| |
|
|
A BILL TO BE ENTITLED
|
|
|
AN ACT
|
|
|
relating to the exclusion from total revenue in computing the |
|
|
franchise tax of certain funds, reimbursements, and expenses |
|
|
related to certain legal services. |
|
|
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
|
|
SECTION 1. Section 171.1011(g-3), Tax Code, as effective |
|
|
January 1, 2008, is amended to read as follows: |
|
|
(g-3) A taxable entity that provides legal services shall |
|
|
exclude from its total revenue, to the extent included under |
|
|
Subsection (c)(1)(A), (c)(2)(A), or (c)(3): |
|
|
(1) the following flow-through funds that are mandated |
|
|
by law, contract, or fiduciary duty to be distributed to the |
|
|
claimant by the claimant's attorney or to other entities on behalf |
|
|
of a claimant by the claimant's attorney: |
|
|
(A) damages due the claimant; |
|
|
(B) funds subject to a lien or other contractual |
|
|
obligation arising out of the representation, other than fees owed |
|
|
to the attorney; |
|
|
(C) funds subject to a subrogation interest or |
|
|
other third-party contractual claim; and |
|
|
(D) fees paid an attorney in the matter who is not |
|
|
a member, partner, shareholder, or employee of the taxable entity; |
|
|
(2) reimbursement of the taxable entity's expenses |
|
|
incurred in prosecuting a claimant's matter that are specific to |
|
|
the matter and that are not general operating expenses; and |
|
|
(3) [the actual out-of-pocket expenses of the
|
|
|
attorney, not to exceed] $500 per pro bono services case handled by |
|
|
the attorney, [of providing pro bono legal services to a person,] |
|
|
but only if the attorney maintains records of the pro bono services |
|
|
for auditing purposes in accordance with the manner in which those |
|
|
services are reported to the State Bar of Texas. |
|
|
SECTION 2. Section 171.1011(p)(4-b), Tax Code, as effective |
|
|
January 1, 2008, is repealed. |
|
|
SECTION 3. This Act applies only to a report originally due |
|
|
on or after the effective date of this Act. |
|
|
SECTION 4. This Act takes effect January 1, 2008. |