85R713 BEF-D
By: Springer H.B. No. 1613
A BILL TO BE ENTITLED
AN ACT
relating to adjustment of the rates of the franchise tax; providing
for decreases in tax rates.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Sections 171.002(a) and (b), Tax Code, are
amended to read as follows:
(a) Subject to Sections 171.003, 171.004, and 171.1016 and
except as provided by Subsection (b), the rate of the franchise tax
is 0.75 percent of taxable margin.
(b) Subject to Sections 171.003, 171.004, and 171.1016, the
rate of the franchise tax is 0.375 percent of taxable margin for
those taxable entities primarily engaged in retail or wholesale
trade.
SECTION 2. Subchapter A, Chapter 171, Tax Code, is amended
by adding Section 171.004 to read as follows:
Sec. 171.004. ADJUSTMENT OF TAX RATES. (a) Beginning in
2018, on January 1 of each year of a biennium for which the
comptroller's most recent certification estimate projects state
tax revenues not dedicated by the constitution for that biennium
will exceed the limit on appropriations in effect for the current
biennium under Section 22(a), Article VIII, Texas Constitution:
(1) the rate of the franchise tax under Section
171.002(a) is adjusted by subtracting 0.15 from the rate in effect
on December 31 of the previous year;
(2) the rate of the franchise tax under Section
171.002(b) is adjusted by subtracting 0.075 from the rate in effect
on December 31 of the previous year; and
(3) the rate of the franchise tax under Section
171.1016(b)(3) is adjusted by subtracting 0.0662 from the rate in
effect on December 31 of the previous year.
(b) The tax rates determined under Subsection (a) apply to a
report originally due on or after the date the determination is
made.
(c) Notwithstanding Subsection (a), if an adjustment
otherwise required by Subsection (a) would reduce a rate of the
franchise tax to less than zero, the rate is instead reduced to
zero.
(d) Notwithstanding any other law, if the rates of the
franchise tax are reduced to zero under Subsection (a) or (c), a
taxable entity does not owe any tax and is not required to file a
report that would otherwise be originally due on or after the date
the rates are reduced to zero.
(e) The comptroller shall make the determination required
by Subsection (a) and may adopt rules related to making that
determination. The comptroller shall publish the franchise tax
rates determined under this section in the Texas Register and on the
comptroller's Internet website not later than January 15 of each
year.
(f) A determination by the comptroller under this section is
final and may not be appealed.
SECTION 3. Sections 171.1016(b) and (e), Tax Code, are
amended to read as follows:
(b) The amount of the tax for which a taxable entity that
elects to pay the tax as provided by this section is liable is
computed by:
(1) determining the taxable entity's total revenue
from its entire business, as determined under Section 171.1011;
(2) apportioning the amount computed under
Subdivision (1) to this state, as provided by Section 171.106, to
determine the taxable entity's apportioned total revenue; and
(3) multiplying the amount computed under Subdivision
(2) by the rate of 0.331 percent or, if applicable, an adjusted tax
rate adopted by the comptroller under Section 171.004.
(e) A reference in this chapter or other law to the rate of
the franchise tax means, as appropriate:
(1) [,] the rate under Section 171.002 or, for a
taxable entity that elects to pay the tax as provided by this
section, the rate under this section; or
(2) the adjusted rates under Section 171.004.
SECTION 4. This Act applies only to a report originally due
on or after the effective date of this Act.
SECTION 5. This Act takes effect January 1, 2018.