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|
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A BILL TO BE ENTITLED
|
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AN ACT
|
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relating to the method of computing the franchise tax and the rates |
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of the tax. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. The heading of Subchapter A, Chapter 171, Tax |
|
Code, is amended to read as follows: |
|
SUBCHAPTER A. [DEFINITIONS;] TAX IMPOSED |
|
SECTION 2. Sections 171.001, 171.0011, and 171.002, Tax |
|
Code, are amended to read as follows: |
|
Sec. 171.001. TAX IMPOSED. (a) A franchise tax is imposed |
|
on: |
|
(1) each corporation [taxable entity] 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. |
|
(b) In this chapter: |
|
(1) "Banking corporation" means each state, national, |
|
domestic, or foreign bank, whether organized under the laws of this |
|
state, another state, or another country, or under federal law, |
|
including a limited banking association organized under Subtitle A, |
|
Title 3, Finance Code, and each bank organized under Section 25(a), |
|
Federal Reserve Act (12 U.S.C. Sections 611-631) (edge |
|
corporations), but does not include a bank holding company as that |
|
term is defined by Section 2, Bank Holding Company Act of 1956 (12 |
|
U.S.C. Section 1841). |
|
(2) "Beginning date" means: |
|
(A) for a corporation chartered in this state, |
|
the date on which the corporation's charter takes effect; and |
|
(B) for a foreign corporation, the date on which |
|
the corporation begins doing business in this state. |
|
(3) "Corporation" includes: |
|
(A) a limited liability company, as defined under |
|
the Texas Limited Liability Company Act; |
|
(B) a savings and loan association; and |
|
(C) a banking corporation. |
|
(4) "Charter" includes a limited liability company's |
|
certificate of organization. |
|
(5) "Internal Revenue Code" means the Internal Revenue |
|
Code of 1986 in effect for the federal tax year beginning on or |
|
after January 1, 1996, and before January 1, 1997, and any |
|
regulations adopted under that code applicable to that period. |
|
(6) "Officer" and "director" include a limited |
|
liability company's directors and managers and a limited banking |
|
association's directors and managers and participants if there are |
|
no directors or managers. |
|
(7) "Savings and loan association" means a savings and |
|
loan association or savings bank, whether organized under the laws |
|
of this state, another state, or another country, or under federal |
|
law. |
|
(8) "Shareholder" includes a limited liability |
|
company's member and a limited banking association's participant. |
|
(c) The tax imposed under this chapter extends to the limits |
|
of the United States Constitution and the federal law adopted under |
|
the United States Constitution. |
|
[(c)
The tax imposed under this section or Section 171.0011
|
|
is not imposed on an entity if, during the period on which the
|
|
report is based, the entity qualifies as a passive entity as defined
|
|
by Section 171.0003.] |
|
Sec. 171.0011. ADDITIONAL TAX. (a) An [Except as provided
|
|
by Section 171.001(c), an] additional tax is imposed on a |
|
corporation [taxable entity] that for any reason becomes no longer |
|
subject to the earned surplus component of the tax, without regard |
|
to whether the corporation remains subject to the taxable capital |
|
component of the tax [imposed under this chapter]. |
|
(b) The additional tax is equal to 2.25 percent of the |
|
corporation's net taxable earned surplus [the appropriate rate
|
|
under Section 171.002 of the taxable entity's taxable margin] |
|
computed on the period beginning on the day after the last day for |
|
which the tax imposed on [taxable margin or] net taxable earned |
|
surplus was computed under Section 171.1532 and ending on the date |
|
the corporation [taxable entity] is no longer subject to the earned |
|
surplus component of the tax [imposed under this chapter]. |
|
(c) The additional tax imposed and any report required by |
|
the comptroller are due on the 60th day after the date the |
|
corporation [taxable entity] becomes no longer subject to the |
|
earned surplus component of the tax [imposed under this chapter]. |
|
(d) Except as otherwise provided by this section, the |
|
provisions of this chapter apply to the tax imposed under this |
|
section. |
|
Sec. 171.002. RATES; COMPUTATION OF TAX. (a) The rates |
|
[Subject to Sections 171.003 and 171.1016 and except as provided by
|
|
Subsection (b), the rate] of the franchise tax are: |
|
(1) 0.125 [is one] percent per year of privilege |
|
period of net taxable capital; and |
|
(2) 2.25 percent of net taxable earned surplus |
|
[margin]. |
|
(b) The amount of franchise tax on each corporation is |
|
computed by adding the following: |
|
(1) the amount calculated by applying the tax rate |
|
prescribed by Subsection (a)(1) to the corporation's net taxable |
|
capital; and |
|
(2) the difference between: |
|
(A) the amount calculated by applying the tax |
|
rate prescribed by Subsection (a)(2) to the corporation's net |
|
taxable earned surplus; and |
|
(B) the amount determined under Subdivision (1) |
|
[Subject to Sections 171.003 and 171.1016, the rate of the
|
|
franchise tax is 0.5 percent of taxable margin for those taxable
|
|
entities primarily engaged in retail or wholesale trade]. |
|
(c) In making a computation under Subsection (b), an amount |
|
computed under Subsection (b)(1) or (b)(2) that is zero or less is |
|
computed as a zero [A taxable entity is primarily engaged in retail
|
|
or wholesale trade only if:
|
|
[(1)
the total revenue from its activities in retail
|
|
or wholesale trade is greater than the total revenue from its
|
|
activities in trades other than the retail and wholesale trades;
|
|
[(2)
except as provided by Subsection (c-1), less than
|
|
50 percent of the total revenue from activities in retail or
|
|
wholesale trade comes from the sale of products it produces or
|
|
products produced by an entity that is part of an affiliated group
|
|
to which the taxable entity also belongs; and
|
|
[(3)
the taxable entity does not provide retail or
|
|
wholesale utilities, including telecommunications services,
|
|
electricity, or gas]. |
|
[(c-1)
Subsection (c)(2) does not apply to total revenue
|
|
from activities in a retail trade described by Major Group 58 of the
|
|
Standard Industrial Classification Manual published by the federal
|
|
Office of Management and Budget.] |
|
(d) A corporation [taxable entity] is not required to pay |
|
any tax and is not considered to owe any tax for a period if: |
|
(1) the amount of tax computed for the corporation |
|
[taxable entity] is less than $100 [$1,000]; or |
|
(2) the amount of the corporation's gross receipts: |
|
(A) [taxable entity's total revenue] from its |
|
entire business under Section 171.105 is less than $150,000; and |
|
(B) from its entire business under Section |
|
171.1051, including the amount excepted under Section 171.1051(a), |
|
is less than $150,000 [or equal to $300,000 or the amount determined
|
|
under Section 171.006 per 12-month period on which margin is
|
|
based]. |
|
SECTION 3. Subchapter A, Chapter 171, Tax Code, is amended |
