Part 1.
COMPTROLLER OF PUBLIC ACCOUNTS
Chapter 3.
TAX ADMINISTRATION
Subchapter V. FRANCHISE TAX
34 TAC §3.544
The Comptroller of Public Accounts proposes an amendment
to §3.544, concerning reports and payments. A new subsection, (a)(4),
has been added to the rule. This provision concerns corporations that will
not owe franchise tax because their gross receipts from the entire business
are less than $150,000. This amendment is in accordance with Senate Bill 441,
76th Legislature, 1999. Subsection (b)(1) has been amended to provide for
a variable annual interest rate on delinquent taxes for reports originally
due on or after January 1, 2000. This amendment is in accordance with Senate
Bill 1321, 76th Legislature, 1999.
Mike Reissig, Director of Estimates, has determined that for the first
five-year period the amendment will be in effect there will be no significant
revenue impact on the state or local government.
Mr. Reissig also has determined that for each year of the first five years
the amendment is in effect the public benefit anticipated as a result of adopting
the amendment will be in providing new information regarding tax responsibilities.
This amendment is adopted under the Tax Code, Title 2, and does not require
a statement of fiscal implications for small businesses. There is no significant
anticipated economic cost to individuals who are required to comply with the
proposed amendment.
Comments on the proposal may be submitted to Bryant K. Lomax, Manager,
Tax Policy Division, P.O. Box 13528, Austin, Texas, 78711.
This amendment is proposed under the Tax Code, §111.002,
which provides the comptroller with the authority to prescribe, adopt, and
enforce rules relating to the administration and enforcement of the provisions
of the Tax Code, Title 2.
The amendment implements the Tax Code, §171.002 and §111.060.
§3.544.Reports and Payments.
(a)
Reports and due dates.
(1)-(3)
(No change.)
(4)
For reports originally due on or
after January 1, 2000, a corporation will not owe any tax if the gross receipts
from its entire business for both taxable capital and taxable earned surplus
are each less than $150,000 during the accounting period upon which the report
is based. A corporation that does not owe any tax under this subsection must
file an information report as authorized by subsection (a)(3) of this section.
(A)
For purposes of computing gross receipts from its entire
business for taxable earned surplus under this subsection, a corporation must
include any gross receipts that would otherwise be excluded from the apportionment
factor under the Tax Code, §171.1061, concerning the allocation of certain
taxable earned surplus to this state.
(B)
A corporation whose gross receipts from its entire business
for taxable capital are $150,000 or greater will be required to compute its
tax on both tax base components as provided for under the Tax Code, §171.002(b),
even though its gross receipts from its entire business for taxable earned
surplus are less than $150,000. For example, if a corporation's gross receipts
from its entire business for taxable capital are $175,000 and its gross receipts
from its entire business for taxable earned surplus are $125,000, the corporation
must compute its tax on both taxable capital and taxable earned surplus.
(C)
A corporation whose gross receipts from its entire business
for taxable earned surplus are $150,000 or greater will be required to compute
its tax on both tax base components as provided for under the Tax Code, §171.002(b),
even though its gross receipts from its entire business for taxable capital
are less than $150,000. For example, if a corporation's gross receipts from
its entire business for taxable earned surplus are $175,000 and its gross
receipts from its entire business for taxable capital are $125,000, the corporation
must compute its tax on both taxable capital and taxable earned surplus.
(b)
Penalty and interest
on delinquent taxes
.
(1)
The Tax Code, §171.362, imposes a 5.0% penalty on
the amount of franchise tax due by a corporation which fails to report or
pay the tax when due. If any part of the tax is not reported or paid within
30 days after the due date, an additional 5.0% penalty is imposed on the amount
of tax unpaid. There is a minimum penalty of $1.00. Delinquent taxes accrue
interest beginning 60 days after the due date. For example, if payment is
made on the 61st day after the due date, one day's interest is due.
(A)
For reports originally due on or before
December 31, 1999, the following rates of interest are in effect as indicated.
