| 1 | 1 | | 81R8545 KLA-D |
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| 2 | 2 | | By: Howard of Fort Bend H.B. No. 3944 |
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| 3 | 3 | | |
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| 4 | 4 | | |
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| 5 | 5 | | A BILL TO BE ENTITLED |
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| 6 | 6 | | AN ACT |
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| 7 | 7 | | relating to an exemption from the franchise tax for certain taxable |
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| 8 | 8 | | entities during an initial period of operation. |
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| 9 | 9 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 10 | 10 | | SECTION 1. Section 171.0001(4), Tax Code, is amended to |
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| 11 | 11 | | read as follows: |
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| 12 | 12 | | (4) "Beginning date" means: |
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| 13 | 13 | | (A) for a taxable entity chartered or organized |
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| 14 | 14 | | in this state, the second anniversary of the date on which the |
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| 15 | 15 | | taxable entity's charter or organization takes effect; and |
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| 16 | 16 | | (B) for any other taxable entity, the later of: |
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| 17 | 17 | | (i) the second anniversary of the date on |
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| 18 | 18 | | which the taxable entity's charter or organization under the laws |
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| 19 | 19 | | of the United States or another state takes effect; or |
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| 20 | 20 | | (ii) the date on which the taxable entity |
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| 21 | 21 | | begins doing business in this state. |
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| 22 | 22 | | SECTION 2. Section 171.001, Tax Code, is amended by adding |
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| 23 | 23 | | Subsection (d) to read as follows: |
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| 24 | 24 | | (d) Notwithstanding Subsection (a), the tax imposed under |
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| 25 | 25 | | this chapter is not imposed on a taxable entity until: |
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| 26 | 26 | | (1) for a taxable entity chartered or organized in |
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| 27 | 27 | | this state, the second anniversary of the date the taxable entity's |
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| 28 | 28 | | charter or organization takes effect; or |
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| 29 | 29 | | (2) for a taxable entity chartered or organized under |
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| 30 | 30 | | the laws of the United States or another state, the later of: |
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| 31 | 31 | | (A) the second anniversary of the date the |
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| 32 | 32 | | taxable entity's charter or organization takes effect; or |
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| 33 | 33 | | (B) the date the taxable entity begins doing |
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| 34 | 34 | | business in this state. |
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| 35 | 35 | | SECTION 3. Section 171.063(g), Tax Code, is amended to read |
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| 36 | 36 | | as follows: |
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| 37 | 37 | | (g) If a corporation's federal tax exemption is withdrawn by |
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| 38 | 38 | | the Internal Revenue Service for failure of the corporation to |
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| 39 | 39 | | qualify or maintain its qualification for the exemption, the |
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| 40 | 40 | | corporation's exemption under this section ends on the effective |
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| 41 | 41 | | date of that withdrawal by the Internal Revenue Service. The |
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| 42 | 42 | | effective date of the withdrawal is considered the corporation's |
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| 43 | 43 | | beginning date for purposes of determining the corporation's |
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| 44 | 44 | | privilege periods and for all other purposes of this chapter, |
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| 45 | 45 | | except that if the effective date of the withdrawal is a date |
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| 46 | 46 | | earlier than the second anniversary of the date the corporation's |
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| 47 | 47 | | charter or organization under the laws of this state, another |
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| 48 | 48 | | state, or the United States took effect, the second anniversary of |
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| 49 | 49 | | that effective date is considered the corporation's beginning date |
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| 50 | 50 | | for those purposes. |
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| 51 | 51 | | SECTION 4. Section 171.204, Tax Code, is amended by adding |
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| 52 | 52 | | Subsection (d) to read as follows: |
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| 53 | 53 | | (d) The comptroller may require a taxable entity on which |
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| 54 | 54 | | the tax imposed under this chapter is not imposed solely because of |
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| 55 | 55 | | the application of Section 171.001(d) to file an information report |
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| 56 | 56 | | stating the date the taxable entity's charter or organization took |
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| 57 | 57 | | effect and the taxable entity's beginning date. The comptroller |
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| 58 | 58 | | may require the report to include other information the comptroller |
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| 59 | 59 | | determines necessary, except that the comptroller may not require |
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| 60 | 60 | | the taxable entity to report or compute its margin. |
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| 61 | 61 | | SECTION 5. (a) The change in law made by this Act applies to |
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| 62 | 62 | | a taxable entity doing business in this state before, on, or after |
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| 63 | 63 | | the effective date of this Act, regardless of the date the taxable |
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| 64 | 64 | | entity's charter or organization takes effect. |
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| 65 | 65 | | (b) A taxable entity on which the tax under Chapter 171, Tax |
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| 66 | 66 | | Code, was imposed before the effective date of this Act, but on |
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| 67 | 67 | | which the tax is not imposed on the effective date of this Act |
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| 68 | 68 | | because of the application of Section 171.001(d), Tax Code, as |
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| 69 | 69 | | added by this Act, is not entitled to a refund of or credit for taxes |
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| 70 | 70 | | paid under Chapter 171, Tax Code, before the effective date of this |
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| 71 | 71 | | Act. |
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| 72 | 72 | | SECTION 6. This Act takes effect January 1, 2010. |
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