|
by adding Section 171.005 to read as follows: |
|
Sec. 171.005. RATE OF TAX FOR CORPORATION IN PROCESS OF |
|
LIQUIDATION. The franchise tax rate on a corporation in the process |
|
of liquidation, as defined by Section 171.102, is the rate |
|
established by Section 171.002. |
|
SECTION 4. Section 171.052, Tax Code, is amended to read as |
|
follows: |
|
Sec. 171.052. CERTAIN CORPORATIONS. (a) An [Except as
|
|
provided by Subsection (c), an] insurance organization, title |
|
insurance company, or title insurance agent authorized to engage in |
|
insurance business in this state now required to pay an annual tax |
|
under Chapter 4 or 9, Insurance Code, measured by its gross premium |
|
receipts is exempted from the franchise tax. A nonadmitted |
|
insurance organization that is required to pay a gross premium |
|
receipts tax during a tax year is exempted from the franchise tax |
|
for that same tax year. |
|
(b) Farm mutuals, local mutual aid associations, and burial |
|
associations are not subject to the franchise tax. |
|
[(c)
An entity is subject to the franchise tax for a tax year
|
|
in any portion of which the entity is in violation of an order
|
|
issued by the Texas Department of Insurance under Section
|
|
2254.003(b), Insurance Code, that is final after appeal or that is
|
|
no longer subject to appeal.] |
|
SECTION 5. The heading of Subchapter C, Chapter 171, Tax |
|
Code, is amended to read as follows: |
|
SUBCHAPTER C. DETERMINATION OF TAXABLE CAPITAL AND TAXABLE EARNED |
|
SURPLUS [MARGIN]; ALLOCATION AND APPORTIONMENT |
|
SECTION 6. Section 171.101, Tax Code, is amended to read as |
|
follows: |
|
Sec. 171.101. DETERMINATION OF NET TAXABLE CAPITAL |
|
[MARGIN]. (a) Except as provided by Subsections (b) and (c), the |
|
net [The] taxable capital [margin] of a corporation [taxable
|
|
entity] is computed by: |
|
(1) adding the corporation's stated capital, as |
|
defined by Section 21.002, Business Organizations Code, and the |
|
corporation's surplus, to determine the corporation's taxable |
|
capital [determining the taxable entity's margin, which is the
|
|
lesser of:
|
|
[(A)
70 percent of the taxable entity's total
|
|
revenue from its entire business, as determined under Section
|
|
171.1011; or
|
|
[(B) an amount computed by:
|
|
[(i)
determining the taxable entity's total
|
|
revenue from its entire business, under Section 171.1011; and
|
|
[(ii)
subtracting, at the election of the
|
|
taxable entity, either:
|
|
[(a)
cost of goods sold, as determined
|
|
under Section 171.1012; or
|
|
[(b)
compensation, as determined
|
|
under Section 171.1013; and
|
|
[(iii)
subtracting, in addition to any
|
|
subtractions made under Subparagraph (ii)(a) or (b), compensation,
|
|
as determined under Section 171.1013, paid to an individual during
|
|
the period the individual is serving on active duty as a member of
|
|
the armed forces of the United States if the individual is a
|
|
resident of this state at the time the individual is ordered to
|
|
active duty and the cost of training a replacement for the
|
|
individual]; |
|
(2) apportioning the corporation's taxable capital |
|
[taxable entity's margin] to this state as provided by Section |
|
171.106(a), (c), or (d), as applicable, [171.106] to determine the |
|
corporation's [taxable entity's] apportioned taxable capital |
|
[margin]; and |
|
(3) subtracting from the amount computed under |
|
Subdivision (2) any other allowable deductions to determine the |
|
corporation's net [taxable entity's] taxable capital [margin]. |
|
(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), (c), or (d), 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 [Notwithstanding Subsection
|
|
(a)(1)(B)(ii), a staff leasing services company may subtract only
|
|
compensation as determined under Section 171.1013]. |
|
(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 [In
|
|
making a computation under this section, an amount that is zero or
|
|
less is computed as a zero]. |
|
[(d)
An election under Subsection (a)(1)(B)(ii) shall be
|
|
made by the taxable entity on its annual report and is effective
|
|
only for that annual report.
A taxable entity shall notify the
|
|
comptroller of its election not later than the due date of the
|
|
annual report.] |
|
SECTION 7. Subchapter C, Chapter 171, Tax Code, is amended |
|
by adding Section 171.102 to read as follows: |
|
Sec. 171.102. DETERMINATION OF TAXABLE CAPITAL OF |
|
CORPORATION IN PROCESS OF LIQUIDATION. (a) "Corporation in the |
|
process of liquidation" means a corporation that: |
|
(1) adopts and pursues in good faith a plan to marshal |
|
the assets of the corporation, to pay or settle with the |
|
corporation's creditors and debtors, and to apportion the remaining |
|
assets of the corporation among the corporation's stockholders; |
|
(2) adopts the plan by a resolution approved by the |
|
corporation's board of directors and ratified by a majority of the |
|
stockholders of record; and |
|
(3) conducts the liquidation in the manner provided by |
|
the law of this state to dissolve a corporation. |
|
(b) The taxable capital of a corporation in the process of |
|
liquidation is the difference between the amount of the |
|
corporation's stock issued and the amount of the liquidating |
|
dividends paid on the stock. |
|
(c) The president and the secretary of the corporation shall |
|
file an affidavit with the comptroller containing information about |
|
the amount of liquidating dividends paid and a statement that the |
|
corporation is in the process of liquidation. The plan described by |
|
Subsection (a) for the corporation's liquidation must be attached |
|
to and be a part of the affidavit. |
|
(d) This section applies only to the computation of a |
|
corporation's taxable capital under Section 171.101. |
|
SECTION 8. Subchapter C, Chapter 171, Tax Code, is amended |
|
by amending Section 171.103 and adding Sections 171.1032 and |
|
171.104 to read as follows: |
|
Sec. 171.103. DETERMINATION OF GROSS RECEIPTS FROM BUSINESS |
|
DONE IN THIS STATE FOR TAXABLE CAPITAL [MARGIN]. In [(a) Subject
|
|
to Section 171.1055, in] apportioning taxable capital [margin], the |
|
gross receipts of a corporation [taxable entity] from its business |
|
done in this state is the sum of the corporation's [taxable
|
|
entity'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[, except that
|
|
receipts derived from servicing loans secured by real property are
|
|
in this state if the real property is located 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. |
|
[(b)
A combined group shall include in its gross receipts
|
|
computed under Subsection (a) the gross receipts of each taxable
|
|
entity that is a member of the combined group and that has a nexus
|
|
with this state for the purpose of taxation.
|
|
[(c)
A taxable entity that is a combined group shall include
|
|
in a report filed under Section 171.201 or 171.202, for each member
|
|
of the combined group that does not have nexus with this state for
|
|
the purpose of taxation:
|
|
[(1)
the gross receipts computed under Subsection (a);
|
|
and
|
|
[(2)
the gross receipts computed under Subsection (a)
|
|
that are subject to taxation in another state under a throwback law
|
|
or regulation.
|
|
[(d)
The information required by Subsection (c) may be used
|
|
for informational purposes only.
