By Greenberg H.B. No. 3743
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 credits, refunds, and exemptions.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Subchapter C, Chapter 171, Tax Code, is amended
1-5 by adding Section 171.114 to read as follows:
1-6 Sec. 171.114. CREDIT ON NET TAXABLE EARNED SURPLUS FOR
1-7 RESEARCH AND DEVELOPMENT ACTIVITIES. (a) A corporation is
1-8 entitled to a credit against the tax due under this chapter on net
1-9 taxable earned surplus as provided by this section.
1-10 (b) Subject to Subsections (c) and (d), the credit for any
1-11 privilege period equals the sum of five percent of:
1-12 (1) the qualified research expenses for this state for
1-13 that period; and
1-14 (2) the basic research payments determined for this
1-15 state for that period.
1-16 (c) The credit may not exceed:
1-17 (1) 25 percent of the amount of net franchise tax due
1-18 for the privilege period after any other applicable tax credits; or
1-19 (2) in combination with the credit under Subchapter Q,
1-20 50 percent of the amount of net franchise tax due for the privilege
1-21 period after any other applicable tax credits other than the credit
2-1 under Subchapter Q.
2-2 (d) The amount of the credit may not reduce the tax below
2-3 zero.
2-4 (e) If a taxpayer is entitled to a credit that exceeds the
2-5 limitation under Subsection (c) for a privilege period, the
2-6 taxpayer may carry the credit forward for not more than 15
2-7 consecutive privilege periods.
2-8 (f) If a corporation's accounting year does not correspond
2-9 to the privilege period, any amount used to calculate the credit
2-10 shall be multiplied by a fraction the numerator of which is the
2-11 number of days in the corporation's accounting year that are also
2-12 in the privilege period and the denominator of which is the number
2-13 of days in the privilege period.
2-14 (g) The comptroller shall adopt rules necessary to implement
2-15 this section.
2-16 (h) This section applies only to an expenditure by a
2-17 corporation made on or before December 31, 2017.
2-18 (i) In this section, "basic research payment" and "qualified
2-19 research expense" have the meanings assigned by Section 41,
2-20 Internal Revenue Code.
2-21 SECTION 2. Chapter 171, Tax Code, is amended by adding
2-22 Subchapters P, and Q to read as follows:
2-23 SUBCHAPTER P. WORKFORCE DEVELOPMENT TAX CREDIT
2-24 Sec. 171.751. ENTITLEMENT TO CREDIT. A corporation is
2-25 entitled to a credit in the amount and under the conditions and
3-1 limitations provided by this subchapter against the tax imposed
3-2 under this chapter.
3-3 Sec. 171.752. QUALIFICATION. A corporation qualifies for a
3-4 credit under this subchapter for each employee:
3-5 (1) originally hired on or after January 1, 2000;
3-6 (2) who, at the time of being hired, is enrolled in a
3-7 technical preparatory career pathway course of study at an
3-8 accredited high school; and
3-9 (3) who is employed as an intern with work assignments
3-10 related to the course of study.
3-11 Sec. 171.753. AMOUNT; LIMITATIONS. (a) The amount of the
3-12 credit is 50 percent of the wages paid by the corporation for each
3-13 qualified employee.
3-14 (b) The credit claimed for each privilege period may not
3-15 exceed $1,500 for each individual employed.
3-16 Sec. 171.754. APPLICATION FOR CREDIT. (a) A corporation
3-17 must apply for a credit under this subchapter on or with the tax
3-18 report for the period for which the credit is claimed.
3-19 (b) The comptroller shall promulgate a form for the
3-20 application for the credit. A corporation must use this form in
3-21 applying for the credit.
3-22 Sec. 171.755. PERIOD FOR WHICH CREDIT MAY BE CLAIMED. A
3-23 corporation may claim a credit under this subchapter for wages paid
3-24 during an accounting period only against the tax owed for the
3-25 corresponding privilege period.
4-1 Sec. 171.756. RULES. The comptroller shall adopt rules
4-2 necessary to implement this subchapter.
4-3 SUBCHAPTER Q. CREDIT FOR EDUCATION INVESTMENT
4-4 IN RESEARCH AND DEVELOPMENT
4-5 Sec. 171.781. ENTITLEMENT. A corporation is entitled to a
4-6 credit in the amount and under the conditions and limitations
4-7 provided by this subchapter against the tax imposed under this
4-8 chapter.
4-9 Sec. 171.782. EDUCATION INVESTMENT CREDIT. (a) A
4-10 corporation is entitled to a credit for fair market value of a
4-11 contribution for research and development purposes, including
4-12 money, service, and equipment, to an education organization in this
4-13 state that normally:
4-14 (1) maintains a regular facility and curriculum; and
4-15 (2) has a regularly enrolled body of students in
4-16 attendance.
4-17 (b) The amount of the credit may not exceed:
4-18 (1) 25 percent of the amount contributed under
4-19 Subsection (a) for the privilege period in which the expenses or
4-20 payments are made; or
4-21 (2) in combination with the credit under Section
4-22 171.114, 50 percent of the amount of net franchise tax due for the
4-23 privilege period after any other applicable tax credits other than
4-24 the credit under Section 171.114.
4-25 Sec. 171.783. ACCOUNTING. If a corporation's accounting
5-1 year does not correspond to the privilege period, any amount used
5-2 to calculate the credit shall be multiplied by a fraction the
5-3 numerator of which is the number of days in the corporation's
5-4 accounting year that are also in the privilege period and the
5-5 denominator of which is the number of days in the privilege period.
5-6 Sec. 171.784. CARRYOVER. A corporation may carry any unused
5-7 credit forward for not more than four consecutive privilege
5-8 periods.
5-9 SECTION 3. Subchapter H, Chapter 151, Tax Code, is amended
5-10 by adding Section 151.3181 to read as follows:
5-11 Sec. 151.3181. EQUIPMENT USED IN RESEARCH OR DEVELOPMENT.
5-12 (a) There are exempted from the taxes imposed by this chapter
5-13 machinery, equipment, or replacement parts that are used directly
5-14 in the research or development of inventions, products, processes,
5-15 or technology by a person that is:
5-16 (1) subject to the franchise tax imposed under Chapter
5-17 171; and
5-18 (2) primarily engaged in:
5-19 (A) the manufacturing, processing, or
5-20 fabrication of tangible personal property for ultimate sale; or
5-21 (B) the performance of scientific or technical
5-22 services for a person described by Paragraph (A).
5-23 (b) The exemption does not include:
5-24 (1) office equipment or supplies; or
5-25 (2) equipment or supplies used in sales or
6-1 distribution activities or in transportation activities.
6-2 (c) In this section, "manufacturing" has the meaning
6-3 assigned by Section 151.318.
6-4 SECTION 4. (a) Sections 1 and 2 of this Act take effect
6-5 January 1, 2000, and apply only to a report originally due on or
6-6 after that date.
6-7 (b) Section 3 of this Act takes effect October 1, 1999.
6-8 (c) The change in law made by Section 3 of this Act does not
6-9 affect taxes imposed before October 1, 1999, and the law in effect
6-10 before that date is continued in effect for purposes of the
6-11 liability for and collection of those taxes.
6-12 SECTION 5. The importance of this legislation and the
6-13 crowded condition of the calendars in both houses create an
6-14 emergency and an imperative public necessity that the
6-15 constitutional rule requiring bills to be read on three several
6-16 days in each house be suspended, and this rule is hereby suspended.