By McCall H.R. No. 1341
76R18149 DAK-D
R E S O L U T I O N
1-1 BE IT RESOLVED by the House of Representatives of the State
1-2 of Texas, 76th Legislature, Regular Session, 1999, That House Rule
1-3 13, Section 9(a), be suspended in part as provided by House Rule
1-4 13, Section 9(f), to enable the conference committee appointed to
1-5 resolve the differences between the house and senate versions of
1-6 Senate Bill No. 441, relating to tax exemptions and credits, to
1-7 consider and take action on the following matters:
1-8 (1) House Rule 13, Sections 9(a)(3) and (4), are suspended
1-9 to permit the committee to add text incorporating a new Section 10
1-10 of the bill, amending Section 171.002(d), Tax Code, to read as
1-11 follows:
1-12 SECTION 10. Section 171.002(d), Tax Code, is amended to read
1-13 as follows:
1-14 (d) A [If the amount of tax computed for a corporation is
1-15 less than $100, the] corporation is not required to pay any tax
1-16 [that amount] and is not considered to owe any tax for a [that]
1-17 period if:
1-18 (1) the amount of tax computed for the corporation is
1-19 less than $100; or
1-20 (2) the amount of the corporation's gross receipts:
1-21 (A) from its entire business under Section
1-22 171.105 is less than $150,000; and
1-23 (B) from its entire business under Section
1-24 171.1051, including the amount excepted under Section 171.1051(a),
2-1 is less than $150,000.
2-2 Explanation: This change is necessary to provide an
2-3 exemption for certain small corporations from the franchise tax.
2-4 (2) House Rule 13, Sections 9(a)(3) and (4), are suspended
2-5 to permit the committee to add text incorporating a new Section 11
2-6 of the bill, amending Section 171.203(a), Tax Code, to read as
2-7 follows:
2-8 SECTION 11. Section 171.203(a), Tax Code, is amended to read
2-9 as follows:
2-10 (a) A corporation on which the franchise tax is imposed,
2-11 regardless of whether the corporation is required to pay any tax,
2-12 shall file a report with the comptroller containing:
2-13 (1) the name of each corporation in which the
2-14 corporation filing the report owns a 10 percent or greater interest
2-15 and the percentage owned by the corporation;
2-16 (2) the name of each corporation that owns a 10
2-17 percent or greater interest in the corporation filing the report;
2-18 (3) the name, title, and mailing address of each
2-19 person who is an officer or director of the corporation on the date
2-20 the report is filed and the expiration date of each person's term
2-21 as an officer or director, if any;
2-22 (4) the name and address of the agent of the
2-23 corporation designated under Section 171.354 of this code; and
2-24 (5) the address of the corporation's principal office
2-25 and principal place of business.
2-26 Explanation: This change is necessary to provide that certain
2-27 corporations exempt from the franchise tax are subject to a limited
3-1 reporting requirement.
3-2 (3) House Rule 13, Sections 9(a)(3) and (4), are suspended
3-3 to permit the committee to add text incorporating a new Section 12
3-4 of the bill, amending Section 171.204, Tax Code, to read as
3-5 follows:
3-6 SECTION 12. Section 171.204, Tax Code, is amended to read as
3-7 follows:
3-8 Sec. 171.204. INFORMATION REPORT. (a) Except as provided
3-9 by Subsection (b), to [To] determine eligibility for the exemption
3-10 provided by Section 171.2022, or to determine the amount of the
3-11 franchise tax or the correctness of a franchise tax report, the
3-12 comptroller may require an officer of a corporation that may be
3-13 subject to the tax imposed under this chapter to file an
3-14 information report with the comptroller stating the amount of the
3-15 corporation's taxable capital and earned surplus, or any other
3-16 information the comptroller may request.
3-17 (b) The comptroller may require an officer of a corporation
3-18 that does not owe any tax because of the application of Section
3-19 171.002(d)(2) to file an abbreviated information report with the
3-20 comptroller stating the amount of the corporation's gross receipts
3-21 from its entire business. The comptroller may not require a
3-22 corporation described by this subsection to file an information
3-23 report that requires the corporation to report or compute its
3-24 earned surplus or taxable capital.
3-25 Explanation: This change is necessary to provide that
3-26 certain corporations exempt from the franchise tax are subject to a
3-27 limited reporting requirement.
4-1 (4) House Rule 13, Sections 9(a)(3) and (4), are suspended
4-2 to permit the committee to add text incorporating a new Section 13
4-3 of the bill, adding Subchapter N, Chapter 171, Tax Code, to read as
4-4 follows:
4-5 SECTION 13. Chapter 171, Tax Code, is amended by adding
4-6 Subchapter N to read as follows:
4-7 SUBCHAPTER N. TAX CREDIT FOR ESTABLISHING DAY-CARE
4-8 CENTER OR PURCHASING CHILD-CARE SERVICES
4-9 Sec. 171.701. DEFINITIONS. In this subchapter:
4-10 (1) "Day-care center" has the meaning assigned by
4-11 Section 42.002, Human Resources Code.
4-12 (2) "Family home" has the meaning assigned by Section
4-13 42.002, Human Resources Code.
4-14 Sec. 171.702. CREDIT. A corporation that meets the
4-15 eligibility requirements under this subchapter is entitled to a
4-16 credit in the amount allowed by this subchapter against the tax
4-17 imposed under this chapter.
4-18 Sec. 171.703. CREDIT FOR DAY-CARE CENTER AND PURCHASED CHILD
4-19 CARE. (a) A corporation may claim a credit under this subchapter
4-20 only for a qualifying expenditure relating to:
4-21 (1) the establishment and operation of a day-care
4-22 center primarily to provide care for the children of employees of
4-23 the corporation or of the corporation and one or more other
4-24 entities sharing the costs of establishing and operating the
4-25 center; or
4-26 (2) the purchase of child-care services that are
4-27 actually provided to children of employees of the corporation at a:
5-1 (A) day-care center; or
5-2 (B) family home that is registered or listed
5-3 with the Department of Protective and Regulatory Services under
5-4 Chapter 42, Human Resources Code.
