82R6148 ALL-F
By: Anderson of Dallas H.B. No. 1865
A BILL TO BE ENTITLED
AN ACT
relating to a franchise tax exclusion for contractual flow-through
funds paid to certain performing artists.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 171.0001, Tax Code, is amended by adding
Subdivisions (1-a), (10-a), (10-b), and (11-b) to read as follows:
(1-a) "Artist" means a natural person or an entity that
contracts to perform or entertain at a live entertainment event.
(10-a) "Live entertainment event" means an event that
occurs on a specific date to which tickets are sold in advance by a
third-party vendor and at which:
(A) a natural person or a group of natural
persons, physically present at the venue, performs for the purpose
of entertaining a ticket holder who is present at the event;
(B) a traveling circus or animal show performs
for the purpose of entertaining a ticket holder who is present at
the event; or
(C) a historical, museum-quality artifact is on
display in an exhibition.
(10-b) "Live event promotion services" means services
related to the promotion, coordination, operation, or management of
a live entertainment event. The term includes services related to:
(A) the provision of staff for the live
entertainment event; or
(B) the scheduling and promotion of an artist
performing or entertaining at the live entertainment event.
(11-b) "Qualified live event promotion company" means
a taxable entity that:
(A) receives at least 60 percent of the entity's
annual total revenue from the provision or arrangement for the
provision of three or more live event promotion services;
(B) maintains a permanent nonresidential office
from which the live event promotion services are provided or
arranged;
(C) employs 10 or more full-time employees during
all or part of the period for which taxable margin is calculated;
(D) does not provide services for a wedding or
carnival; and
(E) is not a movie theater.
SECTION 2. Section 171.1011, Tax Code, is amended by adding
Subsection (g-5) to read as follows:
(g-5) A taxable entity that is a qualified live event
promotion company shall exclude from its total revenue, to the
extent included under Subsection (c)(1)(A), (c)(2)(A), or (c)(3), a
payment made to an artist in connection with the provision of a live
entertainment event or live event promotion services.
SECTION 3. Subchapter D, Chapter 171, Tax Code, is amended
by adding Section 171.155 to read as follows:
Sec. 171.155. WITHHOLDING FROM PAYMENT TO ARTIST. (a) A
taxable entity that makes to an artist that is also a taxable entity
a payment for performing at a live entertainment event in this state
shall withhold from the payment an amount equal to the payment
multiplied by the maximum franchise tax rate under this chapter, as
required by comptroller rule.
(b) A taxable entity that withholds an amount under
Subsection (a) in connection with a payment shall remit the amount
to the comptroller at the time the taxable entity files the entity's
annual report under this chapter.
(c) The comptroller shall refund to the artist any amount by
which the amount remitted under Subsection (b) exceeds the amount
of franchise tax owed by the artist.
(d) If a taxable entity fails to withhold an amount as
required by Subsection (a) in connection with a payment, the
taxable entity and the artist are jointly and severally liable to
the comptroller for the amount of franchise tax owed by the artist
in connection with the payment. If the total amount collected from
the taxable entity and the artist under this subsection exceeds the
amount of franchise tax owed by the artist, the comptroller shall
refund the excess to the taxable entity up to the amount collected
from the taxable entity under this subsection, and shall refund any
remaining excess to the artist.
(e) A taxable entity that withholds an amount under
Subsection (a) in connection with a payment and fails to remit all
or part of the amount to the comptroller is liable to the
comptroller for the amount of franchise tax owed by the artist in
connection with the payment and is liable to the artist for an
amount equal to the amount by which the amount withheld exceeds the
amount remitted to the comptroller in connection with the payment.
The artist is not liable to the comptroller for the amount of
franchise tax owed in connection with the payment that exceeds the
amount remitted under Subsection (b).
(f) A taxable entity is not required to withhold an amount
under Subsection (a) in connection with a payment if the artist
provides the taxable entity a written statement from the
comptroller that the artist is not a taxable entity subject to the
franchise tax under this chapter.
(g) The comptroller shall adopt rules to administer this
section.
SECTION 4. Not later than December 1, 2011, the comptroller
of public accounts shall adopt rules under Section 171.155, Tax
Code, as added by this Act.
SECTION 5. This Act applies only to a report originally due
on or after January 1, 2012.
SECTION 6. (a) Except as provided by Subsection (b) of this
section, this Act takes effect January 1, 2012.
(b) Section 4 of this Act takes effect September 1, 2011.