85R2628 BEF-D
 
  By: Nelson S.B. No. 72
 
 
 
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 state fiscal
  biennium the comptroller prepares in accordance with Section
  49a(a), Article III, Texas Constitution.
               (2)  "Current fiscal biennium" means the state fiscal
  biennium in which a determination date occurs.
               (3)  "Determination date" means the first working day
  in a calendar year.
               (4)  "Working day" has the meaning assigned by Section
  659.083, Government Code.
         (b)  On the determination date each year, the comptroller
  shall:
               (1)  estimate total probable revenue to this state for
  the current fiscal biennium:
                     (A)  using information available on the
  determination date; and 
                     (B)  assuming the franchise tax rates in effect on
  December 31 of the previous year will be adjusted for the current
  year as provided by Subsection (c); 
               (2)  determine the amount of anticipated revenue stated
  in the biennial revenue estimate for the current fiscal biennium,
  as adjusted for estimates of revenue and disbursements associated
  with legislation enacted during the regular legislative session
  preceding the current fiscal biennium and any special sessions of
  that legislature, including any contingent appropriations
  certified before the determination date; and
               (3)  if the amount estimated under Subdivision (1) is
  greater than or equal to the amount determined under Subdivision
  (2), certify that sufficient probable revenue is available for tax
  rate adjustments under Subsection (c).
         (c)  Effective January 1 of each year in which the
  comptroller certifies under Subsection (b)(3) that sufficient
  probable revenue is available for tax rate adjustments for that
  year:
               (1)  the rate of the franchise tax under Section
  171.002(a) is adjusted by subtracting 0.025 from the rate in effect
  on December 31 of the previous year;
               (2)  the rate of the franchise tax under Section
  171.002(b) is adjusted by subtracting 0.0125 from the rate in
  effect on December 31 of the previous year; and
               (3)  the rate of the franchise tax under Section
  171.1016(b)(3) is adjusted by subtracting 0.011 from the rate in
  effect on December 31 of the previous year.
         (d)  The tax rates determined under Subsection (c):
               (1)  apply to a report originally due on or after
  January 1 of the year the comptroller's certification under
  Subsection (b)(3) is made; 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.
         (e)  If the comptroller does not make the certification under
  Subsection (b)(3), the rates of the franchise tax in effect on
  December 31 of the previous year remain in effect for the year in
  which the determination date occurs.
         (f)  Notwithstanding Subsection (c), if an adjustment
  otherwise required by Subsection (c) would reduce a rate of the
  franchise tax to less than zero, the rate is instead reduced to
  zero.
         (g)  Notwithstanding any other law, if the rates of the
  franchise tax under Section 171.002 are reduced to zero under
  Subsection (c) or (f), 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, regardless of
  whether the taxable entity would have computed the tax owed based on
  a rate provided by Section 171.002 or a rate provided by Section
  171.1016.
         (h)  The comptroller shall make the determinations and
  estimates required by Subsections (b) and (f) and may adopt rules
  related to making those determinations and estimates.  The
  comptroller shall publish the franchise tax rates in effect for a
  year in the Texas Register and on the comptroller's Internet
  website not later than January 15 of that year.
         (i)  In the state fiscal year in which the rates of the
  franchise tax under Section 171.002 are reduced to zero under
  Subsection (c) or (f):
               (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. 
         (j)  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 Section 171.002 are reduced to zero under Section 171.004(c)
  or (f).
         SECTION 5.  (a)  Chapter 171, Tax Code, 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.
         (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, 2018.
         SECTION 7.  This Act takes effect September 1, 2017.