By: Nelson, et al. S.B. No. 17
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the decrease of the rates of the franchise tax under
  certain circumstances and the expiration of that tax.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Sections 171.002(a) and (b), Tax Code, are
  amended to read as follows:
         (a)  Subject to Sections 171.003, 171.004, and 171.1016 and
  except as provided by Subsection (b), the rate of the franchise tax
  is 0.75 percent of taxable margin.
         (b)  Subject to Sections 171.003, 171.004, and 171.1016, the
  rate of the franchise tax is 0.375 percent of taxable margin for
  those taxable entities primarily engaged in retail or wholesale
  trade.
         SECTION 2.  Subchapter A, Chapter 171, Tax Code, is amended
  by adding Section 171.004 to read as follows:
         Sec. 171.004.  ADJUSTMENT OF TAX RATES. (a)  In this
  section:
               (1)  "Biennial revenue estimate" means the estimate of
  anticipated revenue to this state for the succeeding biennium that
  the comptroller prepares in accordance with Section 49a(a), Article
  III, Texas Constitution.
               (2)  "Current biennium" means the state fiscal biennium
  in which a biennial revenue estimate is submitted to the governor
  and legislature.
               (3)  "Succeeding biennium" means the state fiscal
  biennium beginning after the current biennium.
         (b)  The comptroller shall determine and include with the
  biennial revenue estimate:
               (1)  the amount of total general revenue-related funds
  that would be available for certification for the succeeding
  biennium assuming a franchise tax rate adjustment under this
  section does not take effect in that biennium;
               (2)  the percentage change between the amount of total
  general revenue-related funds available for certification for the
  current biennium, as provided by the biennial revenue estimate, and
  the amount provided by Subdivision (1) for the succeeding biennium;
               (3)  if the percentage change under Subdivision (2) is
  greater than five percent, the amount of total general
  revenue-related funds that would be available for certification for
  the succeeding biennium assuming the franchise tax rate adjustment
  under this section takes effect in the succeeding biennium; and
               (4)  if the percentage change under Subdivision (2) is
  greater than five percent, the percentage change between the amount
  of total general revenue-related funds available for certification
  for the current biennium, as provided by the biennial revenue
  estimate, and the amount provided by Subdivision (3) for the
  succeeding biennium.
         (c)  If the percentage change determined under Subsection
  (b)(2) is greater than five percent, the comptroller shall
  determine the amount of revenue available for franchise tax
  reduction, which is computed as follows:
  FTR = 0.5 X (SBGR - (CBGR X 1.05))
  where:
         "FTR" is the amount of revenue available for franchise tax
  reduction;
         "SBGR" is the amount provided by Subsection (b)(1) for the
  succeeding biennium; and
         "CBGR" is the amount of total general revenue-related funds
  available for certification for the current biennium, as provided
  by the biennial revenue estimate.
         (d)  This subsection applies only if the percentage change
  determined under Subsection (b)(2) is greater than five percent.  
  Not later than the last day of a state fiscal biennium, the
  comptroller shall determine the rates for purposes of Sections
  171.002(a) and (b) and Section 171.1016 that, if effective
  beginning January 1 of the even-numbered year occurring during the
  succeeding biennium, are estimated to reduce the amount of revenue
  collected under this chapter for the succeeding biennium, as
  compared to the amount of revenue that would be collected if the
  rates then in effect remained in effect, by the amount of revenue
  available for franchise tax reduction determined under Subsection
  (c).  In determining the rates under this subsection, the
  comptroller shall proportionally reduce the rates under Sections
  171.002(a) and (b) and Section 171.1016 that are in effect on the
  date the comptroller makes the determination.
         (e)  Not later than the last day of a state fiscal biennium,
  the comptroller shall:
               (1)  adopt the adjusted tax rates determined under
  Subsection (d), if applicable;
               (2)  publish notice of the adjusted tax rates in the
  Texas Register; and
               (3)  provide any other notice relating to the adjusted
  tax rates that the comptroller considers appropriate.
         (f)  The tax rates adopted under Subsection (e):
               (1)  apply to a report originally due on or after
  January 1 of the even-numbered year described by Subsection (d);
  and
               (2)  are considered for purposes of this chapter to be
  the rates provided by and imposed under Section 171.002 or
  171.1016, as applicable.
