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By: Keffer of Eastland H.B. No. 3
A BILL TO BE ENTITLED
AN ACT
relating to property tax relief and protection of taxpayers,
certain taxes, fees, and property, and other matters relating to
the financing of public schools; providing civil and criminal
penalties; making an appropriation.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
ARTICLE 1. SCHOOL PROPERTY TAX RELIEF
PART A. SCHOOL PROPERTY TAX RELIEF
SECTION 1A.01. Section 45.003, Education Code, is amended
by amending Subsection (d) and adding Subsections (d-1), (d-2), and
(e) to read as follows:
(d) A proposition submitted to authorize the levy of
maintenance taxes must include the question of whether the
governing board or commissioners court may levy, assess, and
collect annual ad valorem taxes for the further maintenance of
public schools, at a rate not to exceed the rate stated in the
proposition, which may be not more than the sum of:
(1) $1.12 [$1.50] on the $100 valuation of taxable
property in the district; and
(2) $0.15 on the $100 valuation of taxable property in
the district for enrichment, as authorized by an election as
provided by Chapter 42[, stated in the proposition].
(d-1) Notwithstanding Subsection (d), for the 2005 tax
year, a proposition submitted to authorize the levy of maintenance
taxes must include the question of whether the governing board or
commissioners court may levy, assess, and collect annual ad valorem
taxes for the further maintenance of public schools, at a rate not
to exceed the rate stated in the proposition, which may be not more
than the sum of:
(1) $1.23 on the $100 valuation of taxable property in
the district; and
(2) $0.15 on the $100 valuation of taxable property in
the district for enrichment, as authorized by an election as
provided by Chapter 42.
(d-2) Subsection (d-1) and this subsection expire January
1, 2006.
(e) An election held before January 1, 2005, authorizing a
maintenance tax at a rate of at least $1.23 on the $100 valuation of
taxable property in the district is sufficient to authorize a rate
of $1.23 or less for the 2005 tax year. An election held before
January 1, 2006, authorizing a maintenance tax at a rate of at least
$1.12 on the $100 valuation of taxable property in the district is
sufficient to authorize a rate of $1.12 or less for the 2006 tax
year.
SECTION 1A.02. (a) The changes in law made by this part
apply to the maintenance and operations tax rate of a school
district beginning with the 2005 tax year.
(b) If before the effective date of this part, the governing
body of a school district adopted an ad valorem tax rate for the
district for the 2005 tax year under the law in effect immediately
before the effective date of this part, and the adopted ad valorem
tax rate included a rate for maintenance and operations expenses
that is greater than the maximum maintenance and operations tax
rate for the 2005 tax year permitted under this part:
(1) on the effective date of this part, the ad valorem
tax rate adopted for the district is invalidated; and
(2) the governing body shall adopt an ad valorem tax
rate for the 2005 tax year in accordance with the changes in law
made by this part.
(c) If tax bills for the 2005 tax year were sent by the tax
assessor for a school district pursuant to a tax rate invalidated
under Subsection (b)(1) of this section, the tax assessor for the
school district shall prepare and mail a new tax bill for the 2005
tax year to each taxpayer of the district in the manner required by
Chapter 31, Tax Code. If a taxpayer pays the taxes for the 2005 tax
year pursuant to a tax rate invalidated under Subsection (b)(1) of
this section, the school district shall refund any difference
between the tax paid and the tax due at the rate adopted under
Subsection (b)(2) of this section.
(d) If this Act is passed by the legislature without
receiving a vote of two-thirds of all the members elected to each
house, any action taken before the effective date of this part in
preparation for the implementation of the changes in law made by
this part, including adoption of a maintenance and operations tax
rate, by an officer or employee or the governing body of a school
district that the officer, employee, or governing body determines
is necessary or appropriate and that the officer, employee, or
governing body would have been authorized to take had this part been
in effect at the time of the action is validated as of the effective
date of this part. Any public notice required by Chapter 26, Tax
Code, or Chapter 44, Education Code, given before the effective
date of this part that includes an additional statement that the tax
rate for the school district will be adopted in accordance with the
changes in law made by this part is validated as of the effective
date of this part.
PART B. BUY-DOWN OF SCHOOL DISTRICT TAXES
SECTION 1B.01. Chapter 403, Government Code, is amended by
adding Subchapters O and P to read as follows:
SUBCHAPTER O. DISTRIBUTION OF INCREASES
IN AVAILABLE STATE REVENUE FOR SCHOOL DISTRICT
TAX RATE REDUCTION
Sec. 403.351. DEFINITIONS. In this subchapter:
(1) "Available state revenue" means state revenue from
any source other than federal funds or revenue that, under a
provision of the Texas Constitution, may be used only for a
particular purpose.
(2) "Increase in available state revenue" means the
amount by which the estimate made by the comptroller in advance of a
regular session of the legislature under Section 49a(a), Article
III, Texas Constitution, of available state revenue for the
succeeding state fiscal biennium exceeds the estimate made by the
comptroller at that time under that section of available state
revenue for the current state fiscal biennium.
Sec. 403.352. CERTIFICATION OF INCREASE IN AVAILABLE STATE
REVENUE. In the statement required by Section 49a, Article III,
Texas Constitution, in advance of a regular session of the
legislature, the comptroller shall certify:
(1) the amount, if any, of the increase in available
state revenue for the succeeding state fiscal biennium; and
(2) the total amount of school district maintenance
and operations taxes levied under Section 3(e), Article VII, Texas
Constitution, for the ad valorem tax year beginning in the second
year of the current state fiscal biennium.
Sec. 403.353. DISTRIBUTION OF AVAILABLE STATE REVENUE FOR
TAX RATE REDUCTION. (a) For the state fiscal biennium following a
certification under Section 403.352, the comptroller shall
distribute to the school districts in this state for tax rate
reduction an amount of available state revenue that is equal to the
sum of:
(1) an amount equal to not less than 15 percent of the
increase in available state revenue for the current state fiscal
biennium certified under Section 403.352, as determined by the
Legislative Budget Board and the governor; and
(2) the amount of available state revenue distributed
in the preceding state fiscal biennium under this section for
school district tax rate reduction.
(b) The comptroller shall distribute the amount required by
Subsection (a) in equal amounts in each state fiscal year of the
state fiscal biennium. The amount distributed in each state fiscal
year shall be apportioned among the school districts in amounts
that, applied to the total taxable value of property in each
district determined under Subchapter M, for the most recent ad
valorem tax year for which the information is available, would
reduce the rate of each school district's maintenance and
operations tax by the same percentage, except that a school
district maintenance and operations tax rate may not be reduced to
less than 75 cents for each $100 of taxable value.
(c) The money received by each school district under this
section must be applied to reducing the district's maintenance and
operations tax rate for purposes of Chapter 42, Education Code.
SUBCHAPTER P. SCHOOL PROPERTY TAX RELIEF FUND
Sec. 403.401. SCHOOL PROPERTY TAX RELIEF FUND. The school
property tax relief fund is an account in the general revenue fund.
Money in the fund may be used only to reduce school district
maintenance and operations tax rates below the rates specified in
H.B. No. 3, Acts of the 79th Legislature, 1st Called Session, 2005.
Sec. 403.402. CERTIFICATION OF CERTAIN STATE TAX REVENUE.
(a) Not later than the effective date of H.B. No. 3, Acts of the
79th Legislature, 1st Called Session, 2005, the comptroller shall
estimate:
(1) for the state fiscal year ending August 31, 2005,
and for each of the five succeeding state fiscal years, the amount
of the increase in state revenue that is attributable to changes in
law made by that Act; and
(2) for the 2005 ad valorem tax year and each of the
five succeeding ad valorem tax years, the amount of the reduction in
school district maintenance and operations taxes that is
attributable to changes in law made by that Act.
(b) The comptroller shall report in writing each estimate
made under Subsection (a) to the governor, the lieutenant governor,
the Legislative Budget Board, and each member of the legislature.
(c) Not later than September 30 of each calendar year, the
comptroller shall:
(1) compute, for the preceding state fiscal year:
(A) the actual amount of the increase in state
revenue that is attributable to changes in law made by H.B. No. 3,
Acts of the 79th Legislature, 1st Called Session, 2005; and
(B) the difference between:
(i) the amount determined under Paragraph
(A); and
(ii) the corresponding amount estimated for
that state fiscal year under Subsection (a);
(2) if the amount described by Subdivision (1)(B)(i)
is greater than the amount described by Subdivision (1)(B)(ii),
transfer an amount equal to the amount determined under Subdivision
(1)(B) to the school property tax relief fund, except as provided by
Subsection (d); and
(3) report in writing the amount of any transfer under
Subdivision (2) to the governor, the lieutenant governor, the
Legislative Budget Board, and each member of the legislature.
