Legislative Changes Affecting Business Entities

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The 82nd Texas Legislative Session and the Special Session convened during June of 2011 did not generate any new material Texas taxes. There are, however, several important administrative and timing provisions1 that business law practitioners and tax law practitioners should be aware of.

General Administrative Provisions

Record Retention

Article 4 of Senate Bill 1 from the Special Session2 (hereafter “SB1”), amends the Occupations Code and the Tax Code to extend the amount of time that taxpayers must keep records including electronically stored documents. Section 111.0041 of the Tax Code is amended to extend the time to at least four years that taxpayers are required to maintain records to substantiate and verify a claim regarding taxes, penalties, and interest. Longer holding periods are required if administrative or judicial proceedings involving the records are pending.

Late Filing Penalty

Article 14 of SB1 adds a $50 late filing penalty for a person who fails to file a reports required under Texas Tax Code Chapter 151 (sales tax); Chapter 152 (motor vehicle tax); 156 (hotel occupancy tax); 162 (motor fuels tax); 171 (franchise tax); or Chapter 183 (mixed beverage tax). The penalty is in addition to any other penalty and without regard to whether the taxpayer subsequently files the report or whether any taxes or fees were due. The article takes effect October 1, 2011.

Please see full alert below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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