Texas House Bill HB3345

Texas 2017 - 85th Regular

Caption

Relating to the definition of "passive entity" for the franchise tax.

Impact

This bill impacts existing state laws by providing a more precise interpretation of passive income within the Tax Code. Specifically, it delineates between different forms of income such as rent, joint operating agreements related to mineral properties, and interest income from public loans. By making these distinctions, the bill could potentially alter how various businesses categorize their income for tax purposes, which may influence their tax liabilities. It addresses the need for clarity in tax laws, aiming to streamline tax compliance for businesses operating in Texas.

Summary

House Bill 3345 aims to amend the Tax Code of Texas by clarifying the definition of 'passive entity' for franchise tax purposes. The bill specifically addresses the types of income that are excluded from the definition of passive income, providing clearer guidelines for businesses regarding what constitutes passive income in relation to the franchise tax. This clarification is intended to reduce ambiguity and provide a more structured understanding of tax obligations for affected entities.

Contention

Although the bill serves to clarify existing tax definitions, there are potential points of contention regarding what entities or income types are classified as passive. The inclusion and exclusion of specific types of income might raise discussions among stakeholders about fairness and the implications for various sectors, particularly those involved in real estate and natural resources. The bill is presented as a clarification, but stakeholders may debate the adequacy of the definitions and whether they fully encompass the complexities of modern business operations.