(d) The comptroller may not make a transfer under Subsection
(c)(2) if making the transfer would reduce the amount of general
revenue available for purposes of certification of the General
Appropriations Act to an amount less than the amount estimated to be
available at the time the comptroller certified the General
Appropriations Act under Section 49a(b), Article III, Texas
Constitution.
(e) In making the statement required by Section 49a, Article
III, Texas Constitution, in advance of a regular session of the
legislature, the comptroller shall consider the amount, if any, of
any estimated transfers required under Subsection (c)(2) for the
succeeding state fiscal biennium. The comptroller shall deduct the
amount of any estimated transfers required under Subsection (c)(2)
for the succeeding state fiscal biennium from the amount available
for appropriation as if those transfers were made on August 31 of
the state fiscal year for which the transfers are made.
Sec. 403.403. DISTRIBUTION OF AVAILABLE STATE REVENUE FOR
TAX RATE REDUCTION. (a) Beginning with the state fiscal year
ending August 1, 2007, each state fiscal year, the comptroller
shall distribute to the school districts in this state for
maintenance tax rate reduction the amount transferred to the school
district property tax relief fund under Section 403.402(c)(2) for
that state fiscal year.
(b) The comptroller shall distribute the amount required by
Subsection (a) in equal amounts in each state fiscal year. The
amount distributed in each state fiscal year shall be apportioned
among the school districts in amounts that, as applied to the total
taxable value of property in each district determined under
Subchapter M, for the most recent year for which the information is
available, would reduce the rate of each school district's
maintenance and operations tax by the same percentage.
(c) The money received by each school district under this
section must be applied to reducing the district's maintenance and
operations tax rate for purposes of Chapter 42, Education Code.
Sec. 403.404. EXPIRATION. This subchapter expires
September 1, 2010.
SECTION 1B.02. Subchapter E, Chapter 42, Education Code, is
amended by adding Section 42.2518 to read as follows:
Sec. 42.2518. ADDITIONAL STATE AID FOR PROPERTY TAX RELIEF.
(a) For any school year, a school district is entitled to
additional state aid to the extent that an increase in the
guaranteed level of state and local funds per student per cent of
tax effort under Section 42.252 applicable to that school year does
not compensate the district for a reduction in district ad valorem
tax revenue caused by ad valorem tax rate reduction made pursuant to
Subchapter O or P, Chapter 403, Government Code.
(b) A determination by the commissioner under this section
is final and may not be appealed.
SECTION 1B.03. Section 26.08(i), Tax Code, is amended to
read as follows:
(i) For purposes of this section, the rollback tax rate of a
school district is the sum of:
(1) the tax rate that, applied to the current total
value for the district, would impose taxes in an amount that, when
added to state funds that would be distributed to the district under
Chapter 42, Education Code, and state funds for property tax rate
relief that will be distributed to the district under Subchapters O
and P, Chapter 403, Government Code, for the school year beginning
in the current tax year using that tax rate, would provide the same
amount of state funds distributed under Chapter 42, Education Code,
and Subchapters O and P, Chapter 403, Government Code, and
maintenance and operations taxes of the district per student in
[weighted] average daily attendance for that school year that would
have been available to the district in the preceding year if the
funding elements for Chapters 41 and 42, Education Code, for the
current year had been in effect for the preceding year;
(2) the rate of $0.04 [$0.06] per $100 of taxable
value; and
(3) the district's current debt rate.
SECTION 1B.04. Section 26.08(k), Tax Code, is repealed.
SECTION 1B.05. For the state fiscal biennium beginning
September 1, 2005, the money in the school property tax relief fund
under Subchapter P, Chapter 403, Government Code, as added by this
part, is appropriated to the comptroller to be used only to reduce
school district maintenance tax rates below the rates specified in
H.B. No. 3, Acts of the 79th Legislature, 1st Called Session, 2005.
The Legislative Budget Board and the governor shall approve
procedures for the distribution of money from the school property
tax relief fund.
SECTION 1B.06. (a) Subchapters O and P, Chapter 403,
Government Code, as added by this Act, expire on January 1 of the
first tax year after the tax year in which all school district
maintenance tax rates are less than $1.00 per $100 of taxable
property. After that date, the legislature may appropriate for
school district property tax rate reduction any amount of state
revenue that would have been required to be used for school district
tax rate reduction under those subchapters, as determined by the
legislature.
(b) It is the intent of the legislature that Subchapters O
and P, Chapter 403, Government Code, as added by this Act, be
construed to provide that all additional state revenue resulting
from the changes in law made by H.B. No. 3, Acts of the 79th
Legislature, 1st Called Session, 2005, be used to provide school
district tax rate reduction.
PART C. PROPERTY TAX ADMINISTRATION
SECTION 1C.01. Section 21.02, Tax Code, is amended by
adding Subsection (e) to read as follows:
(e) This subsection does not apply to a drilling rig
designed for offshore drilling or exploration operations. A mobile
portable drilling rig, and equipment associated with the drilling
rig, is taxable by the taxing unit in which the rig is located on
January 1 if the rig was located in the unit for the preceding 365
consecutive days. If the rig and associated equipment was not
located at its January 1 location for the preceding 365 days, it is
taxable by the taxing unit in which the owner's principal place of
business in this state is located on January 1.
SECTION 1C.02. Section 22.27, Tax Code, is amended by
adding Subsection (c-1) to read as follows:
(c-1) An administrative or judicial proceeding in which
confidential information is disclosed pursuant to Subsection (b)
shall be closed to the public unless all parties to the proceeding
and the persons described in Subsection (b)(2) consent to public
access. Notwithstanding the provisions of this subsection, an
administrative proceeding conducted by a panel of an appraisal
review board is not considered to be a deliberation of public
business by the appraisal review board.
SECTION 1C.03. Section 41A.08, Tax Code, as added by H.B.
182, 79th Legislature, Regular Session, 2005, effective September
1, 2005, and by S.B. 1351, 79th Legislature, Regular Session, 2005,
effective September 1, 2005, is amended by adding Subsection (c) to
read as follows:
(c) The arbitrator may require the appraisal district to
provide meeting space for the arbitration at no cost to the
arbitrator or the property owner.
PART D. PROPERTY TAX RELIEF FOR CULTURALLY
SIGNIFICANT SITES
SECTION 1D.01. Section 11.24, Tax Code, is amended to read
as follows:
Sec. 11.24. HISTORIC AND CULTURALLY SIGNIFICANT SITES. The
governing body of a taxing unit by official action of the body
adopted in the manner required by law for official actions may
exempt from taxation part or all of the assessed value of a
structure or archeological site and the land necessary for access
to and use of the structure or archeological site, if the structure
or archeological site is:
(1) designated as a Recorded Texas Historic Landmark
under Chapter 442, Government Code, or a state archeological
landmark under Chapter 191, Natural Resources Code, by the Texas
Historical Commission; or
(2) designated as a historically, culturally, or
archeologically significant site in need of tax relief to encourage
its preservation pursuant to an ordinance or other law adopted by
the governing body of the unit.
SECTION 1D.02. The change in law made by Section 1D.01 of
this part applies only to a tax year that begins on or after the
effective date of this Act.
PART E. AD VALOREM TAXATION OF CERTAIN RAIL FACILITY PROPERTY
OWNED BY CERTAIN RURAL RAIL TRANSPORTATION DISTRICTS
SECTION 1E.01. Section 25.07(b), Tax Code, is amended to
read as follows:
(b) Except as provided by Sections 11.11(b) [Subsections
(b)] and (c) [of Section 11.11 of this code], a leasehold or other
possessory interest in exempt property may not be listed if:
(1) the property is permanent university fund land;
(2) the property is county public school fund
agricultural land;
(3) the property is a part of a public transportation
facility owned by an incorporated city or town and:
(A) is an airport passenger terminal building or
a building used primarily for maintenance of aircraft or other
aircraft services, for aircraft equipment storage, or for air
cargo;
(B) is an airport fueling system facility;
(C) is in a foreign-trade zone:
(i) that has been granted to a joint airport
board under Chapter 129, Acts of the 65th Legislature, Regular
Session, 1977 (Article 1446.8, Vernon's Texas Civil Statutes);
(ii) the area of which in the portion of the
zone located in the airport operated by the joint airport board does
not exceed 2,500 acres; and
(iii) that is established and operating
pursuant to federal law; or
(D)(i) is in a foreign trade zone established
pursuant to federal law after June 1, 1991, which operates pursuant
to federal law;
(ii) is contiguous to or has access via a
taxiway to an airport located in two counties, one of which has a
population of 500,000 or more according to the federal decennial
census most recently preceding the establishment of the foreign
trade zone; and
(iii) is owned, directly or through a
corporation organized under the Development Corporation Act of 1979
(Article 5190.6, Vernon's Texas Civil Statutes), by the same
incorporated city or town which owns the airport;
(4) the interest is in a part of:
(A) a park, market, fairground, or similar public
facility that is owned by an incorporated city or town; or
(B) a convention center, visitor center, sports
facility with permanent seating, concert hall, arena, or stadium
that is owned by an incorporated city or town as such leasehold or
possessory interest serves a governmental, municipal, or public
purpose or function when the facility is open to the public,
regardless of whether a fee is charged for admission;
(5) the interest involves only the right to use the
property for grazing or other agricultural purposes;
(6) the property is owned by the Texas National
Research Laboratory Commission or by a corporation formed by the
Texas National Research Laboratory Commission under Section
465.008(g), Government Code, and is used or is useful in connection
with an eligible undertaking as defined by Section 465.021,
Government Code; [or]
(7) the property is:
(A) owned by a municipality, a public port, or a
navigation district created or operating under Section 59, Article
XVI, Texas Constitution, or under a statute enacted under Section
59, Article XVI, Texas Constitution; and
(B) used as an aid or facility incidental to or
useful in the operation or development of a port or waterway or in
aid of navigation-related commerce; or
(8) the property is part of a rail facility owned by a
rural rail transportation district created or operating under
Chapter 623, Acts of the 67th Legislature, Regular Session, 1981
(Article 6550c, Vernon's Texas Civil Statutes).
