By Haywood                                       S.B. No. 282

      75R4058 CBH-D                           

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to incentives for an employer that establishes and

 1-3     operates a day-care center for children of employees or purchases

 1-4     child-care services for employees.

 1-5           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-6           SECTION 1.  Chapter 171, Tax Code, is amended by adding

 1-7     Subchapters N and O to read as follows:

 1-8         SUBCHAPTER N.  TAX CREDIT FOR ESTABLISHING DAY-CARE CENTER

 1-9                      OR PURCHASING CHILD-CARE SERVICES

1-10           Sec. 171.701.  DEFINITION.   In this subchapter, "day-care

1-11     center" has the meaning assigned by Section 42.002, Human Resources

1-12     Code.

1-13           Sec. 171.702.  CREDIT.  A corporation that meets the

1-14     eligibility requirements under this subchapter is entitled to a

1-15     credit in the amount allowed by this subchapter against the tax

1-16     imposed under this chapter.

1-17           Sec. 171.703.  CREDIT FOR DAY-CARE CENTER AND PURCHASED CHILD

1-18     CARE.  (a)  A corporation may claim a credit under this  subchapter

1-19     only for a qualifying expenditure relating to:

1-20                 (1)  the establishment and operation of a day-care

1-21     center primarily to provide care for the children of employees of

1-22     the corporation or of the corporation and one or more other

1-23     entities sharing the costs of establishing and operating the

1-24     center; or

 2-1                 (2)  the purchase of child-care services that are

 2-2     actually provided to children of employees of the corporation.

 2-3           (b)  A qualifying expenditure includes an expenditure for:

 2-4                 (1)  planning the day-care center;

 2-5                 (2)  preparing a site to be used for the day-care

 2-6     center;

 2-7                 (3)  constructing the day-care center;

 2-8                 (4)  renovating or remodeling a structure to be used

 2-9     for the day-care center;

2-10                 (5)  purchasing equipment necessary in the use of the

2-11     day-care center and installed for permanent use in or immediately

2-12     adjacent  to the day-care center, including kitchen appliances and

2-13     other food preparation equipment;

2-14                 (6)  expanding the day-care center;

2-15                 (7)  maintaining and operating the day-care center,

2-16     including paying direct administration and staff costs; or

2-17                 (8)  purchasing child-care services that are actually

2-18     provided to children of employees of the corporation.

2-19           (c)  The amount of the credit is equal to the lesser of:

2-20                 (1)  $30,000; or

2-21                 (2)  30 percent of the corporation's qualifying

2-22     expenditures.

2-23           (d)  If a corporation shares in the cost of establishing and

2-24     operating a day-care center, the corporation is entitled to a

2-25     credit for  the qualifying expenditures made by that corporation,

2-26     subject to the limitation prescribed by Subsection (c).

2-27           (e)  If a corporation is also eligible for a credit under

 3-1     Subchapter O, the total credit claimed under this subchapter and

 3-2     Subchapter O in a  reporting period may not exceed $30,000.

 3-3           Sec. 171.704.  APPLICATION FOR CREDIT.  (a)  A corporation

 3-4     must apply for a credit under this subchapter on or with the tax

 3-5     report for the period for which the credit is claimed.

 3-6           (b)  If the corporation is claiming a credit for a qualifying

 3-7     expenditure for purchasing child-care services, the corporation

 3-8     must include proof that the services were actually provided to

 3-9     children of employees of the corporation.

3-10           (c)  The comptroller shall adopt a form for the application

3-11     for the credit.   A corporation must use this form in applying for

3-12     the  credit.

3-13           Sec. 171.705.  PERIOD FOR WHICH CREDIT MAY BE CLAIMED.

3-14     (a)  A corporation may claim a credit under this subchapter for

3-15     qualifying expenditures made during an accounting period only

3-16     against the tax owed for the corresponding reporting period.

3-17           (b)  A corporation may not claim a credit in an amount that

3-18     exceeds the amount of tax due for the report.

3-19           Sec. 171.706.  ASSIGNMENT PROHIBITED.   A corporation may not

3-20     convey, assign, or transfer the credit allowed under this

3-21     subchapter  to another entity unless all of the assets of the

3-22     corporation are conveyed, assigned, or transferred in the same

3-23     transaction.

3-24              (Sections 171.707-171.750 reserved for expansion

3-25           SUBCHAPTER O.  TAX CREDIT FOR HIRING CERTAIN EMPLOYEES

3-26           Sec. 171.751.  DEFINITIONS.    In this subchapter:

3-27                 (1)  "Day-care center" has the meaning assigned by

 4-1     Section 42.002, Human Resources Code.