The comptroller shall adopt
|
|
rules as necessary to enforce the reporting requirement prescribed
|
|
by Subsection (c).] |
|
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 corporation that are subject to Section |
|
171.1061, in apportioning taxable earned surplus, the gross |
|
receipts of a corporation from its business done in this state is |
|
the sum of the 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 partnership or joint venture to the extent |
|
provided by Subsection (c); and |
|
(7) other business done in this state. |
|
(b) A 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 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 corporation shall include in its gross receipts |
|
computed under Subsection (a) the corporation's share of the gross |
|
receipts of each partnership and joint venture of which the |
|
corporation is a part apportioned to this state as though the |
|
corporation directly earned the receipts, including receipts from |
|
business done with the corporation. |
|
Sec. 171.104. GROSS RECEIPTS FROM BUSINESS DONE IN TEXAS: |
|
DEDUCTION FOR FOOD AND MEDICINE RECEIPTS. A corporation may deduct |
|
from its receipts includable under Section 171.103(1) the amount of |
|
the 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) in the absence of this |
|
section: |
|
(1) food that is exempted from the state sales and use |
|
tax under Section 151.314; and |
|
(2) health care supplies that are exempted from the |
|
state sales and use tax under Section 151.313. |
|
SECTION 9. Subchapter C, Chapter 171, Tax Code, is amended |
|
by amending Section 171.105 and adding Section 171.1051 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 corporation from its entire |
|
business is the sum of the corporation's receipts from: |
|
(1) each sale of the corporation's tangible personal |
|
property; |
|
(2) each service, rental, or royalty; and |
|
(3) other business. |
|
(b) If a corporation sells an investment or capital asset, |
|
the corporation's gross receipts from its entire business for |
|
taxable capital include only the net gain from the sale. |
|
Sec. 171.1051. DETERMINATION OF GROSS RECEIPTS FROM ENTIRE |
|
BUSINESS FOR TAXABLE EARNED SURPLUS [MARGIN]. (a) Except for the |
|
gross receipts of a corporation that are subject to Section |
|
171.1061 [Subject to Section 171.1055], in apportioning taxable |
|
earned surplus [margin], the gross receipts of a corporation |
|
[taxable entity] from its entire business is the sum of the |
|
corporation's [taxable entity's] receipts from: |
|
(1) each sale of the corporation's [taxable entity's] |
|
tangible personal property; |
|
(2) each service, rental, or royalty; [and] |
|
(3) each partnership and joint venture as provided by |
|
Subsection (d); and |
|
(4) other business. |
|
(b) If a corporation [taxable entity] sells an investment or |
|
capital asset, the corporation's [taxable entity's] gross receipts |
|
from its entire business for taxable earned surplus [margin] |
|
includes only the net gain from the sale. |
|
(c) A 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 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 corporation shall include in its gross receipts |
|
computed under Subsection (a) the corporation's share of the gross |
|
receipts of each partnership and joint venture of which the |
|
corporation is a part [A combined group shall include in its gross
|
|
receipts computed under Subsection (a) the gross receipts of each
|
|
taxable entity that is a member of the combined group, without
|
|
regard to whether that entity has a nexus with this state for the
|
|
purpose of taxation]. |
|
SECTION 10. Subchapter C, Chapter 171, Tax Code, is amended |
|
by amending Sections 171.106, 171.107, 171.108, and 171.1121, and |
|
by adding Sections 171.1061, 171.109, 171.110, 171.112, and 171.113 |
|
to read as follows: |
|
Sec. 171.106. APPORTIONMENT OF TAXABLE CAPITAL AND TAXABLE |
|
EARNED SURPLUS [MARGIN] TO THIS STATE. (a) Except as provided by |
|
Subsections (c) and (d), a 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 corporation's |
|
taxable capital by a fraction, the numerator of which is the |
|
corporation's gross receipts from business done in this state, as |
|
determined under Section 171.103, and the denominator of which is |
|
the corporation's gross receipts from its entire business, as |
|
determined under Section 171.105. |
|
(b) Except as provided by Subsections (c) and (d) [this
|
|
section], a corporation's taxable earned surplus [taxable entity's
|
|
margin] is apportioned to this state to determine the amount of tax |
|
imposed under Section 171.002(b)(2) [171.002] by multiplying the |
|
taxable earned surplus [margin] by a fraction, the numerator of |
|
which is the corporation's [taxable entity's] gross receipts from |
|
business done in this state, as determined under Section 171.1032 |
|
[171.103], and the denominator of which is the corporation's |
|
[taxable entity's] gross receipts from its entire business, as |
|
determined under Section 171.1051 [171.105]. |
|
(c) [(b)] A corporation's taxable capital or earned surplus |
|
[taxable entity's margin] 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 corporation [taxable entity] 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 corporation's [taxable entity's] total taxable |
|
capital or earned surplus [margin] 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 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) [(c)] A corporation's taxable capital or taxable earned |
|
surplus [taxable entity's margin] 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 corporation's [taxable entity's] |
|
total taxable capital or earned surplus [margin] 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 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. |
|
(e) [(d)] A banking corporation shall exclude from the |
|
numerator of the bank's apportionment factor interest earned on |
|
federal funds and interest earned on securities sold under an |
|
agreement to repurchase that are held in this state in a |
|
correspondent bank that is domiciled in this state. In this |
|
subsection, "correspondent" has the meaning assigned by 12 C.F.R. |
|
Section 206.2(c). |
|
(f) [(e)] Receipts from services that a defense |
|
readjustment project performs in a defense economic readjustment |
|
zone are not receipts from business done in this state. |
|
[(f)
Notwithstanding Section 171.1055, if a loan or
|
|
security is treated as inventory of the seller for federal income
|
|
tax purposes, the gross proceeds of the sale of that loan or
|
|
security are considered gross receipts.] |
|
Sec. 171.1061. ALLOCATION OF CERTAIN TAXABLE EARNED SURPLUS |
|
TO THIS STATE. An item of income included in a 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 corporation's other activities conducted |
|
within that state or country under the United States Constitution, |
|
is allocated to this state if the 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 corporation's taxable earned surplus |
|
allocated to this state under this section may not be apportioned |
|
under Section 171.110(a)(2). |
|
Sec. 171.107. DEDUCTION OF COST OF SOLAR ENERGY DEVICE FROM |
|
TAXABLE CAPITAL OR TAXABLE EARNED SURPLUS [MARGIN] APPORTIONED TO |
|
THIS STATE. (a) In this section, "solar energy device" means a |
|
system or series of mechanisms designed primarily to provide |
|
heating or cooling or to produce electrical or mechanical power by |
|
collecting and transferring solar-generated energy. The term |
|
includes a mechanical or chemical device that has the ability to |
|
store solar-generated energy for use in heating or cooling or in the |
|
production of power. |
|
(b) A corporation [taxable entity] may deduct from its |
|
apportioned taxable capital the amortized cost of a solar energy |
|
device or from its apportioned taxable earned surplus [margin] 10 |
|
percent of the amortized cost of a solar energy device if: |
|
(1) the device is acquired by the corporation [taxable
|
|
entity] for heating or cooling or for the production of power; |
|
(2) the device is used in this state by the corporation |
|
[taxable entity]; and |
|
(3) the cost of the device is amortized in accordance |
|
with Subsection (c). |
|
(c) The amortization of the cost of a solar energy device |
|
must: |
|
(1) be for a period of at least 60 months; |
|
(2) provide for equal monthly amounts [or conform to
|
|
federal depreciation schedules]; |
