82R1714 MXM-D
 
  By: Burnam H.B. No. 354
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the imposition of an income tax on income that exceeds
  $150,000 to provide property tax relief and fund public education;
  providing penalties.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Title 2, Tax Code, is amended by adding Subtitle
  L to read as follows:
  SUBTITLE L. PERSONAL INCOME TAX
  CHAPTER 261. PERSONAL INCOME TAX
  SUBCHAPTER A. IMPOSITION OF TAX
         Sec. 261.001.  TAX IMPOSED. (a) A tax is imposed for each
  tax year:
               (1)  on the taxable income that exceeds $150,000 of
  every resident of this state; and
               (2)  on the taxable income that exceeds $150,000
  derived from sources in this state of every nonresident.
         (b)  The tax rates for an individual are:
               (1)  for taxable income that exceeds $150,000 but does
  not exceed $250,000, three percent of the taxable income that
  exceeds $150,000 but does not exceed $250,000;
               (2)  for taxable income that exceeds $250,000 but does
  not exceed $500,000, $3,000 plus four percent of the taxable income
  that exceeds $250,000 but does not exceed $500,000;
               (3)  for taxable income that exceeds $500,000 but does
  not exceed $1 million, $13,000 plus five percent of the taxable
  income that exceeds $500,000 but does not exceed $1 million; or
               (4)  for taxable income that exceeds $1 million,
  $38,000 plus six percent of the taxable income that exceeds $1
  million.
         Sec. 261.002.  JOINT RETURN. If persons subject to the tax
  under this chapter file a joint federal income tax return with a
  spouse, they may file a joint return under this chapter but they may
  not combine their incomes for the purpose of determining the amount
  of tax owed. The separate incomes of each spouse are taxed as
  individual incomes under Section 261.001.
         Sec. 261.003.  MEANING OF TERMS. (a) In this chapter:
               (1)  an individual is a resident of this state if the
  individual:
                     (A)  is domiciled in this state, unless the
  individual does not maintain a permanent abode in this state and
  does maintain a permanent abode elsewhere and spends, in the
  aggregate, not more than 30 days of the tax year in this state; or
                     (B)  is not domiciled in this state but maintains
  a permanent abode in this state and spends, in the aggregate, more
  than 183 days of the tax year in this state; and
               (2)  an individual is a nonresident if the individual
  is not a resident of this state.
         (b)  Any term used in this chapter and not defined by or for
  purposes of this chapter has the same meaning as when used in a
  comparable context in the laws of the United States relating to
  federal income taxes, unless a different meaning is clearly
  required. Any reference in this chapter to federal law means the
  provisions of the Internal Revenue Code of 1986 in effect on
  December 31, 2011, and other provisions of federal laws relating to
  federal income taxes in effect on December 31, 2011.
  [Sections 261.004-261.050 reserved for expansion]
  SUBCHAPTER B. COMPUTATION OF TAXABLE INCOME
         Sec. 261.051.  TAXABLE INCOME. The taxable income of a
  resident of this state is the resident's federal adjusted gross
  income as defined by federal law.
         Sec. 261.052.  CREDIT FOR INCOME TAX PAID TO ANOTHER STATE.
  (a) A resident individual is allowed a credit against the tax
  otherwise due under this chapter for the amount of any income tax
  imposed on the individual for the tax year by another state of the
  United States on income that is derived from sources in that state
  and that is subject to tax under this chapter.
         (b)  The credit provided by this section may not exceed the
  proportion of the tax otherwise due under this chapter that the
  amount of the taxpayer's adjusted gross income derived from sources
  in the other taxing jurisdiction bears to the taxpayer's entire
  adjusted gross income as modified by this subchapter.
         Sec. 261.053.  DUAL RESIDENCE; REDUCTION OF TAX. If a
  taxpayer is a resident of this state and is regarded as a resident
  of another jurisdiction for purposes of personal income taxation,
  the comptroller shall reduce the tax on that portion of the
  taxpayer's income that is subject to tax in both jurisdictions
  solely by virtue of dual residence. The reduction is an amount
  equal to that portion of the lower of the two taxes applicable to
  the income taxed twice that the tax imposed by this state bears to
  the combined taxes of the two jurisdictions on the income taxed
  twice.
         Sec. 261.054.  NONRESIDENT INDIVIDUALS--TAXABLE INCOME.
  The taxable income of a nonresident individual is that part of the
  individual's federal adjusted gross income derived from sources in
  this state determined under Section 261.055.