 4-2                 (2)  "Wages" has the meaning assigned by Sections

 4-3     51(c)(1), (2), and (3), Internal Revenue Code of 1986 (26 U.S.C.

 4-4     Section 51).

 4-5           Sec. 171.752.  CREDIT.   A corporation that meets the

 4-6     eligibility requirements under this subchapter is entitled to a

 4-7     credit in the amount allowed by this subchapter against the tax

 4-8     imposed under this chapter.

 4-9           Sec. 171.753.  CREDIT FOR WAGES PAID TO ELIGIBLE EMPLOYEE.

4-10     (a)  A corporation is eligible for a credit under this subchapter

4-11     only if  the corporation has  established and operates a day-care

4-12     center primarily to provide care for the children of employees of

4-13     the corporation or of the corporation and one or more other

4-14     entities sharing the costs of establishing and operating the

4-15     center.

4-16           (b)  The corporation may claim a credit for wages paid to an

4-17     employee who:

4-18                 (1)  is a resident of this state;

4-19                 (2)  is a recipient of child-care services under

4-20     Chapter 31, Human Resource Code, on or immediately before the date

4-21     the employee begins employment with the corporation; and

4-22                 (3)  receives child-care services from the corporation

4-23     at a child-care center established and operated by the corporation

4-24     in accordance with Subsection (a).

4-25           (c)  The amount of the credit may not exceed $600 in wages

4-26     paid or incurred by the corporation for services rendered by the

4-27     eligible employee during the period beginning on the date the

 5-1     employee begins work for the corporation and ending on the first

 5-2     anniversary of that date.  If before the first anniversary of the

 5-3     date of employment the employee voluntarily leaves the employment,

 5-4     is unable to work because of a disability, or is terminated with or

 5-5     without cause, the amount of the credit is reduced by the

 5-6     proportion of the year not worked.

 5-7           (d)  The total credits claimed under this subchapter in a

 5-8     reporting period may not exceed $30,000.  If a corporation is also

 5-9     eligible for a  credit under Subchapter N, the total credits

5-10     claimed under this subchapter and Subchapter N in a reporting

5-11     period may not exceed $30,000.

5-12           Sec. 171.754.  APPLICATION FOR CREDIT.  (a)  A corporation

5-13     must apply for a credit under this subchapter on or with the tax

5-14     report for the period for which the credit is claimed.

5-15           (b)  The corporation must include with the application a

5-16     written certification from the appropriate state agency responsible

5-17     for certification that the employee is a recipient of child-care

5-18     services under Chapter 31, Human Resources Code, on or immediately

5-19     before the date the employee begins employment with the

5-20     corporation.

5-21           (c)  The comptroller shall adopt a form for the application

5-22     for the credit.   A corporation must use this form in applying for

5-23     the  credit.

5-24           Sec. 171.755.  PERIOD FOR WHICH CREDIT MAY BE CLAIMED.

5-25     (a)  A corporation may claim a credit under this subchapter for

5-26     wages paid or incurred during an accounting period only against the

5-27     tax owed for the corresponding reporting period.

 6-1           (b)  A corporation may not claim a credit in an amount that

 6-2     exceeds the amount of tax due for the report.

 6-3           Sec. 171.756.  ASSIGNMENT PROHIBITED.  A corporation may not

 6-4     convey, assign, or transfer the credit allowed under this

 6-5     subchapter  to another entity unless all of the assets of the

 6-6     corporation are conveyed, assigned, or transferred in the same

 6-7     transaction.

 6-8           SECTION 2.  A corporation may claim the credit under

 6-9     Subchapter N or O, Chapter 171, Tax Code, as added by this Act,

6-10     only:

6-11                 (1)  for a qualifying expenditure made or for wages

6-12     paid or incurred on or after the effective date of this Act; and

6-13                 (2)  on a franchise tax report due under Chapter 171,

6-14     Tax Code, on or after January 1, 1998.

6-15           SECTION 3.  The importance of this legislation and the

6-16     crowded condition of the calendars in both houses create an

6-17     emergency and an imperative public necessity that the

6-18     constitutional rule requiring bills to be read on three several

6-19     days in each house be suspended, and this rule is hereby suspended,

6-20     and that this Act take effect and be in force from and after its

6-21     passage, and it is so enacted.