Texas 2021 - 87th Regular

Texas House Bill HB1671 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	87R3748 CJC-D
2	2	By: Holland H.B. No. 1671
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to an exemption from the franchise tax and certain filing
8	8	fees for certain businesses owned by veterans during an initial
9	9	period of operation in the state.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Subchapter A, Chapter 12, Business Organizations
12	12	Code, is amended by adding Section 12.005 to read as follows:
13	13	Sec. 12.005. FEE WAIVER FOR NEW VETERAN-OWNED BUSINESS.
14	14	The secretary of state shall waive all fees imposed under
15	15	Subchapter D, Chapter 4, for an entity that is a new veteran-owned
16	16	business as defined by Section 171.0005, Tax Code, until the
17	17	earlier of:
18	18	(1) the fifth anniversary of the date on which the
19	19	entity was formed; or
20	20	(2) the date the entity ceases to qualify as a new
21	21	veteran-owned business as defined by Section 171.0005, Tax Code.
22	22	SECTION 2. Section 171.0001(4), Tax Code, is amended to
23	23	read as follows:
24	24	(4) "Beginning date" means:
25	25	(A) except as provided by Paragraph (B):
26	26	(i) for a taxable entity chartered or
27	27	organized in this state, the date on which the taxable entity's
28	28	charter or organization takes effect; and
29	29	(ii) [(B)] for any other taxable entity,
30	30	the date on which the taxable entity begins doing business in this
31	31	state; or
32	32	(B) for a taxable entity that qualifies as a new
33	33	veteran-owned business as defined by Section 171.0005, the earlier
34	34	of:
35	35	(i) the fifth anniversary of the date on
36	36	which the taxable entity begins doing business in this state; or
37	37	(ii) the date the taxable entity ceases to
38	38	qualify as a new veteran-owned business as defined by Section
39	39	171.0005.
40	40	SECTION 3. Effective January 1, 2026, Section 171.0001(4),
41	41	Tax Code, is amended to read as follows:
42	42	(4) "Beginning date" means:
43	43	(A) for a taxable entity chartered or organized
44	44	in this state, the date on which the taxable entity's charter or
45	45	organization takes effect; and
46	46	(B) for any other taxable entity, the date on
47	47	which the taxable entity begins doing business in this state.
48	48	SECTION 4. Subchapter A, Chapter 171, Tax Code, is amended
49	49	by adding Section 171.0005 to read as follows:
50	50	Sec. 171.0005. DEFINITION OF NEW VETERAN-OWNED BUSINESS.
51	51	(a) A taxable entity is a new veteran-owned business only if the
52	52	taxable entity is a new business in which each owner is a natural
53	53	person who:
54	54	(1) served in and was honorably discharged from a
55	55	branch of the United States armed forces; and
56	56	(2) provides verification to the comptroller of the
57	57	person's service and discharge required by Subdivision (1).
58	58	(b) The Texas Veterans Commission shall provide to a person
59	59	who meets the requirements of Subsection (a)(1) written
60	60	verification of that status in a form required by the comptroller.
61	61	The comptroller shall adopt rules prescribing the form and content
62	62	of the verification and the manner in which the verification may be
63	63	provided to the comptroller.
64	64	(c) For purposes of Subsection (a), a new business is a
65	65	taxable entity that:
66	66	(1) is chartered or organized or otherwise formed in
67	67	this state; and
68	68	(2) first begins doing business in this state on or
69	69	after January 1, 2022.
70	70	SECTION 5. Section 171.001, Tax Code, is amended by adding
71	71	Subsection (d) to read as follows:
72	72	(d) Notwithstanding Subsection (a), the tax imposed under
73	73	this chapter is not imposed on a taxable entity that qualifies as a
74	74	new veteran-owned business as defined by Section 171.0005 until the
75	75	earlier of:
76	76	(1) the fifth anniversary of the date on which the
77	77	taxable entity begins doing business in this state; or
78	78	(2) the date the taxable entity ceases to qualify as a
79	79	new veteran-owned business as defined by Section 171.0005.
80	80	SECTION 6. Section 171.063(g), Tax Code, is amended to read
81	81	as follows:
82	82	(g) If a corporation's federal tax exemption is withdrawn by
83	83	the Internal Revenue Service for failure of the corporation to
84	84	qualify or maintain its qualification for the exemption, the
85	85	corporation's exemption under this section ends on the effective
86	86	date of that withdrawal by the Internal Revenue Service. The
87	87	effective date of the withdrawal is considered the corporation's
88	88	beginning date for purposes of determining the corporation's
89	89	privilege periods and for all other purposes of this chapter,
90	90	except that if the corporation would have been subject to Section
91	91	171.001(d) in the absence of the federal tax exemption, and the
92	92	effective date of the withdrawal is a date earlier than the date the
93	93	corporation would have become subject to the franchise tax as
94	94	provided by Section 171.001(d), the date the corporation would have
95	95	become subject to the franchise tax under that section is
96	96	considered the corporation's beginning date for those purposes.
97	97	SECTION 7. Effective January 1, 2026, Section 171.063(g),
98	98	Tax Code, is amended to read as follows:
99	99	(g) If a corporation's federal tax exemption is withdrawn by
100	100	the Internal Revenue Service for failure of the corporation to
101	101	qualify or maintain its qualification for the exemption, the
102	102	corporation's exemption under this section ends on the effective
103	103	date of that withdrawal by the Internal Revenue Service. The
104	104	effective date of the withdrawal is considered the corporation's
105	105	beginning date for purposes of determining the corporation's
106	106	privilege periods and for all other purposes of this chapter.
107	107	SECTION 8. Section 171.204, Tax Code, is amended by adding
108	108	Subsection (d) to read as follows:
109	109	(d) The comptroller may require a taxable entity on which
110	110	the tax imposed under this chapter is not imposed solely because of
111	111	the application of Section 171.001(d) to file an information report
112	112	stating the taxable entity's beginning date as determined under
113	113	Section 171.0001(4)(B) and any other information the comptroller
114	114	determines necessary. The comptroller may not require the taxable
115	115	entity to report or compute its margin.
116	116	SECTION 9. Effective January 1, 2026, the following
117	117	provisions are repealed:
118	118	(1) Section 12.005, Business Organizations Code;
119	119	(2) Section 171.0005, Tax Code;
120	120	(3) Section 171.001(d), Tax Code; and
121	121	(4) Section 171.204(d), Tax Code.
122	122	SECTION 10. The changes in law made by this Act that take
123	123	effect January 1, 2026, do not apply to a business that first
124	124	qualifies before that date as a new veteran-owned business as
125	125	defined by Section 171.0005, Tax Code, as that section exists
126	126	immediately before that date. A business that first qualifies
127	127	before January 1, 2026, as a new veteran-owned business is governed
128	128	by the law in effect immediately before that date, and that law is
129	129	continued in effect for that purpose.
130	130	SECTION 11. Except as otherwise provided by this Act, this
131	131	Act takes effect January 1, 2022.