Texas 2017 - 85th Regular

Texas House Bill HB102 Compare Versions

Only one version of the bill is available at this time.

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1	1	85R3170 TJB-D
2	2	By: Guillen H.B. No. 102
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to exemptions from ad valorem taxes, the sales and use tax,
8	8	and the franchise tax for certain businesses during an initial
9	9	period of operation in this state.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. This Act may be cited as the Texas Open for
12	12	Business Act.
13	13	SECTION 2. Subchapter B, Chapter 11, Tax Code, is amended by
14	14	adding Section 11.36 to read as follows:
15	15	Sec. 11.36. BUSINESSES DURING INITIAL PERIOD OF OPERATION.
16	16	(a) Subject to Subsection (b), a person is entitled to an exemption
17	17	from taxation by a taxing unit of the real and tangible personal
18	18	property owned by the person if:
19	19	(1) the person meets the requirements of a new
20	20	business under Section 151.3183;
21	21	(2) the property:
22	22	(A) is located in a county with a population of
23	23	250,000 or less; and
24	24	(B) is reasonably necessary for and used by the
25	25	person in the operation of the new business; and
26	26	(3) the exemption is adopted by the governing body of
27	27	the taxing unit in the manner provided by law for official action by
28	28	the governing body.
29	29	(b) A person is entitled to an exemption under this section
30	30	until the earliest of:
31	31	(1) the 10th anniversary of the date on which the
32	32	person first meets the requirements of a new business under Section
33	33	151.3183;
34	34	(2) the date on which the person ceases to meet the
35	35	requirements of a new business under Section 151.3183; or
36	36	(3) the date the comptroller revokes the person's
37	37	sales tax registration number under Section 151.3183(h).
38	38	(c) An exemption authorized by this section and adopted by
39	39	the governing body of a taxing unit applies to:
40	40	(1) the tax year:
41	41	(A) in which the exemption is adopted by the
42	42	governing body if officially adopted before April 15; or
43	43	(B) immediately following the tax year in which
44	44	the exemption is adopted by the governing body if officially
45	45	adopted on or after April 15; and
46	46	(2) each following tax year unless and until repealed
47	47	in the manner provided by Subsection (d).
48	48	(d) The governing body of a taxing unit may repeal an
49	49	exemption adopted under this section in the manner provided by law
50	50	for official action by the governing body. The repeal of an
51	51	exemption by a governing body does not affect the entitlement of a
52	52	person who is receiving the exemption on the date it is repealed to
53	53	continue to receive the exemption for the period described by
54	54	Subsection (b).
55	55	(e) The comptroller by rule shall establish requirements
56	56	and procedures for determining whether and as of what date a person
57	57	meets the requirements of a new business under Section 151.3183 for
58	58	the purpose of this section.
59	59	(f) In determining whether a person meets the requirements
60	60	of a new business under Section 151.3183 and the date that those
61	61	requirements are met, the chief appraiser shall apply the
62	62	requirements and procedures adopted by the comptroller under
63	63	Subsection (e).
64	64	(g) The chief appraiser shall promptly notify the
65	65	comptroller if the chief appraiser determines that a person
66	66	receiving an exemption under this section ceases to meet the
67	67	requirements of a new business under Section 151.3183.
68	68	SECTION 3. Section 11.42(e), Tax Code, is amended to read as
69	69	follows:
70	70	(e) A person who qualifies for an exemption under Section
71	71	11.131 or 11.36 after January 1 of a tax year may receive the
72	72	exemption for the applicable portion of that tax year immediately
73	73	on qualification for the exemption.
74	74	SECTION 4. Section 11.43(k), Tax Code, is amended to read as
75	75	follows:
76	76	(k) A person who qualifies for an exemption authorized by
77	77	Section 11.13(c) or (d), [or] 11.132, or 11.36 must apply for the
78	78	exemption no later than the first anniversary of the date the person
79	79	qualified for the exemption.
