82R1714 MXM-D
	By: Burnam	H.B. No. 354

	A BILL TO BE ENTITLED
	AN ACT
	relating to the imposition of an income tax on income that exceeds
	$150,000 to provide property tax relief and fund public education;
	providing penalties.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Title 2, Tax Code, is amended by adding Subtitle
	L to read as follows:
	SUBTITLE L. PERSONAL INCOME TAX
	CHAPTER 261. PERSONAL INCOME TAX
	SUBCHAPTER A. IMPOSITION OF TAX
	Sec. 261.001.  TAX IMPOSED. (a) A tax is imposed for each
	tax year:
	(1)  on the taxable income that exceeds $150,000 of
	every resident of this state; and
	(2)  on the taxable income that exceeds $150,000
	derived from sources in this state of every nonresident.
	(b)  The tax rates for an individual are:
	(1)  for taxable income that exceeds $150,000 but does
	not exceed $250,000, three percent of the taxable income that
	exceeds $150,000 but does not exceed $250,000;
	(2)  for taxable income that exceeds $250,000 but does
	not exceed $500,000, $3,000 plus four percent of the taxable income
	that exceeds $250,000 but does not exceed $500,000;
	(3)  for taxable income that exceeds $500,000 but does
	not exceed $1 million, $13,000 plus five percent of the taxable
	income that exceeds $500,000 but does not exceed $1 million; or
	(4)  for taxable income that exceeds $1 million,
	$38,000 plus six percent of the taxable income that exceeds $1
	million.
	Sec. 261.002.  JOINT RETURN. If persons subject to the tax
	under this chapter file a joint federal income tax return with a
	spouse, they may file a joint return under this chapter but they may
	not combine their incomes for the purpose of determining the amount
	of tax owed. The separate incomes of each spouse are taxed as
	individual incomes under Section 261.001.
	Sec. 261.003.  MEANING OF TERMS. (a) In this chapter:
	(1)  an individual is a resident of this state if the
	individual:
	(A)  is domiciled in this state, unless the
	individual does not maintain a permanent abode in this state and
	does maintain a permanent abode elsewhere and spends, in the
	aggregate, not more than 30 days of the tax year in this state; or
	(B)  is not domiciled in this state but maintains
	a permanent abode in this state and spends, in the aggregate, more
	than 183 days of the tax year in this state; and
	(2)  an individual is a nonresident if the individual
	is not a resident of this state.
	(b)  Any term used in this chapter and not defined by or for
	purposes of this chapter has the same meaning as when used in a
	comparable context in the laws of the United States relating to
	federal income taxes, unless a different meaning is clearly
	required. Any reference in this chapter to federal law means the
	provisions of the Internal Revenue Code of 1986 in effect on
	December 31, 2011, and other provisions of federal laws relating to
	federal income taxes in effect on December 31, 2011.
	[Sections 261.004-261.050 reserved for expansion]
	SUBCHAPTER B. COMPUTATION OF TAXABLE INCOME
	Sec. 261.051.  TAXABLE INCOME. The taxable income of a
	resident of this state is the resident's federal adjusted gross
	income as defined by federal law.
	Sec. 261.052.  CREDIT FOR INCOME TAX PAID TO ANOTHER STATE.
	(a) A resident individual is allowed a credit against the tax
	otherwise due under this chapter for the amount of any income tax
	imposed on the individual for the tax year by another state of the
	United States on income that is derived from sources in that state
	and that is subject to tax under this chapter.
	(b)  The credit provided by this section may not exceed the
	proportion of the tax otherwise due under this chapter that the
	amount of the taxpayer's adjusted gross income derived from sources
	in the other taxing jurisdiction bears to the taxpayer's entire
	adjusted gross income as modified by this subchapter.
	Sec. 261.053.  DUAL RESIDENCE; REDUCTION OF TAX. If a
	taxpayer is a resident of this state and is regarded as a resident
	of another jurisdiction for purposes of personal income taxation,
	the comptroller shall reduce the tax on that portion of the
	taxpayer's income that is subject to tax in both jurisdictions
	solely by virtue of dual residence. The reduction is an amount
	equal to that portion of the lower of the two taxes applicable to
	the income taxed twice that the tax imposed by this state bears to
	the combined taxes of the two jurisdictions on the income taxed
	twice.
	Sec. 261.054.  NONRESIDENT INDIVIDUALS--TAXABLE INCOME.
	The taxable income of a nonresident individual is that part of the
	individual's federal adjusted gross income derived from sources in
	this state determined under Section 261.055.