Simple interest accrues at an annual rate of 6.0% through March 31,
1980; at an annual rate of 7.0% from April 1, 1980-December 31, 1981; and,
beginning January 1, 1982, at 10% per annum, for taxes due before September
1, 1991. For taxes due on or after September 1, 1991, simple interest accrues
at an annual rate of 12% on all delinquent taxes.
(B)
For reports originally due on or after
January 1, 2000, the annual rate of interest on delinquent taxes is the prime
rate plus one percent, as published in
The Wall Street
Journal
on the first day of each calendar year that is not a Saturday,
Sunday, or legal holiday.
(2)-(6)
(No change.)
(c)-(j)
(No change.)
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State, on January 14, 2000.
TRD-200000300
Martin Cherry
Special Counsel
Comptroller of Public Accounts
Earliest possible date of adoption: February 27, 2000
For further information, please call: (512) 463-4062
34 TAC §3.560
The Comptroller of Public Accounts proposes an amendment
to §3.560, concerning banking corporations. The amendment is in accordance
with House Bill 2067, 76th Legislature, 1999, including a revised definition
of "banking corporation" in subsection (b)(1), a new apportionment requirement
for dividends and interest in subsection (f), and new enforcement guidelines
in subsection (h). The bill repealed §171.1031 which apportioned dividends
and interest to the bank's commercial domicile. A definition of "legal domicile"
has been added to subsection (b) because of the new apportionment requirement
for dividends and interest. The legislation states that these new provisions
apply to reports originally due on or after January 1, 2000.
Mike Reissig, Director of Estimates, has determined that for the first
five-year period the amendment will be in effect there will be no significant
revenue impact on the state or local government.
Mr. Reissig also has determined that for each year of the first five years
the amendment is in effect the public benefit anticipated as a result of adopting
the amendment will be in providing clarification of Comptroller policy related
to banking corporations. This amendment is adopted under the Tax Code, Title
2, and does not require a statement of fiscal implications for small businesses.
There is no significant anticipated economic cost to individuals who are required
to comply with the proposed amendment.
Comments on the proposal may be submitted to Bryant K. Lomax, Manager,
Tax Policy Division, P.O. Box 13528, Austin, Texas, 78711.
This amendment is proposed under the Tax Code, §111.002,
which provides the comptroller with the authority to prescribe, adopt, and
enforce rules relating to the administration and enforcement of the provisions
of the Tax Code, Title 2.
The amendment implements the Tax Code, §§171.001, 171.259, and
171.316.
§3.560.Banking Corporations.
(a)
(No change.)
(b)
Definitions. The following words and terms, when used in
this section, shall have the following meanings, unless the context clearly
indicates otherwise.
(1)
Banking corporation (bank)--Each state, national, domestic,
or foreign bank,
whether organized under the laws of this state, another
state, or another country, or under federal law,
including a limited
banking association
organized under Finance Code, Title 3, Subtitle A
, [
(2)
(No change.)
(3)
Legal domicile-The legal domicile
of a corporation is its state of incorporation. The legal domicile of a partnership
or trust is the principal place of business of the partnership or trust. The
principal place of business of a partnership or trust is the location of its
day-to-day operations. Where the day-to-day operations are conducted equally
or fairly evenly in more than one state, the principal place of business is
the commercial domicile.
(c)-(e)
(No change.)
(f)
Apportionment of dividends and interest.
(1)
This paragraph applies to franchise tax reports originally
due before January 1, 2000.
If a banking corporation has its commercial
domicile in Texas, all dividends and interest received, including interest
from the federal government unless otherwise excluded by §3.555(k) of
this title (relating to Earned Surplus: Computation), are considered to be
Texas gross receipts and gross receipts everywhere.
If a banking corporation's
commercial domicile is not in Texas, no dividends or interest received are
considered to be Texas gross receipts but all are considered to be gross receipts
everywhere, unless otherwise specifically excluded from the receipts factor.
(2)
For reports originally due on or after January
1, 2000, a banking corporation's dividends and/or interest are apportioned
to the legal domicile of the payor. See §3.549(e)(13) of this title (relating
to Taxable Capital: Apportionment) and §3.557(e)(13) of this title (relating
to Earned Surplus: Apportionment) for additional information on apportioning
dividends and interest.