|
(3) begin on the month in which the device is placed in |
|
service in this state; and |
|
(4) cover only a period in which the device is in use |
|
in this state. |
|
(d) A corporation [taxable entity] 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 corporation [taxable entity] |
|
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 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. |
|
Sec. 171.108. DEDUCTION OF COST OF CLEAN COAL PROJECT FROM |
|
TAXABLE CAPITAL OR TAXABLE EARNED SURPLUS [MARGIN] APPORTIONED TO |
|
THIS STATE. (a) In this section, "clean coal project" has the |
|
meaning assigned by Section 5.001, Water Code. |
|
(b) A corporation [taxable entity] may deduct from its |
|
apportioned taxable capital the amortized cost of equipment or from |
|
its apportioned taxable earned surplus [margin] 10 percent of the |
|
amortized cost of equipment: |
|
(1) that is used in a clean coal project; |
|
(2) that is acquired by the corporation [taxable
|
|
entity] for use in generation of electricity, production of process |
|
steam, or industrial production; |
|
(3) that the corporation [taxable entity] uses in this |
|
state; and |
|
(4) the cost of which is amortized in accordance with |
|
Subsection (c). |
|
(c) The amortization of the cost of capital used in a clean |
|
coal project must: |
|
(1) be for a period of at least 60 months; |
|
(2) provide for equal monthly amounts; |
|
(3) begin in the month during which the equipment is |
|
placed in service in this state; and |
|
(4) cover only a period during which the equipment is |
|
used in this state. |
|
(d) A corporation [taxable entity] that makes a deduction |
|
under this section shall file with the comptroller an amortization |
|
schedule showing the period for which the deduction is to be made. |
|
On the request of the comptroller, the corporation [taxable entity] |
|
shall file with the comptroller proof of the cost of the equipment |
|
or proof of the equipment's operation in this state. |
|
(e) A corporation may elect to make the deduction authorized |
|
by this section from apportioned taxable capital or apportioned |
|
taxable earned surplus, but not from both, 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. |
|
Sec. 171.109. SURPLUS. (a) In this chapter: |
|
(1) "Surplus" means the net assets of a 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) 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 |
|
corporation minus its total debts. |
|
(3) "Debt" means any legally enforceable obligation |
|
measured in a certain amount of money that must be performed or paid |
|
within an ascertainable period or on demand. |
|
(a-1) A legally enforceable obligation that requires the |
|
return of a like-kind property that was borrowed will be considered |
|
debt if it is a liability according to generally accepted |
|
accounting principles and if the return must be made within an |
|
ascertainable period or on demand. The amount that will be |
|
considered debt is the fair market value measured on the last day on |
|
which the report is based as required by Section 171.153. For |
|
purposes of this subsection, "like-kind property" means the same |
|
quantity, quality, and nature or character as the property |
|
borrowed. |
|
(b) Except as otherwise provided by this section, a |
|
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 corporation whose taxable capital is less than $1 |
|
million may report its surplus according to the method used in the |
|
corporation's most recent federal income tax return originally due |
|
on or before the date on which the corporation's franchise tax |
|
report is originally due. In determining if taxable capital is less |
|
than $1 million, the corporation shall apply the methods the |
|
corporation used in computing that federal income tax return unless |
|
another method is required under this chapter. |
|
(d) A corporation shall report its surplus based solely on |
|
its own financial condition. Consolidated reporting of surplus is |
|
prohibited. |
|
(e) Unless Section 171.111 applies due to election under |
|
that section before that section's repeal, 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 corporation declaring dividends shall exclude those |
|
dividends from its taxable capital, and a corporation receiving |
|
dividends shall include those dividends in its gross receipts and |
|
taxable capital as of the earlier of: |
|
(1) the date the dividends are declared, if the |
|
dividends are actually paid within one year after the declaration |
|
date; or |
|
(2) the date the dividends are actually paid. |
|
(g) All oil and gas exploration and production activities |
|
conducted by a 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 corporation must use the cost |
|
method of accounting in reporting and calculating the franchise tax |
|
on its investments in subsidiary corporations or other investees. |
|
The retained earnings of a subsidiary corporation or other investee |
|
before acquisition by the parent or investor corporation may not be |
|
excluded from the cost of the subsidiary corporation or investee to |
|
the parent or investor corporation and must be included by the |
|
parent or investor corporation in calculating its surplus. |
|
(i) The following accounts may also be excluded from |
|
surplus, to the extent they are in conformance with generally |
|
accepted accounting principles or the appropriate federal income |
|
tax method, whichever is applicable: |
|
(1) a reserve or allowance for uncollectable accounts; |
|
and |
|
(2) a contra-asset account for depletion, |
|
depreciation, or amortization. |
|
(j) A 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 |
|
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. |
|
(l) The "first in-first out" and "last in-first out" methods |
|
of accounting are acceptable methods for computing surplus. |
|
(m) A corporation may not use the push-down method of |
|
accounting in computing or reporting its surplus. |
|
(n) A corporation must use the equity method of accounting |
|
when reporting an investment in a partnership or joint venture. |
|
Sec. 171.110. DETERMINATION OF NET TAXABLE EARNED SURPLUS. |
|
(a) The net taxable earned surplus of a corporation is computed by: |
|
(1) determining the corporation's reportable federal |
|
taxable income, subtracting from that amount any amount excludable |
|
under Subsection (k), any amount included in reportable federal |
|
taxable income under Section 78 or Sections 951-964, Internal |
|
Revenue Code, and dividends received from a subsidiary, associate, |
|
or affiliated corporation that does not transact a substantial |
|
portion of its business or regularly maintain a substantial portion |
|
of its assets in the United States, and adding 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; |
|
(2) apportioning the corporation's taxable earned |
|
surplus to this state as provided by Section 171.106(b), (c), or |
|
(d), as applicable, to determine the corporation's apportioned |
|
taxable earned surplus; |
|
(3) adding the 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) Except as provided by Subsection (c), a corporation is |
|
not required to add the compensation of officers or directors as |
|
required by Subsection (a)(1) if the corporation is: |
|
(1) a corporation that has not more than 35 |
|
shareholders; or |
|
(2) an S corporation, as that term is defined by |
|
Section 1361, Internal Revenue Code. |
|
(c) A subsidiary corporation may not claim the exclusion |
|
under Subsection (b) if it has a parent corporation that does not |
|
qualify for the exclusion. For purposes of this subsection, a |
|
corporation qualifies as a parent if it ultimately controls the |
|
subsidiary, even if the control arises through a series or group of |
|
other subsidiaries or entities. Control is presumed if a parent |
|
corporation directly or indirectly owns, controls, or holds a |
|
majority of the outstanding voting stock of a corporation or |
|
ownership interests in another entity. |
|
(d) A corporation's reportable federal taxable income is |
|
the corporation's federal taxable income 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. |
|
(e) For purposes of this section, a business loss is any |
|
negative amount 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. A business loss can be |
|
carried forward only by the 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 corporation |
|
