By: Bonnen of Brazoria, Murphy, Parker, H.B. No. 32
Oliveira, Simmons, et al.
A BILL TO BE ENTITLED
AN ACT
relating to the computation and rates of the franchise tax;
decreasing tax rates; amending provisions subject to a criminal
penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Sections 171.002(a) and (b), Tax Code, are
amended to read as follows:
(a) Subject to Sections 171.003, 171.004, 171.007, and
171.1016 and except as provided by Subsection (b), the rate of the
franchise tax is 0.75 [one] percent of taxable margin.
(b) Subject to Sections 171.003, 171.004, 171.007, and
171.1016, the rate of the franchise tax is 0.375 [0.5] percent of
taxable margin for those taxable entities primarily engaged in
retail or wholesale trade.
SECTION 2. Subchapter A, Chapter 171, Tax Code, is amended
by adding Section 171.004 to read as follows:
Sec. 171.004. ADJUSTMENT OF TAX RATES. (a) Beginning in
2018, on January 1 of each even numbered year for which the
comptroller's most recent certification estimate projects state
tax collections not dedicated by the constitution will exceed the
limit on appropriations in effect for the current biennium under
Section 22(a), Article VIII, Texas Constitution:
(1) the rate of the franchise tax under Section
171.002(a) is adjusted by subtracting 0.15 from the rate in effect
on December 31 of the previous year;
(2) the rate of the franchise tax under Section
171.002(b) is adjusted by subtracting 0.075 from the rate in effect
on December 31 of the previous year; and
(3) the rate of the franchise tax under Section
171.1016(b)(3) is adjusted by subtracting 0.0662 from the rate in
effect on December 31 of the previous year.
(b) The tax rates determined under Subsection (a) apply to a
report originally due on or after the date the determination is
made.
(c) Notwithstanding Subsection (a), if an adjustment
otherwise required by Subsection (a) would reduce a rate of the
franchise tax to less than zero, the rate is instead reduced to
zero.
(d) Notwithstanding any other law, if the rates of the
franchise tax are reduced to zero under Subsection (a) or (c), a
taxable entity does not owe any tax and is not required to file a
report that would otherwise be originally due on or after the date
the rates are reduced to zero.
(e) The comptroller shall make the determination required
by Subsection (a) and may adopt rules related to making that
determination. The comptroller shall publish the franchise tax
rates determined under this section in the Texas Register and on the
comptroller's Internet website not later than January 15 of each
year.
(f) A determination by the comptroller under this section is
final and may not be appealed.
SECTION 3. Subchapter A, Chapter 171, Tax Code, is amended
by adding Section 171.007 to read as follows:
Sec. 171.007. COMPTROLLER TAX RATE ADJUSTMENT. (a) On the
date the comptroller makes the transfer of any unencumbered
positive balance of general revenues from a preceding biennium to
the economic stabilization fund as described by Section 49-g(b),
Article III, Texas Constitution, the comptroller shall:
(1) identify an amount of money equal to 25 percent of
those unencumbered general revenues that are not transferred under
that subsection;
(2) estimate the amount of revenue attributable to the
tax imposed under this chapter that would be received by the
comptroller during the current state fiscal biennium if the tax
were imposed at the rates under Sections 171.002(a) and (b) and
Section 171.1016 in effect on the date the estimate is made; and
(3) subtract the amount of money identified under
Subdivision (1) from the amount of revenue estimated under
Subdivision (2).
(b) If the amount of money determined under Subsection
(a)(3) is greater than zero, the comptroller shall determine the
rates for purposes of Sections 171.002(a) and (b) and Section
171.1016 that, if applied beginning January 1 of the current state
fiscal biennium, are estimated to generate the amount of money
determined by the comptroller under Subsection (a)(3) for that
biennium. In determining the rates under this subsection, the
comptroller shall proportionally reduce the rates under Sections
171.002(a) and (b) and Section 171.1016 that are in effect on the
date the comptroller makes the determination.
