Bill Text: TX SB5 | 2023-2024 | 88th Legislature | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Relating to an exemption from ad valorem taxation of a portion of the appraised value of tangible personal property that is held or used for the production of income and a franchise tax credit for the payment of certain related ad valorem taxes.
Spectrum: Slight Partisan Bill (Republican 18-10)
Status: (Engrossed - Dead) 2023-04-10 - Referred to Ways & Means [SB5 Detail]
Download: Texas-2023-SB5-Introduced.html
Bill Title: Relating to an exemption from ad valorem taxation of a portion of the appraised value of tangible personal property that is held or used for the production of income and a franchise tax credit for the payment of certain related ad valorem taxes.
Spectrum: Slight Partisan Bill (Republican 18-10)
Status: (Engrossed - Dead) 2023-04-10 - Referred to Ways & Means [SB5 Detail]
Download: Texas-2023-SB5-Introduced.html
88R17159 RDS-F | ||
By: Parker, et al. | S.B. No. 5 |
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relating to an exemption from ad valorem taxation of a portion of | ||
the appraised value of tangible personal property a person owns | ||
that is held or used for the production of income and a franchise | ||
tax credit for the payment of certain related ad valorem taxes. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
ARTICLE 1. INCOME-PRODUCING TANGIBLE PERSONAL PROPERTY AD VALOREM | ||
TAX EXEMPTION | ||
SECTION 1.01. The heading to Section 11.145, Tax Code, is | ||
amended to read as follows: | ||
Sec. 11.145. INCOME-PRODUCING TANGIBLE PERSONAL PROPERTY | ||
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SECTION 1.02. Section 11.145(a), Tax Code, is amended to | ||
read as follows: | ||
(a) A person is entitled to an exemption from taxation of | ||
$25,000 of the appraised value of tangible personal property the | ||
person owns that is held or used for the production of income [ |
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SECTION 1.03. Section 22.01, Tax Code, is amended by adding | ||
Subsection (j-1) to read as follows: | ||
(j-1) A person is required to render tangible personal | ||
property the person owns that is held or used for the production of | ||
income only if, in the person's opinion, the aggregate market value | ||
of the property in at least one taxing unit that participates in the | ||
appraisal district is greater than the amount exempted under | ||
Section 11.145(a). A person required to render property for | ||
taxation under this subsection must render all tangible personal | ||
property the person owns that is held or used for the production of | ||
income and has taxable situs in the appraisal district. This | ||
subsection does not apply to property exempt from taxation under a | ||
provision of law other than Section 11.145. | ||
SECTION 1.04. This article applies only to ad valorem taxes | ||
imposed for a tax year that begins on or after the effective date of | ||
this article. | ||
SECTION 1.05. This article takes effect January 1, 2024, | ||
but only if the constitutional amendment proposed by the 88th | ||
Legislature, Regular Session, 2023, to authorize the legislature to | ||
exempt from ad valorem taxation a portion of the market value of | ||
tangible personal property a person owns that is held or used for | ||
the production of income is approved by the voters. If that | ||
amendment is not approved by the voters, this article has no effect. | ||
ARTICLE 2. FRANCHISE TAX CREDIT FOR INVENTORY AD VALOREM TAX | ||
LIABILITY | ||
SECTION 2.01. Chapter 171, Tax Code, is amended by adding | ||
Subchapter N to read as follows: | ||
SUBCHAPTER N. TAX CREDIT FOR INVENTORY TAX LIABILITY | ||
Sec. 171.701. DEFINITION. In this subchapter, "inventory" | ||
means: | ||
(1) a finished good held for sale or resale, | ||
including: | ||
(A) a dealer's motor vehicle inventory, as | ||
defined by Section 23.121; | ||
(B) a dealer's vessel and outboard motor | ||
inventory, as defined by Section 23.124; | ||
(C) a dealer's heavy equipment inventory, as | ||
defined by Section 23.1241; or | ||
(D) retail manufactured housing inventory, as | ||
defined by Section 23.127; | ||
(2) a raw or finished material held to be incorporated | ||
into or attached to tangible personal property to create a finished | ||
good; or | ||
(3) residential real property inventory described by | ||
Section 23.12(a). | ||
Sec. 171.702. ELIGIBILITY FOR CREDIT. A taxable entity is | ||
entitled to a credit in the amount and under the conditions provided | ||
by this subchapter against the tax imposed under this chapter. | ||
Sec. 171.703. AMOUNT OF CREDIT; LIMITATIONS. (a) Subject | ||
to Subsections (b) and (c), the amount of a taxable entity's credit | ||
for a report is equal to 20 percent of the amount of ad valorem taxes | ||
paid by the entity during the period on which the report is based | ||
that are derived from the taxable value of the inventory owned by | ||
the entity and located in this state. | ||
(b) The total credit claimed on a report, including the | ||
amount of any carryforward under Section 171.704, may not exceed 20 | ||
percent of the amount of franchise tax due for the report after | ||
applying all other applicable credits. | ||
(c) The total amount of credits that may be awarded under | ||
Subsection (a) in a state fiscal year may not exceed $400 million. | ||
(d) The comptroller by rule shall prescribe procedures by | ||
which the comptroller will allocate the amount of credits available | ||
under Subsection (c). The procedures must provide that credits are | ||
allocated to taxable entities on a first-come, first-served basis, | ||
based on the date the entity applies for the credit. | ||
Sec. 171.704. CARRYFORWARD. (a) If a taxable entity is | ||
eligible for a credit that exceeds the limitation under Section | ||
171.703(b), the entity may carry the unused credit forward for not | ||
more than five consecutive reports. | ||
(b) A carryforward is considered the remaining portion of a | ||
credit that cannot be claimed in the current year because of the | ||
limitation under Section 171.703(b). | ||
(c) Credits, including a carryforward, are considered to be | ||
used in the following order: | ||
(1) a carryforward under this subchapter; and | ||
(2) a current year credit. | ||
Sec. 171.705. APPLICATION FOR CREDIT. (a) A taxable entity | ||
must apply for the credit under this subchapter on or with the | ||
report for the period for which the credit is claimed. | ||
(b) The comptroller shall prescribe the form and method for | ||
applying for a credit under this subchapter. A taxable entity must | ||
use the form in applying for the credit. | ||
(c) The comptroller may require the taxable entity to | ||
include any other information the comptroller determines is | ||
necessary to demonstrate: | ||
(1) whether the entity is eligible for the credit; and | ||
(2) the amount of the credit. | ||
(d) The burden of establishing eligibility for and the | ||
amount of the credit is on the taxable entity. | ||
(e) The comptroller may request permission to examine the | ||
books and records of a taxable entity as necessary to determine | ||
whether the entity is entitled to a credit under this subchapter and | ||
the amount of the credit. The comptroller may disallow the credit | ||
if the taxable entity refuses to allow the comptroller to examine | ||
the books and records. | ||
Sec. 171.706. SALE OR ASSIGNMENT PROHIBITED. A taxable | ||
entity that earns a credit under this subchapter may not sell or | ||
assign any part of the credit. | ||
Sec. 171.707. RULES. The comptroller shall adopt rules as | ||
necessary to implement and administer this subchapter. | ||
SECTION 2.02. Subchapter N, Chapter 171, Tax Code, as added | ||
by this article, applies only to a report originally due on or after | ||
the effective date of this article. | ||
SECTION 2.03. This article takes effect January 1, 2024. |