SECTION 1E.02. This part applies only to the appraisal
records for a tax year that begins on or after January 1, 2006.
SECTION 1E.03. This part takes effect January 1, 2006.
ARTICLE 2. FRANCHISE TAX
PART A. CORPORATE OWNERSHIP IN PARTNERSHIPS
SECTION 2A.01. Section 113.001, Tax Code, is amended by
adding Subsection (c) to read as follows:
(c) Any tax, interest, or penalties due to the state under
Chapter 171 by a person who is subject to that tax by application of
Section 171.001(d) are additionally secured by a lien on the
person's interest in the partnership doing business in this state
whose activities cause the person to be subject to that tax,
including a general or limited partnership interest that the person
is considered to own under Sections 171.001(e) and (f).
SECTION 2A.02. Section 171.001(b), Tax Code, is amended by
adding Subdivisions (6-a) and (6-b) to read as follows:
(6-a) "Partner" includes a beneficiary in a trust.
(6-b) "Partnership" includes a partnership, a joint
venture, and a trust.
SECTION 2A.03. Section 171.001, Tax Code, is amended by
adding Subsections (d), (e), (f), (g), (h), and (i) to read as
follows:
(d) For purposes of Subsection (a), a corporation does
business in this state if the corporation is a foreign corporation
and:
(1) holds a partnership interest, including an
interest as an assignee, as a general partner in a general
partnership that is doing business in this state;
(2) holds a partnership interest, including an
interest as an assignee, as a general partner in a limited
partnership that is doing business in this state; or
(3) holds a controlling interest in a partnership,
including an interest as an assignee, as a limited partner in a
limited partnership that is doing business in this state.
(e) For purposes of Subsection (d), a partner who owns an
interest in an upper tier partnership is considered to be both a
partner in the upper tier partnership and a partner in each lower
tier partnership.
(f) For purposes of Subsection (d)(3), a limited partner is
considered to hold a controlling interest if any related party owns
a controlling interest, directly or indirectly, in the partnership.
In this subsection, "controlling interest" and "related party" have
the meanings assigned those terms by Section 171.1001.
(g) If a corporate partner asserts that the tax imposed
under this chapter violates the United States Constitution or
federal law because of the application of Subsection (d), the
franchise tax is imposed on the partnership doing business in this
state and the franchise tax liability of the partnership shall be
calculated as provided by Subsection (h).
(h) For purposes of Subsection (g), reportable federal
taxable income for a partnership is the partnership's income as an
entity, to the extent that the partnership is owned directly or
indirectly by a corporation, as determined under rules adopted by
the comptroller using principles similar to the standards applied
to a corporation.
(i) For purposes of Subsection (d):
(1) a corporation that is a foreign corporation is not
doing business in this state solely because the corporation holds
an interest in a real estate investment trust as defined by Section
856, Internal Revenue Code, or its "qualified REIT subsidiary"
entities as defined by Section 856(i)(2), Internal Revenue Code;
and
(2) a real estate investment trust or a "qualified
REIT subsidiary" entity as defined in Subdivision (1) is not doing
business in this state solely because the real estate investment
trust or "qualified REIT subsidiary" entity holds a partnership
interest, including an interest as an assignee, as a limited
partner in a limited partnership that is doing business in this
state, provided that the limited partnership satisfies the gross
income requirements of Sections 856(c)(2) and 856(c)(3), Internal
Revenue Code, and the asset valuation requirements of Section
856(c)(4), Internal Revenue Code.
SECTION 2A.04. Section 171.1032(c), Tax Code, is amended to
read as follows:
(c) A corporation shall include in its gross receipts
computed under Subsection (a) the corporation's share of the gross
receipts of each partnership and joint venture in which the
corporation directly or indirectly owns an interest [of which the
corporation is a part] apportioned to this state as though the
corporation directly earned the receipts[, including receipts from
business done with the corporation]. A corporation that owns an
interest in an upper tier partnership is considered to be a partner
in both the upper tier partnership and each lower tier partnership,
and the corporation's share of the gross receipts of each
partnership of which it is a partner is computed and apportioned to
this state as though the corporation directly earned the receipts
at the partnership tier at which the receipts were originally
earned.
SECTION 2A.05. Section 171.1051(d), Tax Code, is amended to
read as follows:
(d) A corporation shall include in its gross receipts
computed under Subsection (a) the corporation's share of the gross
receipts of each partnership and joint venture in which the
corporation directly or indirectly owns an interest [of which the
corporation is a part]. A corporation that owns an interest in an
upper tier partnership is considered to be a partner in both the
upper tier partnership and each lower tier partnership, and the
corporation's share of the gross receipts of each partnership of
which it is a partner is computed as though the corporation directly
earned the receipts at the partnership tier at which the receipts
were originally earned.
SECTION 2A.06. Section 171.110, Tax Code, is amended by
adding Subsection (d-1) to read as follows:
(d-1) In computing net taxable earned surplus, a
corporation shall include the corporation's share of a
partnership's items of income or loss, without regard to whether
the partnership is taxed as a corporation for federal income tax
purposes.
SECTION 2A.07. Section 171.1121, Tax Code, is amended by
adding Subsection (f) to read as follows:
(f) A corporation that owns an interest in an upper tier
partnership is considered to be a partner in both the upper tier
partnership and each lower tier partnership, and the corporation's
share of the gross receipts of each partnership of which it is a
partner is computed and apportioned to this state as though the
corporation directly earned the receipts at the partnership tier at
which the receipts were originally earned.
SECTION 2A.08. This part takes effect November 1, 2005, and
applies to reports originally due on or after that date.
PART B. APPLICATION TO PARTNERSHIPS
SECTION 2B.01. (a) This part takes effect only if a court
enters a final judgment that the tax imposed under Chapter 171, Tax
Code, violates the United States Constitution because of the
application of Section 171.001(d), Tax Code.
(b) This part takes effect on the earlier of the date that
the final judgment under Subsection (a) of this section is upheld on
appeal without any possibility of further appeal or is not appealed
and is no longer subject to appeal, and applies to a report
originally due on or after that date.
SECTION 2B.02. Section 113.001, Tax Code, is amended by
adding Subsection (c-1) to read as follows:
(c-1) Any tax, interest, or penalties due to the state under
Chapter 171 by a person who is subject to that tax by application of
Section 171.001(a)(3) are additionally secured by a lien on the
person's interest in the partnership doing business in this state
whose activities cause the person to be subject to that tax.
SECTION 2B.03. Section 171.001(a), Tax Code, is amended to
read as follows:
(a) A franchise tax is imposed on:
(1) each corporation that does business in this state
or that is chartered in this state; [and]
(2) each limited liability company that does business
in this state or that is organized under the laws of this state;
(3) each general partnership that is doing business in
this state to the extent the general partnership, including an
interest as an assignee, is owned directly or indirectly by a
corporation;
(4) each limited partnership that is doing business in
this state to the extent the general partner's interest, including
an interest as an assignee, in the limited partnership is owned
directly or indirectly by a corporation; and
(5) each limited partnership controlled by a corporate
limited partner, including an interest as an assignee, that is
doing business in this state to the extent the limited partnership
is owned directly or indirectly by the controlling limited partner.
SECTION 2B.04. Section 171.001(b)(3), Tax Code, is amended
to read as follows:
(3) "Corporation" includes:
(A) a limited liability company, as defined under
the Texas Limited Liability Company Act;
(B) a savings and loan association; [and]
(C) a banking corporation; and
(D) a partnership, to the extent appropriate for
purposes of the administration, collection, and enforcement of the
tax under this chapter as it is imposed on partnerships.
