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