[
(g)
(No change.)
(h)
Enforcement.
(1)-(2)
(No change.)
(3)
The banking commissioner shall appoint a conservator
under the Finance Code, Title 3, Subtitle A, to pay the franchise tax of a
banking corporation that is organized under the laws of Texas and that the
commissioner certifies as being delinquent in the payment of the corporation's
franchise tax.
[
(4)
Except as provided in paragraph (3) of this subsection,
a
[
(5)
A banking corporation
that is organized under the laws of Texas or under federal law and has its
main office in Texas will not have its charter forfeited for not paying its
franchise tax.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State, on January 14, 2000.
TRD-200000301
Martin Cherry
Special Counsel
Comptroller of Public Accounts
Earliest possible date of adoption: February 27, 2000
For further information, please call: (512) 463-4062
34 TAC §3.563
The Comptroller of Public Accounts proposes an amendment
to §3.563, concerning savings and loan associations. The amendment is
in accordance with House Bill 2067, 76th Legislature, 1999, including a revised
definition of "savings and loan association" in subsection (b)(4), a new apportionment
requirement for dividends and interest in subsection (e), and new enforcement
guidelines in subsection (g). The bill repealed §171.1031 which apportioned
dividends and interest to the saving and loan association's commercial domicile.
A definition of "legal domicile" has been added to subsection (b) because
of the new apportionment requirement for dividends and interest. The legislation
states that these new provisions apply to reports originally due on or after
January 1, 2000.
Mike Reissig, Director of Estimates, has determined that for the first
five-year period the amendment will be in effect there will be no significant
revenue impact on the state or local government.
Mr. Reissig also has determined that for each year of the first five years
the amendment is in effect the public benefit anticipated as a result of adopting
the amendment will be in providing clarification of Comptroller policy related
to savings and loan associations. This amendment is adopted under the Tax
Code, Title 2, and does not require a statement of fiscal implications for
small businesses. There is no significant anticipated economic cost to individuals
who are required to comply with the proposed amendment.
Comments on the proposal may be submitted to Bryant K. Lomax, Manager,
Tax Policy Division, P.O. Box 13528, Austin, Texas, 78711.
This amendment is proposed under the Tax Code, §111.002,
which provides the comptroller with the authority to prescribe, adopt, and
enforce rules relating to the administration and enforcement of the provisions
of the Tax Code, Title 2.
The amendment implements the Tax Code, §§171.001, 171.260, and
171.317.
§3.563.Savings and Loan Associations.
(a)
(No change.)
(b)
Definitions. The following words and terms, when used in
this section, shall have the following meanings, unless the context clearly
indicates otherwise.
(1)
Commercial domicile--The principal place from which the
trade or business of the entity is directed.
(2)
Legal domicile--The legal domicile
of a corporation is its state of incorporation. The legal domicile of a partnership
or trust is the principal place of business of the partnership or trust. The
principal place of business of a partnership or trust is the location of its
day-to-day operations. Where the day-to-day operations are conducted equally
or fairly evenly in more than one state, the principal place of business is
the commercial domicile.
(3)
[
(A)
Net worth for a savings and loan association shall include
the amount of issued and outstanding common stock, preferred stock (to the
extent such preferred stock may be considered a part of the association's
net worth under generally accepted accounting principles) plus any retained
earnings and paid in surplus as well as such other items as the Texas savings
and loan commissioner may approve in writing for inclusion in the association's
net worth.
(B)
Net worth for a mutual association shall include its pledged
savings liability and expense fund plus any retained earnings and such other
items as the Texas savings and loan commissioner may approve in writing for
inclusion in its net worth.
(4)
[
[(A)
state savings and loan association--any
savings and loan association organized under the laws of this state; ]
[(B)
federal savings and loan association--any
savings and loan association organized under the laws of the United States
of America;]
[(C)
state-chartered savings bank--any savings
bank organized under or subject to the Texas Civil Statutes, Article 489e,
Savings Bank Act;]
[(D)
federal savings bank--any savings bank
organized under the laws of the United States of America; and]
[(E)
mutual savings bank--a savings bank not
authorized to issue capital stock.]
