Relating to the computation of the cost of goods sold by television and radio broadcasters for purposes of the franchise tax.
Summary
SB 263 amends the Texas Tax Code to clarify how television and radio broadcasters compute cost of goods sold (COGS) for franchise tax purposes. The bill specifies that a taxable entity whose principal business activity is film or television production, television or radio broadcasting, or certain distribution of tangible personal property may include in COGS depreciation, amortization, and other expenses directly related to the acquisition, production, or use of the property, including expenses for the right to broadcast or use the property.
The bill also defines “television or radio broadcasting” for this subsection as broadcasting under an FCC-issued license regulated under 47 C.F.R. Part 73 or 74. A separate section states that the amendment is a clarification of existing law, indicating the Legislature’s intent that the change be treated as interpretive rather than a substantive policy shift. The act took effect immediately after receiving the necessary legislative approval.
Impact
SB 263 affects Section 171.1012(o) of the Texas Tax Code, which governs franchise tax deductions for cost of goods sold. It expands or clarifies the types of expenses that television and radio broadcasters may count toward COGS, potentially reducing taxable margin for affected media businesses. The bill primarily impacts broadcasters and related taxable entities that elect the COGS deduction, and it may also influence tax administration by providing a more specific statutory definition of covered broadcasting activities.
Sentiment
The bill appears to have been broadly supported and relatively noncontroversial. It passed the Senate unanimously and the House by a large margin, with only a small number of dissenting votes. The absence of committee transcript debate suggests limited public controversy or that the measure was viewed as a technical clarification rather than a major policy change.
Contention
The main point of contention, to the extent one existed, likely centered on whether the bill merely clarifies existing law or effectively broadens the franchise tax deduction for broadcasters. Supporters would view the measure as resolving ambiguity and aligning tax treatment with industry practice, while skeptics may have been concerned about reduced franchise tax revenue or preferential treatment for media companies. The recorded votes show only modest opposition in the House, indicating that any disagreement was limited.
Includes not-for-profit corporations and public television or radio corporations in the definition of business entity; allows such entities to claim the newspaper and broadcast media jobs tax credit.
Includes not-for-profit corporations and public television or radio corporations in the definition of business entity; allows such entities to claim the newspaper and broadcast media jobs tax credit.