PART 1. COMPTROLLER OF PUBLIC ACCOUNTS
SUBCHAPTER V. FRANCHISE TAX
The Comptroller of Public Accounts proposes new §3.597, concerning margin: Business Tax Advisory Committee. This section implements House Bill 3928, 80th Legislature, 2007, which revises the franchise tax. This section establishes procedures for the functions of the Business Tax Advisory Committee under Tax Code, Chapter 171. Subsection (a) provides that this section only applies to franchise tax reports due on or after January 1, 2008. Subsection (b) dictates the membership of the committee. Subsection (c) defines the purpose of the committee. Subsection (d) establishes procedures for the functions of the advisory committee. Subsection (e) lists the expiration date of this section.
John Heleman, Chief Revenue Estimator, has determined that for the first five-year period the rule will be in effect, there will be no significant revenue impact on the state or units of local government.
Mr. Heleman also has determined that for each year of the first five years the rule is in effect, the proposed new rule would benefit the public by providing guidance to the Business Tax Advisory Committee, which is tasked by the legislature to report on the revised franchise tax's effects on the businesses in Texas. This rule is proposed under 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 rule.
Comments on the proposal may be submitted to Bryant K. Lomax, Manager, Tax Policy Division, P.O. Box 13528, Austin, Texas 78711.
This new section is proposed under Tax Code, §111.002 and §111.022, which provides the comptroller with the authority to prescribe, adopt and enforce rules relating to the administration and enforcement of the provisions of Tax Code, Title 2.
The new section implements Tax Code, §171.214.
§3.597.Margin: Business Tax Advisory Committee.
(a) Effective date. The provisions of this section apply to franchise tax reports originally due on or after January 1, 2008.
(b) Membership. The Business Tax Advisory Committee is composed of:
(1) the comptroller, who is the presiding officer of the advisory committee;
(2) two members of the house of representatives, appointed by the speaker of the house of representatives;
(3) two members of the senate, appointed by the lieutenant governor; and
(4) the following persons appointed by the comptroller, who shall determine the number of residents appointed:
(A) at least five residents of this state who are engaged in a private business, as either an employee or an owner, that is subject to taxation under this chapter; and
(B) at least two residents of this state with expertise in state business taxation.
(c) Purpose. The advisory committee shall conduct a biennial study of the effects of the tax imposed under this chapter on businesses in this state. The study must take into consideration:
(1) the relative share of the tax paid by industry and by size of business;
(2) how the incidence of the tax compares with the economic makeup of this state's business economy;
(3) how the tax compares in structure and in amounts paid to the business taxes imposed by other states;
(4) the effect of the tax on the economic climate of this state, including the effect on capital investment and job creation;
(5) any factors that result in the tax not operating as intended; and
(6) any other item presented by the comptroller or by a majority of the committee.
(d) Procedures. Report findings are to be issued to the speaker of the house of representatives, the lieutenant governor, and the governor not later than the date each regular session of the legislature begins.
(e) Expiration. This section expires January 31, 2013.
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 July 10, 2008.
TRD-200803541
Martin Cherry
General Counsel
Comptroller of Public Accounts
Earliest possible date of adoption: August 24, 2008
For further information, please call: (512) 475-0387