax report applies and if
56-23 no single period during which solicitation is conducted is longer
56-24 than 120 hours.
56-25 (c) In this section, "wholesale center" means a permanent
56-26 wholesale facility that has permanent tenants and that promotes at
57-1 least four national or regional trade shows in a calendar year.
57-2 Sec. 172.281. EXEMPTION: RECYCLING OPERATION. A business
57-3 entity engaged solely in the business of recycling sludge, as
57-4 defined by Section 361.003, Health and Safety Code, is exempted
57-5 from the tax under this chapter.
57-6 Sec. 172.282. EXEMPTION: NONPROFIT CORPORATION ORGANIZED
57-7 FOR STUDENT LOAN FUNDS OR STUDENT SCHOLARSHIP PURPOSES. A nonprofit
57-8 corporation organized solely to provide a student loan fund or
57-9 student scholarships is exempted from the tax under this chapter.
57-10 Sec. 172.283. EXEMPTION: CREDIT UNION. There is exempted
57-11 from the taxes imposed by this chapter a credit union incorporated
57-12 under the Texas Credit Union Act (Article 2461-1.01 et seq.,
57-13 Vernon's Texas Civil Statutes).
57-14 (Sections 172.284-172.300 reserved for expansion
57-15 SUBCHAPTER F. TAX REPORTS AND PAYMENTS
57-16 Sec. 172.301. ESTIMATED TAX REPORTS FOR CORPORATIONS. (a)
57-17 This section applies only to a taxpayer who is a corporation.
57-18 (b) A taxpayer who reasonably expects liability for the tax
57-19 year to exceed $500 shall file an estimated report and pay an
57-20 estimated tax for each quarter of the taxpayer's tax year.
57-21 (c) For a taxpayer whose tax year is the calendar year, the
57-22 quarterly reports and estimated payments shall be made on or before
57-23 April 15, June 15, September 15, and December 15. A taxpayer whose
57-24 tax year is not the calendar year shall file quarterly reports and
57-25 make estimated payments on or before the due dates that in the
57-26 taxpayer's fiscal year correspond to the date required by the
58-1 Internal Revenue Service, or if that date does not apply to a
58-2 taxpayer, to the calendar year dates provided by this subsection.
58-3 (d) The estimated payment made with each quarterly report of
58-4 each tax year is for the estimated tax base for the quarter or
58-5 one-fourth of the estimated annual liability. The second, third,
58-6 and fourth estimated payments in each tax year shall include
58-7 adjustments, if necessary, to correct underpayments or overpayments
58-8 from previous quarterly payments in the tax year to a revised
58-9 estimate of the annual tax liability.
58-10 (e) The comptroller may not assess interest for tax that is
58-11 delinquent if:
58-12 (1) the sum of the estimated payments equals at least
58-13 90 percent of the liability or one percent of the gross receipts in
58-14 this state, as described by Section 172.206, for the tax year and
58-15 the amount of each estimated payment reasonably approximates the
58-16 tax liability incurred during the quarter for which the estimated
58-17 payment was made; or
58-18 (2) the preceding year's tax liability was submitted
58-19 by the taxpayer in four equal installments the sum of which equals
58-20 the previous year's tax liability.
58-21 (f) A taxpayer shall make each estimated report on a form
58-22 prescribed by the comptroller and shall include an estimate of the
58-23 annual tax liability and other information required by the
58-24 comptroller. The form may be combined with any other tax reporting
58-25 form prescribed by the comptroller.
58-26 (g) A taxpayer who files an estimated tax report for the
59-1 taxpayer's first tax year of less than 12 months shall pay amounts
59-2 with each report that are proportional to the number of payments
59-3 made in the first tax year.
59-4 (h) Payments made under this section are a credit against
59-5 the payment required with the annual tax report.
59-6 (i) The comptroller may require filing of the reports and
59-7 payment of the tax for other than quarterly or annual periods if
59-8 the comptroller considers it necessary to ensure payment of the tax
59-9 or to provide a more efficient administration of the tax.
59-10 (j) A taxpayer who elects under the Internal Revenue Code to
59-11 file an annual federal income tax return by March 1 in the year
59-12 following the taxpayer's tax year and does not make a quarterly
59-13 estimate or payment, or does not make a quarterly estimate or
59-14 payment and files a tentative annual return with a tentative
59-15 payment by January 15 in the year following the taxpayer's tax year
59-16 and a final return by April 15 in the year following the taxpayer's
59-17 tax year, has the same option in filing the estimated and annual
59-18 reports required by this chapter.
59-19 Sec. 172.302. REPORT FOR FIRST TAX YEAR. A taxpayer may
59-20 elect to compute the tax for the first taxable year, if less than
59-21 12 months by determining the amount of the tax as if this chapter
59-22 were effective on the first day of the taxpayer's annual accounting
59-23 period and multiply the amount by a fraction, the numerator of
59-24 which is the number of months in the taxpayer's first taxable year,
59-25 and the denominator of which is 12.
59-26 Sec. 172.303. ANNUAL TAX REPORT. (a) A taxpayer shall file
60-1 an annual or final report with the comptroller, in the form and
60-2 content prescribed by the comptroller, on or before the date the
60-3 taxpayer's federal income tax return is due, or if that date does
60-4 not apply to a taxpayer, the last day of the fourth month after the
60-5 end of the taxpayer's tax year.
60-6 (b) A taxpayer shall pay any final tax liability with the
60-7 final report.
60-8 (c) When a taxpayer is granted an extension of time to file
60-9 the taxpayer's federal income tax return for a taxable year, the
60-10 filing of a copy of the request for the federal extension with a
60-11 preliminary report and payment of the estimated tax with the
60-12 comptroller by the due date provided in Subsection (a)
60-13 automatically extends the due date for the filing of a final report
60-14 under this chapter for a period equivalent to the federal extension
60-15 plus 60 days. Interest at the rate that applies to delinquent
60-16 taxes under Section 111.060 shall be added to the amount of the tax
60-17 unpaid for the period of the extension.
60-18 Sec. 172.304. FILING OF FEDERAL TAX RETURNS. (a) A taxpayer
60-19 required to file a report under this chapter may be required to
60-20 furnish a copy of any return or portion of any return that the
60-21 taxpayer has filed under the Internal Revenue Code.
60-22 (b) A taxpayer shall file an amended report with the
60-23 comptroller showing any alteration in or modification of the
60-24 taxpayer's federal income tax return that affects the taxpayer's
60-25 tax base under this chapter not later than 120 days after the date
60-26 of the final determination by the Internal Revenue Service.
61-1 (c) At the request of the comptroller, a person required by
61-2 the Internal Revenue Code to file or submit an information return
61-3 of income paid to others shall, to the extent the information is
61-4 applicable to residents of this state, at the same time file or
61-5 submit information required by the comptroller in the form
61-6 prescribed by the comptroller.
61-7 Sec. 172.305. REPORTS OF TAXPAYERS OTHER THAN CORPORATIONS.
61-8 (a) This section applies only to a taxpayer who is not a
61-9 corporation.
61-10 (b) A taxpayer to which this section applies, including a
61-11 business entity, such as a partnership, business association, or
61-12 joint venture, that has more than one owner, shall file a tax
61-13 report that represents the business activities of the entire entity
61-14 for the relevant accounting period.
61-15 (c) A taxpayer to which this section applies is required
61-16 only to file an annual report under Section 172.304.
61-17 (d) Each owner of a business entity or a business activity
61-18 in which general liability is not otherwise limited by law is
61-19 jointly and severally liable for the amount of the taxes imposed by
61-20 this chapter on the business entity or business activity.
61-21 Sec. 172.306. COMBINED ENTITY REPORTS. (a) A controlled
61-22 group of corporations or an entity under common control, as defined
61-23 by the Internal Revenue Code, or an affiliated group shall file a
61-24 combined report.
61-25 (b) A corporation that has less than 80 percent of its
61-26 tangible assets located in a state or states may not be included in
62-1 any combined report but must file as a separate entity.
62-2 Sec. 172.307. INFORMATION REPORTS. The comptroller by rule
62-3 may require, at the time and in the manner specified by rule, the
62-4 filing of an information report of any taxpayer who has business
62-5 activity in or allocated to this state and who for a tax period has
62-6 gross receipts, as described by Section 172.207, of $500,000 or
62-7 more.
62-8 (Sections 172.308-172.350 reserved for expansion
62-9 SUBCHAPTER G. ADMINISTRATION, COLLECTION, AND ENFORCEMENT
62-10 Sec. 172.351. PROHIBITION OF DISCLOSURE OF INFORMATION. (a)
62-11 A person, including a state officer or employee, who has access to
62-12 a report filed under this chapter commits an offense if the person
62-13 makes known in a manner not permitted by law the amount or source
62-14 of the taxpayer's income, profits, losses, expenditures, or other
62-15 information in the report relating to the financial condition of
62-16 the taxpayer.
62-17 (b) An offense under this section is punishable by a fine of
62-18 not more than $1,000, confinement in jail for not more than one
62-19 year, or both.
62-20 Sec. 172.352. PENALTY FOR FAILURE TO PAY TAX OR FILE REPORT.
62-21 (a) If a taxpayer on which a tax is imposed by this chapter fails
62-22 to pay the tax when it is due and payable or fails to file a report
62-23 required by this chapter when it is due, the taxpayer is liable for
62-24 a penalty of five percent of the amount of the tax due.
62-25 (b) If the tax is not paid or the report is not filed before
62-26 the 31st day after the due date, a penalty of an additional five
63-1 percent of the tax due is imposed.
63-2 (c) The minimum penalty under this section is $1.
63-3 Sec. 172.353. WILFUL AND FRAUDULENT ACTS. (a) A taxpayer
63-4 commits an offense if the taxpayer is subject to the provisions of
63-5 this chapter and the taxpayer wilfully:
63-6 (1) fails to file a report;
63-7 (2) fails to keep books and records as required by
63-8 this chapter;
63-9 (3) files a fraudulent report;
63-10 (4) violates any rule of the comptroller for the
63-11 administration and enforcement of the provisions of this chapter;
63-12 or
63-13 (5) attempts in any other manner to evade or defeat
63-14 any tax imposed by this chapter or the payment of the tax.
63-15 (b) A person commits an offense if the person is an
63-16 accountant or an agent for or an officer or employee of a taxpayer
63-17 and the person knowingly enters or provides false information on
63-18 any report, return, or other document filed by the taxpayer under
63-19 this chapter.
63-20 (c) A person who commits an offense under this section may
63-21 also, in addition to the punishment provided by this section, be
63-22 liable for a penalty under this chapter.
63-23 (d) An offense under this section is a Class A misdemeanor.
63-24 (e) A person whose commercial domicile or whose residence is
63-25 in this state may be prosecuted under this section only in the
63-26 county in which the person's commercial domicile or residence is
64-1 located unless the person asserts a right to be prosecuted in
64-2 another county.
64-3 (f) A prosecution for a violation of this section must be
64-4 commenced before the fifth anniversary of the date of the
64-5 violation.
64-6 Sec. 172.354. RECIPROCAL AGREEMENTS. The comptroller may
64-7 enter into reciprocal agreements with the United States Department
64-8 of the Treasury or taxing officials of other states or nations for
64-9 the enforcement, collection, and exchange of data in connection
64-10 with the administration of this chapter.
