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By: Keffer of Eastland, Grusendorf H.B. No. 3
(Senate Sponsor - Ogden)
(In the Senate - Received from the House March 16, 2005;
March 22, 2005, read first time and referred to Committee on
Finance; May 6, 2005, reported adversely, with favorable Committee
Substitute by the following vote: Yeas 11, Nays 4; May 6, 2005,
sent to printer.)
COMMITTEE SUBSTITUTE FOR H.B. No. 3 By: Ogden
A BILL TO BE ENTITLED
AN ACT
relating to financing public schools in this state and reducing
school property taxes.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
ARTICLE 1. PUBLIC SCHOOL FINANCE
PART A. EDUCATION FUNDING AND SCHOOL PROPERTY TAX RELIEF
SECTION 1A.01. Section 41.002(e), Education Code, is
amended to read as follows:
(e) Notwithstanding Subsection (a), and except as provided
by Subsection (g), in accordance with a determination of the
commissioner, the wealth per student that a school district may
have after exercising an option under Section 41.003(2) or (3) may
not be less than the amount needed to maintain state and local
revenue in an amount equal to state and local revenue per weighted
student for maintenance and operation of the district for the
1992-1993 school year less the district's current year distribution
per weighted student from the available school fund, other than
amounts distributed under Chapter 31, if the district imposes an
effective tax rate for maintenance and operation of the district
equal to the greater of the district's current tax rate or the
maximum maintenance tax rate permitted under Section 45.003 [$1.50
on the $100 valuation of taxable property].
SECTION 1A.02. Section 41.157(d), Education Code, is
amended to read as follows:
(d) Notwithstanding Section 45.003, the consolidated taxing
district may levy, assess, and collect a maintenance tax for the
benefit of the component districts at a rate that exceeds the
maximum maintenance tax rate permitted under Section 45.003 [$1.50
per $100 valuation of taxable property] to the extent necessary to
pay contracted obligations on the lease purchase of permanent
improvements to real property entered into on or before May 12,
1993. The proposition to impose taxes at the necessary rate must be
submitted to the voters in the manner provided by Section 45.003.
SECTION 1A.03. Section 42.252(a), Education Code, is
amended to read as follows:
(a) Each school district's share of the Foundation School
Program is determined by the following formula:
LFA = TR X DPV
where:
"LFA" is the school district's local share;
"TR" is a tax rate which for each hundred dollars of valuation
is an effective tax rate of $0.76 [$0.86]; and
"DPV" is the taxable value of property in the school district
for the preceding tax year determined under Subchapter M, Chapter
403, Government Code.
SECTION 1A.04. Section 42.253, Education Code, is amended
by adding Subsection (e-2) to read as follows:
(e-2) For the 2005-2006 and 2006-2007 school years, the
limit authorized by Subsection (e) is reduced by $0.20. This
subsection expires September 1, 2007.
SECTION 1A.05. Section 42.303, Education Code, is amended
to read as follows:
Sec. 42.303. LIMITATION ON [ENRICHMENT] TAX RATE. (a) The
district [enrichment] tax rate ("DTR") under Section 42.302 may not
exceed $0.69 [$0.64] per $100 of valuation, or a greater amount for
any year provided by appropriation.
(b) Notwithstanding Subsection (a), for the 2005 tax year,
the district tax rate ("DTR") under Section 42.302 may not exceed
$0.54 per $100 of valuation. This subsection expires September 1,
2006.
SECTION 1A.06. Section 45.003, Education Code, is amended
by amending Subsection (d) and adding Subsections (e) and (f) 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, which may be not
more than $1.45 [$1.50] on the $100 valuation of taxable property in
the district, stated in the proposition.
(e) Notwithstanding Subsection (d), for the 2005 and 2006
tax years, a school district may not impose a maintenance tax at a
rate that exceeds $1.30 per $100 of valuation. A district may not
exceed the rate described by this subsection in a subsequent school
year unless authorized by a majority of the qualified voters of the
district voting at an election held for that purpose.
(f) An election held before January 1, 2005, authorizing a
maintenance tax at a rate of at least $1.30 on the $100 valuation of
taxable property in the district is sufficient to authorize a rate
of $1.30 or less for the 2005 tax year or a subsequent tax year.
SECTION 1A.07. Sections 45.006(b) and (f), Education Code,
are amended to read as follows:
(b) Notwithstanding Section 45.003, a school district may
levy, assess, and collect maintenance taxes at a rate that exceeds
the maximum maintenance tax rate permitted under Section 45.003
[$1.50 per $100 valuation of taxable property] if:
(1) additional ad valorem taxes are necessary to pay a
debt of the district that:
(A) resulted from the rendition of a judgment
against the district before May 1, 1995;
(B) is greater than $5 million;
(C) decreases a property owner's ad valorem tax
liability;
(D) requires the district to refund to the
property owner the difference between the amount of taxes paid by
the property owner and the amount of taxes for which the property
owner is liable; and
(E) is payable according to the judgment in more
than one of the district's fiscal years; and
(2) the additional taxes are approved by the voters of
the district at an election held for that purpose.
(f) The governing body of a school district that adopts a
tax rate that exceeds the maximum maintenance tax rate permitted
under Section 45.003 [$1.50 per $100 valuation of taxable property]
may set the amount of the exemption from taxation authorized by
Section 11.13(n), Tax Code, at any time before the date the
governing body adopts the district's tax rate for the tax year in
which the election approving the additional taxes is held.
SECTION 1A.08. (a) This part takes effect September 1,
2005.
(b) This part applies beginning with the 2005-2006 school
year.
PART B. [RESERVED]
PART C. REPEALER; TRANSITION; EFFECTIVE DATE
SECTION 1C.01. Effective September 1, 2005, the following
laws are repealed:
(1) Sections 1-3 and 57, Chapter 201, Acts of the 78th
Legislature, Regular Session, 2003; and
(2) Section 42.253(e-1), Education Code.
ARTICLE 2. RESTRICTIONS ON PROPERTY
VALUATION AND STATE AID TO
SCHOOL DISTRICTS
SECTION 2.01. Section 11.431(a), Tax Code, is amended to
read as follows:
(a) The chief appraiser shall accept and approve or deny an
application for a residence homestead exemption after the deadline
for filing the application [it] has passed if the application [it]
is filed not later than [one year after] the delinquency date for
the taxes on the homestead.
SECTION 2.02. Section 25.25, Tax Code, is amended by
amending Subsections (c), (e), (l), and (m) and adding Subsection
(c-1) to read as follows:
(c) The appraisal review board, on motion of the chief
appraiser or of a property owner, may direct by written order
changes in the appraisal roll for any of the five preceding years to
correct:
(1) clerical errors relating to the qualification of
property for an exemption under Section 11.13 that affect a
property owner's liability for a tax imposed in that tax year;
(2) multiple appraisals of a property in that tax
year; or
(3) the inclusion of property that does not exist in
the form or at the location described in the appraisal roll.
(c-1) The appraisal review board, on motion of the chief
appraiser or of a property owner, may direct by written order
changes in the appraisal roll to correct clerical errors that
affect a property owner's liability for a tax imposed on the owner's
residence homestead other than clerical errors described by
Subsection (c)(1). A motion under this subsection must be filed
before the first anniversary of the deadline under Section 41.12(a)
for approval by the appraisal review board of the appraisal records
for the year in which the tax is imposed.
(e) If the chief appraiser and the property owner do not
agree to the correction before the 15th day after the date the
motion is filed, a party bringing a motion under Subsection (c),
(c-1), or (d) is entitled on request to a hearing on and a
determination of the motion by the appraisal review board. A party
bringing a motion under this section must describe the error or
errors that the motion is seeking to correct. Not later than 15
days before the date of the hearing, the board shall deliver written
notice of the date, time, and place of the hearing to the chief
appraiser, the property owner, and the presiding officer of the
governing body of each taxing unit in which the property is located.
The chief appraiser, the property owner, and each taxing unit are
entitled to present evidence and argument at the hearing and to
receive written notice of the board's determination of the motion.
A property owner who files the motion must comply with the payment
requirements of Section 42.08 or forfeit the right to a final
determination of the motion.
(l) A motion may be filed under Subsection (c) or (c-1)
regardless of whether, for a tax year to which the motion relates,
the owner of the property protested under Chapter 41 an action
relating to the value of the property that is the subject of the
motion.
(m) The hearing on a motion under Subsection (c), (c-1), or
(d) shall be conducted in the manner provided by Subchapter C,
Chapter 41.
SECTION 2.03. Section 42.253(i), Education Code, is amended
to read as follows:
(i) Not later than March 1 each year, the commissioner shall
determine the actual amount of state funds to which each school
district is entitled under the allocation formulas in this chapter
for the current school year and shall compare that amount with the
amount of the warrants issued to each district for that year.
Except as provided by Section 42.257(b), if [If] the amount of the
warrants differs from the amount to which a district is entitled
because of variations in the district's tax rate, student
enrollment, or taxable value of property, the commissioner shall
adjust the district's entitlement for the next fiscal year
accordingly.
SECTION 2.04. Section 42.257(b), Education Code, is amended
to read as follows:
(b) If the district would have received a greater amount
from the foundation school fund for the applicable school year
using the adjusted value, the commissioner shall add the difference
to subsequent distributions to the district from the foundation
school fund. If the final determination is made after the last day
of the state fiscal year corresponding to the tax year for which the
determination is made, the commissioner shall add one-fifth of the
difference to the September payment to the district of the current
year entitlement from the foundation school fund for each of the
next five years. An adjustment does not affect the local fund
assignment of any other district.
SECTION 2.05. Section 42.259(f), Education Code, is amended
to read as follows:
(f) Except as provided by Section 42.257(b) or by Subsection
(c)(8) or (d)(3) of this section, any previously unpaid additional
funds from prior years owed to a district shall be paid to the
district together with the September payment of the current year
entitlement.
SECTION 2.06. Section 403.302(h), Government Code, is
amended to read as follows:
(h) On request of the commissioner of education or a school
district, the comptroller may audit the total taxable value of
property in a school district and may revise the annual study
findings. The request for audit is limited to corrections and
changes in a school district's appraisal roll that occurred after
preliminary certification of the annual study findings by the
comptroller. The [Except as otherwise provided by this subsection,
the] request for audit must be filed with the comptroller not later
than the first [third] anniversary of the date of the final
certification of the annual study findings. [The request for audit
may be filed not later than the first anniversary of the date the
chief appraiser certifies a change to the appraisal roll if the
chief appraiser corrects the appraisal roll under Section 25.25 or
42.41, Tax Code, and the change results in a material reduction in
the total taxable value of property in the school district.] The
comptroller shall certify the findings of the audit to the
commissioner of education.
SECTION 2.07. (a) The change in law made by this article to
Section 11.431, Tax Code, applies only to an application for a
residence homestead exemption for the 2005 and subsequent tax
years. Section 11.431, Tax Code, as that section existed
immediately before the effective date of this article, applies to
an application for a residence homestead exemption for the 2004 tax
year and is continued in effect for that purpose.
(b) The change in law made by this article to Section 25.25,
Tax Code, does not affect a motion filed under that section before
the effective date of this article.
SECTION 2.08. This article takes effect July 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 September 1, 2005.
ARTICLE 3. STATE PROPERTY TAX
SECTION 3.01. Chapter 45, Education Code, is amended by
adding Subchapter I to read as follows:
SUBCHAPTER I. STATE AD VALOREM TAX
Sec. 45.251. STATE AD VALOREM TAX. (a) A state ad valorem
tax for elementary and secondary school purposes is imposed on all
taxable property in this state.
(b) The tax is imposed at the rate of $1.10 per $100 of
taxable value of property subject to the tax.
(c) Except as otherwise provided by law, the state shall be
treated, for purposes of the state ad valorem tax, as a taxing unit
under Title 1, Tax Code.
Sec. 45.252. APPRAISAL OF PROPERTY. (a) Property subject
to the state ad valorem tax shall be appraised by the appraisal
district that appraises property for taxation by the school
district in which the property has taxable situs under Chapter 21,
Tax Code.
(b) Property subject to the state ad valorem tax shall be
appraised in the manner provided by Title 1, Tax Code, for the
appraisal of property that is subject to ad valorem taxation by a
school district.
Sec. 45.253. TAX COLLECTION. (a) The assessor and
collector for each school district shall assess and collect, as
applicable, state ad valorem taxes imposed on property included on
the appraisal roll for state taxation certified to the comptroller
and to the assessor for that school district under Section 26.01,
Tax Code, unless the governing body of the school district
contracts with an official, taxing unit, or political subdivision
of this state for the assessment or collection of the ad valorem
taxes of the district, in which event the official, taxing unit, or
political subdivision that assess or collects taxes for the school
district shall also assess or collect, as applicable, the state ad
valorem taxes.
(b) Each assessor or collector of state ad valorem taxes is
entitled to be reimbursed by the comptroller for the actual costs
incurred by the assessor or collector in assessing or collecting
state ad valorem taxes. However, an assessor or collector is not
entitled to be reimbursed for any amount that is greater than the
additional incremental costs incurred in assessing or collecting
the state ad valorem taxes.
(c) The comptroller shall:
(1) prescribe methods of accounting for and remitting
state ad valorem taxes;
(2) prescribe methods for establishing an assessor's
or collector's additional incremental costs incurred in assessing
or collecting state ad valorem taxes;
(3) prescribe and furnish forms for periodic reports
relating to state ad valorem taxes; and
(4) periodically examine the records of each assessor
or collector of state ad valorem taxes to verify the accuracy of any
reports required under this subsection.
(d) The comptroller may require an assessor or collector of
state ad valorem taxes to give a bond to the state, conditioned on
the faithful performance of the person's duties as assessor or
collector, in the amount the comptroller considers appropriate to
protect the state from potential losses with regard to assessment
or collection of state ad valorem taxes.
Sec. 45.254. DUTIES AND POWERS OF COMPTROLLER. (a) Except
as otherwise provided by this subchapter, a duty imposed on or power
granted to the governing body of a taxing unit by Title 1, Tax Code,
may, for purposes of the state ad valorem tax, be exercised by the
comptroller. A reference to the presiding officer of a governing
body in Title 1, Tax Code, is a reference to the comptroller for the
purposes of the state tax.
(b) The comptroller may delegate to the assessor or
collector for a school district any function of the comptroller
with respect to the assessment or collection of the state ad valorem
tax and may designate a school district assessor or collector as the
comptroller's agent for purposes of administration of assessment or
collection of the state ad valorem tax.
Sec. 45.255. ADMINISTRATION AND REFUND ACCOUNTS. The
comptroller shall deposit to the credit of the general revenue fund
in appropriately designated accounts an amount of revenue collected
from the state ad valorem tax to pay for the expenses of
administering this subchapter and for the payment of tax refunds
that may become payable.
Sec. 45.256. NONAPPLICABILITY OF CERTAIN OTHER TAX LAWS.
Title 2, Tax Code, does not apply to the state ad valorem tax.
Sec. 45.257. TAX INCREMENT FINANCING. Except as otherwise
provided by Section 311.0131, Tax Code, the state may not pay any
portion of the tax increment produced by the state into the tax
increment fund for a reinvestment zone designated under Chapter
311, Tax Code.
Sec. 45.258. TAX ABATEMENT. (a) Except as otherwise
provided by this section, the state may not participate in tax
abatement under Section 311.0125 or 311.013(g) or Chapter 312, Tax
Code.
(b) If school district property taxes on property located in
the taxing jurisdiction of a school district are abated under a tax
abatement agreement entered into by the school district under
Chapter 312, Tax Code, the terms of the agreement regarding the
portion of the value of the property that is to be exempted from
taxation in each year of the agreement apply to the taxation of the
property by the state. A modification of the agreement by the
parties to the agreement under Section 312.208, Tax Code, that
increases the portion of the value of the property that is to be
exempted from taxation or that extends the duration of the
agreement does not apply to the imposition of the state ad valorem
tax unless the modification was entered into before January 1,
2005.
Sec. 45.259. LIMITATION ON APPRAISED VALUE OF CERTAIN
PROPERTY FOR STATE TAXATION. This section applies only in
connection with property for which before April 1, 2005, the owner
of the property has submitted to a school district an application
under Section 313.025, Tax Code, for a limitation on appraised
value under Subchapter B or C, Chapter 313, Tax Code, that is
subsequently approved by the district, and applies only to the
amount stated in the application. In each tax year in which the
appraised value of the property is subject to the limitation, the
appraised value of the property for purposes of the state ad valorem
tax is the same as the appraised value of the property for school
district tax purposes.
Sec. 45.260. TAX RELIEF FOR RESIDENCE HOMESTEADS. (a) In
this section, "residence homestead" has the meaning assigned by
Section 11.13, Tax Code.
(b) The governing body of a school district, before July 1
and in the manner required for official action, may direct the
collector for the district to pay on behalf of the property owner a
specified portion, not to exceed 20 percent, of the state ad valorem
tax imposed for the then current tax year on a residence homestead
that is also taxed by the school district, if the remaining amount
of the state ad valorem tax imposed on the residence homestead is
paid before the delinquency date.
(c) If the governing body of a school district takes action
under Subsection (b), in a tax bill for a residence homestead sent
under Section 31.01, Tax Code, in addition to the information
required by that section, the assessor for the school district
shall state the total amount of state ad valorem taxes due and
inform the person that the school district will pay a portion of
that amount, specified in the tax bill, if the remaining amount of
the state ad valorem taxes is paid before the delinquency date.
(d) A school district may use any available funds, including
funds received from the state under the Foundation School Program,
to make a payment authorized under this section.
SECTION 3.02. Section 6.03(d), Tax Code, is amended to read
as follows:
(d) The voting entitlement of a taxing unit that is entitled
to vote for directors is determined by dividing the total dollar
amount of property taxes imposed in the district by the taxing unit
for the preceding tax year by the sum of the total dollar amount of
property taxes imposed in the district for that year by each taxing
unit that is entitled to vote, by multiplying the quotient by 1,000,
and by rounding the product to the nearest whole number. That
number is multiplied by the number of directorships to be filled. A
taxing unit participating in two or more districts is entitled to
vote in each district in which it participates, but only the taxes
imposed in a district are used to calculate voting entitlement in
that district. In calculating the voting entitlement of a taxing
unit entitled to vote for directors, state taxes imposed in a school
district are treated as if those taxes were imposed by the school
district.
SECTION 3.03. Subchapter A, Chapter 6, Tax Code, is amended
by adding Section 6.038 to read as follows:
Sec. 6.038. STATE PARTICIPATION. (a) The comptroller and
the state do not participate in the election of the board of
directors of an appraisal district, the governance or management of
the district, or the determination of the district's finances and
budget.
(b) The comptroller by rule shall establish guidelines and
criteria under which, if the comptroller finds that generally
accepted appraisal standards and practices were not used by the
appraisal district appraising property subject to the state ad
valorem tax or that the appraised values assigned to property
subject to that tax are invalid, the comptroller may:
(1) withhold payment of all or part of the portion of
the amount of the budget of the appraisal district that is allocated
to the state until the district takes appropriate actions to remedy
the deficiencies in appraisals found by the comptroller; or
(2) direct that all or any part of the portion of the
amount of the budget of the district allocated to the state be
applied to remedying those deficiencies.
SECTION 3.04. Section 6.06(d), Tax Code, is amended to read
as follows:
(d) The state and each [Each] taxing unit participating in
the district are each [is] allocated a portion of the amount of the
budget equal to the proportion that the total dollar amount of
property taxes imposed in the district by the state or taxing unit
for the tax year in which the budget proposal is prepared bears to
the sum of the total dollar amount of property taxes imposed in the
district by the state and each participating unit for that year.
For purposes of this subsection, only state ad valorem taxes
imposed in a school district or portion of a school district for
which the appraisal district appraises property for taxation are
considered as state ad valorem taxes imposed in the district. If a
taxing unit participates in two or more districts, only the taxes
imposed in a district are used to calculate the unit's cost
allocations in that district. If the number of real property
parcels in a taxing unit is less than 5 percent of the total number
of real property parcels in the district and the taxing unit imposes
in excess of 25 percent of the total amount of the property taxes
imposed in the district by all of the participating taxing units for
a year, the unit's allocation may not exceed a percentage of the
appraisal district's budget equal to three times the unit's
percentage of the total number of real property parcels appraised
by the district.
SECTION 3.05. Sections 11.13(b) and (c), Tax Code, are
amended to read as follows:
(b) An adult is entitled to exemption from taxation by the
state for elementary and secondary public school purposes or by a
school district of $15,000 of the appraised value of the adult's
residence homestead, except that $10,000 of the exemption does not
apply to an entity operating under former Chapter 17, 18, 25, 26,
27, or 28, Education Code, as those chapters existed on May 1, 1995,
as permitted by Section 11.301, Education Code.
