88R7330 SRA-F

By: Capriglione H.B. No. 4809

A BILL TO BE ENTITLED

AN ACT

relating to the strong families credit against certain taxes for entities that contribute to certain organizations.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Title 5, Alcoholic Beverage Code, is amended by adding Chapter 207 to read as follows:

CHAPTER 207. STRONG FAMILIES TAX CREDIT

Sec. 207.001. DEFINITIONS. In this chapter:

(1) "Designated contribution," "eligible organization," and "strong families credit" have the meanings assigned by Section 171.701, Tax Code.

(2) "Taxpayer" means a person who pays a tax under this title.

Sec. 207.002. ELIGIBILITY. A taxpayer that makes a designation contribution that meets the requirements of Subchapter N, Chapter 171, Tax Code, is entitled to apply for a strong families credit in the amount and under the conditions provided by this chapter against taxes paid under this title.

Sec. 207.003. AMOUNT OF CREDIT; LIMITATIONS. (a) Subject to Subsections (b) and (c), the amount of a taxpayer's credit for a state fiscal year is equal to the lesser of:

(1) the amount of designated contributions made to eligible organizations during the state fiscal year; or

(2) the amount of taxes paid by the taxpayer under this title during the state fiscal year.

(b) The maximum amount of strong families credits that may be awarded for a state fiscal year is the amount provided by Section 171.706(b), Tax Code.

(c) The maximum amount of designated contributions a taxpayer may make to all eligible organizations in a state fiscal year is the amount provided by Section 171.706(c), Tax Code.

(d) The comptroller shall allocate strong families credits as provided by Section 171.706(d), Tax Code.

Sec. 207.004. APPLICATION. (a) A taxpayer must apply to claim a strong families credit against a tax imposed under this title.

(b) The comptroller shall prescribe the form and method of applying to claim a credit under this section. The taxpayer must use this method in applying for the credit.

(c) The comptroller may award a credit to a taxpayer who applies for the credit under Subsection (a) if the taxpayer is eligible for the credit and the credit is available under Section 171.706(b), Tax Code.

(d) The comptroller shall notify a taxpayer in writing of the comptroller's decision to grant or deny the application under Subsection (a). If the comptroller denies a taxpayer's application, the comptroller shall include in the notice of denial the reasons for the comptroller's decision.

Sec. 207.005. RULES. The comptroller may adopt rules and procedures necessary to implement, administer, and enforce this chapter.

SECTION 2. Subtitle B, Title 3, Insurance Code, is amended by adding Chapter 230 to read as follows:

CHAPTER 230. STRONG FAMILIES TAX CREDIT

Sec. 230.001. DEFINITIONS. In this chapter:

(1) "Designated contribution," "eligible organization," and "strong families credit" have the meanings assigned by Section 171.701, Tax Code.

(2) "State insurance tax liability" means any tax liability incurred by an entity under Chapters 221 through 226 or Chapter 281.

Sec. 230.002. ELIGIBILITY. An entity that makes a designated contribution that meets the requirements of Subchapter N, Chapter 171, Tax Code, is entitled to apply for a strong families credit in the amount and under the conditions provided by this chapter against the entity's state insurance tax liability.

Sec. 230.003. AMOUNT OF CREDIT; LIMITATION ON TOTAL CREDITS. (a) Subject to Subsections (b) and (c), the amount of an entity's credit for a report is equal to the lesser of:

(1) the amount of designated contributions made to an eligible organization during the year covered by the report; or

(2) the amount of the entity's state insurance tax liability for the year covered by the report after applying all other applicable credits.

(b) The maximum amount of strong families credits that may be awarded for a state fiscal year is the amount provided by Section 171.706(b), Tax Code.

(c) The maximum amount of designated contributions an entity may make to all eligible organizations in a state fiscal year is the amount provided by Section 171.706(c), Tax Code.

(d) The comptroller shall allocate strong families credits as provided by Section 171.706(d), Tax Code.

Sec. 230.004. APPLICATION FOR CREDIT. (a) An entity must apply to claim a strong families credit under this chapter on or with the report covering the year in which the designated contribution was made.

(b) The comptroller shall prescribe the form and method of applying to claim a credit under this section. An entity must use this method in applying for the credit under this chapter.

(c) The comptroller may award a credit to an entity that applies for the credit under Subsection (a) if the entity is eligible for the credit and the credit is available under Section 171.706(b), Tax Code.

Sec. 230.005. ASSIGNMENT PROHIBITED; EXCEPTION. An entity may not convey, assign, or transfer the strong families credit to another entity unless substantially all of the assets of the entity are conveyed, assigned, or transferred in the same transaction.

Sec. 230.006. RULES. The comptroller may adopt rules and procedures necessary to implement, administer, and enforce this chapter.

SECTION 3. Chapter 171, Tax Code, is amended by adding Subchapter N to read as follows:

SUBCHAPTER N. STRONG FAMILIES TAX CREDIT

Sec. 171.701. DEFINITIONS. In this subchapter:

(1) "Designated contribution" means a monetary contribution to an eligible organization that the contributor designates at the time of contribution as being made for the purpose of the strong families credit.

