Relating to apportionment of margin from receipts from the sale of locomotives for purposes of the franchise tax.
Impact
If passed, the impact of HB 1108 on state laws will primarily involve adjustments to how the franchise tax is calculated for businesses selling locomotives. By setting a clear formula for determining the portion of revenue that is taxable in Texas, the bill aims to eliminate ambiguities that could lead to varied interpretations and compliance burdens for companies involved in interstate commerce. This could result in more predictable tax responsibilities for these entities and potentially attract more business operations in Texas.
Summary
House Bill 1108 aims to amend the Texas Tax Code concerning the apportionment of revenue generated from the sale of locomotives. Specifically, the bill proposes to determine the portion of a taxable entity's receipts from such sales that can be attributed to business done within the state. This is accomplished by applying a formula based on the ratio of railway track miles in Texas to total railway track miles across the United States. Such a change is directed at providing a more standardized method for taxable entities selling locomotives to evaluate their tax liabilities under state law.
Conclusion
Ultimately, the passage of HB 1108 will reflect the legislature's commitment to refining tax regulations that govern business operations, particularly in sectors involving interstate trade and transportation. The effective date of the act, set for January 1, 2018, signals an intent for timely implementation to influence upcoming tax reporting periods.
Contention
While the bill seems to offer clarity to taxation methods, there may be points of contention regarding its implications for revenue generation at the state level. Critics may argue that the new apportionment formula could disproportionately benefit larger businesses engaged in locomotive sales, possibly leading to reduced tax contributions from businesses operating in Texas. Moreover, concerns regarding fairness in the application of the franchise tax across different types of transportation-related industries might arise.
Relating to an exemption from ad valorem taxation of a portion of the appraised value of tangible personal property that is held or used for the production of income and a franchise tax credit for the payment of certain related ad valorem taxes.
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.