5-5 (b) A qualifying expenditure includes an expenditure for:
5-6 (1) planning the day-care center;
5-7 (2) preparing a site to be used for the day-care
5-8 center;
5-9 (3) constructing the day-care center;
5-10 (4) renovating or remodeling a structure to be used
5-11 for the day-care center;
5-12 (5) purchasing equipment necessary in the use of the
5-13 day-care center and installed for permanent use in or immediately
5-14 adjacent to the day-care center, including kitchen appliances and
5-15 other food preparation equipment;
5-16 (6) expanding the day-care center;
5-17 (7) maintaining and operating the day-care center,
5-18 including paying direct administration and staff costs; or
5-19 (8) purchasing all or part of child-care services that
5-20 are actually provided to children of employees of the corporation
5-21 at a day-care center or registered or listed family home.
5-22 (c) The amount of the credit is equal to the lesser of:
5-23 (1) $50,000;
5-24 (2) 50 percent of the corporation's qualifying
5-25 expenditures; or
5-26 (3) the amount of the limitation provided by Section
5-27 171.705(b).
6-1 (d) If a corporation shares in the cost of establishing and
6-2 operating a day-care center, the corporation is entitled to a
6-3 credit for the qualifying expenditures made by that corporation,
6-4 subject to the limitation prescribed by Subsection (c).
6-5 Sec. 171.704. APPLICATION FOR CREDIT. (a) A corporation
6-6 must apply for a credit under this subchapter on or with the tax
6-7 report for the period for which the credit is claimed.
6-8 (b) If the corporation is claiming a credit for a qualifying
6-9 expenditure for purchasing child-care services, the corporation
6-10 must maintain proof that the services were actually provided to
6-11 children of employees of the corporation at a day-care center or
6-12 registered or listed family home.
6-13 (c) The comptroller shall adopt a form for the application
6-14 for the credit. A corporation must use this form in applying for
6-15 the credit.
6-16 Sec. 171.705. PERIOD FOR WHICH CREDIT MAY BE CLAIMED.
6-17 (a) A corporation may claim a credit under this subchapter for
6-18 qualifying expenditures made during an accounting period only
6-19 against the tax owed for the corresponding reporting period.
6-20 (b) A corporation may not claim a credit in an amount that
6-21 exceeds 90 percent of the amount of tax due for the report.
6-22 Sec. 171.706. ASSIGNMENT PROHIBITED. A corporation may not
6-23 convey, assign, or transfer the credit allowed under this
6-24 subchapter to another entity unless all of the assets of the
6-25 corporation are conveyed, assigned, or transferred in the same
6-26 transaction.
6-27 Sec. 171.707. BIENNIAL REPORT BY COMPTROLLER. (a) Before
7-1 the beginning of each regular session of the legislature, the
7-2 comptroller shall submit to the governor, the lieutenant governor,
7-3 and the speaker of the house of representatives a report that
7-4 states:
7-5 (1) the total amount of qualifying expenditures
7-6 incurred by corporations that claim a credit under this subchapter;
7-7 (2) the total amount of credits applied against the
7-8 tax under this chapter and the amount of unused credits including:
7-9 (A) the total amount of franchise tax due by
7-10 corporations claiming a credit under this subchapter before and
7-11 after the application of the credit;
7-12 (B) the average percentage reduction in
7-13 franchise tax due by corporations claiming a credit under this
7-14 subchapter;
7-15 (C) the percentage of tax credits that were
7-16 awarded to corporations with fewer than 100 employees; and
7-17 (D) the two-digit standard industrial
7-18 classification of corporations claiming a credit under this
7-19 subchapter;
7-20 (3) the geographical distribution of qualifying
7-21 expenditures giving rise to a credit authorized by this subchapter;
7-22 (4) the impact of the credit provided by this
7-23 subchapter on promoting economic development in this state; and
7-24 (5) the impact of the credit provided under this
7-25 subchapter on state tax revenues.
7-26 (b) The final report issued prior to the expiration of this
7-27 subchapter shall include historical information on the credit
8-1 authorized under this subchapter.
8-2 (c) The comptroller may not include in the report
8-3 information that is confidential by law.
8-4 (d) For purposes of this section, the comptroller may
8-5 require a corporation that claims a credit under this subchapter to
8-6 submit information, on a form provided by the comptroller, on the
8-7 location of the corporation's qualifying expenditures and any other
8-8 information necessary to complete the report required under this
8-9 section.
8-10 Explanation: This change is necessary to provide a franchise
8-11 tax credit for establishing a day-care center or purchasing
8-12 child-care services.
8-13 (5) House Rule 13, Sections 9(a)(3) and (4), are suspended
8-14 to permit the committee to add text incorporating a new Section 14
8-15 of the bill, adding Subchapter O, Chapter 171, Tax Code, to read as
8-16 follows:
8-17 SECTION 14. Chapter 171, Tax Code, is amended by adding
8-18 Subchapter O to read as follows:
8-19 SUBCHAPTER O. TAX CREDIT FOR CERTAIN RESEARCH
8-20 AND DEVELOPMENT ACTIVITIES
8-21 Sec. 171.721. DEFINITIONS. In this subchapter:
8-22 (1) "Base amount," "basic research payment," and
8-23 "qualified research expense" have the meanings assigned those terms
8-24 by Section 41, Internal Revenue Code, except that all such payments
8-25 and expenses must be for research conducted within this state.
