Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means
FROM:
John S O'Brien, Director, Legislative Budget Board
IN RE:
HB1358 by Howard, Charlie (relating to the exclusion of certain flow-through funds by qualified courier and logistics companies in determining total revenue for purposes of the franchise tax.), Committee Report 1st House, Substituted
Estimated Two-year Net Impact to General Revenue Related Funds for HB1358, Committee Report 1st House, Substituted: an impact of $0 through the biennium ending August 31, 2013.
The bill will have a direct impact of a revenue loss of ($487,000) from the Property Tax Relief Fund during the 2012-13 biennium. The loss would be required to be made up with an equal amount of General Revenue to fund the Foundation School Program.
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2012
$0
2013
$0
2014
$0
2015
$0
2016
$0
Fiscal Year
Probable Revenue (Loss) from Property Tax Relief Fund 304
2012
($240,000)
2013
($247,000)
2014
($252,000)
2015
($253,000)
2016
($255,000)
Fiscal Analysis
This bill would amend Chapter 171 of the Tax Code, regarding the franchise tax, by adding provisions related to the exclusion from total revenue of certain funds by certain taxpayers. The provisions would apply to a taxable entity that is a qualified courier and logistics company. Such a taxable entity would exclude from total revenue the subcontracting payments made by the taxable entity to nonemployee agents for the performance of delivery services on behalf of the taxable entity.
The bill would define "qualified courier and logistic company" by specifying the types of services that produce at least 80 percent of the entity's total annual revenue. These services would include expedited same-day delivery; temporary storage and delivery of property of another entity; and brokerage of same-day or expedited courier and logistic services. The bill also would specify services the entity does not provide including, among others, livery services, taxicab services, fuel or energy supply services, or overnight delivery services. The definition would require the entity to be registered as a motor carrier under the Transportation Code; maintain automobile liability insurance and cargo insurance; maintain a permanent office; and have at least five full-time employees.
The bill would take effect on January 1, 2012, and would apply to a report due on or after that date.
Methodology
Under current law, payments made by a taxable entity to a nonemployee agent could be excluded from total revenue only in specifically enumerated circumstances. This bill would add payments made by a qualified courier and logistics company to a subcontracting delivery service. The estimate assumes the provisions contained in the bill would exclude overnight delivery service companies. The estimate is based on information from the Comptroller's franchise tax data files and on information from the Texas Courier & Logistic Association.
Local Government Impact
No significant fiscal implication to units of local government is anticipated.