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Relating to the treatment of certain limited liability companies as
passive entities for purposes of the franchise tax.
Estimated Two-year Net Impact to General Revenue Related Funds for HB2611, Committee Report 1st House, Substituted: an impact of $0 through the biennium ending August 31, 2021.
Additionally, the bill will have a direct impact of a revenue loss to the Property Tax Relief
Fund of ($34,553,000) for the 2020-21 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
HB 2611 would alter the definition of a "passive entity" in the Tax Code to include certain limited liability companies. In Texas, a passive entity is one which has a federal gross income consisting of at least 90 percent of dividends, interest, foreign currency exchange gain, periodic and nonperiodic payments with respect to notional principal contracts, option premiums, cash settlement of termination payments with respect to a financial instrument, and income from a limited liability company, among other things, and the entity does not receive more than 10 percent of its federal gross income from conducting an active trade or business.
Texas Action remains neutral on HB 2611 as it does not affect our liberty principles.