         (g)  If the percentage change determined under Subsection
  (b)(2) is not greater than five percent, the rates of the franchise
  tax in effect when the biennial revenue estimate is submitted to the
  governor and legislature remain in effect for the succeeding
  biennium unless modified by other law.
         (h)  Notwithstanding Subsection (d), if an adjustment
  otherwise required by that subsection would reduce a rate of the
  franchise tax to less than zero, the rate is instead reduced to
  zero.
         (i)  Notwithstanding any other law, if the rates of the
  franchise tax are reduced to zero under Subsection (d) or (h), a
  taxable entity does not owe any tax and is not required to file a
  report that would otherwise be originally due on or after the date
  those rates are reduced to zero.
         (j)  The comptroller may adopt rules related to making the
  determinations required by this section.
         (k)  In the state fiscal year in which the rates of the
  franchise tax are reduced to zero under Subsection (d) or (h):
               (1)  this chapter expires as provided by Section
  171.9321; and
               (2)  not later than January 15 of that year the
  comptroller shall:
                     (A)  publish notice in the Texas Register that an
  entity previously subject to the tax imposed under this chapter is
  no longer required to file a report or pay the tax; and
                     (B)  provide any other notice relating to the
  expiration of the tax that the comptroller considers appropriate.
         (l)  An action taken by the comptroller under this section is
  final and may not be appealed.
         SECTION 3.  Sections 171.1016(b) and (e), Tax Code, are
  amended to read as follows:
         (b)  The amount of the tax for which a taxable entity that
  elects to pay the tax as provided by this section is liable is
  computed by:
               (1)  determining the taxable entity's total revenue
  from its entire business, as determined under Section 171.1011;
               (2)  apportioning the amount computed under
  Subdivision (1) to this state, as provided by Section 171.106, to
  determine the taxable entity's apportioned total revenue; and
               (3)  multiplying the amount computed under Subdivision
  (2) by the rate of 0.331 percent or, if applicable, an adjusted tax
  rate determined under Section 171.004.
         (e)  A reference in this chapter or other law to the rate of
  the franchise tax means, as appropriate:
               (1)[,]  the rate under Section 171.002 or, for a
  taxable entity that elects to pay the tax as provided by this
  section, the rate under this section; or
               (2)  the adjusted rates under Section 171.004.
         SECTION 4.  Chapter 171, Tax Code, is amended by adding
  Subchapter Z to read as follows:
  SUBCHAPTER Z.  EXPIRATION
         Sec. 171.9321.  EXPIRATION. This chapter expires on
  December 31 of the year in which the rates of the franchise tax
  under Sections 171.002 and 171.1016 are reduced to zero under
  Section 171.004(d) or (h).
         SECTION 5.  (a)  After Chapter 171, Tax Code, expires as
  provided by Subchapter Z, Chapter 171, Tax Code, as added by this
  Act:
               (1)  Chapter 171 and Subtitle B, Title 2, Tax Code,
  continue to apply to audits, deficiencies, redeterminations, and
  refunds of any tax due or collected under Chapter 171 until barred
  by limitations; and
               (2)  Sections 171.206 through 171.210, Tax Code,
  continue to apply to information described by those sections.
         (b)  The expiration of Chapter 171, Tax Code, does not
  affect:
               (1)  the status of a taxable entity that has had its
  corporate privileges, certificate of authority, certificate of
  organization, certificate of limited partnership, corporate
  charter, or registration revoked, a suit filed against it, or a
  receiver appointed under Subchapter F, G, or H of that chapter;
               (2)  the ability of the comptroller of public accounts,
  secretary of state, or attorney general to take action against a
  taxable entity under Subchapter F, G, or H of that chapter for
  actions that took place before the chapter expired; or
               (3)  the right of a taxable entity to contest a
  forfeiture, revocation, lawsuit, or appointment of a receiver under
  Subchapter F, G, or H of that chapter.
         SECTION 6.  This Act applies only to a report originally due
  on or after January 1, 2020.
         SECTION 7.  This Act takes effect September 1, 2017.