Texas Senate Bill SB1037

Texas 2009 - 81st Regular

Caption

Relating to the franchise tax liability of certain taxable entities.

Impact

The enactment of SB1037 is expected to provide clarity on tax reporting and obligations for various business entities within Texas. By explicitly stating that entities with zero taxable income do not owe tax, the bill aims to alleviate the financial burden on smaller businesses or those experiencing losses. Furthermore, it outlines the requirement for the comptroller to adopt rules necessary to implement the new stipulations effectively, impacting the administrative processes related to tax filings for these entities.

Summary

SB1037 aims to redefine the franchise tax liability for certain taxable entities under Texas law. The bill amends existing provisions in Chapter 171 of the Tax Code, specifically adding a new section that clarifies tax obligations based on an entity's taxable income. For taxable entities categorized as corporations or partnerships, the taxable income is aligned with specific lines on the IRS federal income tax forms. Additionally, entities that report a taxable income of zero or less are exempt from paying any taxes during that period, although exceptions apply for members of combined groups.

Contention

While the bill seeks to simplify and clarify tax liability, discussions around it may involve concerns about potential loopholes and how these changes could affect revenue collection for the state. Questions may arise regarding the compliance mechanism and oversight by the comptroller, as well as the implications for entities that fall under combined reporting groups. Stakeholders may express differing views on how these provisions could either facilitate business growth or lead to unintended consequences in state revenue.