HBA-RBT, RAR C.S.H.B. 551 76(R)BILL ANALYSIS


Office of House Bill AnalysisC.S.H.B. 551
By: Goolsby
Ways & Means
4/9/1999
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

Currently, corporations are not required to pay the franchise tax for a
period if the computed tax for that period is less than $100.  C.S.H.B. 551
provides that corporations are not required to pay the franchise tax if the
corporation's gross receipts are less than $100,000, until January 1, 2006,
when current law is reinstated.  This bill requires the comptroller to file
a report with the governor and the legislature regarding the effectiveness
of exempting these corporations from the franchise tax.   

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

ARTICLE 1

SECTION 1.01.  Amends Section 171.002(d), Tax Code, to provide that a
corporation is not required to pay or considered to owe any tax for a
period if the amount of tax computed for the corporation is less than $100;
or if the amount of the corporation's gross receipts from its entire
business under Section 171.105, Tax Code (Determination of Gross Receipts
From Entire Business for Taxable Capital), and under Section 171.1051,
including the amount excepted under Section 171.1051(a), Tax Code
(Determination of Gross Receipts From Entire Business for Taxable Earned
Surplus), is  
less than $100,000; rather than if the amount of tax computed for a
corporation is less than $100, the corporation is not required to pay that
amount or considered to owe any tax for that period.  Makes nonsubstantive
changes. 

SECTION 1.02.  Amends Section 171.203(a), Tax Code, to specify that a
corporation on which the franchise tax is imposed is required to file a
report regardless of whether the corporation is required to pay the tax. 

SECTION 1.03.  Amends Section 171.204, Tax Code, to authorize the
comptroller to require an officer of a corporation that does not owe any
tax because of the application of Section 171.002(d)(2) to file an
abbreviated information report with the comptroller stating the amount of
the corporation's gross receipts from its entire business.  Prohibits the
comptroller from requiring a corporation described by this subsection to
file an information report that requires the corporation to report or
compute its earned surplus or taxable capital. 

SECTION 1.04.  Article 1 effective date: January 1, 2000.
                 Makes application of this Article prospective.  

ARTICLE 2

SECTION 2.01.  Amends Section 171.002(d), Tax Code, to reinstate this
section to current law, rather than the amendments made by ARTICLE 1. 

SECTION 2.02.  Amends Section 171.204, Tax Code, to reinstate this section
to current law, rather than the amendments made by ARTICLE 1. 
 
SECTION 2.03.  Article 2 effective date: January 1, 2006.
                  Makes application of this Article prospective.

ARTICLE 3

SECTION 3.01.  Requires the comptroller of public accounts to report to the
legislature and the governor before the beginning of the 79th Legislature,
Regular Session, on the effect that exempting small corporations from the
franchise tax under Section 171.002, Tax Code, as amended by this Act, and
limiting the reporting requirements of those corporations have on the
economy of this state, including on the creation of new jobs.  Provides the
required information for the report.  Authorizes the comptroller to include
the report in any other report made to the legislature. 

SECTION 3.02.  Emergency clause.

COMPARISON OF ORIGINAL TO SUBSTITUTE

The substitute redesignates SECTION 1 of the original as SECTION 1.01.

The substitute modifies the original by adding  SECTION 1.02 and SECTION
1.03 which amend Sections 171.203(a) and 171.204, Tax Code, which require
the exempted corporations to file abbreviated reports, effective January 1,
2000(as per SECTION 1.04).   

The substitute modifies the original by adding Article 2 which reinstates
current Sections 171.002(d) and 171.204, Tax Code, regarding the franchise
tax, effective January 1, 2006. 

The substitute modifies the original by adding Article 3, which requires
the comptroller to file a report with the legislature and the governor
before the beginning of the 79th Legislature, Regular Session, detailing
the effectiveness of the exemption.