81R10985 KLA-D
By: Callegari H.B. No. 3237
A BILL TO BE ENTITLED
AN ACT
relating to the franchise tax.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 171.002(d), Tax Code, is amended to read
as follows:
(d) A taxable entity is not required to pay any tax and is
not considered to owe any tax for a period if:
(1) the amount of tax computed for the taxable entity
is less than $1,000; or
(2) the amount of the taxable entity's total revenue
from its entire business is less than or equal to $1 million
[$300,000] or the amount determined under Section 171.006 per
12-month period on which margin is based.
SECTION 2. Section 171.006(b), Tax Code, is amended to read
as follows:
(b) On [Beginning in 2010, on] January 1 of each
even-numbered year, the amounts prescribed by Sections
171.002(d)(2)[, 171.0021,] and 171.1013(c) are increased or
decreased by an amount equal to the amount prescribed by those
sections on December 31 of the preceding year multiplied by the
percentage increase or decrease during the preceding state fiscal
biennium in the consumer price index and rounded to the nearest
$10,000.
SECTION 3. Section 171.1012, Tax Code, is amended by adding
Subsection (q) to read as follows:
(q) Subject to Section 171.1014, a taxable entity that
elects to subtract cost of goods sold for the purpose of computing
its taxable margin may, instead of determining its cost of goods
sold in accordance with the other provisions of this section, elect
to determine cost of goods sold as follows:
(1) for a taxable entity treated for federal income
tax purposes as a corporation, the cost of goods sold is the amount
reportable as cost of goods sold on line 2, Internal Revenue Service
Form 1120;
(2) for a taxable entity treated for federal income
tax purposes as a partnership, the cost of goods sold is the amount
reportable as cost of goods sold on line 2, Internal Revenue Service
Form 1065;
(3) for a taxable entity treated for federal income
tax purposes as an S corporation, the cost of goods sold is the
amount reportable as cost of goods sold on line 2, Internal Revenue
Service Form 1120S; or
(4) for any other taxable entity, the cost of goods
sold is an amount determined in a manner substantially equivalent
to the amount for Subdivision (1), (2), or (3) determined by rules
the comptroller shall adopt.
SECTION 4. Section 171.1013, Tax Code, is amended by
amending Subsection (a) and adding Subsection (i) to read as
follows:
(a) Except as otherwise provided by this section, "wages and
cash compensation" means the amount entered in the Medicare wages
and tips box of Internal Revenue Service Form W-2 or any subsequent
form with a different number or designation that substantially
provides the same information. The term also includes, to the
extent not included above:
(1) net distributive income from a taxable entity
treated as a partnership for federal income tax purposes, but only
if the person receiving the distribution is a natural person or a
professional corporation or professional association owned by a
natural person, to the extent the net distributive income is not
less than zero;
(2) net distributive income from limited liability
companies and corporations treated as S corporations for federal
income tax purposes, but only if the person receiving the
distribution is a natural person;
(3) stock awards and stock options deducted for
federal income tax purposes; and
(4) net distributive income from a limited liability
company treated as a sole proprietorship for federal income tax
purposes, but only if the person receiving the distribution is a
natural person.
(i) Subject to Section 171.1014 and the limitation in
Subsection (c), a taxable entity that elects to subtract
compensation for the purpose of computing its taxable margin under
Section 171.101 may include as wages and cash compensation any
compensation paid to an independent contractor as reported on
Internal Revenue Service Form 1099, or any subsequent form with a
different number or designation that substantially provides the
same information.
SECTION 5. Sections 171.1016(a) and (b), Tax Code, are
amended to read as follows:
(a) Notwithstanding any other provision of this chapter, a
taxable entity [whose total revenue from its entire business is not
more than $10 million] may elect to pay the tax imposed under this
chapter in the amount computed and at the rate provided by this
section rather than in the amount computed and at the tax rate
provided by Section 171.002.
(b) The amount of the tax for which a taxable entity that
elects to pay the tax as provided by this section is liable is
computed by:
(1) determining the taxable entity's total revenue
from its entire business, as determined under Section 171.1011;
(2) apportioning the amount computed under
Subdivision (1) to this state, as provided by Section 171.106, to
determine the taxable entity's apportioned total revenue; and
(3) multiplying the amount computed under Subdivision
(2) by the rate of 0.45 [0.575] percent.
SECTION 6. Sections 171.0021 and 171.1016(d), Tax Code, are
repealed.
SECTION 7. This Act applies only to a report originally due
on or after the effective date of this Act.
SECTION 8. This Act takes effect January 1, 2010.