8-26 (2) "Strategic investment area" means an area that is
8-27 determined by the comptroller under Section 171.726 that is:
9-1 (A) a county within this state with above state
9-2 average unemployment and below state average per capita income; or
9-3 (B) an area within this state that is a
9-4 federally designated urban enterprise community or an urban
9-5 enhanced enterprise community.
9-6 Sec. 171.722. ELIGIBILITY. (a) A corporation is eligible
9-7 for a credit against the tax imposed under this chapter in the
9-8 amount and under the conditions and limitations provided by this
9-9 subchapter.
9-10 (b) A corporation may claim a credit under Section
9-11 171.723(d) or take a carryforward credit without regard to whether
9-12 the strategic investment area in which it made qualified research
9-13 expenses and basic research payments subsequently loses its
9-14 designation as a strategic investment area.
9-15 Sec. 171.723. CALCULATION OF CREDIT. (a) The credit for
9-16 any report equals five percent of the sum of:
9-17 (1) the excess of qualified research expenses incurred
9-18 in this state during the period upon which the tax is based over
9-19 the base amount for this state; and
9-20 (2) the basic research payments determined under
9-21 Section 41(e)(1)(A), Internal Revenue Code, for this state during
9-22 the period upon which the tax is based.
9-23 (b) A corporation may elect to compute the credit for
9-24 qualified research expenses incurred in this state in a manner
9-25 consistent with the alternative incremental credit described in
9-26 Section 41(c)(4), Internal Revenue Code, only if for the
9-27 corresponding federal tax period:
10-1 (1) a federal election was made to compute the federal
10-2 credit under Section 41(c)(4), Internal Revenue Code;
10-3 (2) the corporation was a member of a consolidated
10-4 group for which a federal election was made under Section 41(c)(4),
10-5 Internal Revenue Code; or
10-6 (3) the corporation did not claim the federal credit
10-7 under Section 41(a)(1), Internal Revenue Code.
10-8 (c) For purposes of the alternate credit computation method
10-9 in Subsection (b), the credit percentages applicable to qualified
10-10 research expenses described in Sections 41(c)(4)(A)(i), (ii), and
10-11 (iii), Internal Revenue Code, are 0.41 percent, 0.55 percent, and
10-12 0.69 percent, respectively.
10-13 (d) In computing the credit under this section, a
10-14 corporation may multiply by two the amount of any qualified
10-15 research expenses and basic research payments made in a strategic
10-16 investment area.
10-17 (e) The burden of establishing entitlement to and the value
10-18 of the credit is on the corporation.
10-19 (f) For the purposes of this section, "gross receipts" as
10-20 used in Section 41, Internal Revenue Code, means gross receipts as
10-21 determined under Section 171.1032.
10-22 Sec. 171.724. LIMITATIONS. (a) The total credit claimed
10-23 under this subchapter for a report, including the amount of any
10-24 carryforward credit under Section 171.725, may not exceed 50
10-25 percent of the amount of franchise tax due for the report before
10-26 any other applicable tax credits.
10-27 (b) The total credit claimed under this subchapter and
11-1 Subchapters P and Q for a report, including the amount of any
11-2 carryforward credits, may not exceed the amount of franchise tax
11-3 due for the report after any other applicable credits.
11-4 (c) A corporation that establishes its eligibility for a
11-5 credit under this subchapter is not eligible to establish a credit
11-6 under Subchapter P.
11-7 Sec. 171.725. CARRYFORWARD. If a corporation is eligible
11-8 for a credit that exceeds the limitation under Section 171.724(a)
11-9 or (b), the corporation may carry the unused credit forward for not
11-10 more than 20 consecutive reports. A credit carryforward from a
11-11 previous report is considered to be utilized before the current
11-12 year credit.
11-13 Sec. 171.726. DETERMINATION OF STRATEGIC INVESTMENT AREAS.
11-14 (a) Not later than September 1 each year, the comptroller shall
11-15 determine areas that qualify as strategic investment areas using
11-16 the most recently completed full calendar year data available on
11-17 that date and, not later than October 1, shall publish a list and
11-18 map of the designated areas.
11-19 (b) The designation is effective for the following calendar
11-20 year for purposes of credits available under this subchapter.
11-21 Sec. 171.727. BIENNIAL REPORT BY COMPTROLLER. (a) Before
11-22 the beginning of each regular session of the legislature, the
11-23 comptroller shall submit to the governor, the lieutenant governor,
11-24 and the speaker of the house of representatives a report that
11-25 states:
11-26 (1) the total amount of expenses and payments incurred
11-27 by corporations that claim a credit under this subchapter;
12-1 (2) the total amount of credits applied against the
12-2 tax under this chapter and the amount of unused credits including:
12-3 (A) the total amount of franchise tax due by
12-4 corporations claiming a credit under this subchapter before and
12-5 after the application of the credit;
12-6 (B) the average percentage reduction in
12-7 franchise tax due by corporations claiming a credit under this
12-8 subchapter;
12-9 (C) the percentage of tax credits that were
12-10 awarded to corporations with fewer than 100 employees; and
12-11 (D) the two-digit standard industrial
12-12 classification of corporations claiming a credit under this
12-13 subchapter;
12-14 (3) the geographical distribution of expenses and
12-15 payments giving rise to a credit authorized by this subchapter;
12-16 (4) the impact of the credit provided by this
12-17 subchapter on the amount of research and development performed in
12-18 this state and employment in research and development in this
12-19 state; and
12-20 (5) the impact of the credit provided under this
12-21 subchapter on employment, capital investment, and personal income
12-22 in this state and on state tax revenues.
12-23 (b) The final report issued prior to the expiration of this
12-24 subchapter shall include historical information on the credit
12-25 authorized under this subchapter.