SECTION 2B.05. Section 171.1032(c), Tax Code, is amended to
read as follows:
(c) A corporation shall include in its gross receipts
computed under Subsection (a) the corporation's share of the gross
receipts of each partnership and joint venture of which the
corporation is a part apportioned to this state as though the
corporation directly earned the receipts, including receipts from
business done with the corporation.
SECTION 2B.06. Section 171.1051(d), Tax Code, is amended to
read as follows:
(d) A corporation shall include in its gross receipts
computed under Subsection (a) the corporation's share of the gross
receipts of each partnership and joint venture of which the
corporation is a part.
SECTION 2B.07. Section 171.110, Tax Code, is amended by
adding Subsection (d-2) to read as follows:
(d-2) Reportable federal taxable income for a partnership
subject to the franchise tax under Section 171.001(a) is the
partnership's income as an entity, to the extent that the
partnership is owned by a corporation, as determined under rules
adopted by the comptroller using principles similar to the
standards applied to a corporation.
SECTION 2B.08. Subchapter F, Chapter 171, Tax Code, is
amended by adding Section 171.2515 to read as follows:
Sec. 171.2515. FORFEITURE OF RIGHT OF PARTNERSHIP TO
TRANSACT BUSINESS IN THIS STATE. (a) The comptroller may, for the
same reasons and using the same procedures the comptroller uses in
relation to the forfeiture of the corporate privileges of a
corporation, forfeit the right of a partnership subject to a tax
imposed by this chapter to transact business in this state.
(b) The provisions of this subchapter, including Section
171.255, that apply to the forfeiture of corporate privileges apply
to the forfeiture of a partnership's right to transact business in
this state.
SECTION 2B.09. The following provisions of the Tax Code are
repealed:
(1) Section 113.001(c);
(2) Sections 171.001(d), (e), (f), (g), and (h);
(3) Section 171.110(d-1); and
(4) Section 171.1121(f).
SECTION 2B.10. (a) For a partnership becoming subject to
the franchise tax under this part, income or losses and related
gross receipts occurring before one year before the effective date
of this part may not be considered for purposes of the earned
surplus component or for apportionment purposes for the taxable
capital component.
(b) The comptroller shall adopt rules relating to
establishing the applicable reporting periods for partnerships
becoming subject to the franchise tax under this part.
PART C. ADD-BACK OF CERTAIN PAYMENTS
SECTION 2C.01. Subchapter C, Chapter 171, Tax Code, is
amended by adding Section 171.1001 to read as follows:
Sec. 171.1001. DEFINITIONS. In this subchapter:
(1) "Arm's length" means the standard of conduct under
which unrelated parties having substantially equal bargaining
power, each acting in its own interest, would negotiate or carry out
a particular transaction.
(2) "Controlling interest" means:
(A) for a corporation, either 50 percent or more,
owned directly or indirectly, of the total combined voting power of
all classes of stock of the corporation, or 50 percent or more,
owned directly or indirectly, of the beneficial ownership interest
in the voting stock of the corporation; and
(B) for a partnership, association, trust, or
other entity, 50 percent or more, owned directly or indirectly, of
the capital, profits, or beneficial interest in the partnership,
association, trust, or other entity.
(3) "Interest payment" means an amount allowable as an
interest deduction under Section 163, Internal Revenue Code.
(4) "Management fee" means a fee for services of a
managerial or administrative nature, including services pertaining
to management, accounts receivable and payable, employee benefit
plans, insurance, legal matters, payroll, data processing,
purchasing, taxes, financial matters, securities, accounting,
reporting, and compliance.
(5) "Related party" means a person, corporation, or
other entity, including an entity that is treated as a pass-through
or disregarded entity for purposes of federal taxation, whether the
person, corporation, or entity is subject to the tax under this
chapter or not, in which one person, corporation, or entity, or set
of related persons, corporations, or entities, directly or
indirectly owns or controls a controlling interest in another
entity. To the extent necessary to carry out this section, the
comptroller shall adopt rules defining "related party" using
principles substantially similar to Section 318, Internal Revenue
Code.
(6) "Royalty payment" means a payment directly
connected to the acquisition, use, maintenance or management,
ownership, sale, exchange, or any other disposition of licenses,
trademarks, copyrights, trade names, trade dress, service marks,
mask works, trade secrets, patents, or any other similar types of
intangible assets as determined by the comptroller.
(7) "Valid business purpose" means one or more
business purposes, other than the avoidance or reduction of taxes,
that alone or in combination constitute the primary motivation for
a business activity or transaction that changes in a meaningful
way, apart from tax effects, the economic position of the entity. A
valid business purpose includes compliance with a regulatory
requirement of:
(A) the federal government;
(B) a state or local government;
(C) a foreign nation; or
(D) an agency or political subdivision of any
entity listed in Paragraphs (A)-(C).
SECTION 2C.02. Subchapter C, Chapter 171, Tax Code, is
amended by adding Sections 171.1101-171.1103 to read as follows:
Sec. 171.1101. ADD-BACK OF PAYMENTS TO RELATED PARTY.
Except as provided by Section 171.1102, a corporation shall add
back to reportable federal taxable income any royalty payments,
interest payments, and management fees made to a related party
during the period on which earned surplus is based to the extent
deducted in computing reportable federal taxable income.
Sec. 171.1102. SAFE HARBORS FOR CERTAIN PAYMENTS AND FEES.
(a) A corporation is not required to add back royalty payments to a
related party to the extent:
(1) the related party during the period on which
earned surplus is based directly or indirectly paid or incurred the
amount to a person or entity that is not a related party or the
transaction was done for a valid business purpose, and the payments
were made at arm's length;
(2) the royalty payments are paid or incurred to a
related party organized under the laws of a foreign nation, are
subject to a comprehensive income tax treaty between the foreign
nation and the United States, and are taxed in the foreign nation at
a tax rate equal to or greater than the rate under Section
171.002(a)(2); or
(3) during the period on which earned surplus is
based, the corporation received the amount from a person or entity
that is not a related party, and on behalf of that unrelated person
or entity, paid that amount to the related party in an arm's length
transaction.
(b) A corporation is not required to add back interest
payments to a related party to the extent:
(1) the interest is at or below the applicable federal
rate compounded annually for debt instruments under Section
1274(d), Internal Revenue Code, that was in effect at the time of
the agreement; or
(2) the related party during the period on which
earned surplus is based directly or indirectly paid or incurred the
amount to a person or entity that is not a related party, the
transaction was done for a valid business purpose, and the payments
were made at arm's length.
(c) A corporation is not required to add back a royalty
payment or an interest payment made to a related party, or a
management fee paid to a related party, if the combined tax paid to
this state, or to this state and one or more other states each of
which has a tax rate equal to or greater than the rate under Section
171.002(a)(2), by the corporation and the related party exceeds the
tax that would have been paid by the corporation if the royalty
payment or interest payment had not been made.
(d) A corporation is not required to add back a management
fee paid to a related party to the extent that the transaction was
done for a valid business purpose and the fee was paid at arm's
length.
Sec. 171.1103. ADJUSTMENT TO INCOME AND EXPENSES BY
COMPTROLLER. (a) The comptroller may distribute, apportion, or
allocate gross income, deductions, credits, or allowances between
or among two or more organizations, trades, or businesses, whether
or not incorporated, whether or not organized in the United States,
and whether or not affiliated, if:
(1) the organizations, trades, or businesses are owned
or controlled directly or indirectly by the same interests; and
(2) the comptroller determines that the distribution,
apportionment, or allocation is necessary to reflect an arm's
length standard, within the meaning of 26 C.F.R. Section 1.482-1,
and to clearly reflect the income of those organizations, trades,
or businesses.
(b) The comptroller shall apply the administrative and
judicial interpretations of Section 482, Internal Revenue Code, in
administering this section.
PART D. FRANCHISE TAX CREDIT FOR HEALTH BENEFIT PLAN
FOR EMPLOYEES AND DEPENDENTS
SECTION 2D.01. Chapter 171, Tax Code, is amended by adding
Subchapter X to read as follows:
SUBCHAPTER X. TAX CREDIT FOR HEALTH BENEFIT PLAN
FOR EMPLOYEES AND THEIR DEPENDENTS
Sec. 171.941. ENTITLEMENT TO CREDIT. A corporation is
entitled to a credit in the amount and under the conditions and
limitations provided by this subchapter against the tax imposed
under this chapter.
Sec. 171.942. QUALIFICATION. A corporation qualifies for a
credit under this subchapter if the corporation:
(1) has gross receipts from its entire business, as
determined by Section 171.105, for the reporting period in an
amount equal to or less than $1 million; and
(2) obtains coverage for its employees and their
dependents under a health benefit plan that constitutes creditable
coverage for the purposes of Section 1205.004, Insurance Code.
