Amend HB 551 by adding the following new ARTICLE and SECTIONS
and renumbering subsequent ARTICLES and SECTIONS appropriately to
read as follows:
ARTICLE ___
SECTION ___. Chapter 171, Tax Code, is amended by adding
Subchapter O to read as follows:
SUBCHAPTER O. TAX CREDIT FOR CERTAIN RESEARCH AND
DEVELOPMENT ACTIVITIES
Sec. 171.721. DEFINITIONS. In this subchapter:
(1) "Base amount," "basic research payment," and
"qualified research expense" have the meanings assigned those terms
by Section 41, Internal Revenue Code, except that all such payments
and expenses must be for research conducted within this state.
(2) "Strategic investment area" means:
(A) a county within this state with above state
average unemployment and below state average per capita income; or
(B) an area that is a federally designated urban
enterprise community or an urban enhanced supplemental enterprise
community.
Sec. 171.722. ELIGIBILITY. (a) A corporation is eligible
for a credit against the tax imposed under this chapter in the
amount and under the conditions and limitations provided by this
subchapter.
(b) A corporation may claim a credit under Section
171.723(b) or take a carryforward credit without regard to whether
the strategic investment area in which it made qualified research
expenses and basic research payments subsequently loses its
designation as a strategic investment area.
Sec. 171.723. CALCULATION OF CREDIT. (a) The credit for
any report equals four percent of the sum of:
(1) the excess of qualified research expenses incurred
in this state during the period upon which the tax is based over
the base amount for this state; and
(2) the basic research payments determined under
Section 41(e)(1)(A), Internal Revenue Code, for this state during
the period upon which the tax is based.
(b) In computing the credit under Subsection (a), a
corporation may multiply by two the amount of any qualified
research expenses and basic research payments made in a strategic
investment area as determined by the comptroller under Section
171.726.
(c) The burden of establishing entitlement to and the value
of the credit is on the corporation.
Sec. 171.724. LIMITATIONS. (a) The total credit claimed
under this subchapter for a report, including the amount of any
carryforward credit under Section 171.725, may not exceed 25
percent of the amount of franchise tax due for the report before
any other applicable tax credits.
(b) The total credit claimed under this subchapter and
Subchapters P and Q for a report, including the amount of any
carryforward credits, may not exceed the amount of franchise tax
due for the report after any other applicable credits.
(c) A corporation that establishes its eligibility for a
credit under this subchapter is not eligible to establish a credit
under Subchapter P.
Sec. 171.725. CARRYFORWARD. If a corporation is eligible
for a credit that exceeds the limitation under Section 171.724(a)
or (b), the corporation may carry the unused credit forward for not
more than 20 consecutive reports. A credit carryforward from a
previous report is considered to be utilized before the current
year credit.
Sec. 171.726. DETERMINATION OF STRATEGIC INVESTMENT AREAS.
The comptroller shall determine strategic investment areas on an
annual basis using the most current available data and shall
publish a list and map of strategic investment areas by September 1
of each year.
Sec. 171.727. BIENNIAL REPORT TO LEGISLATURE BY COMPTROLLER.
(a) Before the beginning of each regular session of the
legislature, the comptroller shall submit to the members of the
legislature a report that states:
(1) the total amount of expenses and payments incurred
by corporations that claim a credit under Section 171.723;
(2) the total amount of credits applied against the
tax under this chapter and the amount of unused credits including:
(A) the total amount of franchise tax due by
corporations claiming a credit under this subchapter before and
after the application of the credit;
(B) the average percentage reduction in
franchise tax due by corporations claiming a credit under this
subchapter;
(C) the percentage of tax credits that were
awarded to corporations with fewer than 100 employees; and
(D) the two-digit standard industrial
classification of corporations claiming a credit under this
subchapter;
(3) the geographical distribution of expenses and
payments giving rise to a credit authorized by this subchapter;
(4) the impact of the credit provided by this
subchapter on the amount of research and development performed in
this state and employment in research and development in this
state; and
(5) the impact of the credit provided under this
subchapter on employment, capital investment, and personal income
in this state and on state tax revenues.
