88R1133 BEF-D
By: Schwertner S.B. No. 1061
A BILL TO BE ENTITLED
AN ACT
relating to the computation of and total revenue exemption for the
franchise tax.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 171.002(d), Tax Code, is amended to read
as follows:
(d) A taxable entity is not required to pay any tax and is
not considered to owe any tax for a period if:
(1) the amount of tax computed for the taxable entity
is less than $1,000; or
(2) the amount of the taxable entity's total revenue
from its entire business is less than or equal to $2 [$1] million or
the amount determined under Section 171.006 per 12-month period on
which margin is based.
SECTION 2. Sections 171.101(a) and (b), Tax Code, are
amended to read as follows:
(a) The taxable margin of a taxable entity is computed by:
(1) determining the taxable entity's margin, which is
the lesser of:
(A) the amount provided by this paragraph, which
is the lesser of:
(i) 70 percent of the taxable entity's total
revenue from its entire business, as determined under Section
171.1011; or
(ii) an amount equal to the taxable entity's
total revenue from its entire business as determined under Section
171.1011 minus $2 [$1] million; or
(B) an amount computed by determining the
taxable entity's total revenue from its entire business under
Section 171.1011 and subtracting the greater of:
(i) $2 [$1] million; or
(ii) an amount equal to the sum of:
(a) at the election of the taxable
entity, either:
(1) cost of goods sold, as
determined under Section 171.1012; or
(2) compensation, as determined
under Section 171.1013; and
(b) any compensation, as determined
under Section 171.1013, paid to an individual during the period the
individual is serving on active duty as a member of the armed forces
of the United States if the individual is a resident of this state
at the time the individual is ordered to active duty and the cost of
training a replacement for the individual;
(2) apportioning the taxable entity's margin to this
state as provided by Section 171.106 to determine the taxable
entity's apportioned margin; and
(3) subtracting from the amount computed under
Subdivision (2) any other allowable deductions to determine the
taxable entity's taxable margin.
(b) Notwithstanding Subsection (a)(1)(B)(ii)(a), a
professional employer organization may subtract only the greater of
$2 [$1] million as provided by Subsection (a)(1)(B)(i) or
compensation as determined under Section 171.1013.
SECTION 3. Section 171.1014(d), Tax Code, is amended to
read as follows:
(d) For purposes of Section 171.101, a combined group shall
make an election to subtract either cost of goods sold or
compensation that applies to all of its members, or $2 [$1]
million. Regardless of the election, the taxable margin of the
combined group may not exceed the amount provided by Section
171.101(a)(1)(A) for the combined group.
SECTION 4. This Act applies only to a report originally due
on or after January 1, 2024.
SECTION 5. This Act takes effect January 1, 2024.