Texas Taxes

FRANCHISE TAX—Transportation industry.

The Texas Comptroller has issued guidance on application of the state franchise tax to the transportation industry. The guidance covers nexus, rate, total revenue, cost of goods sold, compensation and apportionment. The Comptroller advises that E-Z computation may be the best franchise tax reporting method for transportation companies that use 1099 contractors and have $10 million or less in total revenue. With no exclusion from revenue or compensation deduction for payments made to independent contractors and no cost of goods sold deduction allowed for services, the reduced tax rate of 0.575% applied to apportioned total revenue may provide the least amount of tax liability. (Texas Tax Policy News 9, 09/01/2010.)

PROPERTY—Homesteads damaged by Hurricane Ike in 2008.

Calculation of the 2010 appraised value of a residence homestead damaged by Hurricane Ike in 2008 and renovated to its pre-storm status is determined by Tex. Tax Code Ann. §23.23(f) (determination of whether an improvement to property is treated as a new improvement in determining appraised value of residence homestead), provided the structure was rendered uninhabitable or unusable. If the structure was not rendered uninhabitable or unusable, calculation of the 2010 appraised value is dependent upon whether the renovations may reasonably be said to constitute a mere “repair” or a “new improvement” under Tex. Tax Code Ann. §23.23(e). If the structure was rendered uninhabitable or unusable, calculation of the 2010 appraised value is dependent upon the appraised value the property would have had in 2009 but for the storm damage, together with the market value of all new improvements to the property as described by Tex. Tax Code Ann. §23.23(f)(2). (Attorney General Opinion, GA-0805, 09/30/2010.)

PROPERTY—Tax record requirements regulation changes.

The Texas Comptroller of Public Accounts has adopted amendments to the following tax record requirements rules in Title 34 of the Texas Administrative Code to delete references to the State Property Tax Board and increase administrative efficiency by providing for Comptroller revision of applicable forms: §9.3042 (concerning request forms for separate or joint taxation); §9.3045 (concerning application for September 1 inventory appraisal); §9.3048 (concerning publication of budget; §9.3049 (concerning change of use determination, the amendment also provides language applicable to additional statutory provisions regarding change of use determinations); §9.3054 (concerning requests to postpone tax bill); and §9.3064 (concerning public notice of protest and appeal forms, the amendment also more thoroughly specifies minimum standards for the form and content of the notice required). The Comptroller has repealed §9.3057, concerning notice of hearing on proposal to tax non-business personal property, because the reasons for initially adopting the rule no longer exist. (34 Tex. Admin Code §9.3042, amended effective 10/03/2010; 34 Tex. Admin Code §9.3045, amended effective 10/03/2010; 34 Tex. Admin Code §9.3048, amended effective 10/03/2010; 34 Tex. Admin Code §9.3049, amended effective 10/05/2010; 34 Tex. Admin Code §9.3054, amended effective 10/05/2010; 34 Tex. Admin Code §9.3057, repealed effective 10/06/2010; 34 Tex. Admin Code §9.3064, amended effective 10/06/2010.)