80	80	SECTION 5. Section 26.1125, Tax Code, is amended to read as
81	81	follows:
82	82	Sec. 26.1125. CALCULATION OF TAXES ON RESIDENCE HOMESTEAD
83	83	OF 100 PERCENT OR TOTALLY DISABLED VETERAN OR PROPERTY OF NEW
84	84	BUSINESS. (a) If a person qualifies for an exemption under Section
85	85	11.131 or 11.36 after the beginning of a tax year, the amount of the
86	86	taxes on the property subject to the exemption [residence homestead
87	87	of the person] for the tax year is calculated by multiplying the
88	88	amount of the taxes that otherwise would be imposed on the property
89	89	[residence homestead] for the entire year had the person not
90	90	qualified for the exemption under Section 11.131 or 11.36 by a
91	91	fraction, the denominator of which is 365 and the numerator of which
92	92	is the number of days that elapsed before the date the person
93	93	qualified for the exemption under Section 11.131 or 11.36.
94	94	(b) If a person qualifies for an exemption under Section
95	95	11.131 or 11.36 with respect to the property after the amount of the
96	96	tax due on the property is calculated and the effect of the
97	97	qualification is to reduce the amount of the tax due on the
98	98	property, the assessor for each taxing unit shall recalculate the
99	99	amount of the tax due on the property and correct the tax roll. If
100	100	the tax bill has been mailed and the tax on the property has not been
101	101	paid, the assessor shall mail a corrected tax bill to the person in
102	102	whose name the property is listed on the tax roll or to the person's
103	103	authorized agent. If the tax on the property has been paid, the tax
104	104	collector for the taxing unit shall refund to the person who paid
105	105	the tax the amount by which the payment exceeded the tax due.
106	106	SECTION 6. Subchapter H, Chapter 151, Tax Code, is amended
107	107	by adding Section 151.3183 to read as follows:
108	108	Sec. 151.3183. TAXABLE ITEMS USED BY CERTAIN NEW BUSINESSES
109	109	DURING INITIAL PERIOD OF OPERATION. (a) In this section:
110	110	(1) "Internal Revenue Code" means the Internal Revenue
111	111	Code of 1986 in effect on December 31, 2016, excluding any changes
112	112	made by federal law after that date, but including any regulations
113	113	adopted under that code applicable to the tax year to which the
114	114	provisions of the code in effect on that date applied.
115	115	(2) "Qualifying job" means an employment position that
116	116	is:
117	117	(A) new to and located in this state;
118	118	(B) permanent and full-time; and
119	119	(C) held by an employee for at least 10 months
120	120	during each 12-month period.
121	121	(b) The sale to or storage, use, or other consumption by a
122	122	new business of a taxable item that will be directly used or
123	123	consumed by the business is exempted from the taxes imposed by this
124	124	chapter.
125	125	(c) A person is a new business for purposes of this section
126	126	if the person is a business that:
127	127	(1) is primarily located in a county with a population
128	128	of 250,000 or less;
129	129	(2) is first located and begins doing business in this
130	130	state on or after January 1, 2018, regardless of whether the
131	131	business is chartered or organized in this state or outside this
132	132	state;
133	133	(3) is not substantially similar in operation and in
134	134	ownership to another business located in this state during any part
135	135	of the preceding five years;
136	136	(4) is primarily engaged in:
137	137	(A) a manufacturing activity described in
138	138	categories 2011-3999 of the 1987 Standard Industrial
139	139	Classification Manual published by the United States Department of
140	140	Labor; or
141	141	(B) qualified research, as defined by Section 41,
142	142	Internal Revenue Code; and
143	143	(5) creates, on or after January 1, 2018, and not later
144	144	than the 30th day after the date the business first locates in this
145	145	state, at least one qualifying job.
146	146	(d) To claim an exemption under this section, a registration
147	147	number issued by the comptroller must be stated on the exemption
148	148	certificate provided by the purchaser of the item.
149	149	(e) Subject to Subsection (f), a person may apply to the
150	150	comptroller for issuance of a registration number by the
151	151	comptroller. The application must be made on a form prescribed by
152	152	the comptroller and include the information required by the
153	153	comptroller to establish that the person is a new business as
154	154	described by Subsection (c).