(c) In addition to the exemption provided by Subsection (b)
[of this section], an adult who is disabled or is 65 years of age or
older is entitled to an exemption from taxation by the state for
elementary and secondary public school purposes or by a school
district of $10,000 of the appraised value of the adult's [his]
residence homestead.
SECTION 3.06. Section 11.14, Tax Code, is amended by adding
Subsection (f) to read as follows:
(f) Subsection (c) does not apply to the comptroller or to
the state ad valorem tax.
SECTION 3.07. Section 11.251, Tax Code, is amended by
adding Subsection (l) to read as follows:
(l) The exemption provided by Subsection (b) does not apply
to the state ad valorem tax unless the property is exempt from that
tax under Section 1-j(d), Article VIII, Texas Constitution.
SECTION 3.08. The heading to Section 11.26, Tax Code, is
amended to read as follows:
Sec. 11.26. LIMITATION OF SCHOOL TAXES [TAX] ON HOMESTEADS
OF ELDERLY OR DISABLED.
SECTION 3.09. Section 11.26, Tax Code, is amended by
amending Subsections (a), (b), (g), (h), (j), and (k) and adding
Subsections (a-1) and (g-1) to read as follows:
(a) The tax officials shall appraise the property to which
this section applies and calculate taxes as on other property, but
if the tax so calculated exceeds the limitation imposed by this
section, the tax imposed is the amount of the tax as limited by this
section, except as otherwise provided by this section. The state or
a [A] school district may not increase the total annual amount of ad
valorem tax it imposes on the residence homestead of an individual
65 years of age or older or on the residence homestead of an
individual who is disabled, as defined by Section 11.13, above the
amount of the tax it imposed in the first tax year in which the
individual qualified that residence homestead for the applicable
exemption provided by Section 11.13(c) for an individual who is 65
years of age or older or is disabled. If the individual qualified
that residence homestead for the exemption after the beginning of
that first year and the residence homestead remains eligible for
the same exemption for the next year, and if the state or school
district taxes imposed on the residence homestead in the next year
are less than the amount of taxes the state or school district, as
applicable, imposed in that first year, the state or [a] school
district may not subsequently increase the total annual amount of
ad valorem taxes it imposes on the residence homestead above the
amount it imposed in the year immediately following the first year
for which the individual qualified that residence homestead for the
same exemption, except as provided by Subsection (b).
(a-1) If the first tax year the individual qualified the
residence homestead for the exemption provided by Section 11.13(c)
for individuals 65 years of age or older was a tax year before the
2006 [1997] tax year, except as provided by Subsection (b):
(1) the amount of the limitation provided by this
section on state taxes is the amount of tax the school district in
which the property is located imposed for the 2005 [1996] tax year
[less an amount equal to the amount determined by multiplying
$10,000 times the tax rate of the school district for the 1997 tax
year,] plus any 2006 state [1997] tax attributable to improvements
made in 2005 [1996], other than improvements made to comply with
governmental regulations or repairs; and
(2) the amount of the limitation provided by this
section on school district taxes is the amount of tax the school
district imposed for the 2005 tax year less the amount of state
taxes imposed in the 2006 tax year, plus any 2006 school taxes
attributable to improvements made in 2005, other than improvements
made to comply with governmental regulations or repairs.
(b) If an individual makes improvements to the individual's
residence homestead, other than improvements required to comply
with governmental requirements or repairs, the state or the school
district may increase the tax on the homestead in the first year the
value of the homestead is increased on the appraisal roll because of
the enhancement of value by the improvements. The amount of the tax
increase is determined by applying the current tax rate to the
difference in the assessed value of the homestead with the
improvements and the assessed value it would have had without the
improvements. A limitation imposed by this section then applies to
the increased amount of tax until more improvements, if any, are
made.
(g) Except as provided by Subsection (b), if an individual
who receives a limitation on tax increases imposed by this section,
including a surviving spouse who receives a limitation under
Subsection (i), subsequently qualifies a different residence
homestead for the same exemption under Section 11.13, the state or a
school district may not impose ad valorem taxes on the subsequently
qualified homestead in a year in an amount that exceeds the amount
of taxes the state or the school district would have imposed on the
subsequently qualified homestead in the first year in which the
individual receives that same exemption for the subsequently
qualified homestead had the limitation on tax increases imposed by
this section not been in effect, multiplied by a fraction the
numerator of which is the total amount of [school district] taxes
imposed by the state or the school district, as applicable, on the
former homestead in the last year in which the individual received
that same exemption for the former homestead and the denominator of
which is the total amount of taxes the state or the school district,
as applicable, [taxes that] would have [been] imposed on the former
homestead in the last year in which the individual received that
same exemption for the former homestead had the limitation on tax
increases imposed by this section not been in effect.
(g-1) Subsection (g) does not apply to a residence homestead
to which this subsection applies. Except as provided by Subsection
(b), if an individual who receives a limitation on tax increases
imposed by this section in a tax year before the 2006 tax year,
including a surviving spouse who receives a limitation under
Subsection (i), subsequently qualifies a different residence
homestead for an exemption under Section 11.13(c) and the first
year in which the subsequently qualified homestead qualifies for
the exemption is a tax year after the 2005 tax year:
(1) the state may not impose taxes on the subsequently
qualified homestead in an amount that exceeds the amount of taxes
the state would have imposed on the subsequently qualified
homestead in the first year in which the individual receives that
exemption for the subsequently qualified homestead had the
limitation on tax increases imposed by this section not been in
effect, multiplied by a fraction the numerator of which is the total
amount of school district taxes imposed on the former homestead in
the last year in which the individual received that exemption for
the former homestead and the denominator of which is the total
amount of school district taxes that would have been imposed on the
former homestead in the last year in which the individual received
that exemption for the former homestead had the limitations on tax
increases imposed by this section not been in effect; and
(2) the school district may not impose taxes on the
subsequently qualified homestead in an amount that exceeds the
positive amount, if any, by which the limitation on state taxes
calculated under Subdivision (1) exceeds the amount of state taxes
imposed in the first year in which the subsequently qualified
homestead receives the exemption.
(h) An individual who receives a limitation on tax increases
under this section, including a surviving spouse who receives a
limitation under Subsection (i), and who subsequently qualifies a
different residence homestead for an exemption under Section
11.13(c) [11.13], or an agent of the individual, is entitled to
receive from the chief appraiser of the appraisal district in which
the former homestead was located a written certificate providing
the information necessary to determine whether the individual may
qualify for that same limitation on the subsequently qualified
homestead under Subsection (g) or (g-1) and to calculate the amount
of taxes the state and the school district may impose on the
subsequently qualified homestead.
(j) If an individual who qualifies for an exemption provided
by Section 11.13(c) for an individual 65 years of age or older dies
in the first year in which the individual qualified for the
exemption and the individual first qualified for the exemption
after the beginning of that year, except as provided by Subsection
(k), the amount to which the surviving spouse's state or school
district taxes are limited under Subsection (i) is the amount of
state or school district taxes, as applicable, imposed on the
residence homestead in that year determined as if the individual
qualifying for the exemption had lived for the entire year.
(k) If in the first tax year after the year in which an
individual dies in the circumstances described by Subsection (j)
the amount of [school district] taxes imposed by the state or the
school district on the residence homestead of the surviving spouse
is less than the amount of state or school district taxes, as
applicable, imposed in the preceding year as limited by Subsection
(j), in a subsequent tax year the surviving spouse's state or school
district taxes on that residence homestead are limited to the
amount of taxes imposed by the state or the school district, as
applicable, in that first tax year after the year in which the
individual dies.
SECTION 3.10. Section 21.03(a), Tax Code, is amended to
read as follows:
(a) If personal property that is taxable by this state or a
taxing unit of this state is used continually outside this state,
whether regularly or irregularly, the appraisal office shall
allocate to this state the portion of the total market value of the
property that fairly reflects its use in this state.
SECTION 3.11. Section 21.031(a), Tax Code, is amended to
read as follows:
(a) If a vessel or other watercraft that is taxable by this
state or a taxing unit of this state is used continually outside
this state, whether regularly or irregularly, the appraisal office
shall allocate to this state the portion of the total market value
of the vessel or watercraft that fairly reflects its use in this
state. The appraisal office shall not allocate to this state the
portion of the total market value of the vessel or watercraft that
fairly reflects its use in another state or country, in
international waters, or beyond the Gulfward boundary of this
state.
SECTION 3.12. Section 22.28, Tax Code, is amended to read as
follows:
Sec. 22.28. PENALTY FOR DELINQUENT REPORT. (a) Except as
otherwise provided by Section 22.30, the chief appraiser shall
impose a penalty on a person who fails to timely file a rendition
statement or property report required by this chapter in an amount
equal to 10 percent of the total amount of taxes imposed on the
property for that year by the state, if the property has taxable
situs in a school district or portion of a school district for which
the appraisal district appraises property for taxation, and by the
other taxing units participating in the appraisal district.
(b) The chief appraiser may retain a portion of a penalty
collected under this section, not to exceed 20 percent of the amount
of the penalty, to cover the chief appraiser's costs of collecting
the penalty. The chief appraiser shall distribute the remainder of
the penalty to the state and each other taxing unit participating in
the appraisal district that imposes taxes on the property in
proportion to the state's or the taxing unit's share of the total
amount of taxes imposed on the property by the state and all other
taxing units participating in the district used to determine the
amount of the penalty.
SECTION 3.13. Sections 22.29(a) and (d), Tax Code, are
amended to read as follows:
(a) The chief appraiser shall impose an additional penalty
on the person equal to 50 percent of the total amount of taxes
imposed on the property for the tax year of the statement or report
by the state, if the property has taxable situs in a school district
or portion of a school district for which the appraisal district
appraises property for taxation, and by the other taxing units
participating in the appraisal district if it is finally determined
by a court that:
(1) the person filed a false statement or report with
the intent to commit fraud or to evade the tax; or
(2) the person alters, destroys, or conceals any
record, document, or thing, or presents to the chief appraiser any
altered or fraudulent record, document, or thing, or otherwise
engages in fraudulent conduct, for the purpose of affecting the
course or outcome of an inspection, investigation, determination,
or other proceeding before the appraisal district.
(d) The chief appraiser may retain a portion of a penalty
collected under this section, not to exceed 20 percent of the amount
of the penalty, to cover the chief appraiser's costs of collecting
the penalty. The chief appraiser shall distribute the remainder of
the penalty to the state and each other taxing unit participating in
the appraisal district that imposes taxes on the property in
proportion to the state's or the taxing unit's share of the total
amount of taxes imposed on the property by the state and all other
taxing units participating in the district used to determine the
amount of the penalty.
SECTION 3.14. Section 23.46(d), Tax Code, is amended to
read as follows:
(d) A tax lien attaches to the land on the date the sale or
change of use occurs to secure payment of the additional tax and
interest imposed by Subsection (c) [of this section] and any
penalties incurred. The lien exists in favor of the state and all
taxing units for which the additional tax is imposed.
SECTION 3.15. Section 23.55(b), Tax Code, is amended to
read as follows:
(b) A tax lien attaches to the land on the date the change of
use occurs to secure payment of the additional tax and interest
imposed by this section and any penalties incurred. The lien exists
in favor of the state and all taxing units for which the additional
tax is imposed.
SECTION 3.16. Section 23.76(b), Tax Code, is amended to
read as follows:
(b) A tax lien attaches to the land on the date the change of
use occurs to secure payment of the additional tax and interest
imposed by this section and any penalties incurred. The lien exists
in favor of the state and all taxing units for which the additional
tax is imposed.
SECTION 3.17. Section 23.86(b), Tax Code, is amended to
read as follows:
(b) A tax lien attaches to the land on the date the change of
use occurs or the deed restriction expires to secure payment of the
additional tax and interest imposed by this section and any
penalties incurred. The lien exists in favor of the state and all
taxing units for which the additional tax is imposed.
SECTION 3.18. Section 23.96(b), Tax Code, is amended to
read as follows:
(b) A tax lien attaches to the property on the date the deed
restriction expires to secure payment of the additional tax and
interest imposed by this section and any penalties incurred. The
lien exists in favor of the state and all taxing units for which the
additional tax is imposed.
SECTION 3.19. Section 23.9807(c), Tax Code, is amended to
read as follows:
(c) A tax lien attaches to the land on the date the change of
use occurs to secure payment of the additional tax and interest
imposed by this section and any penalties incurred. The lien exists
in favor of the state and all taxing units for which the additional
tax is imposed.
SECTION 3.20. Section 25.19(b), Tax Code, as amended by
Chapters 1358 and 1517, Acts of the 76th Legislature, Regular
Session, 1999, is reenacted and amended to read as follows:
(b) The chief appraiser shall separate real from personal
property and include in the notice for each:
(1) a list of the taxing units other than the state in
which the property is taxable and, if the property is appraised by
the appraisal district for state taxation, a statement that the
property is subject to the state tax for elementary and secondary
public school purposes;
(2) the appraised value of the property in the
preceding year;
(3) the taxable value of the property in the preceding
year for:
(A) each taxing unit taxing the property; and
(B) state taxation for elementary and secondary
public school purposes, if the property is appraised by the
appraisal district for state taxation;
(4) the appraised value of the property for the
current year and the kind and amount of each partial exemption, if
any, approved for the current year;
(5) if the appraised value is greater than it was in
the preceding year, the amount of tax that would be imposed on the
property on the basis of the tax rate for each taxing unit other
than the state for the preceding year;
(6) in italic typeface, the following statement: "The
Texas Legislature does not set the amount of your local taxes. Your
local property tax burden is decided by your locally elected
officials, and all inquiries concerning your local taxes should be
directed to those officials";
(7) a detailed explanation of the time and procedure
for protesting the value;
(8) the date and place the appraisal review board will
begin hearing protests; and
(9) a brief explanation that the governing body of
each local taxing unit decides whether [or not] taxes on the
property will increase and the appraisal district only determines
the value of the property.
SECTION 3.21. The heading to Section 26.01, Tax Code, is
amended to read as follows:
Sec. 26.01. SUBMISSION OF ROLLS TO STATE AND TAXING UNITS.
SECTION 3.22. Sections 26.01(a), (c), and (d), Tax Code,
are amended to read as follows:
(a) By July 25, the chief appraiser shall prepare and
certify to the assessor for each taxing unit participating in the
appraisal district that part of the appraisal roll for the
appraisal district that lists the property taxable by the unit. By
that date the chief appraiser shall prepare and certify to the
comptroller and to the assessor for each school district that
participates in the appraisal district that part of the appraisal
roll for the appraisal district that lists property for which the
appraisal district appraises the property for state taxation. The
part certified to the comptroller and school district assessor is
the appraisal roll for state taxes. The part certified to the
assessor is the appraisal roll for the taxing unit. The chief
appraiser shall consult with the assessor for each taxing unit and
the comptroller and notify each taxing unit and the comptroller in
writing by April 1 of the form in which the roll will be provided to
each unit and to the comptroller.
(c) The chief appraiser shall prepare and certify to the
assessor for each taxing unit and the comptroller a listing of those
properties that [which] are taxable by that unit or the state, as
applicable, but that [which] are under protest and therefore not
included on the appraisal roll approved by the appraisal review
board and certified by the chief appraiser. This listing shall
include the appraised market value, productivity value (if
applicable), and taxable value as determined by the appraisal
district and shall also include the market value, taxable value,
and productivity value (if applicable) as claimed by the property
owner filing the protest if available. If the property owner does
not claim a value and the appraised value of the property in the
current year is equal to or less than its value in the preceding
year, the listing shall include a reasonable estimate of the market
value, taxable value, and productivity value (if applicable) that
would be assigned to the property if the taxpayer's claim is upheld.
If the property owner does not claim a value and the appraised value
of the property is higher than its appraised value in the preceding
year, the listing shall include the appraised market value,
productivity value (if applicable) and taxable value of the
property in the preceding year, except that if there is a reasonable
likelihood that the appraisal review board will approve a lower
appraised value for the property than its appraised value in the
preceding year, the chief appraiser shall make a reasonable
estimate of the taxable value that would be assigned to the property
if the property owner's claim is upheld. The taxing unit shall use
the lower value for calculations as prescribed in Sections 26.04
and 26.041 [of this code].
(d) The chief appraiser shall prepare and certify to the
assessor for each taxing unit and the comptroller a list of those
properties of which the chief appraiser has knowledge that are
reasonably likely to be taxable by that unit or the state, as
applicable, but that are not included on the appraisal roll
certified to the assessor or the comptroller under Subsection (a)
or included on the listing certified to the assessor or the
comptroller under Subsection (c). The chief appraiser shall
include on the list for each property the market value, appraised
value, and kind and amount of any partial exemptions as determined
by the appraisal district for the preceding year and a reasonable
estimate of the market value, appraised value, and kind and amount
of any partial exemptions for the current year. Until the property
is added to the appraisal roll, the assessor for a [the] taxing unit
shall include each property on the list in the calculations
prescribed by Sections 26.04 and 26.041, and for that purpose shall
use the lower market value, appraised value, or taxable value, as
appropriate, included on or computed using the information included
on the list for the property.
SECTION 3.23. Chapter 26, Tax Code, is amended by adding
Section 26.011 to read as follows:
Sec. 26.011. PROVISIONS NOT APPLICABLE TO STATE TAX.
Sections 26.04, 26.041, 26.05, 26.051, 26.06, 26.07, and 26.08 do
not apply to the state ad valorem tax or to the comptroller.
SECTION 3.24. Section 26.05, Tax Code, is amended to read as
follows:
Sec. 26.05. TAX RATE. (a) The governing body of each
taxing unit, before the later of September 30 or the 60th day after
the date the certified appraisal roll is received by the taxing
unit, shall adopt a tax rate for the current tax year and shall
notify the assessor for the unit of the rate adopted. The tax rate
consists of two components, each of which must be approved
separately. The components are:
(1) the rate that, if applied to the total taxable
value, will impose the total amount published under Section
26.04(e)(3)(C), less any amount of additional sales and use tax
revenue that will be used to pay debt service; and
(2) the rate that, if applied to the total taxable
value, will impose the amount of taxes imposed to fund maintenance
and operation expenditures for the unit in the prior year [needed to
fund maintenance and operation expenditures of the unit for the
next year]. A unit may not impose taxes that exceed the taxes
levied to fund maintenance and operation expenditures for the prior
year unless the unit does each of the following:
(A) includes in its order, ordinance, or
resolution, in type larger than all other elements of the
instrument, the following statement: "THIS TAX RATE RAISES MORE
TAXES THAN LAST YEAR'S TAX RATE. THE PROPOSED RATE WOULD RAISE
TAXES ON A $100,000 HOME BY [Insert amount]."
(B) includes on the home page of any Internet
website operated by the unit the following statement: "[Insert
name of unit] ADOPTED A TAX RATE THAT RAISES MORE TAXES THAN LAST
YEAR'S TAX RATE. THE PROPOSED RATE RAISES TAXES ON A $100,000 HOME
BY APPROXIMATELY [Insert amount]."
(b) A taxing unit may not impose property taxes in any year
until the governing body has adopted a tax rate for that year, and
the annual tax rate must be set by ordinance, resolution, or order,
depending on the method prescribed by law for adoption of a law by
the governing body. The vote on the ordinance, resolution, or order
setting the tax rate must be separate from the vote adopting the
budget. The vote that adopts a rate that exceeds the effective rate
must be a record vote.
(c) If the governing body of a taxing unit does not adopt a
tax rate before the date required by Subsection (a), the tax rate
for the taxing unit for that tax year is the lower of the effective
tax rate calculated for that tax year or the tax rate adopted by the
taxing unit for the preceding tax year. A tax rate established by
this subsection is treated as an adopted tax rate. Before the fifth
day after the establishment of a tax rate by this subsection, the
governing body of the taxing unit must ratify the applicable tax
rate in the manner required by Subsection (b).
(d) The governing body of a taxing unit other than a school
district may not adopt a tax rate that exceeds the lower of the
rollback tax rate or [103 percent of] the effective tax rate
calculated as provided by this chapter until the governing body has
held two [a] public hearings [hearing] on the proposed tax rate and
has otherwise complied with Section 26.06 and Section 26.065. The
governing body of a taxing unit shall reduce a tax rate set by law or
by vote of the electorate to the lower of the rollback tax rate or
[103 percent of] the effective tax rate and may not adopt a higher
rate unless it first complies with Section 26.06.
(e) A person who owns taxable property is entitled to an
injunction restraining the collection of taxes by a taxing unit in
which the property is taxable if the taxing unit has not complied
with the requirements of this section and the failure to comply was
not in good faith. An action to enjoin the collection of taxes must
be filed prior to the date a taxing unit delivers substantially all
of its tax bills.
(f) Except as required by the law under which an obligation
was created, the governing body may not apply any tax revenues
generated by the rate described in Subsection (a)(1) of this
section for any purpose other than the retirement of debt.
