LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 81ST LEGISLATIVE REGULAR SESSION April 15, 2009 TO: Honorable Rene Oliveira, Chair, House Committee on Ways & Means FROM: John S. O'Brien, Director, Legislative Budget Board IN RE:HB3927 by Oliveira (Relating to the computation of taxable margin for purposes of the franchise tax by a taxable entity principally engaged in Internet hosting.), As Introduced The bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of $20,250,000 for the 2010-11 biennium. Any loss to the Property Tax Relief Fund will have to be made up with General Revenue of the same amount to fund property tax relief.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 81ST LEGISLATIVE REGULAR SESSION
April 15, 2009
TO: Honorable Rene Oliveira, Chair, House Committee on Ways & Means FROM: John S. O'Brien, Director, Legislative Budget Board IN RE:HB3927 by Oliveira (Relating to the computation of taxable margin for purposes of the franchise tax by a taxable entity principally engaged in Internet hosting.), As Introduced
TO: Honorable Rene Oliveira, Chair, House Committee on Ways & Means
FROM: John S. O'Brien, Director, Legislative Budget Board
IN RE: HB3927 by Oliveira (Relating to the computation of taxable margin for purposes of the franchise tax by a taxable entity principally engaged in Internet hosting.), As Introduced
Honorable Rene Oliveira, Chair, House Committee on Ways & Means
Honorable Rene Oliveira, Chair, House Committee on Ways & Means
John S. O'Brien, Director, Legislative Budget Board
John S. O'Brien, Director, Legislative Budget Board
HB3927 by Oliveira (Relating to the computation of taxable margin for purposes of the franchise tax by a taxable entity principally engaged in Internet hosting.), As Introduced
HB3927 by Oliveira (Relating to the computation of taxable margin for purposes of the franchise tax by a taxable entity principally engaged in Internet hosting.), As Introduced
The bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of $20,250,000 for the 2010-11 biennium. Any loss to the Property Tax Relief Fund will have to be made up with General Revenue of the same amount to fund property tax relief.
The bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of $20,250,000 for the 2010-11 biennium. Any loss to the Property Tax Relief Fund will have to be made up with General Revenue of the same amount to fund property tax relief.
The bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of $20,250,000 for the 2010-11 biennium. Any loss to the Property Tax Relief Fund will have to be made up with General Revenue of the same amount to fund property tax relief.
General Revenue-Related Funds, Five-Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds 2010 $0 2011 $0 2012 $0 2013 $0 2014 $0
2010 $0
2011 $0
2012 $0
2013 $0
2014 $0
All Funds, Five-Year Impact: Fiscal Year Probable Revenue Gain/(Loss) fromProperty Tax Relief Fund304 2010 ($10,000,000) 2011 ($10,250,000) 2012 ($10,610,000) 2013 ($11,035,000) 2014 ($11,475,000)
Fiscal Year Probable Revenue Gain/(Loss) fromProperty Tax Relief Fund304 2010 ($10,000,000) 2011 ($10,250,000) 2012 ($10,610,000) 2013 ($11,035,000) 2014 ($11,475,000)
2010 ($10,000,000)
2011 ($10,250,000)
2012 ($10,610,000)
2013 ($11,035,000)
2014 ($11,475,000)
Fiscal Analysis
The bill would amend Chapter 171 of the Tax Code, regarding the franchise tax, by changing the method of apportionment for certain taxable entities. The bill would add a definition of "internet hosting." The bill would amend Section 171.106, dealing with apportionment of margin, by adding a provision providing that receipts from business done in this state for a taxable entity that receives more than 50 percent of its total revenue from internet hosting are receipts from customers whose business is directed or managed from a place in this state. Under current law, receipts are considered to be from business done in this state if the services, including internet hosting services, are performed in this state. The bill would take effect on September 1, 2009, and apply to reports due on or after that date.
The bill would amend Chapter 171 of the Tax Code, regarding the franchise tax, by changing the method of apportionment for certain taxable entities.
The bill would add a definition of "internet hosting." The bill would amend Section 171.106, dealing with apportionment of margin, by adding a provision providing that receipts from business done in this state for a taxable entity that receives more than 50 percent of its total revenue from internet hosting are receipts from customers whose business is directed or managed from a place in this state. Under current law, receipts are considered to be from business done in this state if the services, including internet hosting services, are performed in this state.
The bill would take effect on September 1, 2009, and apply to reports due on or after that date.
Methodology
The bill's definition of "internet hosting" is broad enough to include many taxable entities in the information sector. Several of these taxable entities remit significant amounts of franchise tax and might benefit from the bill's provisions.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 304 Comptroller of Public Accounts
304 Comptroller of Public Accounts
LBB Staff: JOB, MN, SD
JOB, MN, SD