64-11 (Sections 172.355-172.400 reserved for expansion
64-12 SUBCHAPTER H. FORFEITURE OF CORPORATE PRIVILEGES
64-13 Sec. 172.401. FORFEITURE OF CORPORATE PRIVILEGES. The
64-14 comptroller shall forfeit the corporate privileges of a corporation
64-15 on which the tax imposed by this chapter is imposed if the
64-16 corporation:
64-17 (1) does not file, in accordance with this chapter and
64-18 before the 45th day after the date notice of forfeiture is mailed,
64-19 a report required by this chapter; or
64-20 (2) does not pay, before the 45th day after the date
64-21 notice of forfeiture is mailed, a tax imposed by this chapter or
64-22 does not pay, before that date, a penalty imposed by this chapter
64-23 relating to that tax.
64-24 Sec. 172.402. EFFECTS OF FORFEITURE. If the corporate
64-25 privileges of a corporation are forfeited under this subchapter:
64-26 (1) the corporation is denied the right to sue or
65-1 defend in a court of this state; and
65-2 (2) each director or officer of the corporation is
65-3 liable for a debt of the corporation as provided by Section
65-4 172.405.
65-5 Sec. 172.403. SUIT ON CAUSE OF ACTION ARISING BEFORE
65-6 FORFEITURE. In a suit against a corporation on a cause of action
65-7 arising before the forfeiture of the corporate privileges of the
65-8 corporation, affirmative relief may not be granted to the
65-9 corporation unless its corporate privileges are revived under this
65-10 chapter.
65-11 Sec. 172.404. EXCEPTION TO FORFEITURE. The forfeiture of the
65-12 corporate privileges of a corporation does not apply to the
65-13 privilege to defend in a suit to forfeit the corporation's charter
65-14 or certificate of authority.
65-15 Sec. 172.405. LIABILITY OF DIRECTOR AND OFFICERS. (a) If
65-16 the corporate privileges of a corporation are forfeited for the
65-17 failure to file a report or pay a tax or penalty, each director or
65-18 officer of the corporation is liable for each debt of the
65-19 corporation that is created or incurred in this state after the
65-20 date on which the report, tax, or penalty is due and before the
65-21 corporate privileges are revived. The liability includes liability
65-22 for any tax or penalty imposed by this chapter on the corporation
65-23 that becomes due and payable after the date of the forfeiture.
65-24 (b) The liability of a director or officer is in the same
65-25 manner and to the same extent as if the director or officer were a
65-26 partner and the corporation were a partnership.
66-1 (c) A director or officer is not liable for a debt of the
66-2 corporation if the director or officer shows that the debt was
66-3 created or incurred:
66-4 (1) over the director's objection; or
66-5 (2) without the director's knowledge and that the
66-6 exercise of reasonable diligence to become acquainted with the
66-7 affairs of the corporation would not have revealed the intention to
66-8 create the debt.
66-9 (d) If a corporation's charter or certificate of authority
66-10 and its corporate privileges are forfeited and revived under this
66-11 chapter, the liability under this section of a director or officer
66-12 of the corporation is not affected by the revival of the charter or
66-13 certificate and the corporate privileges.
66-14 Sec. 172.406. NOTICE OF FORFEITURE. (a) To forfeit the
66-15 corporate privileges of a corporation, the comptroller must notify
66-16 the corporation that the forfeiture will occur without a judicial
66-17 proceeding unless the corporation:
66-18 (1) files, within the time established by Section
66-19 172.401, the report to which that section refers; or
66-20 (2) pays, within the time established by Section
66-21 172.401, the delinquent tax and penalty to which that section
66-22 refers.
66-23 (b) The notice must be written or printed and be verified by
66-24 the seal of the comptroller's office.
66-25 (c) The comptroller shall mail the notice to the corporation
66-26 at least 45 days before the forfeiture of corporate privileges. The
67-1 comptroller shall address the notice to the corporation and mail it
67-2 to the address named in the corporation's charter as its principal
67-3 place of business or to another known place of business of the
67-4 corporation.
67-5 (d) The comptroller shall keep at the comptroller's office a
67-6 record of the date on which the notice is mailed. For the purposes
67-7 of this chapter, the notice and the record of the mailing date
67-8 constitute legal and sufficient notice of the forfeiture.
67-9 Sec. 172.407. JUDICIAL PROCEEDING NOT REQUIRED FOR
67-10 FORFEITURE. The forfeiture of the corporate privileges of a
67-11 corporation is effected by the comptroller without a judicial
67-12 proceeding.
67-13 Sec. 172.408. REVIVAL OF CORPORATE PRIVILEGES. The
67-14 comptroller shall revive the corporate privileges of a corporation
67-15 if the corporation, before the forfeiture of its charter or
67-16 certificate of authority, pays any tax, penalty, or interest due
67-17 under this chapter.
67-18 (Sections 172.409-172.450 reserved for expansion
67-19 SUBCHAPTER I. FORFEITURE OF CHARTER OR CERTIFICATE OF AUTHORITY
67-20 Sec. 172.451. GROUNDS FOR FORFEITURE OF CHARTER OR
67-21 CERTIFICATE OF AUTHORITY. It is a ground for the forfeiture of a
67-22 corporation's charter or certificate of authority if the corporate
67-23 privileges of the corporation are forfeited under this chapter and
67-24 the corporation does not pay, before the 120th day after the date
67-25 the corporate privileges are forfeited, the amount necessary for
67-26 the corporation to revive under this chapter its corporate
68-1 privileges.
68-2 Sec. 172.452. CERTIFICATION BY COMPTROLLER. After the 120th
68-3 day after the date that the corporate privileges of a corporation
68-4 are forfeited under this chapter, the comptroller shall certify the
68-5 name of the corporation to the attorney general and the secretary
68-6 of state.
68-7 Sec. 172.453. SUIT FOR JUDICIAL FORFEITURE. On receipt of
68-8 the comptroller's certification, the attorney general shall bring
68-9 suit to forfeit the charter or certificate of authority of the
68-10 corporation if a ground exists for the forfeiture of the charter or
68-11 certificate.
68-12 Sec. 172.454. RECORD OF JUDICIAL FORFEITURE. (a) If a
68-13 district court forfeits a corporation's charter or certificate of
68-14 authority under this chapter, the clerk of the court shall promptly
68-15 mail to the secretary of state a certified copy of the court's
68-16 judgment. On receipt of the copy of the judgment, the secretary of
68-17 state shall inscribe on the corporation's record at the secretary's
68-18 office the words "Judgment of Forfeiture" and the date of the
68-19 judgment.
68-20 (b) If an appeal of the judgment is perfected, the clerk of
68-21 the court shall promptly certify to the secretary of state that the
68-22 appeal has been perfected. On receipt of the certification, the
68-23 secretary of state shall inscribe on the corporation's record at
68-24 the secretary's office the word "Appealed" and the date on which
68-25 the appeal was perfected.
68-26 (c) If final disposition of an appeal is made, the clerk of
69-1 the court making the disposition shall promptly certify to the
69-2 secretary of state the type of disposition made and the date of the
69-3 disposition. On receipt of the certification, the secretary of
69-4 state shall inscribe on the corporation's record at the secretary's
69-5 office a brief note of the type of final disposition made and the
69-6 date of the disposition.
69-7 Sec. 172.455. REVIVAL OF CHARTER OR CERTIFICATE OF AUTHORITY
69-8 AFTER JUDICIAL FORFEITURE. A corporation whose charter or
69-9 certificate of authority is judicially forfeited under this chapter
69-10 is entitled to have its charter or certificate revived and to have
69-11 its corporate privileges revived if:
69-12 (1) the corporation files each report that is required
69-13 by this chapter and that is delinquent;
69-14 (2) the corporation pays the tax, penalty, and
69-15 interest that is imposed by this chapter and that is due at the
69-16 time the suit under Section 172.456 to set aside forfeiture is
69-17 filed; and
69-18 (3) the forfeiture of the corporation's charter or
69-19 certificate is set aside in a suit under Section 172.456.
69-20 Sec. 172.456. SUIT TO SET ASIDE JUDICIAL FORFEITURE. If a
69-21 corporation's charter or certificate of authority is judicially
69-22 forfeited under this chapter, a stockholder, director, or officer
69-23 of the corporation at the time of the forfeiture of the charter or
69-24 certificate or of the corporate privileges of the corporation may
69-25 bring suit in a district court of Travis County in the name of the
69-26 corporation to set aside the forfeiture of the charter or
70-1 certificate. The suit must be in the nature of a bill of review.
70-2 The secretary of state and attorney general must be made defendants
70-3 in the suit.
70-4 Sec. 172.457. RECORD OF SUIT TO SET ASIDE JUDICIAL
70-5 FORFEITURE. If a court under this chapter sets aside the forfeiture
70-6 of a corporation's charter or certificate of authority, the
70-7 secretary of state shall inscribe on the corporation's record in
70-8 the secretary's office the words "Charter Revived by Court Order"
70-9 or "Certificate Revived by Court Order," a citation to the suit,
70-10 and the date of the court's judgment.
70-11 Sec. 172.458. CORPORATE PRIVILEGES AFTER JUDICIAL FORFEITURE
70-12 IS SET ASIDE. If a court under this chapter sets aside the
70-13 forfeiture of a corporation's charter or certificate of authority,
70-14 the comptroller shall revive the corporate privileges of the
70-15 corporation and shall inscribe on the corporation's record in the
70-16 comptroller's office a note of the revival.
70-17 Sec. 172.459. FORFEITURE BY SECRETARY OF STATE. The
70-18 secretary of state may forfeit the charter or certificate of
70-19 authority of a corporation if:
70-20 (1) the secretary receives the comptroller's
70-21 certification under Section 172.452;
70-22 (2) the corporation does not revive its forfeited
70-23 corporate privileges before the 120th day after the date that the
70-24 corporate privileges were forfeited; and
70-25 (3) the corporation does not have assets from which a
70-26 judgment for any tax, penalty, or court costs imposed by this
71-1 chapter may be satisfied.
71-2 Sec. 172.460. JUDICIAL PROCEEDING NOT REQUIRED FOR
71-3 FORFEITURE BY SECRETARY OF STATE. The forfeiture by the secretary
71-4 of state of a corporation's charter or certificate of authority
71-5 under this chapter is effected without a judicial proceeding.
71-6 Sec. 172.461. RECORD OF FORFEITURE BY SECRETARY OF STATE.
71-7 The secretary of state shall effect a forfeiture of a corporation's
71-8 charter or certificate of authority under this chapter by
71-9 inscribing on the corporation's record in the secretary's office
71-10 the words "Charter Forfeited" or "Certificate Forfeited," the date
71-11 on which this inscription is made, and a citation to this chapter
71-12 as authority for the forfeiture.
71-13 Sec. 172.462. REVIVAL OF CHARTER OR CERTIFICATE OF AUTHORITY
71-14 AFTER FORFEITURE BY SECRETARY OF STATE. A corporation whose charter
71-15 or certificate of authority is forfeited under this chapter by the
71-16 secretary of state is entitled to have its charter or certificate
71-17 revived and to have its corporate privileges revived if:
71-18 (1) the corporation files each report that is required
71-19 by this chapter and that is delinquent;
71-20 (2) the corporation pays the tax, penalty, and
71-21 interest that is imposed by this chapter and that is due at the
71-22 time the request under Section 172.463 to set aside forfeiture is
71-23 made; and
71-24 (3) the forfeiture of the corporation's charter or
71-25 certificate is set aside in a proceeding under Section 172.463.
