Margin Tax bill voted from committee

HB 3928 by Rep. Keffer (R-Eastland), the revised franchise tax technical corrections bill, was voted from the House Ways and Means committee on Wednesday. In offering the new committee substitute for the bill Keffer pointed out the following changes:

• Line-item references for partnerships were changed to include gross rents in total revenue, consistent with corporate reporting. This change adds $200 million in revenue to the bill.
• HB 3, the original Margin Tax bill, inadvertently changed the apportionment rules for certain banks and securities firms. This has been corrected, moving the rules back as they were originally intended. This change reduces revenue from the bill by $130 million.
• The minimum revenue required for an entity to be taxable was raised from $300,000 to $600,000. This change reduces revenue from the bill by $70 million
• The temporary credit has been revised to apply a 4.5% rate rather than the margin tax rates of .5% and 1% to business loss carry-forwards. However, only 2.25% of the business loss carry-forwards may be used in each of the first ten years of the credit, and 7.75% of the business loss may be used in each of the subsequent ten years.

We've got the new bill for you here (PDF), but be advised that it's lengthy: at 40 pages, don't click the link unless you've got plenty of bandwidth.

HB 3928 now goes to the Calendars committee, where it will be scheduled for a vote on the House floor.

We'll keep you posted as the bill progresses.

Comments

[Kathy R. Kelly, Fort Worth Chapter ED]

How many taxpayers would be dropped from application of the tax if the minimum revenue threshold is raised from $300,000 to $600,000? I would think there's an assumption in the revenue impact calculation.

[Bob Owen]

They estimate 60,000 additional businesses will be exempt from the tax by raising the minimum revenue to $600,000.

[Mike Huffman, CPA]

Thank you for the well written summary of HR representative Keffer's HB 3928 proposed revisions to the Texas Margin Tax Bill.

Sincere Best Regards,

Wm. Mike Huffman, CPA
Houston, Texas

[jessica]

Thanks for linking to the actual bill. I've been trying to research this bill because I believe it is so important for the future. I am going to continue to use your site as a reference.