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A BILL TO BE ENTITLED
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AN ACT
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relating to exempting the first $1 million from total revenue for |
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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(c), Tax Code, is amended to |
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read as follows: |
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(c) Except as provided by this section, and subject to |
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Section 171.1014, for the purpose of computing its taxable margin |
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under Section 171.101, the total revenue of a taxable entity is: |
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(1) for a taxable entity treated for federal income |
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tax purposes as a corporation, an amount computed by: |
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(A) adding: |
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(i) the amount reportable as income on line |
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1c, Internal Revenue Service Form 1120; |
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(ii) the amounts reportable as income on |
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lines 4 through 10, Internal Revenue Service Form 1120; and |
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(iii) any total revenue reported by a lower |
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tier entity as includable in the taxable entity's total revenue |
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under Section 171.1015(b); and |
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(B) subtracting: |
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(i) bad debt expensed for federal income |
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tax purposes that corresponds to items of gross receipts included |
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in Subsection (c)(1)(A) for the current reporting period or a past |
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reporting period; |
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(ii) to the extent included in Subsection |
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(c)(1)(A), foreign royalties and foreign dividends, including |
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amounts determined under Section 78 or Sections 951-964, Internal |
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Revenue Code; |
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(iii) to the extent included in Subsection |
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(c)(1)(A), net distributive income from a taxable entity treated as |
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a partnership or as an S corporation for federal income tax |
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purposes; |
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(iv) allowable deductions from Internal |
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Revenue Service Form 1120, Schedule C, to the extent the relating |
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dividend income is included in total revenue; |
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(v) to the extent included in Subsection |
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(c)(1)(A), items of income attributable to an entity that is a |
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disregarded entity for federal income tax purposes; [and] |
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(vi) to the extent included in Subsection |
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(c)(1)(A), other amounts authorized by this section; and |
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(vii) $1 million; |
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(2) for a taxable entity treated for federal income |
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tax purposes as a partnership, an amount computed by: |
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(A) adding: |
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(i) the amount reportable as income on line |
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1c, Internal Revenue Service Form 1065; |
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(ii) the amounts reportable as income on |
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lines 4, 6, and 7, Internal Revenue Service Form 1065; |
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(iii) the amounts reportable as income on |
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lines 3a and 5 through 11, Internal Revenue Service Form 1065, |
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Schedule K; |
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(iv) the amounts reportable as income on |
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line 17, Internal Revenue Service Form 8825; |
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(v) the amounts reportable as income on |
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line 11, plus line 2 or line 45, Internal Revenue Service Form 1040, |
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Schedule F; and |
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(vi) any total revenue reported by a lower |
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tier entity as includable in the taxable entity's total revenue |
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under Section 171.1015(b); and |
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(B) subtracting: |
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(i) bad debt expensed for federal income |
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tax purposes that corresponds to items of gross receipts included |
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in Subsection (c)(2)(A) for the current reporting period or a past |
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reporting period; |
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(ii) to the extent included in Subsection |
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(c)(2)(A), foreign royalties and foreign dividends, including |
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amounts determined under Section 78 or Sections 951-964, Internal |
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Revenue Code; |
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(iii) to the extent included in Subsection |
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(c)(2)(A), net distributive income from a taxable entity treated as |
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a partnership or as an S corporation for federal income tax |
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purposes; |
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(iv) to the extent included in Subsection |
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(c)(2)(A), items of income attributable to an entity that is a |
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disregarded entity for federal income tax purposes; [and] |
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(v) to the extent included in Subsection |
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(c)(2)(A), other amounts authorized by this section; and |
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(vi) $1 million; or |
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(3) for a taxable entity other than a taxable entity |
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treated for federal income tax purposes as a corporation or |
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partnership, an amount determined in a manner substantially |
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equivalent to the amount for Subdivision (1) or (2), including the |
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subtraction of $1 million as provided by Subdivision (1)(B)(vii) or |
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(2)(B)(vi), determined by rules that the comptroller shall adopt. |
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SECTION 2. 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 |
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entity 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 or the
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amount determined under Section 171.006 per 12-month period on
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which margin is based]. |
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SECTION 3. Section 171.006(b), Tax Code, is amended to read |
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as follows: |
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(b) Beginning in 2010, on January 1 of each even-numbered |
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year, the amounts prescribed by Sections 171.1011(c)(1)(B)(vii), |
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171.1011(c)(2)(B)(vi), 171.1011(c)(3), [171.002(d)(2), 171.0021,] |
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and 171.1013(c) are increased or decreased by an amount equal to the |
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amount prescribed by those sections on December 31 of the preceding |
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year multiplied by the percentage increase or decrease during the |
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preceding state fiscal biennium in the consumer price index and |
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rounded to the nearest $10,000. |
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SECTION 4. Section 171.1014(c), Tax Code, is amended to |
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read as follows: |
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(c) For purposes of Section 171.101, a combined group shall |
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determine its total revenue by: |
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(1) determining the total revenue of each of its |
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members as provided by Section 171.1011 as if the member were an |
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individual taxable entity, except that only one member of the |
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combined group may subtract $1 million under Section |
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171.1011(c)(1)(B)(vii), (c)(2)(B)(vi), or (c)(3); |
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(2) adding the total revenues of the members |
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determined under Subdivision (1) together; and |
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(3) subtracting, to the extent included under Section |
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171.1011(c)(1)(A), (c)(2)(A), or (c)(3), items of total revenue |
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received from a member of the combined group. |
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SECTION 5. Section 171.1015(d), Tax Code, is amended to |
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read as follows: |
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(d) Section 171.002(d) does not apply to an upper tier |
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entity if, before the attribution of any total revenue by a lower |
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tier entity to an upper tier entity under this section, the lower |
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tier entity does not meet the criteria of Section 171.002(d)(1) [or
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(d)(2)]. |
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SECTION 6. (a) Section 1(c), Chapter 286 (H.B. 4765), Acts |
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of the 81st Legislature, Regular Session, 2009, as amended by |
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Section 37.01, Chapter 4 (S.B. 1), Acts of the 82nd Legislature, 1st |
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Called Session, 2011, is repealed. |
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(b) This section takes effect September 1, 2013. |
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SECTION 7. (a) Section 2, Chapter 286 (H.B. 4765), Acts of |
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the 81st Legislature, Regular Session, 2009, as amended by Section |
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37.02, Chapter 4 (S.B. 1), Acts of the 82nd Legislature, 1st Called |
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Session, 2011, and which amended former Subsection (d), Section |
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171.002, Tax Code, is repealed. |
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(b) This section takes effect September 1, 2013. |
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SECTION 8. (a) Section 3, Chapter 286 (H.B. 4765), Acts of |
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the 81st Legislature, Regular Session, 2009, as amended by Section |
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37.03, Chapter 4 (S.B. 1), Acts of the 82nd Legislature, 1st Called |
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Session, 2011, and which amended former Subsection (a), Section |
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171.0021, Tax Code, is repealed. |
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(b) This section takes effect September 1, 2013. |
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SECTION 9. Sections 171.0021, 171.1016(d), and 171.204(b), |
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Tax Code, are repealed. |
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SECTION 10. This Act applies only to a report originally due |
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on or after January 1, 2014. |
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SECTION 11. Except as otherwise provided by this Act, this |
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Act takes effect January 1, 2014. |