85R2628 BEF-D
By: Nelson S.B. No. 72
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) In this section:
(1) "Biennial revenue estimate" means the estimate of
anticipated revenue to this state for the succeeding state fiscal
biennium the comptroller prepares in accordance with Section
49a(a), Article III, Texas Constitution.
(2) "Current fiscal biennium" means the state fiscal
biennium in which a determination date occurs.
(3) "Determination date" means the first working day
in a calendar year.
(4) "Working day" has the meaning assigned by Section
659.083, Government Code.
(b) On the determination date each year, the comptroller
shall:
(1) estimate total probable revenue to this state for
the current fiscal biennium:
(A) using information available on the
determination date; and
(B) assuming the franchise tax rates in effect on
December 31 of the previous year will be adjusted for the current
year as provided by Subsection (c);
(2) determine the amount of anticipated revenue stated
in the biennial revenue estimate for the current fiscal biennium,
as adjusted for estimates of revenue and disbursements associated
with legislation enacted during the regular legislative session
preceding the current fiscal biennium and any special sessions of
that legislature, including any contingent appropriations
certified before the determination date; and
(3) if the amount estimated under Subdivision (1) is
greater than or equal to the amount determined under Subdivision
(2), certify that sufficient probable revenue is available for tax
rate adjustments under Subsection (c).
(c) Effective January 1 of each year in which the
comptroller certifies under Subsection (b)(3) that sufficient
probable revenue is available for tax rate adjustments for that
year:
(1) the rate of the franchise tax under Section
171.002(a) is adjusted by subtracting 0.025 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 0.0125 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 0.011 from the rate in
effect on December 31 of the previous year.
(d) The tax rates determined under Subsection (c):
(1) apply to a report originally due on or after
January 1 of the year the comptroller's certification under
Subsection (b)(3) is made; 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.
(e) If the comptroller does not make the certification under
Subsection (b)(3), the rates of the franchise tax in effect on
December 31 of the previous year remain in effect for the year in
which the determination date occurs.
(f) Notwithstanding Subsection (c), if an adjustment
otherwise required by Subsection (c) would reduce a rate of the
franchise tax to less than zero, the rate is instead reduced to
zero.
(g) Notwithstanding any other law, if the rates of the
franchise tax under Section 171.002 are reduced to zero under
Subsection (c) or (f), 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, regardless of
whether the taxable entity would have computed the tax owed based on
a rate provided by Section 171.002 or a rate provided by Section
171.1016.
(h) The comptroller shall make the determinations and
estimates required by Subsections (b) and (f) and may adopt rules
related to making those determinations and estimates. 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.
(i) In the state fiscal year in which the rates of the
franchise tax under Section 171.002 are reduced to zero under
Subsection (c) or (f):
(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.
(j) 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 Section 171.002 are reduced to zero under Section 171.004(c)
or (f).
SECTION 5. (a) Chapter 171, Tax Code, 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.