| 3 | 3 | | |
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| 4 | 4 | | |
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| 5 | 5 | | A BILL TO BE ENTITLED |
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| 6 | 6 | | AN ACT |
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| 7 | 7 | | relating to the exemption from the franchise tax and certain filing |
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| 8 | 8 | | fees for certain businesses owned by veterans during an initial |
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| 9 | 9 | | period of operation in the state. |
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| 10 | 10 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 11 | 11 | | SECTION 1. Effective January 1, 2022, Section 171.0001(4), |
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| 12 | 12 | | Tax Code, is amended to read as follows: |
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| 13 | 13 | | (4) "Beginning date" means: |
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| 14 | 14 | | (A) [except as provided by Paragraph (B): |
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| 15 | 15 | | [(i)] for a taxable entity chartered or |
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| 16 | 16 | | organized in this state, the date on which the taxable entity's |
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| 17 | 17 | | charter or organization takes effect; and |
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| 18 | 18 | | (B) [(ii)] for any other taxable entity, the date |
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| 19 | 19 | | on which the taxable entity begins doing business in this state[; or |
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| 20 | 20 | | [(B) for a taxable entity that qualifies as a new |
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| 21 | 21 | | veteran-owned business as defined by Section 171.0005, the earlier |
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| 22 | 22 | | of: |
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| 23 | 23 | | [(i) the fifth anniversary of the date on |
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| 24 | 24 | | which the taxable entity begins doing business in this state; or |
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| 25 | 25 | | [(ii) the date the taxable entity ceases to |
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| 26 | 26 | | qualify as a new veteran-owned business as defined by Section |
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| 27 | 27 | | 171.0005]. |
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| 28 | 28 | | SECTION 2. Section 171.0005(a), Tax Code, is amended to |
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| 29 | 29 | | read as follows: |
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| 30 | 30 | | (a) A taxable entity is a new veteran-owned business only if |
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| 31 | 31 | | the taxable entity is a new business, at least 51 percent of which |
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| 32 | 32 | | is owned by one or more natural persons, and each of whom [in which |
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| 33 | 33 | | each owner is a natural person who]: |
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| 34 | 34 | | (1) served in and was honorably discharged from a |
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| 35 | 35 | | branch of the United States armed forces; and |
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| 36 | 36 | | (2) provides verification to the comptroller of the |
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| 37 | 37 | | person's service and discharge required by Subdivision (1). |
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| 38 | 38 | | SECTION 3. Effective January 1, 2022, Section 171.063(g), |
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| 39 | 39 | | Tax Code, is amended to read as follows: |
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| 40 | 40 | | (g) If a corporation's federal tax exemption is withdrawn by |
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| 41 | 41 | | the Internal Revenue Service for failure of the corporation to |
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| 42 | 42 | | qualify or maintain its qualification for the exemption, the |
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| 43 | 43 | | corporation's exemption under this section ends on the effective |
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| 44 | 44 | | date of that withdrawal by the Internal Revenue Service. The |
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| 45 | 45 | | effective date of the withdrawal is considered the corporation's |
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| 46 | 46 | | beginning date for purposes of determining the corporation's |
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| 47 | 47 | | privilege periods and for all other purposes of this chapter[, |
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| 48 | 48 | | except that if the corporation would have been subject to Section |
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| 49 | 49 | | 171.001(d) in the absence of the federal tax exemption, and the |
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| 50 | 50 | | effective date of the withdrawal is a date earlier than the date the |
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| 51 | 51 | | corporation would have become subject to the franchise tax as |
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| 52 | 52 | | provided by Section 171.001(d), the date the corporation would have |
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| 53 | 53 | | become subject to the franchise tax under that section is |
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| 54 | 54 | | considered the corporation's beginning date for those purposes]. |
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| 55 | 55 | | SECTION 4. Effective January 1, 2022, the following |
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| 56 | 56 | | sections are repealed: |
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| 57 | 57 | | (1) Section 171.0005, Tax Code, as amended by this |
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| 58 | 58 | | Act; |
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| 59 | 59 | | (2) Section 171.001(d), Tax Code; |
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| 60 | 60 | | (3) Section 171.204(d), Tax Code; and |
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| 61 | 61 | | (4) Section 12.005, Business Organizations Code. |
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| 62 | 62 | | SECTION 5. The following provisions of Chapter 329 (S.B. |
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| 63 | 63 | | 1049), Acts of the 84th Legislature, Regular Session, 2015, are |
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| 64 | 64 | | repealed: |
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| 65 | 65 | | (1) Section 2, which amended Section 171.0001(4), Tax |
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| 66 | 66 | | Code, effective January 1, 2020; |
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| 67 | 67 | | (2) Section 6, which amended Section 171.063(g), Tax |
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| 68 | 68 | | Code, effective January 1, 2020; |
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| 69 | 69 | | (3) Section 9, which provided for the repeal of |
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| 70 | 70 | | certain laws effective January 1, 2020; and |
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| 71 | 71 | | (4) Section 10, which provided a transition provision. |
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| 72 | 72 | | SECTION 6. The changes in law made by this Act that take |
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| 73 | 73 | | effect January 1, 2022, do not apply to a business that first |
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| 74 | 74 | | qualifies before that date as a new veteran-owned business as |
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| 75 | 75 | | defined by Section 171.0005, Tax Code, as that section exists |
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| 76 | 76 | | immediately before that date. A business that first qualifies |
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| 77 | 77 | | before January 1, 2022, as a new veteran-owned business is governed |
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| 78 | 78 | | by the law in effect immediately before that date, and that law is |
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| 79 | 79 | | continued in effect for that purpose. |
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| 80 | 80 | | SECTION 7. Except as otherwise provided by this Act, this |
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| 81 | 81 | | Act takes effect September 1, 2019. |
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