that did not survive the merger. |
|
(f) A 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 corporation used |
|
that method on its most recent federal income tax report originally |
|
due on or before the date on which the corporation's franchise tax |
|
report is originally due. |
|
(g) For purposes of this section, an approved employee stock |
|
ownership plan controlling a minority interest and voted through a |
|
single trustee shall be considered one shareholder. |
|
(h) A corporation shall report its net taxable earned |
|
surplus based solely on its own financial condition. Consolidated |
|
reporting is prohibited. |
|
(i) For purposes of this section, any person designated as |
|
an officer is presumed to be an officer if that person: |
|
(1) holds an office created by the board of directors |
|
or under the corporate charter or bylaws; and |
|
(2) has legal authority to bind the corporation with |
|
third parties by executing contracts or other legal documents. |
|
(j) A corporation may rebut the presumption described in |
|
Subsection (i) that a person is an officer if it conclusively shows, |
|
through the person's job description or other documentation, that |
|
the person does not participate or have authority to participate in |
|
significant policymaking aspects of the corporate operations. |
|
(k) Dividends and interest received from federal |
|
obligations are not included in earned surplus or gross receipts |
|
for earned surplus purposes. |
|
(l) In this section: |
|
(1) "Federal obligations" means: |
|
(A) stocks and other direct obligations of, and |
|
obligations unconditionally guaranteed by, the United States |
|
government and United States government agencies; and |
|
(B) direct obligations of a United States |
|
government-sponsored agency. |
|
(2) "Obligation" means any bond, debenture, security, |
|
mortgage-backed security, pass-through certificate, or other |
|
evidence of indebtedness of the issuing entity. The term does not |
|
include a deposit, a repurchase agreement, a loan, a lease, a |
|
participation in a loan or pool of loans, a loan collateralized by |
|
an obligation of a United States government agency, or a loan |
|
guaranteed by a United States government agency. |
|
(3) "United States government" means any department or |
|
ministry of the federal government, including a federal reserve |
|
bank. The term does not include a state or local government, a |
|
commercial enterprise owned wholly or partly by the United States |
|
government, or a local governmental entity or commercial enterprise |
|
whose obligations are guaranteed by the United States government. |
|
(4) "United States government agency" means an |
|
instrumentality of the United States government whose obligations |
|
are fully and explicitly guaranteed as to the timely payment of |
|
principal and interest by the full faith and credit of the United |
|
States government. The term includes the Government National |
|
Mortgage Association, the Department of Veterans Affairs, the |
|
Federal Housing Administration, the Farmers Home Administration, |
|
the Export-Import Bank of the United States, the Overseas Private |
|
Investment Corporation, the Commodity Credit Corporation, the |
|
Small Business Administration, and any successor agency. |
|
(5) "United States government-sponsored agency" means |
|
an agency originally established or chartered by the United States |
|
government to serve public purposes specified by the United States |
|
Congress but whose obligations are not explicitly guaranteed by the |
|
full faith and credit of the United States government. The term |
|
includes the Federal Home Loan Mortgage Corporation, the Federal |
|
National Mortgage Association, the Farm Credit System, the Federal |
|
Home Loan Bank System, the Student Loan Marketing Association, and |
|
any successor agency. |
|
Sec. 171.112. GROSS RECEIPTS FOR TAXABLE CAPITAL. (a) For |
|
purposes of this section, "gross receipts" means all revenues that |
|
would be recognized annually under a generally accepted accounting |
|
principles method of accounting, without deduction for the cost of |
|
property sold, materials used, labor performed, or other costs |
|
incurred, unless otherwise specifically provided in this chapter. |
|
(b) Except as otherwise provided by this section, a |
|
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 corporation whose taxable capital is less than $1 |
|
million may report its gross receipts according to the method used |
|
in the corporation's most recent federal income tax return |
|
originally due on or before the date on which the corporation's |
|
franchise tax report is originally due. In determining if taxable |
|
capital is less than $1 million, the corporation shall apply the |
|
methods the corporation used in computing that federal income tax |
|
return unless another method is required under this chapter. |
|
(d) A corporation shall report its gross receipts based |
|
solely on its own financial condition. Consolidated reporting is |
|
prohibited. |
|
(e) Unless Section 171.111 applies due to an election under |
|
that section before that section's repeal, a 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 |
|
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. |
|
(g) Chapter 141 does not apply to this chapter. |
|
(h) Except as otherwise provided by this section, a |
|
corporation shall use the same accounting methods to apportion its |
|
taxable capital as it used to compute its taxable capital. |
|
Sec. 171.1121. GROSS RECEIPTS FOR TAXABLE EARNED SURPLUS |
|
[MARGIN]. (a) For purposes of this section, "gross receipts" means |
|
all revenues reportable by a corporation [taxable entity] 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 |
|
corporation [taxable entity] shall use the same accounting methods |
|
to apportion taxable earned surplus [margin] as used in computing |
|
reportable federal taxable income [margin]. |
|
(c) A corporation shall report its gross receipts based |
|
solely on its own financial condition. Consolidated reporting is |
|
prohibited. |
|
(d) Unless Section 171.111 applies due to an election under |
|
that section before that section's repeal, a corporation [A taxable
|
|
entity] 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. |
|
(e) A corporation's share of a partnership's gross receipts |
|
that is included in the corporation's federal taxable income must |
|
be used in computing the corporation's gross receipts under this |
|
section. Unless otherwise provided by this chapter, a corporation |
|
may not deduct costs incurred from the corporation's share of a |
|
partnership's gross receipts. The gross receipts must be |
|
apportioned as though the corporation directly earned them. |
|
Sec. 171.113. ALTERNATE METHOD OF DETERMINING TAXABLE |
|
CAPITAL AND GROSS RECEIPTS FOR CERTAIN 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. |
|
(b) A corporation to which this section applies may elect to |
|
compute its surplus, assets, debts, and gross receipts according to |
|
the method the 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 corporation making the election. |
|
(c) The comptroller may adopt rules as necessary to specify |
|
the reporting requirements for corporations to which this section |
|
applies. |
|
(d) This section does not apply to a subsidiary 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 corporation. An election under Subsection (b) must be |
|
postmarked not later than the due date for the electing |
|
corporation's franchise tax report to which the election applies. |
|
SECTION 11. Subchapter D, Chapter 171, Tax Code, is amended |
|
to read as follows: |
|
SUBCHAPTER D. PAYMENT OF TAX |
|
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 corporation's |
|
[taxable entity'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. |
|
Sec. 171.152. DATE ON WHICH PAYMENT IS DUE. (a) Payment of |
|
the tax covering the initial period is due within 90 days after the |
|
date that the initial period ends or, if applicable, within 91 days |
|
after the date of the merger. |
|
(b) Payment of the tax covering the second period is due on |
|
the same date as the tax covering the initial period. |
|
(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 corporation's |
|
[taxable entity'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. |
|
Sec. 171.153. BUSINESS ON WHICH TAX ON NET TAXABLE CAPITAL |
|
IS BASED. (a) The tax covering the initial period is reported on |