         Sec. 261.055.  ADJUSTED GROSS INCOME FROM SOURCES IN THIS
  STATE--NONRESIDENT. (a) The adjusted gross income of a
  nonresident derived from sources in this state is the net amount of
  items of income, gain, loss, and deduction entering into the
  nonresident's federal adjusted gross income that are derived from
  or connected with sources in this state, including:
               (1)  the nonresident's distributive share of
  partnership income and deductions determined under Section
  261.403; and
               (2)  the nonresident's share of estate or trust income
  and deductions derived from sources in this state.
         (b)  Items of income, gain, loss, and deduction derived from
  or connected with sources in this state are those items
  attributable to:
               (1)  the ownership or disposition of an interest in
  real or tangible personal property in this state; and
               (2)  a business, trade, profession, or occupation
  conducted in this state.
         (c)  Income from intangible personal property, including
  annuities, dividends, interest, and gains from the disposition of
  intangible personal property, constitutes income derived from
  sources in this state only to the extent that the income is from
  property used in a business, trade, profession, or occupation
  carried on in this state.
         (d)  Deductions for capital losses, net long-term capital
  gains, and net operating losses derived from or connected with
  sources in this state, are determined in the same manner as the
  corresponding federal deductions. However, the extent to which the
  deductions are derived from or connected with sources in this state
  is determined under the comptroller's rules.
         (e)  For a nonresident individual who is a shareholder of a
  corporation that is an electing small business corporation for
  federal income tax purposes, the undistributed taxable income of
  the corporation does not constitute income derived from sources in
  this state and a net operating loss of the corporation does not
  constitute a loss or deduction connected with sources in this
  state.
         (f)  If a business, trade, profession, or occupation is
  carried on partly in and partly outside this state, the items of
  income and deduction derived from or connected with sources in this
  state are determined by apportionment and allocation consistent
  with Chapter 141 under the comptroller's rules.
         (g)  Compensation paid by the United States for service in
  the armed forces of the United States performed by a nonresident is
  not income derived from sources in this state.
  [Sections 261.056-261.100 reserved for expansion]
  SUBCHAPTER C. [RESERVED]
  [Sections 261.101-261.200 reserved for expansion]
  SUBCHAPTER D. ACCOUNTING PERIODS AND METHODS
         Sec. 261.201.  PERIOD FOR COMPUTATION OF TAXABLE INCOME.
  (a) For purposes of the tax imposed by this chapter, a taxpayer's
  tax year is the same as the taxpayer's tax year for federal income
  tax purposes.
         (b)  If a taxpayer's tax year is changed for federal income
  tax purposes, the taxpayer's tax year for purposes of the tax
  imposed by this chapter is similarly changed.
         Sec. 261.202.  METHODS OF ACCOUNTING. (a) A taxpayer's
  method of accounting is the same as the taxpayer's method of
  accounting for federal income tax purposes. If a single method of
  accounting has not been regularly used by the taxpayer, taxable
  income for purposes of this chapter shall be computed under any
  method that in the opinion of the comptroller fairly reflects
  income.
         (b)  If a taxpayer's method of accounting is changed for
  federal income tax purposes, the taxpayer's method of accounting
  for purposes of this chapter is changed in the same manner.
         Sec. 261.203.  ADJUSTMENTS. In computing a taxpayer's
  taxable income for any tax year under a method of accounting
  different from the method under which the taxpayer's taxable income
  for the previous year was computed, there shall be taken into
  account those adjustments that are determined, under rules
  prescribed by the comptroller, to be necessary solely by reason of
  the change in order to prevent amounts from being duplicated or
  omitted.
         Sec. 261.204.  LIMITATION ON ADDITIONAL TAX. (a) If a
  taxpayer's method of accounting is changed, other than from an
  accrual to an installment method, an additional tax that results
  from adjustments determined to be necessary solely because of the
  change may not be greater than if those adjustments were ratably
  allocated and included for the tax year of the change and not more
  than two preceding tax years during which the taxpayer used the
  method of accounting from which the change is made.
         (b)  If a taxpayer's method of accounting is changed from an
  accrual to an installment method, an additional tax for the year of
  the change of method and for a subsequent year that is attributable
  to the receipt of installment payments properly accrued in a prior
  year is reduced by the portion of tax for any prior tax year
  attributable to the accrual of the installment payments, under
  rules adopted by the comptroller.
  [Sections 261.205-261.400 reserved for expansion]
  SUBCHAPTER E. PARTNERS AND PARTNERSHIPS
         Sec. 261.401.  ENTITY NOT TAXABLE. A partnership as an
  entity is not subject to the tax imposed by this chapter. Persons
  carrying on business as partners are liable for the tax imposed by
  this chapter only in their separate or individual capacities.
