(n) Disaster response exemption for an out-of-state
business entity. Effective June 16, 2015, an out-of-state business
entity, as defined in this subsection, is not required to file a franchise
tax report with or pay franchise tax to this state if the business
done in this state is limited to the performance of disaster- and
emergency-related work during a disaster response period. An out-of-state
business entity that remains in Texas after a disaster response period
is not entitled to this exemption.
(1) Notification to comptroller. An entity need not
apply for an exemption from franchise tax under Business & Commerce
Code, §112.004 (Exemption of Out-of-State Business Entity From
Certain Obligations During Disaster Response Period). An entity must
notify the comptroller in writing only when the entity no longer qualifies
for the exemption.
(2) Definitions. For the purpose of this subsection,
the terms defined in subparagraphs (B) - (H) of this paragraph have
the meanings given in Business & Commerce Code, §112.003
(Definitions).
(A) Affiliate--A member of a combined group as that
term is described by Tax Code §171.1014 (Combined Reporting;
Affiliated Group Engaged in Unitary Business).
(B) Critical infrastructure--Equipment and property
that is owned or used by a telecommunications provider or cable operator
or for communications networks, electric generation, electric transmission
and distribution systems, natural gas and natural gas liquids gathering,
processing, and storage, transmission and distributions systems, and
water pipelines and related support facilities, equipment, and property
that serve multiple persons, including buildings, offices, structures,
lines, poles, and pipes.
(C) Declared state disaster or emergency--A disaster
or emergency event that occurs in this state and:
(i) in response to which the governor issues an executive
order or proclamation declaring a state of disaster or a state of
emergency; or
(ii) that the president of the United States declares
a major disaster or emergency.
(D) Disaster- or emergency-related work--Repairing,
renovating, installing, building, rendering services, or performing
other business activities relating to the repair or replacement of
critical infrastructure that has been damaged, impaired, or destroyed
by a declared state disaster or emergency.
(E) Disaster response period--
(i) the period that:
(I) begins on the 10th day before the date of the earliest
event establishing a declared state disaster or emergency by the issuance
of an executive order or proclamation by the governor or a declaration
of the president of the United States; and
(II) ends on the earlier of the 120th day after the
start date or the 60th day after the ending date of the disaster or
emergency period established by the executive order or proclamation
or declaration, or on a later date as determined by an executive order
or proclamation by the governor; or
(ii) the period that, with respect to an out-of-state
business entity:
(I) begins on the date that the out-of-state business
entity enters this state in good faith under a mutual assistance agreement
and in anticipation of a state disaster or emergency, regardless of
whether a state disaster or emergency is actually declared; and
(II) ends on the earlier of the date that the work
is concluded or the seventh day after the out-of-state business entity
enters this state.
(F) In-state business entity--A domestic entity or
foreign entity that is authorized to transact business in this state
immediately before a disaster response period.
(G) Mutual assistance agreement--An agreement to which
one or more business entities are parties and under which a public
utility, municipally owned utility, or joint agency owning, operating,
or owning and operating critical infrastructure used for electric
generation, transmission, or distribution in this state may request
that an out-of-state business entity perform work in this state in
anticipation of a state disaster or emergency.
(H) Out-of-state business entity--A foreign entity
that enters this state at the request of an in-state business entity
under a mutual assistance agreement or is an affiliate of an in-state
business entity and;
(i) that:
(I) except with respect to the performance of a disaster-
or emergency-related work:
(-a-) has no physical presence in this state and is
not authorized to transact business in this state immediately before
a disaster response period; and
(-b-) is not registered with the secretary of state
to transact business in this state, does not file a tax report with
this state or a political subdivision of this state, and does not
have nexus with this state for the purpose of taxation during the
year immediately preceding the disaster response period; and
(II) enters this state at the request of an in-state
business entity, the state, or a political subdivision of this state
to perform disaster- or emergency-related work in this state during
the disaster response period; or
(ii) that performs work in this state under a mutual
assistance agreement.
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Source Note: The provisions of this §3.583 adopted to be effective January 1, 2008, 32 TexReg 10018; amended to be effective January 1, 2009, 33 TexReg 10502; amended to be effective December 31, 2009, 34 TexReg 9466; amended to be effective January 29, 2017, 42 TexReg 213 |