71-26 Sec. 172.463. PROCEEDING TO SET ASIDE FORFEITURE BY
72-1 SECRETARY OF STATE. (a) If a corporation's charter or certificate
72-2 of authority is forfeited under this chapter by the secretary of
72-3 state, a stockholder, director, or officer of the corporation at
72-4 the time of the forfeiture of the charter or certificate or of the
72-5 corporate privileges of the corporation may request in the name of
72-6 the corporation that the secretary of state set aside the
72-7 forfeiture of the charter or certificate.
72-8 (b) If a request is made, the secretary of state shall
72-9 determine if each delinquent report has been filed and any
72-10 delinquent tax, penalty, or interest has been paid. If each report
72-11 has been filed and the tax, penalty, or interest has been paid, the
72-12 secretary shall set aside the forfeiture of the corporation's
72-13 charter or certificate of authority.
72-14 Sec. 172.464. CORPORATE PRIVILEGES AFTER FORFEITURE BY
72-15 SECRETARY OF STATE IS SET ASIDE. If the secretary of state sets
72-16 aside under this chapter the forfeiture of a corporation's charter
72-17 or certificate of authority, the comptroller shall revive the
72-18 corporate privileges of the corporation.
72-19 Sec. 172.465. USE OF CORPORATE NAME AFTER REVIVAL OF CHARTER
72-20 OR CERTIFICATE OF AUTHORITY. If a corporation's charter or
72-21 certificate of authority is forfeited under this chapter by the
72-22 secretary of state and if the corporation requests the secretary to
72-23 set aside the forfeiture under Section 172.463, the corporation
72-24 shall determine from the secretary whether the corporation's name
72-25 is available for use. If the name is not available, the
72-26 corporation shall amend its charter or certificate to change its
73-1 name.
73-2 (Sections 172.466-172.500 reserved for expansion
73-3 SUBCHAPTER J. DISPOSITION OF REVENUE
73-4 Sec. 172.501. TEXAS SCHOOL TRUST FUND. The revenue from the
73-5 tax imposed by this chapter shall be deposited to the credit of the
73-6 Texas School Trust Fund.
73-7 SECTION 3.02. Section 101.003(8), Tax Code, as amended by
73-8 Section 1.01, Chapter 486, and Section 3.27, Chapter 685, Acts of
73-9 the 73rd Legislature, Regular Session, 1993, is amended to read as
73-10 follows:
73-11 (8) "Taxpayer" means a person liable for a tax, fee,
73-12 assessment, or other amount imposed by a statute or under the
73-13 authority of a statutory function administered by the comptroller.
73-14 The term includes a business entity subject to the tax under
73-15 Chapter 172, Tax Code.
73-16 SECTION 3.03. (a) Chapter 171, Tax Code, is repealed January
73-17 1, 2002.
73-18 (b) Chapter 171, Tax Code, and Subtitle B, Title 2, Tax
73-19 Code, continue to apply to audits, deficiencies, redeterminations,
73-20 and refunds of any tax due or collected under Chapter 171 until
73-21 barred by limitations.
73-22 (c) Any corporation that is subject to the franchise tax
73-23 imposed by Chapter 171, Tax Code, before the date of its repeal
73-24 shall pay an additional tax equal to 4.5 percent of the
73-25 corporation's net taxable earned surplus computed on the period
73-26 beginning on the day after the last day for which the tax imposed
74-1 on net taxable earned surplus was computed under Section 171.1532,
74-2 Tax Code, and ending on December 31, 2001. The comptroller by rule
74-3 shall provide for the payment of tax due for an initial or second
74-4 period that does not expire before January 1, 2002. A franchise
74-5 tax return is not required for any initial or second period as
74-6 described by Chapter 171, Tax Code, that begins on or after January
74-7 1, 2002.
74-8 (d) The repeal of Chapter 171, Tax Code, does not affect:
74-9 (1) the status of a corporation that has had its
74-10 corporate privileges, certificate of authority, or corporate
74-11 charter revoked, suit filed against it, or a receiver appointed
74-12 under Subchapter F, G, or H of that chapter;
74-13 (2) the ability of the comptroller, secretary of
74-14 state, or attorney general to take action against a corporation
74-15 under Subchapter F, G, or H for actions that took place before the
74-16 repeal; or
74-17 (3) the right of a corporation to contest a
74-18 forfeiture, revocation, lawsuit, or appointment of a receiver under
74-19 Subchapter F, G, or H.
74-20 SECTION 3.04. (a) Chapter 172, Tax Code, as added by this
74-21 article, applies to any business activity taking place on or after
74-22 July 1, 2002.
74-23 (b) Tax owed under Chapter 172, Tax Code, as added by this
74-24 article, for 2002, shall be proportionately reduced, in the manner
74-25 provided by Section 172.302, as added by this article, for the
74-26 report for the first tax year of a taxpayer, to reflect that the
75-1 2002 tax year is not a full calendar year.
75-2 (c) A corporation, as that term is defined by Section
75-3 172.006, Tax Code, as added by this article, shall make its first
75-4 estimated quarterly business tax payment under Chapter 172, as
75-5 added by this article, on or before October 31, 2002.
75-6 (d) A taxpayer, as that term is defined by Chapter 172, as
75-7 added by this article, other than a corporation, as that term is
75-8 defined by Section 172.006, Tax Code, as added by this article,
75-9 shall file its first tax year report and make its business tax
75-10 payment under Chapter 172, as added by this article, for business
75-11 activity taking place in 2002, beginning on July 1, 2002, on or
75-12 before April 15, 1999.
75-13 (e) In 2002, the comptroller may by rule extend the deadline
75-14 for estimated tax payments of the tax under Chapter 172, Tax Code,
75-15 as added by this article.
75-16 SECTION 3.05. Subject to Sections 3.03 and 3.04 of this
75-17 article, this article takes effect when this Act takes effect.
75-18 ARTICLE 4. SALES, EXCISE, AND USE TAX
75-19 SECTION 4.01. Section 151.051(b), Tax Code, is amended to
75-20 read as follows:
75-21 (b) The sales tax rate is 6 3/4 [6 1/4] percent of the sales
75-22 price of the taxable item sold.
75-23 SECTION 4.02. Subchapter M, Chapter 151, Tax Code, is amended
75-24 by adding Section 151.802 to read as follows:
75-25 Sec. 151.802. DEDICATION TO TEXAS SCHOOL TRUST FUND. (a)
75-26 The net revenue derived from the imposition of the taxes imposed by
76-1 this chapter at the rate of one-half of one percent of the sales
76-2 price of taxable items under this chapter shall be credited to the
76-3 Texas School Trust Fund.
76-4 (b) The comptroller shall determine the amount described by
76-5 Subsection (a) according to available statistical data indicating
76-6 the estimated or actual total receipts in this state from taxable
76-7 sales.
76-8 SECTION 4.03. (a) This article takes effect January 1, 2002.
76-9 (b) The change in law made by this article does not affect
76-10 taxes imposed before the effective date of this article, and the
76-11 law in effect before the effective date of this article is
76-12 continued in effect for purposes of the liability for and
76-13 collection of those taxes.
76-14 ARTICLE 5. MOTOR VEHICLE SALES, RENTAL, AND USE TAX
76-15 SECTION 5.01. Section 152.021, Tax Code, is amended to read
76-16 as follows:
76-17 Sec. 152.021. RETAIL SALES TAX. (a) A tax is imposed on
76-18 every retail sale of every motor vehicle sold in this state.
76-19 Except as provided by this chapter, the tax is an obligation of and
76-20 shall be paid by the purchaser of the motor vehicle.
76-21 (b) The tax rate is 6 3/4 [6 1/4] percent of the total
76-22 consideration.
76-23 SECTION 5.02. Section 152.022, Tax Code, is amended to read
76-24 as follows:
76-25 Sec. 152.022. TAX ON MOTOR VEHICLE PURCHASED OUTSIDE THIS
76-26 STATE. (a) A use tax is imposed on a motor vehicle purchased at
77-1 retail sale outside this state and used on the public highways of
77-2 this state by a Texas resident or other person who is domiciled or
77-3 doing business in this state.
77-4 (b) The tax rate is 6 3/4 [6 1/4] percent of the total
77-5 consideration.
77-6 SECTION 5.03. Sections 152.026(a) and (b), Tax Code, are
77-7 amended to read as follows:
77-8 (a) A tax is imposed on the gross rental receipts from the
77-9 rental of a rented motor vehicle.
77-10 (b) The tax rate is 10 percent of the gross rental receipts
77-11 from the rental of a rented motor vehicle for 30 days or less and 6
77-12 3/4 [6 1/4] percent of the gross rental receipts from the rental of
77-13 a rented motor vehicle for longer than 30 days.
77-14 SECTION 5.04. Section 152.028, Tax Code, is amended to read
77-15 as follows:
77-16 Sec. 152.028. USE TAX ON MOTOR VEHICLE BROUGHT BACK INTO
77-17 STATE. (a) A use tax is imposed on the operator of a motor vehicle
77-18 that was purchased tax-free under Section 152.090 of this code and
77-19 that is brought back into this state for use on the public highways
77-20 of this state. The tax is imposed at the time the motor vehicle is
77-21 brought back into this state.
77-22 (b) The tax rate is 6 3/4 [6 1/4] percent of the total
77-23 consideration.
77-24 SECTION 5.05. Section 152.122, Tax Code, is amended to read
77-25 as follows:
77-26 Sec. 152.122. ALLOCATION OF TAX. The comptroller shall
78-1 deposit the funds received under Section 152.121 of this code as
78-2 follows:
78-3 (1) 25 percent [1/4] to the credit of the foundation
78-4 school fund; [and]
78-5 (2) 7.4 percent to the Texas School Trust Fund; and
78-6 (3) the remaining funds to the credit of the general
78-7 revenue fund.
78-8 SECTION 5.06. This article takes effect January 1, 2002.
78-9 ARTICLE 6. STATE LOTTERY ACCOUNT
78-10 SECTION 6.01. Section 466.355(b), Government Code, is amended
78-11 to read as follows:
78-12 (b) Money in the state lottery account may be used only for
78-13 the following purposes and shall be distributed as follows:
78-14 (1) the payment of prizes to the holders of winning
78-15 tickets;
78-16 (2) the payment of costs incurred in the operation and
78-17 administration of the lottery, including any fees received by a
78-18 lottery operator, provided that the costs incurred in a fiscal
78-19 biennium may not exceed an amount equal to 15 percent of the gross
78-20 revenue accruing from the sale of tickets in that biennium;
78-21 (3) the establishment of a pooled bond fund, lottery
78-22 prize reserve fund, unclaimed prize fund, and prize payment
78-23 account; and
78-24 (4) the balance, after creation of a reserve
78-25 sufficient to pay the amounts needed or estimated to be needed
78-26 under Subdivisions (1) through (3), to be transferred to the Texas
79-1 School Trust Fund [unobligated portion of the general revenue
79-2 fund], on or before the 15th day of each month.
79-3 SECTION 6.02. This article takes effect September 1, 2001.