(b) The final report issued prior to the expiration of this
subchapter shall include historical information on the credit
authorized under this subchapter.
(c) The comptroller may not include in the report
information that is confidential by law.
(d) For purposes of this section, the comptroller may
require a corporation that claims a credit under this subchapter to
submit information, on a form provided by the comptroller on the
location of the corporation's research expenses and payments in
this state and any other information necessary to complete the
report required under this section.
Sec. 171.728. COMPTROLLER POWERS AND DUTIES. The
comptroller shall adopt rules and forms necessary to implement this
subchapter.
Sec. 171.729. EXPIRATION. (a) This subchapter expires
December 31, 2009.
(b) The expiration of this subchapter does not affect the
carryforward of a credit under Section 171.725 for those credits to
which a corporation is eligible before the date this subchapter
expires.
SECTION ___. Chapter 171, Tax Code, is amended by adding
Subchapter P to read as follows:
SUBCHAPTER P. TAX CREDITS FOR CERTAIN JOB CREATION ACTIVITIES
Sec. 171.751. DEFINITIONS. In this subchapter:
(1) "Agricultural processing" means an establishment
primarily engaged in activities described in categories 2011-2099,
2211, 2231, or 3111-3199 of the 1987 Standard Industrial
Classification Manual published by the federal Office of Management
and Budget.
(2) "Central administrative offices" means an
establishment primarily engaged in performing management or support
services for other establishments of the same enterprise. An
enterprise consists of all establishments having more than 50
percent common direct or indirect ownership.
(3) "County average weekly wage" means the average
weekly wage for all covered employment in the county as computed by
the Texas Workforce Commission.
(4) "Data processing" means an establishment primarily
engaged in activities described in categories 7371-7379 of the 1987
Standard Industrial Classification Manual published by the federal
Office of Management and Budget.
(5) "Distribution" means an establishment primarily
engaged in activities described in categories 5012-5199 of the 1987
Standard Industrial Classification Manual published by the federal
Office of Management and Budget.
(6) "Group health benefit plan" means:
(A) a health plan provided by a health
maintenance organization established under the Texas Health
Maintenance Organization Act (Chapter 20A, Vernon's Texas Insurance
Code);
(B) a health benefit plan approved by the
commissioner of insurance; or
(C) a self-funded or self-insured employee
welfare benefit plan that provides health benefits and is
established in accordance with the Employee Retirement Income
Security Act of 1974 (29 U.S.C. Section 1001 et seq.), as amended.
(7) "Manufacturing" means an establishment primarily
engaged in activities described in categories 2011-3999 of the 1987
Standard Industrial Classification Manual published by the federal
Office of Management and Budget.
(8) "Qualified business" means an establishment
primarily engaged in agricultural processing, central
administrative offices, distribution, data processing,
manufacturing, research and development, or warehousing.
(9) "Qualifying job" means a new permanent full-time
job that:
(A) is located in:
(i) a strategic investment area; or
(ii) a county with a population of less
than 250,000, if the job is created by a business primarily engaged
in agricultural processing;
(B) requires at least 1,600 hours of work a
year;
(C) pays at least 110 percent of the county
average weekly wage for the county where the job is located;
(D) is covered by a group health benefit plan
for which the business pays at least 80 percent of the premiums or
other charges assessed under the plan for the employee;
(E) is not transferred from one area in this
state to another area in this state; and
(F) is not created to replace a previous
employee.
(10) "Research and development" means an establishment
primarily engaged in activities described in category 8731 of the
1987 Standard Industrial Classification Manual published by the
federal Office of Management and Budget.
(11) "Strategic investment area" has the meaning
assigned that term by Section 171.721.
(12) "Warehousing" means an establishment primarily
engaged in activities described in categories 4221-4226 of the 1987
Standard Industrial Classification Manual published by the federal
Office of Management and Budget.