	Sec. 261.055.  ADJUSTED GROSS INCOME FROM SOURCES IN THIS
	STATE--NONRESIDENT. (a) The adjusted gross income of a
	nonresident derived from sources in this state is the net amount of
	items of income, gain, loss, and deduction entering into the
	nonresident's federal adjusted gross income that are derived from
	or connected with sources in this state, including:
	(1)  the nonresident's distributive share of
	partnership income and deductions determined under Section
	261.403; and
	(2)  the nonresident's share of estate or trust income
	and deductions derived from sources in this state.
	(b)  Items of income, gain, loss, and deduction derived from
	or connected with sources in this state are those items
	attributable to:
	(1)  the ownership or disposition of an interest in
	real or tangible personal property in this state; and
	(2)  a business, trade, profession, or occupation
	conducted in this state.
	(c)  Income from intangible personal property, including
	annuities, dividends, interest, and gains from the disposition of
	intangible personal property, constitutes income derived from
	sources in this state only to the extent that the income is from
	property used in a business, trade, profession, or occupation
	carried on in this state.
	(d)  Deductions for capital losses, net long-term capital
	gains, and net operating losses derived from or connected with
	sources in this state, are determined in the same manner as the
	corresponding federal deductions. However, the extent to which the
	deductions are derived from or connected with sources in this state
	is determined under the comptroller's rules.
	(e)  For a nonresident individual who is a shareholder of a
	corporation that is an electing small business corporation for
	federal income tax purposes, the undistributed taxable income of
	the corporation does not constitute income derived from sources in
	this state and a net operating loss of the corporation does not
	constitute a loss or deduction connected with sources in this
	state.
	(f)  If a business, trade, profession, or occupation is
	carried on partly in and partly outside this state, the items of
	income and deduction derived from or connected with sources in this
	state are determined by apportionment and allocation consistent
	with Chapter 141 under the comptroller's rules.
	(g)  Compensation paid by the United States for service in
	the armed forces of the United States performed by a nonresident is
	not income derived from sources in this state.
	[Sections 261.056-261.100 reserved for expansion]
	SUBCHAPTER C. [RESERVED]
	[Sections 261.101-261.200 reserved for expansion]
	SUBCHAPTER D. ACCOUNTING PERIODS AND METHODS
	Sec. 261.201.  PERIOD FOR COMPUTATION OF TAXABLE INCOME.
	(a) For purposes of the tax imposed by this chapter, a taxpayer's
	tax year is the same as the taxpayer's tax year for federal income
	tax purposes.
	(b)  If a taxpayer's tax year is changed for federal income
	tax purposes, the taxpayer's tax year for purposes of the tax
	imposed by this chapter is similarly changed.
	Sec. 261.202.  METHODS OF ACCOUNTING. (a) A taxpayer's
	method of accounting is the same as the taxpayer's method of
	accounting for federal income tax purposes. If a single method of
	accounting has not been regularly used by the taxpayer, taxable
	income for purposes of this chapter shall be computed under any
	method that in the opinion of the comptroller fairly reflects
	income.
	(b)  If a taxpayer's method of accounting is changed for
	federal income tax purposes, the taxpayer's method of accounting
	for purposes of this chapter is changed in the same manner.
	Sec. 261.203.  ADJUSTMENTS. In computing a taxpayer's
	taxable income for any tax year under a method of accounting
	different from the method under which the taxpayer's taxable income
	for the previous year was computed, there shall be taken into
	account those adjustments that are determined, under rules
	prescribed by the comptroller, to be necessary solely by reason of
	the change in order to prevent amounts from being duplicated or
	omitted.
	Sec. 261.204.  LIMITATION ON ADDITIONAL TAX. (a) If a
	taxpayer's method of accounting is changed, other than from an
	accrual to an installment method, an additional tax that results
	from adjustments determined to be necessary solely because of the
	change may not be greater than if those adjustments were ratably
	allocated and included for the tax year of the change and not more
	than two preceding tax years during which the taxpayer used the
	method of accounting from which the change is made.
	(b)  If a taxpayer's method of accounting is changed from an
	accrual to an installment method, an additional tax for the year of
	the change of method and for a subsequent year that is attributable
	to the receipt of installment payments properly accrued in a prior
	year is reduced by the portion of tax for any prior tax year
	attributable to the accrual of the installment payments, under
	rules adopted by the comptroller.
	[Sections 261.205-261.400 reserved for expansion]
	SUBCHAPTER E. PARTNERS AND PARTNERSHIPS
	Sec. 261.401.  ENTITY NOT TAXABLE. A partnership as an
	entity is not subject to the tax imposed by this chapter. Persons
	carrying on business as partners are liable for the tax imposed by
	this chapter only in their separate or individual capacities.
