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A BILL TO BE ENTITLED
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AN ACT
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relating to the computation and rates of the franchise tax; |
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decreasing tax rates; amending provisions subject to a criminal |
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penalty. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Sections 171.002(a) and (b), Tax Code, are |
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amended to read as follows: |
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(a) Subject to Sections 171.003, 171.004, 171.007, and |
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171.1016 and except as provided by Subsection (b), the rate of the |
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franchise tax is 0.75 [one] percent of taxable margin. |
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(b) Subject to Sections 171.003, 171.004, 171.007, and |
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171.1016, the rate of the franchise tax is 0.375 [0.5] percent of |
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taxable margin for those taxable entities primarily engaged in |
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retail or wholesale trade. |
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SECTION 2. Subchapter A, Chapter 171, Tax Code, is amended |
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by adding Section 171.004 to read as follows: |
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Sec. 171.004. ADJUSTMENT OF TAX RATES. (a) Beginning in |
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2018, on January 1 of each even numbered year for which the |
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comptroller's most recent certification estimate projects state |
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tax collections not dedicated by the constitution will exceed the |
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limit on appropriations in effect for the current biennium under |
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Section 22(a), Article VIII, Texas Constitution: |
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(1) the rate of the franchise tax under Section |
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171.002(a) is adjusted by subtracting 0.15 from the rate in effect |
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on December 31 of the previous year; |
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(2) the rate of the franchise tax under Section |
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171.002(b) is adjusted by subtracting 0.075 from the rate in effect |
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on December 31 of the previous year; and |
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(3) the rate of the franchise tax under Section |
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171.1016(b)(3) is adjusted by subtracting 0.0662 from the rate in |
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effect on December 31 of the previous year. |
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(b) The tax rates determined under Subsection (a) apply to a |
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report originally due on or after the date the determination is |
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made. |
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(c) Notwithstanding Subsection (a), if an adjustment |
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otherwise required by Subsection (a) would reduce a rate of the |
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franchise tax to less than zero, the rate is instead reduced to |
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zero. |
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(d) Notwithstanding any other law, if the rates of the |
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franchise tax are reduced to zero under Subsection (a) or (c), a |
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taxable entity does not owe any tax and is not required to file a |
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report that would otherwise be originally due on or after the date |
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the rates are reduced to zero. |
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(e) The comptroller shall make the determination required |
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by Subsection (a) and may adopt rules related to making that |
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determination. The comptroller shall publish the franchise tax |
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rates determined under this section in the Texas Register and on the |
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comptroller's Internet website not later than January 15 of each |
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year. |
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(f) A determination by the comptroller under this section is |
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final and may not be appealed. |
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SECTION 3. Subchapter A, Chapter 171, Tax Code, is amended |
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by adding Section 171.007 to read as follows: |
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Sec. 171.007. COMPTROLLER TAX RATE ADJUSTMENT. (a) On the |
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date the comptroller makes the transfer of any unencumbered |
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positive balance of general revenues from a preceding biennium to |
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the economic stabilization fund as described by Section 49-g(b), |
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Article III, Texas Constitution, the comptroller shall: |
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(1) identify an amount of money equal to 25 percent of |
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those unencumbered general revenues that are not transferred under |
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that subsection; |
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(2) estimate the amount of revenue attributable to the |
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tax imposed under this chapter that would be received by the |
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comptroller during the current state fiscal biennium if the tax |
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were imposed at the rates under Sections 171.002(a) and (b) and |
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Section 171.1016 in effect on the date the estimate is made; and |
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(3) subtract the amount of money identified under |
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Subdivision (1) from the amount of revenue estimated under |
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Subdivision (2). |
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(b) If the amount of money determined under Subsection |
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(a)(3) is greater than zero, the comptroller shall determine the |
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rates for purposes of Sections 171.002(a) and (b) and Section |
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171.1016 that, if applied beginning January 1 of the current state |
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fiscal biennium, are estimated to generate the amount of money |
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determined by the comptroller under Subsection (a)(3) for that |
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biennium. In determining the rates under this subsection, the |
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comptroller shall proportionally reduce the rates under Sections |
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171.002(a) and (b) and Section 171.1016 that are in effect on the |
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date the comptroller makes the determination. |
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(c) Not later than December 15 of each odd-numbered year, |
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the comptroller shall: |
