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A BILL TO BE ENTITLED
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AN ACT
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relating to the decrease of the rates of the franchise tax under |
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certain circumstances and the expiration of that tax. |
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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, and 171.1016 and |
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except as provided by Subsection (b), the rate of the franchise tax |
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is 0.75 percent of taxable margin. |
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(b) Subject to Sections 171.003, 171.004, and 171.1016, the |
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rate of the franchise tax is 0.375 percent of taxable margin for |
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those taxable entities primarily engaged in retail or wholesale |
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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) In this |
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section: |
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(1) "Biennial revenue estimate" means the estimate of |
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anticipated revenue to this state for the succeeding biennium that |
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the comptroller prepares in accordance with Section 49a(a), Article |
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III, Texas Constitution. |
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(2) "Current biennium" means the state fiscal biennium |
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in which a biennial revenue estimate is submitted to the governor |
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and legislature. |
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(3) "Succeeding biennium" means the state fiscal |
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biennium beginning after the current biennium. |
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(b) The comptroller shall determine and include with the |
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biennial revenue estimate: |
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(1) the amount of total general revenue-related funds |
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that would be available for certification for the succeeding |
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biennium assuming a franchise tax rate adjustment under this |
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section does not take effect in that biennium; |
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(2) the percentage change between the amount of total |
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general revenue-related funds available for certification for the |
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current biennium, as provided by the biennial revenue estimate, and |
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the amount provided by Subdivision (1) for the succeeding biennium; |
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(3) if the percentage change under Subdivision (2) is |
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greater than five percent, the amount of total general |
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revenue-related funds that would be available for certification for |
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the succeeding biennium assuming the franchise tax rate adjustment |
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under this section takes effect in the succeeding biennium; and |
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(4) if the percentage change under Subdivision (2) is |
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greater than five percent, the percentage change between the amount |
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of total general revenue-related funds available for certification |
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for the current biennium, as provided by the biennial revenue |
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estimate, and the amount provided by Subdivision (3) for the |
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succeeding biennium. |
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(c) If the percentage change determined under Subsection |
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(b)(2) is greater than five percent, the comptroller shall |
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determine the amount of revenue available for franchise tax |
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reduction, which is computed as follows: |
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FTR = 0.5 X (SBGR - (CBGR X 1.05)) |
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where: |
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"FTR" is the amount of revenue available for franchise tax |
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reduction; |
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"SBGR" is the amount provided by Subsection (b)(1) for the |
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succeeding biennium; and |
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"CBGR" is the amount of total general revenue-related funds |
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available for certification for the current biennium, as provided |
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by the biennial revenue estimate. |
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(d) This subsection applies only if the percentage change |
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determined under Subsection (b)(2) is greater than five percent. |
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Not later than the last day of a state fiscal biennium, the |
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comptroller shall determine the rates for purposes of Sections |
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171.002(a) and (b) and Section 171.1016 that, if effective |
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beginning January 1 of the even-numbered year occurring during the |
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succeeding biennium, are estimated to reduce the amount of revenue |
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collected under this chapter for the succeeding biennium, as |
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compared to the amount of revenue that would be collected if the |
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rates then in effect remained in effect, by the amount of revenue |
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available for franchise tax reduction determined under Subsection |
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(c). 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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(e) Not later than the last day of a state fiscal biennium, |
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the comptroller shall: |
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(1) adopt the adjusted tax rates determined under |
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Subsection (d), if applicable; |
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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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(f) The tax rates adopted under Subsection (e): |
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(1) apply to a report originally due on or after |
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January 1 of the even-numbered year described by Subsection (d); |
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and |
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(2) are considered for purposes of this chapter to be |
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the rates provided by and imposed under Section 171.002 or |
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171.1016, as applicable. |
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(g) If the percentage change determined under Subsection |
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(b)(2) is not greater than five percent, the rates of the franchise |
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tax in effect when the biennial revenue estimate is submitted to the |
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governor and legislature remain in effect for the succeeding |
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biennium unless modified by other law. |
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(h) Notwithstanding Subsection (d), if an adjustment |
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otherwise required by that subsection 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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(i) Notwithstanding any other law, if the rates of the |
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franchise tax are reduced to zero under Subsection (d) or (h), 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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those rates are reduced to zero. |
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(j) The comptroller may adopt rules related to making the |
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determinations required by this section. |
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(k) In the state fiscal year in which the rates of the |
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franchise tax are reduced to zero under Subsection (d) or (h): |
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(1) this chapter expires as provided by Section |
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171.9321; and |
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(2) not later than January 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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(l) An action taken by the comptroller under this section is |
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final and may not be appealed. |
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SECTION 3. Sections 171.1016(b) and (e), Tax Code, are |
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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 0.331 percent or, if applicable, an adjusted tax |
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rate determined under Section 171.004. |
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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 171.004. |
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SECTION 4. 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. 171.9321. EXPIRATION. This chapter expires on |
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December 31 of the year in which the rates of the franchise tax |
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under Sections 171.002 and 171.1016 are reduced to zero under |
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Section 171.004(d) or (h). |
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SECTION 5. (a) After Chapter 171, Tax Code, expires as |
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provided by Subchapter Z, Chapter 171, Tax Code, as added by this |
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Act: |
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(1) Chapter 171 and Subtitle B, Title 2, Tax Code, |
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continue to apply to audits, deficiencies, redeterminations, and |
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refunds of any tax due or collected under Chapter 171 until barred |
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by limitations; and |
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(2) Sections 171.206 through 171.210, Tax Code, |
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continue to apply to information described by those sections. |
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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, a 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 6. This Act applies only to a report originally due |
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on or after January 1, 2020. |
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SECTION 7. This Act takes effect September 1, 2017. |
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* * * * * |