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A BILL TO BE ENTITLED
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AN ACT
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relating to the franchise and insurance premium tax credit for the |
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certified rehabilitation of certified historic structures. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. The heading to Subtitle F, Title 2, Tax Code, is |
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amended to read as follows: |
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SUBTITLE F. FRANCHISE TAX; CREDITS |
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SECTION 2. Subchapter S, Chapter 171, Tax Code, is |
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transferred to Subtitle F, Title 2, Tax Code, redesignated as |
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Chapter 172, Tax Code, and amended to read as follows: |
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CHAPTER 172 [SUBCHAPTER S]. TAX CREDIT FOR CERTIFIED |
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REHABILITATION OF CERTIFIED HISTORIC STRUCTURES |
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Sec. 172.101 [171.901]. DEFINITIONS. (a) Terms used in |
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this chapter and defined by Chapter 171 have the meanings assigned |
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by Chapter 171. |
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(b) In this chapter [subchapter]: |
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(1) "Certified historic structure" means a property in |
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this state that is: |
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(A) listed individually in the National Register |
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of Historic Places; |
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(B) designated as a Recorded Texas Historic |
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Landmark under Section 442.006, Government Code, or as a state |
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archeological landmark under Chapter 191, Natural Resources Code; |
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or |
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(C) certified by the commission as contributing |
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to the historic significance of: |
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(i) a historic district listed in the |
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National Register of Historic Places; or |
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(ii) a local district certified by the |
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United States Department of the Interior in accordance with 36 |
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C.F.R. Section 67.9. |
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(2) "Certified rehabilitation" means the |
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rehabilitation of a certified historic structure that the |
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commission has certified as meeting the United States secretary of |
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the interior's Standards for Rehabilitation as defined in 36 C.F.R. |
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Section 67.7. |
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(3) "Commission" means the Texas Historical |
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Commission. |
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Sec. 172.102 [171.9015]. ELIGIBLE COSTS AND EXPENSES. (a) |
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Subject to Subsections (b) and (c), in this chapter [subchapter], |
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"eligible costs and expenses" means qualified rehabilitation |
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expenditures as defined by Section 47(c)(2), Internal Revenue Code. |
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(b) Except as provided by Subsection (c), the depreciation |
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and tax-exempt use provisions of Section 47(c)(2), Internal Revenue |
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Code, do not apply to costs and expenses incurred by an entity |
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exempted from the federal income tax under Section 501(a), Internal |
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Revenue Code [exempt from the tax imposed under this chapter by |
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Section 171.063], and those costs and expenses are eligible costs |
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and expenses if the other provisions of Section 47(c)(2), Internal |
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Revenue Code, are satisfied. |
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(c) Expenditures by an entity described by Subsection (b) to |
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rehabilitate a structure that is leased to a tax-exempt entity in a |
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disqualified lease, as those terms are defined by Section 168(h), |
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Internal Revenue Code, are not eligible costs and expenses. |
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Sec. 172.103 [171.902]. ELIGIBILITY FOR CREDIT. An entity |
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is eligible to apply for a credit in the amount and under the |
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conditions and limitations provided by this chapter [subchapter] |
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against the taxes [tax] imposed under Chapter 171 of this code and, |
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as provided by Section 172.109(e), Chapters 221, 222, 223, and 224, |
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Insurance Code [this chapter]. |
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Sec. 172.104 [171.903]. QUALIFICATION. An entity is |
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eligible for a credit for eligible costs and expenses incurred in |
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the certified rehabilitation of a certified historic structure as |
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provided by this chapter [subchapter] if: |
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(1) the rehabilitated certified historic structure is |
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placed in service on or after September 1, 2013; |
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(2) the entity has an ownership interest in the |
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certified historic structure in the year during which the structure |
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is placed in service after the rehabilitation; and |
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(3) the total amount of the eligible costs and |
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expenses incurred exceeds $5,000. |
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Sec. 172.105 [171.904]. CERTIFICATION OF ELIGIBILITY. (a) |
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Before claiming, selling, or assigning a credit under this chapter |
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[subchapter], the entity that incurred the eligible costs and |
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expenses in the rehabilitation of a certified historic structure |
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must request from the commission a certificate of eligibility on |
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which the commission certifies that the work performed meets the |
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definition of a certified rehabilitation. The entity must include |
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with the entity's request: |
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(1) information on the property that is sufficient for |
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the commission to determine whether the property meets the |
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definition of a certified historic structure; and |
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(2) information on the rehabilitation, and |
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photographs before and after work is performed, sufficient for the |
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commission to determine whether the rehabilitation meets the United |
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States secretary of the interior's Standards for Rehabilitation as |
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defined in 36 C.F.R. Section 67.7. |
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(b) The commission shall issue a certificate of eligibility |
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to an entity that has incurred eligible costs and expenses as |
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provided by this chapter [subchapter]. The certificate must: |
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(1) confirm that: |
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(A) the property to which the eligible costs and |
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expenses relate is a certified historic structure; and |
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(B) the rehabilitation qualifies as a certified |
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rehabilitation; and |
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(2) specify the date the certified historic structure |
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was first placed in service after the rehabilitation. |
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(c) The entity must forward the certificate of eligibility |
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and the following documentation to the comptroller to claim the tax |
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credit: |
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(1) an audited cost report issued by a certified |
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public accountant, as defined by Section 901.002, Occupations Code, |
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that itemizes the eligible costs and expenses incurred in the |
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certified rehabilitation of the certified historic structure by the |
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entity; |
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(2) the date the certified historic structure was |
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first placed in service after the rehabilitation and evidence of |
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that placement in service; and |
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(3) an attestation of the total eligible costs and |
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expenses incurred by the entity on the rehabilitation of the |
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certified historic structure. |
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(d) For purposes of approving the tax credit under |