79-4 SECTION 6.03. Section 466.355, Government Code, as amended by
79-5 this article, applies only to revenue from the sale of a lottery
79-6 ticket that occurs on or after the effective date of this article.
79-7 Revenue from the sale of a lottery ticket that occurs before the
79-8 effective date of this article is governed by the law in effect on
79-9 the date of the sale, and the former law is continued in effect for
79-10 that purpose.
79-11 ARTICLE 7. INCOME TAX
79-12 SECTION 7.01. Title 2, Tax Code, is amended by adding
79-13 Subtitle L to read as follows:
79-14 SUBTITLE L. PERSONAL INCOME TAX
79-15 CHAPTER 261. PERSONAL INCOME TAX
79-16 SUBCHAPTER A. IMPOSITION OF TAX
79-17 Sec. 261.001. TAX IMPOSED. (a) A tax is imposed for each
79-18 tax year:
79-19 (1) on the taxable income of every resident of this
79-20 state; and
79-21 (2) on the taxable income derived from sources in this
79-22 state of every nonresident.
79-23 (b) The tax rate is four percent of the amount of taxable
79-24 income that exceeds $69,000.
79-25 Sec. 261.002. JOINT RETURN OR RETURN OF SURVIVING SPOUSE. If
79-26 a husband and wife file a joint return, the tax imposed by Section
80-1 261.001 is twice the tax that would be imposed if the taxable
80-2 income were divided by two.
80-3 Sec. 261.003. MEANING OF TERMS. (a) In this chapter:
80-4 (1) an individual is a resident of this state if the
80-5 individual:
80-6 (A) is domiciled in this state unless the
80-7 individual does not maintain a permanent place of abode in this
80-8 state and does maintain a permanent place of abode elsewhere and
80-9 spends, in the aggregate, not more than 30 days of the tax year in
80-10 this state; or
80-11 (B) is not domiciled in this state but maintains
80-12 a permanent place of abode in this state and spends, in the
80-13 aggregate, more than 183 days of the tax year in this state; and
80-14 (2) an individual is a nonresident if the individual
80-15 is not a resident of this state.
80-16 (b) Any term used in this chapter and not defined by or for
80-17 purposes of this chapter has the same meaning as when used in a
80-18 comparable context in the laws of the United States relating to
80-19 federal income taxes, unless a different meaning is clearly
80-20 required. Any reference in this chapter to federal law means the
80-21 provisions of the Internal Revenue Code of 1986 in effect on
80-22 December 31, 2001, and other provisions of federal laws relating to
80-23 federal income taxes in effect on December 31, 2001.
80-24 (Sections 261.004-261.050 reserved for expansion
80-25 SUBCHAPTER B. COMPUTATION OF TAXABLE INCOME
80-26 Sec. 261.051. TAXABLE INCOME. The taxable income of a
81-1 resident of this state is the resident's federal adjusted gross
81-2 income as defined by the federal law.
81-3 Sec. 261.052. CREDIT FOR INCOME TAX PAID TO ANOTHER STATE.
81-4 (a) A resident individual is allowed a credit against the tax
81-5 otherwise due under this chapter for the amount of any income tax
81-6 imposed on the individual for the tax year by another state of the
81-7 United States on income that is derived from sources in that state
81-8 and that is subject to tax under this chapter.
81-9 (b) The credit provided by this section may not exceed the
81-10 proportion of the tax otherwise due under this chapter that the
81-11 amount of the taxpayer's adjusted gross income derived from sources
81-12 in the other taxing jurisdiction bears to the taxpayer's entire
81-13 adjusted gross income as modified by this subchapter.
81-14 Sec. 261.053. DUAL RESIDENCE; REDUCTION OF TAX. If a
81-15 taxpayer is a resident of this state and is regarded as a resident
81-16 of another jurisdiction for purposes of personal income taxation,
81-17 the comptroller shall reduce the tax on that portion of the
81-18 taxpayer's income that is subject to tax in both jurisdictions
81-19 solely by virtue of dual residence. The reduction shall be in an
81-20 amount equal to that portion of the lower of the two taxes
81-21 applicable to the income taxed twice that the tax imposed by this
81-22 state bears to the combined taxes of the two jurisdictions on the
81-23 income taxed twice.
81-24 Sec. 261.054. NONRESIDENT INDIVIDUALS--TAXABLE INCOME. The
81-25 taxable income of a nonresident individual is that part of the
81-26 individual's federal adjusted gross income derived from sources in
82-1 this state determined under Section 261.056.
82-2 Sec. 261.055. HUSBAND AND WIFE--NONRESIDENT. (a) If the
82-3 federal taxable income of a husband and wife, both of whom are
82-4 nonresidents of this state, is determined on separate federal
82-5 returns, their taxable incomes in this state shall be separately
82-6 determined.
82-7 (b) If the federal taxable income of a husband and wife,
82-8 both of whom are nonresidents, is determined on a joint federal
82-9 return, their tax shall be determined in this state on their
82-10 combined taxable income.
82-11 (c) If one spouse is a nonresident and the other a resident,
82-12 separate taxes shall be determined on their separate taxable
82-13 incomes in this state on forms prescribed by the comptroller unless
82-14 both elect to determine their combined taxable income in this state
82-15 as if both were residents. If a husband and wife file a joint
82-16 federal income tax return but determine their taxable income in
82-17 this state separately, they must compute their taxable incomes in
82-18 this state as if their federal adjusted gross incomes had been
82-19 determined separately.
82-20 Sec. 261.056. ADJUSTED GROSS INCOME FROM SOURCES IN THIS
82-21 STATE--NONRESIDENT. (a) The adjusted cross income of a nonresident
82-22 derived from sources in this state is the net amount of items of
82-23 income, gain, loss, and deduction entering into the nonresident's
82-24 federal adjusted gross income that are derived from or connected
82-25 with sources in this state including:
82-26 (1) the nonresident's distributive share of
83-1 partnership income and deductions determined under Section 261.403;
83-2 and
83-3 (2) the nonresident's share of estate or trust income
83-4 and deductions derived from sources in this state.
83-5 (b) Items of income, gain, loss, and deduction derived from
83-6 or connected with sources in this state are those items
83-7 attributable to:
83-8 (1) the ownership or disposition of an interest in
83-9 real or tangible personal property in this state; and
83-10 (2) a business, trade, profession, or occupation
83-11 conducted in this state.
83-12 (c) Income from intangible personal property, including
83-13 annuities, dividends, interest, and gains from the disposition of
83-14 intangible personal property, constitutes income derived from
83-15 sources in this state only to the extent that the income is from
83-16 property used in a business, trade, profession, or occupation
83-17 carried on in this state.
83-18 (d) Deductions for capital losses, net long-term capital
83-19 gains, and net operating losses derived from or connected with
83-20 sources in this state, are determined in the same manner as the
83-21 corresponding federal deductions. However, the extent to which the
83-22 deductions are derived from or connected with sources in this state
83-23 is determined under the comptroller's rules.
83-24 (e) For a nonresident individual who is a shareholder of a
83-25 corporation that is an electing small business corporation for
83-26 federal income tax purposes, the undistributed taxable income of
84-1 the corporation does not constitute income derived from sources in
84-2 this state and a net operating loss of the corporation does not
84-3 constitute a loss or deduction connected with sources in this
84-4 state.
84-5 (f) If a business, trade, profession, or occupation is
84-6 carried on partly in and partly outside this state, the items of
84-7 income and deduction derived from or connected with sources in this
84-8 state are determined by apportionment and allocation consistent
84-9 with Chapter 141 under the comptroller's rules.
84-10 (g) Compensation paid by the United States for service in
84-11 the armed forces of the United States performed by a nonresident is
84-12 not income derived from sources in this state.
84-13 (Sections 261.057-261.100 reserved for expansion
84-14 SUBCHAPTER C. WITHHOLDING TAX
84-15 Sec. 261.101. EMPLOYER TO WITHHOLD TAX FROM WAGES. (a) Each
84-16 employer maintaining an office or doing business in this state and
84-17 making payment of wages taxable under this chapter to a resident or
84-18 nonresident individual shall withhold from those wages for each
84-19 payroll period a tax computed in a manner as to result, so far as
84-20 practicable, in withholding from the employee's wages during each
84-21 calendar year an amount equivalent to the amount of tax reasonably
84-22 estimated to be due from the employee under this chapter from the
84-23 amount of the wages paid by the employer and included in the
84-24 employee's adjusted gross income during the calendar year. The
84-25 method of determining the amount to be withheld shall be prescribed
84-26 by the comptroller's rules. Payments by the United States for
85-1 service in the armed forces of the United States are not subject to
85-2 state withholding.
85-3 (b) The comptroller may enter into agreements with the tax
85-4 departments of other states that require income tax to be withheld
85-5 from the payment of wages and salaries to govern the amounts to be
85-6 withheld from the wages and salaries of residents of those states
85-7 under this chapter. The agreements may provide for recognition of
85-8 anticipated tax credits in determining the amounts to be withheld,
85-9 and the comptroller, by rule, may relieve employers in this state
85-10 from withholding income tax on wages and salaries paid to
85-11 nonresident employees. An agreement authorized by this section is
85-12 subject to the condition that the tax department of the other state
85-13 grants similar treatment to residents of this state.
85-14 Sec. 261.102. INFORMATION STATEMENT FOR EMPLOYEE. An
85-15 employer required to withhold the tax under Section 261.101 from
85-16 the wages of an employee shall furnish to each employee from whom
85-17 the employer withheld the tax during the calendar year a written
85-18 statement as prescribed by rule showing the amount of wages paid by
85-19 the employer to the employee, the amount deducted and withheld as
85-20 tax, and other information the comptroller prescribes. The
85-21 withholding statement shall be given to the employee from whom the
85-22 tax is withheld on or before February 15 of the year succeeding the
85-23 calendar year in which the withholding occurs or, if the employee's
85-24 employment ends during the calendar year, before the 31st day after
85-25 the last day on which wages are paid to the employee.
85-26 Sec. 261.103. CREDIT FOR TAX WITHHELD. Wages on which the
86-1 withholding tax applies are included fully as taxable income under
86-2 this chapter as if no withholding were required. The amount of
86-3 withholding tax actually withheld under this subchapter in a
86-4 calendar year is considered to have been paid to the comptroller on
86-5 behalf of the person from whom withheld, and the person shall be
86-6 credited with having paid that amount of tax for the tax year in
86-7 which the wages are taxed. For a tax year of less than 12 months,
86-8 the credit shall be made under rules of the comptroller.
86-9 Sec. 261.104. EMPLOYER'S RETURN AND PAYMENT OF TAX WITHHELD.
