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.