155	155	(f) A person who meets the requirements of a new business as
156	156	described by Subsection (c) must apply for a registration number
157	157	not later than the first anniversary of the date the person begins
158	158	doing business in this state. The comptroller shall deny an
159	159	application received after that date.
160	160	(g) A registration number issued under this section expires
161	161	on the 10th anniversary of the date of issuance, unless revoked at
162	162	an earlier time by the comptroller as provided by Subsection (h).
163	163	The registration number may not be renewed.
164	164	(h) The comptroller shall revoke and may not reinstate a
165	165	registration number issued to a person if the person ceases to meet
166	166	a requirement prescribed by Subsection (c). The comptroller shall
167	167	promptly notify the chief appraiser of each appraisal district in
168	168	which a person whose registration number is revoked owns property
169	169	that the registration number has been revoked. A person whose
170	170	registration number is revoked is liable for payment of the taxes
171	171	imposed under this chapter on the sales price of each taxable item
172	172	for which the person claimed an exemption under this section on or
173	173	after the date the registration number was revoked.
174	174	(i) The comptroller shall adopt rules necessary to
175	175	implement this section, including rules relating to the:
176	176	(1) qualification of a person for an exemption under
177	177	this section;
178	178	(2) issuance and revocation of a registration number
179	179	issued under this section; and
180	180	(3) reporting and other procedures necessary to ensure
181	181	that a person to whom a registration number is issued under this
182	182	section complies with this section and remains entitled to the
183	183	exemption authorized by this section.
184	184	SECTION 7. Section 171.0001(4), Tax Code, as effective
185	185	until January 1, 2020, is amended to read as follows:
186	186	(4) "Beginning date" means:
187	187	(A) except as provided by Paragraph (B) or (C):
188	188	(i) for a taxable entity chartered or
189	189	organized in this state, the date on which the taxable entity's
190	190	charter or organization takes effect; and
191	191	(ii) for any other taxable entity, the date
192	192	on which the taxable entity begins doing business in this state;
193	193	[or]
194	194	(B) for a taxable entity that qualifies as a new
195	195	veteran-owned business as defined by Section 171.0005, the earlier
196	196	of:
197	197	(i) the fifth anniversary of the date on
198	198	which the taxable entity begins doing business in this state; or
199	199	(ii) the date the taxable entity ceases to
200	200	qualify as a new veteran-owned business as defined by Section
201	201	171.0005; or
202	202	(C) for a taxable entity that meets the
203	203	requirements of a new business under Section 151.3183, the earlier
204	204	of:
205	205	(i) the 10th anniversary of the date on
206	206	which the taxable entity begins doing business in this state; or
207	207	(ii) the date the taxable entity ceases to
208	208	comply with the requirements of a new business under Section
209	209	151.3183.
210	210	SECTION 8. Section 171.0001(4), Tax Code, as effective
211	211	January 1, 2020, is amended to read as follows:
212	212	(4) "Beginning date" means:
213	213	(A) except as provided by Paragraph (B):
214	214	(i) for a taxable entity chartered or
215	215	organized in this state, the date on which the taxable entity's
216	216	charter or organization takes effect; and
217	217	(ii) [(B)] for any other taxable entity,
218	218	the date on which the taxable entity begins doing business in this
219	219	state; or
220	220	(B) for a taxable entity that meets the
221	221	requirements of a new business under Section 151.3183, the earlier
222	222	of:
223	223	(i) the 10th anniversary of the date on
224	224	which the taxable entity begins doing business in this state; or
225	225	(ii) the date the taxable entity ceases to
226	226	comply with the requirements of a new business under Section
227	227	151.3183.
