Texas House Bill HB3277

Texas 2009 - 81st Regular

Caption

Relating to the imposition of the franchise tax on certain combined groups.

Impact

The proposed amendments will specifically affect how entities report their income for tax purposes if they belong to a defined group. The modifications could potentially reduce the complexity for smaller businesses, as it allows certain groups to file combined reports instead of individual ones, fostering consistency in how they report taxable income amidst varying business structures. The bill mandates that entities conducting business outside of the U.S. adhere to specific inclusion criteria, which might limit the ability to group with foreign operations for tax reporting.

Summary

House Bill 3277 seeks to amend the Texas Tax Code concerning the imposition of the franchise tax on certain combined groups. The bill redefines what constitutes an 'affiliated group' and a 'combined group'. This aims to clarify the requirements under which taxable entities that are part of an affiliated group engaged in a unitary business are to file their tax reports, allowing for a more streamlined process while ensuring compliance with state taxation regulations.

Contention

Discussions around HB 3277 suggest that there may be contention regarding the implications of these changes. Proponents argue that simplifying the filing process for combined groups can reduce bureaucratic hurdles for many businesses, particularly those operating in Texas within affiliated groups. Conversely, opponents may raise concerns about the potential for tax evasion through loopholes related to the definition of 'combined groups', particularly as it pertains to foreign operations and income. Transparency in reporting and tax accountability remains a concern that could be highlighted in future debates.