         Sec. 261.402.  RESIDENT PARTNER--ADJUSTED GROSS INCOME. (a)
  Partnership income, gain, loss, or deduction is allocated in
  accordance with each partner's distributive share for federal
  income tax purposes.
         (b)  Each item of partnership income, gain, loss, or
  deduction has the same character for a partner under this chapter as
  it has for federal income tax purposes. If an item is not
  characterized for federal income tax purposes, it has the same
  character for a partner as if realized directly from the source from
  which realized by the partnership or incurred in the same manner as
  incurred by the partnership.
         (c)  If a partner's distributive share of an item of
  partnership income, gain, loss, or deduction is determined for
  federal income tax purposes by a special provision in the
  partnership agreement with respect to the item, and the principal
  purpose of the provision is the avoidance or evasion of tax under
  this chapter, the partner's distributive share of the item and a
  modification required with respect to it is determined in
  accordance with the partner's distributive share of the taxable
  income or loss of the partnership generally, excluding those items
  requiring separate computation under Section 702, Internal Revenue
  Code of 1986.
         Sec. 261.403.  NONRESIDENT PARTNER--ADJUSTED GROSS INCOME
  FROM SOURCES IN THIS STATE. (a) In determining the adjusted gross
  income of a nonresident partner of any partnership, there shall be
  included only that part derived from or connected with sources in
  this state of the partner's distributive share of items of
  partnership income, gain, loss, and deduction entering into the
  partner's federal adjusted gross income, as that part is determined
  under rules adopted by the comptroller and consistent with the
  rules adopted under Section 261.055.
         (b)  Except as authorized by Subsection (c), in determining
  the sources of a nonresident partner's income, no effect is given to
  a provision in the partnership agreement that:
               (1)  characterizes payments to the partner as being for
  services or for the use of capital, or allocates to the partner, as
  income or gain from sources outside this state, a greater
  proportion of the partner's distributive share of partnership
  income or gain than the ratio of partnership income or gain from
  sources outside this state to partnership income or gain from all
  sources; or
               (2)  allocates to the partner a greater proportion of a
  partnership item of loss or deduction connected with sources in
  this state than the partner's proportionate share, for federal
  income tax purposes, of partnership loss or deduction generally.
         (c)  The comptroller may, on application, authorize the use
  of other methods of determining a nonresident partner's portion of
  partnership items derived from or connected with sources in this
  state, and the modifications related to it, that are appropriate
  and equitable, on terms the comptroller may require.
         (d)  A nonresident partner's distributive share of items of
  income, gain, loss, or deduction is determined under Section
  261.402(a). The character of partnership items for a nonresident
  partner is determined under Section 261.402(b). The effect of a
  special provision in a partnership agreement, other than a
  provision described by Subsection (b), having as a principal
  purpose the avoidance or evasion of tax under this chapter is
  determined under Section 261.402(c).
  [Sections 261.404-261.500 reserved for expansion]
  SUBCHAPTER F. TAX RETURNS AND PAYMENTS
         Sec. 261.501.  PERSONS REQUIRED TO MAKE RETURNS OF INCOME. A
  state income tax return shall be made by every individual who has
  adjusted gross income from sources in this state in excess of
  $150,000.
         Sec. 261.502.  RETURNS BY FIDUCIARIES. (a) An income tax
  return for a deceased individual shall be made and filed by the
  executor, administrator, or other person charged with the care of
  the property of the decedent. A final return of a decedent is due
  when it would have been due if the decedent had not died.
         (b)  An income tax return for an individual who is unable to
  make a return because of minority or other disability shall be made
  and filed by the individual's authorized agent, guardian,
  conservator, fiduciary, or other person charged with the care of
  the individual or the individual's property other than a receiver
  in possession of only a part of the individual's property.
         (c)  If two or more fiduciaries are acting jointly, the
  return may be made by any one of them.
         Sec. 261.503.  NOTICE OF QUALIFICATION AS RECEIVER. A
  receiver, trustee in bankruptcy, assignee for benefit of creditors,
  or other similar fiduciary shall give notice of the person's
  qualification to the comptroller, as may be required by rule.
         Sec. 261.504.  CHANGE OF STATUS AS RESIDENT OR NONRESIDENT
  DURING YEAR. (a) If the status of an individual changes during the
  individual's tax year from resident to nonresident or from
  nonresident to resident, the comptroller by rule may require the
  individual to file one return for the portion of the year during
  which the individual is a resident and one for the portion of the
  year during which the individual is a nonresident.
