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A BILL TO BE ENTITLED
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AN ACT
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relating to the phaseout and repeal of the franchise tax; lowering |
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the rates of the tax. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. (a) Effective January 1, 2016, Sections |
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171.002(a) and (b), Tax Code, are amended to read as follows: |
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(a) Subject to Sections 171.003 and 171.1016 and except as |
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provided by Subsection (b), the rate of the franchise tax is 0.8 |
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[one] percent of taxable margin. |
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(b) Subject to Sections 171.003 and 171.1016, the rate of |
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the franchise tax is 0.4 [0.5] percent of taxable margin for those |
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taxable entities primarily engaged in retail or wholesale trade. |
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(b) This section applies only to a report originally due on |
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or after January 1, 2016. |
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SECTION 2. (a) Effective January 1, 2017, Sections |
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171.002(a) and (b), Tax Code, are amended to read as follows: |
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(a) Subject to Sections 171.003 and 171.1016 and except as |
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provided by Subsection (b), the rate of the franchise tax is 0.56 |
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[one] percent of taxable margin. |
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(b) Subject to Sections 171.003 and 171.1016, the rate of |
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the franchise tax is 0.28 [0.5] percent of taxable margin for those |
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taxable entities primarily engaged in retail or wholesale trade. |
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(b) This section applies only to a report originally due on |
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or after January 1, 2017. |
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SECTION 3. (a) Effective January 1, 2018, Sections |
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171.002(a) and (b), Tax Code, are amended to read as follows: |
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(a) Subject to Sections 171.003 and 171.1016 and except as |
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provided by Subsection (b), the rate of the franchise tax is 0.336 |
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[one] percent of taxable margin. |
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(b) Subject to Sections 171.003 and 171.1016, the rate of |
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the franchise tax is 0.168 [0.5] percent of taxable margin for those |
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taxable entities primarily engaged in retail or wholesale trade. |
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(b) This section applies only to a report originally due on |
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or after January 1, 2018. |
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SECTION 4. (a) Effective January 1, 2019, Sections |
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171.002(a) and (b), Tax Code, are amended to read as follows: |
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(a) Subject to Sections 171.003 and 171.1016 and except as |
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provided by Subsection (b), the rate of the franchise tax is 0.168 |
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[one] percent of taxable margin. |
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(b) Subject to Sections 171.003 and 171.1016, the rate of |
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the franchise tax is 0.084 [0.5] percent of taxable margin for those |
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taxable entities primarily engaged in retail or wholesale trade. |
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(b) This section applies only to a report originally due on |
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or after January 1, 2019. |
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SECTION 5. (a) Effective January 1, 2016, Section |
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171.1016(b), Tax Code, is amended to read as follows: |
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(b) The amount of the tax for which a taxable entity that |
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elects to pay the tax as provided by this section is liable is |
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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 0.46 [0.575] percent. |
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(b) This section applies only to a report originally due on |
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or after January 1, 2016. |
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SECTION 6. (a) Effective January 1, 2017, Section |
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171.1016(b), Tax Code, is amended to read as follows: |
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(b) The amount of the tax for which a taxable entity that |
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elects to pay the tax as provided by this section is liable is |
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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 0.322 [0.575] percent. |
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(b) This section applies only to a report originally due on |
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or after January 1, 2017. |
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SECTION 7. (a) Effective January 1, 2018, Section |
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171.1016(b), Tax Code, is amended to read as follows: |
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(b) The amount of the tax for which a taxable entity that |
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elects to pay the tax as provided by this section is liable is |
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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 0.193 [0.575] percent. |
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(b) This section applies only to a report originally due on |
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or after January 1, 2018. |
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SECTION 8. (a) Effective January 1, 2019, Section |
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171.1016(b), Tax Code, is amended to read as follows: |
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(b) The amount of the tax for which a taxable entity that |
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elects to pay the tax as provided by this section is liable is |
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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 0.097 [0.575] percent. |
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(b) This section applies only to a report originally due on |
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or after January 1, 2019. |
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SECTION 9. (a) Chapter 171, Tax Code, is repealed. |
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(b) A taxable entity that is subject to the franchise tax |
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imposed under Chapter 171, Tax Code, on December 31, 2019, shall |
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file a final franchise tax report and pay a transitional tax as |
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required by this subsection on or before May 15, 2020. The |
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transitional tax is equal to the tax the taxable entity would have |
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paid in 2020 under Chapter 171, Tax Code, if Chapter 171, Tax Code, |
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had not been repealed. The provisions of Chapter 171, Tax Code, |
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relating to the computation and payment of the franchise tax remain |
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in effect after the repeal of Chapter 171, Tax Code, by this section |
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for the purposes of computing and paying the transitional tax |
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required by this subsection. |
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(c) Chapter 171, Tax Code, and Subtitle B, Title 2, Tax |
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Code, continue to apply to audits, deficiencies, redeterminations, |
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and refunds of any tax due or collected under Chapter 171, including |
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the tax due as provided by Subsection (b) of this section, until |
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barred by limitations. |
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(d) The repeal of Chapter 171, Tax Code, does not 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 repeal; 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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(e) This section takes effect January 1, 2020. |
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SECTION 10. Except as otherwise provided by this Act, this |
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Act applies only to a report originally due on or after the |
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effective date of this Act. |
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SECTION 11. Except as otherwise provided by this Act, this |
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Act takes effect January 1, 2016. |