| 1 | 1 | | 85R713 BEF-D |
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| 2 | 2 | | By: Springer H.B. No. 1613 |
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| 3 | 3 | | |
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| 4 | 4 | | |
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| 5 | 5 | | A BILL TO BE ENTITLED |
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| 6 | 6 | | AN ACT |
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| 7 | 7 | | relating to adjustment of the rates of the franchise tax; providing |
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| 8 | 8 | | for decreases in tax rates. |
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| 9 | 9 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 10 | 10 | | SECTION 1. Sections 171.002(a) and (b), Tax Code, are |
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| 11 | 11 | | amended to read as follows: |
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| 12 | 12 | | (a) Subject to Sections 171.003, 171.004, and 171.1016 and |
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| 13 | 13 | | except as provided by Subsection (b), the rate of the franchise tax |
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| 14 | 14 | | is 0.75 percent of taxable margin. |
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| 15 | 15 | | (b) Subject to Sections 171.003, 171.004, and 171.1016, the |
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| 16 | 16 | | rate of the franchise tax is 0.375 percent of taxable margin for |
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| 17 | 17 | | those taxable entities primarily engaged in retail or wholesale |
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| 18 | 18 | | trade. |
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| 19 | 19 | | SECTION 2. Subchapter A, Chapter 171, Tax Code, is amended |
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| 20 | 20 | | by adding Section 171.004 to read as follows: |
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| 21 | 21 | | Sec. 171.004. ADJUSTMENT OF TAX RATES. (a) Beginning in |
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| 22 | 22 | | 2018, on January 1 of each year of a biennium for which the |
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| 23 | 23 | | comptroller's most recent certification estimate projects state |
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| 24 | 24 | | tax revenues not dedicated by the constitution for that biennium |
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| 25 | 25 | | will exceed the limit on appropriations in effect for the current |
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| 26 | 26 | | biennium under Section 22(a), Article VIII, Texas Constitution: |
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| 27 | 27 | | (1) the rate of the franchise tax under Section |
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| 28 | 28 | | 171.002(a) is adjusted by subtracting 0.15 from the rate in effect |
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| 29 | 29 | | on December 31 of the previous year; |
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| 30 | 30 | | (2) the rate of the franchise tax under Section |
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| 31 | 31 | | 171.002(b) is adjusted by subtracting 0.075 from the rate in effect |
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| 32 | 32 | | on December 31 of the previous year; and |
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| 33 | 33 | | (3) the rate of the franchise tax under Section |
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| 34 | 34 | | 171.1016(b)(3) is adjusted by subtracting 0.0662 from the rate in |
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| 35 | 35 | | effect on December 31 of the previous year. |
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| 36 | 36 | | (b) The tax rates determined under Subsection (a) apply to a |
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| 37 | 37 | | report originally due on or after the date the determination is |
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| 38 | 38 | | made. |
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| 39 | 39 | | (c) Notwithstanding Subsection (a), if an adjustment |
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| 40 | 40 | | otherwise required by Subsection (a) would reduce a rate of the |
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| 41 | 41 | | franchise tax to less than zero, the rate is instead reduced to |
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| 42 | 42 | | zero. |
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| 43 | 43 | | (d) Notwithstanding any other law, if the rates of the |
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| 44 | 44 | | franchise tax are reduced to zero under Subsection (a) or (c), a |
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| 45 | 45 | | taxable entity does not owe any tax and is not required to file a |
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| 46 | 46 | | report that would otherwise be originally due on or after the date |
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| 47 | 47 | | the rates are reduced to zero. |
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| 48 | 48 | | (e) The comptroller shall make the determination required |
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| 49 | 49 | | by Subsection (a) and may adopt rules related to making that |
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| 50 | 50 | | determination. The comptroller shall publish the franchise tax |
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| 51 | 51 | | rates determined under this section in the Texas Register and on the |
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| 52 | 52 | | comptroller's Internet website not later than January 15 of each |
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| 53 | 53 | | year. |
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| 54 | 54 | | (f) A determination by the comptroller under this section is |
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| 55 | 55 | | final and may not be appealed. |
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| 56 | 56 | | SECTION 3. Sections 171.1016(b) and (e), Tax Code, are |
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| 57 | 57 | | amended to read as follows: |
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| 58 | 58 | | (b) The amount of the tax for which a taxable entity that |
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| 59 | 59 | | elects to pay the tax as provided by this section is liable is |
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| 60 | 60 | | computed by: |
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| 61 | 61 | | (1) determining the taxable entity's total revenue |
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| 62 | 62 | | from its entire business, as determined under Section 171.1011; |
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| 63 | 63 | | (2) apportioning the amount computed under |
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| 64 | 64 | | Subdivision (1) to this state, as provided by Section 171.106, to |
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| 65 | 65 | | determine the taxable entity's apportioned total revenue; and |
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| 66 | 66 | | (3) multiplying the amount computed under Subdivision |
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| 67 | 67 | | (2) by the rate of 0.331 percent or, if applicable, an adjusted tax |
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| 68 | 68 | | rate adopted by the comptroller under Section 171.004. |
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| 69 | 69 | | (e) A reference in this chapter or other law to the rate of |
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| 70 | 70 | | the franchise tax means, as appropriate: |
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| 71 | 71 | | (1) [,] the rate under Section 171.002 or, for a |
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| 72 | 72 | | taxable entity that elects to pay the tax as provided by this |
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| 73 | 73 | | section, the rate under this section; or |
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| 74 | 74 | | (2) the adjusted rates under Section 171.004. |
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| 75 | 75 | | SECTION 4. This Act applies only to a report originally due |
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| 76 | 76 | | on or after the effective date of this Act. |
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| 77 | 77 | | SECTION 5. This Act takes effect January 1, 2018. |
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