SECTION 3.25. Section 26.06, Tax Code, is amended as
follows:
Sec. 26.06. NOTICE, HEARING, AND VOTE ON TAX
INCREASE. (a) Public hearings [A public hearing] required by
Section 26.05 may not be held before the seventh day after the date
the notice of the public hearings [hearing] on the proposed tax
increase is given. The hearings [hearing] must be on a weekday that
is not a public holiday. The second hearing must take place no
sooner than three days after the first hearing. The hearings
[hearing] must be held inside the boundaries of the unit in a
publicly owned building or, if a suitable publicly owned building
is not available, in a suitable building to which the public
normally has access. At the hearings [hearing], the governing body
must afford adequate opportunity for proponents and opponents of
the tax increase to present their views.
(b) The notice of the [a] public hearings [hearing] may not
be smaller than one-quarter page of a standard-size or a
tabloid-size newspaper, and the headline on the notice must be in
18-point or larger type. The notice must:
(1) contain a statement in the following form:
"NOTICE OF PUBLIC HEARING ON TAX INCREASE
"Last year, the [name of taxing unit] property tax rate was
$[insert rate]. That rate raised $[insert amount] which was used to
fund operations such as [insert sample descriptions of unit's
operations].
"This year, [name of taxing unit] is proposing a property tax
rate of $[insert rate]. This rate would raise $[insert amount]
(which is $[insert amount] more than last year).
"There will be two public hearings to consider this increase.
The first public hearing will be held on (date and time) at (meeting
place). The second hearing will be held on (date and time) at
(meeting place).
"You have a right to attend this meeting and make comments.
You are encouraged to attend and you have a right to testify."
["The (name of the taxing unit) will hold a public hearing on
a proposal to increase total tax revenues from properties on the tax
roll in the preceding year by (percentage by which proposed tax rate
exceeds lower of rollback tax rate or effective tax rate calculated
under this chapter) percent. Your individual taxes may increase at
a greater or lesser rate, or even decrease, depending on the change
in the taxable value of your property in relation to the change in
taxable value of all other property and the tax rate that is
adopted.
["The public hearing will be held on (date and time) at
(meeting place).
["(Names of all members of the governing body, showing how
each voted on the proposal to consider the tax increase or, if one
or more were absent, indicating the absences.)"; and
[(2) contain the following information:
[(A) the unit's adopted tax rate for the
preceding year and the proposed tax rate, expressed as an amount per
$100;
[(B) the difference, expressed as an amount per
$100 and as a percent increase or decrease, as applicable, in the
proposed tax rate compared to the adopted tax rate for the preceding
year;
[(C) the average appraised value of a residence
homestead in the taxing unit in the preceding year and in the
current year; the unit's homestead exemption, other than an
exemption available only to disabled persons or persons 65 years of
age or older, applicable to that appraised value in each of those
years; and the average taxable value of a residence homestead in the
unit in each of those years, disregarding any homestead exemption
available only to disabled persons or persons 65 years of age or
older;
[(D) the amount of tax that would have been
imposed by the unit in the preceding year on a residence homestead
appraised at the average appraised value of a residence homestead
in that year, disregarding any homestead exemption available only
to disabled persons or persons 65 years of age or older;
[(E) the amount of tax that would be imposed by
the unit in the current year on a residence homestead appraised at
the average appraised value of a residence homestead in the current
year, disregarding any homestead exemption available only to
disabled persons or persons 65 years of age or older, if the
proposed tax rate is adopted; and
[(F) the difference between the amounts of tax
calculated under Paragraphs (D) and (E), expressed in dollars and
cents and described as the annual increase or decrease, as
applicable, in the tax to be imposed by the unit on the average
residence homestead in the unit in the current year if the proposed
tax rate is adopted.]
(c) The notice may be delivered by mail to each property
owner in the unit, or it may be published in a newspaper. If the
notice is published in a newspaper, it may not be in the part of the
paper in which legal notices and classified advertisements appear.
If the unit operates an Internet website, the notice shall appear on
that site from the beginning of the first publication until the
second hearing is concluded.
(d) At the public hearing the governing body shall announce
the date, time, and place of the meeting at which it will vote on the
proposed tax rate. After the hearing the governing body shall give
notice of the meeting at which it will vote on the proposed tax rate
and the notice shall be in the same form as prescribed by
Subsections (b) and (c), except that it must state the following:
"NOTICE OF VOTE ON TAX RATE
"The (name of the taxing unit) conducted [a] public hearings
[hearing] on a proposal to increase the total tax revenues of the
(name of the taxing unit) from properties on the tax roll in the
preceding year by (percentage by which proposed tax rate exceeds
lower of rollback tax rate or effective tax rate calculated under
this chapter) percent on (date and times [time] public hearings
were [hearing was] conducted).
"The (governing body of the taxing unit) is scheduled to vote
on the tax rate that will result in that tax increase at a public
meeting to be held on (date and time) at (meeting place)."
(e) The meeting to vote on the tax increase may not be
earlier than the third day or later than the 14th day after the date
of the last public hearing. The meeting must be held inside the
boundaries of the taxing unit in a publicly owned building or, if a
suitable publicly owned building is not available, in a suitable
building to which the public normally has access. If the governing
body does not adopt a tax rate that exceeds the lower of the
rollback tax rate or [103 percent of] the effective tax rate by the
14th day, it must give a new notice under Subsection (d) before it
may adopt a rate that exceeds the lower of the rollback tax rate or
103 percent of the effective tax rate. A motion on the adoption of
an order, ordinance, resolution, or any other action that adopts a
tax rate that exceeds the effective rate must be made in the
following form: "I move that property taxes be increased by the
adoption of a tax rate of __________." The vote that adopts a rate
that exceeds the effective rate must be a record vote.
(f) The comptroller by rule shall prescribe the language and
format to be used in the part of the notice required by Subsection
(b)(2). A notice under Subsection (b) is not valid if it does not
substantially conform to the language and format prescribed by the
comptroller under this subsection.
(g) This section does not apply to a school district. A
school district shall provide notice of a public hearing on a tax
increase as required by Section 44.004, Education Code.
SECTION 3.26. Section 26.07(b), Tax Code, is amended to
read as follows:
(b) A petition is valid only if:
(1) it states that it is intended to require an
election in the taxing unit on the question of reducing the tax rate
for the current year;
(2) it is signed by a number of registered voters of
the taxing unit equal to at least seven [10] percent of the number
of registered voters of a [the] taxing unit with a maintenance and
operations property tax levy equal to or in excess of $5 million, or
10 percent of the number of registered voters of a taxing unit with
a maintenance and operations property tax levy of less than $5
million, according to the most recent official list of registered
voters; and
(3) it is submitted to the governing body on or before
the 90th day after the date on which the governing body adopted the
tax rate for the current year.
SECTION 3.27. Section 26.09(c), Tax Code, is amended to
read as follows:
(c) The tax is calculated by:
(1) subtracting from the appraised value of a property
as shown on the appraisal roll for a taxing [the] unit or the state
the amount of any partial exemption allowed the property owner that
applies to appraised value to determine taxable [net appraised]
value; and
(2) [multiplying the net appraised value by the
assessment ratio to determine assessed value;
[(3) subtracting from the assessed value the amount of
any partial exemption allowed the property owner to determine
taxable value; and
[(4)] multiplying the taxable value by the applicable
tax rate.
SECTION 3.28. Section 26.12, Tax Code, is amended by adding
Subsection (e) to read as follows:
(e) For purposes of this section, the state is not a taxing
unit.
SECTION 3.29. Section 26.15(c), Tax Code, is amended to
read as follows:
(c) At any time, the governing body of a taxing unit, on
motion of the assessor for the unit or of a property owner, shall
direct by written order changes in the tax roll to correct errors in
the mathematical computation of a tax. The assessor shall enter the
corrections ordered by the governing body. The comptroller may
order changes in the state tax roll to correct errors in the
mathematical computation of the state ad valorem tax.
SECTION 3.30. Section 31.01, Tax Code, is amended by
amending Subsection (c) and adding Subsection (c-1) to read as
follows:
(c) The tax bill or a separate statement accompanying the
tax bill shall:
(1) identify the property subject to the tax;
(2) state the appraised value, assessed value, and
taxable value of the property;
(3) if the property is land appraised as provided by
Subchapter C, D, E, or H, Chapter 23, state the market value and the
taxable value for purpose of deferred or additional taxation as
provided by Section 23.46, 23.55, 23.76, or 23.9807, as applicable;
(4) state the assessment ratio for the unit;
(5) state the type and amount of any partial exemption
applicable to the property, indicating whether it applies to
appraised or assessed value;
(6) state the total tax rate for the unit;
(7) state the amount of tax due, the due date, and the
delinquency date;
(8) explain the payment option and discounts provided
by Sections 31.03 and 31.05, if available to the unit's taxpayers,
and state the date on which each of the discount periods provided by
Section 31.05 concludes, if the discounts are available;
(9) state the rates of penalty and interest imposed
for delinquent payment of the tax;
(10) include the name and telephone number of the
assessor for the unit and, if different, of the collector for the
unit; [and]
(11) for real property, state for the current tax year
and each of the preceding five tax years:
(A) the appraised value and taxable value of
property;
(B) the total tax rate for the unit;
(C) the amount of taxes imposed on the property
by the unit; and
(D) the difference, expressed as a percent
increase or decrease, as applicable, in the amount of taxes imposed
on the property by the unit compared to the amount imposed for the
preceding tax year;
(12) for real property, state the differences,
expressed as a percent increase or decrease, as applicable, in the
following for the current year as compared to the fifth tax year
before that tax year:
(A) the appraised value and taxable value of
property;
(B) the total tax rate for the unit; and
(C) the amount of taxes imposed on the property
by the unit; and
(13) include any other information required by the
comptroller.
(c-1) If for any of the preceding six tax years any
information required by Subsection (c)(11) or (12) to be included
in a tax bill or separate statement is unavailable, the tax bill or
statement must state that the information is not available for that
year.
SECTION 3.31. Section 31.11(a), Tax Code, is amended to
read as follows:
(a) If a taxpayer applies to the tax collector of a taxing
unit for a refund of an overpayment or erroneous payment of taxes
and the auditor for the unit or the comptroller in the case of the
state ad valorem tax determines that the payment was erroneous or
excessive, the tax collector or, for state taxes, the comptroller
shall refund the amount of the excessive or erroneous payment from
available current tax collections or from funds appropriated by the
unit or the state, as appropriate, for making refunds. For taxes
other than state taxes [However], the collector may not make the
refund unless:
(1) in the case of a collector who collects taxes for
one taxing unit, the governing body of the taxing unit also
determines that the payment was erroneous or excessive and approves
the refund if the amount of the refund exceeds:
(A) $2,500 for a refund to be paid by a county
with a population of 1.5 million or more; or
(B) $500 for a refund to be paid by any other
taxing unit; or
(2) in the case of a collector who collects taxes for
more than one taxing unit, the governing body of the taxing unit
that employs the collector also determines that the payment was
erroneous or excessive and approves the refund if the amount of the
refund exceeds $2,500.
SECTION 3.32. Sections 32.01(a) and (d), Tax Code, are
amended to read as follows:
(a) On January 1 of each year, a tax lien attaches to
property to secure the payment of all taxes, penalties, and
interest ultimately imposed for the year by the state or a taxing
unit on the property, whether or not the taxes are imposed in the
year the lien attaches. The lien to secure the payment of state ad
valorem taxes and applicable penalties and interest exists in favor
of the state. The lien to secure the payment of taxes imposed by a
taxing unit and applicable penalties and interest exists in favor
of the [each] taxing unit having power to tax the property.
(d) The lien under this section is perfected on attachment
and, except as provided by Section 32.03(b), perfection requires no
further action by the state or taxing unit.
SECTION 3.33. Section 33.01(a), Tax Code, is amended to
read as follows:
(a) A delinquent tax, including a delinquent state ad
valorem tax, incurs a penalty of six percent of the amount of the
tax for the first calendar month it is delinquent plus one percent
for each additional month or portion of a month the tax remains
unpaid prior to July 1 of the year in which it becomes delinquent.
However, a tax delinquent on July 1 incurs a total penalty of twelve
percent of the amount of the delinquent tax without regard to the
number of months the tax has been delinquent. A delinquent tax
continues to incur the penalty provided by this subsection as long
as the tax remains unpaid, regardless of whether a judgment for the
delinquent tax has been rendered.
SECTION 3.34. Subchapter A, Chapter 33, Tax Code, is
amended by adding Section 33.11 to read as follows:
Sec. 33.11. COLLECTION OF DELINQUENT STATE AD VALOREM
TAXES; PENALTY. (a) The collector for a school district has the
same powers and duties regarding the collection of delinquent state
ad valorem taxes imposed on property having taxable situs in the
school district as the collector has regarding delinquent school
district taxes on that property.
(b) The attorney who represents a school district to enforce
the collection of delinquent school district taxes represents the
state to enforce the collection of delinquent state ad valorem
taxes imposed on property having taxable situs in the school
district. If the governing body of a school district contracts with
a private attorney to enforce the collection of delinquent school
district ad valorem taxes, the contract applies to the collection
of delinquent state ad valorem taxes on property taxable by that
school district without further action. The compensation of the
private attorney for collecting delinquent state ad valorem taxes
is equal to a percentage of the amount collected that represents the
portion of that amount attributable to the additional penalty
provided by Subsection (c). If the governing body of a school
district contracts with an official, taxing unit, or political
subdivision of this state for the collection of the ad valorem taxes
of the school district that includes the collection of delinquent
school district taxes, the contract applies to the collection of
delinquent state ad valorem taxes on property taxable by that
school district without further action.
(c) State ad valorem taxes that remain delinquent on July 1
of the year in which they become delinquent incur an additional
penalty to defray costs of collection if the collection of the
delinquent taxes is covered by a contract with a private attorney
under Subsection (b). The amount of the penalty is the amount of
the compensation specified in the contract.
(d) A tax lien attaches in favor of the state to the property
on which the tax is imposed to secure payment of the penalty.
(e) The person responsible for collecting the delinquent
state ad valorem tax shall deliver a notice of delinquency and of
the penalty to the property owner at least 30 and not more than 60
days before July 1.
(f) Sections 6.30, 33.07, and 33.08 do not apply to the
state ad valorem tax.
SECTION 3.35. Sections 33.21(a) and (b), Tax Code, are
amended to read as follows:
(a) A person's personal property is subject to seizure for
the payment of a delinquent tax, penalty, and interest the person
[he] owes the state or a taxing unit on property.
(b) A person's personal property is subject to seizure for
the payment of a tax imposed by the state or other [a] taxing unit on
the person's [his] property before the tax becomes delinquent if:
(1) the collector discovers that property on which the
tax has been or will be imposed is about to be removed from the
county; and
(2) the collector knows of no other personal property
in the county from which the tax may be satisfied.
SECTION 3.36. Section 33.23(b), Tax Code, is amended to
read as follows:
(b) A bond may not be required of the state or other [a]
taxing unit for issuance or delivery of a tax warrant, and a fee or
court cost may not be charged for issuance or delivery of a warrant.
SECTION 3.37. Section 33.44(b), Tax Code, is amended to
read as follows:
(b) For purposes of joining a county, citation may be served
on the county [tax] assessor-collector. For purposes of joining
any other taxing unit, citation may be served on the officer charged
with collecting taxes for the unit or on the presiding officer or
secretary of the governing body of the unit. For purposes of
joining the state, citation shall be served on the school district
collector who collects state ad valorem taxes on the property.
Citation may be served by certified mail, return receipt requested.
A person on whom service is authorized by this subsection may waive
the issuance and service of citation in behalf of the person's [his]
taxing unit.
SECTION 3.38. Section 34.04(b), Tax Code, is amended to
read as follows:
(b) A copy of the petition shall be served, in the manner
prescribed by Rule 21a, Texas Rules of Civil Procedure, as amended,
or that rule's successor, on all parties to the underlying action
not later than the 20th day before the date set for a hearing on the
petition. If the state is a party to the underlying action, the
copy of the petition to be served on the state shall be served on the
school district collector who collects state ad valorem taxes on
the subject property. The attorney who represents the state to
enforce the collection of delinquent state ad valorem taxes in the
school district in which the property is located shall represent
the state at the hearing.
SECTION 3.39. The heading to Chapter 41, Tax Code, is
amended to read as follows:
CHAPTER 41. ADMINISTRATIVE [LOCAL] REVIEW
SECTION 3.40. Section 41.03, Tax Code, is amended to read as
follows:
Sec. 41.03. CHALLENGE BY STATE OR TAXING UNIT. (a) The
state or another [A] taxing unit is entitled to challenge before the
appraisal review board:
(1) the level of appraisals of any category of
property in the district or in any territory in the district, but
not the appraised value of a single taxpayer's property;
(2) an exclusion of property from the appraisal
records;
(3) a grant in whole or in part of a partial exemption;
(4) a determination that land qualifies for appraisal
as provided by Subchapter C, D, E, or H, Chapter 23; or
(5) failure to identify the taxing unit as one in which
a particular property is taxable.
(b) If the state or other [a] taxing unit challenges a
determination that land qualifies for appraisal under Subchapter H,
Chapter 23, on the ground that the land is not located in an
aesthetic management zone, critical wildlife habitat zone, or
streamside management zone, the state or other taxing unit must
first seek a determination letter from the director of the Texas
Forest Service. The appraisal review board shall accept the letter
as conclusive proof of the type, size, and location of the zone.
SECTION 3.41. Subchapter A, Chapter 41, Tax Code, is
amended by adding Sections 41.031 and 41.032 to read as follows:
Sec. 41.031. CHALLENGE BY STATE. The state is entitled to
challenge before the appraisal review board the exclusion of
property from the appraisal roll for state ad valorem taxes.
Sec. 41.032. REPRESENTATION OF STATE. The comptroller
represents the state in a challenge by the state under this
subchapter. The comptroller may delegate that function to the
appropriate school district assessor or collector.
SECTION 3.42. Section 41.06(a), Tax Code, is amended to
read as follows:
(a) The secretary of the appraisal review board shall
deliver to the comptroller on behalf of the state and to the
presiding officer of the governing body of each taxing unit other
than the state entitled to appear at a challenge hearing written
notice of the date, time, and place fixed for the hearing. The
secretary shall deliver the notice not later than the 10th day
before the date of the hearing.
SECTION 3.43. Section 41.07(d), Tax Code, is amended to
read as follows:
(d) The board shall deliver by certified mail a notice of
the issuance of the order and a copy of the order to the taxing unit.
If the order of the board excludes property from the appraisal roll
for state ad valorem taxes, the board shall also deliver a notice of
issuance and a copy of the order to the comptroller and the
appropriate school district assessor in the manner prescribed by
the comptroller.
SECTION 3.44. Section 41.47(d), Tax Code, is amended to
read as follows:
(d) The board shall deliver by certified mail a notice of
issuance of the order and a copy of the order to the property owner
and the chief appraiser. If the order of the board excludes
property from the appraisal roll for state ad valorem taxes, the
board shall also deliver a notice of issuance and a copy of the
order to the comptroller and the appropriate school district
assessor in the manner prescribed by the comptroller.
SECTION 3.45. Subchapter A, Chapter 42, Tax Code, is
amended by adding Section 42.032 to read as follows:
Sec. 42.032. RIGHT OF APPEAL BY COMPTROLLER. (a) The
comptroller is entitled to appeal an order of the appraisal review
board excluding property from the appraisal roll for state ad
valorem taxes.
(b) The attorney general shall represent the comptroller in
an appeal under this section. The attorney general may delegate its
duties under this section to a county or district attorney or may
contract with a private attorney for the performance of those
duties.
SECTION 3.46. Sections 42.06(a) and (c), Tax Code, are
amended to read as follows:
(a) To exercise the party's right to appeal an order of an
appraisal review board, a party other than a property owner must
file written notice of appeal within 15 days after the date the
party receives the notice required by Section 41.47 or, in the case
of a taxing unit or the comptroller, by Section 41.07 that the order
appealed has been issued. To exercise the right to appeal an order
of the comptroller, a party other than a property owner must file
written notice of appeal within 15 days after the date the party
receives the comptroller's order. A property owner is not required
to file a notice of appeal under this section.
(c) If the chief appraiser, a taxing unit, [or] a county, or
the comptroller appeals[, the chief appraiser, if the appeal is of]
an order of the appraisal review board, the chief appraiser [or the
comptroller, if the appeal is of an order of the comptroller,] shall
deliver a copy of the notice to the property owner whose property is
involved in the appeal. If the appeal is of an order of the
comptroller, the comptroller shall deliver a copy of the notice to
the property owner. The chief appraiser or the comptroller shall
deliver the copy of the notice within 10 days after the date the
notice is filed.
