Bill Text: TX SB330 | 2015-2016 | 84th Legislature | Introduced


Bill Title: Relating to the computation of the franchise tax.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2015-03-04 - Left pending in committee [SB330 Detail]

Download: Texas-2015-SB330-Introduced.html
 
 
  By: Creighton S.B. No. 330
 
 
 
   
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the computation of the franchise tax.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 171.101(a), Tax Code, is 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
  computed by determining the taxable entity's total revenue from its
  entire business, as determined under Section 171.1011, and
  subtracting an amount equal to the sum of:
                     (A)  $1 million;
                     (B)  cost of goods sold, as determined under
  Section 171.1012; and
                     (C)  compensation, as determined under Section
  171.1013 [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 $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)  $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.
         SECTION 2.  Section 171.1011(v), Tax Code, is amended to
  read as follows:
         (v)  A taxable entity primarily engaged in the business of
  transporting goods by waterways [that does not subtract cost of
  goods sold in computing its taxable margin] shall exclude from its
  total revenue direct costs of providing transportation services by
  intrastate or interstate waterways to the same extent that a
  taxable entity that sells in the ordinary course of business real or
  tangible personal property is [would be] authorized by Section
  171.1012 to subtract those costs as costs of goods sold in computing
  its taxable margin, notwithstanding Section 171.1012(e)(3).
         SECTION 3.  Sections 171.1012(b), (k), (o), and (t), Tax
  Code, are amended to read as follows:
         (b)  Subject to Section 171.1014, a taxable entity shall
  determine the amount of [that elects to subtract] cost of goods sold
  as provided by this section for the purpose of computing its taxable
  margin [shall determine the amount of that cost of goods sold as
  provided by this section].
         (k)  Notwithstanding any other provision of this section, a
  [if the] taxable entity that is a lending institution and that
  offers loans to the public [and elects to subtract cost of goods
  sold, the entity], other than an entity primarily engaged in an
  activity described by category 5932 of the 1987 Standard Industrial
  Classification Manual published by the federal Office of Management
  and Budget, may subtract as a cost of goods sold an amount equal to
  interest expense.  For purposes of this subsection, an entity
  engaged in lending to unrelated parties solely for agricultural
  production offers loans to the public.
         (o)  The cost of goods sold for [If] a taxable entity,
  including a taxable entity with respect to which cost of goods sold
  is determined pursuant to Section 171.1014(e)(1), whose principal
  business activity is film or television production or broadcasting
  or the distribution of tangible personal property described by
  Subsection (a)(3)(A)(ii), or any combination of these activities,
  [elects to subtract cost of goods sold, the cost of goods sold for
  the taxable entity] shall be the costs described in this section in
  relation to the property and include depreciation, amortization,
  and other expenses directly related to the acquisition, production,
  or use of the property, including expenses for the right to
  broadcast or use the property.
         (t)  The cost of goods sold for [If] a taxable entity that is
  a movie theater [elects to subtract cost of goods sold, the cost of
  goods sold for the taxable entity] shall be the costs described by
  this section in relation to the acquisition, production,
  exhibition, or use of a film or motion picture, including expenses
  for the right to use the film or motion picture.
         SECTION 4.  Sections 171.1013(b), (b-1), (c-1), and (h), Tax
  Code, are amended to read as follows:
         (b)  Subject to Section 171.1014, [a taxable entity that
  elects to subtract compensation] for the purpose of computing its
  taxable margin under Section 171.101 a taxable entity shall [may]
  subtract an amount of compensation equal to:
               (1)  subject to the limitation in Subsection (c), all
  wages and cash compensation paid by the taxable entity to its
  officers, directors, owners, partners, and employees; and
               (2)  the cost of all benefits, to the extent deductible
  for federal income tax purposes, the taxable entity provides to its
  officers, directors, owners, partners, and employees, including
  workers' compensation benefits, health care, employer
  contributions made to employees' health savings accounts, and
  retirement.
         (b-1)  This subsection applies to a taxable entity that is a
  small employer, as that term is defined by Section 1501.002,
  Insurance Code, and that has not provided health care benefits to
  any of its employees in the calendar year preceding the beginning
  date of its reporting period.  Subject to Section 171.1014, [a
  taxable entity to which this subsection applies that elects to
  subtract compensation] for the purpose of computing its taxable
  margin under Section 171.101 a taxable entity to which this
  subsection applies may subtract health care benefits as provided
  under Subsection (b) and may also subtract:
               (1)  for the first 12-month period on which margin is
  based and in which the taxable entity provides health care benefits
  to all of its employees, an additional amount equal to 50 percent of
  the cost of health care benefits provided to its employees for that
  period; and
               (2)  for the second 12-month period on which margin is
  based and in which the taxable entity provides health care benefits
  to all of its employees, an additional amount equal to 25 percent of
  the cost of health care benefits provided to its employees for that
  period.
         (c-1)  Subject to Section 171.1014, [a taxable entity that
  elects to subtract compensation] for the purpose of computing its
  taxable margin under Section 171.101 a taxable entity may not
  subtract as compensation any wages or cash compensation paid to an
  undocumented worker.  As used in this section "undocumented
  worker" means a person who is not lawfully entitled to be present
  and employed in the United States.
         (h)  Subject to Section 171.1014, [a taxable entity that
  elects to subtract compensation] for the purpose of computing its
  taxable margin under Section 171.101 a taxable entity may not
  include as wages or cash compensation amounts paid to an employee
  whose primary employment is directly associated with the operation
  of a facility that is:
               (1)  located on property owned or leased by the federal
  government; and
               (2)  managed or operated primarily to house members of
  the armed forces of the United States.
         SECTION 5.  Sections 171.1014(d), (e), and (f), Tax Code,
  are amended to read as follows:
         (d)  For purposes of Section 171.101, a combined group shall
  [make an election to] subtract the sum of [either] cost of goods
  sold, as determined under Subsection (e),[or] compensation, as
  determined under Subsection (f) [that applies to all of its
  members, or] and $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].
         (e)  For purposes of Section 171.101, a combined group shall
  determine cost [that elects to subtract costs] of goods sold [shall
  determine that amount] by:
               (1)  determining the cost of goods sold for each of its
  members as provided by Section 171.1012 as if the member were an
  individual taxable entity;
               (2)  adding the amounts of cost of goods sold
  determined under Subdivision (1) together; and
               (3)  subtracting from the amount determined under
  Subdivision (2) any cost of goods sold amounts paid from one member
  of the combined group to another member of the combined group, but
  only to the extent the corresponding item of total revenue was
  subtracted under Subsection (c)(3).
         (f)  For purposes of Section 171.101, a combined group shall
  determine the amount of compensation [that elects] to subtract
  [compensation shall determine that amount] by:
               (1)  determining the compensation for each of its
  members as provided by Section 171.1013 as if each member were an
  individual taxable entity, subject to the limitation prescribed by
  Section 171.1013(c);
               (2)  adding the amounts of compensation determined
  under Subdivision (1) together; and
               (3)  subtracting from the amount determined under
  Subdivision (2) any compensation amounts paid from one member of
  the combined group to another member of the combined group, but only
  to the extent the corresponding item of total revenue was
  subtracted under Subsection (c)(3).
         SECTION 6.  Sections 171.101(b) and (d), Tax Code, are
  repealed.
         SECTION 7.  This Act applies only to a report originally due
  on or after the effective date of this Act.
         SECTION 8.  This Act takes effect January 1, 2016.
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