	Sec. 261.402.  RESIDENT PARTNER--ADJUSTED GROSS INCOME. (a)
	Partnership income, gain, loss, or deduction is allocated in
	accordance with each partner's distributive share for federal
	income tax purposes.
	(b)  Each item of partnership income, gain, loss, or
	deduction has the same character for a partner under this chapter as
	it has for federal income tax purposes. If an item is not
	characterized for federal income tax purposes, it has the same
	character for a partner as if realized directly from the source from
	which realized by the partnership or incurred in the same manner as
	incurred by the partnership.
	(c)  If a partner's distributive share of an item of
	partnership income, gain, loss, or deduction is determined for
	federal income tax purposes by a special provision in the
	partnership agreement with respect to the item, and the principal
	purpose of the provision is the avoidance or evasion of tax under
	this chapter, the partner's distributive share of the item and a
	modification required with respect to it is determined in
	accordance with the partner's distributive share of the taxable
	income or loss of the partnership generally, excluding those items
	requiring separate computation under Section 702, Internal Revenue
	Code of 1986.
	Sec. 261.403.  NONRESIDENT PARTNER--ADJUSTED GROSS INCOME
	FROM SOURCES IN THIS STATE. (a) In determining the adjusted gross
	income of a nonresident partner of any partnership, there shall be
	included only that part derived from or connected with sources in
	this state of the partner's distributive share of items of
	partnership income, gain, loss, and deduction entering into the
	partner's federal adjusted gross income, as that part is determined
	under rules adopted by the comptroller and consistent with the
	rules adopted under Section 261.055.
	(b)  Except as authorized by Subsection (c), in determining
	the sources of a nonresident partner's income, no effect is given to
	a provision in the partnership agreement that:
	(1)  characterizes payments to the partner as being for
	services or for the use of capital, or allocates to the partner, as
	income or gain from sources outside this state, a greater
	proportion of the partner's distributive share of partnership
	income or gain than the ratio of partnership income or gain from
	sources outside this state to partnership income or gain from all
	sources; or
	(2)  allocates to the partner a greater proportion of a
	partnership item of loss or deduction connected with sources in
	this state than the partner's proportionate share, for federal
	income tax purposes, of partnership loss or deduction generally.
	(c)  The comptroller may, on application, authorize the use
	of other methods of determining a nonresident partner's portion of
	partnership items derived from or connected with sources in this
	state, and the modifications related to it, that are appropriate
	and equitable, on terms the comptroller may require.
	(d)  A nonresident partner's distributive share of items of
	income, gain, loss, or deduction is determined under Section
	261.402(a). The character of partnership items for a nonresident
	partner is determined under Section 261.402(b). The effect of a
	special provision in a partnership agreement, other than a
	provision described by Subsection (b), having as a principal
	purpose the avoidance or evasion of tax under this chapter is
	determined under Section 261.402(c).
	[Sections 261.404-261.500 reserved for expansion]
	SUBCHAPTER F. TAX RETURNS AND PAYMENTS
	Sec. 261.501.  PERSONS REQUIRED TO MAKE RETURNS OF INCOME. A
	state income tax return shall be made by every individual who has
	adjusted gross income from sources in this state in excess of
	$150,000.
	Sec. 261.502.  RETURNS BY FIDUCIARIES. (a) An income tax
	return for a deceased individual shall be made and filed by the
	executor, administrator, or other person charged with the care of
	the property of the decedent. A final return of a decedent is due
	when it would have been due if the decedent had not died.
	(b)  An income tax return for an individual who is unable to
	make a return because of minority or other disability shall be made
	and filed by the individual's authorized agent, guardian,
	conservator, fiduciary, or other person charged with the care of
	the individual or the individual's property other than a receiver
	in possession of only a part of the individual's property.
	(c)  If two or more fiduciaries are acting jointly, the
	return may be made by any one of them.
	Sec. 261.503.  NOTICE OF QUALIFICATION AS RECEIVER. A
	receiver, trustee in bankruptcy, assignee for benefit of creditors,
	or other similar fiduciary shall give notice of the person's
	qualification to the comptroller, as may be required by rule.
	Sec. 261.504.  CHANGE OF STATUS AS RESIDENT OR NONRESIDENT
	DURING YEAR. (a) If the status of an individual changes during the
	individual's tax year from resident to nonresident or from
	nonresident to resident, the comptroller by rule may require the
	individual to file one return for the portion of the year during
	which the individual is a resident and one for the portion of the
	year during which the individual is a nonresident.
