Franchise tax revisions … but not our own

A number of bills have been filed making changes to the new franchise tax, though we’ve yet to see the big corrections bill we recommended. The filing deadline was Friday, so if our bill is to be proposed, it will require two-thirds of the House to vote to suspend the rules to do so.

Among the great many revised franchise tax bills, the most significant may well be HB 2948 by Rep. Hill (R-Richardson), which clarifies the temporary credit. Under HB 2948, the temporary credit would be equal to the unused business loss carry-forwards pursuant to the last franchise tax return times 4.5%, and it could be claimed on the first tax return filed after Jan. 1, 2008 without prior notice. It would still have the requirement to use it pro rata over a ten year period and retain the 20 year period before the benefit would expire.

Other noteworthy franchise tax bills …

  • HB 1964 by McCall (R-Plano) attempts to exempt revenues and costs for vaccines from the margin tax. The way it’s worded, it might give a physician an exemption for the revenue from vaccines and the cost of the vaccine itself.
  • HB 2533 by Strama (D-Austin) allows deductions for independent contractor payments reported on 1099s, but only for businesses with total revenues of $2 million or less.
  • HB 2638 by Smithee (R-Amarillo) makes it clear that the $500 deduction lawyers get for pro bono cases applies only to pro bono cases and not all cases.
  • HB 2726 by Goolsby (R-Dallas) provides a franchise tax exemption for consortiums formed to serve private educational institutions.
  • HB 2777 by Heflin (D-Crosbyton) provides for a credit against the franchise tax equal to 10% of employees’ health care benefits provided by an employer with gross receipts less than $750,000.
  • HB 2841 by Villarreal (D-San Antonio) adds entities described by Sec. 501(a) and 501(c)(9) of the IRC or whose exclusive propose is to provide pension, health, disability or other benefits to the employees of one or more employers as non-taxable entities.
  • HB 2985 by Creighton (R-Conroe) excludes from taxable revenue almost all payments received by a commercial landlord from a tenant. Specifically excluded as flow-through revenue are “ad valorem taxes, franchise taxes, any tax or excise imposed on rents, general or special assessments or other taxes, operating expenses, including property and other insurance expenses, utilities, maintenance expenses, management expenses, and similar amounts generally expended for commercial real property.”
  • SB 1378 by Shapleigh (D-El Paso) makes specifically identified items deductible as cost of goods sold by certain defined entities doing business near the Mexican border that are also located and conduct 90% of their business in a “strategic investment area.”

We’re tracking all these bills and many, many more for you. Click here for just a sampling of this session’s bills of interest.

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