Relating to the computation of cost of goods for purposes of the franchise tax by certain taxable entities.
Impact
If enacted, SB1800 would directly impact how the franchise tax is calculated for businesses that focus on ticket sales for various events, including sporting events, concerts, and theatrical performances. By enabling these entities to subtract ticket purchase costs from their gross receipts, the bill could potentially lead to reduced tax liabilities for ticket vendors. This change may attract more businesses to operate within Texas, as the clarity and simplicity of tax computation could incentivize growth in the event ticket resale market.
Summary
Senate Bill 1800 aims to adjust the computation of 'cost of goods sold' for certain taxable entities in Texas, specifically those engaged in the business of procuring and reselling event tickets. Under the proposed legislation, such entities would be allowed to deduct the purchase price of tickets as part of their cost of goods sold when calculating their franchise tax obligations. This amendment is intended to simplify tax calculations for these businesses, making it easier for them to manage their finances while complying with state tax laws.
Contention
While there appears to be a clear intent to support ticket resale businesses, there may be concerns regarding the broader implications of altering tax computation frameworks. Considerations may include the potential for reducing state revenue from franchise taxes if a significant number of businesses qualify for this deduction. Additionally, there might be debates about whether such benefits create an uneven playing field among different types of businesses, particularly in sectors that do not benefit from similar tax adjustments.
Notable_points
The bill is reflective of Texas' efforts to enhance its business environment by providing more favorable tax conditions for specific industries. The simplification of tax processes for prominent sectors like entertainment could lead to increased business activity. The proposal was referred to the Finance committee on March 24, 2015, indicating that it is under legislative review and may be subject to further amendments as discussions progress.
Relating to the amount of the total revenue exemption for the franchise tax and the exclusion of certain taxable entities from the requirement to file a franchise tax report.
Relating to the amount of the total revenue exemption for the franchise tax and the exclusion of certain taxable entities from the requirement to file a franchise tax report.