(2) "Eligible organization" means an organization that is designated by the comptroller as an eligible organization under this subchapter.

(3) "Strong families credit" means the tax credit established under this subchapter that may be claimed under:

(A) Chapter 207, Alcoholic Beverage Code;

(B) Chapter 230, Insurance Code;

(C) this subchapter; or

(D) Chapter 203.

Sec. 171.702. ELIGIBILITY FOR CREDIT. A taxable entity that makes a designated contribution that meets the requirements of this subchapter is eligible to apply for a strong families credit in the amount and under the conditions provided by this subchapter against the tax imposed under this chapter.

Sec. 171.703. QUALIFICATIONS FOR ELIGIBLE ORGANIZATION; VERIFICATION OF ELIGIBILITY. (a) An organization may apply for designation as an eligible organization under this subchapter if the organization:

(1) is exempt from federal income taxation under Section 501(a), Internal Revenue Code of 1986, as an organization described by Section 501(c)(3) of that code;

(2) is authorized to transact business in this state;

(3) has provided the following services in this state for at least three years preceding the organization's initial application for designation as an eligible organization:

(A) mental health services, including individual and family therapy;

(B) in-home and community-based parenting services;

(C) comprehensive case management services based on the assessment of family strengths and needs;

(D) financial empowerment services, including financial literacy, job skills, and vocational training; or

(E) in-school programs, community-based events, or online resources to assist fathers in learning and improving parenting skills or programs that provide services and resources that engage absent fathers in being more involved in their children's lives.

(b) Services described by Subsections (a)(3)(A) through (D) must be provided based on community needs identified through a needs assessment, implemented with a continuous quality improvement process, and evaluated based on outcomes.

(c) An organization must reapply for designation as an eligible organization each calendar year by submitting to the comptroller a signed application form containing:

(1) a description of the qualifying services and resources provided by the organization;

(2) the total number of individuals served through the services and resources described by Subdivision (1) during the previous calendar year and the number of those individuals served and provided resources that year using designated contributions;

(3) outcomes for services described by Subdivision (1);

(4) the organization's financial information;

(5) the organization's contact information;

(6) a statement, signed under penalty of perjury by an officer of the organization, that the organization meets all criteria to qualify as an eligible organization, has fulfilled the requirements for the previous calendar year, and intends to fulfill the requirements for the next calendar year; and

(7) any other documentation requested by the comptroller to verify eligibility or compliance with this section.

Sec. 171.704. DUTIES OF ELIGIBLE ORGANIZATION. (a) An eligible organization shall:

(1) conduct a local, state, and national criminal background check for all individuals working directly with children in a program funded by designated contributions that includes the use of:

(A) a commercial multistate and multijurisdiction criminal records locator or other similar commercial nationwide database; and

(B) the national sex offender registry database maintained by the United States Department of Justice or a successor agency;

(2) spend all designated contributions, other than the amount described by Subdivision (3), to provide services for residents of this state;

(3) spend no more than five percent of the total dollar amount of designated contributions on administrative expenses; and

(4) annually submit to the comptroller:

(A) the report of an audit of the eligible organization conducted by an independent certified public accountant in accordance with generally accepted auditing principles completed not later than the 180th day after the end of the eligible organization's fiscal year; and

(B) a copy of the eligible organization's most recent Form 990 filed with the Internal Revenue Service.

(b) On receipt of a designated contribution, an eligible organization shall provide the entity making the contribution with a certificate of contribution that includes:

(1) the entity's name;

(2) the eligible organization's name;

(3) the entity's federal employer identification number, if applicable;

(4) the amount of the designated contribution; and

(5) the date the designated contribution was made.

Sec. 171.705. DUTIES OF COMPTROLLER. (a) The comptroller shall:

(1) accept applications for designation or redesignation as an eligible organization and provide that designation to eligible applicants;

(2) revoke an organization's designation as an eligible organization if the organization violates this subchapter or fails to maintain the eligibility requirements of this subchapter;

(3) publish information about the strong families credit on the comptroller's website, including:

(A) the requirements and process for an organization to be designated as an eligible organization; and

(B) a list of organizations currently designated as eligible organizations; and

(4) require the return of designated contributions made to an organization that has had the organization's designation as an eligible organization revoked or that otherwise fails to comply with the requirements of this subchapter.

(b) An organization that is required to return contributions under Subsection (a)(4) is ineligible for designation or redesignation as an eligible organization for a period of 10 years beginning on the date the requirement is imposed.

(c) An organization whose designation as an eligible organization lapses or is revoked for a reason other than the reason described by Subsection (a)(4) may reapply for designation as an eligible organization.

Sec. 171.706. AMOUNT OF CREDIT; LIMITATION ON TOTAL CREDITS. (a) Subject to Subsections (b) and (c), the amount of a taxable entity's credit for a report is equal to the lesser of:

(1) the amount of designated contributions made to designated organizations during the period covered by the report; or

(2) the amount of franchise tax due for the report after applying all other applicable credits.

