Texas 2015 - 84th Regular

Texas Senate Bill SB330 Compare Versions

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1	1	By: Creighton S.B. No. 330
2	2
3	3
4	4	A BILL TO BE ENTITLED
5	5	AN ACT
6	6	relating to the computation of the franchise tax.
7	7	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
8	8	SECTION 1. Section 171.101(a), Tax Code, is amended to read
9	9	as follows:
10	10	(a) The taxable margin of a taxable entity is computed by:
11	11	(1) determining the taxable entity's margin, which is
12	12	computed by determining the taxable entity's total revenue from its
13	13	entire business, as determined under Section 171.1011, and
14	14	subtracting an amount equal to the sum of:
15	15	(A) $1 million;
16	16	(B) cost of goods sold, as determined under
17	17	Section 171.1012; and
18	18	(C) compensation, as determined under Section
19	19	171.1013 [the lesser of:
20	20	[(A) the amount provided by this paragraph, which
21	21	is the lesser of:
22	22	[(i) 70 percent of the taxable entity's
23	23	total revenue from its entire business, as determined under Section
24	24	171.1011; or
25	25	[(ii) an amount equal to the taxable
26	26	entity's total revenue from its entire business as determined under
27	27	Section 171.1011 minus $1 million; or
28	28	[(B) an amount computed by determining the
29	29	taxable entity's total revenue from its entire business under
30	30	Section 171.1011 and subtracting the greater of:
31	31	[(i) $1 million; or
32	32	[(ii) an amount equal to the sum of:
33	33	[(a) at the election of the taxable
34	34	entity, either:
35	35	[(1) cost of goods sold, as
36	36	determined under Section 171.1012; or
37	37	[(2) compensation, as determined
38	38	under Section 171.1013; and
39	39	[(b) any compensation, as determined
40	40	under Section 171.1013, paid to an individual during the period the
41	41	individual is serving on active duty as a member of the armed forces
42	42	of the United States if the individual is a resident of this state
43	43	at the time the individual is ordered to active duty and the cost of
44	44	training a replacement for the individual];
45	45	(2) apportioning the taxable entity's margin to this
46	46	state as provided by Section 171.106 to determine the taxable
47	47	entity's apportioned margin; and
48	48	(3) subtracting from the amount computed under
49	49	Subdivision (2) any other allowable deductions to determine the
50	50	taxable entity's taxable margin.
51	51	SECTION 2. Section 171.1011(v), Tax Code, is amended to
52	52	read as follows:
53	53	(v) A taxable entity primarily engaged in the business of
54	54	transporting goods by waterways [that does not subtract cost of
55	55	goods sold in computing its taxable margin] shall exclude from its
56	56	total revenue direct costs of providing transportation services by
57	57	intrastate or interstate waterways to the same extent that a
58	58	taxable entity that sells in the ordinary course of business real or
59	59	tangible personal property is [would be] authorized by Section
60	60	171.1012 to subtract those costs as costs of goods sold in computing
61	61	its taxable margin, notwithstanding Section 171.1012(e)(3).
62	62	SECTION 3. Sections 171.1012(b), (k), (o), and (t), Tax
63	63	Code, are amended to read as follows:
64	64	(b) Subject to Section 171.1014, a taxable entity shall
65	65	determine the amount of [that elects to subtract] cost of goods sold
66	66	as provided by this section for the purpose of computing its taxable
67	67	margin [shall determine the amount of that cost of goods sold as
68	68	provided by this section].
69	69	(k) Notwithstanding any other provision of this section, a
70	70	[if the] taxable entity that is a lending institution and that
71	71	offers loans to the public [and elects to subtract cost of goods
72	72	sold, the entity], other than an entity primarily engaged in an
73	73	activity described by category 5932 of the 1987 Standard Industrial
74	74	Classification Manual published by the federal Office of Management
75	75	and Budget, may subtract as a cost of goods sold an amount equal to
76	76	interest expense. For purposes of this subsection, an entity
77	77	engaged in lending to unrelated parties solely for agricultural
78	78	production offers loans to the public.
79	79	(o) The cost of goods sold for [If] a taxable entity,
80	80	including a taxable entity with respect to which cost of goods sold
81	81	is determined pursuant to Section 171.1014(e)(1), whose principal
82	82	business activity is film or television production or broadcasting
83	83	or the distribution of tangible personal property described by
84	84	Subsection (a)(3)(A)(ii), or any combination of these activities,
85	85	[elects to subtract cost of goods sold, the cost of goods sold for
86	86	the taxable entity] shall be the costs described in this section in
87	87	relation to the property and include depreciation, amortization,
88	88	and other expenses directly related to the acquisition, production,
89	89	or use of the property, including expenses for the right to
90	90	broadcast or use the property.
91	91	(t) The cost of goods sold for [If] a taxable entity that is
92	92	a movie theater [elects to subtract cost of goods sold, the cost of
93	93	goods sold for the taxable entity] shall be the costs described by
94	94	this section in relation to the acquisition, production,
95	95	exhibition, or use of a film or motion picture, including expenses
96	96	for the right to use the film or motion picture.