Sec. 171.943. AMOUNT; LIMITATIONS. (a) The amount of the
credit is 15 percent of the cost to the corporation of obtaining
coverage for its employees and their dependents under a health
benefit plan.
(b) The credit claimed for each privilege period may not
exceed the amount of franchise tax due, before any other applicable
tax credits, for the privilege period.
(c) A corporation may claim a credit under this subchapter
for an expenditure made during an accounting period only against
the tax owed for the corresponding privilege period.
(d) A corporation may not carry over an expenditure made
during a privilege period to a subsequent privilege period.
(e) A corporation may not convey, assign, or transfer a
credit under this subchapter to another entity unless all of the
assets of the corporation are conveyed, assigned, or transferred in
the same transaction.
Sec. 171.944. APPLICATION FOR CREDIT. A corporation must
apply for a credit under this subchapter on or with the tax report
for the period for which the credit is claimed.
Sec. 171.945. RULES. The comptroller shall adopt rules
necessary to implement this subchapter.
SECTION 2D.02. Section 151.325, Tax Code, is repealed.
SECTION 2D.03. This part takes effect January 1, 2006, and
applies only to a tax report originally due on or after that date.
PART E. TRANSITIONAL PROVISIONS
SECTION 2E.01. (a) Except as otherwise provided by this
article, this article takes effect November 1, 2005, and applies to
reports originally due on or after that date.
(b) For a corporation becoming subject to the franchise tax
under this article:
(1) income or losses, and related gross receipts,
occurring before January 1, 2005, may not be considered for
purposes of the earned surplus component, or for apportionment
purposes for the taxable capital component;
(2) a corporation subject to the franchise tax on
January 1, 2006, for which January 1, 2006, is not the beginning
date, shall file an annual report due May 15, 2006, based on the
period:
(A) beginning on the later of:
(i) January 1, 2005; or
(ii) the date the corporation was organized
in this state or, if a foreign corporation, the date it began doing
business in this state; and
(B) ending on the date the corporation's last
accounting period ends in 2005 or, if none, on December 31, 2005;
and
(3) a corporation subject to the earned surplus
component of the franchise tax at any time after October 31, 2005,
and before January 1, 2006, but not subject to the earned surplus
component on January 1, 2006, shall file a final report computed on
net taxable earned surplus, for the privilege of doing business at
any time after October 31, 2005, and before January 1, 2006, based
on the period:
(A) beginning on the later of:
(i) January 1, 2005; or
(ii) the date the corporation was organized
in this state or, if a foreign corporation, the date it began doing
business in this state; and
(B) ending on the date the corporation became no
longer subject to the earned surplus component of the tax.
ARTICLE 3. SALES AND USE TAXES
PART A. STATE SALES AND USE TAXES
SECTION 3A.01. Section 151.0031, Tax Code, is amended to
read as follows:
Sec. 151.0031. "COMPUTER PROGRAM." "Computer program"
means a series of instructions that are coded for acceptance or use
by a computer system and that are designed to permit the computer
system to process data and provide results and information. The
series of instructions may be contained in or on magnetic tapes,
punched cards, printed instructions, or other tangible or
electronic media. For purposes of this chapter, the term includes a
computer program created or developed exclusively for a client who
retains all rights to the program.
SECTION 3A.02. Subchapter A, Chapter 151, Tax Code, is
amended by adding Section 151.0043 to read as follows:
Sec. 151.0043. "MOTOR VEHICLE REPAIR SERVICES." (a)
"Motor vehicle repair services" means the repair, remodeling,
maintenance, or restoration of a motor vehicle, including testing
or diagnostic services, body repair and painting, engine repair,
transmission repair, exhaust system repair, brake repair, and air
conditioning repair.
(b) "Motor vehicle repair services" does not include any
vehicle emissions tests required by law, safety inspection tests
required by law, and other similar tests required by law.
SECTION 3A.03. Section 151.0101(a), Tax Code, is amended to
read as follows:
(a) "Taxable services" means:
(1) amusement services;
(2) cable television services;
(3) personal services;
(4) motor vehicle parking and storage services;
(5) the repair, remodeling, maintenance, and
restoration of tangible personal property, including motor vehicle
repair services, except:
(A) aircraft; and
(B) a ship, boat, or other vessel, other than:
(i) a taxable boat or motor as defined by
Section 160.001;
(ii) a sports fishing boat; or
(iii) any other vessel used for pleasure;
[(C) the repair, maintenance, and restoration of
a motor vehicle; and
[(D) the repair, maintenance, creation, and
restoration of a computer program, including its development and
modification, not sold by the person performing the repair,
maintenance, creation, or restoration service;]
(6) telecommunications services;
(7) credit reporting services;
(8) debt collection services;
(9) insurance services;
(10) information services;
(11) real property services;
(12) data processing services;
(13) real property repair and remodeling;
(14) security services;
(15) telephone answering services;
(16) Internet access service; and
(17) a sale by a transmission and distribution
utility, as defined in Section 31.002, Utilities Code, of
transmission or delivery of service directly to an electricity
end-use customer whose consumption of electricity is subject to
taxation under this chapter.
SECTION 3A.04. Section 151.051(b), Tax Code, is amended to
read as follows:
(b) The sales tax rate is 7.25 [6 1/4] percent of the sales
price of the taxable item sold.
SECTION 3A.05. Section 151.315, Tax Code, is amended to
read as follows:
Sec. 151.315. WATER. Water, other than water sold in a
sealed container, is exempted from the taxes imposed by this
chapter.
SECTION 3A.06. Section 151.419(b), Tax Code, is amended to
read as follows:
(b) The application must be accompanied with:
(1) an agreement that is signed by the applicant or a
responsible officer of an applicant corporation, that is in a form
prescribed by the comptroller, and that provides that the applicant
agrees to:
(A) accrue and pay all taxes imposed by
Subchapter D [of this chapter] on the storage and use of all taxable
items sold to or leased or rented by the permit holder unless the
items are exempted from the taxes imposed by this chapter; and
(B) pay the imposed taxes monthly on or before
the 20th day of the month following the end of each calendar month;
[and
[(C) waive the discount permitted by Section
151.423 of this code on the payment of all taxes under the direct
payment permit only;]
(2) a description, in the amount of detail that the
comptroller requires, of the accounting method by which the
applicant proposes to differentiate between taxable and exempt
transactions; and
(3) records establishing that the applicant is a
responsible person who annually purchases taxable items that have a
value when purchased of $800,000 or more excluding the value of
taxable items for which resale certificates were or could have been
given.
SECTION 3A.07. Sections 151.424(a) and (c), Tax Code, are
amended to read as follows:
(a) A taxpayer who prepays the taxpayer's tax liability on
the basis of a reasonable estimate of the tax liability for a
quarter in which a prepayment is made or for a month in which a
prepayment is made may deduct and withhold 1.25 percent of the
amount of the prepayment [in addition to the amount permitted to be
deducted and withheld under Section 151.423 of this code]. A
reasonable estimate of the tax liability must be at least 90 percent
of the tax ultimately due or the amount of tax paid in the same
quarter, or month, if a monthly prepayer, in the last preceding
year. Failure to prepay a reasonable estimate of the tax will
result in the loss of the entire prepayment discount.
(c) A taxpayer who prepays the tax liability as permitted by
this section must file a report when due as provided by this
chapter. The amount of a prepayment made by a taxpayer under this
section shall be credited against the amount of actual tax
liability of the taxpayer as shown on the tax report of the
taxpayer. If there is a tax liability owed by the taxpayer in
excess of the prepayment credit, the taxpayer shall send to the
comptroller the remaining tax liability at the time of filing the
quarterly or monthly report. [The taxpayer is entitled to the
deduction permitted under Section 151.423 of this code on the
amount of the remaining tax liability.]
SECTION 3A.08. Section 151.425, Tax Code, is amended to
read as follows:
Sec. 151.425. FORFEITURE OF DISCOUNT OR REIMBURSEMENT. If
a taxpayer fails to file a report required by this chapter when due
or to pay the tax when due, the taxpayer forfeits any claim to a
[deduction or] discount allowed under [Section 151.423 or] Section
151.424 [of this code].
SECTION 3A.09. Section 151.428(c), Tax Code, is amended to
read as follows:
(c) The reporting, collection, refund, and penalty
provisions of this chapter and Subtitle B [of this title] apply to
the payments required by this section, except that Section
[Sections 151.423 and] 151.424 does [of this code do] not apply to
this section.