         (b)  Except as provided by Subsection (c), the taxable income
  of an individual is determined as provided by Section 261.051 for
  residents and Section 261.054 for nonresidents as if the
  individual's tax year for federal income tax purposes were limited
  to the period of the individual's resident and nonresident status
  respectively.
         (c)  There is included in determining taxable income from
  sources in or outside this state, as the case may be, income, gain,
  loss, or deduction accrued prior to the change of status even though
  not otherwise includable or allowable in respect to the period
  before the change, but the taxation or deduction of items accrued
  before the change of status is not affected by the change.
         (d)  If two returns are required to be filed under this
  section, the total of the taxes due may not be less than would be due
  if the total of the taxable incomes reported on the two returns were
  includable in one return.
         Sec. 261.505.  TIME AND PLACE FOR FILING RETURNS AND PAYING
  TAX. (a) A person required to make and file an income tax return
  required by this chapter shall:
               (1)  file the return not later than the 15th day of the
  fourth month following the end of the taxpayer's tax year; and
               (2)  pay a tax due to the comptroller not later than the
  last day the filing of the return is allowed without penalty,
  excluding an extension of time for filing the return.
         (b)  The comptroller by rule shall prescribe the place for
  filing a return, statement, or other document required by this
  chapter and for the payment of a tax.
         Sec. 261.506.  ESTIMATED TAX. (a) An individual subject to
  the income tax imposed by this chapter shall make estimated
  payments of the tax. Section 6654, Internal Revenue Code of 1986,
  other than Subsections (a), (b), (d)(2), and (e) of that section,
  governing the payment of estimated federal income taxes on
  individuals applies to the payments required by this section,
  including exemptions from the estimated tax payment requirement. A
  reference in that section to the federal income tax imposed on
  individuals is construed as a reference to the tax imposed by this
  chapter as required to administer this section. A power or duty
  given by Section 6654, Internal Revenue Code of 1986, to the United
  States secretary of the treasury is assigned to the comptroller for
  purposes of the estimated payments required by this section.
         (b)  The comptroller shall adopt rules to administer this
  section.
         (c)  Payment of the estimated tax or an installment is
  considered payment on account of the tax imposed by this chapter.
         Sec. 261.507.  EXTENSION OF TIME FOR FILING AND PAYMENT. (a)
  The comptroller, on terms the comptroller may require, may grant a
  reasonable extension of time for payment of tax or an installment,
  or for filing a return, statement, or other document required under
  this chapter. Except for an extension for a taxpayer who is outside
  the United States, an extension for filing a return, statement, or
  document may not exceed six months.
         (b)  If the time for the payment of an amount of tax is
  extended, the comptroller may require the taxpayer to furnish a
  bond or other security in an amount not exceeding twice the amount
  of tax for which the extension of time for payment is granted, on
  terms the comptroller may require.
         Sec. 261.508.  CHANGE OF ELECTION. An election expressly
  authorized by this chapter may be changed as authorized by the
  comptroller or by the comptroller's rule.
         Sec. 261.509.  SIGNING OF RETURNS AND OTHER DOCUMENTS. (a)
  A return, statement, or other document required to be made or filed
  under this chapter shall be signed as provided by the comptroller.
  An individual's name signed to a return, statement, or other
  document is prima facie evidence that the individual signed the
  return, statement, or other document.
         (b)  A return, statement, or other document required of a
  partnership must be signed by at least one partner. A partner's
  name signed to a return, statement, or other document is prima facie
  evidence that the partner is authorized to sign on behalf of the
  partnership.
         (c)  The making or filing of a return, statement, or other
  document or copy required to be made or filed under this chapter,
  including a copy of a federal return, constitutes a certification
  by the person making or filing the return, statement, or other
  document or copy that the statements contained in it are true and
  that a copy filed is a true copy.
  [Sections 261.510-261.520 reserved for expansion]
  SUBCHAPTER G. INFORMATION RETURNS
         Sec. 261.521.  GENERAL REQUIREMENTS. The comptroller by
  rule may require the keeping of records, the content and form of
  returns and statements, and the filing of copies of federal income
  returns and determinations. The comptroller may require a person,
  by rule or by notice served on the person, to make returns, render
  statements, or keep records, as the comptroller considers
  sufficient to show whether the person is liable under this chapter
  for tax or for the collection of tax.
         Sec. 261.522.  REPORT OF CHANGE IN FEDERAL TAXABLE INCOME.