	(b)  Except as provided by Subsection (c), the taxable income
	of an individual is determined as provided by Section 261.051 for
	residents and Section 261.054 for nonresidents as if the
	individual's tax year for federal income tax purposes were limited
	to the period of the individual's resident and nonresident status
	respectively.
	(c)  There is included in determining taxable income from
	sources in or outside this state, as the case may be, income, gain,
	loss, or deduction accrued prior to the change of status even though
	not otherwise includable or allowable in respect to the period
	before the change, but the taxation or deduction of items accrued
	before the change of status is not affected by the change.
	(d)  If two returns are required to be filed under this
	section, the total of the taxes due may not be less than would be due
	if the total of the taxable incomes reported on the two returns were
	includable in one return.
	Sec. 261.505.  TIME AND PLACE FOR FILING RETURNS AND PAYING
	TAX. (a) A person required to make and file an income tax return
	required by this chapter shall:
	(1)  file the return not later than the 15th day of the
	fourth month following the end of the taxpayer's tax year; and
	(2)  pay a tax due to the comptroller not later than the
	last day the filing of the return is allowed without penalty,
	excluding an extension of time for filing the return.
	(b)  The comptroller by rule shall prescribe the place for
	filing a return, statement, or other document required by this
	chapter and for the payment of a tax.
	Sec. 261.506.  ESTIMATED TAX. (a) An individual subject to
	the income tax imposed by this chapter shall make estimated
	payments of the tax. Section 6654, Internal Revenue Code of 1986,
	other than Subsections (a), (b), (d)(2), and (e) of that section,
	governing the payment of estimated federal income taxes on
	individuals applies to the payments required by this section,
	including exemptions from the estimated tax payment requirement. A
	reference in that section to the federal income tax imposed on
	individuals is construed as a reference to the tax imposed by this
	chapter as required to administer this section. A power or duty
	given by Section 6654, Internal Revenue Code of 1986, to the United
	States secretary of the treasury is assigned to the comptroller for
	purposes of the estimated payments required by this section.
	(b)  The comptroller shall adopt rules to administer this
	section.
	(c)  Payment of the estimated tax or an installment is
	considered payment on account of the tax imposed by this chapter.
	Sec. 261.507.  EXTENSION OF TIME FOR FILING AND PAYMENT. (a)
	The comptroller, on terms the comptroller may require, may grant a
	reasonable extension of time for payment of tax or an installment,
	or for filing a return, statement, or other document required under
	this chapter. Except for an extension for a taxpayer who is outside
	the United States, an extension for filing a return, statement, or
	document may not exceed six months.
	(b)  If the time for the payment of an amount of tax is
	extended, the comptroller may require the taxpayer to furnish a
	bond or other security in an amount not exceeding twice the amount
	of tax for which the extension of time for payment is granted, on
	terms the comptroller may require.
	Sec. 261.508.  CHANGE OF ELECTION. An election expressly
	authorized by this chapter may be changed as authorized by the
	comptroller or by the comptroller's rule.
	Sec. 261.509.  SIGNING OF RETURNS AND OTHER DOCUMENTS. (a)
	A return, statement, or other document required to be made or filed
	under this chapter shall be signed as provided by the comptroller.
	An individual's name signed to a return, statement, or other
	document is prima facie evidence that the individual signed the
	return, statement, or other document.
	(b)  A return, statement, or other document required of a
	partnership must be signed by at least one partner. A partner's
	name signed to a return, statement, or other document is prima facie
	evidence that the partner is authorized to sign on behalf of the
	partnership.
	(c)  The making or filing of a return, statement, or other
	document or copy required to be made or filed under this chapter,
	including a copy of a federal return, constitutes a certification
	by the person making or filing the return, statement, or other
	document or copy that the statements contained in it are true and
	that a copy filed is a true copy.
	[Sections 261.510-261.520 reserved for expansion]
	SUBCHAPTER G. INFORMATION RETURNS
	Sec. 261.521.  GENERAL REQUIREMENTS. The comptroller by
	rule may require the keeping of records, the content and form of
	returns and statements, and the filing of copies of federal income
	returns and determinations. The comptroller may require a person,
	by rule or by notice served on the person, to make returns, render
	statements, or keep records, as the comptroller considers
	sufficient to show whether the person is liable under this chapter
	for tax or for the collection of tax.
	Sec. 261.522.  REPORT OF CHANGE IN FEDERAL TAXABLE INCOME.
