By Howard H.B. No. 99 76R1748 KLA-D A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to a franchise tax credit for certain contributions to a 1-3 public school or a nonprofit scholarship funding organization. 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 CERTAIN CONTRIBUTIONS TO NONPROFIT 1-8 SCHOLARSHIP FUNDING ORGANIZATIONS AND PUBLIC SCHOOLS 1-9 Sec. 171.701. PURPOSE. The purpose of this subchapter is to 1-10 provide a franchise tax credit for certain contributions to a 1-11 nonprofit scholarship funding organization or public school. It is 1-12 the intent of the legislature that freedom of religion of all 1-13 citizens is inviolate and that nothing in this subchapter be 1-14 construed to cause excessive governmental entanglement with the 1-15 religious instruction of a nonpublic school. With respect to a 1-16 nonpublic school, nothing in this subchapter gives a governmental 1-17 agency authority to regulate, control, supervise, or in any way be 1-18 involved in the: 1-19 (1) form, manner, or content of religious instruction, 1-20 ministry, teaching, or curriculum offered by the nonpublic school; 1-21 (2) ability of the nonpublic school to select and 1-22 supervise qualified personnel and otherwise control the terms of 1-23 employment, including the right to employ individuals who share the 1-24 religious views of the school; 2-1 (3) internal self-governance and autonomy of the 2-2 nonpublic school; or 2-3 (4) religious environment of the nonpublic school, 2-4 such as symbols, art, icons, and scripture. 2-5 Sec. 171.702. DEFINITIONS. In this subchapter: 2-6 (1) "Eligible school" means a public or nonpublic 2-7 primary or secondary school that: 2-8 (A) offers a general education to primary or 2-9 secondary students; 2-10 (B) does not discriminate on the basis of race, 2-11 color, disability, or national origin; and 2-12 (C) is located in this state. 2-13 (2) "Nonprofit scholarship funding organization" means 2-14 a charitable organization that: 2-15 (A) is exempt from federal tax under Section 2-16 501(a) of the Internal Revenue Code by being listed as an exempt 2-17 organization in Section 501(c)(3) of the code; and 2-18 (B) allocates at least 90 percent of its annual 2-19 revenue to providing scholarships for tuition, transportation, and 2-20 textbook expenses to children enrolled in an eligible school. 2-21 Sec. 171.703. CREDIT. A corporation that meets the 2-22 eligibility requirements of this subchapter is entitled to a credit 2-23 in the amount allowed by this subchapter against the tax imposed by 2-24 this chapter. 2-25 Sec. 171.704. CREDIT FOR CERTAIN CONTRIBUTIONS TO A 2-26 NONPROFIT SCHOLARSHIP FUNDING ORGANIZATION OR PUBLIC SCHOOL. A 2-27 corporation is entitled to a credit under this subchapter for the 3-1 amount of money the corporation contributes to a nonprofit 3-2 scholarship funding organization or public school only if: 3-3 (1) the contribution is used to provide scholarships 3-4 for tuition, transportation, or textbook expenses to children 3-5 enrolled in eligible schools; and 3-6 (2) the corporation does not designate a specific 3-7 child as the beneficiary of the contribution. 3-8 Sec. 171.705. LIMITATION. The total credits claimed under 3-9 this subchapter during a privilege period may not exceed: 3-10 (1) 75 percent of the amount of net franchise tax due 3-11 for the privilege period after all other applicable tax credits are 3-12 applied for credits claimed for contributions to nonprofit 3-13 scholarship funding organizations; and 3-14 (2) five percent of the amount of net franchise tax 3-15 due for the privilege period after all other applicable tax credits 3-16 are applied for credits claimed for contributions to public 3-17 schools. 3-18 Sec. 171.706. APPLICATION FOR CREDIT. (a) A corporation 3-19 must apply for a credit under this subchapter on or with the tax 3-20 report for the period for which the credit is claimed. 3-21 (b) The comptroller shall promulgate a form for the 3-22 application for the credit authorized by this subchapter. A 3-23 corporation must use this form in applying for the credit. 3-24 (c) The comptroller shall prescribe the form and manner of 3-25 proof required to obtain the credit authorized by this subchapter. 3-26 Sec. 171.707. PERIOD FOR WHICH CREDIT MAY BE CLAIMED. (a) A 3-27 corporation may claim a credit under this subchapter for a 4-1 contribution during an accounting period only against the tax owed 4-2 for the corresponding privilege period. 4-3 (b) A contribution in excess of the limitation under Section 4-4 171.705 does not carry forward or backward and may not be used to 4-5 create a business loss carryover. 4-6 Sec. 171.708. TRANSFER OF CREDIT. A corporation may not 4-7 convey, assign, or transfer the credit authorized by this 4-8 subchapter to another entity unless all of the assets of the 4-9 corporation are conveyed, assigned, or transferred in the same 4-10 transaction. 4-11 SECTION 2. The legislature declares that the provisions of 4-12 this Act are not severable and that this Act would not have been 4-13 enacted without the inclusion of all provisions. If any provision 4-14 of this Act is for any reason held invalid, the entire Act is 4-15 invalid. 4-16 SECTION 3. A corporation may claim the credit under 4-17 Subchapter N, Chapter 171, Tax Code, as added by this Act, only for 4-18 a contribution made after the effective date of this Act and only 4-19 on a franchise tax report due under Chapter 171, Tax Code, on or 4-20 after the effective date of this Act. 4-21 SECTION 4. This Act takes effect January 1, 2000. 4-22 SECTION 5. The importance of this legislation and the 4-23 crowded condition of the calendars in both houses create an 4-24 emergency and an imperative public necessity that the 4-25 constitutional rule requiring bills to be read on three several 4-26 days in each house be suspended, and this rule is hereby suspended.