  (a) If the amount of a taxpayer's federal taxable income reported
  on the taxpayer's federal income tax return for a tax year is
  changed or corrected by the United States Internal Revenue Service
  or other competent authority, or as the result of a renegotiation of
  a contract or subcontract with the United States, the taxpayer
  shall:
               (1)  report the change or correction in federal taxable
  income not later than the 90th day after the final determination of
  the change, correction, or renegotiation, or as required by the
  comptroller; and
               (2)  concede the accuracy of the determination or state
  in what way it is erroneous.
         (b)  A taxpayer filing an amended federal income tax return
  shall also file, not later than the 90th day after filing, an
  amended return under this chapter, and shall give any information
  required by the comptroller.
         (c)  The comptroller by rule may prescribe exceptions to the
  requirements of this section.
  [Sections 261.523-261.600 reserved for expansion]
  SUBCHAPTER H. ADDITIONS TO TAX; PENALTIES
         Sec. 261.601.  FAILURE TO FILE TAX RETURN. (a) A person who
  does not file a return required under this chapter on or before the
  prescribed date is subject to the following penalty based on a
  percentage of the full amount of tax owed on the prescribed day:
               (1)  if the return is filed not later than the 30th day
  after the prescribed date, five percent;
               (2)  if the return is filed later than the 30th day
  after the prescribed date, but not later than the 60th day after the
  prescribed date, 10 percent;
               (3)  if the return is filed later than the 60th day
  after the prescribed date, but not later than the 90th day after the
  prescribed date, 15 percent;
               (4)  if the return is filed later than the 90th day
  after the prescribed date, but not later than the 120th day after
  the prescribed date, 20 percent; or
               (5)  if the return is filed later than the 120th day
  after the prescribed date, 25 percent.
         (b)  The prescribed date is determined with regard to an
  extension of time for filing.
         (c)  In determining the amount owed on the prescribed date,
  the taxpayer is entitled to credit for a portion of the tax paid on
  or before the prescribed date and other credit that may be claimed
  on the return.
         (d)  The penalty required by this section does not apply if
  the taxpayer shows that the failure to file a return was not the
  result of wilful neglect before the prescribed date or at any time
  during the delinquency and that good cause for the failure existed
  at all times before filing.
         Sec. 261.602.  FAILURE TO PAY TAX. (a) A person who does not
  pay any amount of tax owed by the person on the prescribed date
  shall pay, in addition to all other penalties and interest, a
  penalty of 10 percent of the amount of the tax due and owing on the
  prescribed date.
         (b)  The prescribed date is determined with regard to
  extensions of time allowed by the comptroller.
         (c)  A failure to pay all or part of an estimated tax is
  considered to be an underpayment of estimated tax. The comptroller
  by rule shall prescribe the method of determining the amount and
  period of underpayment.
         Sec. 261.603.  PENALTIES AND INTEREST TREATED AS TAX. The
  penalties and interest provided by this subchapter shall be paid on
  notice and demand and shall be assessed, collected, and paid in the
  same manner as other taxes. The comptroller may issue a deficiency
  notice for all or part of a penalty or interest along with or
  separate from the amount of tax owed in absence of penalties or
  interest.
  [Sections 261.604-261.630 reserved for expansion]
  SUBCHAPTER I. CREDITS AND REFUNDS
         Sec. 261.631.  CREDITS AND REFUNDS. (a) Within the
  applicable period of limitations the comptroller may credit an
  overpayment of income tax and interest on the overpayment against a
  liability of a tax imposed by the tax laws of this state on the
  person who made the overpayment, and the comptroller shall refund
  the balance out of the proceeds of the tax retained by the
  comptroller.
         (b)  The comptroller may prescribe rules providing for
  crediting against the estimated tax for a tax year the amount
  determined to be an overpayment of the income tax for a preceding
  tax year.
         (c)  If an amount of income tax is assessed and collected
  after the expiration of the period of limitations properly
  applicable, the amount is an overpayment.
         Sec. 261.632.  ABATEMENTS. (a) The comptroller may abate
  any unpaid portion of a tax or a tax liability that is excessive in
  amount, assessed after the expiration of the applicable period of
  limitations, or erroneously or illegally assessed.
         (b)  The comptroller may abate the unpaid portion of a tax or
  a tax liability if the comptroller determines under uniform rules
  prescribed by the comptroller that the administration and
  collection costs involved would not warrant collection of the
  amount due.
