| (a) Effective date. The provisions of this section
apply to franchise tax reports originally due on or after January
1, 2008, except as otherwise noted.
(b) Definitions. The following words and terms, when
used in this section, shall have the following meanings, unless the
context clearly indicates otherwise.
(1) Actual cost of uncompensated care--The amount determined
by multiplying Operating Expenses by the Uncompensated Care Ratio
where:
(A) operating expenses are the amounts reported on
line 2 and line 21, Internal Revenue Service Form 1065 or the amounts
reported on line 2 and line 20, Internal Revenue Service Form 1120S
or the corresponding line items from any other federal form filed,
less any items that have already been subtracted from total revenue
(e.g., bad debts);
(B) uncompensated care ratio means uncompensated care
charges less partial payments divided by total charges;
(C) uncompensated care charges are the standard charges
for health care services where the provider has not received any payment
or where the provider has received partial payment that does not cover
the cost of the health care provided to the patient. Uncompensated
care charges do not include any portion of a charge that the health
care provider has no right to collect under a private health care
plan, under an agreement with an individual for a specific amount
or under the charge limitations imposed by the programs described
in subsection (e)(10)(A)(i) - (iii) of this section;
(D) standard charges must be comparable to the charges
applied to services provided to all patients of the health care provider;
(E) partial payment is an amount that has been received
toward uncompensated care charges that does not cover the cost of
the services provided;
(F) total charges are charges for all health care services,
including uncompensated care;
(G) records that clearly identify each patient, the
procedure performed, and the standard charge for such a service, as
well as payments received from each patient must be maintained by
the health care provider for all uncompensated care;
(H) a corresponding adjustment must be made to reduce
the cost of goods sold deduction or the compensation deduction for
the portion of the cost of goods sold or compensation that has been
excluded from revenue:
(i) the cost of goods sold deduction is reduced by
subtracting the product of the cost of goods sold under §3.588
of this title (relating to Margin: Cost of Goods Sold) multiplied
by the uncompensated care ratio;
(ii) the compensation deduction is reduced by subtracting
the product of the compensation and benefits amounts under §3.589
of this title (relating to Margin: Compensation) multiplied by the
uncompensated care ratio.
(2) Federal obligations--
(A) stocks and other direct obligations of, and obligations
unconditionally guaranteed by, the United States government and United
States government agencies; and
(B) direct obligations of a United States government-sponsored
agency.
(3) Health care institution--An ambulatory surgical
center; an assisted living facility licensed under Health and Safety
Code, Chapter 247; an emergency medical services provider; a home
and community support services agency; a hospice; a hospital; a hospital
system; an intermediate care facility for the mentally retarded or
a home and community-based services waiver program for persons with
mental retardation adopted in accordance with the federal Social Security
Act, §1915(c) (42 U.S.C. §1396n); a birthing center; a nursing
home; an end stage renal disease facility licensed under Health and
Safety Code, §251.011; or a pharmacy.
(4) Health care provider--Any taxable entity that participates
in the Medicaid program, Medicare program, Children's Health Insurance
Program (CHIP), state workers' compensation program, or TRICARE military
health system as a provider of health care services.
(5) Lending institution--An entity that makes loans;
and
(A) is regulated by the Federal Reserve Board, the
Office of the Comptroller of the Currency, the Federal Deposit Insurance
Corporation, the Commodity Futures Trading Commission, the Office
of Thrift Supervision, the Texas Department of Banking, the Office
of Consumer Credit Commissioner, the Credit Union Department, or any
comparable regulatory body;
(B) is licensed by, registered with, or otherwise regulated
by the Department of Savings and Mortgage Lending;
(C) is a "broker" or "dealer" as defined by the Securities
Exchange Act of 1934 at 15 U.S.C. §78c; or
(D) provides financing to unrelated parties solely
for agricultural production.
(6) Management company--A corporation, limited liability
company, or other limited liability entity that conducts all or part
of the active trade or business of another entity ("the managed entity")
in exchange for a management fee and reimbursement of specified costs
incurred in the conduct of the active trade or business of the managed
entity, including wages and cash compensation as determined under
Tax Code, §171.1013(a) and (b). To qualify as a management company:
(A) the entity must perform active and substantial
management and operational functions, control and direct the daily
operations and provide services such as accounting, general administration,
legal, financial or similar services; or
(B) if the entity does not conduct all of the active
trade or business of an entity, the entity must conduct all operations,
as provided in subparagraph (A) of this paragraph, for a distinct
revenue-producing component of the entity.
(7) Net distributive income--The net amount of income,
gain, deduction, or loss relating to a pass-through entity or disregarded
entity reportable to the owners for the tax year of the entity.
(8) Obligation--Any bond, debenture, security, mortgage-backed
security, pass-through certificate, or other evidence of indebtedness
of the issuing entity. The term does not include a deposit, a repurchase
agreement, a loan, a lease, a participation in a loan or pool of loans,
a loan collateralized by an obligation of a United States government
agency, or a loan guaranteed by a United States government agency.
(9) Pro bono services--The direct provision of legal
services to the poor, without an expectation of compensation.
(10) Product--Services, tangible personal property,
and intangible property.
(11) Sales commission--
(A) any form of compensation paid to a person for engaging
in an act for which a license is required by Occupations Code, Chapter
1101; or
(B) compensation paid to a sales representative by
a principal in an amount that is based on the amount or level of certain
orders for or sales of the principal's product and that the principal
is required to report on Internal Revenue Service Form 1099-MISC (or
would have been reported if the amount had met the Internal Revenue
Service minimum reporting requirement).
(C) for purposes of defining sales commission, a principal
is a person who:
(i) manufactures, produces, imports, distributes, or
acts as an independent agent for the distribution of a product for
sale;
(ii) uses a sales representative to solicit orders
for the product; and
(iii) compensates the sales representative wholly or
partly by sales commission.
(12) Security--The meaning assigned by Internal Revenue
Code, §475(c)(2), and includes instruments described by Internal
Revenue Code, §475(e)(2)(B), (C), and (D).
(13) Staff leasing services company--A business entity
that offers staff leasing services, as that term is defined by Labor
Code, §91.001, or a temporary employment service, as that term
is defined by Labor Code, §93.001.
(14) Tiered partnership arrangement--An ownership structure
in which any of the interests in one taxable entity treated as a partnership
or an S corporation for federal income tax purposes (a "lower tier
entity") are owned by one or more other taxable entities (an "upper
tier entity").
(15) United States government--Any department or ministry
of the federal government, including a federal reserve bank. The term
does not include a state or local government, a commercial enterprise
owned wholly or partly by the United States government, or a local
governmental entity or commercial enterprise whose obligations are
guaranteed by the United States government.
Cont'd... |
