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A BILL TO BE ENTITLED
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AN ACT
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relating to the exclusion of certain service costs in determining a |
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taxable entity's taxable margin for purposes of 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 171.1011, Tax Code, is amended by adding |
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Subsection (v) to read as follows: |
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(v) A taxable entity primarily engaged in the business of |
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transporting commodities by waterways that does not subtract cost |
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of goods sold in computing its taxable margin shall exclude from its |
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total revenue direct costs of providing inbound and outbound |
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transportation services by intrastate or interstate waterways to |
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the same extent that a taxable entity that sells in the ordinary |
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course of business real or tangible personal property would be |
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authorized by Section 171.1012 to subtract those costs as costs of |
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goods sold in computing its taxable margin. |
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SECTION 2. Section 171.1012, Tax Code, is amended by adding |
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Subsections (k-2) and (k-3) to read as follows: |
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(k-2) This subsection applies only to a pipeline entity: (1) |
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that owns or leases and operates the pipeline by which the product |
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is transported for others and only to that portion of the product to |
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which the entity does not own title; and (2) that is primarily |
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engaged in gathering, storing, transporting, or processing crude |
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oil, including finished petroleum products, natural gas, |
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condensate, and natural gas liquids, except for a refinery |
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installation that manufactures finished petroleum products from |
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crude oil. Notwithstanding Subsection (e)(3) or (i), a pipeline |
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entity providing services for others related to the product that |
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the pipeline does not own and to which this subsection applies may |
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subtract as a cost of goods sold its depreciation, operations, and |
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maintenance costs allowed by this section related to the services |
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provided. |
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(k-3) For purposes of Subsection (k-2), "processing" means |
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the physical or mechanical removal, separation, or treatment of |
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crude oil, including finished petroleum products, natural gas, |
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condensate, and natural gas liquids after those materials are |
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produced from the earth. The term does not include the chemical or |
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biological transformation of those materials. |
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SECTION 3. 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 4. This Act takes effect January 1, 2014. |