By: Hilderbran H.B. No. 1289
A BILL TO BE ENTITLED
AN ACT
relating to the exclusion of certain service costs in determining a
taxable entity's taxable margin for purposes of the franchise tax.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 171.1011, Tax Code, is amended by adding
Subsection (v) to read as follows:
(v) A taxable entity primarily engaged in the business of
transporting commodities by waterways that does not subtract cost
of goods sold in computing its taxable margin shall exclude from its
total revenue direct costs of providing inbound and outbound
transportation services by intrastate or interstate waterways to
the same extent that a taxable entity that sells in the ordinary
course of business real or tangible personal property would be
authorized by Section 171.1012 to subtract those costs as costs of
goods sold in computing its taxable margin.
SECTION 2. Section 171.1012, Tax Code, is amended by adding
Subsections (k-2) and (k-3) to read as follows:
(k-2) This subsection applies only to a pipeline entity: (1)
that owns or leases and operates the pipeline by which the product
is transported for others and only to that portion of the product to
which the entity does not own title; and (2) that is primarily
engaged in gathering, storing, transporting, or processing crude
oil, including finished petroleum products, natural gas,
condensate, and natural gas liquids, except for a refinery
installation that manufactures finished petroleum products from
crude oil. Notwithstanding Subsection (e)(3) or (i), a pipeline
entity providing services for others related to the product that
the pipeline does not own and to which this subsection applies may
subtract as a cost of goods sold its depreciation, operations, and
maintenance costs allowed by this section related to the services
provided.
(k-3) For purposes of Subsection (k-2), "processing" means
the physical or mechanical removal, separation, or treatment of
crude oil, including finished petroleum products, natural gas,
condensate, and natural gas liquids after those materials are
produced from the earth. The term does not include the chemical or
biological transformation of those materials.
SECTION 3. This Act applies only to a report originally due
on or after the effective date of this Act.
SECTION 4. This Act takes effect January 1, 2014.