86-10 (a) An employer required to deduct and withhold tax under this
86-11 chapter shall, for each calendar quarter, on or before the 15th day
86-12 of the month following the end of the calendar quarter, file a
86-13 withholding return as prescribed by the comptroller and pay to the
86-14 comptroller or to a depository designated by the comptroller, the
86-15 taxes required to be withheld, except that for the fourth quarter
86-16 of the calendar year, the return shall be filed and the taxes paid
86-17 on or before January 31 of the succeeding year. If the amount
86-18 required to be withheld by an employer for a calendar month exceeds
86-19 $500, the employer shall, not later than the 15th day of the
86-20 succeeding month, pay the withheld amount to the comptroller or to
86-21 a depository designated by the comptroller. The amount paid is
86-22 allowed as a credit against the liability shown on the employer's
86-23 quarterly withholding return required by this section. If the
86-24 amount required to be deducted and withheld by an employer is less
86-25 than $100 in a calendar quarter, the comptroller by rule may permit
86-26 an employer to file a withholding return on or before July 31 for
87-1 the semiannual period ending on June 30 and on or before January 31
87-2 of the succeeding year for the semiannual period ending on December
87-3 31. The comptroller may, if it is necessary for the protection of
87-4 the revenue, require an employer to make a return and pay to the
87-5 comptroller the tax withheld at any time. If the amount of wages
87-6 paid by an employer is not sufficient under this chapter to require
87-7 the withholding of tax from the wages of any of the employer's
87-8 employees, the comptroller by rule may permit the employer to file
87-9 an annual return on or before January 31 of the succeeding calendar
87-10 year.
87-11 (b) If an employer fails to collect the tax, truthfully
87-12 account for the tax, pay the tax, or make returns of the tax as
87-13 required by this section, the comptroller may serve a notice
87-14 requiring the employer to collect the taxes that became collectible
87-15 after service of notice, to deposit the taxes in a bank approved by
87-16 the comptroller, in a separate account, in trust for and payable to
87-17 the comptroller, and to keep the amount of the tax in the account
87-18 until paid over to the comptroller. A notice remains in effect
87-19 until a notice of cancellation is served by the comptroller.
87-20 Sec. 261.105. EMPLOYER'S LIABILITY FOR WITHHELD TAXES. An
87-21 employer required to withhold a tax under this chapter is liable
87-22 for the tax For purposes of assessment and collection, any amount
87-23 required to be withheld and paid to the comptroller, and any
87-24 additions to tax, penalties, and interest with respect to it, is
87-25 the tax of the employer. Any amount of tax actually deducted and
87-26 withheld under this chapter shall be held to be a special fund in
88-1 trust for the comptroller. An employee does not have a right of
88-2 action against his employer in respect to money withheld from the
88-3 employee's wages and paid over to the comptroller in compliance or
88-4 in intended compliance with this chapter.
88-5 Sec. 261.106. EMPLOYER'S FAILURE TO WITHHOLD. If an employer
88-6 fails to withhold tax as required, and thereafter the tax against
88-7 which that tax may be credited is paid, the tax so required to be
88-8 withheld may not be collected from the employer, but the employer
88-9 is liable for additions to tax penalties or interest otherwise
88-10 applicable resulting from a failure to withhold.
88-11 (Sections 261.107-261.200 reserved for expansion
88-12 SUBCHAPTER D. ACCOUNTING PERIODS AND METHODS
88-13 Sec. 261.201. PERIOD FOR COMPUTATION OF TAXABLE INCOME. (a)
88-14 For purposes of the tax imposed by this chapter, a taxpayer's tax
88-15 year is the same as the taxpayer's tax year for federal income tax
88-16 purposes.
88-17 (b) If a taxpayer's tax year is changed for federal income
88-18 tax purposes, the taxpayer's tax year for purposes of the tax
88-19 imposed by this chapter shall be similarly changed.
88-20 Sec. 261.202. METHODS OF ACCOUNTING. (a) A taxpayer's
88-21 method of accounting is the same as the taxpayer's method of
88-22 accounting for federal income tax purposes. If a single method of
88-23 accounting has not been regularly used by the taxpayer, taxable
88-24 income for purposes of this chapter shall be computed under any
88-25 method that in the opinion of the comptroller fairly reflects
88-26 income.
89-1 (b) If a taxpayer's method of accounting is changed for
89-2 federal income tax purposes, the taxpayer's method of accounting
89-3 for purposes of this chapter is changed in the same manner.
89-4 Sec. 261.203. ADJUSTMENTS. In computing a taxpayer's taxable
89-5 income for any tax year under a method of accounting different from
89-6 the method under which the taxpayer's taxable income for the
89-7 previous year was computed, there shall be taken into account those
89-8 adjustments that are determined, under rules prescribed by the
89-9 comptroller, to be necessary solely by reason of the change in
89-10 order to prevent amounts from being duplicated or omitted.
89-11 Sec. 261.204. LIMITATION ON ADDITIONAL TAX. (a) If a
89-12 taxpayer's method of accounting is changed, other than from an
89-13 accrual to an installment method, an additional tax that results
89-14 from adjustments determined to be necessary solely because of the
89-15 change may not be greater than if those adjustments were ratably
89-16 allocated and included for the tax year of the change and not more
89-17 than two preceding tax years during which the taxpayer used the
89-18 method of accounting from which the change is made.
89-19 (b) If a taxpayer's method of accounting is changed from an
89-20 accrual to an installment method, an additional tax for the year of
89-21 the change of method and for a subsequent year that is attributable
89-22 to the receipt of installment payments properly accrued in a prior
89-23 year shall be reduced by the portion of tax for any prior tax year
89-24 attributable to the accrual of the installment payments, under
89-25 rules adopted by the comptroller.
89-26 (Sections 261.205-261.400 reserved for expansion
90-1 SUBCHAPTER E. PARTNERS AND PARTNERSHIPS
90-2 Sec. 261.401. ENTITY NOT TAXABLE. A partnership as an entity
90-3 is not subject to the tax imposed by this chapter. Persons
90-4 carrying on business as partners are liable for the tax imposed by
90-5 this chapter only in their separate or individual capacities.
90-6 Sec. 261.402. RESIDENT PARTNER--ADJUSTED GROSS INCOME. (a)
90-7 Partnership income, gain, loss, or deduction shall be allocated in
90-8 accordance with each partner's distributive share for federal
90-9 income tax purposes.
90-10 (b) Each item of partnership income, gain, loss, or
90-11 deduction has the same character for a partner under this chapter
90-12 as it has for federal income tax purposes. If an item is not
90-13 characterized for federal income tax purposes, it has the same
90-14 character for a partner as if realized directly from the source
90-15 from which realized by the partnership or incurred in the same
90-16 manner as incurred by the partnership.
90-17 (c) If a partner's distributive share of an item of
90-18 partnership income, gain, loss, or deduction is determined for
90-19 federal income tax purposes by a special provision in the
90-20 partnership agreement with respect to the item, and the principal
90-21 purpose of the provision is the avoidance or evasion of tax under
90-22 this chapter, the partner's distributive share of the item and a
90-23 modification required with respect to it is determined in
90-24 accordance with the partner's distributive share of the taxable
90-25 income or loss of the partnership generally, excluding those items
90-26 requiring separate commutation under Section 702 of the Internal
91-1 Revenue Code of 1986.
91-2 Sec. 261.403. NONRESIDENT PARTNER--ADJUSTED GROSS INCOME
91-3 FROM SOURCES IN THIS STATE. (a) In determining the adjusted gross
91-4 income of a nonresident partner of any partnership, there shall be
91-5 included only that part derived from or connected with sources in
91-6 this state of the partner's distributive share of items of
91-7 partnership income, gain, loss, and deduction entering into the
91-8 partner's federal adjusted gross income, as that part is determined
91-9 under rules adopted by the comptroller and consistent with the
91-10 rules under Section 261.056.
91-11 (b) Except as authorized in Subsection (c), in determining
91-12 the sources of a nonresident partner's income, no effect is given
91-13 to a provision in the partnership agreement that:
91-14 (1) characterizes payments to the partner as being for
91-15 services or for the use of capital, or allocated to the partner, as
91-16 income or gain from sources outside this state, a greater
91-17 proportion of his distributive share of partnership income or gain
91-18 than the ratio of partnership income or gain from sources outside
91-19 this state to partnership income or gain from all sources; or
91-20 (2) allocates to the partner a greater proportion of a
91-21 partnership item of loss or deduction connected with sources in
91-22 this state than the partner's proportionate share, for federal
91-23 income tax purposes, of partnership loss or deduction generally.
91-24 (c) The comptroller may, on application, authorize the use
91-25 of other methods of determining a nonresident partner's portion of
91-26 partnership items derived from or connected with sources in this
92-1 state, and the modifications related to it, that are appropriate
92-2 and equitable, on terms and conditions the comptroller may require.
92-3 (d) A nonresident partner's distributive share of items of
92-4 income, gain, loss, or deduction is determined under Section
92-5 261.402(a). The character of partnership items for a nonresident
92-6 partner is determined under Section 261.402(b). The effect of a
92-7 special provision in a partnership agreement, other than a
92-8 provision referred to in Subsection (b), having as a principal
92-9 purpose the avoidance or evasion of tax under this chapter is
92-10 determined under Section 261.402(c).
92-11 (Sections 261.404-261.500 reserved for expansion
92-12 SUBCHAPTER F. TAX RETURNS AND PAYMENTS
92-13 Sec. 261.501. PERSONS REQUIRED TO MAKE RETURNS OF INCOME. A
92-14 state income tax return shall be made by every individual who has
92-15 adjusted gross income from sources in this state of more than
92-16 $69,000.
92-17 Sec. 261.502. JOINT RETURNS BY HUSBAND AND WIFE. (a) A
92-18 husband and wife may make a joint state income tax return even
92-19 though one of the spouses has no gross income or deductions except
92-20 that:
92-21 (1) a joint return may not be made if the spouses are
92-22 not permitted to file a joint federal income tax return;
92-23 (2) if the federal income tax liability of either
92-24 spouse is determined on a separate federal return, their income tax
92-25 liabilities under this chapter shall be determined on separate
92-26 returns;
93-1 (3) if the federal income tax liabilities of husband
93-2 and wife, other than a husband and wife described in Subsection
93-3 (b), are determined on a joint federal return, the husband and wife
93-4 shall file a joint return under this chapter, and their tax
93-5 liabilities are joint and several; and
93-6 (4) if neither spouse is required to file a federal
93-7 income tax return and either or both are required to file an income
93-8 tax return under this chapter, they may elect to file separate
93-9 returns or a joint return, and, according to their election, their
93-10 liabilities are separate or joint and several.
93-11 (b) If either husband or wife is a resident and the other is
93-12 a nonresident, they shall file on forms required by the comptroller
93-13 separate income tax returns in this state if either spouse has
93-14 income that is not community property, and in that case their tax
93-15 liabilities are separate; but they may elect to determine their
93-16 joint taxable income as if both were residents, and in that case
93-17 their liabilities are joint and several.
93-18 Sec. 261.503. RETURNS BY FIDUCIARIES. (a) An income tax
93-19 return for a deceased individual shall be made and filed by the
93-20 executor, administrator, or other person charged with the care of
93-21 the property of the decedent. A final return of a decedent is due
93-22 when it would have been due if the decedent had not died.
93-23 (b) An income tax return for an individual who is unable to
93-24 make a return because of minority or other disability shall be made
93-25 and filed by the individual's duly authorized agent, guardian,
93-26 conservator, fiduciary, or other person charged with the care of
94-1 the individual or the individual's property other than a receiver
94-2 in possession of only a part of the individual's property.
94-3 (c) If two or more fiduciaries are acting jointly, the
94-4 return may be made by any one of them.
94-5 Sec. 261.504. NOTICE OF QUALIFICATION AS RECEIVER. A
94-6 receiver, trustee in bankruptcy, assignee for benefit of creditors,
94-7 or other similar fiduciary shall give notice of his or her
94-8 qualification to the comptroller, as may be required by rule.
