By Shields                                       H.B. No. 760

      75R3323 CBH-D                           

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to a franchise tax credit for contributions made to

 1-3     medical savings accounts.

 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-5           SECTION 1.  Chapter 171, Tax Code, is amended by adding

 1-6     Subchapter N to read as follows:

 1-7               SUBCHAPTER N.  TAX CREDIT FOR CONTRIBUTIONS TO

 1-8                           MEDICAL SAVINGS ACCOUNT

 1-9           Sec. 171.701.  DEFINITION.  In this subchapter, "medical

1-10     savings account" has the meaning assigned by 26 U.S.C.A. Section

1-11     220(d)(1).

1-12           Sec. 171.702.  CREDIT.  A corporation that meets the

1-13     eligibility requirements under this subchapter is entitled to a

1-14     credit in the amount allowed under this subchapter against the tax

1-15     imposed under this chapter.

1-16           Sec. 171.703.  CREDIT FOR CONTRIBUTIONS TO MEDICAL SAVINGS

1-17     ACCOUNT.  (a)  A corporation is eligible for a credit under this

1-18     subchapter only if the corporation:

1-19                 (1)  made a contribution to a medical savings account

1-20     for an employee during the reporting period; and

1-21                 (2)  employed an average of 50 or fewer employees

1-22     during the reporting period.

1-23           (b)  The amount of the credit is equal to the total amount

1-24     the employer contributed to medical savings accounts for employees

 2-1     during the reporting period.

 2-2           Sec. 171.704.  APPLICATION FOR CREDIT.  (a)  A corporation

 2-3     must apply for a credit under this subchapter on or with the tax

 2-4     report for the period for which the credit is claimed.

 2-5           (b)  The corporation shall adopt a form for the application

 2-6     for the credit.  A corporation must use this form in applying for

 2-7     the credit.

 2-8           Sec. 171.705.  PERIOD FOR WHICH CREDIT MAY BE CLAIMED.  (a)

 2-9     Except as provided by Subsection (b), a corporation may claim a

2-10     credit under this subchapter for contributions made during an

2-11     accounting period only against the tax owed for the corresponding

2-12     reporting period.

2-13           (b)  A corporation may not claim a credit in an amount  that

2-14     exceeds the amount of the tax due for the report.   A corporation

2-15     shall apply unused credit each reporting period toward the tax due

2-16     under this chapter until the credit is used.

2-17           Sec. 171.706.  ASSIGNMENT PROHIBITED.  A corporation may not

2-18     convey, assign, or transfer the credit allowed under this

2-19     subchapter to another entity unless all of the assets of the

2-20     corporation are conveyed, assigned, or transferred in the same

2-21     transaction.

2-22           SECTION 2.  This Act applies to reports originally due on or

2-23     after January 1, 1998.

2-24           SECTION 3.  The importance of this legislation and the

2-25     crowded condition of the calendars in both houses create an

2-26     emergency and an imperative public necessity that the

2-27     constitutional rule requiring bills to be read on three several

 3-1     days in each house be suspended, and this rule is hereby suspended.