12-26 (c) The comptroller may not include in the report
12-27 information that is confidential by law.
13-1 (d) For purposes of this section, the comptroller may
13-2 require a corporation that claims a credit under this subchapter to
13-3 submit information, on a form provided by the comptroller, on the
13-4 location of the corporation's research expenses and payments in
13-5 this state and any other information necessary to complete the
13-6 report required under this section.
13-7 Sec. 171.728. COMPTROLLER POWERS AND DUTIES. The
13-8 comptroller shall adopt rules and forms necessary to implement this
13-9 subchapter.
13-10 Sec. 171.729. EXPIRATION. (a) This subchapter expires
13-11 December 31, 2009.
13-12 (b) The expiration of this subchapter does not affect the
13-13 carryforward of a credit under Section 171.725 for those credits to
13-14 which a corporation is eligible before the date this subchapter
13-15 expires.
13-16 Sec. 171.730. TEMPORARY CREDIT RATES AND LIMITATIONS. (a)
13-17 Notwithstanding any other provision of this subchapter, this
13-18 section applies to a report originally due before January 1, 2002.
13-19 (b) For purposes of computing the credit under Section
13-20 171.723(a) for a report described by Subsection (a), the credit
13-21 equals four percent of the sum of:
13-22 (1) the excess of qualified research expenses incurred
13-23 in this state during the period upon which the tax is based over
13-24 the base amount for this state; and
13-25 (2) the basic research payments determined under
13-26 Section 41(e)(1)(A), Internal Revenue Code, for this state during
13-27 the period upon which the tax is based.
14-1 (c) For purposes of computing the credit under Section
14-2 171.723(d) for a report described by Subsection (a), a corporation
14-3 may multiply by 1.5 the amount of any qualified research expenses
14-4 and basic research payments made in a strategic investment area.
14-5 (d) The total credit claimed under this subchapter for a
14-6 report described by Subsection (a), including the amount of any
14-7 carryforward credit under Section 171.725, may not exceed 25
14-8 percent of the amount of franchise tax due for the report before
14-9 any other applicable tax credits.
14-10 (e) For purposes of the alternate credit computation method
14-11 in Section 171.723(b), the credit percentages applicable to
14-12 qualified research expenses described in Sections 41(c)(4)(A)(i),
14-13 (ii), and (iii), Internal Revenue Code, are 0.33 percent, 0.44
14-14 percent, and 0.55 percent, respectively.
14-15 (f) This section expires January 1, 2002.
14-16 (g) The expiration of this section does not affect the
14-17 carryforward of a credit under Section 171.725 for those credits to
14-18 which a corporation is eligible before the date this section
14-19 expires.
14-20 Explanation: This change is necessary to provide a franchise
14-21 tax credit for certain research and development activities.
14-22 (6) House Rule 13, Sections 9(a)(3) and (4), are suspended
14-23 to permit the committee to add text incorporating a new Section 15
14-24 of the bill, adding Subchapter P, Chapter 171, Tax Code, to read as
14-25 follows:
14-26 SECTION 15. Chapter 171, Tax Code, is amended by adding
14-27 Subchapter P to read as follows:
15-1 SUBCHAPTER P. TAX CREDITS FOR CERTAIN JOB CREATION ACTIVITIES
15-2 Sec. 171.751. DEFINITIONS. In this subchapter:
15-3 (1) "Agricultural processing" means an establishment
15-4 primarily engaged in activities described in categories 2011-2099,
15-5 2211, 2231, or 3111-3199 of the 1987 Standard Industrial
15-6 Classification Manual published by the federal Office of Management
15-7 and Budget.
15-8 (2) "Central administrative offices" means an
15-9 establishment primarily engaged in performing management or support
15-10 services for other establishments of the same enterprise. An
15-11 enterprise consists of all establishments having more than 50
15-12 percent common direct or indirect ownership.
15-13 (3) "County average weekly wage" means the average
15-14 weekly wage for all covered employment in the county as computed by
15-15 the Texas Workforce Commission.
15-16 (4) "Data processing" means an establishment primarily
15-17 engaged in activities described in categories 7371-7379 of the 1987
15-18 Standard Industrial Classification Manual published by the federal
15-19 Office of Management and Budget.
15-20 (5) "Distribution" means an establishment primarily
15-21 engaged in activities described in categories 5012-5199 of the 1987
15-22 Standard Industrial Classification Manual published by the federal
15-23 Office of Management and Budget.
15-24 (6) "Group health benefit plan" means:
15-25 (A) a health plan provided by a health
15-26 maintenance organization established under the Texas Health
15-27 Maintenance Organization Act (Chapter 20A, Vernon's Texas Insurance
16-1 Code);
16-2 (B) a health benefit plan approved by the
16-3 commissioner of insurance; or
16-4 (C) a self-funded or self-insured employee
16-5 welfare benefit plan that provides health benefits and is
16-6 established in accordance with the Employee Retirement Income
16-7 Security Act of 1974 (29 U.S.C. Section 1001 et seq.), as amended.
16-8 (7) "Manufacturing" means an establishment primarily
16-9 engaged in activities described in categories 2011-3999 of the 1987
16-10 Standard Industrial Classification Manual published by the federal
16-11 Office of Management and Budget.
16-12 (8) "Qualified business" means an establishment
16-13 primarily engaged in agricultural processing, central
16-14 administrative offices, distribution, data processing,
16-15 manufacturing, research and development, or warehousing.
