| (D) payments made to independent contractors and reportable
on Internal Revenue Service Form 1099 (or would have been reported
if the amount had met the Internal Revenue Service minimum reporting
requirement).
(2) A client can include as compensation the following
amounts for covered employees:
(A) wages and cash compensation; and
(B) benefits.
(3) A client cannot include as compensation the following:
(A) an administrative fee;
(B) payments made to a professional employer organization
as reimbursement for payments made to independent contractors assigned
to the client and reportable on Internal Revenue Service Form 1099
(or would have been reported if the amount had met the Internal Revenue
Service minimum reporting requirement); and
(C) other costs.
(4) A professional employer organization shall determine
compensation only for the taxable entity's own employees who are not
covered employees.
(g) Management company. See §3.587 of this title.
(1) A taxable entity that is a management company may
not include as wages and cash compensation any amounts reimbursed
by a managed entity.
(2) A taxable entity that is a managed entity may subtract
wages and cash compensation that are reimbursed to the management
company.
(3) A management company shall determine compensation
for only those wages and compensation payments that are not reimbursed
by a managed entity.
(h) Small employers. This subsection applies to a taxable
entity that is a small employer and that has not provided health care
benefits to any of its employees in the calendar year preceding the
beginning date of its reporting period. Subject to Tax Code, §171.1014,
a taxable entity to which this subsection applies that elects to subtract
compensation for the purpose of computing its taxable margin under
Tax Code, §171.101, may subtract the following health care benefits:
(1) amounts as provided under subsection (c) of this
section;
(2) for the first 12-month period on which margin is
based and in which the taxable entity provides health care benefits
to all of its employees, an additional amount equal to 50% of the
cost of health care benefits provided to its employees for that period;
and
(3) for the second 12-month period on which margin
is based and in which the taxable entity provides health care benefits
to all of its employees, an additional amount equal to 25% of the
cost of health care benefits provided to its employees for that period.
(4) The term "provide" does not include amounts
paid by the employee, officer, director, etc.
(i) Election to subtract compensation. The election
to subtract compensation is made by filing the franchise tax report
using the compensation method or by amending any report filed within
the statute of limitations. A taxable entity may file an amended report
for the purpose of correcting a mathematical or other error in a report,
or to change its method of computing margin.
(j) Expenses paid with qualifying loan or grant proceeds.
A taxable entity may include in compensation any expense paid using
the qualifying loan or grant proceeds, as defined under Tax Code, §171.10131
(Provisions Related to Certain Money Received for COVID-19 Relief),
to the extent the expense is otherwise includable as compensation
under this section, even if the taxable entity has excluded the qualifying
loan or grant proceeds from its total revenue under §3.587 of
this title.
|
| Source Note: The provisions of this §3.589 adopted to be effective January 1, 2008, 32 TexReg 10038; amended to be effective January 1, 2009, 33 TexReg 10504; amended to be effective December 31, 2009, 34 TexReg 9471; amended to be effective April 19, 2022, 47 TexReg 2031; amended to be effective December 19, 2022, 47 TexReg 8278 |