|
the initial report and is based on the business done by the |
|
corporation during the period beginning on the 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; |
|
(2) if there is no such period ending date in |
|
Subdivision (1), then ending on the day that is the last day of a |
|
calendar month and that is nearest to the end of the corporation's |
|
first year of business; or |
|
(3) ending on the day after the merger occurs, for the |
|
survivor of a merger that occurs after the ending date prescribed by |
|
Subdivision (1) or (2), whichever is applicable, and before January |
|
1, of the year an initial report is due by the survivor. |
|
(b) The tax covering the second period is reported on the |
|
initial report and is based on the same business on which the tax |
|
covering the initial period is based and is to be prorated based on |
|
the length of the second period. |
|
(c) The tax covering the regular annual period is based on |
|
the business done by the corporation during its last accounting |
|
period that ends in the year before the year in which the tax is due. |
|
If a corporation is the survivor of a merger that occurs between the |
|
end of its last accounting period in the year before the report year |
|
and January 1 of the report year, the tax will be based on the |
|
financial condition of the surviving corporation for the 12-month |
|
period ending on the day after the merger. However, if the first |
|
anniversary of the 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. |
|
Sec. 171.1531. CREDIT FOR SURVIVOR OF MERGER. (a) "Credit |
|
period" means the period from the date of the merger or the date the |
|
survivor was required to pay franchise tax, whichever is later, |
|
through the end of the privilege period for which tax was actually |
|
paid by the nonsurvivors. |
|
(b) The survivor of a merger is entitled to a credit against |
|
the tax computed on its net taxable capital under Section |
|
171.002(b)(1) in the amount of the franchise tax computed on net |
|
taxable capital paid by the nonsurvivors for the credit period, |
|
provided the tax computed on net taxable capital paid by the |
|
survivor for the credit period is based on the survivor's financial |
|
condition after the merger. Only a survivor that is subject to the |
|
franchise tax is entitled to the merger credit. The merger credit |
|
shall be allocated among survivors based on net taxable capital |
|
reported, and as provided by Section 171.153. |
|
(c) The credit will be limited to the lesser of the amount of |
|
tax on net taxable capital paid for the credit period by the |
|
survivor or by the nonsurvivors. |
|
Sec. 171.1532. BUSINESS ON WHICH TAX ON NET TAXABLE EARNED |
|
SURPLUS [MARGIN] 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 corporation [taxable
|
|
entity] during the period beginning on the corporation's [taxable
|
|
entity'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), then ending on the day that is the last day of a |
|
calendar month and that is nearest to the end of the corporation's |
|
[taxable entity'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 corporation [taxable entity] during the |
|
period beginning with the day after the last date upon which |
|
[taxable margin or] 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. |
|
Sec. 171.154. PAYMENT TO COMPTROLLER. A corporation |
|
[taxable entity] on which a tax is imposed by this chapter shall pay |
|
the tax to the comptroller. |
|
Sec. 171.158. PAYMENT BY FOREIGN CORPORATION [TAXABLE
|
|
ENTITY] BEFORE WITHDRAWAL FROM STATE. (a) Except as provided by |
|
Subsection (b), a foreign corporation [taxable entity] holding a |
|
[registration or] certificate of authority to do business in this |
|
state may withdraw from doing business in this state by filing a |
|
certificate of withdrawal with the secretary of state. The |
|
secretary of state shall file the certificate of withdrawal as |
|
provided by law. |
|
(b) The foreign corporation [taxable entity] may not |
|
withdraw from doing business in this state unless it has paid, |
|
before filing the certificate of withdrawal, any tax or penalty |
|
imposed by this chapter on the corporation [taxable entity]. |
|
SECTION 12. Sections 171.201, 171.202, 171.2022, 171.203, |
|
171.204, 171.205, 171.206, 171.207, 171.208, 171.209, 171.211, and |
|
171.212, Tax Code, are amended to read as follows: |
|
Sec. 171.201. INITIAL REPORT. (a) Except as provided by |
|
Section 171.2022, a corporation [taxable entity] on which the |
|
franchise tax is imposed shall file an initial report with the |
|
comptroller containing: |
|
(1) [financial] information showing the financial |
|
condition of the corporation on the day that is the last day of a |
|
calendar month and that is nearest to the end of the corporation's |
|
first year of business [of the taxable entity necessary to compute
|
|
the tax under this chapter]; |
|
(2) the name and address of[:
|
|
[(A)] each officer[,] and director[, and
|
|
manager] of the corporation [taxable entity;
|
|
[(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 |
|
corporation [taxable entity] designated under Section 171.354; and |
|
(4) other information required by the comptroller. |
|
(b) The corporation [taxable entity] shall file the report |
|
on or before the date the payment is due under Section 171.152(a). |
|
Sec. 171.202. ANNUAL REPORT. (a) Except as provided by |
|
Section 171.2022, a corporation [taxable entity] on which the |
|
franchise tax is imposed shall file an annual report with the |
|
comptroller containing: |
|
(1) financial information of the corporation [taxable
|
|
entity] necessary to compute the tax under this chapter; |
|
(2) the name and address of each officer and director |
|
of the corporation [taxable entity]; |
|
(3) the name and address of the agent of the |
|
corporation [taxable entity] designated under Section 171.354; and |
|
(4) other information required by the comptroller. |
|
(b) The corporation [taxable entity] 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 |
|
corporation [taxable entity] 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 corporation [taxable entity]: |
|
(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. |
|
(d) In the case of a taxpayer whose previous return was its |
|
initial report, the optional payment provided under Subsection |
|
(c)(2)(B) or (e)(2)(B) must be equal to the greater of: |
|
(1) an amount produced by multiplying the net taxable |
|
capital [margin], as reported on the initial report filed on or |
|
before May 14, by the rate of tax in Section 171.002(a)(1) [171.002] |
|
that is effective January 1 of the year in which the report is due; |
|
or |
|
(2) an amount produced by multiplying the net taxable |
|
earned surplus, as reported on the initial report filed on or before |
|
May 14, by the rate of tax in Section 171.002(a)(2) that is |
|
effective January 1 of the year in which the report is due. |
|
(e) The comptroller shall grant an extension of time for the |
|
filing of a report required by this section by a corporation |
|
[taxable entity] required by rule to make its tax payments by |
|
electronic funds transfer to any date on or before the next August |
|
15, if the corporation [taxable entity]: |
|
(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 |
|
corporation [taxable entity] 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 corporation [taxable entity]: |
|
(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. |
|
(h) If the sum of the amounts paid under Subsections (e)(2) |
|
and (f)(2) is at least 99 percent of the amount reported as due on |
|
the report filed on or before November 15, penalties for |
|
underpayment with respect to the amount paid under Subsection |
|
(f)(2) are waived. |
|
(i) If a corporation [taxable entity] 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 corporation |
|
[taxable entity] may not receive an extension under Subsection (c) |
|
or (e) unless the corporation [taxable entity] complies with |
|
Subsection (c)(2)(A) or (e)(2)(A), as appropriate. |
|
Sec. 171.2022. EXEMPTION FROM REPORTING REQUIREMENTS. A |
|
corporation [taxable entity] 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. The exemption applies only to a period |
|
for which no tax is due. |
|
Sec. 171.203. PUBLIC INFORMATION REPORT. (a) A |
|
corporation [or limited liability company] on which the franchise |
|
tax is imposed, regardless of whether the corporation [or limited