Sec. 171.752. ELIGIBILITY. (a) A corporation is eligible
for a credit against the tax imposed under this chapter if the
corporation:
(1) is a qualified business as defined in Section
171.751;
(2) creates a minimum of 10 qualifying jobs; and
(3) pays an average weekly wage, for the year in which
credits are claimed, of at least 110 percent of the county average
weekly wage for the county where the qualifying jobs are located.
(b) A corporation may claim a credit or take a carryforward
credit without regard to whether the strategic investment area in
which it created the qualifying jobs subsequently loses its
designation as a strategic investment area, if applicable.
Sec. 171.753. CALCULATION OF CREDIT. A corporation may
establish a credit equal to 25 percent of the total wages and
salaries paid by the corporation for qualifying jobs during the
period upon which the tax is based.
Sec. 171.754. LENGTH OF CREDIT. The credit established
shall be claimed in five equal installments of one-fifth the credit
amount over the five consecutive reports beginning with the report
based upon the period during which the qualifying jobs were
created.
Sec. 171.755. LIMITATIONS. (a) The total credit claimed
under this subchapter for a report, including the amount of any
carryforward credit under Section 171.756, may not exceed 50
percent of the amount of franchise tax due for the report before
any other applicable tax credits.
(b) The total credit claimed under this subchapter and
Subchapters O and Q for a report, including the amount of any
carryforward credits, may not exceed the amount of franchise tax
due for the report after any other applicable credits.
(c) A corporation that establishes its eligibility for a
credit under this subchapter is not eligible to establish a credit
under Subchapter O.
Sec. 171.756. CARRYFORWARD. (a) If a corporation is
eligible for a credit from an installment that exceeds the
limitations under Section 171.755(a) or (b), the corporation may
carry the unused credit forward for not more than five consecutive
reports.
(b) A carryforward is considered the remaining portion of an
installment that cannot be claimed in the current year because of
the tax limitation under Section 171.755. A carryforward is added
to the next year's installment of the credit in determining the tax
limitation for that year. A credit carryforward from a previous
report is considered to be utilized before the current year
installment.
Sec. 171.757. CERTIFICATION OF ELIGIBILITY. (a) For the
initial and each succeeding report in which a credit is claimed
under this subchapter, the corporation shall file with its report,
on a form provided by the comptroller, information that
sufficiently demonstrates that the corporation is eligible for the
credit and is in compliance with Section 171.752.
(b) The burden of establishing entitlement to and the value
of the credit is on the corporation.
(c) If, in one of the five years in which the installment of
a credit accrues, the number of the corporation's full-time
employees falls below the number of full-time employees the
corporation had in the year in which the corporation qualified for
the credit, the credit expires and the corporation may not take any
remaining installment of the credit.
(d) Notwithstanding Subsection (c), the corporation may,
however, take the portion of an installment that accrued in a
previous year and was carried forward to the extent permitted under
Section 171.756.
Sec. 171.758. ASSIGNMENT PROHIBITED. A corporation may not
convey, assign, or transfer 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.
Sec. 171.759. BIENNIAL REPORT TO LEGISLATURE BY COMPTROLLER.
(a) Before the beginning of each regular session of the
legislature, the comptroller shall submit to the members of the
legislature a report that states:
(1) the total number of jobs created by corporations
that claim a credit under this subchapter and the average and
median annual wage of those jobs;
(2) the total amount of credits applied against the
tax under this chapter and the amount of unused credits including:
(A) the total amount of franchise tax due by
corporations claiming a credit under this subchapter before and
after the application of the credit;
(B) the average percentage reduction in
franchise tax due by corporations claiming a credit under this
subchapter; and
(C) the percentage of tax credits that were
awarded to corporations with fewer than 100 employees;
(3) a breakdown of the two-digit standard industrial
classification of businesses claiming a credit under this
subchapter;
(4) the geographical distribution of the credits
claimed under this subchapter; and
(5) the impact of the credit provided under this
subchapter on employment, personal income, and capital investment
in this state and on state tax revenues.
