Texas House Bill HB1475

Texas 2013 - 83rd Regular

Caption

Relating to the exclusion of certain flow-through payments related to petroleum and mineral interests in determining total revenue for purposes of the franchise tax.

Impact

This bill, if enacted, is expected to have significant implications for businesses in the petroleum and mineral industry. By providing an exclusion for certain payments, it can potentially lower the taxable revenue of these entities, thereby reducing their financial liabilities under the franchise tax. Supporters of the bill argue that it could foster economic activity by allowing businesses some leeway in their tax obligations, which might encourage investment and development within the Texas oil and gas sector.

Summary

House Bill 1475 aims to amend the Tax Code of Texas by allowing certain flow-through payments related to petroleum and mineral interests to be excluded from total revenue calculations for franchise tax purposes. Specifically, the bill defines 'landman services' and outlines that taxable entities primarily engaged in these services can exclude subcontracting payments made to nonemployees for their services. The intention behind the bill is to alleviate the tax burden on companies involved in the oil and gas sector, particularly those that utilize subcontractors for various operational tasks.

Contention

While proponents celebrate the fiscal relief that the bill promises to provide, it is likely to encounter some level of opposition from various stakeholders concerned about the broader implications it may have on state revenue. Critics may argue that such exclusions could lead to diminishing tax revenues for the state, especially if applied broadly across other service sectors in the future. There is potential for debate over the fairness of such tax policy changes and whether they disproportionately benefit specific industries at the expense of overall state funding.