88R1133 BEF-D
 
  By: Schwertner S.B. No. 1061
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the computation of and total revenue exemption for the
  franchise tax.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 171.002(d), Tax Code, is amended to read
  as follows:
         (d)  A taxable entity is not required to pay any tax and is
  not considered to owe any tax for a period if:
               (1)  the amount of tax computed for the taxable entity
  is less than $1,000; or
               (2)  the amount of the taxable entity's total revenue
  from its entire business is less than or equal to $2 [$1] million or
  the amount determined under Section 171.006 per 12-month period on
  which margin is based.
         SECTION 2.  Sections 171.101(a) and (b), Tax Code, are
  amended to read as follows:
         (a)  The taxable margin of a taxable entity is computed by:
               (1)  determining the taxable entity's margin, which is
  the lesser of:
                     (A)  the amount provided by this paragraph, which
  is the lesser of:
                           (i)  70 percent of the taxable entity's total
  revenue from its entire business, as determined under Section
  171.1011; or
                           (ii)  an amount equal to the taxable entity's
  total revenue from its entire business as determined under Section
  171.1011 minus $2 [$1] million; or
                     (B)  an amount computed by determining the
  taxable entity's total revenue from its entire business under
  Section 171.1011 and subtracting the greater of:
                           (i)  $2 [$1] million; or
                           (ii)  an amount equal to the sum of:
                                 (a)  at the election of the taxable
  entity, either:
                                       (1)  cost of goods sold, as
  determined under Section 171.1012; or
                                       (2)  compensation, as determined
  under Section 171.1013; and
                                 (b)  any compensation, as determined
  under Section 171.1013, paid to an individual during the period the
  individual is serving on active duty as a member of the armed forces
  of the United States if the individual is a resident of this state
  at the time the individual is ordered to active duty and the cost of
  training a replacement for the individual;
               (2)  apportioning the taxable entity's margin to this
  state as provided by Section 171.106 to determine the taxable
  entity's apportioned margin; and
               (3)  subtracting from the amount computed under
  Subdivision (2) any other allowable deductions to determine the
  taxable entity's taxable margin.
         (b)  Notwithstanding Subsection (a)(1)(B)(ii)(a), a
  professional employer organization may subtract only the greater of
  $2 [$1] million as provided by Subsection (a)(1)(B)(i) or
  compensation as determined under Section 171.1013.
         SECTION 3.  Section 171.1014(d), Tax Code, is amended to
  read as follows:
         (d)  For purposes of Section 171.101, a combined group shall
  make an election to subtract either cost of goods sold or
  compensation that applies to all of its members, or $2 [$1]
  million.  Regardless of the election, the taxable margin of the
  combined group may not exceed the amount provided by Section
  171.101(a)(1)(A) for the combined group.
         SECTION 4.  This Act applies only to a report originally due
  on or after January 1, 2024.
         SECTION 5.  This Act takes effect January 1, 2024.