Relating to the inclusion of a portion of the costs of accepting credit and debit cards in the cost of goods sold for purposes of computing the franchise tax.
If enacted, HB1579 would specifically alter the provisions of Section 171.1012 of the Texas Tax Code concerning how businesses report their costs associated with goods sold. By allowing a portion of credit and debit card transaction fees to be counted in this calculation, the bill is expected to make a positive impact on small businesses and retailers who often face high processing fees. Moreover, this could encourage businesses to accept credit card payments, thus facilitating consumer purchases and potentially increasing sales volume.
House Bill 1579 addresses the inclusion of certain costs associated with the acceptance of credit and debit cards in the computation of the franchise tax in Texas. The bill proposes that, for purposes of calculating the franchise tax, businesses may include 20 percent of the costs related to credit and debit card transactions as part of their cost of goods sold. This legislative change aims to provide relief to businesses by allowing them to account for processing fees as part of their taxable expenses, which could potentially lower their overall tax burden.
While proponents of the bill, including business advocates, argue it provides necessary support to businesses dealing with high transaction fees, there may be contention surrounding how this amendment could affect state revenue from franchise tax. Critics might express concerns that the loss in tax revenue could impact state funding for essential services. Additionally, there may be debate about the fairness and implications of subsidizing credit card processing fees through the tax code, considering that not all businesses utilize credit cards at the same frequency.