	(a) If the amount of a taxpayer's federal taxable income reported
	on the taxpayer's federal income tax return for a tax year is
	changed or corrected by the United States Internal Revenue Service
	or other competent authority, or as the result of a renegotiation of
	a contract or subcontract with the United States, the taxpayer
	shall:
	(1)  report the change or correction in federal taxable
	income not later than the 90th day after the final determination of
	the change, correction, or renegotiation, or as required by the
	comptroller; and
	(2)  concede the accuracy of the determination or state
	in what way it is erroneous.
	(b)  A taxpayer filing an amended federal income tax return
	shall also file, not later than the 90th day after filing, an
	amended return under this chapter, and shall give any information
	required by the comptroller.
	(c)  The comptroller by rule may prescribe exceptions to the
	requirements of this section.
	[Sections 261.523-261.600 reserved for expansion]
	SUBCHAPTER H. ADDITIONS TO TAX; PENALTIES
	Sec. 261.601.  FAILURE TO FILE TAX RETURN. (a) A person who
	does not file a return required under this chapter on or before the
	prescribed date is subject to the following penalty based on a
	percentage of the full amount of tax owed on the prescribed day:
	(1)  if the return is filed not later than the 30th day
	after the prescribed date, five percent;
	(2)  if the return is filed later than the 30th day
	after the prescribed date, but not later than the 60th day after the
	prescribed date, 10 percent;
	(3)  if the return is filed later than the 60th day
	after the prescribed date, but not later than the 90th day after the
	prescribed date, 15 percent;
	(4)  if the return is filed later than the 90th day
	after the prescribed date, but not later than the 120th day after
	the prescribed date, 20 percent; or
	(5)  if the return is filed later than the 120th day
	after the prescribed date, 25 percent.
	(b)  The prescribed date is determined with regard to an
	extension of time for filing.
	(c)  In determining the amount owed on the prescribed date,
	the taxpayer is entitled to credit for a portion of the tax paid on
	or before the prescribed date and other credit that may be claimed
	on the return.
	(d)  The penalty required by this section does not apply if
	the taxpayer shows that the failure to file a return was not the
	result of wilful neglect before the prescribed date or at any time
	during the delinquency and that good cause for the failure existed
	at all times before filing.
	Sec. 261.602.  FAILURE TO PAY TAX. (a) A person who does not
	pay any amount of tax owed by the person on the prescribed date
	shall pay, in addition to all other penalties and interest, a
	penalty of 10 percent of the amount of the tax due and owing on the
	prescribed date.
	(b)  The prescribed date is determined with regard to
	extensions of time allowed by the comptroller.
	(c)  A failure to pay all or part of an estimated tax is
	considered to be an underpayment of estimated tax. The comptroller
	by rule shall prescribe the method of determining the amount and
	period of underpayment.
	Sec. 261.603.  PENALTIES AND INTEREST TREATED AS TAX. The
	penalties and interest provided by this subchapter shall be paid on
	notice and demand and shall be assessed, collected, and paid in the
	same manner as other taxes. The comptroller may issue a deficiency
	notice for all or part of a penalty or interest along with or
	separate from the amount of tax owed in absence of penalties or
	interest.
	[Sections 261.604-261.630 reserved for expansion]
	SUBCHAPTER I. CREDITS AND REFUNDS
	Sec. 261.631.  CREDITS AND REFUNDS. (a) Within the
	applicable period of limitations the comptroller may credit an
	overpayment of income tax and interest on the overpayment against a
	liability of a tax imposed by the tax laws of this state on the
	person who made the overpayment, and the comptroller shall refund
	the balance out of the proceeds of the tax retained by the
	comptroller.
	(b)  The comptroller may prescribe rules providing for
	crediting against the estimated tax for a tax year the amount
	determined to be an overpayment of the income tax for a preceding
	tax year.
	(c)  If an amount of income tax is assessed and collected
	after the expiration of the period of limitations properly
	applicable, the amount is an overpayment.
	Sec. 261.632.  ABATEMENTS. (a) The comptroller may abate
	any unpaid portion of a tax or a tax liability that is excessive in
	amount, assessed after the expiration of the applicable period of
	limitations, or erroneously or illegally assessed.
	(b)  The comptroller may abate the unpaid portion of a tax or
	a tax liability if the comptroller determines under uniform rules
	prescribed by the comptroller that the administration and
	collection costs involved would not warrant collection of the
	amount due.
