85R919 BEF-D
By: Schofield H.B. No. 599
A BILL TO BE ENTITLED
AN ACT
relating to the decrease of the rates of the franchise tax under
certain circumstances and the expiration of that tax.
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 even-numbered year occurring during a
state fiscal biennium for which the comptroller's certification
revenue estimate projects that the percent change from the previous
state fiscal biennium in total general revenue-related funds
available for certification will be at least six percent:
(1) the rate of the franchise tax under Section
171.002(a) is adjusted by subtracting 0.25 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 0.125 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 0.111 from the rate in
effect on December 31 of the previous year.
(b) The tax rates determined under Subsection (a):
(1) apply to a report originally due on or after
January 1 of the even-numbered year described by Subsection (a);
and
(2) are considered for purposes of this chapter to be
the rates provided by and imposed under Section 171.002 or
171.1016, as applicable.
(c) If in an even-numbered year the comptroller determines
that the condition under Subsection (a) has not been met for the
state fiscal biennium during which that year occurs, the rates of
the franchise tax in effect on December 31 of the previous year
remain in effect until at least January 1 of the next even-numbered
year.
(d) 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.
(e) Notwithstanding any other law, if the rates of the
franchise tax are reduced to zero under Subsection (a) or (d), 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
those rates are reduced to zero.
(f) The comptroller shall determine whether the condition
under Subsection (a) is met and determine the applicable franchise
tax rates under this section. The comptroller may adopt rules
related to making those determinations. The comptroller shall
publish the franchise tax rates in effect for a year in the Texas
Register and on the comptroller's Internet website not later than
January 15 of that year.
(g) In the state fiscal year in which the rates of the
franchise tax are reduced to zero under Subsection (a) or (d):
(1) this chapter expires as provided by Section
171.9321; and
(2) not later than January 15 of that year the
comptroller shall:
(A) publish notice in the Texas Register that an
entity previously subject to the tax imposed under this chapter is
no longer required to file a report or pay the tax; and
(B) provide any other notice relating to the
expiration of the tax that the comptroller considers appropriate.
(h) An action taken 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 determined 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. Chapter 171, Tax Code, is amended by adding
Subchapter Z to read as follows:
SUBCHAPTER Z. EXPIRATION
Sec. 171.9321. EXPIRATION. This chapter expires on
December 31 of the year in which the rates of the franchise tax
under Sections 171.002 and 171.1016 are reduced to zero under
Section 171.004(a) or (d).
SECTION 5. (a) After Chapter 171, Tax Code, expires as
provided by Subchapter Z, Chapter 171, Tax Code, as added by this
Act, Chapter 171 and Subtitle B, Title 2, Tax Code, continue to
apply to audits, deficiencies, redeterminations, and refunds of any
tax due or collected under Chapter 171 until barred by limitations.
(b) The expiration of Chapter 171, Tax Code, does not
affect:
(1) the status of a taxable entity that has had its
corporate privileges, certificate of authority, certificate of
organization, certificate of limited partnership, corporate
charter, or registration revoked, a suit filed against it, or a
receiver appointed under Subchapter F, G, or H of that chapter;
(2) the ability of the comptroller of public accounts,
secretary of state, or attorney general to take action against a
taxable entity under Subchapter F, G, or H of that chapter for
actions that took place before the chapter expired; or
(3) the right of a taxable entity to contest a
forfeiture, revocation, lawsuit, or appointment of a receiver under
Subchapter F, G, or H of that chapter.
SECTION 6. This Act applies only to a report originally due
on or after January 1, 2018.
SECTION 7. This Act takes effect September 1, 2017.