16-16 (9) "Qualifying job" means a new permanent full-time
16-17 job that:
16-18 (A) is located in:
16-19 (i) a strategic investment area; or
16-20 (ii) a county within this state with a
16-21 population of less than 50,000, if the job is created by a business
16-22 primarily engaged in agricultural processing;
16-23 (B) requires at least 1,600 hours of work a
16-24 year;
16-25 (C) pays at least 110 percent of the county
16-26 average weekly wage for the county where the job is located;
16-27 (D) is covered by a group health benefit plan
17-1 for which the business pays at least 80 percent of the premiums or
17-2 other charges assessed under the plan for the employee;
17-3 (E) is not transferred from one area in this
17-4 state to another area in this state; and
17-5 (F) is not created to replace a previous
17-6 employee.
17-7 (10) "Research and development" means an establishment
17-8 primarily engaged in activities described in category 8731 of the
17-9 1987 Standard Industrial Classification Manual published by the
17-10 federal Office of Management and Budget.
17-11 (11) "Strategic investment area" has the meaning
17-12 assigned that term by Section 171.721.
17-13 (12) "Warehousing" means an establishment primarily
17-14 engaged in activities described in categories 4221-4226 of the 1987
17-15 Standard Industrial Classification Manual published by the federal
17-16 Office of Management and Budget.
17-17 Sec. 171.752. ELIGIBILITY. (a) A corporation is eligible
17-18 for a credit against the tax imposed under this chapter if the
17-19 corporation:
17-20 (1) is a qualified business as defined in Section
17-21 171.751;
17-22 (2) creates a minimum of 10 qualifying jobs; and
17-23 (3) pays an average weekly wage, for the year in which
17-24 credits are claimed, of at least 110 percent of the county average
17-25 weekly wage for the county where the qualifying jobs are located.
17-26 (b) A corporation may claim a credit or take a carryforward
17-27 credit without regard to whether the strategic investment area in
18-1 which it created the qualifying jobs subsequently loses its
18-2 designation as a strategic investment area, if applicable.
18-3 Sec. 171.753. CALCULATION OF CREDIT. A corporation may
18-4 establish a credit equal to 25 percent of the total wages and
18-5 salaries paid by the corporation for qualifying jobs during the
18-6 period upon which the tax is based.
18-7 Sec. 171.754. LENGTH OF CREDIT. The credit established
18-8 shall be claimed in five equal installments of one-fifth the credit
18-9 amount over the five consecutive reports beginning with the report
18-10 based upon the period during which the qualifying jobs were
18-11 created.
18-12 Sec. 171.755. LIMITATIONS. (a) The total credit claimed
18-13 under this subchapter for a report, including the amount of any
18-14 carryforward credit under Section 171.756, may not exceed 50
18-15 percent of the amount of franchise tax due for the report before
18-16 any other applicable tax credits.
18-17 (b) The total credit claimed under this subchapter and
18-18 Subchapters O and Q for a report, including the amount of any
18-19 carryforward credits, may not exceed the amount of franchise tax
18-20 due for the report after any other applicable credits.
18-21 (c) A corporation that establishes its eligibility for a
18-22 credit under this subchapter is not eligible to establish a credit
18-23 under Subchapter O.
18-24 Sec. 171.756. CARRYFORWARD. (a) If a corporation is
18-25 eligible for a credit from an installment that exceeds the
18-26 limitations under Section 171.755(a) or (b), the corporation may
18-27 carry the unused credit forward for not more than five consecutive
19-1 reports.
19-2 (b) A carryforward is considered the remaining portion of an
19-3 installment that cannot be claimed in the current year because of
19-4 the tax limitation under Section 171.755. A carryforward is added
19-5 to the next year's installment of the credit in determining the tax
19-6 limitation for that year. A credit carryforward from a previous
19-7 report is considered to be utilized before the current year
19-8 installment.
19-9 Sec. 171.757. CERTIFICATION OF ELIGIBILITY. (a) For the
19-10 initial and each succeeding report in which a credit is claimed
19-11 under this subchapter, the corporation shall file with its report,
19-12 on a form provided by the comptroller, information that
19-13 sufficiently demonstrates that the corporation is eligible for the
19-14 credit and is in compliance with Section 171.752.
19-15 (b) The burden of establishing entitlement to and the value
19-16 of the credit is on the corporation.
19-17 (c) If, in one of the five years in which the installment of
19-18 a credit accrues, the number of the corporation's full-time
19-19 employees falls below the number of full-time employees the
19-20 corporation had in the year in which the corporation qualified for
19-21 the credit, the credit expires and the corporation may not take any
19-22 remaining installment of the credit.
19-23 (d) Notwithstanding Subsection (c), the corporation may,
19-24 however, take the portion of an installment that accrued in a
19-25 previous year and was carried forward to the extent permitted under
19-26 Section 171.756.
19-27 Sec. 171.758. ASSIGNMENT PROHIBITED. A corporation may not
20-1 convey, assign, or transfer the credit allowed under this
20-2 subchapter to another entity unless all of the assets of the
20-3 corporation are conveyed, assigned, or transferred in the same
20-4 transaction.
20-5 Sec. 171.759. BIENNIAL REPORT BY COMPTROLLER. (a) Before
20-6 the beginning of each regular session of the legislature, the
20-7 comptroller shall submit to the governor, the lieutenant governor,
20-8 and the speaker of the house of representatives a report that
20-9 states:
20-10 (1) the total number of jobs created by corporations
20-11 that claim a credit under this subchapter and the average and
20-12 median annual wage of those jobs;
20-13 (2) the total amount of credits applied against the
20-14 tax under this chapter and the amount of unused credits including:
20-15 (A) the total amount of franchise tax due by
20-16 corporations claiming a credit under this subchapter before and
20-17 after the application of the credit;
20-18 (B) the average percentage reduction in
20-19 franchise tax due by corporations claiming a credit under this
20-20 subchapter; and
20-21 (C) the percentage of tax credits that were
20-22 awarded to corporations with fewer than 100 employees;
20-23 (3) a breakdown of the two-digit standard industrial
20-24 classification of businesses claiming a credit under this
20-25 subchapter;
20-26 (4) the geographical distribution of the credits
20-27 claimed under this subchapter; and
21-1 (5) the impact of the credit provided under this
21-2 subchapter on employment, personal income, and capital investment
21-3 in this state and on state tax revenues.
