SRC-JXG C.S.S.B. 58 76(R)BILL ANALYSIS


Senate Research CenterC.S.S.B. 58
76R9170 CBH-DBy: Haywood
Finance
4/26/1999
Committee Report (Substituted)


DIGEST
 
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. C.S.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. 

PURPOSE

As proposed, C.S.S.B. 58 provides corporations with tax incentives to
establish and operate day-care centers or registered family homes, or
purchase child care services for employees of the corporation. 

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 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 limitation
prescribed by Subsection (c), if a corporation shares in the cost of
establishing and operating a day-care center. 

Sec. 171.704. APPLICATION FOR CREDIT. Requires a corporation to apply for
credit under this subchapter on or with the tax report for the period for
which the credit is claimed. Requires a corporation to 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. Requires a corporation to 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.





SUMMARY OF COMMITTEE CHANGES

SECTION 1.

 Amends Section 171.701, Tax Code, to add the definition of "family home."

Amends Section 171.703, Tax Code, to set forth the qualifying conditions
under which a corporation may claim credit, including the purchase of
child-care services that are actually provided to children of employees of
the corporation at a day care center, or family home that is registered
with the Department of Protective and Regulatory Services under Chapter 42,
Human Resources Code. Sets forth qualifying expenditures, including
purchasing all or part of child-care services that are actually provided to
children of employees of the corporation at a day-care center or a
registered or listed family home. 

 Amends Section 171.704, Tax Code, to make a conforming change.