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A BILL TO BE ENTITLED
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AN ACT
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relating to an exemption from the franchise tax and certain filing |
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fees for certain businesses owned by veterans during an initial |
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period of operation in the state. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 171.0001(4), Tax Code, is amended to |
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read as follows: |
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(4) "Beginning date" means: |
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(A) except as provided by Paragraph (B): |
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(i) for a taxable entity chartered or |
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organized in this state, the date on which the taxable entity's |
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charter or organization takes effect; and |
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(ii) [(B)] for any other taxable entity, |
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the date on which the taxable entity begins doing business in this |
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state; or |
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(B) for a taxable entity that qualifies as a new |
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veteran-owned business as defined by Section 171.0005, the earlier |
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of: |
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(i) the fifth anniversary of the date on |
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which the taxable entity begins doing business in this state; or |
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(ii) the date the taxable entity ceases to |
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qualify as a new veteran-owned business as defined by Section |
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171.0005. |
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SECTION 2. Effective January 1, 2020, Section 171.0001(4), |
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Tax Code, is amended to read as follows: |
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(4) "Beginning date" means: |
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(A) for a taxable entity chartered or organized |
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in this state, the date on which the taxable entity's charter or |
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organization takes effect; and |
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(B) for any other taxable entity, the date on |
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which the taxable entity begins doing business in this state. |
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SECTION 3. Subchapter A, Chapter 171, Tax Code, is amended |
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by adding Section 171.0005 to read as follows: |
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Sec. 171.0005. DEFINITION OF NEW VETERAN-OWNED BUSINESS. |
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(a) A taxable entity is a new veteran-owned business only if the |
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taxable entity is a new business in which each owner is a natural |
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person who: |
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(1) served in and was honorably discharged from a |
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branch of the United States armed forces; and |
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(2) provides verification to the comptroller of the |
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person's service and discharge required by Subdivision (1). |
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(b) The Texas Veterans Commission shall provide to a person |
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who meets the requirements of Subsection (a)(1) written |
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verification of that status in a form required by the comptroller. |
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The comptroller shall adopt rules prescribing the form and content |
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of the verification and the manner in which the verification may be |
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provided to the comptroller. |
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(c) For purposes of Subsection (a), a new business is a |
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taxable entity that: |
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(1) is chartered or organized or otherwise formed in |
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this state; and |
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(2) first begins doing business in this state on or |
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after January 1, 2016. |
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SECTION 4. Section 171.001, Tax Code, is amended by adding |
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Subsection (d) to read as follows: |
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(d) Notwithstanding Subsection (a), the tax imposed under |
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this chapter is not imposed on a taxable entity that qualifies as a |
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new veteran-owned business as defined by Section 171.0005 until the |
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earlier of: |
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(1) the fifth anniversary of the date on which the |
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taxable entity begins doing business in this state; or |
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(2) the date the taxable entity ceases to qualify as a |
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new veteran-owned business as defined by Section 171.0005. |
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SECTION 5. Section 171.063(g), Tax Code, is amended to read |
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as follows: |
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(g) If a corporation's federal tax exemption is withdrawn by |
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the Internal Revenue Service for failure of the corporation to |
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qualify or maintain its qualification for the exemption, the |
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corporation's exemption under this section ends on the effective |
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date of that withdrawal by the Internal Revenue Service. The |
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effective date of the withdrawal is considered the corporation's |
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beginning date for purposes of determining the corporation's |
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privilege periods and for all other purposes of this chapter, |
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except that if the corporation would have been subject to Section |
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171.001(d) in the absence of the federal tax exemption, and the |
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effective date of the withdrawal is a date earlier than the date the |
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corporation would have become subject to the franchise tax as |
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provided by Section 171.001(d), the date the corporation would have |
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become subject to the franchise tax under that section is |
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considered the corporation's beginning date for those purposes. |
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SECTION 6. Effective January 1, 2020, Section 171.063(g), |
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Tax Code, is amended to read as follows: |
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(g) If a corporation's federal tax exemption is withdrawn by |
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the Internal Revenue Service for failure of the corporation to |
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qualify or maintain its qualification for the exemption, the |
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corporation's exemption under this section ends on the effective |
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date of that withdrawal by the Internal Revenue Service. The |
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effective date of the withdrawal is considered the corporation's |
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beginning date for purposes of determining the corporation's |
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privilege periods and for all other purposes of this chapter. |
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SECTION 7. Section 171.204, Tax Code, is amended by adding |
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Subsection (d) to read as follows: |
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(d) The comptroller may require a taxable entity on which |
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the tax imposed under this chapter is not imposed solely because of |
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the application of Section 171.001(d) to file an information report |
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stating the taxable entity's beginning date as determined under |
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Section 171.0001(4)(B) and any other information the comptroller |
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determines necessary. The comptroller may not require the taxable |
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entity to report or compute its margin. |
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SECTION 8. Subchapter A, Chapter 12, Business Organizations |
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Code, is amended by adding Section 12.005 to read as follows: |
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Sec. 12.005. FEE WAIVER FOR NEW VETERAN-OWNED BUSINESS. |
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The secretary of state shall waive all fees imposed under |
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Subchapter D, Chapter 4, for an entity that is a new veteran-owned |
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business as defined by Section 171.0005, Tax Code, until the |
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earlier of: |
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(1) the fifth anniversary of the date on which the |
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entity was formed; or |
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(2) the date the entity ceases to qualify as a new |
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veteran-owned business as defined by Section 171.0005, Tax Code. |
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SECTION 9. Effective January 1, 2020, the following |
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sections are repealed: |
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(1) Section 171.0005, Tax Code; |
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(2) Section 171.001(d), Tax Code; |
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(3) Section 171.204(d), Tax Code; and |
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(4) Section 12.005, Business Organizations Code. |
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SECTION 10. The changes in law made by this Act that take |
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effect January 1, 2020, do not apply to a business that first |
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qualifies before that date as a new veteran-owned business as |
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defined by Section 171.0005, Tax Code, as that section exists |
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immediately before that date. A business that first qualifies |
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before January 1, 2020, as a new veteran-owned business is governed |
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by the law in effect immediately before that date, and that law is |
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continued in effect for that purpose. |
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SECTION 11. Except as otherwise provided by this Act, this |
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Act takes effect January 1, 2016. |