SECTION 3A.10. Section 152.047(a), Tax Code, is amended to
read as follows:
(a) Except as inconsistent with this chapter and rules
adopted under this chapter, the seller of a motor vehicle shall
report and pay the tax imposed on a seller-financed sale to the
comptroller on the seller's receipts from seller-financed sales in
the same manner as the sales tax is reported and paid by a retailer
under Sections 151.401, 151.402, 151.405, 151.406, 151.409,
[151.423,] 151.424, and 151.425.
SECTION 3A.11. Section 151.423, Tax Code, is repealed.
SECTION 3A.12. (a) There are exempted from the increase in
the rate of the tax imposed by Chapter 151, Tax Code, that is made by
this part the receipts from the sale, use, or rental and the
storage, use, or consumption in this state of taxable items if:
(1) the items are used:
(A) for the performance of a contract for the
improvement of real property entered into on or before July 8, 2005,
if the contract is not subject to change or modification because of
the tax rate increase made by this part; or
(B) pursuant to an obligation of a bid submitted
for the improvement of real property submitted on or before July 8,
2005, if the bid may not be withdrawn, modified, or changed because
of the tax rate increase made by this part; and
(2) an electronic or paper copy of the contract or bid
on which the exemption is claimed is given by the taxpayer to the
comptroller not later than October 1, 2005.
(b) The exemption provided by this section expires
September 1, 2007.
SECTION 3A.13. There are exempted from the taxes imposed by
Chapter 151, Tax Code, the receipts from the sale, use, storage,
rental, or other consumption in this state of services that became
subject to the taxes because of the terms of this part and that are
the subject of a written contract or bid entered into on or before
August 1, 2005. The exemption provided by this section applies only
if the taxpayer, not later than October 1, 2005, gives to the
comptroller an electronic or paper copy of the contract or bid on
which the exemption is claimed. The exemption provided by this
section expires September 1, 2007.
SECTION 3A.14. (a) Except as otherwise provided by this
section, this part takes effect September 1, 2005, if this Act
receives a vote of two-thirds of all the members elected to each
house, as provided by Section 39, Article III, Texas Constitution.
If this Act does not receive the vote necessary for effect on that
date, this part takes effect November 1, 2005.
(b) Section 151.051(b), Tax Code, as amended by this part,
takes effect October 1, 2005, if this Act receives a vote of
two-thirds of all the members elected to each house, as provided by
Section 39, Article III, Texas Constitution. If this Act does not
receive the vote necessary for effect on that date, Section
151.051(b), Tax Code, takes effect January 1, 2006.
PART B. MOTOR VEHICLE SALES AND USE TAX
SECTION 3B.01. Section 152.002, Tax Code, is amended by
adding Subsection (f) to read as follows:
(f) Notwithstanding Subsection (a), the total consideration
of a used motor vehicle is the amount on which the tax is computed as
provided by Section 152.0412.
SECTION 3B.02. Section 152.021(b), Tax Code, is amended to
read as follows:
(b) The tax rate is 7.35 [6 1/4] percent of the total
consideration.
SECTION 3B.03. Section 152.022(b), Tax Code, is amended to
read as follows:
(b) The tax rate is 7.35 [6 1/4] percent of the total
consideration.
SECTION 3B.04. Section 152.026(b), Tax Code, is amended to
read as follows:
(b) The tax rate is 10 percent of the gross rental receipts
from the rental of a rented motor vehicle for 30 days or less and
7.35 [6 1/4] percent of the gross rental receipts from the rental of
a rented motor vehicle for longer than 30 days.
SECTION 3B.05. Section 152.028(b), Tax Code, is amended to
read as follows:
(b) The tax rate is 7.35 [6 1/4] percent of the total
consideration.
SECTION 3B.06. Section 152.041(a), Tax Code, is amended to
read as follows:
(a) The tax assessor-collector of the county in which an
application for registration or for a Texas certificate of title is
made shall collect taxes imposed by this chapter, subject to
Section 152.0412, unless another person is required by this chapter
to collect the taxes.
SECTION 3B.07. Subchapter C, Chapter 152, Tax Code, is
amended by adding Section 152.0412 to read as follows:
Sec. 152.0412. STANDARD PRESUMPTIVE VALUE; USE BY TAX
ASSESSOR-COLLECTOR. (a) In this section, "standard presumptive
value" means the average retail value of a motor vehicle as
determined by the Texas Department of Transportation, based on a
nationally recognized motor vehicle industry reporting service.
(b) If the amount paid for a motor vehicle subject to the tax
imposed by this chapter is equal to or greater than the standard
presumptive value of the vehicle, a county tax assessor-collector
shall compute the tax on the amount paid.
(c) If the amount paid for a motor vehicle subject to the tax
imposed by this chapter is less than the standard presumptive value
of the vehicle, a county tax assessor-collector shall compute the
tax on the standard presumptive value unless the purchaser
establishes the retail value of the vehicle as provided by
Subsection (d).
(d) A county tax assessor-collector shall compute the tax
imposed by this chapter on the retail value of a motor vehicle if:
(1) the retail value is shown on an appraisal
certified by an adjuster licensed under Chapter 4101, Insurance
Code, or by a motor vehicle dealer operating under Subchapter B,
Chapter 503, Transportation Code;
(2) the appraisal is on a form prescribed by the
comptroller for that purpose; and
(3) the purchaser of the vehicle obtains the appraisal
not later than the 20th day after the date of purchase.
(e) On request, a motor vehicle dealer operating under
Subchapter B, Chapter 503, Transportation Code, shall provide a
certified appraisal of the retail value of a motor vehicle. The
comptroller by rule shall establish a fee that a dealer may charge
for providing the certified appraisal. The county tax
assessor-collector shall retain a copy of a certified appraisal
received under this section for a period prescribed by the
comptroller.
(f) The Texas Department of Transportation shall maintain
information on the standard presumptive values of motor vehicles as
part of the department's registration and title system. The
department shall update the information at least quarterly each
calendar year.
(g) This section does not apply to a transaction described
by Section 152.024 or 152.025.
SECTION 3B.08. Not later than November 1, 2005, the Texas
Department of Transportation shall:
(1) establish standard presumptive values for motor
vehicles as provided by Section 152.0412, Tax Code, as added by this
part;
(2) modify the department's registration and title
system as needed to include that information and administer that
section; and
(3) make that information available through the system
to all county tax assessor-collectors.
SECTION 3B.09. (a) Except as provided by Subsection (b) of
this section, this part takes effect September 1, 2005, if this Act
receives a vote of two-thirds of all the members elected to each
house, as provided by Section 39, Article III, Texas Constitution.
If this Act does not receive the vote necessary for effect on that
date, this part takes effect on the first day of the first month
that begins on or after the 91st day after the last day of the
legislative session.
(b) Section 152.0412, Tax Code, as added by this part, takes
effect November 1, 2005.
PART C. BOAT AND BOAT MOTOR SALES AND USE TAX
SECTION 3C.01. Section 160.021(b), Tax Code, is amended to
read as follows:
(b) The tax rate is 7.35 [6 1/4] percent of the total
consideration.
SECTION 3C.02. Section 160.022(b), Tax Code, is amended to
read as follows:
(b) The tax rate is 7.35 [6 1/4] percent of the total
consideration.
SECTION 3C.03. This part takes effect September 1, 2005, if
this Act receives a vote of two-thirds of all the members elected to
each house, as provided by Section 39, Article III, Texas
Constitution. If this Act does not receive the vote necessary for
effect on that date, this part takes effect November 1, 2005.
ARTICLE 4. CIGARETTE AND TOBACCO PRODUCTS TAXES
SECTION 4.01. Section 154.021(b), Tax Code, is amended to
read as follows:
(b) The tax rates are:
(1) $70.50 [$20.50] per thousand on cigarettes
weighing three pounds or less per thousand; and
(2) the rate provided by Subdivision (1) plus $2.10
per thousand on cigarettes weighing more than three pounds per
thousand.
SECTION 4.02. Section 155.021(b), Tax Code, is amended to
read as follows:
(b) The tax rates are:
(1) 1.25 cents [one cent] per 10 or fraction of 10 on
cigars weighing three pounds or less per thousand;
(2) $9.375 [$7.50] per thousand on cigars that:
(A) weigh more than three pounds per thousand;
and
(B) sell at factory list price, exclusive of any
trade discount, special discount, or deal, for 3.3 cents or less
each;
(3) $13.75 [$11] per thousand on cigars that:
(A) weigh more than three pounds per thousand;
(B) sell at factory list price, exclusive of any
trade discount, special discount, or deal, for more than 3.3 cents
each; and
(C) contain no substantial amount of nontobacco
ingredients; and
(4) $18.75 [$15] per thousand on cigars that:
(A) weigh more than three pounds per thousand;
(B) sell at factory list price, exclusive of any
trade discount, special discount, or deal, for more than 3.3 cents
each; and
(C) contain a substantial amount of nontobacco
ingredients.