97	97	SECTION 4. Sections 171.1013(b), (b-1), (c-1), and (h), Tax
98	98	Code, are amended to read as follows:
99	99	(b) Subject to Section 171.1014, [a taxable entity that
100	100	elects to subtract compensation] for the purpose of computing its
101	101	taxable margin under Section 171.101 a taxable entity shall [may]
102	102	subtract an amount of compensation equal to:
103	103	(1) subject to the limitation in Subsection (c), all
104	104	wages and cash compensation paid by the taxable entity to its
105	105	officers, directors, owners, partners, and employees; and
106	106	(2) the cost of all benefits, to the extent deductible
107	107	for federal income tax purposes, the taxable entity provides to its
108	108	officers, directors, owners, partners, and employees, including
109	109	workers' compensation benefits, health care, employer
110	110	contributions made to employees' health savings accounts, and
111	111	retirement.
112	112	(b-1) This subsection applies to a taxable entity that is a
113	113	small employer, as that term is defined by Section 1501.002,
114	114	Insurance Code, and that has not provided health care benefits to
115	115	any of its employees in the calendar year preceding the beginning
116	116	date of its reporting period. Subject to Section 171.1014, [a
117	117	taxable entity to which this subsection applies that elects to
118	118	subtract compensation] for the purpose of computing its taxable
119	119	margin under Section 171.101 a taxable entity to which this
120	120	subsection applies may subtract health care benefits as provided
121	121	under Subsection (b) and may also subtract:
122	122	(1) for the first 12-month period on which margin is
123	123	based and in which the taxable entity provides health care benefits
124	124	to all of its employees, an additional amount equal to 50 percent of
125	125	the cost of health care benefits provided to its employees for that
126	126	period; and
127	127	(2) for the second 12-month period on which margin is
128	128	based and in which the taxable entity provides health care benefits
129	129	to all of its employees, an additional amount equal to 25 percent of
130	130	the cost of health care benefits provided to its employees for that
131	131	period.
132	132	(c-1) Subject to Section 171.1014, [a taxable entity that
133	133	elects to subtract compensation] for the purpose of computing its
134	134	taxable margin under Section 171.101 a taxable entity may not
135	135	subtract as compensation any wages or cash compensation paid to an
136	136	undocumented worker. As used in this section "undocumented
137	137	worker" means a person who is not lawfully entitled to be present
138	138	and employed in the United States.
139	139	(h) Subject to Section 171.1014, [a taxable entity that
140	140	elects to subtract compensation] for the purpose of computing its
141	141	taxable margin under Section 171.101 a taxable entity may not
142	142	include as wages or cash compensation amounts paid to an employee
143	143	whose primary employment is directly associated with the operation
144	144	of a facility that is:
145	145	(1) located on property owned or leased by the federal
146	146	government; and
147	147	(2) managed or operated primarily to house members of
148	148	the armed forces of the United States.
149	149	SECTION 5. Sections 171.1014(d), (e), and (f), Tax Code,
150	150	are amended to read as follows:
151	151	(d) For purposes of Section 171.101, a combined group shall
152	152	[make an election to] subtract the sum of [either] cost of goods
153	153	sold, as determined under Subsection (e),[or] compensation, as
154	154	determined under Subsection (f) [that applies to all of its
155	155	members, or] and $1 million [. Regardless of the election, the
156	156	taxable margin of the combined group may not exceed the amount
157	157	provided by Section 171.101(a)(1)(A) for the combined group].
158	158	(e) For purposes of Section 171.101, a combined group shall
159	159	determine cost [that elects to subtract costs] of goods sold [shall
160	160	determine that amount] by:
161	161	(1) determining the cost of goods sold for each of its
162	162	members as provided by Section 171.1012 as if the member were an
163	163	individual taxable entity;
164	164	(2) adding the amounts of cost of goods sold
165	165	determined under Subdivision (1) together; and
166	166	(3) subtracting from the amount determined under
167	167	Subdivision (2) any cost of goods sold amounts paid from one member
168	168	of the combined group to another member of the combined group, but
169	169	only to the extent the corresponding item of total revenue was
170	170	subtracted under Subsection (c)(3).
171	171	(f) For purposes of Section 171.101, a combined group shall
172	172	determine the amount of compensation [that elects] to subtract
173	173	[compensation shall determine that amount] by:
174	174	(1) determining the compensation for each of its
175	175	members as provided by Section 171.1013 as if each member were an
176	176	individual taxable entity, subject to the limitation prescribed by
177	177	Section 171.1013(c);
178	178	(2) adding the amounts of compensation determined
179	179	under Subdivision (1) together; and
180	180	(3) subtracting from the amount determined under
181	181	Subdivision (2) any compensation amounts paid from one member of
182	182	the combined group to another member of the combined group, but only
183	183	to the extent the corresponding item of total revenue was
184	184	subtracted under Subsection (c)(3).
185	185	SECTION 6. Sections 171.101(b) and (d), Tax Code, are
186	186	repealed.
187	187	SECTION 7. This Act applies only to a report originally due
188	188	on or after the effective date of this Act.
189	189	SECTION 8. This Act takes effect January 1, 2016.