SECTION 3.47. Sections 42.43(a), (b), and (c), Tax Code,
are amended to read as follows:
(a) If the final determination of an appeal that decreases a
property owner's tax liability occurs after the property owner has
paid the owner's [his] taxes, the taxing unit and the comptroller,
if the property is subject to the state ad valorem tax, shall refund
to the property owner the difference between the amount of taxes
paid and amount of taxes for which the property owner is liable.
(b) For a refund made under this section because an
exemption under Section 11.20 that was denied by the chief
appraiser or appraisal review board is granted, the taxing unit or
the comptroller shall include with the refund interest on the
amount refunded calculated at an annual rate that is equal to the
auction average rate quoted on a bank discount basis for
three-month treasury bills issued by the United States government,
as published by the Federal Reserve Board, for the week in which the
taxes became delinquent, but not more than 10 percent, calculated
from the delinquency date for the taxes until the date the refund is
made. For any other refund made under this section, the taxing unit
or the comptroller shall include with the refund interest on the
amount refunded at an annual rate of eight percent, calculated from
the delinquency date for the taxes until the date the refund is
made.
(c) Notwithstanding Subsection (b), if a taxing unit or the
comptroller does not make a refund, including interest, required by
this section before the 60th day after the date the chief appraiser
certifies a correction to the appraisal roll under Section 42.41,
the taxing unit or the comptroller shall include with the refund
interest on the amount refunded at an annual rate of 12 percent,
calculated from the delinquency date for the taxes until the date
the refund is made.
SECTION 3.48. Sections 43.01 and 43.04, Tax Code, are
amended to read as follows:
Sec. 43.01. AUTHORITY TO BRING SUIT. The comptroller or a
[A] taxing unit may sue the appraisal district that appraises
property for the state or the unit to compel the appraisal district
to comply with the provisions of this title, rules of the
comptroller, or other applicable law.
Sec. 43.04. SUIT TO COMPEL COMPLIANCE WITH DEADLINES. The
comptroller or the governing body of a taxing unit may sue the chief
appraiser or members of the appraisal review board, as applicable,
for failure to comply with the deadlines imposed by Section
25.22(a), 26.01(a), or 41.12. If the court finds that the chief
appraiser or appraisal review board failed to comply for good cause
shown, the court shall enter an order fixing a reasonable deadline
for compliance. If the court finds that the chief appraiser or
appraisal review board failed to comply without good cause, the
court shall enter an order requiring the chief appraiser or
appraisal review board to comply with the deadline not later than
the 10th day after the date the judgment is signed. In a suit
brought under this section, the court may enter any other order the
court considers necessary to ensure compliance with the court's
deadline or the applicable statutory requirements. Failure to obey
an order of the court is punishable as contempt.
SECTION 3.49. Subchapter A, Chapter 313, Tax Code, is
amended by adding Section 313.008 to read as follows:
Sec. 313.008. REPORT TO LEGISLATURE. (a) Not later than
December 1, 2006, the Legislative Budget Board shall submit a
report to the legislature that includes recommended changes to this
chapter to provide incentives and credits relating to the state ad
valorem tax that are consistent with the purposes described by
Section 313.003.
(b) This section expires January 1, 2007.
SECTION 3.50. Chapter 311, Tax Code, is amended by adding
Section 311.0131 to read as follows:
Sec. 311.0131. SCHOOL DISTRICT ANNUAL OBLIGATION TO TAX
INCREMENT FUND; STATE PAYMENT OF PORTION OF OBLIGATION. (a) This
section applies only to a reinvestment zone created before
September 1, 1999, for which a school district enters into an
agreement under Section 311.013(f) with the governing body of the
municipality that created the zone to pay into the tax increment
fund for the zone a portion of the school district's tax increment
produced from property located in the zone.
(b) Notwithstanding the terms of the agreement regarding
the portion of the school district's tax increment required to be
paid into the fund, in each year, the portion of the school
district's tax increment the school district is required to pay
into the fund is the school district annual obligation for the
school district for that year calculated under Subsection (c).
(c) The municipality that created the zone or its designee
shall calculate the school district annual obligation for a school
district by applying the applicable school district's tax rate for
the 2004 tax year to the captured appraised value for the school
district for the year for which the obligation is calculated and
multiplying that amount by the percentage of the school district's
tax increment for the year for which the obligation is calculated
that the school district agreed to pay into the tax increment fund
in that year under Section 311.013(f).
(d) The school district annual obligation for each year
shall be apportioned between the school district and the state in
proportion to the amount of taxes each of those entities imposes on
the captured appraised value for the zone in that year as calculated
under this subsection. The amount of taxes the state imposes on
that captured appraised value is calculated by multiplying the rate
of the state ad valorem tax rate for that year by the captured
appraised value for the state. The amount of taxes the school
district imposes on that captured appraised value used in making
the apportionment is calculated by multiplying the school district
local fund assignment tax rate for that year by the captured
appraised value for the school district. The tax increment base for
the state under Section 311.012 is determined as if this section
were in effect for the year in which the reinvestment zone was
created.
(e) If more than one school district imposes taxes on
property in a reinvestment zone, the school district annual
obligation for each school district and the portion of that
obligation that the state is required to pay under this section
shall be calculated separately for the portion of the property in
the reinvestment zone located in each school district.
(f) The comptroller shall verify the payments to be made by
the state under this section and shall retain from state property
tax collections sufficient funds to make the calculated payments.
From the retained funds, the comptroller shall pay to the school
district or, if required by the agreement, to the municipality the
portion of the school district annual obligation apportioned to the
state under Subsection (c).
(g) On receipt of the state's portion of the school district
annual obligation by a school district, the school district
promptly shall pay the state's portion to the municipality. At the
time of payment of the state's portion to the municipality, the
school district shall pay to the municipality any unpaid balance of
the school district's portion of the school district annual
obligation.
(h) Amounts paid to a municipality under Subsections (f) and
(g) shall be deposited to the credit of the tax increment fund on
behalf of the school district.
(i) This section ceases to apply to a reinvestment zone on
the earlier date specified by Section 311.017(a)(1) or (2) for the
reinvestment zone. If the agreement provides that the termination
date may be extended, the state's obligation to pay a portion of the
school district annual obligation ceases on the date the school
district ceases to be required to pay any tax increment produced by
the school district into the tax increment fund for the zone.
SECTION 3.51. The changes in law made by this article to
Chapter 41, Tax Code, apply only to a challenge or protest under
that chapter for which the notice is filed on or after the effective
date of this article. A challenge or protest for which the notice
is filed before the effective date of this article is covered by the
law in effect when the notice of protest was filed, and the former
law is continued in effect for that purpose.
SECTION 3.52. The changes in law made by this article apply
to each tax year that begins on or after January 1, 2006. The
changes in law do not apply to a tax year that begins before January
1, 2006, and the law as it existed before January 1, 2006, is
continued in effect for purposes of taxes imposed in that tax year.
SECTION 3.53. (a) This article takes effect only if the
constitutional amendment proposed by ___.J.R. No. ___, 79th
Legislature, Regular Session, 2005, is approved by the voters.
(b) If the constitutional amendment proposed by ___.J.R.
No. ___, 79th Legislature, Regular Session, 2005, is not approved
by the voters, this article has no effect.
(c) Except as otherwise specifically provided by this Act,
this article takes effect January 1, 2006, but only if H.B. No. 2,
Acts of the 79th Legislature, Regular Session, 2005, becomes law. If H.B. No. 2 does not become law, this article has no effect.
ARTICLE 4. FRANCHISE TAX
SECTION 4.01. Section 171.001(a), Tax Code, is amended to
read as follows:
(a) A franchise tax is imposed on[:
[(1)] each taxable entity [corporation] that does
business in this state or that is chartered or organized 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].
SECTION 4.02. Sections 171.001(b)(2), (4), and (5), Tax
Code, are amended to read as follows:
(2) "Beginning date" means:
(A) for a taxable entity [corporation] chartered
or organized in this state, the date on which the taxable entity's
[corporation's] charter or organization takes effect; or [and]
(B) for any other taxable entity [a foreign
corporation], the date on which the taxable entity [corporation]
begins doing business in this state.
(4) "Charter" includes a limited liability company's
certificate of organization, a limited partnership's certificate
of limited partnership, and the registration of a limited liability
partnership.
(5) "Internal Revenue Code" means the Internal Revenue
Code of 1986 in effect for the federal tax year beginning on [or
after] January 1, 2005 [1996, and before January 1, 1997], and any
regulations adopted under that code applicable to that period.
SECTION 4.03. Section 171.001, Tax Code, is amended by
adding Subsection (d) to read as follows:
(d) On or before November 1 of each even-numbered year, the
comptroller shall submit proposed legislation to update the
definition of "Internal Revenue Code" in Subsection (b) to:
(1) the governor;
(2) the lieutenant governor;
(3) the speaker of the house of representatives;
(4) the chair of the Senate Committee on Finance; and
(5) the chair of the House Committee on Ways and Means.
SECTION 4.04. Sections 171.0011(a), (b), and (c), Tax Code,
are amended to read as follows:
(a) An additional tax is imposed on a taxable entity
[corporation] that for any reason becomes no longer subject to the
earned surplus component of the tax, without regard to whether the
taxable entity [corporation] remains subject to the taxable capital
component of the tax.
(b) The additional tax is equal to four [4.5] percent of the
taxable entity's [corporation's] net taxable earned surplus
computed on the period beginning on the day after the last day for
which the tax imposed on net taxable earned surplus was computed
under Section 171.1532 and ending on the date the taxable entity
[corporation] is no longer subject to the earned surplus component
of the tax.
(c) The additional tax imposed and any report required by
the comptroller are due on the 60th day after the date the taxable
entity [corporation] becomes no longer subject to the earned
surplus component of the tax.
SECTION 4.05. Subchapter A, Chapter 171, Tax Code, is
amended by adding Section 171.0013 to read as follows:
Sec. 171.0013. TAXABLE ENTITY. (a) Except as provided by
Subsection (b), "taxable entity" means a general partnership,
limited partnership, limited liability partnership, corporation,
banking corporation, savings and loan association, limited
liability company, trust, business trust, professional
association, business association, joint venture, joint stock
company, holding company, or other legal entity.
(b) "Taxable entity" does not include:
(1) a sole proprietorship; or
(2) a passive entity as described by Subsection (c).
(c) An entity is a passive entity only if:
(1) the entity is a limited partnership or a trust,
other than a business trust;
(2) the entity makes no payments of wages or other
compensation to employees or independent contractors, other than
for accounting or legal services reasonably necessary for the
operation of the entity;
(3) during the period on which earned surplus is
based, the entity receives at least 90 percent of its income from
one or more of the following:
(A) interest;
(B) dividends;
(C) real property rents;
(D) gains from the sale of real property and
securities, other than a sale of securities of an entity that
constitutes a controlling interest held by the selling entity and
its related parties; or
(E) mineral royalties and other nonoperating
mineral interests;
(4) the income described in Subdivision (3) comes only
from assets acquired and held for investment purposes; and
(5) the entity was formed, created, or organized
before April 30, 2005.
SECTION 4.06. Sections 171.002(a), (b), and (d), Tax Code,
are amended to read as follows:
(a) The rates of the franchise tax are:
(1) 0.25 percent per year of privilege period of net
taxable capital; and
(2) four [4.5] percent of net taxable earned surplus.
(b) The amount of franchise tax on each taxable entity
[corporation] is computed by adding the following:
(1) the amount calculated by applying the tax rate
prescribed by Subsection (a)(1) to the taxable entity's
[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 taxable entity's
[corporation's] net taxable earned surplus; and
(B) the amount determined under Subdivision (1).
(d) A taxable entity [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 taxable entity
[corporation] is less than $100; or
(2) the amount of the taxable entity's [corporation's]
gross receipts:
(A) from its entire business under Section
171.105 is less than:
(i) for a taxable entity other than a
general partnership, $150,000; and
(ii) for a general partnership, $300,000;
and
(B) from its entire business under Section
171.1051, including the amount excepted under Section 171.1051(a),
is less than:
(i) for a taxable entity other than a
general partnership, $150,000; and
(ii) for a general partnership, $300,000.
SECTION 4.07. Subchapter B, Chapter 171, Tax Code, is
amended by adding Section 171.088 to read as follows:
Sec. 171.088. EXEMPTION--NONCORPORATE TAXABLE ENTITY
ELIGIBLE FOR CERTAIN EXEMPTIONS. A taxable entity that is not a
corporation but that, because of its activities, would qualify for
a specific exemption under this subchapter if it were a corporation
qualifies for the exemption and is exempt from the tax in the same
manner and under the same conditions as a corporation.
SECTION 4.08. 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;
(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; and
(C) notwithstanding Paragraphs (A) and (B), for a
passive entity, 20 percent or more, owned directly or indirectly,
of the capital, profits, or beneficial interest in the passive
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 a taxable entity 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.
(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 4.09. Section 171.101, Tax Code, is amended to read
as follows:
Sec. 171.101. DETERMINATION OF NET TAXABLE CAPITAL. The
[(a) Except as provided by Subsections (b) and (c), the] net taxable
capital of a taxable entity [corporation] is computed by:
(1) [adding the corporation's stated capital, as
defined by Article 1.02, Texas Business Corporation Act, and the
corporation's surplus, to determine the corporation's taxable
capital;
[(2)] apportioning the taxable entity's surplus
[corporation's taxable capital] to this state as provided by
Section 171.106(a) or (c), as applicable, to determine the taxable
entity's [corporation's] apportioned taxable capital; and
(2) [(3)] subtracting from the amount computed under
Subdivision (1) [(2)] any other allowable deductions to determine
the taxable entity's [corporation's] net taxable capital.
[(b) The net taxable capital of a limited liability company
is computed by:
[(1) adding the company's members' contributions, as
provided for under the Texas Limited Liability Company Act, and
surplus to determine the company's taxable capital;
[(2) apportioning the amount determined under
Subdivision (1) to this state in the same manner that the taxable
capital of a corporation is apportioned to this state under Section
171.106(a) or (c), as applicable, to determine the company's
apportioned taxable capital; and
[(3) subtracting from the amount computed under
Subdivision (2) any other allowable deductions, to determine the
company's net taxable capital.
[(c) The net taxable capital of a savings and loan
association is computed by:
[(1) determining the association's net worth; and
[(2) apportioning the amount determined under
Subdivision (1) to this state in the same manner that the taxable
capital of a corporation is apportioned to this state under Section
171.106(a) to determine the association's net taxable capital.]
SECTION 4.10. Section 171.103, Tax Code, is amended to read
as follows:
Sec. 171.103. DETERMINATION OF GROSS RECEIPTS FROM BUSINESS
DONE IN THIS STATE FOR TAXABLE CAPITAL. In apportioning taxable
capital, the gross receipts of a taxable entity [corporation] from
its business done in this state is the sum of the taxable entity's
[corporation's] receipts from:
(1) each sale of tangible personal property if the
property is delivered or shipped to a buyer in this state regardless
of the FOB point or another condition of the sale, and each sale of
tangible personal property shipped from this state to a purchaser
in another state in which the seller is not subject to taxation;
(2) each service performed in this state;
(3) each rental of property situated in this state;
(4) the use of a patent, copyright, trademark,
franchise, or license in this state;
(5) each sale of real property located in this state,
including royalties from oil, gas, or other mineral interests; and
(6) other business done in this state.
SECTION 4.11. Section 171.1032, Tax Code, is amended to
read as follows:
Sec. 171.1032. DETERMINATION OF GROSS RECEIPTS FROM
BUSINESS DONE IN THIS STATE FOR TAXABLE EARNED SURPLUS. (a) Except
for the gross receipts of a taxable entity [corporation] that are
subject to the provisions of Section 171.1061, in apportioning
taxable earned surplus, the gross receipts of a taxable entity
[corporation] from its business done in this state is the sum of the
taxable entity's [corporation's] receipts from:
(1) each sale of tangible personal property if the
property is delivered or shipped to a buyer in this state regardless
of the FOB point or another condition of the sale, and each sale of
tangible personal property shipped from this state to a purchaser
in another state in which the seller is not subject to any tax on, or
measured by, net income, without regard to whether the tax is
imposed;
(2) each service performed in this state;
(3) each rental of property situated in this state;
(4) the use of a patent, copyright, trademark,
franchise, or license in this state;
(5) each sale of real property located in this state,
including royalties from oil, gas, or other mineral interests;
(6) each entity that is not a taxable entity
[partnership or joint venture] to the extent provided by Subsection
(c); and
(7) other business done in this state.
(b) A taxable entity [corporation] shall deduct from its
gross receipts computed under Subsection (a) any amount to the
extent included under Subsection (a) because of the application of
Section 78 or Sections 951-964, Internal Revenue Code, any amount
excludable under Section 171.110(k), and dividends received from a
subsidiary, associate, or affiliated entity [corporation] that
does not transact a substantial portion of its business or
regularly maintain a substantial portion of its assets in the
United States.
(c) A taxable entity [corporation] shall include in its
gross receipts computed under Subsection (a) the taxable entity's
[corporation's] share of the gross receipts of each entity that is
not a taxable entity [partnership and joint venture] of which the
taxable entity [corporation] is a part apportioned to this state as
though the taxable entity [corporation] directly earned the
receipts, including receipts from business done with the taxable
entity [corporation].
SECTION 4.12. Section 171.104, Tax Code, is amended to read
as follows:
Sec. 171.104. GROSS RECEIPTS FROM BUSINESS DONE IN TEXAS:
DEDUCTION FOR FOOD AND MEDICINE RECEIPTS. A taxable entity
[corporation] may deduct from its receipts includable under Section
171.103(1) [of this code] the amount of the taxable entity's
[corporation's] receipts from sales of the following items, if the
items are shipped from outside this state and the receipts would be
includable under Section 171.103(1) [of this code] in the absence
of this section:
(1) food that is exempted from the Limited Sales,
Excise, and Use Tax Act by Section 151.314(a) [of this code]; and
(2) health care supplies that are exempted from the
Limited Sales, Excise, and Use Tax Act by Section 151.313 [of this
code].
SECTION 4.13. Section 171.105, Tax Code, is amended to read
as follows:
Sec. 171.105. DETERMINATION OF GROSS RECEIPTS FROM ENTIRE
BUSINESS FOR TAXABLE CAPITAL. (a) In apportioning taxable
capital, the gross receipts of a taxable entity [corporation] from
its entire business is the sum of the taxable entity's
[corporation's] receipts from:
(1) each sale of the taxable entity's [corporation's]
tangible personal property;
(2) each service, rental, or royalty; and
(3) other business.
(b) If a taxable entity [corporation] sells an investment or
capital asset, the taxable entity's [corporation's] gross receipts
from its entire business for taxable capital include only the net
gain from the sale.
SECTION 4.14. Section 171.1051, Tax Code, is amended to
read as follows:
Sec. 171.1051. DETERMINATION OF GROSS RECEIPTS FROM ENTIRE
BUSINESS FOR TAXABLE EARNED SURPLUS. (a) Except for the gross
receipts of a taxable entity [corporation] that are subject to the
provisions of Section 171.1061, in apportioning taxable earned
surplus, the gross receipts of a taxable entity [corporation] from
its entire business is the sum of the taxable entity's
[corporation's] receipts from:
(1) each sale of the taxable entity's [corporation's]
tangible personal property;
(2) each service, rental, or royalty;
(3) each entity that is not a taxable entity
[partnership and joint venture] as provided by Subsection (d); and
(4) other business.
(b) If a taxable entity [corporation] sells an investment or
capital asset, the taxable entity's [corporation's] gross receipts
from its entire business for taxable earned surplus includes only
the net gain from the sale.
(c) A taxable entity [corporation] shall deduct from its
gross receipts computed under Subsection (a) any amount to the
extent included in Subsection (a) because of the application of
Section 78 or Sections 951-964, Internal Revenue Code, any amount
excludable under Section 171.110(k), and dividends received from a
subsidiary, associate, or affiliated entity [corporation] that
does not transact a substantial portion of its business or
regularly maintain a substantial portion of its assets in the
United States.
(d) A taxable entity [corporation] shall include in its
gross receipts computed under Subsection (a) the taxable entity's
[corporation's] share of the gross receipts of each entity that is
not a taxable entity [partnership and joint venture] of which the
taxable entity [corporation] is a part.
SECTION 4.15. Sections 171.106(a)-(d), Tax Code, are
amended to read as follows:
(a) Except as provided by Subsections (c) and (d), a taxable
entity's [corporation's] taxable capital is apportioned to this
state to determine the amount of the tax imposed under Section
171.002(b)(1) by multiplying the taxable entity's [corporation's]
taxable capital by a fraction, the numerator of which is the taxable
entity's [corporation's] gross receipts from business done in this
state, as determined under Section 171.103, and the denominator of
which is the taxable entity's [corporation's] gross receipts from
its entire business, as determined under Section 171.105.