21-4 (b) The final report issued prior to the expiration of this
21-5 subchapter shall include historical information on the credit
21-6 authorized under this subchapter.
21-7 (c) The comptroller may not include in the report
21-8 information that is confidential by law.
21-9 (d) For purposes of this section, the comptroller may
21-10 require a corporation that claims a credit under this subchapter to
21-11 submit information, on a form provided by the comptroller, on the
21-12 location of the corporation's job creation in this state and any
21-13 other information necessary to complete the report required under
21-14 this section.
21-15 (e) The comptroller shall provide notice to the members of
21-16 the legislature that the report required under this section is
21-17 available on request.
21-18 Sec. 171.760. COMPTROLLER POWERS AND DUTIES. The
21-19 comptroller shall adopt rules and forms necessary to implement this
21-20 subchapter.
21-21 Sec. 171.761. EXPIRATION. (a) This subchapter expires
21-22 December 31, 2009.
21-23 (b) The expiration of this subchapter does not affect the
21-24 carryforward of a credit under Section 171.756 or those credits for
21-25 which a corporation is eligible before the date this subchapter
21-26 expires.
21-27 Explanation: This change is necessary to provide a franchise
22-1 tax credit for certain job creation activities.
22-2 (7) House Rule 13, Sections 9(a)(3) and (4), are suspended
22-3 to permit the committee to add text incorporating a new Section 16
22-4 of the bill, adding Subchapter Q, Chapter 171, Tax Code, to read as
22-5 follows:
22-6 SECTION 16. Chapter 171, Tax Code, is amended by adding
22-7 Subchapter Q to read as follows:
22-8 SUBCHAPTER Q. TAX CREDITS FOR CERTAIN CAPITAL INVESTMENTS
22-9 Sec. 171.801. DEFINITIONS. In this subchapter:
22-10 (1) "Agricultural processing," "central administrative
22-11 offices," "county average weekly wage," "data processing,"
22-12 "distribution," "manufacturing," "qualified business," "research
22-13 and development," and "warehousing" have the meanings assigned
22-14 those terms by Section 171.751.
22-15 (2) "Qualified capital investment" means tangible
22-16 personal property first placed in service in a strategic investment
22-17 area, or first placed in service in a county with a population of
22-18 less than 50,000 by a corporation primarily engaged in agricultural
22-19 processing, and that is described in Section 1245(a), Internal
22-20 Revenue Code, such as engines, machinery, tools, and implements
22-21 used in a trade or business or held for investment and subject to
22-22 an allowance for depreciation, cost recovery under the accelerated
22-23 cost recovery system, or amortization. The term does not include
22-24 real property or buildings and their structural components.
22-25 Property that is leased under a capitalized lease is considered a
22-26 "qualified capital investment," but property that is leased under
22-27 an operating lease is not considered a "qualified capital
23-1 investment." Property expensed under Section 179, Internal Revenue
23-2 Code, is not considered a "qualified capital investment."
23-3 (3) "Strategic investment area" has the meaning
23-4 assigned that term by Section 171.721.
23-5 Sec. 171.802. ELIGIBILITY. (a) A qualified business is
23-6 eligible for a credit against the tax imposed under this chapter in
23-7 the amount and under the conditions and limitations provided by
23-8 this subchapter.
23-9 (b) To qualify for the credit authorized under this
23-10 subchapter, a qualified business must:
23-11 (1) pay an average weekly wage, at the location with
23-12 respect to which the credit is claimed, that is at least 110
23-13 percent of the county average weekly wage;
23-14 (2) offer coverage to all full-time employees at the
23-15 location with respect to which the credit is claimed by a group
23-16 health benefit plan, as defined by Section 171.751, for which the
23-17 business pays at least 80 percent of the premiums or other charges
23-18 assessed under the plan for the employees; and
23-19 (3) make a minimum $500,000 qualified capital
23-20 investment.
23-21 (c) A corporation may claim a credit or take a carryforward
23-22 credit without regard to whether the strategic investment area in
23-23 which it made the qualified capital investment subsequently loses
23-24 its designation as a strategic investment area, if applicable.
23-25 Sec. 171.803. CALCULATION OF CREDIT. A corporation may
23-26 establish a credit equal to 7.5 percent of the qualified capital
23-27 investment during the period upon which the tax is based.
24-1 Sec. 171.804. LENGTH OF CREDIT. The credit established
24-2 shall be claimed in five equal installments of one-fifth the credit
24-3 amount over the five consecutive reports beginning with the report
24-4 based upon the period during which the qualified capital investment
24-5 was made.
24-6 Sec. 171.805. LIMITATIONS. (a) The total credit claimed
24-7 under this subchapter for a report, including the amount of any
24-8 carryforward credit under Section 171.806, may not exceed 50
24-9 percent of the amount of franchise tax due for the report before
24-10 any other applicable tax credits.
24-11 (b) The total credit claimed under this subchapter and
24-12 Subchapters O and P for a report, including the amount of any
24-13 carryforward credits, may not exceed the amount of franchise tax
24-14 due for the report after any other applicable tax credits.
24-15 (c) A corporation that establishes its eligibility for a
24-16 credit under this subchapter is not eligible to claim a franchise
24-17 tax reduction authorized under Section 171.1015.
24-18 Sec. 171.806. CARRYFORWARD. (a) If a corporation is
24-19 eligible for a credit from an installment that exceeds the
24-20 limitation under Section 171.805(a) or (b), the corporation may
24-21 carry the unused credit forward for not more than five consecutive
24-22 reports.
