Texas House Bill HB1195

Texas 2021 - 87th Regular

Caption

Relating to the franchise tax treatment of certain loans and grants made under the federal Coronavirus Aid, Relief, and Economic Security Act.

Impact

The enactment of HB 1195 would primarily relieve businesses from reporting certain federal loan and grant proceeds as revenue, thereby potentially reducing their taxable income. By allowing expenses funded by these proceeds to be included as costs of goods sold or compensation, the bill aims to encourage economic recovery and support affected industries. This law applies specifically to entities that received funds as part of COVID-19 related relief programs, thus directly impacting their financial reporting and tax obligations.

Summary

House Bill 1195 is designed to amend the Texas Tax Code regarding the franchise tax treatment of loans and grants received under the federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The bill seeks to provide clarity and alleviate tax burdens for taxable entities by allowing them to exclude qualifying loan or grant proceeds from total revenue calculations, which effectively affects how these entities report income during tax filing. This change aims to support businesses that received federal assistance, acknowledging the significant impact of the COVID-19 pandemic on the economy.

Sentiment

Overall, the sentiment around HB 1195 appears to be positive, particularly among business owners and economic development advocates who view the bill as a necessary step to foster recovery. Legislators have recognized the unprecedented economic challenges posed by the pandemic and the importance of providing aid to businesses. The broad support for the bill, reflected in the voting records from both the House and Senate, suggests that there is a consensus on the need for continued assistance during the recovery period.

Contention

While HB 1195 received overwhelming support, potential points of contention may arise from other stakeholders concerned about long-term fiscal implications of tax relief measures. Some might argue that repeatedly excluding federal assistance from taxable income could set a precedent for future relief efforts, complicating fiscal policy and budgeting at the state level. However, such concerns were not significantly voiced during the discussions surrounding the bill, indicating a focus on immediate economic recovery efforts.