(b) Except as provided by Subsections (c) and (d), a taxable
entity's [corporation's] taxable earned surplus is apportioned to
this state to determine the amount of tax imposed under Section
171.002(b)(2) by multiplying the taxable earned surplus by a
fraction, the numerator of which is the taxable entity's
[corporation's] gross receipts from business done in this state, as
determined under Section 171.1032, and the denominator of which is
the taxable entity's [corporation's] gross receipts from its entire
business, as determined under Section 171.1051.
(c) A taxable entity's [corporation's] taxable capital or
earned surplus that is derived, directly or indirectly, from the
sale of management, distribution, or administration services to or
on behalf of a regulated investment company, including a taxable
entity [corporation] that includes trustees or sponsors of employee
benefit plans that have accounts in a regulated investment company,
is apportioned to this state to determine the amount of the tax
imposed under Section 171.002 by multiplying the taxable entity's
[corporation's] total taxable capital or earned surplus from the
sale of services to or on behalf of a regulated investment company
by a fraction, the numerator of which is the average of the sum of
shares owned at the beginning of the year and the sum of shares
owned at the end of the year by the investment company shareholders
who are commercially domiciled in this state or, if the
shareholders are individuals, are residents of this state, and the
denominator of which is the average of the sum of shares owned at
the beginning of the year and the sum of shares owned at the end of
the year by all investment company shareholders. The taxable
entity [corporation] shall make a separate computation to allocate
taxable capital and earned surplus. In this subsection, "regulated
investment company" has the meaning assigned by Section 851(a),
Internal Revenue Code.
(d) A taxable entity's [corporation's] taxable capital or
taxable earned surplus that is derived, directly or indirectly,
from the sale of management, administration, or investment services
to an employee retirement plan is apportioned to this state to
determine the amount of the tax imposed under Section 171.002 by
multiplying the taxable entity's [corporation's] total taxable
capital or earned surplus from the sale of services to an employee
retirement plan company by a fraction, the numerator of which is the
average of the sum of beneficiaries domiciled in Texas at the
beginning of the year and the sum of beneficiaries domiciled in
Texas at the end of the year, and the denominator of which is the
average of the sum of all beneficiaries at the beginning of the year
and the sum of all beneficiaries at the end of the year. The taxable
entity [corporation] shall make a separate computation to apportion
taxable capital and earned surplus. In this section, "employee
retirement plan" means a plan or other arrangement that is
qualified under Section 401(a), Internal Revenue Code, or satisfies
the requirements of Section 403, Internal Revenue Code, or a
government plan described in Section 414(d), Internal Revenue Code.
The term does not include an individual retirement account or
individual retirement annuity within the meaning of Section 408,
Internal Revenue Code.
SECTION 4.16. Section 171.1061, Tax Code, is amended to
read as follows:
Sec. 171.1061. ALLOCATION OF CERTAIN TAXABLE EARNED SURPLUS
TO THIS STATE. An item of income included in a taxable entity's
[corporation's] taxable earned surplus, except that portion
derived from dividends and interest, that a state, other than this
state, or a country, other than the United States, cannot tax
because the activities generating that item of income do not have
sufficient unitary connection with the taxable entity's
[corporation's] other activities conducted within that state or
country under the United States Constitution, is allocated to this
state if the taxable entity's [corporation's] commercial domicile
is in this state. Income that can only be allocated to the state of
commercial domicile because the income has insufficient unitary
connection with any other state or country shall be allocated to
this state or another state or country net of expenses related to
that income. A portion of a taxable entity's [corporation's]
taxable earned surplus allocated to this state under this section
may not be apportioned under Section 171.110(a)(2).
SECTION 4.17. Sections 171.107(b), (d), and (e), Tax Code,
are amended to read as follows:
(b) A taxable entity [corporation] may deduct from its
apportioned taxable capital the amortized cost of a solar energy
device or from its apportioned taxable earned surplus 10 percent of
the amortized cost of a solar energy device if:
(1) the device is acquired by the taxable entity
[corporation] for heating or cooling or for the production of
power;
(2) the device is used in this state by the taxable
entity [corporation]; and
(3) the cost of the device is amortized in accordance
with Subsection (c) [of this section].
(d) A taxable entity [corporation] that makes a deduction
under this section shall file with the comptroller an amortization
schedule showing the period in which a deduction is to be made. On
the request of the comptroller, the taxable entity [corporation]
shall file with the comptroller proof of the cost of the solar
energy device or proof of the device's operation in this state.
(e) A taxable entity [corporation] may elect to make the
deduction authorized by this section either from apportioned
taxable capital or apportioned taxable earned surplus for each
separate regular annual period. An election for an initial period
applies to the second tax period and to the first regular annual
period.
SECTION 4.18. Section 171.109, Tax Code, is amended by
amending Subsections (a), (b)-(f), (h), (j), (k), (m), and (n), by
reenacting and amending Subsection (g), as amended by Chapters 801
and 1198, Acts of the 71st Legislature, Regular Session, 1989, and
by adding Subsection (a-2) to read as follows:
(a) In this chapter:
(1) "Surplus" or "taxable capital" means the net
assets of a taxable entity [corporation minus its stated capital.
For a limited liability company, "surplus" means the net assets of
the company minus its members' contributions]. Surplus includes
unrealized, estimated, or contingent losses or obligations or any
writedown of assets other than those listed in Subsection (i) [of
this section] net of appropriate income tax provisions. The
definition under this subdivision does not apply to earned surplus.
(2) "Net assets" means the total assets of a taxable
entity [corporation] minus its total debts.
(3) "Debt" means any legally enforceable obligation
measured in a certain amount of money which must be performed or
paid within an ascertainable period of time or on demand.
(a-2) In this section, "distribution" includes a dividend.
(b) Except as otherwise provided in this section, a taxable
entity [corporation] must compute its surplus, assets, and debts
according to generally accepted accounting principles. If
generally accepted accounting principles are unsettled or do not
specify an accounting practice for a particular purpose related to
the computation of surplus, assets, or debts, the comptroller by
rule may establish rules to specify the applicable accounting
practice for that purpose.
(c) A taxable entity [corporation] whose taxable capital is
less than $1 million may report its surplus according to the method
used in the taxable entity's [corporation's] most recent federal
income tax return originally due on or before the date on which the
taxable entity's [corporation's] franchise tax report is originally
due. In determining if taxable capital is less than $1 million, the
taxable entity [corporation] shall apply the methods the taxable
entity [corporation] used in computing that federal income tax
return unless another method is required under this chapter.
(d) A taxable entity [corporation] shall report its surplus
based solely on its own financial condition. Consolidated
reporting of surplus is prohibited.
(e) A taxable entity [Unless the provisions of Section
171.111 apply due to an election under that section, a corporation]
may not change the accounting methods used to compute its surplus
more often than once every four years without the written consent of
the comptroller. A change in accounting methods is not justified
solely because it results in a reduction of tax liability.
(f) A taxable entity making a distribution [corporation
declaring dividends] shall exclude the distribution [those
dividends] from its taxable capital, and a taxable entity
[corporation] receiving a distribution [dividends] shall include
the distribution [those dividends] in its gross receipts and
taxable capital as of the earlier of:
(1) the date the distribution is [dividends are]
declared, if the distribution is [dividends are] actually paid in
cash or property other than a note payable within one year after the
declaration date; or
(2) the date the distribution is [dividends are]
actually paid in cash or property other than a note payable.
(g) All oil and gas exploration and production activities
conducted by a taxable entity [corporation] that reports its
surplus according to generally accepted accounting principles as
required or permitted by this chapter must be reported according to
the successful efforts or the full cost method of accounting.
(h) A parent or investor taxable entity [corporation] must
use the cost method of accounting in reporting and calculating the
franchise tax on its investments in subsidiary taxable entities
[corporations] or other investees. The retained earnings of a
subsidiary taxable entity [corporation] or other investee before
acquisition by the parent or investor taxable entity [corporation]
may not be excluded from the cost of the subsidiary taxable entity
[corporation] or investee to the parent or investor taxable entity
[corporation] and must be included by the parent or investor
taxable entity [corporation] in calculating its surplus.
(j) A taxable entity [corporation] may not exclude from
surplus:
(1) liabilities for compensation and other benefits
provided to employees, other than wages, that are not debt as of the
end of the accounting period on which the taxable capital component
is based, including retirement, medical, insurance,
postretirement, and other similar benefits; and
(2) deferred investment tax credits.
(k) Notwithstanding any other provision in this chapter, a
taxable entity [corporation] subject to the tax imposed by this
chapter shall use double entry bookkeeping to account for all
transactions that affect the computation of that tax.
(m) A taxable entity [corporation] may not use the push-down
method of accounting in computing or reporting its surplus.
(n) A taxable entity [corporation] must use the equity
method of accounting when reporting an investment in an entity that
is not a taxable entity [a partnership or joint venture].
SECTION 4.19. Section 171.110, Tax Code, is amended by
amending Subsections (a), (d), (e), (f), and (h) and adding
Subsections (m), (n), and (o) to read as follows:
(a) The net taxable earned surplus of a taxable entity
[corporation] is computed by:
(1) determining the taxable entity's [corporation's]
reportable federal taxable income and making the following
adjustments:
(A) for a corporation, subtracting [from that
amount] any amount excludable under Subsection (k) and[,] any
amount included in reportable federal taxable income under Section
78 or Sections 951-964, Internal Revenue Code;
(B) for a corporation, subtracting [, and]
dividends received from a subsidiary, associate, or affiliated
taxable entity [corporation] that does not transact a substantial
portion of its business or regularly maintain a substantial portion
of its assets in the United States;
(C) [, and] adding 15 percent of compensation as
described by Subsection (m) [to that amount any compensation of
officers or directors, or if a bank, any compensation of directors
and executive officers, to the extent excluded in determining
federal taxable income to determine the corporation's taxable
earned surplus]; and
(D) for a partnership other than a partnership
that is registered with or that has filed a certificate of formation
or similar document with the secretary of state of this state or
with an appropriate filing officer of any other state:
(i) subtracting the distributive share of
income for each partner that is a natural person; and
(ii) adding, for each partner that is a
natural person, the product of an amount equal to 0.33 percent of
the gross receipts, as defined under Section 171.1051, of the
partnership times the ratio of the distributive share of the income
of that partner to the total income of the partnership;
(2) apportioning the taxable entity's [corporation's]
taxable earned surplus to this state as provided by Section
171.106(b) or (c), as applicable, to determine the taxable entity's
[corporation's] apportioned taxable earned surplus;
(3) adding the taxable entity's [corporation's]
taxable earned surplus allocated to this state as provided by
Section 171.1061; and
(4) subtracting from that amount any allowable
deductions and any business loss that is carried forward to the tax
reporting period and deductible under Subsection (e).
(d) A corporation's reportable federal taxable income is
the corporation's federal taxable income under Subsection (a)(1)
after Schedule C special deductions and before net operating loss
deductions as computed under the Internal Revenue Code, except that
an S corporation's reportable federal taxable income is the amount
of the income reportable to the Internal Revenue Service as taxable
to the corporation's shareholders. Reportable federal taxable
income for a partnership is the partnership's income as an entity as
determined under rules adopted by the comptroller using principles
similar to the standards applied to a corporation. Reportable
federal taxable income for an entity other than a corporation or
partnership is determined under rules adopted by the comptroller
using principles similar to the standards applied to a corporation.
(e) For purposes of this section, a business loss is any
negative amount of earned surplus after apportionment and
allocation. The business loss shall be carried forward to the year
succeeding the loss year as a deduction to net taxable earned
surplus, then successively to the succeeding four taxable years
after the loss year or until the loss is exhausted, whichever occurs
first, but for not more than five taxable years after the loss year.
Notwithstanding the preceding sentence, a business loss from a tax
year that ends before January 1, 1991, may not be used to reduce net
taxable earned surplus. A business loss can be carried forward only
by the taxable entity [corporation] that incurred the loss and
cannot be transferred to or claimed by any other entity, including
the survivor of a merger if the loss was incurred by the taxable
entity [corporation] that did not survive the merger.
(f) A taxable entity [corporation] may use either the "first
in-first out" or "last in-first out" method of accounting to
compute its net taxable earned surplus, but only to the extent that
the taxable entity [corporation] used that method on its most
recent federal income tax report originally due on or before the
date on which the taxable entity's [corporation's] franchise tax
report is originally due.
(h) A taxable entity [corporation] shall report its net
taxable earned surplus based solely on its own financial condition.
Consolidated reporting is prohibited.
(m) For purposes of this section, compensation for a taxable
entity is the amount the taxable entity entered as total payments in
Part 1, line 1, of the federal Internal Revenue Service Form 940 or
940-EZ, Employer's Annual Federal Unemployment (FUTA) Tax Return,
and guaranteed payments to partners, during the period on which
earned surplus is based, except that:
(1) for a taxable entity that is a client company of a
staff leasing services company, compensation is the amount the
client company entered as total payments in Part 1, line 1, of Form
940 or 940-EZ, plus payments by the staff leasing services company
to assigned employees of the client company; and
(2) for a taxable entity that is a staff leasing
services company, compensation is the amount the staff leasing
services company entered as total payments in Part 1, line 1, of
Form 940 or 940-EZ, minus payments by the staff leasing services
company to assigned employees of a client company.
(n) A staff leasing services company shall submit to the
comptroller a copy of each quarterly report filed with the Texas
Workforce Commission under Section 91.044(a), Labor Code,
containing the name, address, telephone number, federal income tax
identification number, and classification code of each client
company.
(o) For purposes of this section, the terms "assigned
employee," "client company," "license holder," and "staff leasing
services company" have the meanings assigned by Section 91.001,
Labor Code.
SECTION 4.19A. (a) Section 171.110(a), Tax Code, is
amended to read as follows:
(a) The net taxable earned surplus of a taxable entity
[corporation] is computed by:
(1) determining the taxable entity's [corporation's]
reportable federal taxable income and making the following
adjustments:
(A) for a corporation, subtracting [from that
amount] any amount excludable under Subsection (k) and[,] any
amount included in reportable federal taxable income under Section
78 or Sections 951-964, Internal Revenue Code;
(B) for a corporation, subtracting [, and]
dividends received from a subsidiary, associate, or affiliated
taxable entity [corporation] that does not transact a substantial
portion of its business or regularly maintain a substantial portion
of its assets in the United States;
(C) [, and] adding 25 percent of compensation as
described by Subsection (m) [to that amount any compensation of
officers or directors, or if a bank, any compensation of directors
and executive officers, to the extent excluded in determining
federal taxable income to determine the corporation's taxable
earned surplus]; and
(D) for a partnership other than a partnership
that is registered with or that has filed a certificate of formation
or similar document with the secretary of state of this state or
with an appropriate filing officer of any other state:
(i) subtracting the distributive share of
income for each partner that is a natural person; and
(ii) adding, for each partner that is a
natural person, the product of an amount equal to 0.33 percent of
the gross receipts, as defined under Section 171.1051, of the
partnership times the ratio of the distributive share of the income
of that partner to the total income of the partnership;
(2) apportioning the taxable entity's [corporation's]
taxable earned surplus to this state as provided by Section
171.106(b) or (c), as applicable, to determine the taxable entity's
[corporation's] apportioned taxable earned surplus;
(3) adding the taxable entity's [corporation's]
taxable earned surplus allocated to this state as provided by
Section 171.1061; and
(4) subtracting from that amount any allowable
deductions and any business loss that is carried forward to the tax
reporting period and deductible under Subsection (e).
(b) This section takes effect January 1, 2007, and applies
to a report originally due on or after that date, but only if the
constitutional amendment proposed by S.J.R. No. 38, 79th
Legislature, Regular Session, 2005, is approved by the voters. If
that amendment is not approved by the voters, this section has no
effect.
SECTION 4.20. 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.
(a) A taxable entity shall add back to reportable federal taxable
income any payments made to a related party that is a passive entity
as described by Section 171.0013(c) during the period on which
earned surplus is based to the extent deducted in computing
reportable federal taxable income. The safe harbors provided by
Section 171.1102 do not apply to payments under this subsection.
(b) Except as provided by Section 171.1102, a taxable entity
shall add back to reportable federal taxable income any royalty
payments, interest payments, and management fees made to a related
party that is not a passive entity as described by Section
171.0013(c), 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 taxable entity 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, the
transaction was done for a valid business purpose, and the payments
were made at arm's length; or
(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 four percent.
(b) A taxable entity 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 taxable entity 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 taxable entity and the related party exceeds
the tax that would have been paid by the taxable entity if the
royalty payment or interest payment had not been made.
(d) A taxable entity 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.
SECTION 4.21. Sections 171.112(b)-(f) and (h), Tax Code,
are amended to read as follows:
(b) Except as otherwise provided in this section, a taxable
entity [corporation] must compute gross receipts in accordance with
generally accepted accounting principles. If generally accepted
accounting principles are unsettled or do not specify an accounting
practice for a particular purpose related to the computation of
gross receipts, the comptroller by rule may establish rules to
specify the applicable accounting practice.
(c) A taxable entity [corporation] whose taxable capital is
less than $1 million may report its gross receipts according to the
method used in the taxable entity's [corporation's] most recent
federal income tax return originally due on or before the date on
which the taxable entity's [corporation's] franchise tax report is
originally due. In determining if taxable capital is less than $1
million, the taxable entity [corporation] shall apply the methods
the taxable entity [corporation] used in computing that federal
income tax return unless another method is required under this
chapter.
(d) A taxable entity [corporation] shall report its gross
receipts based solely on its own financial condition. Consolidated
reporting is prohibited.
(e) Unless the provisions of Section 171.111 apply due to an
election under that section, a taxable entity [corporation] may not
change its accounting methods used to calculate gross receipts more
often than once every four years without the express written
consent of the comptroller. A change in accounting methods is not
justified solely because it results in a reduction of tax
liability.
(f) Notwithstanding any other provision in this chapter, a
taxable entity [corporation] subject to the tax imposed by this
chapter shall use double entry bookkeeping to account for all
transactions that affect the computation of that tax.
(h) Except as otherwise provided by this section, a taxable
entity [corporation] shall use the same accounting methods to
apportion its taxable capital as it used to compute its taxable
capital.
SECTION 4.22. Sections 171.1121(a)-(d), Tax Code, are
amended to read as follows:
(a) For purposes of this section, "gross receipts" means all
revenues reportable by a taxable entity [corporation] on its
federal tax return, without deduction for the cost of property
sold, materials used, labor performed, or other costs incurred,
unless otherwise specifically provided in this chapter. "Gross
receipts" does not include revenues that are not included in
taxable earned surplus. For example, Schedule C special deductions
and any amounts subtracted from reportable federal taxable income
under Section 171.110(a)(1) are not included in taxable earned
surplus and therefore are not considered gross receipts.
(b) Except as otherwise provided by this section, a taxable
entity [corporation] shall use the same accounting methods to
apportion taxable earned surplus as used in computing reportable
federal taxable income.
(c) A taxable entity [corporation] shall report its gross
receipts based solely on its own financial condition. Consolidated
reporting is prohibited.
(d) Unless the provisions of Section 171.111 apply due to an
election under that section, a taxable entity [corporation] may not
change its accounting methods used to calculate gross receipts more
often than once every four years without the express written
consent of the comptroller. A change in accounting methods is not
justified solely because it results in a reduction of tax
liability.
SECTION 4.23. Section 171.113, Tax Code, is amended to read
as follows:
Sec. 171.113. ALTERNATE METHOD OF DETERMINING TAXABLE
CAPITAL AND GROSS RECEIPTS FOR CERTAIN TAXABLE ENTITIES
[CORPORATIONS]. (a) This section applies only to:
(1) a corporation organized as a close corporation
under Part 12, Texas Business Corporation Act, that has not more
than 35 shareholders;
(2) a foreign corporation organized under the close
corporation law of another state that has not more than 35
shareholders; [and]
(3) an S corporation as that term is defined by Section
1361, Internal Revenue Code of 1986 (26 U.S.C. Section 1361); and
(4) a taxable entity other than a corporation that has
35 or fewer owners.
(b) A taxable entity [corporation] to which this section
applies may elect to compute its surplus, assets, debts, and gross
receipts according to the method the taxable entity [corporation]
uses to report its federal income tax instead of as provided by
Sections 171.109(b) and (g) and Section 171.112(b). This section
does not affect the application of the other subsections of
Sections 171.109 and 171.112 and other provisions of this chapter
to a taxable entity [corporation] making the election.
(c) The comptroller may adopt rules as necessary to specify
the reporting requirements for taxable entities [corporations] to
which this section applies.
(d) This section does not apply to a subsidiary of a taxable
entity [corporation] unless it applies to the parent [corporation]
of the subsidiary.