24-23 (b) A carryforward is considered the remaining portion of an
24-24 installment that cannot be claimed in the current year because of
24-25 the tax limitation under Section 171.805. A carryforward is added
24-26 to the next year's installment of the credit in determining the tax
24-27 limitation for that year. A credit carryforward from a previous
25-1 report is considered to be utilized before the current year
25-2 installment.
25-3 Sec. 171.807. CERTIFICATION OF ELIGIBILITY. (a) For the
25-4 initial and each succeeding report in which a credit is claimed
25-5 under this subchapter, the corporation shall file with its report,
25-6 on a form provided by the comptroller, information that
25-7 sufficiently demonstrates that the corporation is eligible for the
25-8 credit and is in compliance with Section 171.802.
25-9 (b) The burden of establishing entitlement to and the value
25-10 of the credit is on the qualified business.
25-11 (c) A credit expires under this subchapter and the
25-12 corporation may not take any remaining installment of the credit if
25-13 in one of the five years in which the installment of a credit
25-14 accrues, the qualified business:
25-15 (1) disposes of the qualified capital investment;
25-16 (2) takes the qualified capital investment out of
25-17 service;
25-18 (3) moves the qualified capital investment out of this
25-19 state; or
25-20 (4) fails to pay an average weekly wage as required by
25-21 Section 171.802.
25-22 (d) Notwithstanding Subsection (c), the corporation may take
25-23 the portion of an installment that accrued in a previous year and
25-24 was carried forward to the extent permitted under Section 171.806.
25-25 Sec. 171.808. ASSIGNMENT PROHIBITED. A corporation may not
25-26 convey, assign, or transfer the credit allowed under this
25-27 subchapter to another entity unless all of the assets of the
26-1 corporation are conveyed, assigned, or transferred in the same
26-2 transaction.
26-3 Sec. 171.809. BIENNIAL REPORT BY COMPTROLLER. (a) Before
26-4 the beginning of each regular session of the legislature, the
26-5 comptroller shall submit to the governor, the lieutenant governor,
26-6 and the speaker of the house of representatives a report that
26-7 states:
26-8 (1) the total amount of qualified capital investments
26-9 made by corporations that claim a credit under this subchapter and
26-10 the average and median wages paid by those corporations;
26-11 (2) the total amount of credits applied against the
26-12 tax under this chapter and the amount of unused credits, including:
26-13 (A) the total amount of franchise tax due by
26-14 corporations claiming a credit under this subchapter before and
26-15 after the application of the credit;
26-16 (B) the average percentage reduction in
26-17 franchise tax due by corporations claiming a credit under this
26-18 subchapter;
26-19 (C) the percentage of tax credits that were
26-20 awarded to corporations with fewer than 100 employees; and
26-21 (D) the two-digit standard industrial
26-22 classification of corporations claiming a credit under this
26-23 subchapter;
26-24 (3) the geographical distribution of the qualified
26-25 capital investments on which tax credit claims are made under this
26-26 subchapter; and
26-27 (4) the impact of the credit provided under this
27-1 subchapter on employment, capital investment, personal income, and
27-2 state tax revenues.
27-3 (b) The final report issued before the expiration of this
27-4 subchapter shall include historical information on the credit
27-5 authorized under this subchapter.
27-6 (c) The comptroller may not include in the report
27-7 information that is confidential by law.
27-8 (d) For purposes of this section, the comptroller may
27-9 require a corporation that claims a credit under this subchapter to
27-10 submit information, on a form provided by the comptroller, on the
27-11 location of the corporation's capital investment in this state and
27-12 any other information necessary to complete the report required
27-13 under this section.
27-14 (e) The comptroller shall provide notice to the members of
27-15 the legislature that the report required under this section is
27-16 available on request.
27-17 Sec. 171.810. COMPTROLLER POWERS AND DUTIES. The
27-18 comptroller shall adopt rules and forms necessary to implement this
27-19 subchapter.
27-20 Sec. 171.811. EXPIRATION. (a) This subchapter expires
27-21 December 31, 2009.
27-22 (b) The expiration of this subchapter does not affect the
27-23 carryforward of a credit under Section 171.806 or those credits for
27-24 which a corporation is eligible before the date this subchapter
27-25 expires.
27-26 Explanation: This change is necessary to provide a franchise
27-27 tax credit for certain capital investments.
28-1 (8) House Rule 13, Sections 9(a)(3) and (4), are suspended
28-2 to permit the committee to add text incorporating a new Section 17
28-3 of the bill, adding Subchapter R, Chapter 171, Tax Code, to read as
28-4 follows:
28-5 SECTION 17. Chapter 171, Tax Code, is amended by adding
28-6 Subchapter R to read as follows:
28-7 SUBCHAPTER R. TAX CREDIT FOR CONTRIBUTIONS TO
28-8 BEFORE AND AFTER SCHOOL PROGRAMS
28-9 Sec. 171.831. DEFINITION. In this subchapter, "school-age
28-10 child care" means care provided before and after school and during
28-11 the summer and holidays for children who are at least five years of
28-12 age but younger than 14 years of age.
28-13 Sec. 171.832. CREDIT. A corporation that meets the
28-14 eligibility requirements under this subchapter is entitled to a
28-15 credit in the amount allowed by this subchapter against the tax
28-16 imposed under this chapter.