(c)-(d)
(No change.)
(e)
Apportionment of dividends and interest.
(1)
This paragraph applies to franchise tax reports originally
due before January 1, 2000.
If a savings and loan association or a savings
bank has its commercial domicile in Texas, all dividends and interest received,
including interest from the federal government unless otherwise excluded by §3.555(k)
of this title (relating to Earned Surplus: Computation), are considered to
be Texas gross receipts and gross receipts everywhere.
[
If a savings and loan association or
a savings bank does not have its commercial domicile in Texas, dividends and
interest received are not considered to be Texas gross receipts but all are
considered to be gross receipts everywhere unless otherwise excluded by §3.555(k)
of this title (relating to Earned Surplus: Computation).
[
Interest received by a savings and loan
association for mortgages owned by the savings and loan association are considered
Texas receipts if the savings and loan association's commercial domicile is
in Texas.
(2)
For reports originally due on or
after January 1, 2000, a savings and loan association's dividends and/or interest
are apportioned to the legal domicile of the payor. See §3.549(e)(13)
of this title (relating to Taxable Capital: Apportionment) and §3.557(e)(13)
of this title (relating to Earned Surplus: Apportionment) for additional information
on apportioning dividends and interest.
(f)
(No change.)
(g)
Enforcement.
(1)
The Texas Savings and Loan Commissioner shall
appoint
a conservator under Finance Code, Title 3, Subtitle B or C, to pay the franchise
tax of a savings and loan association that is organized under the laws of
Texas and that the commissioner certifies as being delinquent in the payment
of the savings and loan association's franchise tax.
[
(2)
Except as provided in paragraph (1) of this subsection,
no savings and loan association
that is organized under the laws of Texas
or under federal law and has its main office in Texas
[
(3)
A savings and loan association
that is organized under the laws of Texas or under federal law and has its
main office in Texas will not have its charter forfeited for not paying its
franchise tax.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State, on January 14, 2000.
TRD-200000302
Martin Cherry
Special Counsel
Comptroller of Public Accounts
Earliest possible date of adoption: February 27, 2000
For further information, please call: (512) 463-4062
Subchapter A. PRACTICE AND PROCEDURE
as defined by the Banking Act, §1.002(a),
] and each
bank organized under the Federal Reserve Act, §25(a), (12 United States
Code, §§611-631) (edge corporations), but does not include a bank
holding company as that term is defined by the Bank Holding Company Act of
1956 (12 United States Code, § 1841).
If a banking corporation's commercial
domicile is not in Texas, no dividends or interest received are considered
to be Texas gross receipts but all are considered to be gross receipts everywhere.
]
The comptroller may ask that the Banking Department
of Texas issue a cease and desist order requiring a bank to pay all taxes,
penalties, and interest. To the extent not preempted by federal law, the Texas
Department of Banking is required to appoint a conservator under the Banking
Act, Chapter 6, Subchapter B, to pay the franchise tax of any banking corporation
certified by the comptroller as being delinquent in the payment of its franchise
tax.
]
no
] banking corporation
that is organized under the
laws of Texas or under federal law and has its main office in Texas
will
not
have its corporate privileges [
or charter
] forfeited
by the comptroller for not paying its franchise tax.
(2)
] Net worth--
(3)
] Savings and loan
association--
A savings and loan association or savings bank, whether
organized under the laws of Texas, another state, another country, or under
federal law.
[
An entity that qualifies as a savings and loan association
under the Internal Revenue Code, §7701(a)19. This includes, but is not
limited to:
]
(2)
]
(3)
]
revoke the
charter of a savings and loan association or a savings bank certified by the
comptroller as delinquent in the payment of its franchise tax.
]
or savings
bank
] will have its corporate privileges [
or charter
] forfeited
by the comptroller for not paying its franchise tax.
Chapter 9.
PROPERTY TAX ADMINISTRATION