	Sec. 261.633.  EXTENDED LIMITATION PERIOD. (a) If a
	taxpayer is required by Section 261.522 to report a change or
	correction in federal taxable income reported on a federal income
	tax return, or to report a change or correction that is treated in
	the same manner as if it were an overpayment for federal income tax
	purposes, or to file an amended return with the comptroller, a claim
	for credit or refund of a resulting overpayment of tax must be filed
	by the taxpayer not later than the second anniversary of the date
	the notice of the change or correction or the amended return was
	required to be filed with the comptroller. If the report or amended
	return required by Section 261.522 is not filed within the period
	prescribed by that section, interest on a resulting refund or
	credit ceases to accrue after the period. The amount of credit or
	refund may not exceed the amount of the reduction in tax
	attributable to the federal change, correction, or items amended on
	the taxpayer's amended federal income tax return. This subsection
	does not affect the time within which or the amount for which a
	claim for credit or refund may be filed under a provision other than
	this section.
	(b)  If a claim for credit or refund relates to an
	overpayment of tax on account of the deductibility by the taxpayer
	of a debt as a debt that became worthless or a loss from
	worthlessness of a security or the effect that the deductibility of
	a debt or of a loss has on the application to the taxpayer of a
	carryover, the claim may be made, under rules adopted by the
	comptroller, not later than the seventh anniversary of the date
	prescribed by law for filing the return for the year with respect to
	which the claim is made.
	(c)  If a claim for credit or refund relates to an
	overpayment attributable to a net operating loss carryback, the
	claim may be made, under rules adopted by the comptroller, not later
	than the 15th day of the 40th month following the end of the tax year
	of the net operating loss that resulted in the carryback or the
	period prescribed by Section 111.104, whichever expires later.
	[Sections 261.634-261.650 reserved for expansion]
	SUBCHAPTER J. MISCELLANEOUS ENFORCEMENT PROVISIONS
	Sec. 261.651.  TAXPAYER NOT RESIDENT. If notice and demand
	for the payment of a tax is given to a nonresident and it appears to
	the comptroller that it is not practicable to locate property of the
	taxpayer sufficient in amount to cover the amount of tax due, the
	comptroller may authorize the institution of any available action
	or proceeding to collect or enforce the claim in any place by any
	procedure by which a civil judgment of a court of record of this
	state could be collected or enforced. The comptroller may
	designate agents or retain counsel outside this state for the
	purpose of collecting taxes due under this chapter and require of
	them bonds or other security for the faithful performance of their
	duties. The comptroller may enter into agreements with the tax
	department of another state for the collection of taxes from
	persons found in this state who are delinquent in the payment of
	income taxes imposed by that state on condition that the agreeing
	state afford similar assistance in the collection of taxes from
	persons found in that state who are delinquent in the payment of
	taxes imposed by this chapter.
	Sec. 261.652.  INCOME TAX CLAIMS OF OTHER STATES. The courts
	of this state shall recognize and enforce liabilities for personal
	income taxes lawfully imposed by another state that extends a like
	comity to this state, and the authorized officer of the other state
	may sue for the collection of personal income tax in the courts of
	this state. A certificate by the secretary of state of the other
	state that an officer suing for the collection of the tax is
	authorized to collect the tax is conclusive proof of the officer's
	authority. In this section, "taxes" includes additions to tax,
	interest, and penalties.
	Sec. 261.653.  ORDER TO COMPEL COMPLIANCE. (a) On
	application of the attorney general, a judge of a court of
	appropriate jurisdiction for the county in which a taxpayer or
	other person who intentionally or knowingly refuses to file a tax
	return required by this chapter may, by order, direct the person to
	file the return. A person who fails or refuses to obey the order is
	guilty of contempt of court.
	(b)  If any person intentionally or knowingly refuses to make
	available any books, papers, records, or memoranda for examination
	by the comptroller or wilfully refuses to attend and testify, in
	accordance with the powers conferred on the comptroller by Chapter
	111, on application of the comptroller, a judge in the court of
	appropriate jurisdiction for the county where the person resides
	may by order direct the person to comply with the comptroller's
	request for books, papers, records, or memoranda or for the
	person's attendance and testimony. If the books, papers, records,
	or memoranda required by the comptroller are in the custody of a
	corporation, the order of the court may be directed to any principal
	officer of the corporation. A person who fails or refuses to obey
	the order is guilty of contempt of court.
	Sec. 261.654.  TRANSFEREES. (a) In this section,
	"transferee" includes an heir or a recipient of a donation, legacy,
	devise, or distribution.