(e) The election under Subsection (b) becomes effective
when written notice of the election is received by the comptroller
from the taxable entity [corporation]. An election under
Subsection (b) must be postmarked not later than the due date for
the electing taxable entity's [corporation's] franchise tax report
to which the election applies.
SECTION 4.24. Section 171.151, Tax Code, is amended to read
as follows:
Sec. 171.151. PRIVILEGE PERIOD COVERED BY TAX. The
franchise tax shall be paid for each of the following:
(1) an initial period beginning on the taxable
entity's [corporation's] beginning date and ending on the day
before the first anniversary of the beginning date;
(2) a second period beginning on the first anniversary
of the beginning date and ending on December 31 following that date;
and
(3) after the initial and second periods have expired,
a regular annual period beginning each year on January 1 and ending
the following December 31.
SECTION 4.25. Section 171.152(c), Tax Code, is amended to
read as follows:
(c) Payment of the tax covering the regular annual period is
due May 15, of each year after the beginning of the regular annual
period. However, if the first anniversary of the taxable entity's
[corporation's] beginning date is after October 3 and before
January 1, the payment of the tax covering the first regular annual
period is due on the same date as the tax covering the initial
period.
SECTION 4.26. Sections 171.153(a) and (c), Tax Code, are
amended to read as follows:
(a) The tax covering the initial period is reported on the
initial report and is based on the business done by the taxable
entity [corporation] during the period beginning on the taxable
entity's [corporation's] beginning date and:
(1) ending on the last accounting period ending date
that is at least six months after the beginning date and at least 60
days before the original due date of the initial report; or
(2) if there is no such period ending date in
Subdivision (1) [of this subsection], then ending on the day that is
the last day of a calendar month and that is nearest to the end of
the taxable entity's [corporation's] first year of business; or
(3) ending on the day after the merger occurs, for the
survivor of a merger which occurs after the day on which the tax is
based in Subdivision (1) or [Subdivision] (2), whichever is
applicable, [of Subsection (a)] and before January 1, of the year an
initial report is due by the survivor.
(c) The tax covering the regular annual period is based on
the business done by the taxable entity [corporation] during its
last accounting period that ends in the year before the year in
which the tax is due; unless a taxable entity [corporation] is the
survivor of a merger which occurs between the end of its last
accounting period in the year before the report year and January 1
of the report year, in which case the tax will be based on the
financial condition of the surviving taxable entity [corporation]
for the 12-month period ending on the day after the merger.
However, if the first anniversary of the taxable entity's
[corporation's] beginning date is after October 3 and before
January 1, the tax covering the first regular annual period is based
on the same business on which the tax covering the initial period is
based and is reported on the initial report.
SECTION 4.27. Section 171.1532, Tax Code, is amended to
read as follows:
Sec. 171.1532. BUSINESS ON WHICH TAX ON NET TAXABLE EARNED
SURPLUS IS BASED. (a) The tax covering the privilege periods
included on the initial report, as required by Section 171.153, is
based on the business done by the taxable entity [corporation]
during the period beginning on the taxable entity's [corporation's]
beginning date and:
(1) ending on the last accounting period ending date
that is at least 60 days before the original due date of the initial
report; or
(2) if there is no such period ending date in
Subdivision (1) [of this subsection], then ending on the day that is
the last day of a calendar month and that is nearest to the end of
the taxable entity's [corporation's] first year of business.
(b) The tax covering the regular annual period, other than a
regular annual period included on the initial report, is based on
the business done by the taxable entity [corporation] during the
period beginning with the day after the last date upon which net
taxable earned surplus on a previous report was based and ending
with its last accounting period ending date for federal income tax
purposes in the year before the year in which the report is
originally due.
SECTION 4.28. Section 171.154, Tax Code, is amended to read
as follows:
Sec. 171.154. PAYMENT TO COMPTROLLER. A taxable entity
[corporation] on which a tax is imposed by this chapter shall pay
the tax to the comptroller.
SECTION 4.29. Section 171.201, Tax Code, is amended to read
as follows:
Sec. 171.201. INITIAL REPORT. (a) Except as provided by
Section 171.2022, a taxable entity [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
taxable entity [corporation] on the day that is the last day of a
calendar month and that is nearest to the end of the taxable
entity's [corporation's] first year of business;
(2) the name and address of:
(A) each officer, [and] director, and manager of
the taxable entity [corporation];
(B) for a limited partnership, each general
partner;
(C) for a general partnership or limited
liability partnership, each managing partner or, if there is not a
managing partner, each partner; or
(D) for a trust, each trustee;
(3) the name and address of the agent of the taxable
entity [corporation] designated under Section 171.354; and
(4) other information required by the comptroller.
(b) The taxable entity [corporation] shall file the report
on or before the date the payment is due under Subsection (a) of
Section 171.152.
SECTION 4.30. Sections 171.202(a)-(c), (e), (f), and (i),
Tax Code, are amended to read as follows:
(a) Except as provided by Section 171.2022, a taxable entity
[corporation] on which the franchise tax is imposed shall file an
annual report with the comptroller containing:
(1) financial information of the taxable entity
[corporation] necessary to compute the tax under this chapter;
(2) the name and address of each officer and director
of the taxable entity [corporation];
(3) the name and address of the agent of the taxable
entity [corporation] designated under Section 171.354; and
(4) other information required by the comptroller.
(b) The taxable entity [corporation] shall file the report
before May 16 of each year after the beginning of the regular annual
period. The report shall be filed on forms supplied by the
comptroller.
(c) The comptroller shall grant an extension of time to a
taxable entity [corporation] that is not required by rule to make
its tax payments by electronic funds transfer for the filing of a
report required by this section to any date on or before the next
November 15, if a taxable entity [corporation]:
(1) requests the extension, on or before May 15, on a
form provided by the comptroller; and
(2) remits with the request:
(A) not less than 90 percent of the amount of tax
reported as due on the report filed on or before November 15; or
(B) 100 percent of the tax reported as due for the
previous calendar year on the report due in the previous calendar
year and filed on or before May 14.
(e) The comptroller shall grant an extension of time for the
filing of a report required by this section by a taxable entity
[corporation] required by rule to make its tax payments by
electronic funds transfer to any date on or before the next August
15, if the taxable entity [corporation]:
(1) requests the extension, on or before May 15, on a
form provided by the comptroller; and
(2) remits with the request:
(A) not less than 90 percent of the amount of tax
reported as due on the report filed on or before August 15; or
(B) 100 percent of the tax reported as due for the
previous calendar year on the report due in the previous calendar
year and filed on or before May 14.
(f) The comptroller shall grant an extension of time to a
taxable entity [corporation] required by rule to make its tax
payments by electronic funds transfer for the filing of a report due
on or before August 15 to any date on or before the next November 15,
if the taxable entity [corporation]:
(1) requests the extension, on or before August 15, on
a form provided by the comptroller; and
(2) remits with the request the difference between the
amount remitted under Subsection (e) and 100 percent of the amount
of tax reported as due on the report filed on or before November 15.
(i) If a taxable entity [corporation] requesting an
extension under Subsection (c) or (e) does not file the report due
in the previous calendar year on or before May 14, the taxable
entity [corporation] may not receive an extension under Subsection
(c) or (e) unless the taxable entity [corporation] complies with
Subsection (c)(2)(A) or (e)(2)(A), as appropriate.
SECTION 4.31. Section 171.2022, Tax Code, is amended to
read as follows:
Sec. 171.2022. EXEMPTION FROM REPORTING REQUIREMENTS. A
taxable entity [corporation] that does not owe any tax under this
chapter for any period is not required to file a report under
Section 171.201 or[,] 171.202[, or 171.2021]. The exemption
applies only to a period for which no tax is due.
SECTION 4.32. Section 171.204, Tax Code, is amended to read
as follows:
Sec. 171.204. INFORMATION REPORT. (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 taxable entity
[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 taxable entity's [corporation's] taxable capital
and earned surplus, or any other information the comptroller may
request.
(b) The comptroller may require a taxable entity [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
taxable entity's [corporation's] gross receipts from its entire
business. The comptroller may not require a taxable entity
[corporation] described by this subsection to file an information
report that requires the taxable entity [corporation] to report or
compute its earned surplus or taxable capital.
SECTION 4.33. Section 171.205, Tax Code, is amended to read
as follows:
Sec. 171.205. ADDITIONAL INFORMATION REQUIRED BY
COMPTROLLER. The comptroller may require a taxable entity
[corporation] on which the franchise tax is imposed to furnish to
the comptroller information from the taxable entity's
[corporation's] books and records that has not been filed
previously and that is necessary for the comptroller to determine
the amount of the tax.
SECTION 4.34. Section 171.206, Tax Code, is amended to read
as follows:
Sec. 171.206. CONFIDENTIAL INFORMATION. Except as provided
by Section 171.207 [of this code], the following information is
confidential and may not be made open to public inspection:
(1) information that is obtained from a record or
other instrument that is required by this chapter to be filed with
the comptroller; or
(2) information, including information about the
business affairs, operations, profits, losses, or expenditures of a
taxable entity [corporation], obtained by an examination of the
books and records, officers, partners, trustees, agents, or
employees of a taxable entity [corporation] on which a tax is
imposed by this chapter.
SECTION 4.35. Section 171.208, Tax Code, is amended to read
as follows:
Sec. 171.208. PROHIBITION OF DISCLOSURE OF INFORMATION. A
person, including a state officer or employee or an owner [a
shareholder] of a taxable entity [corporation], who has access to a
report filed under this chapter may not make known in a manner not
permitted by law the amount or source of the taxable entity's
[corporation's] income, profits, losses, expenditures, or other
information in the report relating to the financial condition of
the taxable entity [corporation].
SECTION 4.36. Section 171.209, Tax Code, is amended to read
as follows:
Sec. 171.209. RIGHT OF OWNER [SHAREHOLDER] TO EXAMINE OR
RECEIVE REPORTS. If an owner [a person owning at least one share of
outstanding stock] of a taxable entity [corporation] on whom the
franchise tax is imposed presents evidence of the ownership to the
comptroller, the person is entitled to examine or receive a copy of
an initial or annual report that is filed under Section 171.201 or
171.202 [of this code] and that relates to the taxable entity
[corporation].
SECTION 4.37. Section 171.211, Tax Code, is amended to read
as follows:
Sec. 171.211. EXAMINATION OF [CORPORATE] RECORDS. To
determine the franchise tax liability of a taxable entity
[corporation], the comptroller may investigate or examine the
records of the taxable entity [corporation].
SECTION 4.38. The heading to Subchapter F, Chapter 171, Tax
Code, is amended to read as follows:
SUBCHAPTER F. FORFEITURE OF CORPORATE AND BUSINESS PRIVILEGES
SECTION 4.39. 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 4.40. Section 171.351, Tax Code, is amended to read
as follows:
Sec. 171.351. VENUE OF SUIT TO ENFORCE CHAPTER. Venue of a
civil suit against a taxable entity [corporation] to enforce this
chapter is either in a county where the taxable entity's
[corporation's] principal office is located according to its
charter or certificate of authority or in Travis County.
SECTION 4.41. Section 171.353, Tax Code, is amended to read
as follows:
Sec. 171.353. APPOINTMENT OF RECEIVER. If a court forfeits
a taxable entity's [corporation's] charter or certificate of
authority, the court may appoint a receiver for the taxable entity
[corporation] and may administer the receivership under the laws
relating to receiverships.
SECTION 4.42. Section 171.354, Tax Code, is amended to read
as follows:
Sec. 171.354. AGENT FOR SERVICE OF PROCESS. Each taxable
entity [corporation] on which a tax is imposed by this chapter shall
designate a resident of this state as the taxable entity's
[corporation's] agent for the service of process.
SECTION 4.43. Sections 171.362(a), (d), and (e), Tax Code,
are amended to read as follows:
(a) If a taxable entity [corporation] on which a tax is
imposed by this chapter fails to pay the tax when it is due and
payable or fails to file a report required by this chapter when it
is due, the taxable entity [corporation] is liable for a penalty of
five percent of the amount of the tax due.
(d) If a taxable entity [corporation] electing to remit
under [Paragraph (A) of Subdivision (2) of Subsection (c) of]
Section 171.202(c)(2)(A) [171.202 of this code] remits less than
the amount required, the penalties imposed by this section and the
interest imposed under Section 111.060 [of this code] are assessed
against the difference between the amount required to be remitted
under [Paragraph (A) of Subdivision (2) of Subsection (c) of]
Section 171.202(c)(2)(A) [171.202] and the amount actually
remitted on or before May 15.
(e) If a taxable entity [corporation] remits the entire
amount required by [Subsection (c) of] Section 171.202(c) [171.202
of this code], no penalties will be imposed against the amount
remitted on or before November 15.
SECTION 4.44. Sections 171.363(a) and (b), Tax Code, are
amended to read as follows:
(a) A taxable entity [corporation] commits an offense if the
taxable entity [corporation] is subject to the provisions of this
chapter and the taxable entity [corporation] wilfully:
(1) fails to file a report;
(2) fails to keep books and records as required by this
chapter;
(3) files a fraudulent report;
(4) violates any rule of the comptroller for the
administration and enforcement of the provisions of this chapter;
or
(5) attempts in any other manner to evade or defeat any
tax imposed by this chapter or the payment of the tax.
(b) A person commits an offense if the person is an
accountant or an agent for or an officer or employee of a taxable
entity [corporation] and the person knowingly enters or provides
false information on any report, return, or other document filed by
the taxable entity [corporation] under this chapter.
SECTION 4.45. Section 171.401, Tax Code, is amended to read
as follows:
Sec. 171.401. REVENUE DEPOSITED IN FOUNDATION SCHOOL
[GENERAL REVENUE] FUND. The revenue from the tax imposed by this
chapter [on corporations] shall be deposited to the credit of the
foundation school [general revenue] fund.
SECTION 4.46. Chapter 171, Tax Code, is amended by adding
Subchapter V to read as follows:
SUBCHAPTER V. TAX CREDIT FOR CERTAIN PHYSICIANS
Sec. 171.901. DEFINITION. In this subchapter, "physician"
means:
(1) an individual licensed to practice medicine in
this state;
(2) a professional association organized under the
Texas Professional Association Act (Article 1528f, Vernon's Texas
Civil Statutes);
(3) an approved nonprofit health corporation
certified under Chapter 162, Occupations Code; or
(4) another person wholly owned by physicians and
engaged in the practice of medicine as permitted by Subtitle B,
Title 3, Occupations Code.
Sec. 171.902. QUALIFICATION. (a) A physician that
participates in the Medicaid program or the Children's Health
Insurance Program (CHIP) as a provider of health care services is
entitled to a credit in the amount provided by Subsection (b)
against the taxes imposed under this chapter for that calendar
quarter.
(b) The amount of credit is equal to 20 percent of the total
amount of payments the physician received from payments under the
Medicaid or Children's Health Insurance Program (CHIP) during that
calendar quarter that can be verified, if necessary.
Sec. 171.903. LIMITATIONS. (a) A physician may not
receive a credit in an amount that exceeds the amount of the tax or
assessment due after applying any other credits.
(b) A physician may not convey, assign, or transfer the
credit allowed under this subchapter to any other physician unless
all of the assets of the practice of the physician are conveyed,
assigned, or transferred in the same transaction.
Sec. 171.904. RULES. The comptroller shall adopt rules to
implement this subchapter. The Health and Human Services
Commission shall assist the comptroller in the formulation and
adoption of the rules.
SECTION 4.47. Chapter 171, Tax Code, is amended by adding
Subchapter W to read as follows:
SUBCHAPTER W. APPLICATION OF REFUNDS AND CREDITS TO NONCORPORATE
TAXABLE ENTITIES
Sec. 171.921. APPLICATION OF REFUNDS AND CREDITS TO
NONCORPORATE TAXABLE ENTITIES. A taxable entity that is not a
corporation but that, because of its activities, would qualify for
a specific refund or credit under this chapter if it were a
corporation qualifies for the refund or credit in the same manner
and under the same conditions as a corporation.
SECTION 4.48. Article 1, Texas Revised Partnership Act
(Article 6132b-1.01 et seq.), is amended by adding Section 1.07 to
read as follows:
Sec. 1.07. CERTIFICATE OF FORMATION. (a) A general
partnership may file a certificate of formation with the secretary
of state.
(b) A general partnership that files a certificate of
formation with the secretary of state is not subject to Section
171.110(a)(1)(D), Tax Code.
(c) The secretary of state shall:
(1) promulgate a form for a certificate of formation
for the purpose of this section; and
(2) establish a database, accessible to the
comptroller, of general partnerships that file certificates of
formation.
SECTION 4.49. Subchapter A, Chapter 152, Business
Organizations Code, is amended by adding Section 152.006 to read as
follows:
Sec. 152.006. CERTIFICATE OF FORMATION. (a) A general
partnership may file a certificate of formation with the secretary
of state.
(b) A general partnership that files a certificate of
formation with the secretary of state is not subject to Section
171.110(a)(1)(D), Tax Code.
(c) The secretary of state shall:
(1) promulgate a form for a certificate of formation
for the purpose of this section; and
(2) establish a database, accessible to the
comptroller, of general partnerships that file certificates of
formation.
SECTION 4.50. Sections 171.110(b), (c), (g), (i), and (j),
Tax Code, are repealed.
SECTION 4.51. (a) Subject to other provisions of this
section, this article applies to reports originally due on or after
the effective date of this article.
(b) For an entity 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) an entity 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 entity was organized in
this state or, if a foreign entity, the date it began doing business
in this state; and
(B) ending on the date the entity's last
accounting period ends in 2005 or, if none, on December 31, 2005;
and
(3) an entity subject to the earned surplus component
of the franchise tax at any time after August 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 August 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 entity was organized in
this state or, if a foreign entity, the date it began doing business
in this state; and
(B) ending on the date the entity became no
longer subject to the earned surplus component of the tax.
(c) For purposes of this article, an existing partnership is
considered as continuing if it is not terminated.
(d) A partnership is considered terminated only if no part
of any business, financial operation, or venture of the partnership
continues to be carried on by any of its partners in a partnership.
(e) For a merger or consolidation of two or more
partnerships, the resulting partnership is, for purposes of this
article, considered the continuation of any merging or
consolidating partnership whose members own an interest of more
than 50 percent in the capital and profits of the resulting
partnership.
(f) For a division of a partnership into two or more
partnerships, the resulting partnerships, other than any resulting
partnership the members of which had an interest of 50 percent or
less in the capital and profits of the prior partnership, are, for
purposes of this article, considered a continuation of the prior
partnership.
SECTION 4.52. If a credit under Chapter 171, Tax Code, as
amended by this article, is found by a court in a final judgment
upheld on appeal or no longer subject to appeal to be
unconstitutional, the credit is disallowed for all entities on or
after the date the final judgment was entered by the court and an
entity is not entitled to and may not apply for the credit on or
after that date for any reporting period beginning before, on, or
after that date.
SECTION 4.53. (a) This section applies to a suit brought by
an entity subject to the tax under Chapter 171, Tax Code, as amended
by this article, contending that the imposition of the tax on the
entity is unconstitutional.
(b) The suit must be brought in a district court in Travis
County.
(c) The judgment of the district court may be reviewed only
by direct appeal to the supreme court filed on or before the 15th
day after the date the district court enters its judgment. The
district court shall try the suit and the supreme court shall hear
any appeal relating to the suit as expeditiously as possible.
(d) If an entity bringing a suit to which this section
applies contends, in whole or in part, that the imposition of the
tax under Chapter 171, Tax Code, as amended by this article, on the
entity is unconstitutional because of the requirements of Section
24, Article VIII, Texas Constitution, and a court in a final
judgment upheld on appeal or no longer subject to appeal finds that
it is unconstitutional on that basis, then, notwithstanding Section
171.110(a)(1)(D), Tax Code, as added by this article, all taxable
entities, other than a corporation or limited liability company,
shall, in determining net taxable earned surplus:
(1) subtract that portion of the taxable entity's
reportable federal taxable income on which the imposition of the
tax under Chapter 171, Tax Code, as amended by this article, has
been found to be unconstitutional; and
(2) add the product of an amount equal to 0.75 percent
of the gross receipts, as defined under Section 171.1051, Tax Code,
as amended by this article, of the taxable entity times the ratio of
the portion of the entity's income described under Subdivision (1)
to the total income of the entity.
SECTION 4.54. This article takes effect September 1, 2005,
and applies to reports originally due on or after that date.
ARTICLE 5. SALES AND USE TAXES
PART A. STATE SALES AND USE TAX
SECTION 5A.01. Section 151.051(b), Tax Code, is amended to
read as follows:
(b) The sales tax rate is 6.5 [6 1/4] percent of the sales
price of the taxable item sold.
SECTION 5A.01A. (a) Section 151.051(b), Tax Code, is
amended to read as follows:
(b) The sales tax rate is 6.75 [6 1/4] percent of the sales
price of the taxable item sold.