         Sec. 261.633.  EXTENDED LIMITATION PERIOD. (a) If a
  taxpayer is required by Section 261.522 to report a change or
  correction in federal taxable income reported on a federal income
  tax return, or to report a change or correction that is treated in
  the same manner as if it were an overpayment for federal income tax
  purposes, or to file an amended return with the comptroller, a claim
  for credit or refund of a resulting overpayment of tax must be filed
  by the taxpayer not later than the second anniversary of the date
  the notice of the change or correction or the amended return was
  required to be filed with the comptroller. If the report or amended
  return required by Section 261.522 is not filed within the period
  prescribed by that section, interest on a resulting refund or
  credit ceases to accrue after the period. The amount of credit or
  refund may not exceed the amount of the reduction in tax
  attributable to the federal change, correction, or items amended on
  the taxpayer's amended federal income tax return. This subsection
  does not affect the time within which or the amount for which a
  claim for credit or refund may be filed under a provision other than
  this section.
         (b)  If a claim for credit or refund relates to an
  overpayment of tax on account of the deductibility by the taxpayer
  of a debt as a debt that became worthless or a loss from
  worthlessness of a security or the effect that the deductibility of
  a debt or of a loss has on the application to the taxpayer of a
  carryover, the claim may be made, under rules adopted by the
  comptroller, not later than the seventh anniversary of the date
  prescribed by law for filing the return for the year with respect to
  which the claim is made.
         (c)  If a claim for credit or refund relates to an
  overpayment attributable to a net operating loss carryback, the
  claim may be made, under rules adopted by the comptroller, not later
  than the 15th day of the 40th month following the end of the tax year
  of the net operating loss that resulted in the carryback or the
  period prescribed by Section 111.104, whichever expires later.
  [Sections 261.634-261.650 reserved for expansion]
  SUBCHAPTER J. MISCELLANEOUS ENFORCEMENT PROVISIONS
         Sec. 261.651.  TAXPAYER NOT RESIDENT. If notice and demand
  for the payment of a tax is given to a nonresident and it appears to
  the comptroller that it is not practicable to locate property of the
  taxpayer sufficient in amount to cover the amount of tax due, the
  comptroller may authorize the institution of any available action
  or proceeding to collect or enforce the claim in any place by any
  procedure by which a civil judgment of a court of record of this
  state could be collected or enforced. The comptroller may
  designate agents or retain counsel outside this state for the
  purpose of collecting taxes due under this chapter and require of
  them bonds or other security for the faithful performance of their
  duties. The comptroller may enter into agreements with the tax
  department of another state for the collection of taxes from
  persons found in this state who are delinquent in the payment of
  income taxes imposed by that state on condition that the agreeing
  state afford similar assistance in the collection of taxes from
  persons found in that state who are delinquent in the payment of
  taxes imposed by this chapter.
         Sec. 261.652.  INCOME TAX CLAIMS OF OTHER STATES. The courts
  of this state shall recognize and enforce liabilities for personal
  income taxes lawfully imposed by another state that extends a like
  comity to this state, and the authorized officer of the other state
  may sue for the collection of personal income tax in the courts of
  this state. A certificate by the secretary of state of the other
  state that an officer suing for the collection of the tax is
  authorized to collect the tax is conclusive proof of the officer's
  authority. In this section, "taxes" includes additions to tax,
  interest, and penalties.
         Sec. 261.653.  ORDER TO COMPEL COMPLIANCE. (a) On
  application of the attorney general, a judge of a court of
  appropriate jurisdiction for the county in which a taxpayer or
  other person who intentionally or knowingly refuses to file a tax
  return required by this chapter may, by order, direct the person to
  file the return. A person who fails or refuses to obey the order is
  guilty of contempt of court.
         (b)  If any person intentionally or knowingly refuses to make
  available any books, papers, records, or memoranda for examination
  by the comptroller or wilfully refuses to attend and testify, in
  accordance with the powers conferred on the comptroller by Chapter
  111, on application of the comptroller, a judge in the court of
  appropriate jurisdiction for the county where the person resides
  may by order direct the person to comply with the comptroller's
  request for books, papers, records, or memoranda or for the
  person's attendance and testimony. If the books, papers, records,
  or memoranda required by the comptroller are in the custody of a
  corporation, the order of the court may be directed to any principal
  officer of the corporation. A person who fails or refuses to obey
  the order is guilty of contempt of court.
         Sec. 261.654.  TRANSFEREES. (a) In this section,
  "transferee" includes an heir or a recipient of a donation, legacy,
  devise, or distribution.
