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78R2793 CBH-D
By: Mowery H.B. No. 450
A BILL TO BE ENTITLED
AN ACT
relating to the imposition of a minimum franchise tax.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Sections 171.002(a), (b), and (d), Tax Code, are
amended to read as follows:
(a) Except as provided by Subsection (d), the [The] rates of
the franchise tax are:
(1) 0.25 percent per year of privilege period of net
taxable capital; and
(2) 4.5 percent of net taxable earned surplus.
(b) Except as provided by Subsection (d), the [The] amount
of franchise tax on each corporation is computed by adding the
following:
(1) the amount calculated by applying the tax rate
prescribed by Subsection (a)(1) to the corporation's net taxable
capital; and
(2) the difference between:
(A) the amount calculated by applying the tax
rate prescribed by Subsection (a)(2) to the corporation's net
taxable earned surplus; and
(B) the amount determined under Subdivision (1).
(d) If the amount of tax computed under Subsection (b) is
less than $100 after all credits are claimed, the amount of the tax
is $100 [A corporation is not required to pay any tax and is not
considered to owe any tax for a period if:
[(1) the amount of tax computed for the corporation is
less than $100; or
[(2) the amount of the corporation's gross receipts:
[(A) from its entire business under Section
171.105 is less than $150,000; and
[(B) from its entire business under Section
171.1051, including the amount excepted under Section 171.1051(a),
is less than $150,000].
SECTION 2. Section 171.201(a), Tax Code, is amended to read
as follows:
(a) A [Except as provided by Section 171.2022, a]
corporation on which the franchise tax is imposed shall file an
initial report with the comptroller containing:
(1) information showing the financial condition of the
corporation on the day that is the last day of a calendar month and
that is nearest to the end of the corporation's first year of
business;
(2) the name and address of each officer and director
of the corporation;
(3) the name and address of the agent of the
corporation designated under Section 171.354; and
(4) other information required by the comptroller.
SECTION 3. Sections 171.202(a) and (d), Tax Code, are
amended to read as follows:
(a) A [Except as provided by Section 171.2022, a]
corporation on which the franchise tax is imposed shall file an
annual report with the comptroller containing:
(1) financial information of the corporation
necessary to compute the tax under this chapter;
(2) the name and address of each officer and director
of the corporation;
(3) the name and address of the agent of the
corporation designated under Section 171.354; and
(4) other information required by the comptroller.
(d) In the case of a taxpayer whose previous return was its
initial report, the optional payment provided under Subsection
(c)(2)(B) or (e)(2)(B) must be equal to the greater of:
(1) an amount produced by multiplying the net taxable
capital, as reported on the initial report filed on or before May
14, by the rate of tax in Section 171.002(a)(1) that is effective
January 1 of the year in which the report is due; [or]
(2) an amount produced by multiplying the net taxable
earned surplus, as reported on the initial report filed on or before
May 14, by the rate of tax in Section 171.002(a)(2) that is
effective January 1 of the year in which the report is due; or
(3) $100.
SECTION 4. Section 171.203(a), Tax Code, is amended to read
as follows:
(a) A corporation on which the franchise tax is imposed[,
regardless of whether the corporation is required to pay any tax,]
shall file a report with the comptroller containing:
(1) the name of each corporation in which the
corporation filing the report owns a 10 percent or greater interest
and the percentage owned by the corporation;
(2) the name of each corporation that owns a 10 percent
or greater interest in the corporation filing the report;
(3) the name, title, and mailing address of each
person who is an officer or director of the corporation on the date
the report is filed and the expiration date of each person's term as
an officer or director, if any;
(4) the name and address of the agent of the
corporation designated under Section 171.354 of this code; and
(5) the address of the corporation's principal office
and principal place of business.
SECTION 5. Section 171.204, Tax Code, is amended to read as
follows:
Sec. 171.204. INFORMATION REPORT. To [(a) Except as
provided by Subsection (b), to determine eligibility for the
exemption provided by Section 171.2022, or to] determine the amount
of the franchise tax or the correctness of a franchise tax report,
the comptroller may require an officer of a corporation that may be
subject to the tax imposed under this chapter to file an information
report with the comptroller stating the amount of the corporation's
taxable capital and earned surplus, or any other information the
comptroller may request.
[(b) The comptroller may require an officer of a corporation
that does not owe any tax because of the application of Section
171.002(d)(2) to file an abbreviated information report with the
comptroller stating the amount of the corporation's gross receipts
from its entire business. The comptroller may not require a
corporation described by this subsection to file an information
report that requires the corporation to report or compute its
earned surplus or taxable capital.]
SECTION 6. Section 171.851, Tax Code, as added by Chapter
1263, Acts of the 77th Legislature, Regular Session, 2001, is
amended to read as follows:
Sec. 171.851. LIMITATION. The total credits claimed under
this chapter for a report, including the amount of any carryforward
credits, may not exceed the amount of franchise tax due for the
report as computed under Section 171.002(b).
SECTION 7. Section 171.2022, Tax Code, is repealed.
SECTION 8. This Act takes effect January 1, 2004, and
applies only to a report originally due on or after that date. A
report originally due before that date is governed by the law in
effect on that date, and that law is continued in effect for the
purpose of the liability for and collection of those taxes.