BILL ANALYSIS
C.S.S.B. 345
By: Brown
Finance
04-25-95
Committee Report (Substituted)
BACKGROUND
Tax abatements work as an incentive to bring businesses into this
state. The state auditor recently concluded that tax abatements
have been one of the most successful incentives in affecting
business location decisions. The Property Redevelopment Tax
Abatement Act expires on September 1, 1995.
PURPOSE
As proposed, C.S.S.B. 345 entitles an eligible person to a refund
of state sales and use taxes and state franchise taxes for taxes
paid on property in a reinvestment zone.
RULEMAKING AUTHORITY
It is the committee's opinion that rulemaking authority is granted
to the state comptroller of public accounts under SECTION 1
(Section 111.304(a), Tax Code) of this bill.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Chapter 111, Tax Code, by adding Subchapter F,
as follows:
SUBCHAPTER F. TAX REFUND FOR ECONOMIC DEVELOPMENT
Sec. 111.301. REFUND OF STATE TAXES; APPLICATION FOR REFUND.
(a) Entitles an eligible person to a refund of state sales and
use taxes and state franchise taxes paid in a calendar year
for which the person paid ad valorem taxes to a school
district for property in that year that meets certain
criteria.
(b) Prohibits the amount of a refund from exceeding the
amount of net state sales and state franchise taxes paid by
the person, after any applicable tax credit. Entitles a
person to a refund for five years or the duration of the tax
abatement agreement (agreement), whichever is less.
Prohibits a person from applying for a refund after the date
of the cancellation of the agreement or the date of
relocation of the person's business outside the zone.
(c) Sets forth requirements for a person or business to be
eligible for the tax refund.
(d) Provides that application for the refund is to the
comptroller. Sets forth information that must be included
in the application.
(e) Requires the comptroller to make a refund in an amount
equal to 80 percent of the amount shown on the state tax
refund voucher (voucher) issued to a person under Section
111.303. Provides that a refund amount does not earn
interest.
(f) Requires a person applying for a refund to certify to
the comptroller that the person complies with each term of
the agreement entered into with a municipality or county.
(g) Prohibits the comptroller from acting on an application
until the relevant agreement is on file with the comptroller
and the Texas Department of Commerce (department).
(h) Prohibits the comptroller from acting on the refund
application until the person comes into compliance if the
comptroller determines that the person applying for the
refund is not in compliance with the agreement. Requires
the comptroller to notify the municipality or county of the
person's noncompliance.
(i) Authorizes the comptroller to grant a person not in
compliance a temporary waiver if the comptroller determines
that the person's noncompliance is the result of a natural
disaster.
(j) Authorizes the comptroller to conduct any audit
determined necessary for enforcement or administration of
this subchapter.
Sec. 111.302. APPLICATION FOR TAX REFUND VOUCHER. (a)
Authorizes a person to apply to the comptroller for a voucher.
(b) Sets forth requirements of the application.
Sec. 111.303. ISSUANCE OF TAX REFUND VOUCHER; AMOUNT OF
VOUCHER. (a) Requires the comptroller to issue a voucher for
a tax year in which the applicant has paid the ad valorem
taxes imposed by a school district on the person's property.
(b) Requires the voucher, if the person qualifies for the
voucher, to be issued before the 90th day after the date the
application is filed with the comptroller.
(c) Provides that the amount of the voucher is equal to the
portion of the ad valorem taxes paid to a school district by
the person for the applicable tax year on the property that
the person would not have been required to pay if the school
district had entered into an agreement covering the property
that included the same terms as the applicable municipal or
county agreement.
Sec. 111.304. RULES AND FORMS. (a) Requires the
comptroller, by rule, to adopt rules and forms for the
administration of this subchapter. Requires the rules to
include a schedule of the state taxes to which this subchapter
applies.
(b) Requires the comptroller to provide without charge one
copy of the rules and forms to each person applying for the
refund.
Sec. 111.305. EVALUATION; ANNUAL REPORT. Requires the
comptroller to submit an annual report to the legislature by
December 1, 1999, and December 1 of each subsequent year.
Sets forth information to be included in the report.
SECTION 2. Amends Section 312.005(a), Tax Code, to require a taxing
unit that designates a reinvestment zone (zone) or executes an
agreement to deliver to the department and to the comptroller
before a certain date a report providing, among other information,
the guidelines and criteria established for the zone, including
subsequent amendments; a copy of each agreement to which the taxing
unit is a party; and any other information required by the
comptroller. Deletes language requiring information about the
agreement to be included in the report.
SECTION 3. Amends Section 312.202, Tax Code, to require an area to
be in the judgment of the governing body reasonably likely as a
result of the designation to contribute to the economic development
of the municipality in order to be designated as a zone. Deletes
language regarding criteria that must be met for an area to be
designated as a zone.
SECTION 4. Amends Section 312.205(a), Tax Code, to require an
agreement under Section 312.204 to contain, among other criteria,
each term agreed to by the owner of the property; require the owner
of the property to certify annually to the governing body of each
taxing unit that the owner is in compliance with each applicable
term of the agreement; and authorize the governing body of the
municipality to cancel or modify the agreement if the property
owner fails to comply with the agreement.
SECTION 5. Amends Section 312.006, Tax Code, to provide that this
chapter expires September 1, 2003, rather than 1995, if not
continued in effect.
SECTION 6. (a) Effective date: September 1, 1995. Makes
application of this Act prospective beginning September 1,1995.
(b) Effective date of Section 5: August 31, 1995.
SECTION 7. Emergency clause.