(c) Not later than December 15 of each odd-numbered year,
the comptroller shall:
(1) adopt the adjusted tax rates determined under
Subsection (b);
(2) publish notice of the adjusted tax rates in the
Texas Register; and
(3) provide any other notice relating to the adjusted
tax rates that the comptroller considers appropriate.
(d) The adjusted tax rates adopted by the comptroller under
this section apply to a report originally due on or after January 1
of the even-numbered year following the date the rates are adopted.
(e) In the state fiscal year in which the amount of money
determined under Subsection (a)(3) is zero or less:
(1) this chapter expires as provided by Section
171.975; and
(2) not later than December 15 of that year the
comptroller shall:
(A) publish notice in the Texas Register that an
entity previously subject to the tax imposed under this chapter is
no longer required to file a report or pay the tax; and
(B) provide any other notice relating to the
expiration of the tax that the comptroller considers appropriate.
(f) An action taken by the comptroller under this section is
final and may not be appealed.
(g) The comptroller shall adopt rules to implement this
section.
SECTION 4. Sections 171.1016(a), (b), and (e), Tax Code,
are amended to read as follows:
(a) Notwithstanding any other provision of this chapter, a
taxable entity whose total revenue from its entire business is not
more than $20 [$10] million may elect to pay the tax imposed under
this chapter in the amount computed and at the rate provided by this
section rather than in the amount computed and at the tax rate
provided by Section 171.002.
(b) Subject to Section 171.004, the [The] amount of the tax
for which a taxable entity that elects to pay the tax as provided by
this section is liable is computed by:
(1) determining the taxable entity's total revenue
from its entire business, as determined under Section 171.1011;
(2) apportioning the amount computed under
Subdivision (1) to this state, as provided by Section 171.106, to
determine the taxable entity's apportioned total revenue; and
(3) multiplying the amount computed under Subdivision
(2) by the rate of 0.331 [0.575] percent or, if applicable, the
adjusted tax rate adopted by the comptroller under Section 171.007.
(e) A reference in this chapter or other law to the rate of
the franchise tax means, as appropriate:
(1) [,] the rate under Section 171.002 or, for a
taxable entity that elects to pay the tax as provided by this
section, the rate under this section; or
(2) the adjusted rates under Section 171.007.
SECTION 5. Chapter 171, Tax Code, is amended by adding
Subchapter Z to read as follows:
SUBCHAPTER Z. EXPIRATION
Sec. 171.975. EXPIRATION. This chapter expires on December
31 of the year in which the amount of money determined by the
comptroller under Section 171.007(a)(3) is zero or less.
SECTION 6. (a) Chapter 171, Tax Code, and Subtitle B,
Title 2, Tax Code, continue to apply to audits, deficiencies,
redeterminations, and refunds of any tax due or collected under
Chapter 171 until barred by limitations.
(b) The expiration of Chapter 171, Tax Code, does not
affect:
(1) the status of a taxable entity that has had its
corporate privileges, certificate of authority, certificate of
organization, certificate of limited partnership, corporate
charter, or registration revoked, suit filed against it, or a
receiver appointed under Subchapter F, G, or H of that chapter;
(2) the ability of the comptroller of public accounts,
secretary of state, or attorney general to take action against a
taxable entity under Subchapter F, G, or H of that chapter for
actions that took place before the chapter expired; or
(3) the right of a taxable entity to contest a
forfeiture, revocation, lawsuit, or appointment of a receiver under
Subchapter F, G, or H of that chapter.
SECTION 7. The comptroller of public accounts shall study
and report to the legislature on the impact of this Act on the rate
of the franchise tax and what further reductions in the rate of that
tax may be made following a review of existing exemptions and
credits from the franchise tax. The comptroller shall provide the
report to the legislature not later than December 31, 2016.
SECTION 8. This Act applies only to a report originally due
on or after the effective date of this Act.
SECTION 9. This Act takes effect January 1, 2016.