(b) This section takes effect on the first anniversary of
the date Section 5A.01 of this Act takes effect, but only if the
constitutional amendment proposed by S.J.R. No. 38, 79th
Legislature, Regular Session, 2005, is approved by the voters. If
that amendment is not approved by the voters, this section has no
effect.
SECTION 5A.02. Subchapter H, Chapter 151, Tax Code, is
amended by adding Section 151.327 to read as follows:
Sec. 151.327. SCHOOL SUPPLIES BEFORE START OF SCHOOL. (a)
The sale or storage, use, or other consumption of a school supply,
including a backpack, is exempted from the taxes imposed by this
chapter if the school supply is purchased:
(1) for use by a student in a class in a public or
private elementary or secondary school;
(2) during the period described by Section
151.326(a)(2); and
(3) for a sales price of less than $100 per item.
(b) The comptroller shall adopt rules specifying the school
supplies that are exempt from taxation under this section.
(c) The exemption provided by this section does not apply to
the purchase of a textbook.
SECTION 5A.03. (a) Subchapter I, Chapter 151, Tax Code, is
amended by adding Section 151.433 to read as follows:
Sec. 151.433. TAX REIMBURSEMENT FOR FINANCIAL ASSISTANCE
AND FOOD STAMP RECIPIENTS. (a) This section applies to a person
who:
(1) receives financial assistance under Chapter 31,
Human Resources Code, or nutritional assistance under Chapter 33,
Human Resources Code, through the use of an electronic benefits
transfer system; or
(2) is eligible to receive financial assistance under
Chapter 31, Human Resources Code, through the use of an electronic
benefits transfer system, but to whom that financial assistance is
not paid because a sanction is applied against the person under
Section 31.0032, Human Resources Code.
(b) The comptroller and the executive commissioner of the
Health and Human Services Commission by joint rule shall establish
a program to reimburse a person to which this section applies for 20
percent of the estimated tax the person will pay under this chapter
during a state fiscal year.
(c) Not later than August 15 of each year, using available
statistical data, the comptroller by rule shall estimate the amount
of taxes a person to which this section applies will pay under this
chapter during the next state fiscal year. In estimating that
amount, the comptroller shall consider:
(1) the amount of the individual's federal adjusted
gross income, as defined by federal law;
(2) the number of dependents the individual has for
federal income tax purposes; and
(3) any other information the comptroller considers
appropriate.
(d) Based on the estimations made under Subsection (c), the
comptroller shall develop and adopt a table specifying by income
bracket and number of dependents:
(1) the estimated amount of taxes persons to which
this section applies will pay under this chapter during the next
state fiscal year; and
(2) the amount of reimbursement the persons are
eligible to receive under Subsection (b).
(e) The comptroller shall provide the table to the executive
commissioner of the Health and Human Services Commission as soon as
possible after the date the table is adopted. Using the table, the
executive commissioner shall provide to each person to which this
section applies reimbursement in the form of:
(1) additional monthly state money payments if the
person is receiving financial assistance under Chapter 31, Human
Resources Code; or
(2) additional monthly nutritional assistance if the
person is not receiving financial assistance under Chapter 31,
Human Resources Code, but is receiving nutritional assistance under
Chapter 33, Human Resources Code.
(f) Reimbursement provided under Subsection (e) must be
made available to the person using the electronic benefits transfer
system through which the person is receiving the financial or
nutritional assistance. Except as provided by Subsection (g), the
amount of the monthly reimbursement is equal to one-twelfth of the
amount determined under Subsection (d)(2).
(g) Notwithstanding any other law, the total amount of
reimbursements provided under this section may not exceed $100
million each state fiscal year. The comptroller and the executive
commissioner of the Health and Human Services Commission shall take
any necessary action to ensure that this limit is not exceeded,
including:
(1) decreasing the percentage of reimbursement of
taxes paid under this chapter for which a person is otherwise
eligible;
(2) decreasing the amounts of the monthly state money
payments or monthly nutritional assistance on a pro rata basis or by
a specific amount; or
(3) suspending the reimbursements.
(h) Notwithstanding any other law, a person described by
Subsection (a)(2) is entitled to reimbursement provided under this
section to the same extent the person would be entitled to that
reimbursement if a sanction were not applied against the person
under Section 31.0032, Human Resources Code.
(b) Subchapter B, Chapter 31, Human Resources Code, is
amended by adding Section 31.0321 to read as follows:
Sec. 31.0321. EXCLUSION OF CERTAIN TAX REIMBURSEMENTS. The
Health and Human Services Commission may not consider any
reimbursement of estimated taxes to which a person may be entitled
under Section 151.433, Tax Code, in determining:
(1) whether the person meets household income and
resource requirements for financial assistance under this chapter;
or
(2) the amount of financial assistance granted to the
person under this chapter for the support of dependent children.
(c) Chapter 33, Human Resources Code, is amended by adding
Section 33.028 to read as follows:
Sec. 33.028. EXCLUSION OF CERTAIN TAX REIMBURSEMENTS. To
the extent permitted by federal law, the Health and Human Services
Commission may not consider any reimbursement of estimated taxes to
which a person may be entitled under Section 151.433, Tax Code, in
determining whether the person meets the household income and
resource requirements for eligibility for food stamps.
(d) If before implementing any provision of this section a
state agency determines that a waiver or authorization from a
federal agency is necessary for implementation of that provision,
the agency affected by the provision shall request the waiver or
authorization and may delay implementing that provision until the
waiver or authorization is granted.
SECTION 5A.04. The change in law made by this part does not
affect tax liability accruing before the effective date of this
part. That liability continues in effect as if this part had not
been enacted, and the former law is continued in effect for the
collection of taxes due and for civil and criminal enforcement of
the liability of those taxes.
SECTION 5A.05. Except as otherwise provided by this part,
this part takes effect July 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 October 1, 2005.
PART B. MOTOR VEHICLE SALES AND USE TAX
SECTION 5B.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 5B.02. Section 152.021(b), Tax Code, is amended to
read as follows:
(b) The tax rate is 6.5 [6 1/4] percent of the total
consideration.
SECTION 5B.02A. (a) Section 152.021(b), Tax Code, is
amended to read as follows:
(b) The tax rate is 6.75 [6 1/4] percent of the total
consideration.
(b) This section takes effect on the first anniversary of
the date on which Section 5B.02 of this Act takes effect, but only
if the constitutional amendment proposed by S.J.R. No. 38, 79th
Legislature, Regular Session, 2005, is approved by the voters. If
that amendment is not approved by the voters, this section has no
effect.
SECTION 5B.03. Section 152.022(b), Tax Code, is amended to
read as follows:
(b) The tax rate is 6.5 [6 1/4] percent of the total
consideration.
SECTION 5B.03A. (a) Section 152.022(b), Tax Code, is
amended to read as follows:
(b) The tax rate is 6.75 [6 1/4] percent of the total
consideration.
(b) This section takes effect on the first anniversary of
the date Section 5B.03 of this Act takes effect, but only if the
constitutional amendment proposed by S.J.R. No. 38, 79th
Legislature, Regular Session, 2005, is approved by the voters. If
that amendment is not approved by the voters, this section has no
effect.
SECTION 5B.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 6.5
[6 1/4] percent of the gross rental receipts from the rental of a
rented motor vehicle for longer than 30 days.
SECTION 5B.04A. (a) 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
6.75 [6 1/4] percent of the gross rental receipts from the rental of
a rented motor vehicle for longer than 30 days.
(b) This section takes effect on the first anniversary of
the date Section 5B.04 of this Act takes effect, but only if the
constitutional amendment proposed by S.J.R. No. 38, 79th
Legislature, Regular Session, 2005, is approved by the voters. If
that amendment is not approved by the voters, this section has no
effect.
SECTION 5B.05. Section 152.028(b), Tax Code, is amended to
read as follows:
(b) The tax rate is 6.5 [6 1/4] percent of the total
consideration.
SECTION 5B.05A. (a) Section 152.028(b), Tax Code, is
amended to read as follows:
(b) The tax rate is 6.75 [6 1/4] percent of the total
consideration.
(b) This section takes effect on the first anniversary of
the date Section 5B.05 of this Act takes effect, but only if the
constitutional amendment proposed by S.J.R. No. 38, 79th
Legislature, Regular Session, 2005, is approved by the voters. If
that amendment is not approved by the voters, this section has no
effect.
SECTION 5B.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 5B.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 5B.08. Not later than October 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 5B.09. (a) Except as provided by this part and
Subsection (b) of this section, this part takes effect July 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 September 1, 2005.
(b) Section 152.0412, Tax Code, as added by this part, takes
effect October 1, 2005.
PART C. BOAT AND MOTOR BOAT SALES AND USE TAX
SECTION 5C.01. Section 160.021(b), Tax Code, is amended to
read as follows:
(b) The tax rate is 6.5 [6 1/4] percent of the total
consideration.
SECTION 5C.01A. (a) Section 160.021(b), Tax Code, is
amended to read as follows:
(b) The tax rate is 6.75 [6 1/4] percent of the total
consideration.
(b) This section takes effect on the first anniversary of
the date Section 5C.01 of this Act takes effect, but only if the
constitutional amendment proposed by S.J.R. No. 38, 79th
Legislature, Regular Session, 2005, is approved by the voters. If
that amendment is not approved by the voters, this section has no
effect.
SECTION 5C.02. Section 160.022(b), Tax Code, is amended to
read as follows:
(b) The tax rate is 6.5 [6 1/4] percent of the total
consideration.
SECTION 5C.02A. (a) Section 160.022(b), Tax Code, is
amended to read as follows:
(b) The tax rate is 6.75 [6 1/4] percent of the total
consideration.
(b) This section takes effect on the first anniversary of
the date Section 5C.02 of this Act takes effect, but only if the
constitutional amendment proposed by S.J.R. No. 38, 79th
Legislature, Regular Session, 2005, is approved by the voters. If
that amendment is not approved by the voters, this section has no
effect.
SECTION 5C.03. This part takes effect July 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 September 1, 2005.
PART D. MOTOR FUELS TAX
SECTION 5D.01. Section 162.503, Tax Code, is amended to
read as follows:
Sec. 162.503. ALLOCATION OF GASOLINE TAX. (a) Except as
provided by Subsection (b), on [On] or before the fifth workday
after the end of each month, the comptroller, after making all
deductions for refund purposes and for the amounts allocated under
Sections 162.502 and 162.5025, shall allocate the net remainder of
the taxes collected under Subchapter B as follows:
(1) one-fourth of the tax shall be deposited to the
credit of the available school fund;
(2) one-half of the tax shall be deposited to the
credit of the state highway fund for the construction and
maintenance of the state road system under existing law; and
(3) from the remaining one-fourth of the tax the
comptroller shall:
(A) deposit to the credit of the county and road
district highway fund all the remaining tax receipts until a total
of $7,300,000 has been credited to the fund each fiscal year; and
(B) after the amount required to be deposited to
the county and road district highway fund has been deposited,
deposit to the credit of the state highway fund the remainder of the
one-fourth of the tax, the amount to be provided on the basis of
allocations made each month of the fiscal year, which sum shall be
used by the Texas Department of Transportation for the
construction, improvement, and maintenance of farm-to-market
roads.
(b) During the months of June, July, and August of each
odd-numbered year, the comptroller may not make the allocations to
the state highway fund and county and road district highway fund
otherwise required by Subsections (a)(2) and (3). After September
5 and before September 11 of that year, the comptroller shall
allocate and deposit to the state highway fund the total amount of
revenue that would have been otherwise allocated and deposited to
that fund during those months.
SECTION 5D.02. Section 162.504, Tax Code, is amended to
read as follows:
Sec. 162.504. ALLOCATION OF DIESEL FUEL TAX. (a) Except as
provided by Subsection (b), on [On] or before the fifth workday
after the end of each month, the comptroller, after making
deductions for refund purposes, for the administration and
enforcement of this chapter, and for the amounts allocated under
Section 162.5025, shall allocate the remainder of the taxes
collected under Subchapter C as follows:
(1) one-fourth of the taxes shall be deposited to the
credit of the available school fund; and
(2) three-fourths of the taxes shall be deposited to
the credit of the state highway fund.
(b) During the months of June, July, and August of each
odd-numbered year, the comptroller may not make the allocation to
the state highway fund otherwise required by Subsection (a)(2).
After September 5 and before September 11 of that year, the
comptroller shall allocate and deposit to the state highway fund
the total amount of revenue that would have been otherwise
allocated to that fund during those months.
SECTION 5D.03. Section 162.505, Tax Code, is amended to
read as follows:
Sec. 162.505. ALLOCATION OF LIQUEFIED GAS TAX. (a) Except
as provided by Subsection (b), on [On] or before the fifth workday
after the end of each month, the comptroller, after making
deductions for refund purposes and for the administration and
enforcement of this chapter, shall allocate the remainder of the
taxes collected under Subchapter D as follows:
(1) one-fourth of the taxes shall be deposited to the
credit of the available school fund; and
(2) three-fourths of the taxes shall be deposited to
the credit of the state highway fund.
(b) During the months of June, July, and August of each
odd-numbered year, the comptroller may not make the allocation to
the state highway fund otherwise required by Subsection (a)(2).
After September 5 and before September 11 of that year, the
comptroller shall allocate and deposit to the state highway fund
the total amount of revenue that would have been otherwise
allocated to that fund during those months.
SECTION 5D.04. This part takes effect July 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 September 1, 2005.
PART E. HOTEL OCCUPANCY TAXES
SECTION 5E.01. Section 156.001, Tax Code, is amended to
read as follows:
Sec. 156.001. DEFINITION. In this chapter, "hotel" means a
building in which members of the public obtain sleeping
accommodations for consideration. The term includes a hotel,
motel, tourist home, tourist house, tourist court, lodging house,
inn, rooming house, or bed and breakfast. The term does not
include:
(1) a hospital, sanitarium, or nursing home; [or]
(2) a dormitory or other housing facility owned or
leased and operated by an institution of higher education or a
private or independent institution of higher education as those
terms are defined by Section 61.003, Education Code, used by the
institution for the purpose of providing sleeping accommodations
for persons engaged in an educational program or activity at the
institution; or
(3) that part of an apartment or condominium building
that consists of unfurnished dwelling units that are leased to
tenants, as defined by Section 92.001, Property Code.
SECTION 5E.02. Section 351.002(c), Tax Code, is amended to
read as follows:
(c) The tax does not apply to a person who has the right to
use or possess a room in a hotel for at least 30 consecutive days, so
long as there is no interruption of payment for that period [is a
permanent resident under Section 156.101 of this code].
SECTION 5E.03. Section 352.001(1), Tax Code, is amended to
read as follows:
(1) "Hotel" has the meaning assigned by Section
156.001 [156.001(1)].
SECTION 5E.04. Section 352.002(c), Tax Code, is amended to
read as follows:
(c) The tax does not apply to a person who has the right to
use or possess a room in a hotel for at least 30 consecutive days, so
long as there is no interruption of payment for that period [is a
permanent resident under Section 156.101 of this code].
SECTION 5E.05. Section 156.101, Tax Code, is repealed.
SECTION 5E.06. This part takes effect July 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 October 1, 2005.
ARTICLE 6. TAX ON TOBACCO PRODUCTS AND ALCOHOL
PART A. CIGARETTE AND TOBACCO PRODUCTS
SECTION 6A.01. Section 154.021(b), Tax Code, is amended to
read as follows:
(b) The tax rates are:
(1) $58 [$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 6A.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 6A.03. Section 155.0211(b), Tax Code, is amended to
read as follows:
(b) The tax rate for tobacco products other than cigars is
44.02 [35.213] percent of the manufacturer's list price, exclusive
of any trade discount, special discount, or deal.
SECTION 6A.04. This part takes effect July 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 September 1, 2005.
PART B. ALCOHOL TAXES
SECTION 6B.01. Section 201.03, Alcoholic Beverage Code, is
amended to read as follows:
Sec. 201.03. TAX ON DISTILLED SPIRITS. (a) A tax is
imposed on the first sale of distilled spirits at the rate of $3
[$2.40] per gallon.
(b) The minimum tax imposed on packages of distilled spirits
containing two ounces or less is 6.25 [five] cents per package.
(c) Should packages containing less than one-half pint but
more than two ounces ever be legalized in this state, the minimum
tax imposed on each of these packages is 15.25 cents [$0.122].
SECTION 6B.02. Section 201.04, Alcoholic Beverage Code, is
amended to read as follows:
Sec. 201.04. TAX ON VINOUS LIQUOR. (a) A tax is imposed on
the first sale of vinous liquor that does not contain over 14
percent of alcohol by volume at the rate of 25.5 [20.4] cents per
gallon.
(b) A tax is imposed on vinous liquor that contains more
than 14 percent of alcohol by volume at the rate of 51 [40.8] cents
per gallon.
(c) A tax is imposed on artificially carbonated and natural
sparkling vinous liquor at the rate of 64.5 [51.6] cents per gallon.
SECTION 6B.03. Section 201.42, Alcoholic Beverage Code, is
amended to read as follows:
Sec. 201.42. TAX ON ALE AND MALT LIQUOR. A tax is imposed on
the first sale of ale and malt liquor at the rate of 24.75 cents
[$0.198] per gallon.
SECTION 6B.04. Section 203.01, Alcoholic Beverage Code, is
amended to read as follows:
Sec. 203.01. TAX ON BEER. A tax is imposed on the first sale
of beer manufactured in this state or imported into this state at
the rate of $7.50 [six dollars] per barrel.
SECTION 6B.05. Section 183.021, Tax Code, is amended to
read as follows:
Sec. 183.021. TAX IMPOSED ON MIXED BEVERAGES. A tax at the
rate of 17.5 [14] percent is imposed on the gross receipts of a
permittee received from the sale, preparation, or service of mixed
beverages or from the sale, preparation, or service of ice or
nonalcoholic beverages that are sold, prepared, or served for the
purpose of being mixed with an alcoholic beverage and consumed on
the premises of the permittee.
SECTION 6B.06. This part takes effect July 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 September 1, 2005.
ARTICLE 7. MISCELLANEOUS FEES AND FUNDS
PART A. TRANSFERRING CERTAIN TOBACCO SETTLEMENT PROCEEDS INTO
DEDICATED GENERAL REVENUE ACCOUNTS
SECTION 7A.01. Subchapter G, Chapter 403, Government Code,
is amended by adding Sections 403.108 and 403.1081-403.1083 to read
as follows:
Sec. 403.108. SECONDARY HEALTH ACCOUNT FOR HIGHER
EDUCATION. (a) In this section:
(1) "Earnings account" means the account described by
Subsection (d).
(2) "Secondary account" means the secondary health
account for higher education.
(b) The secondary account and the earnings account are
dedicated accounts in the general revenue fund.
(c) The secondary account consists of:
(1) money transferred to the account at the direction
of the legislature; and
(2) donations to the account.
(d) The earnings account consists of the earnings received
from investment of the assets in the secondary account. The
comptroller shall periodically transfer those earnings from the
secondary account to the earnings account.
(e) Money in the secondary account may be used only for a
purpose described by Subsection (d) or (f).
(f) The comptroller shall manage and invest assets in the
secondary account in authorized investments under Section 404.024.
Any expenses incurred by the comptroller in managing and investing
assets in the secondary account shall be paid from the account.
(g) Money in the earnings account may be appropriated only
for a purpose specified in and subject to any conditions and
reporting requirements prescribed by Subchapter A, Chapter 63,
Education Code, for the use of money from the permanent health fund
for higher education.
(h) An institution of higher education that has accepted a
gift under former Subchapter I, Chapter 51, Education Code, that
was conditioned on the institution's receipt of state matching
funds from the eminent scholars fund may use money the institution
receives under this section to provide the state matching funds and
treat the money as if it were a distribution to the institution from
the eminent scholars fund for purposes of the former Subchapter I.
(i) An institution of higher education that receives a
distribution from the earnings account shall include in the report
required by Section 63.004, Education Code:
(1) the total amount of money the institution received
from the account;
(2) the purpose for which the money was used; and
(3) any other information required by the Legislative
Budget Board.
(j) Section 404.071 does not apply to the secondary account
or the earnings account.
Sec. 403.1081. SECONDARY ACCOUNTS FOR EACH INSTITUTION OF
HIGHER EDUCATION. (a) In this section:
(1) "Earnings account" means an account described by
Subsection (e).
(2) "Secondary account" means the secondary accounts
described by Subsection (b).
(b) In addition to the permanent endowment funds created by
Section 63.101, Education Code, there is a secondary account for
the benefit of each institution of higher education or group of
related components of an institution of higher education listed in
Section 63.101(a), Education Code.
(c) Each secondary account and earnings account is a
dedicated account in the general revenue fund.