         (b)  The liability, at law or in equity, of a transferee of
  property of a taxpayer for any tax, addition to tax, penalty, or
  interest due under this chapter is assessed, paid, and collected in
  the same manner and subject to the same provisions and limitations
  as in the case of the tax to which the liability relates except as
  otherwise provided by this section.
         (c)  The period of limitation for assessment of liability of
  a transferee is:
               (1)  the first anniversary of the expiration of the
  period of limitation against the initial transferor if the
  transferee is the initial transferee;
               (2)  the first anniversary of the expiration of the
  period of limitation against the preceding transferee, but not
  later than the third anniversary of the expiration of the period of
  limitation for assessment against the initial transferor, if the
  transferee is not the initial transferee; or
               (3)  notwithstanding Subdivisions (1) and (2), if
  before the expiration of the period of limitation under Subdivision
  (1) or (2) a proceeding for the collection of the liability has been
  begun against the initial transferor or the last preceding
  transferee, respectively, the first anniversary of the date on
  which the proceeding is terminated.
         (d)  If, before the expiration of the period of limitation
  applicable to a transferee, the comptroller and the transferee
  consent in writing to an assessment after that time, the liability
  may be assessed at any time before the expiration of the agreed
  period. The period of limitation on credit or refund to the
  transferee of overpayments of tax made by the transferee or of
  overpayments of tax made by the transferor of which the transferee
  is legally entitled to credit or refund is extended by an agreement
  under this subsection and any extension of the agreement.
         (e)  If a person dies, the period of limitation for
  assessment against that person is the period that would be in effect
  had death not occurred.
         Sec. 261.655.  JEOPARDY DETERMINATIONS. (a) If the
  comptroller issues a jeopardy determination for a tax for a current
  period, the comptroller shall terminate the tax period of the
  taxpayer immediately, and the notice and demand for a return and
  immediate payment of the tax shall apply to the terminated period
  and to income accrued and deductions incurred on or before the
  termination date if not otherwise properly includable or deductible
  for the period.
         (b)  The comptroller may abate the jeopardy determination if
  the comptroller finds that jeopardy does not exist.
         Sec. 261.656.  BANKRUPTCY OR RECEIVERSHIP. (a) On the
  adjudication of bankruptcy of any taxpayer in any bankruptcy
  proceeding or the appointment of a receiver for any taxpayer in any
  receivership proceeding before any court of the United States or
  any state or territory, any deficiency, together with additions to
  tax and interest provided by law, determined by the comptroller may
  be immediately assessed.
         (b)  Claims for the deficiency and additions to tax and
  interest may be presented, for adjudication in accordance with law,
  to the court before which the bankruptcy or receivership proceeding
  is pending, despite the pendency of any protest before the
  comptroller. A protest against a proposed assessment may not be
  filed with the comptroller after the adjudication of bankruptcy or
  appointment of the receiver.
         Sec. 261.657.  EVIDENCE OF RELATED FEDERAL DETERMINATION.
  Evidence of a federal determination relevant to the taxes imposed
  by this chapter is admissible in an administrative or judicial
  proceeding relating to those taxes.
  [Sections 261.658-261.670 reserved for expansion]
  SUBCHAPTER K. OFFENSES
         Sec. 261.671.  ATTEMPT TO EVADE OR DEFEAT TAX. (a) A person
  commits an offense if the person intentionally or knowingly
  attempts in any manner to evade or defeat a tax imposed by this
  chapter or the payment of tax imposed by this chapter.
         (b)  An offense under this section is a felony of the third
  degree.
         Sec. 261.672.  FAILURE TO PAY. (a) A person commits an
  offense if the person is required under this chapter to pay a tax
  imposed by this chapter and the person intentionally or knowingly
  fails to pay the tax.
         (b)  An offense under this section is a felony of the third
  degree.
         Sec. 261.673.  FAILURE TO FILE RETURN, SUPPLY INFORMATION,
  OR PAY TAX. (a) A person commits an offense if the person is
  required under this chapter to pay a tax, or required by this
  chapter or rule adopted under this chapter to make a return, to keep
  records, or to supply information, and the person intentionally or
  knowingly fails to pay the tax, make the return, keep the records,
  or supply the information at the time or times required by law.
         (b)  An offense under this section is a Class A misdemeanor.
