| |
| |
|
|
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, 2022. |
|
|
SECTION 7. This Act takes effect September 1, 2019. |