| TO: | Honorable Jim Keffer, Chair, House Committee on Ways & Means |
| FROM: | John S. O'Brien, Director, Legislative Budget Board |
| IN RE: | HB3928 by Keffer, Jim (Relating to technical changes to the revised franchise tax. ), Committee Report 1st House, Substituted |
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2008 | $0 |
| 2009 | $0 |
| 2010 | $0 |
| 2011 | $0 |
| 2012 | $0 |
| Fiscal Year | Probable Revenue Gain/(Loss) from Property Tax Relief Fund 304 |
|---|---|
| 2008 | ($3,502,000) |
| 2009 | $3,595,000 |
| 2010 | ($4,998,000) |
| 2011 | $6,586,000 |
| 2012 | ($3,005,000) |
The bill would amend Chapter 171 of the Tax Code, relating to the franchise tax.
The bill would make various technical corrections to the changes enacted in HB 3, 79th Legislature, Third Called Session (2006).
In addition, the bill would increase the threshold for an entity owing margin tax to $600,000, from $300,000.
The bill would amend the initial date for indexing the receipts amount and compensation amount for inflation to 2010 and require updates in even-numbered years.
The bill would require partnerships to include gross rental income instead of net rental income for determining total revenue.
The bill would provide that the gross proceeds from the sale of a loan or security treated as inventory of the seller for federal income tax purposes would be considered gross receipts for apportionment.
The bill would amend the temporary credit provisions by specifying that the credit is based on business loss carryforwards that existed before January 1, 2008.
The bill would specify the maximum amount of usable business loss carryforwards available in any year.
The bill would provide that the maximum credit available to a taxable entity would be the annual available business loss carryforward multiplied by 4.5 percent. The amount of credit would be limited to the liability of the taxable entity claiming the credit.
With one exception, the bill would take effect January 1, 2008.
SECTION 30, which would clarify the reporting responsibility of a newly taxable entity, would take effect immediately upon enactment, assuming that the bill received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, SECTION 30 would take effect September 1, 2007.
This fiscal note is based upon analyses provided by the Comptroller's Office.
The fiscal implications of increasing the threshold amount for an entity owing margin tax to $600,000 from $300,000 and of changing the first date for indexing the amount were estimated using data from the Internal Revenue Service. The effect of including partnership gross rental income rather than net rental income for calculating total revenue was estimated using Internal Revenue Service data on partnerships. The effect of apportioning certain loans and securities based on gross proceeds was estimated using Comptroller franchise tax files. The effect of changing the calculation of the temporary credit provisions was estimated using Comptroller franchise tax files.
| Source Agencies: | 304 Comptroller of Public Accounts
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| LBB Staff: | JOB, SD, CT
|