28-17 Sec. 171.833. EXPENDITURES ELIGIBLE FOR CREDIT. (a) A
28-18 corporation may claim a credit under this subchapter only for a
28-19 qualifying expenditure relating to the operation of a school-age
28-20 child care program that is operated by:
28-21 (1) a nonprofit organization licensed under Chapter
28-22 42, Human Resources Code;
28-23 (2) a nonprofit, accredited educational facility or by
28-24 another nonprofit entity under contract with the educational
28-25 facility, if the Texas Education Agency or Southern Association of
28-26 Colleges and Schools has approved the curriculum content of the
28-27 program operated under the contract; or
29-1 (3) a county or municipality, if the governing body of
29-2 the county or municipality annually adopts standards of care by
29-3 order or ordinance that include minimum child-to-staff ratios,
29-4 staff qualifications, facility, health, and safety standards, and
29-5 mechanisms for monitoring and enforcing the standards.
29-6 (b) A qualifying expenditure includes an expenditure for:
29-7 (1) constructing, renovating, or remodeling a facility
29-8 or structure to be used by the program;
29-9 (2) purchasing necessary equipment, supplies, or food
29-10 to be used in the program; or
29-11 (3) operating the program, including administrative
29-12 and staff costs.
29-13 Sec. 171.834. AMOUNT; LIMITATIONS. (a) The amount of the
29-14 credit is equal to 30 percent of a corporation's qualifying
29-15 expenditures.
29-16 (b) A corporation may claim a credit under this subchapter
29-17 for a qualifying expenditure during an accounting period only
29-18 against the tax owed for the corresponding reporting period.
29-19 (c) A corporation may not claim a credit in an amount that
29-20 exceeds 50 percent of the amount of net franchise tax due, after
29-21 applying any other credits, for the reporting period.
29-22 Sec. 171.835. APPLICATION FOR CREDIT. (a) A corporation
29-23 must apply for a credit under this subchapter on or with the tax
29-24 report for the period for which the credit is claimed.
29-25 (b) The comptroller shall adopt a form for the application
29-26 for the credit. A corporation must use this form in applying for
29-27 the credit.
30-1 Sec. 171.836. ASSIGNMENT PROHIBITED. A corporation may not
30-2 convey, assign, or transfer a credit allowed under this subchapter
30-3 to another entity unless all of the assets of the corporation are
30-4 conveyed, assigned, or transferred in the same transaction.
30-5 Explanation: This change is necessary to provide a franchise
30-6 tax credit for contributions to before and after school programs.
30-7 (9) House Rule 13, Sections 9(a)(3) and (4), are suspended
30-8 to permit the committee to add text incorporating a new Section 18
30-9 of the bill to read as follows:
30-10 SECTION 18. The comptroller may combine the reports required
30-11 under Subchapters N, O, P, and Q, Chapter 171, Tax Code, as added
30-12 by this Act, into a single report.
30-13 Explanation: This change is necessary to allow the
30-14 comptroller to combine certain required franchise tax reports into
30-15 a single report.
30-16 (10) House Rule 13, Sections 9(a)(3) and (4), are suspended
30-17 to permit the committee to add text incorporating a new Section 19
30-18 of the bill to read as follows:
30-19 SECTION 19. (a) Before the beginning of the 79th
30-20 Legislature, Regular Session, the comptroller of public accounts
30-21 shall report to the legislature and the governor on the effect that
30-22 exempting small corporations from the franchise tax under Section
30-23 171.002, Tax Code, as amended by this Act, has had on the economy
30-24 of this state, including on the creation of new jobs in this state.
30-25 (b) The report must include:
30-26 (1) an assessment of the intended purposes of the
30-27 exemptions and whether the exemptions are achieving those
31-1 objectives;
31-2 (2) an assessment of whether the exemptions have
31-3 created any problems in the administration of the franchise tax;
31-4 and
31-5 (3) a recommendation for retaining, eliminating, or
31-6 amending the exemptions.
31-7 (c) The comptroller of public accounts may include the
31-8 report in any other report made to the legislature.
31-9 Explanation: This change is necessary to require the
31-10 comptroller to prepare a report on the effect of the change in the
31-11 exemption for small corporations from the franchise tax.
31-12 (11) House Rule 13, Sections 9(a)(3) and (4), are suspended
31-13 to permit the committee to add text incorporating a new Section 20
31-14 of the bill, providing effective date and transitional provisions,
31-15 to read as follows:
31-16 SECTION 20. (a) Except as otherwise provided by this
31-17 section, this Act takes effect October 1, 1999.
31-18 (b) The changes in law made by this Act by amending Section
31-19 151.3111(b), Tax Code, and adding Section 151.326, Tax Code, take
31-20 effect on the earliest day that they may take effect under Section
31-21 39, Article III, Texas Constitution. The comptroller of public
31-22 accounts may adopt emergency rules for the implementation of those
31-23 provisions.
31-24 (c) The changes in law made by this Act by amending Section
31-25 151.313(a), Tax Code, take effect April 1, 2000.
31-26 (d) The changes in law made by this Act by amending Sections
31-27 171.002(d), 171.203(a), and 171.204, Tax Code, and adding
32-1 Subchapters N, O, P, Q, and R, Chapter 171, Tax Code, take effect
32-2 January 1, 2000, and apply only to a report originally due on or
32-3 after that date.
32-4 (e) A corporation may claim a credit under Subchapters N, O,
32-5 P, Q, and R, Chapter 171, Tax Code, as added by this Act, only for
32-6 expenses and payments incurred, qualified investments or
32-7 expenditures made, or new jobs created on or after January 1, 2000.
32-8 (f) The changes in law made by this Act do not affect taxes
32-9 imposed before the effective date of those changes, and the law in
32-10 effect before the effective date of those changes is continued in
32-11 effect for purposes of the liability for and collection of those
32-12 taxes.
32-13 Explanation: This change is necessary to provide for the
32-14 effective date of certain changes to law made by the bill and to
32-15 provide transition provisions for certain changes to law made by
32-16 the bill.