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A BILL TO BE ENTITLED
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AN ACT
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relating to the determination of compensation for purposes of the |
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franchise tax. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 171.1013, Tax Code, is amended by |
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amending Subsection (a) and adding Subsection (i) to read as |
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follows: |
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(a) Except as otherwise provided by this section, "wages and |
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cash compensation" means the amount entered in the Medicare wages |
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and tips box of Internal Revenue Service Form W-2 or any subsequent |
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form with a different number or designation that substantially |
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provides the same information. The term also includes, to the |
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extent not included above: |
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(1) net distributive income from a taxable entity |
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treated as a partnership for federal income tax purposes, but only |
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if the person receiving the distribution is a natural person; |
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(2) net distributive income from limited liability |
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companies and corporations treated as S corporations for federal |
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income tax purposes, but only if the person receiving the |
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distribution is a natural person; |
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(3) stock awards and stock options deducted for |
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federal income tax purposes; [and] |
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(4) net distributive income from a limited liability |
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company treated as a sole proprietorship for federal income tax |
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purposes, but only if the person receiving the distribution is a |
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natural person; and |
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(5) payroll taxes paid by a taxable entity in |
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connection with the employment of an officer, director, owner, |
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partner, or employee. |
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(i) Subject to Section 171.1014 and the limitation in |
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Subsection (c), a taxable entity that elects to subtract |
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compensation for the purpose of computing its taxable margin under |
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Section 171.101 may include as wages and cash compensation any |
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nonemployee compensation paid to an independent contractor as |
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reported on Internal Revenue Service Form 1099 or any subsequent |
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form with a different number or designation that substantially |
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provides the same information. |
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SECTION 2. 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 3. This Act takes effect January 1, 2016. |