| (a) Effective date. Except as otherwise provided in this section, the provisions of this section apply to franchise tax reports originally due on or after January 1, 1992. (b) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1) Banking corporation (bank)--Each state, national, domestic, or foreign bank, whether organized under the laws of this state, another state, or another country, or under federal law, including a limited banking association organized under Finance Code, Title 3, Subtitle A and each bank organized under the Federal Reserve Act, §25(a), (12 United States Code, §§611-631) (edge corporations), but does not include a bank holding company as that term is defined by the Bank Holding Company Act of 1956 (12 United States Code, §1841). (2) Commercial domicile--The principal place from which the trade or business of the entity is directed. (3) Correspondent bank--a United States depository institution or foreign bank, as defined by 12 C.F.R. §206.2(e), that accepts deposits of and/or performs banking services for insured depository institutions, and to which insured depository institutions have interbank liabilities regulated by 12 C.F.R. §§206.1 et seq. The term "correspondent bank" does not include a depository institution or foreign bank that is commonly controlled with the insured depository institution. (4) Legal domicile--The legal domicile of a corporation is its state of incorporation. The legal domicile of a partnership or trust is the principal place of business of the partnership or trust. The principal place of business of a partnership or trust is the location of its day-to-day operations. Where the day-to-day operations are conducted equally or fairly evenly in more than one state, the principal place of business is the commercial domicile. (c) Banking corporations subject to franchise tax. (1) All banking corporations that are chartered or that do business in Texas beginning May 1, 1985, are subject to franchise tax, except those banks that are specifically listed in subsection (d) of this section. (2) Beginning January 1, 1996, the following banking corporations are subject to Texas franchise tax: (A) non-Texas banking corporations doing business in Texas solely in a fiduciary capacity and registered with the Texas Secretary of State's Office under the Probate Code, §105A; and (B) banking corporations doing business solely on federal enclaves in Texas. (3) For those banking corporations subject to tax pursuant to paragraph (2) of this subsection, January 1, 1996, is considered the banking corporation's beginning date for purposes of determining the banking corporation's privilege periods and for all other purposes of the Tax Code, Chapter 171. (d) Banks not subject to tax. Unincorporated private banks, other than limited banking associations, doing business in Texas are not subject to Texas franchise tax. (e) Other franchise tax provisions apply. All provisions of this subchapter concerning the Texas franchise tax are applicable to banking corporations. However, this section will control if it conflicts with another section of this subchapter. (f) Apportionment of dividends and interest. (1) This paragraph applies to franchise tax reports originally due before January 1, 2000. If a banking corporation has its commercial domicile in Texas, all dividends and interest received, including interest from the federal government unless otherwise excluded by §3.555(k) of this title (relating to Earned Surplus: Computation), are considered to be Texas gross receipts and gross receipts everywhere. If a banking corporation's commercial domicile is not in Texas, no dividends or interest received are considered to be Texas gross receipts but all are considered to be gross receipts everywhere, unless otherwise specifically excluded from the receipts factor. (2) For reports originally due on or after January 1, 2000, a banking corporation's dividends and/or interest are apportioned to the legal domicile of the payor. See §3.549(e)(13) of this title (relating to Taxable Capital: Apportionment) and §3.557(e)(13) of this title (relating to Earned Surplus: Apportionment) for additional information on apportioning dividends and interest. (3) For reports that are originally due on or after January 1, 2002, a banking corporation may exclude from its Texas gross receipts interest that is earned on federal funds and interest that is earned on securities that are sold under an agreement to repurchase and that are held in a correspondent bank that is domiciled in Texas, but the banking corporation must include the interest in its gross receipts everywhere. (g) Earned surplus. Regarding the add-back of compensation of executive officers and directors of banking corporations and directors, managers, and participants of a limited banking association, see §3.558 of this title (relating to Earned Surplus: Officer and Director Compensation). (h) Enforcement. (1) All taxes, penalties, and interest due by a banking corporation are secured by a lien on all of the bank's property that is subject to execution. The lien attaches to all of the property of the bank liable for the taxes. (2) The attorney general may bring suit in the name of the state to recover delinquent taxes, penalties, and interest. (3) The banking commissioner shall appoint a conservator under the Finance Code, Title 3, Subtitle A, to pay the franchise tax of a banking corporation that is organized under the laws of Texas and that the commissioner certifies as being delinquent in the payment of the corporation's franchise tax. (4) Except as provided in paragraph (3) of this subsection, a banking corporation that is organized under the laws of Texas or under federal law and has its main office in Texas will not have its corporate privileges forfeited by the comptroller for not paying its franchise tax. (5) A banking corporation that is organized under the laws of Texas or under federal law and has its main office in Texas will not have its charter forfeited for not paying its franchise tax. |