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(1) adopt the adjusted tax rates determined under |
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Subsection (b); |
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(2) publish notice of the adjusted tax rates in the |
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Texas Register; and |
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(3) provide any other notice relating to the adjusted |
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tax rates that the comptroller considers appropriate. |
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(d) The adjusted tax rates adopted by the comptroller under |
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this section apply to a report originally due on or after January 1 |
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of the even-numbered year following the date the rates are adopted. |
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(e) In the state fiscal year in which the amount of money |
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determined under Subsection (a)(3) is zero or less: |
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(1) this chapter expires as provided by Section |
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171.975; and |
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(2) not later than December 15 of that year the |
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comptroller shall: |
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(A) publish notice in the Texas Register that an |
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entity previously subject to the tax imposed under this chapter is |
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no longer required to file a report or pay the tax; and |
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(B) provide any other notice relating to the |
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expiration of the tax that the comptroller considers appropriate. |
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(f) An action taken by the comptroller under this section is |
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final and may not be appealed. |
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(g) The comptroller shall adopt rules to implement this |
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section. |
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SECTION 4. Sections 171.1016(a), (b), and (e), Tax Code, |
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are amended to read as follows: |
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(a) Notwithstanding any other provision of this chapter, a |
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taxable entity whose total revenue from its entire business is not |
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more than $20 [$10] million may elect to pay the tax imposed under |
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this chapter in the amount computed and at the rate provided by this |
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section rather than in the amount computed and at the tax rate |
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provided by Section 171.002. |
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(b) Subject to Section 171.004, the [The] amount of the tax |
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for which a taxable entity that elects to pay the tax as provided by |
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this section is liable is computed by: |
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(1) determining the taxable entity's total revenue |
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from its entire business, as determined under Section 171.1011; |
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(2) apportioning the amount computed under |
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Subdivision (1) to this state, as provided by Section 171.106, to |
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determine the taxable entity's apportioned total revenue; and |
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(3) multiplying the amount computed under Subdivision |
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(2) by the rate of 0.331 [0.575] percent or, if applicable, the |
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adjusted tax rate adopted by the comptroller under Section 171.007. |
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(e) A reference in this chapter or other law to the rate of |
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the franchise tax means, as appropriate: |
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(1) [,] the rate under Section 171.002 or, for a |
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taxable entity that elects to pay the tax as provided by this |
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section, the rate under this section; or |
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(2) the adjusted rates under Section 171.007. |
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SECTION 5. Chapter 171, Tax Code, is amended by adding |
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Subchapter Z to read as follows: |
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SUBCHAPTER Z. EXPIRATION |
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Sec. 171.975. EXPIRATION. This chapter expires on December |
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31 of the year in which the amount of money determined by the |
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comptroller under Section 171.007(a)(3) is zero or less. |
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SECTION 6. (a) Chapter 171, Tax Code, and Subtitle B, |
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Title 2, Tax Code, continue to apply to audits, deficiencies, |
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redeterminations, and refunds of any tax due or collected under |
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Chapter 171 until barred by limitations. |
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(b) The expiration of Chapter 171, Tax Code, does not |
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affect: |
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(1) the status of a taxable entity that has had its |
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corporate privileges, certificate of authority, certificate of |
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organization, certificate of limited partnership, corporate |
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charter, or registration revoked, suit filed against it, or a |
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receiver appointed under Subchapter F, G, or H of that chapter; |
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(2) the ability of the comptroller of public accounts, |
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secretary of state, or attorney general to take action against a |
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taxable entity under Subchapter F, G, or H of that chapter for |
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actions that took place before the chapter expired; or |
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(3) the right of a taxable entity to contest a |
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forfeiture, revocation, lawsuit, or appointment of a receiver under |
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Subchapter F, G, or H of that chapter. |
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SECTION 7. The comptroller of public accounts shall study |
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and report to the legislature on the impact of this Act on the rate |
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of the franchise tax and what further reductions in the rate of that |
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tax may be made following a review of existing exemptions and |
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credits from the franchise tax. The comptroller shall provide the |
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report to the legislature not later than December 31, 2016. |
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SECTION 8. 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 9. This Act takes effect January 1, 2016. |