(d) A secondary account consists of:
(1) money transferred to the account at the direction
of the legislature; and
(2) donations to the account.
(e) An earnings account for an institution or group of
related components of an institution consists of the earnings
received from investment of the assets in the corresponding
secondary account for the institution or group of components. The
comptroller shall periodically transfer those earnings from the
secondary account to the earnings account.
(f) Money in a secondary account may be used only for a
purpose described by Subsection (e) or (g).
(g) The comptroller shall manage and invest assets in a
secondary account in authorized investments under Section 404.024.
Any expenses incurred by the comptroller in managing and investing
assets in a secondary account shall be paid from the account.
(h) Money in an earnings account may be appropriated only
for a purpose specified in and subject to any conditions and
reporting requirements prescribed by Subchapter B, Chapter 63,
Education Code, for the use of money from the corresponding
permanent endowment fund established by that subchapter.
(i) An institution of higher education that has accepted a
gift under former Subchapter I, Chapter 51, Education Code, that
was conditioned on the institution's receipt of state matching
funds from the eminent scholars fund may use money the institution
receives under this section to provide the state matching funds and
treat the money as if it were a distribution to the institution from
the eminent scholars fund for purposes of the former Subchapter I.
(j) An institution of higher education that receives an
appropriation from an earnings account shall include in the report
required by Section 63.103, Education Code:
(1) the total amount of money the institution received
from the account;
(2) the purpose for which the money was used; and
(3) any other information required by the Legislative
Budget Board.
(k) Section 404.071 does not apply to a secondary account or
an earnings account.
Sec. 403.1082. SECONDARY ACCOUNT FOR HIGHER EDUCATION
NURSING, ALLIED HEALTH, AND OTHER HEALTH-RELATED PROGRAMS. (a) In
this section:
(1) "Earnings account" means the account described by
Subsection (d).
(2) "Secondary account" means the secondary account
for higher education nursing, allied health, and other
health-related programs.
(b) The secondary account and the earnings account are
dedicated accounts in the general revenue fund.
(c) The secondary account consists of:
(1) money transferred to the account at the direction
of the legislature; and
(2) donations to the account.
(d) The earnings account consists of the earnings received
from investment of the assets in the secondary account. The
comptroller shall periodically transfer those earnings from the
secondary account to the earnings account.
(e) Money in the secondary account may be used only for a
purpose described by Subsection (d) or (f).
(f) The comptroller shall manage and invest assets in the
secondary account in authorized investments under Section 404.024.
Any expenses incurred by the comptroller in managing and investing
assets in the secondary account shall be paid from the account.
(g) Money in the earnings account may be appropriated only
for a purpose specified in and subject to any conditions and
reporting requirements prescribed by Subchapter C, Chapter 63,
Education Code, for the use of money from the permanent fund for
higher education nursing, allied health, and other health-related
programs.
(h) The Texas Higher Education Coordinating Board shall
include in the report required by Section 63.203, Education Code:
(1) the name of each institution that received a grant
from the earnings account;
(2) the purpose for which the grant was used; and
(3) any additional information required by the
Legislative Budget Board.
(i) Section 404.071 does not apply to the secondary account
or the earnings account.
Sec. 403.1083. SECONDARY ACCOUNT FOR MINORITY HEALTH
RESEARCH AND EDUCATION. (a) In this section:
(1) "Earnings account" means the account described by
Subsection (d).
(2) "Secondary account" means the secondary account
for minority health research and education.
(b) The secondary account and the earnings account are
dedicated accounts in the general revenue fund.
(c) The secondary account consists of:
(1) money transferred to the account at the direction
of the legislature; and
(2) donations to the account.
(d) The earnings account consists of the earnings received
from investment of the assets in the secondary account. The
comptroller shall periodically transfer those earnings from the
secondary account to the earnings account.
(e) Money in the secondary account may be used only for a
purpose described by Subsection (d) or (f).
(f) The comptroller shall manage and invest assets in the
secondary account in authorized investments under Section 404.024.
Any expenses incurred by the comptroller in managing and investing
assets in the secondary account shall be paid from the account.
(g) Money in the earnings account may be appropriated only
to the Texas Higher Education Coordinating Board for the purpose of
providing grants as specified by Section 63.302(c), Education Code,
for money from the permanent fund for minority health research and
education.
(h) The Texas Higher Education Coordinating Board shall
report regarding the money received under this section in the
manner required by Section 63.302(f), Education Code, and shall
include in the report:
(1) the total amount distributed under this section;
(2) the name of each institution that received a
grant;
(3) the purpose of each grant, including a description
of any partnership formed; and
(4) any additional information required by the
Legislative Budget Board.
(i) Section 404.071 does not apply to the secondary account
or the earnings account.
SECTION 7A.02. Section 403.1069, Government Code, is
amended to read as follows:
Sec. 403.1069. REPORTING REQUIREMENT. The Department of
State Health Services [department] shall provide a report to the
Legislative Budget Board on the permanent funds established under
this subchapter from which the department may receive an
appropriation of the available earnings [to the Legislative Budget
Board] no later than November 1 of each year. The report shall
include the total amount of money distributed from each fund, the
purpose for which the money was used, and any additional
information that may be requested by the Legislative Budget Board.
SECTION 7A.03. (a) On November 1, 2006, all amounts held in
the following funds shall be transferred, in the estimated amount
listed, to the accounts established under Sections 403.108,
403.1081, 403.1082, and 403.1083, Government Code, as added by this
Act, as specified by this section: Fund Number Fund Name Amount
0810 Permanent Health Fund for
Higher Education $376,600,000
0811 Permanent Endowment Fund for Health Related Institutions -
University of Texas Health
Science Center at San Antonio $215,200,000
0812 Permanent Endowment Fund for
Health Related Institutions -
University of Texas M.D.
Anderson Cancer Center $107,600,000
0813 Permanent Endowment Fund for
Health Related Institutions -
University of Texas
Southwestern Medical
Center at Dallas $53,800,000
0814 Permanent Endowment Fund for
Health Related Institutions -
University of Texas Medical
Branch at Galveston $26,900,000
0815 Permanent Endowment Fund for
Health Related Institutions -
University of Texas Health
Science Center at Houston $26,900,000
0816 Permanent Endowment Fund for
Health Related Institutions -
University of Texas Health
Science Center at Tyler $26,900,000
0817 Permanent Endowment Fund for
Health Related Institutions -
University of Texas at El Paso $26,900,000
0818 Permanent Endowment Fund for
Health Related Institutions -
Texas A&M University Health
Science Center $25,600,000
0819 Permanent Endowment Fund for
Health Related Institutions -
University of North Texas
Health Science Center at
Fort Worth $25,400,000
0820 Permanent Endowment Fund for
Health Related Institutions -
Components of Texas Tech
University Health Science
Center in El Paso $26,500,000
0821 Permanent Endowment Fund for
Health Related Institutions -
Components of Texas Tech
University Health Science
Center other than El Paso $26,500,000
0822 Permanent Endowment Fund for
Health Related Institutions -
University of Texas Regional
Academic Health Center $21,500,000
0823 Permanent Endowment Fund for
Health Related Institutions -
Baylor College of Medicine $24,400,000
0824 Permanent Fund for Higher
Education Nursing, Allied
Health and Other Health
Related Programs $44,000,000
0825 Permanent Fund for Minority
Health Research and Education $24,400,000
Informational Total: $1,079,100,000
(b) Amounts transferred from the Permanent Health Fund for
Higher Education shall be deposited to the credit of the secondary
health account for higher education established under Section
403.108, Government Code, as added by this Act.
(c) Amounts transferred from the Permanent Endowment Fund
for Health Related Institutions - University of Texas Health
Science Center at San Antonio shall be deposited to the credit of
the secondary account established for the benefit of The University
of Texas Health Science Center at San Antonio under Section
403.1081, Government Code, as added by this Act.
(d) Amounts transferred from the Permanent Endowment Fund
for Health Related Institutions - University of Texas M. D.
Anderson Cancer Center shall be deposited to the credit of the
secondary account established for the benefit of The University of
Texas M. D. Anderson Cancer Center under Section 403.1081,
Government Code, as added by this Act.
(e) Amounts transferred from the Permanent Endowment Fund
for Health Related Institutions - University of Texas Southwestern
Medical Center at Dallas shall be deposited to the credit of the
secondary account established for the benefit of The University of
Texas Southwestern Medical Center at Dallas under Section 403.1081,
Government Code, as added by this Act.
(f) Amounts transferred from the Permanent Endowment Fund
for Health Related Institutions - University of Texas Medical
Branch at Galveston shall be deposited to the credit of the
secondary account established for the benefit of The University of
Texas Medical Branch at Galveston under Section 403.1081,
Government Code, as added by this Act.
(g) Amounts transferred from the Permanent Endowment Fund
for Health Related Institutions - University of Texas Health
Science Center at Houston shall be deposited to the credit of the
secondary account established for the benefit of The University of
Texas Health Science Center at Houston under Section 403.1081,
Government Code, as added by this Act.
(h) Amounts transferred from the Permanent Endowment Fund
for Health Related Institutions - University of Texas Health
Science Center at Tyler shall be deposited to the credit of the
secondary account established for the benefit of The University of
Texas Health Science Center at Tyler under Section 403.1081,
Government Code, as added by this Act.
(i) Amounts transferred from the Permanent Endowment Fund
for Health Related Institutions - University of Texas at El Paso
shall be deposited to the credit of the secondary account
established for the benefit of The University of Texas at El Paso
under Section 403.1081, Government Code, as added by this Act.
(j) Amounts transferred from the Permanent Endowment Fund
for Health Related Institutions - Texas A&M University Health
Science Center shall be deposited to the credit of the secondary
account established for the benefit of The Texas A&M University
Health Science Center under Section 403.1081, Government Code, as
added by this Act.
(k) Amounts transferred from the Permanent Endowment Fund
for Health Related Institutions - University of North Texas Health
Science Center at Fort Worth shall be deposited to the credit of the
secondary account established for the benefit of the University of
North Texas Health Science Center at Fort Worth under Section
403.1081, Government Code, as added by this Act.
(l) Amounts transferred from the Permanent Endowment Fund
for Health Related Institutions - Components of Texas Tech
University Health Sciences Center in El Paso shall be deposited to
the credit of the secondary account established for the benefit of
the components of Texas Tech University Health Sciences Center in
El Paso under Section 403.1081, Government Code, as added by this
Act.
(m) Amounts transferred from the Permanent Endowment Fund
for Health Related Institutions - Components of Texas Tech
University Health Sciences Center other than El Paso shall be
deposited to the credit of the secondary account established for
the benefit of the components of Texas Tech University Health
Sciences Center other than El Paso under Section 403.1081,
Government Code, as added by this Act.
(n) Amounts transferred from the Permanent Endowment Fund
for Health Related Institutions - University of Texas Regional
Academic Health Center shall be deposited to the credit of the
secondary account established for the benefit of The University of
Texas Regional Academic Health Center under Section 403.1081,
Government Code, as added by this Act.
(o) Amounts transferred from the Permanent Endowment Fund
for Health Related Institutions - Baylor College of Medicine shall
be deposited to the credit of the secondary account established for
the benefit of Baylor College of Medicine under Section 403.1081,
Government Code, as added by this Act.
(p) Amounts transferred from the Permanent Fund for Higher
Education Nursing, Allied Health, and Other Health Related Programs
shall be deposited to the credit of the secondary account for higher
education nursing, allied health, and other health-related
programs established under Section 403.1082, Government Code, as
added by this Act.
(q) Amounts transferred from the Permanent Fund for
Minority Health Research and Education shall be deposited to the
credit of the secondary account for minority health research and
education established under Section 403.1083, Government Code, as
added by this Act.
SECTION 7A.04. (a) The transfers to accounts in the general
revenue fund made by this article may not result in a reduction in
the amount available for distribution from those accounts, and the
same amount that would have been distributed from the permanent
funds but for the transfers made by this article shall be
appropriated and distributed from the applicable accounts created
by this article. If the earnings from the secondary account that
are transferred to the earnings account are inadequate to make a
distribution of the same amount that would have been distributed
from the permanent funds, to the extent that the difference is
solely the result of an investment policy other than total return,
the comptroller shall transfer the difference to the applicable
earnings account from the unobligated portion of general revenue.
(b) The comptroller of public accounts shall determine the
amount of any loss to the Permanent Health Fund for Higher Education
and other funds administered by The University of Texas System as a
result of the transfer to general revenue under this article. On
August 31, 2007, the comptroller shall transfer from general
revenue to the applicable secondary account created by this Act, an
amount equal to the amount of the loss. In determining the amount
of the loss, the comptroller shall consider the difference in the
rate of return on investment of that secondary account and the rate
of return over the preceding three years on investment of the
Permanent University Fund.
(c) Notwithstanding any other provision of this article,
the total of distributions under sections (a) and (b) from the
accounts created by this article, plus transfers under Subsection
(b) of this section, may not exceed $65 million for any fiscal year.
SECTION 7A.05. This part takes effect September 1, 2005.
PART B. TEXAS MOBILITY FUND
SECTION 7B.01. Subchapter M, Chapter 201, Transportation
Code, is amended by adding Section 201.9471 to read as follows:
Sec. 201.9471. TEMPORARY DISPOSITION OF MONEY ALLOCATED TO
FUND. (a) Notwithstanding Sections 521.058, 521.313, 521.3466,
521.427, 522.029, 524.051, and 724.046, to the extent that those
sections allocate money to the Texas mobility fund, in state fiscal
year 2006 the comptroller shall deposit that money to the credit of
the general revenue fund instead of to the credit of the Texas
mobility fund.
(b) Notwithstanding Sections 521.313, 521.3466, 521.427,
522.029, 524.051, and 724.046, to the extent that those sections
allocate money to the Texas mobility fund, in state fiscal year 2007
the comptroller shall deposit that money to the credit of the
general revenue fund instead of to the credit of the Texas mobility
fund.
(c) This section expires January 1, 2008.
SECTION 7B.02. This part takes effect September 1, 2005.
PART C. TELECOMMUNICATIONS INFRASTRUCTURE FUND
SECTION 7C.01. Section 57.048, Utilities Code, is amended
by amending Subsections (a), (b), and (e) and adding Subsections
(f)-(i) to read as follows:
(a) An annual assessment is imposed on each
telecommunications utility, [and] each commercial mobile service
provider, and each cable company doing business in this state.
(b) The assessment is imposed at the rate of 1.25 percent of
the taxable telecommunications receipts of the telecommunications
utility, [or] commercial mobile service provider, or cable
company[, subject to this section].
(e) The comptroller may require a telecommunications
utility, [or] commercial mobile service provider, or cable company
to provide any report or information necessary to fulfill the
comptroller's duties under this section. Information provided to
the comptroller under this section is confidential and exempt from
disclosure under Chapter 552, Government Code.
(f) Notwithstanding any other provision of this title, a
certificated telecommunications utility may recover from the
utility's customers an assessment imposed on the utility under this
subchapter after the total amount deposited to the credit of the
fund, excluding interest and loan repayments, is equal to $1.5
billion, as determined by the comptroller. A certificated
telecommunications utility may recover only the amount of the
assessment imposed after the total amount deposited to the credit
of the fund, excluding interest and loan repayments, is equal to
$1.5 billion, as determined by the comptroller. The utility may
recover the assessment through a monthly billing process.
(g) The comptroller shall publish in the Texas Register the
date on which the total amount deposited to the credit of the fund,
excluding interest and loan repayments, is equal to $1.5 billion.
(h) Not later than February 15 of each year, a certificated
telecommunications utility that wants to recover the assessment
under Subsection (f) shall file with the commission an affidavit or
affirmation stating the amount that the utility paid to the
comptroller under this section during the previous calendar year
and the amount the utility recovered from its customers in
cumulative payments during that year.
(i) The commission shall maintain the confidentiality of
information the commission receives under this section that is
claimed to be confidential for competitive purposes. The
confidential information is exempt from disclosure under Chapter
552, Government Code.
SECTION 7C.02. Section 57.0485, Utilities Code, is amended
to read as follows:
Sec. 57.0485. ALLOCATION OF REVENUE [ACCOUNTS]. [(a)] The
comptroller shall deposit [50 percent of] the money collected by
the comptroller under Section 57.048 to the credit of the general
revenue fund [public schools account in the fund. The comptroller
shall deposit the remainder of the money collected by the
comptroller under Section 57.048 to the credit of the qualifying
entities account in the fund.
[(b) Interest earned on money in an account shall be
deposited to the credit of that account].
SECTION 7C.03. Section 57.051, Utilities Code, is amended
to read as follows:
Sec. 57.051. SUNSET PROVISION. The Telecommunications
Infrastructure Fund [Board] is subject to Chapter 325, Government
Code (Texas Sunset Act). Unless continued in existence as provided
by that chapter, [the board is abolished and] this subchapter
expires September 1, 2011 [2005].
SECTION 7C.04. Sections 57.043 and 57.048(c) and (d),
Utilities Code, are repealed.
SECTION 7C.05. If, on the day before the effective date of
this part, the assessment prescribed by Section 57.048, Utilities
Code, is imposed at a rate of less than 1.25 percent, the
comptroller shall, on the effective date of this part, reset the
rate of the assessment to 1.25 percent.
SECTION 7C.06. This part takes effect July 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 September 1, 2005.
ARTICLE 8. EFFECTS OF IMPLEMENTATION; EFFECTIVE DATE
SECTION 8.01. SPECIAL REPORT ON EFFECTS OF CERTAIN TAX
POLICIES ON PERSONAL INCOME AND BUSINESSES. (a) The comptroller of
public accounts shall prepare a report that provides a
comprehensive analysis of the effects of tax policies adopted by
the 79th Legislature on the personal income of residents of this
state and on businesses in this state. Not later than October 15,
2006, the comptroller shall submit the report to the governor,
lieutenant governor, speaker of the house of representatives, and
each other member of the legislature.
(b) The report required under Subsection (a) of this section
must include at least the following information with respect to
business taxes enacted or significantly reformed by the 79th
Legislature:
(1) the total amount of the tax revenue collected from
businesses between the effective date of this Act and the date of
the report;
(2) a profile of the businesses that paid the taxes by:
(A) the number of employees;
(B) the two-digit standard industrial
classification; and
(C) for the period described by Subdivision (1)
of this subsection:
(i) the total amount of wages paid and,
reported separately, the total amount of taxable wages paid;
(ii) the total amount of profits made and,
reported separately, the total amount of taxable profits made;
(iii) the total amount of taxes paid; and
(iv) any credits used to reduce tax
liability;
(3) the percentage of the taxes that were paid by
businesses with fewer than 100 employees;
(4) an estimate of the number and wages of workers not
covered by the taxes; and
(5) an estimate of the number, two-digit standard
industrial classification, and profits of, and an estimate of the
wages paid by, businesses not covered by the taxes.
(c) The report required under Subsection (a) of this section
must also include at least the following:
(1) with respect to major legislation enacted by the
79th Legislature, a tax incidence analysis, categorized by industry
sector and family income level, of the effects of:
(A) any reduction in school district tax rates;
(B) any changes in business taxation;
(C) any changes in property taxation;
(D) any increase in the rate of the sales tax on
the sales tax base as compared to the sales tax base that existed on
January 1, 2005;
(E) any repeal of a sales tax exemption or
exclusion;
(F) any increase in the rate of the motor vehicle
sales and use tax;
(G) any increase in the rate of the boat and boat
motor sales and use tax;
(H) any tax imposed on the sale of discretionary
food and drink items;
(I) any increase in rate of the cigarette, cigar,
or tobacco products tax;
(J) any changes in the assessments imposed under
Subchapter C, Chapter 57, Utilities Code, for the
Telecommunications Infrastructure Fund; and
(K) any other changes in major state taxes; and
(2) with respect to residents of this state who
itemize deductions on their federal income tax returns, an
analysis, categorized by income level, of:
(A) the amount of state sales taxes deducted from
those persons' federal income taxes; and
(B) the difference between the federal income tax
deductions for property taxes paid that were claimed by those
persons before property tax rate reductions were enacted by the
79th Legislature and the federal income tax deductions for property
taxes paid that were claimed by those persons after those
reductions were enacted.
(d) Not later than October 15, 2008, the comptroller of
public accounts shall:
(1) update the information contained in the report
submitted under this section; and
(2) submit the updated report to the persons listed in
Subsection (a) of this section.
SECTION 8.02. (a) Except as provided by Subsections (b) and
(c) of this section, this Act takes effect July 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 September 1, 2005.
(b) If a section, part, or article of this bill provides a
different effective date than provided by Subsection (a) of this
section, that section, part, or article takes effect according to
its terms.
(c) This Act takes effect only if House Bill No. 2, Acts of
the 79th Legislature, Regular Session, 2005, becomes law. If that
bill does not become law, this Act has no effect.
* * * * *