228	228	SECTION 9. Section 171.001, Tax Code, is amended by adding
229	229	Subsection (e) to read as follows:
230	230	(e) Notwithstanding Subsection (a), the tax imposed under
231	231	this chapter is not imposed on a taxable entity that meets the
232	232	requirements of a new business under Section 151.3183 until the
233	233	earlier of:
234	234	(1) the 10th anniversary of the date on which the
235	235	taxable entity begins doing business in this state; or
236	236	(2) the date the taxable entity ceases to comply with
237	237	the requirements of a new business under Section 151.3183.
238	238	SECTION 10. Section 171.063(g), Tax Code, as effective
239	239	until January 1, 2020, is amended to read as follows:
240	240	(g) If a corporation's federal tax exemption is withdrawn by
241	241	the Internal Revenue Service for failure of the corporation to
242	242	qualify or maintain its qualification for the exemption, the
243	243	corporation's exemption under this section ends on the effective
244	244	date of that withdrawal by the Internal Revenue Service. The
245	245	effective date of the withdrawal is considered the corporation's
246	246	beginning date for purposes of determining the corporation's
247	247	privilege periods and for all other purposes of this chapter,
248	248	except that if the corporation would have been subject to Section
249	249	171.001(d) or (e) in the absence of the federal tax exemption, and
250	250	the effective date of the withdrawal is a date earlier than the date
251	251	the corporation would have become subject to the franchise tax as
252	252	provided by Section 171.001(d) or (e), as applicable, the date the
253	253	corporation would have become subject to the franchise tax under
254	254	Section 171.001(d) or (e) [that section] is considered the
255	255	corporation's beginning date for those purposes.
256	256	SECTION 11. Section 171.063(g), Tax Code, as effective
257	257	January 1, 2020, is amended to read as follows:
258	258	(g) If a corporation's federal tax exemption is withdrawn by
259	259	the Internal Revenue Service for failure of the corporation to
260	260	qualify or maintain its qualification for the exemption, the
261	261	corporation's exemption under this section ends on the effective
262	262	date of that withdrawal by the Internal Revenue Service. The
263	263	effective date of the withdrawal is considered the corporation's
264	264	beginning date for purposes of determining the corporation's
265	265	privilege periods and for all other purposes of this chapter,
266	266	except that if the corporation would have been subject to Section
267	267	171.001(e) in the absence of the federal tax exemption, and the
268	268	effective date of the withdrawal is a date earlier than the date the
269	269	corporation would have become subject to the franchise tax as
270	270	provided by Section 171.001(e), the date the corporation would have
271	271	become subject to the franchise tax under that section is
272	272	considered the corporation's beginning date for those purposes.
273	273	SECTION 12. Section 171.204, Tax Code, is amended by adding
274	274	Subsection (e) to read as follows:
275	275	(e) The comptroller may require a taxable entity on which
276	276	the tax imposed under this chapter is not imposed solely because of
277	277	the application of Section 171.001(e) to file an information report
278	278	stating the taxable entity's beginning date as determined under
279	279	Section 171.0001 and any other information the comptroller
280	280	determines necessary. The comptroller may not require the taxable
281	281	entity to report or compute its margin.
282	282	SECTION 13. Not later than December 1, 2017, the
283	283	comptroller of public accounts shall adopt rules as required by
284	284	Section 151.3183(i), Tax Code, as added by this Act.
285	285	SECTION 14. Section 11.36, Tax Code, as added by this Act,
286	286	and Sections 11.42, 11.43, and 26.1125, Tax Code, as amended by this
287	287	Act, apply only to ad valorem taxes imposed for a tax year that
288	288	begins on or after January 1, 2018.
289	289	SECTION 15. (a) Except as provided by Subsection (b) of
290	290	this section or as otherwise provided by this Act, this Act takes
291	291	effect September 1, 2017.
292	292	(b) Sections 2, 3, 4, and 5 of this Act take effect January
293	293	1, 2018, but only if the constitutional amendment authorizing the
294	294	governing bodies of certain political subdivisions to exempt from
295	295	ad valorem taxation the real and tangible personal property of
296	296	businesses during an initial period of operation in this state is
297	297	approved by the voters. If that amendment is not approved by the
298	298	voters, Sections 2, 3, 4, and 5 of this Act have no effect.