	(b)  The liability, at law or in equity, of a transferee of
	property of a taxpayer for any tax, addition to tax, penalty, or
	interest due under this chapter is assessed, paid, and collected in
	the same manner and subject to the same provisions and limitations
	as in the case of the tax to which the liability relates except as
	otherwise provided by this section.
	(c)  The period of limitation for assessment of liability of
	a transferee is:
	(1)  the first anniversary of the expiration of the
	period of limitation against the initial transferor if the
	transferee is the initial transferee;
	(2)  the first anniversary of the expiration of the
	period of limitation against the preceding transferee, but not
	later than the third anniversary of the expiration of the period of
	limitation for assessment against the initial transferor, if the
	transferee is not the initial transferee; or
	(3)  notwithstanding Subdivisions (1) and (2), if
	before the expiration of the period of limitation under Subdivision
	(1) or (2) a proceeding for the collection of the liability has been
	begun against the initial transferor or the last preceding
	transferee, respectively, the first anniversary of the date on
	which the proceeding is terminated.
	(d)  If, before the expiration of the period of limitation
	applicable to a transferee, the comptroller and the transferee
	consent in writing to an assessment after that time, the liability
	may be assessed at any time before the expiration of the agreed
	period. The period of limitation on credit or refund to the
	transferee of overpayments of tax made by the transferee or of
	overpayments of tax made by the transferor of which the transferee
	is legally entitled to credit or refund is extended by an agreement
	under this subsection and any extension of the agreement.
	(e)  If a person dies, the period of limitation for
	assessment against that person is the period that would be in effect
	had death not occurred.
	Sec. 261.655.  JEOPARDY DETERMINATIONS. (a) If the
	comptroller issues a jeopardy determination for a tax for a current
	period, the comptroller shall terminate the tax period of the
	taxpayer immediately, and the notice and demand for a return and
	immediate payment of the tax shall apply to the terminated period
	and to income accrued and deductions incurred on or before the
	termination date if not otherwise properly includable or deductible
	for the period.
	(b)  The comptroller may abate the jeopardy determination if
	the comptroller finds that jeopardy does not exist.
	Sec. 261.656.  BANKRUPTCY OR RECEIVERSHIP. (a) On the
	adjudication of bankruptcy of any taxpayer in any bankruptcy
	proceeding or the appointment of a receiver for any taxpayer in any
	receivership proceeding before any court of the United States or
	any state or territory, any deficiency, together with additions to
	tax and interest provided by law, determined by the comptroller may
	be immediately assessed.
	(b)  Claims for the deficiency and additions to tax and
	interest may be presented, for adjudication in accordance with law,
	to the court before which the bankruptcy or receivership proceeding
	is pending, despite the pendency of any protest before the
	comptroller. A protest against a proposed assessment may not be
	filed with the comptroller after the adjudication of bankruptcy or
	appointment of the receiver.
	Sec. 261.657.  EVIDENCE OF RELATED FEDERAL DETERMINATION.
	Evidence of a federal determination relevant to the taxes imposed
	by this chapter is admissible in an administrative or judicial
	proceeding relating to those taxes.
	[Sections 261.658-261.670 reserved for expansion]
	SUBCHAPTER K. OFFENSES
	Sec. 261.671.  ATTEMPT TO EVADE OR DEFEAT TAX. (a) A person
	commits an offense if the person intentionally or knowingly
	attempts in any manner to evade or defeat a tax imposed by this
	chapter or the payment of tax imposed by this chapter.
	(b)  An offense under this section is a felony of the third
	degree.
	Sec. 261.672.  FAILURE TO PAY. (a) A person commits an
	offense if the person is required under this chapter to pay a tax
	imposed by this chapter and the person intentionally or knowingly
	fails to pay the tax.
	(b)  An offense under this section is a felony of the third
	degree.
	Sec. 261.673.  FAILURE TO FILE RETURN, SUPPLY INFORMATION,
	OR PAY TAX. (a) A person commits an offense if the person is
	required under this chapter to pay a tax, or required by this
	chapter or rule adopted under this chapter to make a return, to keep
	records, or to supply information, and the person intentionally or
	knowingly fails to pay the tax, make the return, keep the records,
	or supply the information at the time or times required by law.
	(b)  An offense under this section is a Class A misdemeanor.
