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A BILL TO BE ENTITLED
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AN ACT
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relating to the computation of and total revenue exemption for the |
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franchise tax. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 171.002(d), Tax Code, is amended to read |
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as follows: |
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(d) A taxable entity is not required to pay any tax and is |
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not considered to owe any tax for a period if: |
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(1) the amount of tax computed for the taxable entity |
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is less than $1,000; or |
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(2) the amount of the taxable entity's total revenue |
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from its entire business is less than or equal to $2 [$1] million or |
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the amount determined under Section 171.006 per 12-month period on |
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which margin is based. |
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SECTION 2. Sections 171.101(a) and (b), Tax Code, are |
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amended to read as follows: |
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(a) The taxable margin of a taxable entity is computed by: |
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(1) determining the taxable entity's margin, which is |
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the lesser of: |
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(A) the amount provided by this paragraph, which |
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is the lesser of: |
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(i) 70 percent of the taxable entity's total |
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revenue from its entire business, as determined under Section |
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171.1011; or |
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(ii) an amount equal to the taxable entity's |
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total revenue from its entire business as determined under Section |
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171.1011 minus $2 [$1] million; or |
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(B) an amount computed by determining the |
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taxable entity's total revenue from its entire business under |
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Section 171.1011 and subtracting the greater of: |
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(i) $2 [$1] million; or |
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(ii) an amount equal to the sum of: |
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(a) at the election of the taxable |
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entity, either: |
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(1) cost of goods sold, as |
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determined under Section 171.1012; or |
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(2) compensation, as determined |
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under Section 171.1013; and |
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(b) any compensation, as determined |
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under Section 171.1013, paid to an individual during the period the |
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individual is serving on active duty as a member of the armed forces |
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of the United States if the individual is a resident of this state |
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at the time the individual is ordered to active duty and the cost of |
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training a replacement for the individual; |
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(2) apportioning the taxable entity's margin to this |
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state as provided by Section 171.106 to determine the taxable |
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entity's apportioned margin; and |
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(3) subtracting from the amount computed under |
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Subdivision (2) any other allowable deductions to determine the |
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taxable entity's taxable margin. |
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(b) Notwithstanding Subsection (a)(1)(B)(ii)(a), a |
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professional employer organization may subtract only the greater of |
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$2 [$1] million as provided by Subsection (a)(1)(B)(i) or |
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compensation as determined under Section 171.1013. |
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SECTION 3. Section 171.1014(d), Tax Code, is amended to |
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read as follows: |
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(d) For purposes of Section 171.101, a combined group shall |
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make an election to subtract either cost of goods sold or |
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compensation that applies to all of its members, or $2 [$1] |
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million. Regardless of the election, the taxable margin of the |
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combined group may not exceed the amount provided by Section |
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171.101(a)(1)(A) for the combined group. |
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SECTION 4. This Act applies only to a report originally due |
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on or after January 1, 2024. |
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SECTION 5. This Act takes effect January 1, 2024. |