Texas House Bill HB3642

Texas 2011 - 82nd Regular

• Introduced: 3/11/11
• Refer: 3/23/11

Caption

Relating to the dates on which franchise tax payments are due from certain taxable entities.

Impact

By implementing this new payment schedule, HB3642 is expected to have a significant impact on cash flow management for large taxable entities in Texas. The change is intended to facilitate more consistent tax income for the state while alleviating the financial burden on businesses that may struggle with large lump-sum payments. Furthermore, by allowing some flexibility in the payment structure, the state is fostering a more business-friendly environment, which supporters believe will bolster economic activity.

Summary

House Bill 3642 amends the Texas Tax Code to redefine the payment schedule for franchise tax payments made by large taxable entities. The bill specifies that these entities are required to pay their taxes in five installments throughout the year, including initial payments due on specific dates such as July 15, October 15, January 15, and April 15, with a final payment due on May 15. This restructuring aims to provide a more manageable payment timeline for larger businesses, who typically report greater tax liabilities than smaller entities.

Sentiment

The sentiment around HB3642 appears to be generally positive among business groups and proponents of economic growth. Many view this amendment as a necessary reform that will promote better fiscal planning for large companies. However, there may also be concerns among other stakeholders regarding the stability of tax revenue streams for the state, particularly if larger entities find ways to mitigate their tax liabilities through the new schedule.

Contention

Notably, there may be points of contention regarding the definition of 'large taxable entity' as established by this bill, which hinges on the median tax liability calculated by the comptroller. Critics might argue that the new thresholds could inadvertently categorize smaller businesses as 'large' depending on fluctuations in tax reports, thus subjecting them to a more demanding payment schedule. Additionally, the legislature's ability to accurately assess and compute the median tax liability each year could also be a topic of debate.