(b) The final report issued prior to the expiration of this
subchapter shall include historical information on the credit
authorized under this subchapter.
(c) The comptroller may not include in the report
information that is confidential by law.
(d) For purposes of this section, the comptroller may
require a corporation that claims a credit under this subchapter to
submit information, on a form provided by the comptroller, on the
location of the corporation's job creation in this state and any
other information necessary to complete the report required under
this section.
Sec. 171.760. COMPTROLLER POWERS AND DUTIES. The
comptroller shall adopt rules and forms necessary to implement this
subchapter.
Sec. 171.761. EXPIRATION. (a) This subchapter expires
December 31, 2009.
(b) The expiration of this subchapter does not affect the
carryforward of a credit under Section 171.756 or those credits for
which a corporation is eligible before the date this subchapter
expires.
SECTION ___. Chapter 171, Tax Code, is amended by adding
Subchapter Q to read as follows:
SUBCHAPTER Q. TAX CREDITS FOR CERTAIN CAPITAL INVESTMENTS
Sec. 171.801. DEFINITIONS. In this subchapter:
(1) "Agricultural processing," "central administrative
offices," "county average weekly wage," "distribution," "data
processing," "manufacturing," "qualified business," "research and
development," and "warehousing" have the meanings assigned those
terms by Section 171.751.
(2) "Capitalized lease" means a transaction that is
classified as a purchase for federal income tax purposes even
though it is denominated as a "lease."
(3) "Qualified capital investment" means tangible
personal property first placed in service in a strategic investment
area, or first placed in service in a county with a population of
less than 250,000 by a corporation primarily engaged in
agricultural processing, and that is described in Section 1245(a),
Internal Revenue Code, such as engines, machinery, tools, and
implements used in a trade or business or held for investment and
subject to an allowance for depreciation, cost recovery under the
accelerated cost recovery system, or amortization. The term does
not include real property or buildings and their structural
components. Property that is leased under a capitalized lease is
considered a "qualified capital investment," but property that is
leased under an operating lease is not considered a "qualified
capital investment." Property expensed under Section 179, Internal
Revenue Code, is not considered a "qualified capital investment."
(4) "Strategic investment area" has the meaning
assigned that term by Section 171.721.
Sec. 171.802. ELIGIBILITY. (a) A corporation is eligible
for a credit against the tax imposed under this chapter in the
amount and under the conditions and limitations provided by this
subchapter.
(b) To qualify for the credit authorized under this
subchapter, a qualified business must:
(1) make a minimum $500,000 qualified capital
investment; and
(2) pay an average weekly wage, at the location with
respect to which the credit is claimed, which is at least 110
percent of the county average weekly wage.
(c) A corporation may claim a credit or take a carryforward
credit without regard to whether the strategic investment area in
which it made the qualified capital investment subsequently loses
its designation as a strategic investment area, if applicable.
Sec. 171.803. CALCULATION OF CREDIT. A corporation may
establish a credit equal to 7.5 percent of the qualified capital
investment during the period upon which the tax is based.
Sec. 171.804. LENGTH OF CREDIT. The credit established
shall be claimed in five equal installments of one-fifth the credit
amount over the five consecutive reports beginning with the report
based upon the period during which the qualified capital investment
was made.
Sec. 171.805. LIMITATIONS. (a) The total credit claimed
under this subchapter for a report, including the amount of any
carryforward credit under Section 171.806, may not exceed 50
percent of the amount of franchise tax due for the report before
any other applicable tax credits.
(b) The total credit claimed under this subchapter and
Subchapters O and P for a report, including the amount of any
carryforward credits, may not exceed the amount of franchise tax
due for the report after any other applicable tax credits.
(c) A corporation that establishes its eligibility for a
credit under this subchapter is not eligible to claim a franchise
tax reduction authorized under Section 171.1015.
