By: Hilderbran H.B. No. 1289
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the exclusion of certain service costs in determining a
  taxable entity's taxable margin for purposes of the franchise tax.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 171.1011, Tax Code, is amended by adding
  Subsection (v) to read as follows:
         (v)  A taxable entity primarily engaged in the business of
  transporting commodities by waterways that does not subtract cost
  of goods sold in computing its taxable margin shall exclude from its
  total revenue direct costs of providing inbound and outbound
  transportation services by intrastate or interstate waterways to
  the same extent that a taxable entity that sells in the ordinary
  course of business real or tangible personal property would be
  authorized by Section 171.1012 to subtract those costs as costs of
  goods sold in computing its taxable margin.
         SECTION 2.  Section 171.1012, Tax Code, is amended by adding
  Subsections (k-2) and (k-3) to read as follows:
         (k-2)  This subsection applies only to a pipeline entity: (1)
  that owns or leases and operates the pipeline by which the product
  is transported for others and only to that portion of the product to
  which the entity does not own title; and (2) that is primarily
  engaged in gathering, storing, transporting, or processing crude
  oil, including finished petroleum products, natural gas,
  condensate, and natural gas liquids, except for a refinery
  installation that manufactures finished petroleum products from
  crude oil.  Notwithstanding Subsection (e)(3) or (i), a pipeline
  entity providing services for others related to the product that
  the pipeline does not own and to which this subsection applies may
  subtract as a cost of goods sold its depreciation, operations, and
  maintenance costs allowed by this section related to the services
  provided.
         (k-3)  For purposes of Subsection (k-2), "processing" means
  the physical or mechanical removal, separation, or treatment of
  crude oil, including finished petroleum products, natural gas,
  condensate, and natural gas liquids after those materials are
  produced from the earth.  The term does not include the chemical or
  biological transformation of those materials.
         SECTION 3.  This Act applies only to a report originally due
  on or after the effective date of this Act.
         SECTION 4.  This Act takes effect January 1, 2014.