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A BILL TO BE ENTITLED
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AN ACT
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relating to the franchise tax. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 171.002(d), Tax Code, is amended to read |
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as follows: |
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(d) A taxable entity is not required to pay any tax and is |
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not considered to owe any tax for a period if: |
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(1) the amount of tax computed for the taxable entity |
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is less than $1,000; or |
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(2) the amount of the taxable entity's total revenue |
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from its entire business is less than or equal to $1 million |
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[$300,000] or the amount determined under Section 171.006 per |
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12-month period on which margin is based. |
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SECTION 2. Section 171.006(b), Tax Code, is amended to read |
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as follows: |
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(b) On [Beginning in 2010, on] January 1 of each |
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even-numbered year, the amounts prescribed by Sections |
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171.002(d)(2)[, 171.0021,] and 171.1013(c) are increased or |
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decreased by an amount equal to the amount prescribed by those |
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sections on December 31 of the preceding year multiplied by the |
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percentage increase or decrease during the preceding state fiscal |
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biennium in the consumer price index and rounded to the nearest |
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$10,000. |
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SECTION 3. Section 171.1012, Tax Code, is amended by adding |
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Subsection (q) to read as follows: |
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(q) Subject to Section 171.1014, a taxable entity that |
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elects to subtract cost of goods sold for the purpose of computing |
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its taxable margin may, instead of determining its cost of goods |
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sold in accordance with the other provisions of this section, elect |
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to determine cost of goods sold as follows: |
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(1) for a taxable entity treated for federal income |
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tax purposes as a corporation, the cost of goods sold is the amount |
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reportable as cost of goods sold on line 2, Internal Revenue Service |
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Form 1120; |
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(2) for a taxable entity treated for federal income |
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tax purposes as a partnership, the cost of goods sold is the amount |
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reportable as cost of goods sold on line 2, Internal Revenue Service |
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Form 1065; |
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(3) for a taxable entity treated for federal income |
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tax purposes as an S corporation, the cost of goods sold is the |
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amount reportable as cost of goods sold on line 2, Internal Revenue |
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Service Form 1120S; or |
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(4) for any other taxable entity, the cost of goods |
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sold is an amount determined in a manner substantially equivalent |
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to the amount for Subdivision (1), (2), or (3) determined by rules |
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the comptroller shall adopt. |
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SECTION 4. Section 171.1013, Tax Code, is amended by |
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amending Subsection (a) and adding Subsection (i) to read as |
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follows: |
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(a) Except as otherwise provided by this section, "wages and |
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cash compensation" means the amount entered in the Medicare wages |
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and tips box of Internal Revenue Service Form W-2 or any subsequent |
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form with a different number or designation that substantially |
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provides the same information. The term also includes, to the |
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extent not included above: |
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(1) net distributive income from a taxable entity |
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treated as a partnership for federal income tax purposes, but only |
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if the person receiving the distribution is a natural person or a |
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professional corporation or professional association owned by a |
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natural person, to the extent the net distributive income is not |
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less than zero; |
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(2) net distributive income from limited liability |
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companies and corporations treated as S corporations for federal |
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income tax purposes, but only if the person receiving the |
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distribution is a natural person; |
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(3) stock awards and stock options deducted for |
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federal income tax purposes; and |
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(4) net distributive income from a limited liability |
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company treated as a sole proprietorship for federal income tax |
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purposes, but only if the person receiving the distribution is a |
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natural person. |
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(i) Subject to Section 171.1014 and the limitation in |
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Subsection (c), a taxable entity that elects to subtract |
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compensation for the purpose of computing its taxable margin under |
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Section 171.101 may include as wages and cash compensation any |
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compensation paid to an independent contractor as reported on |
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Internal Revenue Service Form 1099, or any subsequent form with a |
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different number or designation that substantially provides the |
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same information. |
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SECTION 5. Sections 171.1016(a) and (b), Tax Code, are |
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amended to read as follows: |
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(a) Notwithstanding any other provision of this chapter, a |
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taxable entity [whose total revenue from its entire business is not
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more than $10 million] may elect to pay the tax imposed under this |
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chapter in the amount computed and at the rate provided by this |
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section rather than in the amount computed and at the tax rate |
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provided by Section 171.002. |
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(b) The amount of the tax for which a taxable entity that |
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elects to pay the tax as provided by this section is liable is |
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computed by: |
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(1) determining the taxable entity's total revenue |
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from its entire business, as determined under Section 171.1011; |
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(2) apportioning the amount computed under |
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Subdivision (1) to this state, as provided by Section 171.106, to |
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determine the taxable entity's apportioned total revenue; and |
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(3) multiplying the amount computed under Subdivision |
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(2) by the rate of 0.45 [0.575] percent. |
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SECTION 6. Sections 171.0021 and 171.1016(d), Tax Code, are |
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repealed. |
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SECTION 7. This Act applies only to a report originally due |
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on or after the effective date of this Act. |
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SECTION 8. This Act takes effect January 1, 2010. |