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A BILL TO BE ENTITLED
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AN ACT
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relating to the decrease of the rates of the franchise tax under |
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certain circumstances and the expiration of that tax. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Sections 171.002(a) and (b), Tax Code, are |
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amended to read as follows: |
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(a) Subject to Sections 171.003, 171.004, and 171.1016 and |
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except as provided by Subsection (b), the rate of the franchise tax |
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is 0.75 percent of taxable margin. |
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(b) Subject to Sections 171.003, 171.004, and 171.1016, the |
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rate of the franchise tax is 0.375 percent of taxable margin for |
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those taxable entities primarily engaged in retail or wholesale |
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trade. |
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SECTION 2. Subchapter A, Chapter 171, Tax Code, is amended |
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by adding Section 171.004 to read as follows: |
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Sec. 171.004. ADJUSTMENT OF TAX RATES. (a) Beginning in |
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2018, on January 1 of each even-numbered year occurring during a |
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state fiscal biennium for which the comptroller's certification |
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revenue estimate projects that the percent change from the previous |
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state fiscal biennium in total general revenue-related funds |
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available for certification will be at least six percent: |
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(1) the rate of the franchise tax under Section |
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171.002(a) is adjusted by subtracting 0.25 from the rate in effect |
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on December 31 of the previous year; |
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(2) the rate of the franchise tax under Section |
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171.002(b) is adjusted by subtracting 0.125 from the rate in effect |
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on December 31 of the previous year; and |
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(3) the rate of the franchise tax under Section |
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171.1016(b)(3) is adjusted by subtracting 0.111 from the rate in |
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effect on December 31 of the previous year. |
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(b) The tax rates determined under Subsection (a): |
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(1) apply to a report originally due on or after |
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January 1 of the even-numbered year described by Subsection (a); |
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and |
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(2) are considered for purposes of this chapter to be |
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the rates provided by and imposed under Section 171.002 or |
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171.1016, as applicable. |
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(c) If in an even-numbered year the comptroller determines |
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that the condition under Subsection (a) has not been met for the |
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state fiscal biennium during which that year occurs, the rates of |
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the franchise tax in effect on December 31 of the previous year |
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remain in effect until at least January 1 of the next even-numbered |
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year. |
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(d) Notwithstanding Subsection (a), if an adjustment |
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otherwise required by Subsection (a) would reduce a rate of the |
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franchise tax to less than zero, the rate is instead reduced to |
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zero. |
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(e) Notwithstanding any other law, if the rates of the |
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franchise tax are reduced to zero under Subsection (a) or (d), a |
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taxable entity does not owe any tax and is not required to file a |
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report that would otherwise be originally due on or after the date |
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those rates are reduced to zero. |
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(f) The comptroller shall determine whether the condition |
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under Subsection (a) is met and determine the applicable franchise |
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tax rates under this section. The comptroller may adopt rules |
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related to making those determinations. The comptroller shall |
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publish the franchise tax rates in effect for a year in the Texas |
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Register and on the comptroller's Internet website not later than |
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January 15 of that year. |
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(g) In the state fiscal year in which the rates of the |
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franchise tax are reduced to zero under Subsection (a) or (d): |
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(1) this chapter expires as provided by Section |
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171.9321; and |
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(2) not later than January 15 of that year the |
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comptroller shall: |
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(A) publish notice in the Texas Register that an |
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entity previously subject to the tax imposed under this chapter is |
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no longer required to file a report or pay the tax; and |
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(B) provide any other notice relating to the |
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expiration of the tax that the comptroller considers appropriate. |
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(h) An action taken by the comptroller under this section is |
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final and may not be appealed. |
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SECTION 3. Sections 171.1016(b) and (e), Tax Code, are |
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amended to read as follows: |
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(b) The amount of the tax for which a taxable entity that |
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elects to pay the tax as provided by this section is liable is |
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computed by: |
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(1) determining the taxable entity's total revenue |
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from its entire business, as determined under Section 171.1011; |
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(2) apportioning the amount computed under |
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Subdivision (1) to this state, as provided by Section 171.106, to |
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determine the taxable entity's apportioned total revenue; and |
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(3) multiplying the amount computed under Subdivision |
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(2) by the rate of 0.331 percent or, if applicable, an adjusted tax |
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rate determined under Section 171.004. |
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(e) A reference in this chapter or other law to the rate of |
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the franchise tax means, as appropriate: |
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(1) [,] the rate under Section 171.002 or, for a |
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taxable entity that elects to pay the tax as provided by this |
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section, the rate under this section; or |
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(2) the adjusted rates under Section 171.004. |
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SECTION 4. Chapter 171, Tax Code, is amended by adding |
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Subchapter Z to read as follows: |
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SUBCHAPTER Z. EXPIRATION |
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Sec. 171.9321. EXPIRATION. This chapter expires on |
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December 31 of the year in which the rates of the franchise tax |
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under Sections 171.002 and 171.1016 are reduced to zero under |
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Section 171.004(a) or (d). |
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SECTION 5. (a) After Chapter 171, Tax Code, expires as |
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provided by Subchapter Z, Chapter 171, Tax Code, as added by this |
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Act, Chapter 171 and Subtitle B, Title 2, Tax Code, continue to |
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apply to audits, deficiencies, redeterminations, and refunds of any |
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tax due or collected under Chapter 171 until barred by limitations. |
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(b) The expiration of Chapter 171, Tax Code, does not |
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affect: |
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(1) the status of a taxable entity that has had its |
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corporate privileges, certificate of authority, certificate of |
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organization, certificate of limited partnership, corporate |
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charter, or registration revoked, a suit filed against it, or a |
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receiver appointed under Subchapter F, G, or H of that chapter; |
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(2) the ability of the comptroller of public accounts, |
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secretary of state, or attorney general to take action against a |
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taxable entity under Subchapter F, G, or H of that chapter for |
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actions that took place before the chapter expired; or |
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(3) the right of a taxable entity to contest a |
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forfeiture, revocation, lawsuit, or appointment of a receiver under |
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Subchapter F, G, or H of that chapter. |
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SECTION 6. This Act applies only to a report originally due |
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on or after January 1, 2018. |
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SECTION 7. This Act takes effect September 1, 2017. |