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| June 22nd, 2009
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House Bill 4611, effective offers next year, an important advantage to small and medium-sized companies Texas banks - banks - often called Community under the revised franchise tax or "Margin Tax." In the last days of before recently ended legislative session enables credit institutions the Bill to pass, (i.e. banks), the gross proceeds from the sale of certain securities as part of their gross revenue for allocation of costs (instead of only the net proceeds) to treat purposes. Whether large or net income from securities, sales can be counted provision a Bank (or any other taxpayer) costs percentage is significant. This is because among subsection (e)(25) of the Comptroller of public accounts article 3.591 ("margin: breakdown"), proceeds from the sale of securities is at the location of the billing program is relative and, more importantly, "If securities are sold through an Exchange and the buyer can not be identified, then 7.9% of the revenue is a Texas entrance".
In other words, 92.1% of the revenue from the typical sale of securities on the stock exchange is outside of Texas, related so it is almost always advantageous to gross revenue, rather than only net profit from such a taxpayer sale distribution percentage calculation can include.
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House Bill 4611 is designed to resolve a problem by the Comptroller's interpretation of subsection (f) the tax code section 171.106 ("breakdown of margin to a State") arose. In subsection (e)(16) of rule 3.591 and explanations as the 2008 memorandum as document No. 200809240L agency STAR indexed database, how treated a Bank Securities for federal income tax purposes - and regardless of how it categorized those securities for purposes of financial reporting - determines whether gross or net proceeds from the sale of these securities in gross revenue sharing formula could be counted. The legislature's Bill analysis of language which has been declared the final (registered) version of the invoice;
[T] he comptroller's Office offers section 171.106(f) for securities and loans only applies to the a taxable entity dutifully or treatment under section 475(a)(1), internal revenue code or accounts for securities and loans under section 471, internal revenue code.
The Comptroller of the political position on section 171.106(f) is satisfiable trade easiest components of these companies from the large Multistate banks, due to the large security. This large Multistate banks with Security Broker have all necessary procedures and guidelines to comply with section 475(a)(1) divisions, internal code needed revenue.
The Comptroller of the political position on section 171.106(f) will generate considerable administrative burden and potential regulatory issues for small to medium-sized banks, only shops in Texas, commonly recognized State community banks. These banks have usually not large trading security components, but sell securities and loans under its normal course of business. These banks with implementing costly and extensive management processes and policies to meet the comptroller's position face or suffer significantly higher franchise tax burdens (as a percentage of income) than their large Multistate counterparts.
The legislature's solution to this problem is subsection (f-1), section 171.106 of House Bill 4611 added. Under the new subsection purposes Division a bank is the gross proceeds from the sale of securities, be allowed, as part of their gross income the as "securities available for sale" or "Trading Securities" categorized under financial accounting standard (FAS) include no 115 as in effect on 1 January 2009. In other words, if a Bank Securities, thereby under FAS 115, categorized keeps it this securities 92.1% sold as from Alabama sources are handled by the gross proceeds, reducing this bank Texas distribution percentage and ultimately their franchise tax. So community keep banking and your tax advisor, this law change in mind in the preparation of the next year franchise tax reports.
One final note: Section 2 (providing that the laws originally only applies to a report due on or after the date of entry into force of the Bill) and section 3 (assuming that the legislation effective January 2010 is 1) House Bill 4611 together seem exclude reimbursement claims for banks that their securities sales reporting and paying their 2008 and 2009 franchise taxes used the net proceeds.