| 1 | 1 | | 84R13304 BEF-F |
|---|
| 2 | 2 | | By: Capriglione H.B. No. 2940 |
|---|
| 3 | 3 | | |
|---|
| 4 | 4 | | |
|---|
| 5 | 5 | | A BILL TO BE ENTITLED |
|---|
| 6 | 6 | | AN ACT |
|---|
| 7 | 7 | | relating to the determination of compensation for purposes of the |
|---|
| 8 | 8 | | franchise tax. |
|---|
| 9 | 9 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
|---|
| 10 | 10 | | SECTION 1. Section 171.1013, Tax Code, is amended by |
|---|
| 11 | 11 | | amending Subsection (a) and adding Subsection (i) to read as |
|---|
| 12 | 12 | | follows: |
|---|
| 13 | 13 | | (a) Except as otherwise provided by this section, "wages and |
|---|
| 14 | 14 | | cash compensation" means the amount entered in the Medicare wages |
|---|
| 15 | 15 | | and tips box of Internal Revenue Service Form W-2 or any subsequent |
|---|
| 16 | 16 | | form with a different number or designation that substantially |
|---|
| 17 | 17 | | provides the same information. The term also includes, to the |
|---|
| 18 | 18 | | extent not included above: |
|---|
| 19 | 19 | | (1) net distributive income from a taxable entity |
|---|
| 20 | 20 | | treated as a partnership for federal income tax purposes, but only |
|---|
| 21 | 21 | | if the person receiving the distribution is a natural person; |
|---|
| 22 | 22 | | (2) net distributive income from limited liability |
|---|
| 23 | 23 | | companies and corporations treated as S corporations for federal |
|---|
| 24 | 24 | | income tax purposes, but only if the person receiving the |
|---|
| 25 | 25 | | distribution is a natural person; |
|---|
| 26 | 26 | | (3) stock awards and stock options deducted for |
|---|
| 27 | 27 | | federal income tax purposes; [and] |
|---|
| 28 | 28 | | (4) net distributive income from a limited liability |
|---|
| 29 | 29 | | company treated as a sole proprietorship for federal income tax |
|---|
| 30 | 30 | | purposes, but only if the person receiving the distribution is a |
|---|
| 31 | 31 | | natural person; and |
|---|
| 32 | 32 | | (5) payroll taxes paid by a taxable entity in |
|---|
| 33 | 33 | | connection with the employment of an officer, director, owner, |
|---|
| 34 | 34 | | partner, or employee. |
|---|
| 35 | 35 | | (i) Subject to Section 171.1014 and the limitation in |
|---|
| 36 | 36 | | Subsection (c), a taxable entity that elects to subtract |
|---|
| 37 | 37 | | compensation for the purpose of computing its taxable margin under |
|---|
| 38 | 38 | | Section 171.101 may include as wages and cash compensation any |
|---|
| 39 | 39 | | nonemployee compensation paid to an independent contractor as |
|---|
| 40 | 40 | | reported on Internal Revenue Service Form 1099 or any subsequent |
|---|
| 41 | 41 | | form with a different number or designation that substantially |
|---|
| 42 | 42 | | provides the same information. |
|---|
| 43 | 43 | | SECTION 2. This Act applies only to a report originally due |
|---|
| 44 | 44 | | on or after the effective date of this Act. |
|---|
| 45 | 45 | | SECTION 3. This Act takes effect January 1, 2016. |
|---|