94-9 Sec. 261.505. CHANGE OF STATUS AS RESIDENT OR NONRESIDENT
94-10 DURING YEAR. (a) If the status of an individual changes during the
94-11 individual's tax year from resident to nonresident or from
94-12 nonresident to resident, the comptroller by rule may require the
94-13 individual to file one return for the portion of the year during
94-14 which the individual is a resident and one for the portion of the
94-15 year during which the individual is a nonresident.
94-16 (b) Except as provided in Subsection (c), the taxable income
94-17 of an individual is determined as provided in Section 261.051 for
94-18 residents and Section 261.054 for nonresidents as if the
94-19 individual's tax year for federal income tax purposes were limited
94-20 to the period of the individual's resident and nonresident status
94-21 respectively.
94-22 (c) There shall be included in determining taxable income
94-23 from sources in or outside this state, as the case may be, income,
94-24 gain, loss, or deduction accrued prior to the change of status even
94-25 though not otherwise includable or allowable in respect to the
94-26 period before the change, but the taxation or deduction of items
95-1 accrued before the change of status is not affected by the change.
95-2 (d) If two returns are required to be filed under this
95-3 section, the total of the taxes due may not be less than would be
95-4 due if the total of the taxable incomes reported on the two returns
95-5 were includable in one return.
95-6 Sec. 261.506. TIME AND PLACE FOR FILING RETURNS AND PAYING
95-7 TAX. The income tax return required by this chapter shall be filed
95-8 not later than the 15th day of the fourth month following the end
95-9 of the taxpayer's tax year. A person required to make and file a
95-10 return under this chapter shall pay a tax due to the comptroller
95-11 not later than the last day that the filing of the return is
95-12 allowed without penalty, excluding an extension of time for filing
95-13 the return. The comptroller by rule shall prescribe the place for
95-14 filing a return, statement, or other document required by this
95-15 chapter and for the payment of a tax.
95-16 Sec. 261.507. ESTIMATED TAX. (a) An individual subject to
95-17 the income tax imposed by this chapter shall make estimated
95-18 payments of the tax. The provisions of Section 6654, Internal
95-19 Revenue Code of 1986, other than Subsections (a), (b), (d)(2), and
95-20 (e) of that section, governing the payment of estimated federal
95-21 income taxes on individuals apply to the payments required by this
95-22 section, including exemptions from the estimated tax payment
95-23 requirement. A reference in that section to the federal income tax
95-24 imposed on individuals is construed as a reference to the tax
95-25 imposed by this chapter as required to administer this section. A
95-26 power or duty given by Section 6654 to the United States secretary
96-1 of the treasury is assigned to the comptroller for purposes of the
96-2 estimated payments required by this section.
96-3 (b) The comptroller shall adopt rules for the administration
96-4 of this section.
96-5 (c) Payment of the estimated tax or an installment is
96-6 considered payment on account of the imposed by this chapter.
96-7 Sec. 261.508. EXTENSION OF TIME FOR FILING AND PAYMENT. (a)
96-8 The comptroller, on terms and conditions the comptroller may
96-9 require, may grant a reasonable extension of time for payment of
96-10 tax or an installment, or for filing a return, statement, or other
96-11 document required under this chapter. Except for an extension for
96-12 a taxpayer who is outside the United States, an extension for
96-13 filing any return, statement, or document may not exceed six
96-14 months.
96-15 (b) If the time for the payment of an amount of tax is
96-16 extended, the comptroller may require the taxpayer to furnish a
96-17 bond or other security in an amount not exceeding twice the amount
96-18 of tax for which the extension of time for payment is granted on
96-19 terms and condition the comptroller may require.
96-20 Sec. 261.509. CHANGE OF ELECTION. An election expressly
96-21 authorized by this chapter may be changed as authorized by the
96-22 comptroller or by the comptroller's rule.
96-23 Sec. 261.510. SIGNING OF RETURNS AND OTHER DOCUMENTS. (a) A
96-24 return, statement, or other document required to be made or filed
96-25 under this chapter shall be signed as provided by the comptroller.
96-26 An individual's name signed to a return, statement, or other
97-1 document is prima facie evidence that the individual signed the
97-2 return, statement, or other document.
97-3 (b) A return, statement, or other document required of a
97-4 partnership must be signed by at least one partner. A partner's
97-5 name signed to a return, statement, or other document is prima
97-6 facie evidence that the partner is authorized to sign on behalf of
97-7 the partnership.
97-8 (c) The making or filing of a return, statement, or other
97-9 document or copy required to be made or filed under this chapter,
97-10 including a copy of a federal return, constitutes a certification
97-11 by the person making or filing the return, statement, or other
97-12 document or copy that the statements contained in it are true and
97-13 that a copy filed is a true copy.
97-14 (Sections 261.511-261.520 reserved for expansion
97-15 SUBCHAPTER G. INFORMATION RETURNS
97-16 Sec. 261.521. GENERAL REQUIREMENTS. The comptroller by rule
97-17 may require the keeping of records, the content and form of returns
97-18 and statements, and the filing of copies of federal income returns
97-19 and determinations. The comptroller may require a person, by rule
97-20 or by notice served on the person, to make returns, render
97-21 statements, or keep records, as the comptroller considers
97-22 sufficient to show whether the person is liable under this chapter
97-23 for tax or for the collection of tax.
97-24 Sec. 261.522. PARTNERSHIP RETURN. Each partnership having a
97-25 resident partner or having income derived from sources in this
97-26 state, determined in accordance with the applicable rules of
98-1 Section 261.056 as in the case of a nonresident individual, shall
98-2 make a return for the tax year setting forth all items of income,
98-3 gain, loss, and deduction, and the names and addresses of the
98-4 individuals, whether residents or nonresidents, who would be
98-5 entitled to share in the net income if distributed and the amount
98-6 of the distributive share of each individual, and other relevant
98-7 information the comptroller requires by rules or instructions. The
98-8 return must be filed not later than the 15th day of the fourth
98-9 month following the end of each tax year. For purposes of this
98-10 section, "tax year" means a year or period that would be a tax year
98-11 of the partnership if it were subject to tax under this chapter.
98-12 Sec. 261.523. INFORMATION RETURNS. The comptroller by rule
98-13 may require returns of information to be made and filed not later
98-14 than February 28 of each year by a person making payment or
98-15 crediting in a calendar year the amount of $600 or more ($10 or
98-16 more in the case of interest or dividends) to a person who may be
98-17 subject to the tax imposed under this chapter. The returns may be
98-18 required of any person, including a lessee or mortgagor of real or
98-19 personal property, a fiduciary, an employer, and an officer or
98-20 employee of this state, or of any municipality or other political
98-21 subdivision of this state, having the control, receipt, custody,
98-22 disposal, or payment of dividends, interest, rents, salaries,
98-23 wages, premiums, annuities, compensations, remunerations,
98-24 emoluments, or other fixed or determinable gains, profits, or
98-25 income, except interest coupons payable to bearer. A copy of the
98-26 withholding statement required to be furnished by an employer to an
99-1 employee constitutes the return of information required to be made
99-2 under this section for wages.
99-3 Sec. 261.524. REPORT OF CHANGE IN FEDERAL TAXABLE INCOME.
99-4 (a) If the amount of a taxpayer's federal taxable income reported
99-5 on the taxpayer's federal income tax return for a tax year is
99-6 changed or corrected by the United States Internal Revenue Service
99-7 or other competent authority, or as the result of a renegotiation
99-8 of a contract or subcontract with the United States, the taxpayer
99-9 shall:
99-10 (1) report the change or correction in federal taxable
99-11 income not later than the 90th day after the final determination of
99-12 the change, correction, or renegotiation, or as required by the
99-13 comptroller; and
99-14 (2) concede the accuracy of the determination or state
99-15 in what way it is erroneous.
99-16 (b) A taxpayer filing an amended federal income tax return
99-17 shall also file, not later than the 90th day after filing, an
99-18 amended return under this chapter, and shall give any information
99-19 required by the comptroller.
99-20 (c) The comptroller by rule may prescribe exceptions to the
99-21 requirements of this section.
99-22 (Sections 261.525-261.600 reserved for expansion
99-23 SUBCHAPTER H. ADDITIONS TO TAX; PENALTIES
99-24 Sec. 261.601. FAILURE TO FILE TAX RETURN. (a) A person who
99-25 does not file a return required under this chapter on or before the
99-26 prescribed date is subject to the following penalty based on a
100-1 percentage of the full amount of tax owed on the prescribed day:
100-2 (1) if the return is filed not later than the 30th day
100-3 after the prescribed date, five percent;
100-4 (2) if the return is filed later than the 30th day
100-5 after the prescribed date, but not later than the 60th day after
100-6 the prescribed date, 10 percent;
100-7 (3) if the return is filed later than the 60th day
100-8 after the prescribed date, but not later than the 90th day after
100-9 the prescribed date, 15 percent;
100-10 (4) if the return is filed later than the 90th day
100-11 after the prescribed date, but not later than the 120th day after
100-12 the prescribed date, 20 percent; or
100-13 (5) if the return is filed later than the 120th day
100-14 after the prescribed date, 25 percent.
100-15 (b) The prescribed date is determined with regard to an
100-16 extension of time for filing.
100-17 (c) In determining the amount owed on the prescribed date,
100-18 the taxpayer is entitled to credit for a portion of the tax paid on
100-19 or before the prescribed date and other credit that may be claimed
100-20 on the return.
100-21 (d) The penalty required by this section does not apply if
100-22 the taxpayer shows that the failure to file a return was not the
100-23 result of wilful neglect before the prescribed date or at any time
100-24 during the delinquency and that good cause for the failure existed
100-25 at all times before filing.
100-26 Sec. 261.602. FAILURE TO FILE INFORMATION RETURN. (a) A
101-1 person who does not file a statement of payment to another person
101-2 required under the authority of this chapter or a duplicate
101-3 statement of tax withheld on wages on or before the prescribed date
101-4 for filing shall, after notice and demand by the comptroller, pay a
101-5 penalty of $5 for each statement not timely filed.
101-6 (b) The total amount of penalties imposed under this section
101-7 on any person during a single calendar year may not exceed $2,000.
101-8 (c) The prescribed date for filing is determined with regard
101-9 to any extension of time for filing.
101-10 (d) The penalty required by this section is not applicable
101-11 if the person required to file the statement shows that the failure
101-12 to file did not result from wilful neglect and that there was good
101-13 cause for the failure.
101-14 Sec. 261.603. FAILURE TO PAY TAX. (a) A person who does not
101-15 pay any amount of tax owed by the person on the prescribed date
101-16 shall pay, in addition to all other penalties and additions, a
101-17 penalty of 10 percent of the amount of the tax due and owing on the
101-18 prescribed date.
101-19 (b) The prescribed date is determined with regard to
101-20 extensions of time allowed by the comptroller.
101-21 (c) A failure to pay all or part of an estimated tax is
101-22 considered to be an underpayment of estimated tax. The comptroller
101-23 by rule shall prescribe the method of determining the amount and
101-24 period of underpayment.