SECTION 4.03. Section 155.0211(b), Tax Code, is amended to
read as follows:
(b) The tax rate for tobacco products other than cigars is
40 [35.213] percent of the manufacturer's list price, exclusive of
any trade discount, special discount, or deal.
SECTION 4.04. This article takes effect September 1, 2005,
if this Act receives a vote of two-thirds of all the members elected
to each house, as provided by Section 39, Article III, Texas
Constitution. If this Act does not receive the vote necessary for
effect on that date, this article takes effect November 1, 2005.
ARTICLE 5. COLLECTION OF DELINQUENT OBLIGATIONS TO STATE
SECTION 5.01. Section 403.019(c), Government Code, is
amended to read as follows:
(c) A contract under this section is not valid unless
approved by the attorney general. The attorney general shall
approve a contract if the attorney general determines that the
contract complies with the requirements of this section, that the
contract does not conflict with any contract formed under Section
2107.003(b), and that the contract [and] is in the best interest of
the state. No judicial action by any person on behalf of the state
under a contract authorized and approved by this section may be
brought unless approved by the attorney general.
SECTION 5.02. Section 2107.003, Government Code, is amended
to read as follows:
Sec. 2107.003. COLLECTION BY ATTORNEY GENERAL,
COMPTROLLER, OR OUTSIDE AGENT. (a) Except as provided by Section
2107.004 [Subsection (c)], a state agency shall report an
uncollected and delinquent obligation to [request] the attorney
general for collection. The state agency must report the
obligation on or before the 120th day after the date the obligation
becomes past due or delinquent [to collect an obligation before the
agency may employ, retain, or contract with a person other than a
full-time employee of the state agency to collect the obligation].
(b) The attorney general:
(1) shall provide legal services for collection of the
obligation;
(2) may authorize the requesting state agency to
employ, retain, or contract, subject to approval by the attorney
general, with one or more persons to collect the obligation; or
(3) if the attorney general determines it to be
economical and in the best interest of the state, may contract with
one or more persons [a person other than a full-time employee of the
agency] to collect the [an] obligation [that the attorney general
cannot collect].
(c) The comptroller may employ, retain, or contract with a
person other than a full-time state employee to collect delinquent
obligations that are owed the comptroller in the comptroller's
official capacity, are not collected through normal collection
procedures, and do not meet the guidelines adopted for collection
by the attorney general. A proposed contract under this subsection
shall be reviewed by the attorney general and may include a
collection fee computed on the amounts collected under the
contract.
(d) The agency contracting under Subsection (b) is entitled
to recover from the obligor, in addition to the amount of the
obligation, the costs incurred in undertaking the collection,
including the costs of a contract under this section. The obligor
is liable for costs of recovery under this section in an amount
equal to 30 percent of the sum of the amount of the obligation and
any penalty and interest due on the obligation.
(e) A contract formed under Subsection (b) must provide for
the compensation due to the contractor. The amount of the
compensation shall be equal to 30 percent of the sum of the
collected amount of:
(1) the obligation;
(2) any penalty; and
(3) any interest.
(f) A contract formed under Subsection (b) or (c) may permit
or require the contractor to pursue a judicial action to collect the
amount of the obligation in a proper court in or outside of this
state.
(g) In a suit in a Texas state court brought by a contractor
to collect an obligation under this section, the state is not:
(1) required to post security for costs;
(2) liable for costs; and
(3) liable for fees for:
(A) service of process;
(B) attorneys ad litem;
(C) arbitration; or
(D) mediation.
(h) Notwithstanding any other law, an amount collected
under a contract formed under Subsection (b), including the costs
of recovery and court costs or other costs, shall be deposited to
the credit of the general revenue fund. The contracting agency
shall pay the compensation due under the contract to the contractor
and shall pay to the applicable court any court costs collected.
(i) The contracting agency shall require a person
contracting under Subsection (b) to post a bond or other security in
an amount the contracting agency determines is sufficient to cover
all revenue or other property of the state that is expected to come
into the possession or control of the contractor in the course of
providing contract services.
(j) A person who contracts under Subsection (b) is an agent
of this state for purposes of determining priority of a claim to be
collected under the contract with respect to claims of other
creditors. The contractor does not exercise any sovereign power of
the state.
(k) The contracting state agency may provide a person
contracting under Subsection (b) any information, including
confidential information, that the agency is not prohibited from
sharing under an agreement with another state or with the United
States and that is:
(1) in the custody of the agency holding the claim; and
(2) necessary to the collection of the obligation.
(l) A person acting under a contract formed under Subsection
(b) or (c) and each employee or agent of that person is subject to
all prohibitions against the disclosure of confidential
information obtained from the contracting agency, the reporting
state agency, or their employees. A contractor or the contractor's
employee or agent who discloses confidential information in
violation of the prohibition is subject to the same penalties for
that disclosure as would apply to the contracting agency or its
employees.
(m) The contracting agency shall require a person who
contracts under Subsection (b) to obtain and maintain insurance
adequate to provide reasonable coverage for damages negligently,
recklessly, or intentionally caused by the contractor or the
contractor's employee or agent in the course of collecting an
obligation under the contract and to protect this state from
liability for those damages. The state is not liable for and may
not indemnify a person acting under a contract under Subsection (b)
for damages negligently, recklessly, or intentionally caused by the
contractor or the contractor's employee or agent in the course of
collecting an obligation under the contract.
(n) In addition to grounds for termination provided by the
contract terms, the attorney general or the contracting agency, as
applicable, may terminate a contract formed under Subsection (b) if
the contractor or the contractor's employee or agent:
(1) violates the federal Fair Debt Collection
Practices Act (15 U.S.C. Section 1692 et seq.);
(2) discloses confidential information to a person not
authorized to receive the information; or
(3) performs any act that results in a final judgment
for damages against this state.
SECTION 5.03. Section 2254.102(c), Government Code, is
amended to read as follows:
(c) This subchapter does not apply to a contract:
(1) with an agency to collect an obligation under
Section 2107.003(b); or
(2) for legal services entered into by an institution
of higher education under Section 153.006, Education Code.
SECTION 5.04. Except as otherwise provided by this Act,
this article takes effect immediately if this Act receives a vote of
two-thirds of all the members elected to each house, as provided by
Section 39, Article III, Texas Constitution. If this Act does not
receive the vote necessary for immediate effect, this article takes
effect on the 91st day after the last day of the legislative
session.
ARTICLE 6. MIXED BEVERAGE TAX
SECTION 6.01. Subchapter B, Chapter 183, Tax Code, is
amended by adding Section 183.0212 to read as follows:
Sec. 183.0212. SEPARATE STATEMENT OF TAX REQUIRED. A
permittee shall ensure that each invoice, billing, sales slip, or
ticket for the purchase of an item subject to taxation under this
chapter includes a separate statement of the amount of tax imposed
under this chapter in relation to that item.
SECTION 6.02. This article takes effect September 1, 2005,
if this Act receives a vote of two-thirds of all the members elected
to each house, as provided by Section 39, Article III, Texas
Constitution. If this Act does not receive the vote necessary for
effect on that date, this article takes effect November 1, 2005.
ARTICLE 7. DEPOSIT OF CERTAIN TRAFFIC PENALTIES IN GENERAL
REVENUE FUND
SECTION 7.01. Subchapter D, Chapter 542, Transportation
Code, is amended by adding Section 542.405 to read as follows:
Sec. 542.405. DEPOSIT OF REVENUE FROM CERTAIN TRAFFIC
PENALTIES TO GENERAL REVENUE FUND. (a) In this section,
"photographic traffic signal enforcement system" means a system
that:
(1) consists of a camera system and vehicle sensor
installed to exclusively work in conjunction with an electrically
operated traffic-control signal;
(2) is capable of producing one or more recorded
photographic or digital images that depict the license plate
attached to the front or the rear of a motor vehicle that is not
operated in compliance with the instructions of the traffic-control
signal; and
(3) is designed to enforce compliance with the
instructions of the traffic-control signal by imposition of a civil
or administrative penalty against the owner of the motor vehicle.
(b) This section applies only to a civil or administrative
penalty imposed on the owner of a motor vehicle by a local authority
that operates or contracts for the operation of a photographic
traffic signal enforcement system with respect to a highway under
its jurisdiction or that operates or contracts for the operation of
any other type of electronic traffic law enforcement system
consisting of a camera system that automatically produces one or
more recorded photographs or digital images of the license plate on
a motor vehicle or the operator of a motor vehicle.
(c) Of the gross amount received by a local authority from
the imposition of a civil or administrative penalty against the
owner of a motor vehicle, the local authority may retain $1 and
shall remit the remainder to the comptroller for deposit to the
credit of the general revenue fund.
