84(R) - 2015
House Ways & Means
House Ways & Means
Relating to apportionment of certain receipts of a broadcaster under the franchise tax.
A fiscal note dated April 27, 2015 anticipates a two-year net impact to General Revenue Related Funds from CSHB 2896 of $0 through the biennium ending August 31, 2017.
Additionally, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($6,124,000) for the 2016-17 biennium. Any loss to the Property Tax Relief Fund must be made up with an equal amount of General Revenue to fund the Foundation School Program.
House Bill 2896 would amend Section 171.106 of the Tax Code related to the apportionment of margin to this state for the purpose of the franchise tax.
House Bill 2896 would require that a broadcaster (as defined in the bill) must include must include in the numerator of the broadcaster's apportionment factor receipts arising from licensing income from broadcasting or distributing film programming if the legal domicile of the broadcaster's customer (as defined in the bill) is in Texas.
Vote Recommendation Notes
An amendment was introduced and adopted on the House floor that would change the date the act takes effect from January 1, 2016 to January 1, 2017. A committee substitute was introduced in Senate committee that would change this date to January 1, 2018.
We continue to support this bill. The second chamber sponsor is Senator Paul Bettencourt.
First chamber recommendation:
According to current law regarding the apportionment of margin to this state (Section 171.106) for the purpose of the franchise tax, a taxable entity's margin is apportioned to this state to determine the amount of tax imposed under Section 171.002 by multiplying the margin by a fraction, the numerator of which is the taxable entity's gross receipts from business done in this state, as determined under Section 171.103 (determination of gross receipts from business done in this state for margin), and the denominator of which is the taxable entity's gross receipts from its entire business, as determined under Section 171.105 (determination of gross receipts from entire business for margin).
House Bill 2896 would specify that broadcasters should include in the numerator of the broadcaster's apportionment receipts from licensing income or distributing film programming only when customers are domiciled in the state of Texas. The receipts would treated as receipts from business done in this state when the customer, defined as a person, including a licensee, that has a direct connection or contractual relationship with the broadcaster, is located in Texas, staying true to Section 171.103(4) on the determination of gross receipts from business done in this state regarding the use of patent, copyright, trademark, franchise or license. We support House Bill 2896.