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A BILL TO BE ENTITLED
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AN ACT
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relating to a franchise tax exclusion for contractual flow-through |
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funds paid to certain performing artists. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 171.0001, Tax Code, is amended by adding |
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Subdivisions (1-a), (10-a), (10-b), and (11-b) to read as follows: |
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(1-a) "Artist" means a natural person or an entity that |
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contracts to perform or entertain at a live entertainment event. |
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(10-a) "Live entertainment event" means an event that |
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occurs on a specific date to which tickets are sold in advance by a |
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third-party vendor and at which: |
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(A) a natural person or a group of natural |
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persons, physically present at the venue, performs for the purpose |
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of entertaining a ticket holder who is present at the event; |
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(B) a traveling circus or animal show performs |
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for the purpose of entertaining a ticket holder who is present at |
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the event; or |
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(C) a historical, museum-quality artifact is on |
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display in an exhibition. |
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(10-b) "Live event promotion services" means services |
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related to the promotion, coordination, operation, or management of |
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a live entertainment event. The term includes services related to: |
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(A) the provision of staff for the live |
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entertainment event; or |
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(B) the scheduling and promotion of an artist |
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performing or entertaining at the live entertainment event. |
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(11-b) "Qualified live event promotion company" means |
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a taxable entity that: |
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(A) receives at least 60 percent of the entity's |
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annual total revenue from the provision or arrangement for the |
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provision of three or more live event promotion services; |
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(B) maintains a permanent nonresidential office |
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from which the live event promotion services are provided or |
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arranged; |
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(C) employs 10 or more full-time employees during |
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all or part of the period for which taxable margin is calculated; |
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(D) does not provide services for a wedding or |
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carnival; and |
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(E) is not a movie theater. |
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SECTION 2. Section 171.1011, Tax Code, is amended by adding |
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Subsection (g-5) to read as follows: |
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(g-5) A taxable entity that is a qualified live event |
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promotion company shall exclude from its total revenue, to the |
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extent included under Subsection (c)(1)(A), (c)(2)(A), or (c)(3), a |
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payment made to an artist in connection with the provision of a live |
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entertainment event or live event promotion services. |
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SECTION 3. Subchapter D, Chapter 171, Tax Code, is amended |
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by adding Section 171.155 to read as follows: |
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Sec. 171.155. WITHHOLDING FROM PAYMENT TO ARTIST. (a) A |
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taxable entity that makes to an artist that is also a taxable entity |
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a payment for performing at a live entertainment event in this state |
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shall withhold from the payment an amount equal to the payment |
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multiplied by the maximum franchise tax rate under this chapter, as |
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required by comptroller rule. |
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(b) A taxable entity that withholds an amount under |
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Subsection (a) in connection with a payment shall remit the amount |
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to the comptroller at the time the taxable entity files the entity's |
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annual report under this chapter. |
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(c) The comptroller shall refund to the artist any amount by |
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which the amount remitted under Subsection (b) exceeds the amount |
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of franchise tax owed by the artist. |
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(d) If a taxable entity fails to withhold an amount as |
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required by Subsection (a) in connection with a payment, the |
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taxable entity and the artist are jointly and severally liable to |
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the comptroller for the amount of franchise tax owed by the artist |
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in connection with the payment. If the total amount collected from |
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the taxable entity and the artist under this subsection exceeds the |
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amount of franchise tax owed by the artist, the comptroller shall |
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refund the excess to the taxable entity up to the amount collected |
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from the taxable entity under this subsection, and shall refund any |
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remaining excess to the artist. |
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(e) A taxable entity that withholds an amount under |
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Subsection (a) in connection with a payment and fails to remit all |
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or part of the amount to the comptroller is liable to the |
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comptroller for the amount of franchise tax owed by the artist in |
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connection with the payment and is liable to the artist for an |
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amount equal to the amount by which the amount withheld exceeds the |
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amount remitted to the comptroller in connection with the payment. |
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The artist is not liable to the comptroller for the amount of |
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franchise tax owed in connection with the payment that exceeds the |
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amount remitted under Subsection (b). |
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(f) A taxable entity is not required to withhold an amount |
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under Subsection (a) in connection with a payment if the artist |
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provides the taxable entity a written statement from the |
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comptroller that the artist is not a taxable entity subject to the |
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franchise tax under this chapter. |
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(g) The comptroller shall adopt rules to administer this |
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section. |
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SECTION 4. Not later than December 1, 2011, the comptroller |
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of public accounts shall adopt rules under Section 171.155, Tax |
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Code, as added by this Act. |
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SECTION 5. This Act applies only to a report originally due |
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on or after January 1, 2012. |
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SECTION 6. (a) Except as provided by Subsection (b) of this |
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section, this Act takes effect January 1, 2012. |
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(b) Section 4 of this Act takes effect September 1, 2011. |