  [Sections 261.674-261.680 reserved for expansion]
  SUBCHAPTER L. POWERS OF COMPTROLLER
         Sec. 261.681.  COOPERATION WITH OTHER JURISDICTIONS. The
  comptroller may permit the United States secretary of the treasury
  or the secretary's delegate, or the proper officer of any state or
  other jurisdiction imposing an income tax on the incomes of
  individuals, or the authorized representative of either officer, to
  inspect the income tax returns of an individual, or may furnish to
  the officer or authorized representative an abstract of the return
  of income of an individual or supply the officer with information
  concerning an item of income contained in a return, or disclosed by
  the report of an investigation of the income or return of income of
  an individual, but permission may be granted only if the statutes of
  the United States or of the other jurisdiction, as applicable,
  grant substantially similar privileges to the comptroller.
         Sec. 261.682.  COOPERATION WITH OTHER TAX OFFICIALS OF THIS
  STATE. The comptroller may permit other tax officials of this state
  to inspect tax returns and reports filed under this chapter but the
  inspection is permitted only for purposes of enforcing a tax law and
  only to the extent and under the conditions prescribed by rule of
  the comptroller.
         Sec. 261.683.  CONTRACT WITH SECRETARY OF TREASURY FOR
  COLLECTION OF TAX. The comptroller may enter into an agreement with
  the United States secretary of the treasury or the secretary's
  delegate under which, to the extent provided by the terms of the
  agreement, the secretary or delegate will administer, enforce, and
  collect a tax imposed by this chapter on behalf of this state. The
  cost of the services performed by the secretary or delegate in
  administering, enforcing, or collecting the tax under the terms of
  the agreement may be paid from the appropriations for the general
  operations of the comptroller.
         Sec. 261.684.  ARMED FORCES RELIEF PROVISIONS. (a) The
  period of service in the armed forces of the United States in a
  combat zone plus a period of continuous hospitalization outside
  this state attributable to that service plus the next 180 days is
  disregarded in determining, under rules of the comptroller, whether
  an act required by this chapter was performed by a taxpayer or the
  taxpayer's representative within the time prescribed.
         (b)  If an individual dies during an induction period while
  in active service as a member of the armed forces of the United
  States and the death occurred while the individual was serving in a
  combat zone or as a result of wounds, disease, or injury incurred
  while serving, the tax imposed by this chapter does not apply to the
  tax year in which the individual dies or to any prior tax year
  ending on or after the first day the individual so served in a
  combat zone.
         Sec. 261.685.  DISPOSITION OF PROCEEDS. The revenue from
  the tax imposed by this chapter shall be deposited as follows:
               (1)  two-thirds of the revenue shall be deposited to
  the credit of a special account in the general revenue fund and may
  be appropriated only for the purpose of reducing the rate of ad
  valorem maintenance and operations taxes levied for the support of
  primary and secondary education in the manner provided by Sections
  24(h) and (i), Article VIII, Texas Constitution, for the reduction
  of that rate; and
               (2)  one-third to the credit of the foundation school
  fund.
         SECTION 2.  Section 111.201, Tax Code, is amended to read as
  follows:
         Sec. 111.201.  ASSESSMENT LIMITATION. (a) No tax imposed by
  this title may be assessed after four years from the date that the
  tax becomes due and payable except as provided by Subsection (b).
         (b)  A tax imposed by Chapter 261 may not be assessed after
  six years from the date the tax becomes due and payable.
         SECTION 3.  A referendum as required by Section 24, Article
  VIII, Texas Constitution, on the adoption of the income tax under
  this Act shall be submitted to the voters at an election to be held
  November 8, 2011. The ballot for the referendum shall be printed to
  permit voting for or against the proposition: "The adoption of an
  income tax at graduated rates of three percent to six percent for
  taxable income in excess of $150,000."
         SECTION 4.  (a) Except as provided by Subsection (b) of this
  section, this Act applies to income earned, accrued, or received on
  or after the effective date of this Act.
         (b)  Income, deductions, losses, credits against income, or
  other adjustments allowed in determining the amount of tax under
  this Act or the amount of federal adjusted gross income under this
  Act, including carryovers, are not prohibited in computing the
  taxes for a tax period beginning on January 1, 2012, because those
  adjustments may have accrued or otherwise originated before the
  effective date of this Act.
         (c)  In 2012, the comptroller by rule may suspend the
  application of Section 261.506, Tax Code, as added by this Act,
  wholly or partly and may extend the deadlines for estimated tax
  payments under that section.
         SECTION 5.  (a) Except as provided by Section 6 of this Act,
  if the proposition in Section 3 of this Act is approved, this Act
  takes effect January 1, 2012.
         (b)  Except as provided by Section 6 of this Act, if the
  proposition in Section 3 of this Act is not approved, this Act has
  no effect.
         SECTION 6.  Section 3 of this Act takes effect September 1,
  2011.