By: Taylor of Galveston, Menéndez S.B. No. 1031
(In the Senate - Filed February 22, 2017; March 6, 2017,
read first time and referred to Committee on Finance; May 3, 2017,
reported adversely, with favorable Committee Substitute by the
following vote: Yeas 10, Nays 4; May 3, 2017, sent to printer.)
Click here to see the committee vote
COMMITTEE SUBSTITUTE FOR S.B. No. 1031 By: Taylor of Galveston
A BILL TO BE ENTITLED
AN ACT
relating to a deduction under the franchise tax for certain
contracts with the federal government.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 171.101(a), Tax Code, is amended to read
as follows:
(a) The taxable margin of a taxable entity is computed by:
(1) determining the taxable entity's margin, which is
the lesser of:
(A) the amount provided by this paragraph, which
is the lesser of:
(i) 70 percent of the taxable entity's total
revenue from its entire business, as determined under Section
171.1011; or
(ii) an amount equal to the taxable entity's
total revenue from its entire business as determined under Section
171.1011 minus $1 million; or
(B) an amount computed by determining the taxable
entity's total revenue from its entire business under Section
171.1011 and subtracting the greater of:
(i) $1 million; or
(ii) an amount equal to the sum of:
(a) at the election of the taxable
entity, either:
(1) cost of goods sold, as
determined under Section 171.1012; or
(2) compensation, as determined
under Section 171.1013; [and]
(b) any compensation, as determined
under Section 171.1013, paid to an individual during the period the
individual is serving on active duty as a member of the armed forces
of the United States if the individual is a resident of this state
at the time the individual is ordered to active duty and the cost of
training a replacement for the individual; and
(c) any costs not already subtracted
under Sub-subparagraph (a) that are properly allowable under the
Federal Acquisition Regulation (48 C.F.R. Chapter 1), or a
successor regulation, for contracts, or subcontracts supporting
those contracts, for the sale of goods or services to the federal
government by a taxable entity that is a party to at least one
contract subject to the requirements of 48 C.F.R. Chapter 2;
(2) apportioning the taxable entity's margin to this
state as provided by Section 171.106 to determine the taxable
entity's apportioned margin; and
(3) subtracting from the amount computed under
Subdivision (2) any other allowable deductions to determine the
taxable entity's taxable margin.
SECTION 2. This Act applies only to a report originally due
on or after the effective date of this Act.
SECTION 3. This Act takes effect January 1, 2020.
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