81R7177 BEF-D
By: Burnam H.B. No. 1735
A BILL TO BE ENTITLED
AN ACT
relating to the imposition of an income tax on income that exceeds
$100,000 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 $100,000 of
every resident of this state; and
(2) on the taxable income that exceeds $100,000
derived from sources in this state of every nonresident.
(b) The tax rates for an individual are:
(1) for taxable income that exceeds $100,000 but does
not exceed $150,000, two percent of the taxable income;
(2) for taxable income that exceeds $150,000 but does
not exceed $250,000, $1,000 plus three percent of the taxable
income that exceeds $150,000 but does not exceed $250,000;
(3) for taxable income that exceeds $250,000 but does
not exceed $500,000, $4,000 plus four percent of the taxable income
that exceeds $250,000 but does not exceed $500,000;
(4) for taxable income that exceeds $500,000 but does
not exceed $1 million, $14,000 plus five percent of the taxable
income that exceeds $500,000 but does not exceed $1 million; and
(5) for taxable income that exceeds $1 million,
$39,000 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, 2009, and other provisions of federal laws relating to
federal income taxes in effect on December 31, 2009.
[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 shall be 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 shall be 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
$100,000.
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 shall be 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. The income tax return required by this chapter shall be filed
not later than the 15th day of the fourth month following the end of
the taxpayer's tax year. A person required to make and file a
return under this chapter shall pay a tax due to the comptroller not
later than the last day that the filing of the return is allowed
without penalty, excluding an extension of time for filing the
return. 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 balance shall be refunded
by the comptroller 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. For the purposes of 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 memorandums 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 memorandums or
for the person's attendance and testimony. If the books, papers,
records, or memorandums 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) 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.
"Transferee" includes an heir or a recipient of a donation, legacy,
devise, or distribution.
(b) 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.
(c) 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.
(d) 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 shall
be 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 3, 2009. 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 two percent to six percent for
taxable income in excess of $100,000."
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, 2010, because those
adjustments may have accrued or otherwise originated before the
effective date of this Act.
(c) In 2010, 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, 2010.
(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,
2009.