By Turner of Coleman H.B. No. 2737
Line and page numbers may not match official copy.
Bill not drafted by TLC or Senate E&E.
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to tax incentives for certain agricultural processing
1-3 companies locating or expanding in this state.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subchapter H, Chapter 151, Tax Code, is amended
1-6 by adding Section 151.3185 to read as follows:
1-7 Sec. 151.3185. TAXABLE ITEMS SOLD OR USED BY CERTAIN
1-8 AGRICULTURAL PROCESSORS. (a) In this section:
1-9 (1) "Agricultural processor" means a person who is or
1-10 proposes to be engaged in processing an agricultural product.
1-11 (2) "Agricultural product" means an agricultural,
1-12 horticultural, viticultural, or vegetable product, bees, honey,
1-13 fish or other seafood, livestock, and poultry.
1-14 (3) "Economically distressed county" means a county
1-15 that:
1-16 (A) has a per capita income that averaged 25
1-17 percent below the state average for the most recent three
1-18 consecutive years for which statistics are available and an
1-19 unemployment rate that averaged 25 percent above the state average
1-20 for the most recent three consecutive years for which statistics
1-21 are available; or
2-1 (B) is adjacent to an international border.
2-2 (4) "Qualified agricultural processor" means an
2-3 agricultural processor who meets the qualifications prescribed by
2-4 Subsection (c).
2-5 (5) "Rural county" means a county with a population of
2-6 less than 250,000.
2-7 (b) A taxable item purchased, leased, rented, stored, or
2-8 used by the agricultural processing business of a qualified
2-9 agricultural processor is exempted from the taxes imposed by this
2-10 chapter.
2-11 (c) An agricultural processor qualifies for the exemption
2-12 provided by this section only if the processor:
2-13 (1) establishes a new agricultural processing business
2-14 in a rural county or economically distressed county or expands an
2-15 existing agricultural processing business located in a rural county
2-16 or economically distressed county; and
2-17 (2) makes a capital investment of not less than
2-18 $100,000 in establishing or expanding the business in the location
2-19 described by Subdivision (1).
2-20 (d) A qualified agricultural processor that is not a
2-21 corporation subject to taxation under Chapter 171 may claim the
2-22 exemption provided by this section only until the third anniversary
2-23 of the date on which the processor begins constructing or expanding
2-24 a facility that is necessary or essential to the agricultural
2-25 processing business described by Subsection (c) or enters into a
3-1 lease for such a facility.
3-2 (e) A qualified agricultural processor that is a corporation
3-3 subject to taxation under Chapter 171 may claim the exemption
3-4 provided by this section only until the first anniversary of the
3-5 date on which the processor begins constructing or expanding a
3-6 facility that is necessary or essential to the agricultural
3-7 processing business described by Subsection (c) or enters into a
3-8 lease for such a facility.
3-9 (f) A corporation must apply to the comptroller for the
3-10 exemption provided by this section. The burden of establishing
3-11 entitlement to the exemption is on the agricultural processor.
3-12 SECTION 2. Chapter 171, Tax Code, is amended by adding
3-13 Subchapter N to read as follows:
3-14 SUBCHAPTER N. CREDIT FOR CERTAIN AGRICULTURAL PROCESSORS
3-15 Sec. 171.701. DEFINITIONS. In this subchapter:
3-16 (1) "Agricultural processor" has the meaning assigned
3-17 by Section 151.3185.
3-18 (2) "Agricultural product" has the meaning assigned by
3-19 Section 151.3185.
3-20 (3) "Economically distressed county" has the meaning
3-21 assigned by Section 151.3185.
3-22 (4) "New permanent employee" means a new employee,
3-23 other than a private contractor, hired by a corporation for a
3-24 position that requires at least 1,600 hours of work a year and is
3-25 intended to be held by one employee during the entire year.
4-1 (5) "Rural county" has the meaning assigned by Section
4-2 151.3185.
4-3 Sec. 171.702. ENTITLEMENT TO CREDIT. A corporation is
4-4 entitled to a credit in the amount and under the conditions and
4-5 limitations provided by this subchapter against the tax imposed
4-6 under this chapter.
4-7 Sec. 171.703. TYPES OF CORPORATIONS THAT QUALIFY FOR CREDIT.
4-8 (a) A corporation qualifies for a credit under this subchapter if
4-9 the corporation is an agricultural processor that:
4-10 (1) establishes a new agricultural processing business
4-11 in a rural county or economically distressed county or expands an
4-12 existing agricultural processing business located in a rural county
4-13 or economically distressed county; and
4-14 (2) makes an overall investment relating to the
4-15 establishment or expansion in a privilege period that is equal to
4-16 at least $250,000 as computed under Subsection (b).