(d) The comptroller shall adopt rules and forms to implement
and enforce this section.
SECTION 7.02. Section 542.405, Transportation Code, as
added by this article, applies to revenue received by a local
authority unit of this state from the imposition of a civil or
administrative penalty on or after the effective date of this Act,
regardless of whether the penalty was imposed before, on, or after
the effective date of this Act.
ARTICLE 8. UNCLAIMED PROPERTY
SECTION 8.01. Subchapter H, Chapter 74, Property Code, is
amended by adding Section 74.7085 to read as follows:
Sec. 74.7085. HEARING. (a) If, after an examination of
records under Section 74.702, the comptroller determines that a
person holds unclaimed property that should have been delivered to
the comptroller as provided by this chapter, the person may
petition the comptroller for a hearing on that determination and on
the imposition of any interest or penalty resulting from that
determination.
(b) A person must file a petition for a hearing with the
comptroller under this section not later than the 30th day after the
date the determination is made. If a petition for a hearing is not
filed before the expiration of the period provided by this
subsection, the determination is final on the expiration of that
period.
(c) At the time a person files a petition for a hearing under
Subsection (b), the person must pay to the comptroller a hearing fee
in the amount of $50, which the comptroller shall use for the
purpose of administering hearings under this section.
SECTION 8.02. Subchapter A, Chapter 74, Property Code, is
amended by adding Section 74.002 to read as follows:
Sec. 74.002. SINGLE BUSINESS ENTERPRISE DOCTRINE
INAPPLICABLE. The single business enterprise doctrine does not
apply to this chapter.
SECTION 8.03. The change in law made by Section 74.7085,
Property Code, as added by this article, applies only to a
determination by the comptroller made on or after the effective
date of this Act. A determination by the comptroller made before
the effective date of this Act is governed by the law in effect on
the date the determination was made, and the former law is continued
in effect for that purpose.
SECTION 8.04. Section 74.002, Property Code, as added by
this article, is intended only to clarify existing law with respect
to Chapter 74, Property Code.
ARTICLE 9. TEXAS ECONOMIC DEVELOPMENT ACT
SECTION 9.01. Section 313.007, Tax Code, is amended to read
as follows:
Sec. 313.007. EXPIRATION. Subchapters B, C, and D expire
December 31, 2011 [2007].
SECTION 9.02. Section 313.024(a), Tax Code, is amended to
read as follows:
(a) This subchapter and Subchapters C and D apply only to
property owned by an entity [a corporation or limited liability
company] to which Chapter 171 [Section 171.001] applies.
SECTION 9.03. Section 313.024(b), Tax Code, as amended by
House Bill No. 2201, Acts of the 79th Legislature, Regular Session,
2005, is amended to read as follows:
(b) To be eligible for a limitation on appraised value under
this subchapter, the entity [corporation or limited liability
company] must use the property in connection with:
(1) manufacturing;
(2) research and development;
(3) a clean coal project, as defined by Section 5.001,
Water Code;
(4) a gasification project for a coal and biomass
mixture; or
(5) renewable energy electric generation.
SECTION 9.04. Section 313.051, Tax Code, is amended to read
as follows:
Sec. 313.051. APPLICABILITY. (a) This subchapter applies
only to a school district that has territory in:
(1) a strategic investment area, as defined by Section
171.721; [, Tax Code,] or
(2) [in] a county:
(A) [(1)] that has a population of less than
50,000;
(B) [(2)] that is not partially or wholly located
in a metropolitan statistical area; and
(C) [(3)] in which, from 1990 to 2000, according
to the federal decennial census, the population:
(i) [(A)] remained the same;
(ii) [(B)] decreased; or
(iii) [(C)] increased, but at a rate of not
more than three percent per annum.
(a-1) Notwithstanding Subsection (a), if on January 1,
2002, this subchapter applied to a school district in whose
territory is located a federal nuclear facility, this subchapter
continues to apply to the school district regardless of whether the
school district ceased or ceases to be described by Subsection (a)
after that date.
(b) The governing body of a school district to which this
subchapter applies may enter into an agreement in the same manner as
a school district to which Subchapter B applies may do so under
Subchapter B, subject to Sections 313.052-313.054. Except as
otherwise provided by this subchapter, the provisions of Subchapter
B apply to a school district to which this subchapter applies. For
purposes of this subchapter, a property owner is required to create
only at least 10 new jobs on the owner's qualified property. At
least 80 percent of all the new jobs created must be qualifying jobs
as defined by Section 313.021(3), except that, for a school
district described by Subsection (a)(2), each qualifying job must
pay at least 110 percent of the average weekly wage for
manufacturing jobs in the region designated for the regional
planning commission, council of governments, or similar regional
planning agency created under Chapter 391, Local Government Code,
in which the district is located.
SECTION 9.05. Section 313.051(b), Tax Code, as amended by
this Act, applies only to a limitation on the appraised value for
school district maintenance and operations ad valorem tax purposes
for which the owner files an application on or after the effective
date of this Act. A limitation on the appraised value for school
district maintenance and operations ad valorem tax purposes for
which the owner files an application before the effective date of
this Act is governed by the law as it existed immediately before the
effective date of this Act, and that law is continued in effect for
that purpose.
ARTICLE 10. SEXUALLY ORIENTED BUSINESS ADMISSIONS FEE
SECTION 10.01. Sections 47.001-47.004, Business & Commerce
Code, as renumbered by House Bill No. 2018, Acts of the 79th
Legislature, Regular Session, 2005, are designated as Subchapter A,
Chapter 47, Business & Commerce Code, and a subchapter heading is
added to read as follows:
SUBCHAPTER A. RESTRICTION ON OWNERS, OPERATORS, MANAGERS, OR
EMPLOYEES OF SEXUALLY ORIENTED BUSINESSES
SECTION 10.02. Section 47.001, Business & Commerce Code, as
renumbered by House Bill No. 2018, Acts of the 79th Legislature,
Regular Session, 2005, is amended to read as follows:
Sec. 47.001. DEFINITIONS. In this subchapter [chapter]:
(1) "Sex offender" means a person who has been
convicted of or placed on deferred adjudication for an offense for
which a person is subject to registration under Chapter 62, Code of
Criminal Procedure.
(2) "Sexually oriented business" has the meaning
assigned by Section 243.002, Local Government Code.
SECTION 10.03. Chapter 47, Business & Commerce Code, as
renumbered by House Bill No. 2018, Acts of the 79th Legislature,
Regular Session, 2005, is amended by adding Subchapter B to read as
follows:
SUBCHAPTER B. FEE ON ADMISSIONS TO CERTAIN SEXUALLY
ORIENTED BUSINESSES
Sec. 47.051. DEFINITIONS. In this subchapter:
(1) "Nude" means:
(A) entirely unclothed; or
(B) clothed in a manner that leaves uncovered or
visible through less than fully opaque clothing any portion of the
breasts below the top of the areola of the breasts, if the person is
female, or any portion of the genitals or buttocks.
(2) "Sexually oriented business" has the meaning
assigned by Section 243.002, Local Government Code.
Sec. 47.052. ADMISSION FEE. (a) A fee is imposed on a
sexually oriented business that provides live nude entertainment or
performances in an amount equal to $4 for each entry by each
customer admitted to the business.
(b) For purposes of this section, the amount that a business
charges a customer for admission includes a membership fee or a
multiple-entry admission charge.
Sec. 47.053. REMISSION OF FEE TO COMPTROLLER; DEPOSIT IN
GENERAL REVENUE. A sexually oriented business shall remit the fee
imposed by Section 47.052 to the comptroller each quarter in the
manner prescribed by the comptroller for deposit to the credit of
the general revenue fund.
Sec. 47.054. ADMINISTRATION, COLLECTION, AND ENFORCEMENT.
The comptroller shall adopt any necessary rules for the
administration, payment, collection, and enforcement of the fee
imposed by this chapter.
SECTION 10.04. Subchapter B, Chapter 47, Business &
Commerce Code, as added by this article, expires August 31, 2007.
SECTION 10.05. The fee imposed by Section 47.052, Business &
Commerce Code, as added by this article, applies only to a
customer admitted to a sexually oriented business on or after the
effective date of this article.
SECTION 10.06. This article takes effect January 1, 2006.
ARTICLE 11. EFFECTIVE DATE
SECTION 11.01. (a) Except as provided by Subsection (b) of
this section, this Act takes effect September 1, 2005, if this Act
receives a vote of two-thirds of all the members elected to each
house, as provided by Section 39, Article III, Texas Constitution.
If this Act does not receive the vote necessary for effect on that
date, this Act takes effect on the 91st day after the last day of the
legislative session.
(b) If a section, part, or article of this Act provides a
different effective date than provided by Subsection (a) of this
section, that section, part, or article takes effect according to
its terms.