101-25 Sec. 261.604. FAILURE TO PAY OVER WITHHOLDING TAX. (a) An
101-26 employer who fails to pay the tax withheld by the employer or
102-1 required to be withheld by the employer at the time required under
102-2 this chapter is liable for the amount of the unpaid tax in addition
102-3 to the amount of the penalty prescribed in Section 261.603 together
102-4 with interest on the full amount of tax and penalty due.
102-5 (b) Interest and addition assessed under this section may
102-6 not be collected from the employee by the employer.
102-7 (c) The comptroller has the same rights and powers for the
102-8 collection of the tax, addition, and interest against an employer
102-9 as are prescribed for the collection of the tax against an
102-10 individual.
102-11 Sec. 261.605. PENALTIES AND ADDITIONS TREATED AS TAX. The
102-12 penalties and additions provided by this subchapter shall be paid
102-13 on notice and demand and shall be assessed, collected, and paid in
102-14 the same manner as other taxes. The comptroller may issue a
102-15 deficiency notice for all or part of a penalty or addition along
102-16 with or separate from the amount of tax owed in absence of
102-17 additions or penalties.
102-18 (Sections 261.606-261.630 reserved for expansion
102-19 SUBCHAPTER I. CREDITS AND REFUNDS
102-20 Sec. 261.631. CREDITS AND REFUNDS. (a) Within the
102-21 applicable period of limitations the comptroller may credit an
102-22 overpayment of income tax and interest on the overpayment against a
102-23 liability of a tax imposed by the tax laws of this state on the
102-24 person who made the overpayment, and the balance shall be refunded
102-25 by the comptroller out of the proceeds of the tax retained by the
102-26 comptroller.
103-1 (b) If the amount allowable as a credit for tax withheld
103-2 from the taxpayer exceeds the tax to which the credit relates, the
103-3 excess is an overpayment.
103-4 (c) If there has been an overpayment of tax required to be
103-5 deducted and withheld under Section 261.101, refund shall be made
103-6 to the employer only to the extent that the amount of the
103-7 overpayment was not deducted and withheld by the employer.
103-8 (d) The comptroller may prescribe rules providing for
103-9 crediting against the estimated tax for a tax year the amount
103-10 determined to be an overpayment of the income tax for a preceding
103-11 tax year.
103-12 (e) If an amount of income tax is assessed and collected
103-13 after the expiration of the period of limitations properly
103-14 applicable, the amount is an overpayment.
103-15 Sec. 261.632. ABATEMENTS. (a) The comptroller may abate any
103-16 unpaid portion of a tax or a tax liability that is excessive in
103-17 amount, assessed after the expiration of the applicable period of
103-18 limitations, or erroneously or illegally assessed.
103-19 (b) The comptroller may abate the unpaid portion of a tax or
103-20 a tax liability if the comptroller determines under uniform rules
103-21 prescribed by the comptroller that the administration and
103-22 collection costs involved would not warrant collection of the
103-23 amount due.
103-24 Sec. 261.633. EXTENDED LIMITATION PERIOD. (a) If a taxpayer
103-25 is required by Section 261.524 to report a change or correction in
103-26 federal taxable income reported on a federal income tax return, or
104-1 to report a change or correction that is treated in the same manner
104-2 as if it were an overpayment for federal income tax purposes, or to
104-3 file an amended return with the comptroller, a claim for credit or
104-4 refund of a resulting overpayment of tax must be filed by the
104-5 taxpayer not later than two years after the notice of the change or
104-6 correction or the amended return was required to be filed with the
104-7 comptroller. If the report or amended return required by Section
104-8 261.524 is not filed within the period specified by that section,
104-9 interest on a resulting refund or credit ceases to accrue after the
104-10 period. The amount of credit or refund may not exceed the amount
104-11 of the reduction in tax attributable to the federal change,
104-12 correction, or items amended on the taxpayer's amended federal
104-13 income tax return. This subsection does not affect the time within
104-14 which or the amount for which a claim for credit or refund may be
104-15 filed apart from this section.
104-16 (b) If a claim for credit or refund relates to an
104-17 overpayment of tax on account of the deductibility by the taxpayer
104-18 of a debt as a debt that became worthless or a loss from
104-19 worthlessness of a security or the effect that the deductibility of
104-20 a debt or of a loss has on the application to the taxpayer of a
104-21 carryover, the claim may be made, under rules adopted by the
104-22 comptroller, not later than the seventh year after the date
104-23 prescribed by law for filing the return for the year with respect
104-24 to which the claim is made.
104-25 (c) If a claim for credit or refund relates to an
104-26 overpayment attributable to a net operating loss carryback, the
105-1 claim may be made, under rules adopted by the comptroller, not
105-2 later than the 15th day of the 40th month following the end of the
105-3 tax year of the net operating loss that resulted in the carryback
105-4 or the period prescribed by Section 111.104, whichever expires
105-5 later.
105-6 (Sections 261.634-261.650 reserved for expansion
105-7 SUBCHAPTER J. MISCELLANEOUS ENFORCEMENT PROVISIONS
105-8 Sec. 261.651. TAXPAYER NOT RESIDENT. If notice and demand
105-9 for the payment of a tax is given to a nonresident and it appears
105-10 to the comptroller that it is not practicable to locate property of
105-11 the taxpayer sufficient in amount to cover the amount of tax due,
105-12 the comptroller may authorize the institution of any available
105-13 action or proceeding to collect or enforce the claim in any place
105-14 by any procedure by which a civil judgment of a court of record of
105-15 this state could be collected or enforced. The comptroller may
105-16 designate agents or retain counsel outside this state for the
105-17 purpose of collecting taxes due under this chapter and require of
105-18 them bonds or other security for the faithful performance of their
105-19 duties. The comptroller may enter into agreements with the tax
105-20 department of another state for the collection of taxes from
105-21 persons found in this state who are delinquent in the payment of
105-22 income taxes imposed by that state on condition that the agreeing
105-23 state afford similar assistance in the collection of taxes from
105-24 persons found in that state who are delinquent in the payment of
105-25 taxes imposed by this chapter.
105-26 Sec. 261.652. INCOME TAX CLAIMS OF OTHER STATES. The courts
106-1 of this state shall recognize and enforce liabilities for personal
106-2 income taxes lawfully imposed by another state that extends a like
106-3 comity to this state, and the duly authorized officer of the other
106-4 state may sue for the collection of personal income tax in the
106-5 courts of this state. A certificate by the secretary of state of
106-6 the other state that an officer suing for the collection of the tax
106-7 is duly authorized to collect the tax is conclusive proof of the
106-8 officer's authority. For the purposes of this section, "taxes"
106-9 includes additions to tax, interest, and penalties.
106-10 Sec. 261.653. ORDER TO COMPEL COMPLIANCE. (a) On
106-11 application of the attorney general, a judge of a court of
106-12 appropriate jurisdiction for the county in which a taxpayer or
106-13 other person who intentionally or knowingly refuses to file a tax
106-14 return required by this chapter may, by order, direct the person to
106-15 file the return. A person who fails or refuses to obey the order
106-16 is guilty of contempt of court.
106-17 (b) If any person intentionally or knowingly refuses to make
106-18 available any books, papers, records, or memorandums for
106-19 examination by the comptroller or wilfully refuses to attend and
106-20 testify, pursuant to the powers conferred on the comptroller by
106-21 Chapter 111, on application of the comptroller, a judge in the
106-22 court of appropriate jurisdiction for the county where the person
106-23 resides may by order direct the person to comply with the
106-24 comptroller's request for books, papers, records, or memorandums or
106-25 for the person's attendance and testimony. If the books, papers,
106-26 records, or memorandums required by the comptroller are in the
107-1 custody of a corporation, the order of the court may be directed to
107-2 any principal officer of the corporation. A person who fails or
107-3 refuses to obey the order is guilty of contempt of court.
107-4 Sec. 261.654. TRANSFEREES. (a) The liability, at law or in
107-5 equity, of a transferee of property of a taxpayer for any tax,
107-6 addition to tax, penalty, or interest due under this chapter, is
107-7 assessed, paid, and collected in the same manner and subject to the
107-8 same provisions and limitations as in the case of the tax to which
107-9 the liability relates except as otherwise provided in this section.
107-10 "Transferee" includes an heir or a recipient of a donation, legacy,
107-11 devise, or distribution.
107-12 (b) The period of limitation for assessment of liability of
107-13 a transferee is:
107-14 (1) one year after the expiration of the period of
107-15 limitation against the initial transferor if the transferee is the
107-16 initial transferee;
107-17 (2) one year after the expiration of the period of
107-18 limitation against the preceding transferee, but not more than
107-19 three years after the expiration of the period of limitation for
107-20 assessment against the initial transferor, if the transferee is not
107-21 the initial transferee; or
107-22 (3) notwithstanding Subdivisions (1) and (2), if
107-23 before the expiration of the period of limitation under Subdivision
107-24 (1) or (2) a proceeding for the collection of the liability has
107-25 been begun against the initial transferor or the last preceding
107-26 transferee, respectively, one year after the proceeding is
108-1 terminated.
108-2 (c) If, before the expiration of the period of limitation
108-3 applicable to a transferee, the comptroller and the transferee
108-4 consent in writing to an assessment after that time, the liability
108-5 may be assessed at any time before the expiration of the agreed
108-6 period. The period of limitation on credit or refund to the
108-7 transferee of overpayments of tax made by the transferee or of
108-8 overpayments of tax made by the transferor of which the transferee
108-9 is legally entitled to credit or refund is extended by an agreement
108-10 under this subsection and any extension of the agreement.
108-11 (d) If a person dies, the period of limitation for
108-12 assessment against that person is the period that would be in
108-13 effect had death not occurred.
108-14 Sec. 261.655. JEOPARDY DETERMINATIONS. (a) If the
108-15 comptroller issues a jeopardy determination for a tax for a current
108-16 period, the comptroller shall terminate the tax period of the
108-17 taxpayer immediately, and the notice and demand for a return and
108-18 immediate payment of the tax shall apply to the terminated period
108-19 and to income accrued and deductions incurred on or before
108-20 termination date if not otherwise properly includable or deductible
108-21 for the period.
108-22 (b) The comptroller may abate the jeopardy determination if
108-23 he finds that jeopardy does not exist.
108-24 Sec. 261.656. BANKRUPTCY OR RECEIVERSHIP. (a) On the
108-25 adjudication of bankruptcy of any taxpayer in any bankruptcy
108-26 proceeding or the appointment of a receiver for any taxpayer in any
109-1 receivership proceeding before any court of the United States or
109-2 any state or territory, any deficiency, together with additions to
109-3 tax and interest provided by law, determined by the comptroller may
109-4 be immediately assessed.
109-5 (b) Claims for the deficiency and additions to tax and
109-6 interest may be presented, for adjudication in accordance with law,
109-7 to the court before which the bankruptcy or receivership proceeding
109-8 is pending, despite the pendency of any protest before the
109-9 comptroller. A protest against a proposed assessment may not be
109-10 filed with the comptroller after the adjudication of bankruptcy or
109-11 appointment of the receiver.
109-12 Sec. 261.657. EVIDENCE OF RELATED FEDERAL DETERMINATION.
109-13 Evidence of a federal determination relevant to the taxes imposed
109-14 by this chapter is admissible in an administrative or judicial
109-15 proceeding relating to those taxes.