4-17 (b) The value of a corporation's overall investment in
4-18 establishing or expanding an agricultural processing business in a
4-19 rural county or economically distressed county is computed by
4-20 multiplying the corporation's capital investment made in
4-21 establishing or expanding the business by the value of the new
4-22 permanent jobs created by the corporation as computed under
4-23 Subsection (c).
4-24 (c) The value of a new permanent job created by a
4-25 corporation is equal to:
5-1 (1) $0 for each new permanent employee hired by the
5-2 corporation to work at an agricultural processing business
5-3 established or expanded in a rural county or economically
5-4 distressed area if the corporation hires four or fewer new
5-5 permanent employees;
5-6 (2) $1,000 for each new permanent employee hired by
5-7 the corporation to work at an agricultural processing business
5-8 established or expanded in a rural county or economically
5-9 distressed area if the corporation hires at least five and not more
5-10 than 14 new permanent employees;
5-11 (3) $5,000 for each new permanent employee hired by
5-12 the corporation to work at an agricultural processing business
5-13 established or expanded in a rural county or economically
5-14 distressed area if the corporation hires at least 15 and not more
5-15 than 49 new permanent employees; and
5-16 (4) $10,000 for each new permanent employee hired by
5-17 the corporation to work at an agricultural processing business
5-18 established or expanded in a rural county or economically
5-19 distressed area if the corporation hires more than 49 new permanent
5-20 employees.
5-21 Sec. 171.704. AMOUNT OF CREDIT. (a) The total amount of
5-22 the credit for which a corporation may qualify during a privilege
5-23 period is equal to:
5-24 (1) two percent of the value of the corporation's
5-25 overall investment for the privilege period if the value is at
6-1 least $250,000 but not more than $500,000;
6-2 (2) four percent of the value of the corporation's
6-3 overall investment for the privilege period if the value is more
6-4 than $500,000 but not more than $1 million;
6-5 (3) six percent of the value of the corporation's
6-6 overall investment for the privilege period if the value is more
6-7 than $1 million but not more than $5 million;
6-8 (4) eight percent of the value of the corporation's
6-9 overall investment for the privilege period if the value is more
6-10 than $5 million but not more than $10 million; and
6-11 (5) 10 percent of the value of the corporation's
6-12 overall investment for the privilege period if the value is more
6-13 than $10 million.
6-14 (b) A credit related to a particular new permanent employee
6-15 expires if:
6-16 (1) the employee does not remain continuously employed
6-17 with the business for at least 90 days; or
6-18 (2) the number of full-time employees working at that
6-19 employee's location falls below the number of employees at that
6-20 location on the day after that employee was hired.
6-21 (c) A corporation that qualifies for a credit under this
6-22 subchapter must take the credit in five equal installments.
6-23 Sec. 171.705. LIMITATIONS. (a) The total credit claimed
6-24 under this subchapter for a privilege period may not exceed 50
6-25 percent of the amount of net franchise tax due for the privilege
7-1 period after any other applicable tax credits.
7-2 (b) The amount of the credit may not reduce the tax below
7-3 zero.
7-4 Sec. 171.706. CARRYOVER. If a corporation is entitled to
7-5 take a credit that exceeds the limitation prescribed by Section
7-6 171.705 for a privilege period, the corporation may carry the
7-7 credit forward to consecutive reports.
7-8 Sec. 171.707. CONVEYANCE, ASSIGNMENT, OR TRANSFER. A
7-9 corporation may not convey, assign, or transfer a credit to another
7-10 person.
7-11 Sec. 171.708. RULES. The comptroller shall adopt rules
7-12 necessary to implement this subchapter.
7-13 SECTION 3. Subchapter B, Chapter 403, Government Code, is
7-14 amended by adding Section 403.0255 to read as follows:
7-15 Sec. 403.0255. INCENTIVES FOR AGRICULTURAL PROCESSORS. The
7-16 comptroller shall promote awareness of incentives available to
7-17 companies that want to establish or expand an agricultural
7-18 processing business in this state.
7-19 SECTION 4. Chapter 12, Agriculture Code, is amended by
7-20 adding Section 12.0021 to read as follows:
7-21 Sec. 12.0021. INCENTIVES FOR AGRICULTURAL PROCESSORS. The
7-22 department shall recruit the governor's office and other state
7-23 agencies to participate in a coordinated campaign to increase
7-24 awareness of the incentives available to companies that want to
7-25 establish or expand an agricultural processing business in this
8-1 state.
8-2 SECTION 5. (a) This Act takes effect January 1, 2000.
8-3 (b) A corporation may claim an exemption or credit under
8-4 this Act only for a capital investment made or new permanent
8-5 employee hired on or after the effective date of this Act.
8-6 SECTION 6. The importance of this legislation and the
8-7 crowded condition of the calendars in both houses create an
8-8 emergency and an imperative public necessity that the
8-9 constitutional rule requiring bills to be read on three several
8-10 days in each house be suspended, and this rule is hereby suspended.