(b) For the 2024 state fiscal year, the maximum amount of strong families credits that may be awarded is $25 million. For each subsequent state fiscal year, the maximum amount of strong families credits that may be awarded is:

(1) the same maximum amount allowed under this subsection for the previous state fiscal year, if less than the maximum amount of credits was awarded that fiscal year; or

(2) an amount equal to 110 percent of the maximum amount allowed under this subsection for the previous state fiscal year, if the maximum amount of credits was awarded that fiscal year.

(c) For the 2024 state fiscal year, each entity may make no more than $2.5 million in designated contributions. For each subsequent state fiscal year, each entity may make qualifying contributions of not more than 110 percent of the amount allowed to be made under this subsection for the previous state fiscal year.

(d) The comptroller by rule shall prescribe procedures by which the comptroller will allocate strong families credits. The procedures must provide that any credits are allocated to entities that apply on a first-come, first-served basis.

Sec. 171.707. APPLICATION FOR CREDIT. (a) A taxable entity must apply to claim a strong families credit under this subchapter on or with the report covering the period in which the designated contribution was made.

(b) The comptroller shall prescribe the form and method of applying to claim a credit under this section. A taxable entity must use this method in applying for the credit.

(c) The comptroller may award a credit to a taxable entity that applies for the credit under Subsection (a) if the taxable entity is eligible for the credit and the credit is available under Section 171.706(b).

(d) The comptroller shall notify a taxable entity in writing of the comptroller's decision to grant or deny the application under Subsection (a). If the comptroller denies a taxable entity's application, the comptroller shall include in the notice of denial the reasons for the comptroller's decision.

Sec. 171.708. ASSIGNMENT PROHIBITED; EXCEPTION. A taxable entity may not convey, assign, or transfer a strong families credit awarded under this subchapter to another taxable entity unless substantially all of the assets of the taxable entity are conveyed, assigned, or transferred in the same transaction.

Sec. 171.709. RULES. The comptroller may adopt rules and procedures necessary to implement, administer, and enforce this subchapter.

SECTION 4. Subtitle I, Title 2, Tax Code, is amended by adding Chapter 203 to read as follows:

CHAPTER 203. STRONG FAMILIES TAX CREDIT

Sec. 203.001. DEFINITIONS. In this chapter, "designated contribution," "eligible organization," and "strong families credit" have the meanings assigned by Section 171.701.

Sec. 203.002. ELIGIBILITY. A producer that makes a designated contribution that meets the requirements of Subchapter N, Chapter 171, is entitled to apply for a strong families credit in the amount and under the conditions provided by this chapter against tax paid under Chapter 201 or 202.

Sec. 203.003. AMOUNT OF CREDIT; LIMITATIONS. (a) Subject to Subsections (b) and (c), the amount of a producer's credit for a state fiscal year is equal to the lesser of:

(1) the amount of designated contributions made to eligible organizations during the state fiscal year; or

(2) the amount of taxes paid by the producer under Chapter 201 or 202, as applicable, during the state fiscal year.

(b) The maximum amount of strong families credits that may be awarded for a state fiscal year is the amount provided by Section 171.706(b).

(c) The maximum amount of designated contributions a producer may make to all eligible organizations in a state fiscal year is the amount provided by Section 171.706(c).

(d) The comptroller shall allocate strong families credits as provided by Section 171.706(d).

Sec. 203.004. APPLICATION. (a) The person responsible for paying the tax under Chapter 201 or 202 must apply to claim a strong families credit against that tax.

(b) The comptroller shall prescribe the form and method of applying to claim a credit under this section. The person responsible for paying the tax must use this method in applying for the credit.

(c) The comptroller may award a credit to a person who applies for the credit under Subsection (a) if the person is eligible for the credit and the credit is available under Section 171.706(b).

(d) The comptroller shall notify a person in writing of the comptroller's decision to grant or deny the application under Subsection (a). If the comptroller denies a person's application, the comptroller shall include in the notice of denial the reasons for the comptroller's decision.

Sec. 203.005. RULES. The comptroller may adopt rules and procedures necessary to implement, administer, and enforce this chapter.

SECTION 5. (a) An entity may apply for a credit under Chapter 207, Alcoholic Beverage Code, as added by this Act, Chapter 230, Insurance Code, as added by this Act, Subchapter N, Chapter 171, Tax Code, as added by this Act, or Chapter 203, Tax Code, as added by this Act, only for a designated contribution made on or after January 1, 2024.

(b) Chapter 207, Alcoholic Beverage Code, as added by this Act, Chapter 230, Insurance Code, as added by this Act, Subchapter N, Chapter 171, Tax Code, as added by this Act, and Chapter 203, Tax Code, as added by this Act, apply only to a report originally due on or after January 1, 2024.

SECTION 6. This Act takes effect January 1, 2024.