109-16 (Sections 261.658-261.670 reserved for expansion
109-17 SUBCHAPTER K. OFFENSES
109-18 Sec. 261.671. ATTEMPT TO EVADE OR DEFEAT TAX. (a) A person
109-19 commits an offense if the person intentionally or knowingly
109-20 attempts in any manner to evade or defeat a tax imposed by this
109-21 chapter or the payment of tax imposed by this chapter.
109-22 (b) An offense under this section is a felony of the third
109-23 degree.
109-24 Sec. 261.672. FAILURE TO COLLECT OR PAY OVER. (a) A person
109-25 commits an offense if the person is required under this chapter to
109-26 collect, truthfully account for, and pay over a tax imposed by this
110-1 chapter and the person intentionally or knowingly fails to collect
110-2 or truthfully account for and pay over the tax.
110-3 (b) An offense under this section is a felony of the third
110-4 degree.
110-5 Sec. 261.673. FAILURE TO FILE RETURN, SUPPLY INFORMATION, OR
110-6 PAY TAX. (a) A person commits an offense if the person is required
110-7 under this chapter to pay a tax, or required by this chapter or
110-8 rule adopted under this chapter to make a return, to keep records,
110-9 or to supply information, and the person intentionally or knowingly
110-10 fails to pay the tax, make the return, keep the records, or supply
110-11 the information at the time or times required by law.
110-12 (b) An offense under this section is a Class A misdemeanor.
110-13 (Sections 261.674-261.680 reserved for expansion
110-14 SUBCHAPTER L. POWERS OF COMPTROLLER
110-15 Sec. 261.681. COOPERATION WITH OTHER JURISDICTIONS. The
110-16 comptroller may permit the United States secretary of the treasury
110-17 or the secretary's delegate, or the proper officer of any state or
110-18 other jurisdiction imposing an income tax on the incomes of
110-19 individuals, or the authorized representative of either officer, to
110-20 inspect the income tax returns of an individual, or may furnish to
110-21 the officer or authorized representative an abstract of the return
110-22 of income of an individual or supply the officer with information
110-23 concerning an item of income contained in a return, or disclosed by
110-24 the report of an investigation of the income or return of income of
110-25 an individual, but permission may be granted only if the statutes
110-26 of the United States or of the other jurisdiction, as applicable,
111-1 grant substantially similar privileges to the comptroller.
111-2 Sec. 261.682. COOPERATION WITH OTHER TAX OFFICIALS OF THIS
111-3 STATE. The comptroller may permit other tax officials of this state
111-4 to inspect tax returns and reports filed under this chapter but the
111-5 inspection shall be permitted only for purposes of enforcing a tax
111-6 law and only to the extent and under the conditions prescribed by
111-7 rule of the comptroller.
111-8 Sec. 261.683. CONTRACT WITH SECRETARY OF TREASURY FOR
111-9 COLLECTION OF TAX. The comptroller may enter into an agreement with
111-10 the United States secretary of the treasury or the secretary's
111-11 delegate, under which, to the extent provided by the terms of the
111-12 agreement, the secretary or delegate will administer, enforce, and
111-13 collect a tax imposed by this chapter on behalf of this state. The
111-14 cost of the services performed by the secretary or delegate in
111-15 administering, enforcing, or collecting the tax under the terms of
111-16 the agreement may be paid from the appropriations for the general
111-17 operations of the comptroller.
111-18 Sec. 261.684. ARMED FORCES RELIEF PROVISIONS. (a) The
111-19 period of service in the armed forces of the United States in a
111-20 combat zone plus a period of continuous hospitalization outside
111-21 this state attributable to that service plus the next 180 days
111-22 shall be disregarded in determining, under rules of the
111-23 comptroller, whether an act required by this chapter was performed
111-24 by a taxpayer or the taxpayer's representative within the time
111-25 prescribed.
111-26 (b) In the case of an individual who dies during an
112-1 induction period while in active service as a member of the armed
112-2 forces of the United States, if the death occurred while the
112-3 individual was serving in a combat zone or as a result of wounds,
112-4 disease, or injury incurred while so serving, the tax imposed by
112-5 this chapter does not apply to the tax year in which the individual
112-6 dies or to any prior tax year ending on or after the first day the
112-7 individual so served in a combat zone.
112-8 Sec. 261.685. DISPOSITION OF PROCEEDS. The revenue from the
112-9 tax imposed by this chapter shall be deposited to the credit of the
112-10 general revenue fund.
112-11 SECTION 7.02. Section 111.201, Tax Code, is amended to read
112-12 as follows:
112-13 Sec. 111.201. ASSESSMENT LIMITATION. (a) No tax imposed by
112-14 this title may be assessed after four years from the date that the
112-15 tax becomes due and payable except as provided by Subsection (b).
112-16 (b) A tax imposed by Chapter 261 may not be assessed after
112-17 six years from the date the tax becomes due and payable.
112-18 SECTION 7.03. A referendum as required by Section 24, Article
112-19 VIII, Texas Constitution, on the adoption of the income tax under
112-20 this Act shall be submitted to the voters at an election to be held
112-21 November 6, 2001. The ballot for the referendum shall be printed
112-22 to permit voting for or against the proposition: "The adoption of
112-23 an income tax at a rate of four percent on individuals with net
112-24 incomes greater than $69,000."
112-25 SECTION 7.04. (a) If the proposition in Section 3 of this
112-26 Act is approved, this Act takes effect January 1, 2002.
113-1 (b) If the proposition in Section 3 of this Act is not
113-2 approved, this Act has no effect.
113-3 SECTION 7.05. (a) Except as provided by Subsection (b) of
113-4 this section, this Act applies to income earned, accrued, or
113-5 received on or after the effective date of this Act.
113-6 (b) Income, deductions, losses, credits against income, or
113-7 other adjustment allowed in determining the amount of tax under
113-8 this Act or the amount of federal adjusted gross income under this
113-9 Act, including carryovers, are not prohibited in computing the
113-10 taxes for a tax period beginning on January 1, 2002, because those
113-11 adjustments may have accrued or otherwise originated before the
113-12 effective date of this Act.
113-13 (c) In 2002, the comptroller by rule may suspend the
113-14 application of Section 261.507, Tax Code, as added by this Act, in
113-15 whole or in part, and may extend the deadlines for estimated tax
113-16 payments under that section.
113-17 ARTICLE 8. TAX ON SOFT DRINKS
113-18 SECTION 8.01. Subtitle E, Title 2, Tax Code, is amended by
113-19 adding Chapter 161 to read as follows:
113-20 CHAPTER 161. SOFT DRINK TAX
113-21 SUBCHAPTER A. GENERAL PROVISIONS
113-22 Sec. 161.001. DEFINITION. In this chapter, "soft drink"
113-23 means a nonalcoholic beverage that is carbonated to some extent and
113-24 that contains natural or artificial sweeteners. The term does not
113-25 include a beverage that contains:
113-26 (1) milk or milk products;
114-1 (2) soy, rice, or similar milk substitutes; or
114-2 (3) more than 50 percent of vegetable or fruit juice
114-3 by volume.
114-4 (Sections 161.002-161.050 reserved for expansion
114-5 SUBCHAPTER B. IMPOSITION AND COLLECTION OF TAX
114-6 Sec. 161.051. TAX IMPOSED. (a) A tax is imposed on the sale
114-7 of soft drinks in this state for resale to the ultimate consumer.
114-8 (b) A tax is imposed on the importation of soft drinks for
114-9 sale in this state to the ultimate consumer.
114-10 Sec. 161.052. RATE OF TAX. The rate of the tax imposed by
114-11 this chapter is one-fourth of one cent for each ounce of soft
114-12 drink.
114-13 Sec. 161.053. EXEMPTION FROM TAX. The tax imposed by this
114-14 chapter does not apply to soft drinks that:
114-15 (1) the comptroller determines are unsalable; or
114-16 (2) this state is prohibited from taxing by federal
114-17 law.
114-18 Sec. 161.054. PAYMENT OF TAX. (a) The manufacturer,
114-19 bottler, or other person selling soft drinks in this state for
114-20 resale to the ultimate consumer or importing soft drinks for sale
114-21 in this state to the ultimate consumer shall pay the tax imposed by
114-22 this chapter.
114-23 (b) On or before the 25th day of each month, the person
114-24 responsible for paying the tax shall send to the comptroller the
114-25 amount of tax due under this chapter for the preceding month.
114-26 Sec. 161.055. REPORTS. On or before the 25th day of each
115-1 month, the person responsible for paying the tax under this chapter
115-2 shall file with the comptroller a report stating:
115-3 (1) the volume of soft drinks sold in this state for
115-4 resale to the ultimate consumer;
115-5 (2) the volume of soft drinks imported into this state
115-6 for sale in this state to the ultimate consumer; and
115-7 (3) any other information required by the comptroller.
115-8 Sec. 161.056. RECORDS. The person responsible for paying the
115-9 tax under this chapter shall keep a complete record of:
115-10 (1) the volume of soft drinks sold in this state for
115-11 resale to the ultimate consumer;
115-12 (2) the volume of soft drinks imported into this state
115-13 for sale in this state to the ultimate consumer; and
115-14 (3) any other information required by the comptroller.
115-15 (Sections 161.057-161.100 reserved for expansion
115-16 SUBCHAPTER C. PENALTIES AND OFFENSES
115-17 Sec. 161.101. INTEREST ON DELINQUENT TAX. A tax imposed by
115-18 this chapter that is delinquent draws interest as provided by
115-19 Section 111.060.
115-20 Sec. 161.102. PENALTY. (a) A person who is responsible for
115-21 paying the tax imposed by this chapter and who fails to file a
115-22 report as required by this chapter or does not pay the tax when it
115-23 is due forfeits to the state a penalty of 12 percent of the amount
115-24 of the delinquent tax.
115-25 (b) If a report required by this chapter is not filed or a
115-26 tax imposed by this chapter is not paid within 30 days after it is
116-1 due, the person responsible for paying the tax forfeits to the
116-2 state a penalty of an additional 12 percent of the amount of the
116-3 delinquent tax.
116-4 (c) The minimum penalty under this section is $1.
116-5 Sec. 161.103. CRIMINAL PENALTY. (a) A person who violates
116-6 this chapter commits an offense.
116-7 (b) An offense under this section is a Class C misdemeanor.
116-8 (Sections 161.104-161.150 reserved for expansions
116-9 SUBCHAPTER D. ALLOCATION
116-10 Sec. 161.151. ALLOCATION OF TAX REVENUE. All of the revenue
116-11 from the tax imposed by this chapter shall be deposited to the
116-12 credit of the general revenue fund.
116-13 SECTION 8.02. This Act takes effect September 1, 2001, and
116-14 applies to soft drinks sold or imported on or after that date.
116-15 Soft drinks sold or imported before that date are governed by the
116-16 law in effect when the soft drinks were sold or imported, and that
116-17 law is continued in effect for that purpose.
116-18 ARTICLE 9. CONTINGENCY; EMERGENCY
116-19 SECTION 9.01. (a) This Act takes effect on the date on which
116-20 the constitutional amendment proposed by ___ J.R. No. ___, 77th
116-21 Legislature, Regular Session, 2001, takes effect. If that
116-22 amendment is not approved by the voters, this Act has no effect.
116-23 (b) Each article of this Act takes effect as provided by the
116-24 terms of the article.