	[Sections 261.674-261.680 reserved for expansion]
	SUBCHAPTER L. POWERS OF COMPTROLLER
	Sec. 261.681.  COOPERATION WITH OTHER JURISDICTIONS. The
	comptroller may permit the United States secretary of the treasury
	or the secretary's delegate, or the proper officer of any state or
	other jurisdiction imposing an income tax on the incomes of
	individuals, or the authorized representative of either officer, to
	inspect the income tax returns of an individual, or may furnish to
	the officer or authorized representative an abstract of the return
	of income of an individual or supply the officer with information
	concerning an item of income contained in a return, or disclosed by
	the report of an investigation of the income or return of income of
	an individual, but permission may be granted only if the statutes of
	the United States or of the other jurisdiction, as applicable,
	grant substantially similar privileges to the comptroller.
	Sec. 261.682.  COOPERATION WITH OTHER TAX OFFICIALS OF THIS
	STATE. The comptroller may permit other tax officials of this state
	to inspect tax returns and reports filed under this chapter but the
	inspection is permitted only for purposes of enforcing a tax law and
	only to the extent and under the conditions prescribed by rule of
	the comptroller.
	Sec. 261.683.  CONTRACT WITH SECRETARY OF TREASURY FOR
	COLLECTION OF TAX. The comptroller may enter into an agreement with
	the United States secretary of the treasury or the secretary's
	delegate under which, to the extent provided by the terms of the
	agreement, the secretary or delegate will administer, enforce, and
	collect a tax imposed by this chapter on behalf of this state. The
	cost of the services performed by the secretary or delegate in
	administering, enforcing, or collecting the tax under the terms of
	the agreement may be paid from the appropriations for the general
	operations of the comptroller.
	Sec. 261.684.  ARMED FORCES RELIEF PROVISIONS. (a) The
	period of service in the armed forces of the United States in a
	combat zone plus a period of continuous hospitalization outside
	this state attributable to that service plus the next 180 days is
	disregarded in determining, under rules of the comptroller, whether
	an act required by this chapter was performed by a taxpayer or the
	taxpayer's representative within the time prescribed.
	(b)  If an individual dies during an induction period while
	in active service as a member of the armed forces of the United
	States and the death occurred while the individual was serving in a
	combat zone or as a result of wounds, disease, or injury incurred
	while serving, the tax imposed by this chapter does not apply to the
	tax year in which the individual dies or to any prior tax year
	ending on or after the first day the individual so served in a
	combat zone.
	Sec. 261.685.  DISPOSITION OF PROCEEDS. The revenue from
	the tax imposed by this chapter shall be deposited as follows:
	(1)  two-thirds of the revenue shall be deposited to
	the credit of a special account in the general revenue fund and may
	be appropriated only for the purpose of reducing the rate of ad
	valorem maintenance and operations taxes levied for the support of
	primary and secondary education in the manner provided by Sections
	24(h) and (i), Article VIII, Texas Constitution, for the reduction
	of that rate; and
	(2)  one-third to the credit of the foundation school
	fund.
	SECTION 2.  Section 111.201, Tax Code, is amended to read as
	follows:
	Sec. 111.201.  ASSESSMENT LIMITATION. (a) No tax imposed by
	this title may be assessed after four years from the date that the
	tax becomes due and payable except as provided by Subsection (b).
	(b)  A tax imposed by Chapter 261 may not be assessed after
	six years from the date the tax becomes due and payable.
	SECTION 3.  A referendum as required by Section 24, Article
	VIII, Texas Constitution, on the adoption of the income tax under
	this Act shall be submitted to the voters at an election to be held
	November 8, 2011. The ballot for the referendum shall be printed to
	permit voting for or against the proposition: "The adoption of an
	income tax at graduated rates of three percent to six percent for
	taxable income in excess of $150,000."
	SECTION 4.  (a) Except as provided by Subsection (b) of this
	section, this Act applies to income earned, accrued, or received on
	or after the effective date of this Act.
	(b)  Income, deductions, losses, credits against income, or
	other adjustments allowed in determining the amount of tax under
	this Act or the amount of federal adjusted gross income under this
	Act, including carryovers, are not prohibited in computing the
	taxes for a tax period beginning on January 1, 2012, because those
	adjustments may have accrued or otherwise originated before the
	effective date of this Act.
	(c)  In 2012, the comptroller by rule may suspend the
	application of Section 261.506, Tax Code, as added by this Act,
	wholly or partly and may extend the deadlines for estimated tax
	payments under that section.
	SECTION 5.  (a) Except as provided by Section 6 of this Act,
	if the proposition in Section 3 of this Act is approved, this Act
	takes effect January 1, 2012.
	(b)  Except as provided by Section 6 of this Act, if the
	proposition in Section 3 of this Act is not approved, this Act has
	no effect.
	SECTION 6.  Section 3 of this Act takes effect September 1,
	2011.