|
|
liability company] is required to pay any tax, shall file a report |
|
with the comptroller containing: |
|
(1) the name of each corporation [or limited liability
|
|
company] in which the corporation [or limited liability company] |
|
filing the report owns a 10 percent or greater interest and the |
|
percentage owned by the corporation [or limited liability company]; |
|
(2) the name of each corporation [or limited liability
|
|
company] that owns a 10 percent or greater interest in the |
|
corporation [or limited liability company] filing the report; |
|
(3) the name, title, and mailing address of each |
|
person who is an officer or director of the corporation [or limited
|
|
liability company] on the date the report is filed and the |
|
expiration date of each person's term as an officer or director, if |
|
any; |
|
(4) the name and address of the agent of the |
|
corporation [or limited liability company] designated under |
|
Section 171.354; and |
|
(5) the address of the corporation's [or limited
|
|
liability company's] principal office and principal place of |
|
business. |
|
(b) The corporation [or limited liability company] shall |
|
file the report once a year on a form prescribed by the comptroller. |
|
(c) The comptroller shall forward the report to the |
|
secretary of state. |
|
(d) The corporation [or limited liability company] shall |
|
send a copy of the report to each person named in the report under |
|
Subsection (a)(3) who is not currently employed by the corporation |
|
[or limited liability company] or a related corporation [or limited
|
|
liability company] listed in Subsection (a)(1) or (2). An officer |
|
or director of the corporation [or limited liability company] or |
|
another authorized person must sign the report under a |
|
certification that: |
|
(1) all information contained in the report is true |
|
and correct to the best of the person's knowledge; and |
|
(2) a copy of the report has been mailed to each person |
|
identified in this subsection on the date the return is filed. |
|
(e) If a person's name is included in a report under |
|
Subsection (a)(3) and the person is not an officer or director of |
|
the corporation [or limited liability company] on the date the |
|
report is filed, the person may file with the comptroller a sworn |
|
statement disclaiming the person's status as shown on the report. |
|
The comptroller shall maintain a record of statements filed under |
|
this subsection and shall make that information available on |
|
request using the same procedures the comptroller uses for other |
|
requests for public information. |
|
(f) A public information report that is filed |
|
electronically complies with the signature and certification |
|
requirements prescribed by Subsection (d). |
|
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 corporation [taxable
|
|
entity] that may be subject to the tax imposed under this chapter to |
|
file an information report with the comptroller stating the amount |
|
of the corporation's taxable capital and earned surplus [taxable
|
|
entity's margin], or any other information the comptroller may |
|
request [that is necessary to make a determination under this
|
|
subsection]. |
|
(b) The comptroller may require an officer of a corporation |
|
[taxable entity] that does not owe any tax because of the |
|
application of Section 171.002(d)(2) to file an abbreviated |
|
information report with the comptroller stating the amount of the |
|
corporation's gross receipts [taxable entity's total revenue] from |
|
its entire business. The comptroller may not require a corporation |
|
[taxable entity] described by this subsection to file an |
|
information report that requires the corporation [taxable entity] |
|
to report or compute its earned surplus or taxable capital [margin.
|
|
[(c)
The comptroller may require any entity to file
|
|
information as necessary to verify that the entity is not subject to
|
|
the tax imposed under this chapter]. |
|
Sec. 171.205. ADDITIONAL INFORMATION REQUIRED BY |
|
COMPTROLLER. The comptroller may require a corporation [taxable
|
|
entity] on which the franchise tax is imposed to furnish to the |
|
comptroller information from the corporation's [taxable entity's] |
|
books and records that has not been filed previously and that is |
|
necessary for the comptroller to determine the amount of the tax. |
|
Sec. 171.206. CONFIDENTIAL INFORMATION. Except as provided |
|
by Section 171.207, 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, [cost of goods sold,
|
|
compensation,] or expenditures of a corporation [taxable entity], |
|
obtained by an examination of the books and records, officers, |
|
[partners, trustees, agents,] or employees of a corporation |
|
[taxable entity] on which a tax is imposed by this chapter. |
|
Sec. 171.207. INFORMATION NOT CONFIDENTIAL. The following |
|
information is not confidential and shall be made open to public |
|
inspection: |
|
(1) information contained in a document filed under |
|
this chapter with a county clerk as notice of a tax lien; and |
|
(2) information contained in a report required by |
|
Section 171.203 [or 171.2035]. |
|
Sec. 171.208. PROHIBITION OF DISCLOSURE OF INFORMATION. A |
|
person, including a state officer or employee or a shareholder [an
|
|
owner] of a corporation [taxable entity], 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 corporation's [taxable
|
|
entity's] income, profits, losses, expenditures, [cost of goods
|
|
sold, compensation,] or other information in the report relating to |
|
the financial condition of the corporation [taxable entity]. |
|
Sec. 171.209. RIGHT OF SHAREHOLDER [OWNER] TO EXAMINE OR |
|
RECEIVE REPORTS. If a person owning at least one share of |
|
outstanding stock [an owner] of a corporation [taxable entity] 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 and that relates to the corporation |
|
[taxable entity]. |
|
Sec. 171.211. EXAMINATION OF CORPORATE RECORDS. To |
|
determine the franchise tax liability of a corporation [taxable
|
|
entity], the comptroller may investigate or examine the records of |
|
the corporation [taxable entity]. |
|
Sec. 171.212. REPORT OF CHANGES TO FEDERAL INCOME TAX |
|
RETURN. (a) A corporation [taxable entity] must file an amended |
|
report under this chapter if: |
|
(1) the corporation's net [taxable entity's] taxable |
|
earned surplus [margin] is changed as the result of an audit or |
|
other adjustment by the Internal Revenue Service or another |
|
competent authority; or |
|
(2) the corporation [taxable entity] files an amended |
|
federal income tax return or other return that changes the |
|
corporation's net [taxable entity's] taxable earned surplus |
|
[margin]. |
|
(b) The corporation [taxable entity] shall file the amended |
|
report under Subsection (a)(1) not later than the 120th day after |
|
the date the revenue agent's report or other adjustment is final. |
|
For purposes of this subsection, a revenue agent's report or other |
|
adjustment is final on the date on which all administrative appeals |
|
with the Internal Revenue Service or other competent authority have |
|
been exhausted or waived. |
|
(c) The corporation [taxable entity] shall file the amended |
|
report under Subsection (a)(2) not later than the 120th day after |
|
the date the corporation [taxable entity] files the amended federal |
|
income tax return or other return. For purposes of this subsection, |
|
a corporation [taxable entity] is considered to have filed an |
|
amended federal income tax return if the corporation [taxable
|
|
entity] is a member of an affiliated group during a period in which |
|
an amended consolidated federal income tax report is filed. |
|
(d) If a corporation [taxable entity] fails to comply with |
|
this section, the corporation [taxable entity] is liable for a |
|
penalty of 10 percent of the tax that should have been reported |
|
under this section and that had not previously been reported to the |
|
comptroller. The penalty prescribed by this subsection is in |
|
addition to any other penalty provided by law. |
|
SECTION 13. Section 171.309, Tax Code, is amended to read as |
|
follows: |
|
Sec. 171.309. FORFEITURE BY SECRETARY OF STATE. The |
|
secretary of state may forfeit the charter or [,] certificate of |
|
authority [, or registration] of a corporation [taxable entity] if: |
|
(1) the secretary receives the comptroller's |
|
certification under Section 171.302; [and] |