Sec. 171.806. CARRYFORWARD. (a) If a corporation is
eligible for a credit from an installment that exceeds the
limitation under Section 171.805(a) or (b), the corporation may
carry the unused credit forward for not more than five consecutive
reports.
(b) A carryforward is considered the remaining portion of an
installment that cannot be claimed in the current year because of
the tax limitation under Section 171.805. A carryforward is added
to the next year's installment of the credit in determining the tax
limitation for that year. A credit carryforward from a previous
report is considered to be utilized before the current year
installment.
Sec. 171.807. CERTIFICATION OF ELIGIBILITY. (a) For the
initial and each succeeding report in which a credit is claimed
under this subchapter, the corporation shall file with its report,
on a form provided by the comptroller, information that
sufficiently demonstrates that the corporation is eligible for the
credit and is in compliance with Section 171.802.
(b) The burden of establishing entitlement to and the value
of the credit is on the qualified business.
(c) A credit expires under this subchapter and the
corporation may not take any remaining installment of the credit if
in one of the five years in which the installment of a credit
accrues, the qualified business:
(1) disposes of the qualified capital investment;
(2) takes the qualified capital investment out of
service;
(3) moves the qualified capital investment out of this
state; or
(4) fails to pay an average weekly wage as required by
Section 171.802.
(d) Notwithstanding Subsection (c), the corporation may take
the portion of an installment that accrued in a previous year and
was carried forward to the extent permitted under Section 171.806.
Sec. 171.808. ASSIGNMENT PROHIBITED. A corporation may not
convey, assign, or transfer 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.
Sec. 171.809. BIENNIAL REPORT TO LEGISLATURE BY COMPTROLLER.
(a) Before the beginning of each regular session of the
legislature, the comptroller shall submit to the members of the
legislature a report that states:
(1) the total amount of qualified capital investments
made by corporations that claim a credit under this subchapter and
the average and median wages paid by those corporations;
(2) the total amount of credits applied against the
tax under this chapter and the amount of unused credits including:
(A) the total amount of franchise tax due by
corporations claiming a credit under this subchapter before and
after the application of the credit;
(B) the average percentage reduction in
franchise tax due by corporations claiming a credit under this
subchapter;
(C) the percentage of tax credits that were
awarded to corporations with fewer than 100 employees; and
(D) the two-digit standard industrial
classification of corporations claiming a credit under this
subchapter;
(3) the geographical distribution of the qualified
capital investments upon which tax credit claims are made under
this subchapter; and
(4) the impact of the credit provided under this
subchapter on employment, capital investment, personal income, and
state tax revenues.
(b) The final report issued prior to the expiration of this
subchapter shall include historical information on the credit
authorized under this subchapter.
(c) The comptroller may not include in the report
information that is confidential by law.
(d) For purposes of this section, the comptroller may
require a corporation that claims a credit under this subchapter to
submit information, on a form provided by the comptroller, on the
location of the corporation's capital investment in this state and
any other information necessary to complete the report required
under this section.
Sec. 171.810. COMPTROLLER POWERS AND DUTIES. The
comptroller shall adopt rules and forms necessary to implement this
subchapter.
Sec. 171.811. EXPIRATION. (a) This subchapter expires
December 31, 2009.
(b) The expiration of this subchapter does not affect the
carryforward of a credit under Section 171.806 or those credits for
which a corporation is eligible before the date this subchapter
expires.
SECTION ___. The comptroller of public accounts of the State
of Texas may combine the reports required under Subchapters O, P,
and Q, Chapter 171, Tax Code, as added by this Act, into a single
report or may include the reports in any other report made to the
legislature.
SECTION ___. (a) This Article takes effect January 1, 2000.
(b) The changes in law made by this Article apply only to a
report originally due on or after January 1, 2000. A corporation
may claim a credit under Subchapters O, P, and Q, Chapter 171, Tax
Code, as added by this Act, only for expenses and payments
incurred, qualified investments made, or new jobs created, on or
after January 1, 2000.