LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 83RD LEGISLATIVE REGULAR SESSION April 12, 2013 TO: Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means FROM: Ursula Parks, Director, Legislative Budget Board IN RE:HB1735 by Hilderbran (relating to the exclusion of certain taxable entities from a combined group for purposes of the franchise tax.), Committee Report 1st House, Substituted No significant fiscal implication to the State is anticipated. This bill would amend Chapter 171 of the Tax Code, regarding the franchise tax, by prohibiting a taxable entity that provides retail or wholesale electric utilities being included as a member in a combined group under certain conditions. The conditions would include that in the absence of the exclusion of the taxable entity that provides retail or wholesale electric utilities, the combined group would not qualify as being primarily engaged in wholesale or retail trade, and that the entity providing wholesale or retail electric utilities would have less than five percent of the combined group's total revenue from providing wholesale or retail electric utilities. Under the bill's provisions a combined group otherwise qualified as primarily engaged in retail or wholesale trade would not lose that qualification because an affiliate of the group provides retail or wholesale electric utilities because that affiliate would be excluded from the combined group for franchise tax reporting. The analysis assumes that the combined group would have a tax rate of one-half percent on taxable margin and the affiliate providing retail or wholesale electric utilities would have a tax rate of one percent on taxable margin. This bill would take effect September 1, 2013. Local Government Impact No fiscal implication to units of local government is anticipated. Source Agencies:304 Comptroller of Public Accounts LBB Staff: UP, KK
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 83RD LEGISLATIVE REGULAR SESSION
April 12, 2013
TO: Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means FROM: Ursula Parks, Director, Legislative Budget Board IN RE:HB1735 by Hilderbran (relating to the exclusion of certain taxable entities from a combined group for purposes of the franchise tax.), Committee Report 1st House, Substituted
TO: Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means
FROM: Ursula Parks, Director, Legislative Budget Board
IN RE: HB1735 by Hilderbran (relating to the exclusion of certain taxable entities from a combined group for purposes of the franchise tax.), Committee Report 1st House, Substituted
Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means
Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means
Ursula Parks, Director, Legislative Budget Board
Ursula Parks, Director, Legislative Budget Board
HB1735 by Hilderbran (relating to the exclusion of certain taxable entities from a combined group for purposes of the franchise tax.), Committee Report 1st House, Substituted
HB1735 by Hilderbran (relating to the exclusion of certain taxable entities from a combined group for purposes of the franchise tax.), Committee Report 1st House, Substituted
No significant fiscal implication to the State is anticipated.
No significant fiscal implication to the State is anticipated.
This bill would amend Chapter 171 of the Tax Code, regarding the franchise tax, by prohibiting a taxable entity that provides retail or wholesale electric utilities being included as a member in a combined group under certain conditions. The conditions would include that in the absence of the exclusion of the taxable entity that provides retail or wholesale electric utilities, the combined group would not qualify as being primarily engaged in wholesale or retail trade, and that the entity providing wholesale or retail electric utilities would have less than five percent of the combined group's total revenue from providing wholesale or retail electric utilities. Under the bill's provisions a combined group otherwise qualified as primarily engaged in retail or wholesale trade would not lose that qualification because an affiliate of the group provides retail or wholesale electric utilities because that affiliate would be excluded from the combined group for franchise tax reporting. The analysis assumes that the combined group would have a tax rate of one-half percent on taxable margin and the affiliate providing retail or wholesale electric utilities would have a tax rate of one percent on taxable margin. This bill would take effect September 1, 2013.
This bill would amend Chapter 171 of the Tax Code, regarding the franchise tax, by prohibiting a taxable entity that provides retail or wholesale electric utilities being included as a member in a combined group under certain conditions. The conditions would include that in the absence of the exclusion of the taxable entity that provides retail or wholesale electric utilities, the combined group would not qualify as being primarily engaged in wholesale or retail trade, and that the entity providing wholesale or retail electric utilities would have less than five percent of the combined group's total revenue from providing wholesale or retail electric utilities.
Under the bill's provisions a combined group otherwise qualified as primarily engaged in retail or wholesale trade would not lose that qualification because an affiliate of the group provides retail or wholesale electric utilities because that affiliate would be excluded from the combined group for franchise tax reporting. The analysis assumes that the combined group would have a tax rate of one-half percent on taxable margin and the affiliate providing retail or wholesale electric utilities would have a tax rate of one percent on taxable margin. This bill would take effect September 1, 2013.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 304 Comptroller of Public Accounts
304 Comptroller of Public Accounts
LBB Staff: UP, KK
UP, KK