By Hill H.B. No. 980
76R3373 DAK-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to a franchise tax refund or credit for certain research
1-3 and development activities.
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 O to read as follows:
1-7 SUBCHAPTER O. TAX REFUND OR CREDIT FOR CERTAIN RESEARCH AND
1-8 DEVELOPMENT ACTIVITIES
1-9 Sec. 171.721. DEFINITIONS. In this subchapter, "base
1-10 amount," "basic research payment," and "qualified research expense"
1-11 have the meanings assigned by Section 41, Internal Revenue Code.
1-12 Sec. 171.722. ENTITLEMENT. A corporation is entitled to a
1-13 refund in the amount and under the conditions and limitations
1-14 provided by this subchapter against the tax imposed under this
1-15 chapter.
1-16 Sec. 171.723. AMOUNT. (a) Except as provided by Subsection
1-17 (b), and subject to adjustment under Section 171.726, the refund
1-18 for any privilege period equals five percent of the sum of:
1-19 (1) the qualified research expenses for this state
1-20 divided by the base amount for this state; and
1-21 (2) the basic research payments determined under
1-22 Section 41(e)(1)(A), Internal Revenue Code, for this state.
1-23 (b) The total refund claimed under this section for a
1-24 privilege period may not exceed 25 percent of the amount of net
2-1 franchise tax due for the privilege period after any other
2-2 applicable tax credits or refunds.
2-3 (c) If a corporation's accounting year does not correspond
2-4 to the privilege period, the base amount and any other amount used
2-5 to calculate the refund shall be multiplied by a ratio the
2-6 numerator of which is the number of days in the corporation's
2-7 accounting year that are also in the privilege period and the
2-8 denominator of which is the number of days in the privilege period.
2-9 Sec. 171.724. APPLICATION. (a) A corporation must apply
2-10 for a refund under this subchapter on or with the tax report for
2-11 the period for which the refund is claimed.
2-12 (b) The comptroller shall promulgate a form for the
2-13 application for the refund. A corporation must use this form in
2-14 applying for the refund.
2-15 Sec. 171.725. DETERMINATION OF TOTAL AMOUNT OF REFUNDS. The
2-16 comptroller shall determine the total amount of refunds claimed for
2-17 a tax year on all reports that are filed on or before November 15.
2-18 Sec. 171.726. ADJUSTMENT AND PAYMENT OF REFUND. (a) On or
2-19 before December 31 of a tax year, the comptroller shall send to a
2-20 corporation entitled to a refund under this subchapter:
2-21 (1) the full amount of the refund determined under
2-22 Section 171.723 if the amount under Section 171.725 is less than or
2-23 equal to $125 million; or
2-24 (2) a portion of the refund determined under Section
2-25 171.723 in accordance with Subsection (b) if the amount under
2-26 Section 171.725 is greater than $125 million.
2-27 (b) If the amount under Section 171.725 is greater than $125
3-1 million, the comptroller shall determine the amount of a
3-2 corporation's refund by multiplying the amount of the corporation's
3-3 refund determined under Section 171.723 by a fraction:
3-4 (1) the numerator of which is $125 million; and
3-5 (2) the denominator of which is the amount under
3-6 Section 171.725.
3-7 Sec. 171.727. CREDIT. (a) The comptroller may, for a tax
3-8 year, allow corporations to take a credit directly against the tax
3-9 owed under this chapter instead of issuing a refund after the tax
3-10 is paid if the comptroller determines that the amount under Section
3-11 171.725 for the tax year is reasonably certain to be less than or
3-12 equal to $125 million.
3-13 (b) If the comptroller makes the determination under
3-14 Subsection (a), the provisions of this subchapter that relate to
3-15 the entitlement to and amount of limitations of a refund apply in
3-16 the same manner to a credit.
3-17 Sec. 171.728. RULES. The comptroller shall adopt rules
3-18 necessary to implement this subchapter.
3-19 SECTION 2. (a) This Act takes effect January 1, 2000.
3-20 (b) This Act applies only to:
3-21 (1) a report originally due on or after the effective
3-22 date of this Act; and
3-23 (2) an expense or payment made on or after January 1,
3-24 1999.
3-25 SECTION 3. The importance of this legislation and the
3-26 crowded condition of the calendars in both houses create an
3-27 emergency and an imperative public necessity that the
4-1 constitutional rule requiring bills to be read on three several
4-2 days in each house be suspended, and this rule is hereby suspended.