HBA-RBT S.B. 58 76(R)    BILL ANALYSIS


Office of House Bill AnalysisS.B. 58
By: Haywood
Ways & Means
5/20/1999
Engrossed


BACKGROUND AND PURPOSE
 
Currently, there is an increased demand for certain child-care services as
a result of changes at both the federal and state level regarding work
requirements for public assistance eligibility. S.B. 58 would provide a
corporation tax credit as an incentive to establish and operate day-care
centers or registered family homes for children of employees, or purchasing
child care services for employees. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the in SECTION (Section , Code) of this
bill. 
 
SECTION BY SECTION ANALYSIS

SECTION 1. Amends Chapter 171, Tax Code, by adding Subchapter N, as follows:

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

 Sec. 171.701. DEFINITIONS. Defines "day-care center" and "family home."

Sec. 171.702. CREDIT. Entitles an eligible corporation to receive credit
against taxes imposed under this chapter. 

Sec. 171.703. CREDIT FOR DAY-CARE CENTER AND PURCHASED CHILD CARE. Sets
forth the qualifying conditions under which a corporation may claim credit.
Sets forth expenditures in a qualifying expenditure. Provides that the
amount of the credit is equal to the lesser of $50,000; 50 percent of the
corporation's qualifying expenditures; or the amount of the limitation
provided by Section 171.705(b). Entitles a corporation to a credit for the
qualifying expenditures made by the corporation, subject to the limitations
set forth, if a corporation shares in the cost of establishing and
operating a day-care center. 

Sec. 171.704. APPLICATION FOR CREDIT.  Provides that a corporation must
apply for credit under this subchapter on or with the tax report for the
period for which the credit is claimed.  Provides that a corporation must
include proof that the services were actually provided to children of
employees of the corporation at a day-care center or registered or listed
family home, if the corporation is claiming a credit for a qualifying
expenditure for purchasing child-care services. Requires the comptroller to
adopt a form for the application for the credit.  Provides that a
corporation must use this form in applying 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 90 percent of the amount of tax due for
the report.  

Sec. 171.706. ASSIGNMENT PROHIBITED. Prohibits a corporation from
conveying, assigning, or transferring 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. 

 SECTION 2. Authorizes a corporation to claim the credit under Chapter
171N, Tax Code, as added by this Act, only for a qualifying expenditure
made on or after the effective date of this Act, and on a franchise tax
report due under Chapter 171, Tax Code, on or after January 1, 2000. 

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