SRC-HRD S.B. 282 75(R)    BILL ANALYSIS


Senate Research CenterS.B. 282
By: Haywood
Tax Reform and Public School Finance
4-18-97
As Filed


DIGEST 

By some accounts there is currently an increased demand for child care
services as a result of changes at both the federal and state level
regarding work requirements for public assistance eligibility.  As a
result of these changes, greater encouragement of private-sector
involvement may be needed in hiring welfare recipients and developing
child care facilities to meet employees' needs. This bill would offer a
tax credit as an incentive for any corporation that establishes and
operates a day-care center for children of employees or that purchases
child-care services for employees.  S.B. 282 would offer an additional
incentive in the form of a tax credit to an employer who hires any person
who is receiving child-care services under Chapter 31, Human Resource
Code, and from the corporation.   

PURPOSE

As proposed, S.B. 282 provides tax credits to corporations that provide a
day-care center and daycare services to the children of their employees.  

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Chapter 171, Tax Code, by adding Chapters N and O, as
follows: 

SUBCHAPTER N.  TAX CREDIT FOR ESTABLISHING DAY-CARE CENTER
OR PURCHASING CHILD-CARE SERVICES

Sec. 171.701.  DEFINITION.  Defines "day-care center."

Sec. 171.702.  CREDIT.  Provides that a corporation that meets the
eligibility requirements under this subchapter is entitled to a credit in
the amount allowed by this subchapter against the tax imposed under this
chapter. 

Sec. 171.703.  CREDIT FOR DAY-CARE CENTER AND PURCHASED CHILD CARE.
Authorizes a corporation to claim a credit under this subchapter only for
a qualifying expenditure relating to specific purchases made in relation
to providing child care services. Sets forth expenditures included in a
qualifying expenditure.  Provides that if the corporation shares in the
cost of establishing and operating a day-care center, the corporation is
entitled to a credit for the qualifying expenditures made by that
corporation.  Prohibits the total credit claimed under this subchapter and
Subchapter O, if a corporation is also eligible for a credit under
Subchapter O, from exceeding $30,000. 

Sec. 171.704.  APPLICATION FOR CREDIT.  Requires a corporation to apply
for a credit under this subchapter on or with the tax report for the
period for which the credit is claimed. Requires the corporation to
include proof that child-care services were actually provided to the
children of employees in order to claim a credit for a qualifying
expenditure.   Requires the comptroller to adopt a form for the
application for the credit.  

 Sec. 171.705.  PERIOD FOR WHICH CREDIT MAY BE CLAIMED.  Authorizes a
corporation to claim a credit under this subchapter for qualifying
expenditures made during an accounting period only against the tax owed
for the corresponding reporting period. Prohibits a corporation from
claiming a credit in an amount that exceeds the amount of tax due for the
report.   

Sec. 171.706.  ASSIGNMENT PROHIBITED.  Prohibits a corporation from
conveying, assigning, or transferring the credit allowed under this
subchapter to another entity unless all of the assets of the corporation
are conveyed, assigned, or transferred in the same transaction. 

SUBCHAPTER O.  TAX CREDIT FOR HIRING CERTAIN EMPLOYEES

Sec. 171.751.  DEFINITIONS.  Defines "day-care center" and "wages."

Sec. 171.752.  CREDIT.  Makes a conforming change.

Sec. 171.753.  CREDIT FOR WAGES PAID TO ELIGIBLE EMPLOYEE.  Sets forth the
terms of eligibility for a credit under this subchapter for a corporation.
Authorizes the corporation to claim a credit for wages paid to an employee
who meets certain criteria.  Sets forth the limit of the amount of the
credit per employee.  Prohibits the total credits claimed under this
subchapter from exceeding $30,000 per reporting period.  Makes conforming
changes. 

Sec. 171.754.  APPLICATION FOR CREDIT.  Requires a corporation to apply
for a credit under this subchapter on or with the tax report for the
period for which the credit is claimed. Requires the corporation to
include with the application a written certification from the appropriate
state agency responsible for certification that the employee is a
recipient of childcare services under Chapter 31, Human Resources Code, on
or immediately before the date the employee begins employment with the
corporation.  Makes conforming changes. 

Sec. 171.755.  PERIOD FOR WHICH CREDIT MAY BE CLAIMED.  Authorizes a
corporation to claim a credit under this subchapter for wages paid or
incurred during an accounting period only against the tax owed for the
corresponding reporting period.    

Sec. 171.756.  ASSIGNMENT PROHIBITED.  Makes a conforming change.

SECTION 2. Makes application of this Act prospective to January 1, 1998.

SECTION 3.   Emergency clause.
  Effective date: upon passage.