|
(2) the corporation [taxable entity] does not revive |
|
its forfeited corporate privileges within 120 days after the date |
|
that the corporate privileges were forfeited; and |
|
(3) the corporation does not have assets from which a |
|
judgment for any tax, penalty, or court costs imposed by this |
|
chapter may be satisfied. |
|
SECTION 14. The heading to Subchapter F, Chapter 171, Tax |
|
Code, is amended to read as follows: |
|
SUBCHAPTER F. FORFEITURE OF CORPORATE [AND BUSINESS] PRIVILEGES |
|
SECTION 15. Sections 171.351, 171.353, and 171.354, Tax |
|
Code, are amended to read as follows: |
|
Sec. 171.351. VENUE OF SUIT TO ENFORCE CHAPTER. Venue of a |
|
civil suit against a corporation [taxable entity] to enforce this |
|
chapter is either in a county where the corporation's [taxable
|
|
entity's] principal office is located according to its charter or |
|
certificate of authority or in Travis County. |
|
Sec. 171.353. APPOINTMENT OF RECEIVER. If a court forfeits |
|
a corporation's [taxable entity's] charter or certificate of |
|
authority, the court may appoint a receiver for the corporation |
|
[taxable entity] and may administer the receivership under the laws |
|
relating to receiverships. |
|
Sec. 171.354. AGENT FOR SERVICE OF PROCESS. Each |
|
corporation [taxable entity] on which a tax is imposed by this |
|
chapter shall designate a resident of this state as the |
|
corporation's [taxable entity's] agent for the service of process. |
|
SECTION 16. Sections 171.362(a), (d), and (e), Tax Code, |
|
are amended to read as follows: |
|
(a) If a corporation [taxable entity] 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 corporation [taxable entity] is liable for a penalty of |
|
five percent of the amount of the tax due. |
|
(d) If a corporation [taxable entity] electing to remit |
|
under Section 171.202(c)(2)(A) remits less than the amount |
|
required, the penalties imposed by this section and the interest |
|
imposed under Section 111.060 are assessed against the difference |
|
between the amount required to be remitted under Section |
|
171.202(c)(2)(A) and the amount actually remitted on or before May |
|
15. |
|
(e) If a corporation [taxable entity] remits the entire |
|
amount required by Section 171.202(c), no penalties will be imposed |
|
against the amount remitted on or before November 15. |
|
SECTION 17. Sections 171.363(a) and (b), Tax Code, are |
|
amended to read as follows: |
|
(a) A corporation [taxable entity] commits an offense if the |
|
corporation [taxable entity] is subject to the provisions of this |
|
chapter and the corporation [taxable entity] 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 |
|
corporation [taxable entity] and the person knowingly enters or |
|
provides false information on any report, return, or other document |
|
filed by the corporation [taxable entity] under this chapter. |
|
SECTION 18. Section 171.401, Tax Code, is amended to read as |
|
follows: |
|
Sec. 171.401. REVENUE DEPOSITED IN GENERAL REVENUE FUND. |
|
The revenue from the tax imposed by this chapter on corporations |
|
shall be deposited to the credit of the general revenue fund. |
|
SECTION 19. Sections 313.024(a) and (b), Tax Code, are |
|
amended to read as follows: |
|
(a) This subchapter and Subchapters C and D apply only to |
|
property owned by a corporation or limited liability company [an
|
|
entity] to which Chapter 171 applies. |
|
(b) To be eligible for a limitation on appraised value under |
|
this subchapter, the corporation or limited liability company |
|
[entity] must use the property in connection with: |
|
(1) manufacturing; |
|
(2) research and development; |
|
(3) a clean coal project, as defined by Section 5.001, |
|
Water Code; |
|
(4) an advanced clean energy project, as defined by |
|
Section 382.003, Health and Safety Code; |
|
(5) renewable energy electric generation; |
|
(6) electric power generation using integrated |
|
gasification combined cycle technology; or |
|
(7) nuclear electric power generation. |
|
SECTION 20. The following statutes are repealed: |
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(1) Section 171.0001, Tax Code; |
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(2) Section 171.0002, Tax Code; |
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(3) Section 171.0003, Tax Code; |
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(4) Section 171.0004, Tax Code; |
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(5) Section 171.0021, Tax Code; |
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(6) Section 171.003, Tax Code; |
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(7) Section 171.006, Tax Code; |
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(8) Section 171.088, Tax Code; |
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(9) Section 171.1011, Tax Code; |
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(10) Section 171.1012, Tax Code; |
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(11) Section 171.1013, Tax Code; |
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(12) Section 171.1014, Tax Code; |
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(13) Section 171.1015, Tax Code; |
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(14) Section 171.1016, Tax Code; |
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(15) Section 171.1055, Tax Code; |
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(16) Section 171.111, Tax Code; |
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(17) Section 171.2125, Tax Code; |
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(18) Section 171.214, Tax Code; |
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(19) Section 171.2515, Tax Code; |
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(20) Section 171.3015, Tax Code; |
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(21) Section 171.3125, Tax Code; and |
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(22) Section 171.4011, Tax Code. |
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SECTION 21. (a) The repeal of Section 171.111, Tax Code, by |
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this Act does not affect a credit that was established under that |
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section before the effective date of this Act. |
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(b) A corporation that has any unused credits established |
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before the effective date of this Act under Section 171.111, Tax |
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Code, may claim those unused credits on or with the tax report for |
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the period in which the credits were established, and the former law |
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under which the corporation established the credits is continued in |
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effect for purposes of determining the amount of the credits the |
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corporation may claim and the manner in which the corporation may |
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claim the credits. |
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SECTION 22. (a) This Act applies only to a report |
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originally due on or after the effective date of this Act. |
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(b) The change in law made by this Act does not affect the |
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obligation for or the payment, computation, and collection of the |
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franchise tax for a report originally due before the effective date |
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of this Act. The obligation for and the payment, computation, and |
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collection of the franchise tax for a report originally due before |
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the effective date of this Act is governed by the law in effect on |
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the date the report was originally due and that law is continued in |
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effect for those purposes. |
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SECTION 23. This Act takes effect January 1, 2010. |