Texas House Bill HB1089

Texas 2019 - 86th Regular

Caption

Relating to the classification of certain entities as primarily engaged in retail trade for purposes of the franchise tax.

Impact

The amendment stipulates specific sectors such as apparel rental, heavy construction equipment rental, and rental activities related to industrial uniforms which could affect the tax liabilities of businesses operating within these industries. By clearly defining what constitutes retail trade, the bill seeks to provide greater consistency in how businesses are classified and taxed, potentially streamlining compliance for Texas businesses engaged in retail functions.

Summary

House Bill 1089 aims to clarify the classification of certain entities as primarily engaged in retail trade for the purpose of the franchise tax in Texas. The bill specifically amends Section 171.0001(12) of the Tax Code to expand the definition of 'retail trade' to include various activities that are listed in the 1987 Standard Industrial Classification Manual published by the federal Office of Management and Budget. This update is particularly important for businesses that fall under categories specified in the amendment, as it directly influences their tax obligations.

Contention

There may be points of contention surrounding the interpretation of what constitutes retail trade, especially in lightly regulated sectors or emerging business models that could be classified differently under the updated provisions. Stakeholders in sectors not mentioned in the updated definition might express concerns about the implications of this classification on their operations. Furthermore, there may be discussions regarding whether the amendments create any unintended consequences that could favor certain businesses over others.