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Subsection (c), the comptroller may rely on the audited cost report |
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provided by the entity that requested the tax credit. |
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(e) An entity that sells or assigns a credit under this |
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chapter [subchapter] to another entity shall provide a copy of the |
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certificate of eligibility, together with the audited cost report, |
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to the purchaser or assignee. |
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Sec. 172.106 [171.905]. AMOUNT OF CREDIT; LIMITATIONS. |
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(a) The total amount of the credit under this chapter [subchapter] |
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with respect to the rehabilitation of a single certified historic |
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structure that may be claimed may not exceed 25 percent of the total |
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eligible costs and expenses incurred in the certified |
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rehabilitation of the certified historic structure. |
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(b) The total credit claimed for a report, including the |
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amount of any carryforward under Section 172.107 [171.906], may not |
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exceed the amount of franchise tax due for the report after any |
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other applicable tax credits. |
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(c) Eligible costs and expenses may only be counted once in |
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determining the amount of the tax credit available, and more than |
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one entity may not claim a credit for the same eligible costs and |
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expenses. |
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Sec. 172.107 [171.906]. CARRYFORWARD. (a) If an entity is |
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eligible for a credit that exceeds the limitation under Section |
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172.106(b) [171.905(b)], the entity may carry the unused credit |
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forward for not more than five consecutive reports. |
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(b) A carryforward is considered the remaining portion of a |
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credit that cannot be claimed in the current year because of the |
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limitation under Section 172.106(b) [171.905(b)]. |
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Sec. 172.108 [171.907]. APPLICATION FOR CREDIT. (a) An |
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entity must apply for a credit under this chapter [subchapter] on or |
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with the report for the period for which the credit is claimed. |
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(b) An entity shall file with any report on which the credit |
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is claimed a copy of the certificate of eligibility issued by the |
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commission under Section 172.105 [171.904] and any other |
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information required by the comptroller to sufficiently |
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demonstrate that the entity is eligible for the credit. |
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(c) The burden of establishing eligibility for and the value |
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of the credit is on the entity. |
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Sec. 172.109 [171.908]. SALE OR ASSIGNMENT OF CREDIT. (a) |
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An entity that incurs eligible costs and expenses may sell or assign |
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all or part of the credit that may be claimed for those costs and |
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expenses to one or more entities, and any entity to which all or |
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part of the credit is sold or assigned may sell or assign all or part |
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of the credit to another entity. There is no limit on the total |
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number of transactions for the sale or assignment of all or part of |
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the total credit authorized under this chapter [subchapter], |
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however, collectively all transfers are subject to the maximum |
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total limits provided by Section 172.106 [171.905]. |
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(b) An entity that sells or assigns a credit under this |
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section and the entity to which the credit is sold or assigned shall |
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jointly submit written notice of the sale or assignment to the |
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comptroller on a form promulgated by the comptroller not later than |
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the 30th day after the date of the sale or assignment. The notice |
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must include: |
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(1) the date of the sale or assignment; |
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(2) the amount of the credit sold or assigned; |
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(3) the names and federal tax identification numbers |
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of the entity that sold or assigned the credit or part of the credit |
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and the entity to which the credit or part of the credit was sold or |
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assigned; and |
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(4) the amount of the credit owned by the selling or |
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assigning entity before the sale or assignment, and the amount the |
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selling or assigning entity retained, if any, after the sale or |
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assignment. |
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(c) The sale or assignment of a credit in accordance with |
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this section does not extend the period for which a credit may be |
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carried forward and does not increase the total amount of the credit |
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that may be claimed. After an entity claims a credit for eligible |
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costs and expenses, another entity may not use the same costs and |
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expenses as the basis for claiming a credit. |
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(d) Notwithstanding the requirements of this chapter |
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[subchapter], a credit earned or purchased by, or assigned to, a |
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partnership, limited liability company, S corporation, or other |
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pass-through entity may be allocated to the partners, members, or |
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shareholders of that entity and claimed under this chapter |
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[subchapter] in accordance with the provisions of any agreement |
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among the partners, members, or shareholders and without regard to |
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the ownership interest of the partners, members, or shareholders in |
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the rehabilitated certified historic structure, provided that the |
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entity that claims the credit must be subject to the tax imposed |
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under Chapter 171 [this chapter]. |
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(e) An entity that incurs eligible costs and expenses or to |
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which all or part of a credit is sold or assigned and that is subject |
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to a premium tax imposed under Chapter 221, 222, 223, or 224, |
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Insurance Code, may claim all or part of the credit against that |
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tax. The provisions of this chapter [subchapter], including |
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provisions relating to the total amount of the credit that may be |
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claimed for a report, the carryforward of the credit, and the sale |
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or assignment of the credit, apply with respect to a credit claimed |
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against a tax imposed under Chapter 221, 222, 223, or 224, Insurance |
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Code, to the same extent those provisions apply to a credit claimed |
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against the tax imposed under Chapter 171 of this code [this |
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chapter]. An entity claiming all or part of a credit as authorized |
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by this subsection is not required to pay any additional |
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retaliatory tax levied under Chapter 281, Insurance Code, as a |
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result of claiming that credit. |
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Sec. 172.110 [171.909]. RULES. The commission and the |
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comptroller shall adopt rules necessary to implement this chapter |
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[subchapter]. |
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SECTION 3. The changes in law made by this Act do not affect |
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the validity of a credit that accrued under Subchapter S, Chapter |
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171, Tax Code, before the effective date of this Act. The credit |
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continues in effect as a credit under Chapter 172, Tax Code, as |
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transferred, redesignated, and amended by this Act. |
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SECTION 4. This Act takes effect September 1, 2023. |
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* * * * * |