76R17073 E By Sibley, et al. S.B. No. 5 Substitute the following for S.B. No. 5: By Oliveira C.S.S.B. No. 5 A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to the authorization of certain franchise tax incentives 1-3 promoting economic development. 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 ESTABLISHING DAY-CARE CENTER 1-8 OR PURCHASING CHILD-CARE SERVICES 1-9 Sec. 171.701. DEFINITIONS. In this subchapter: 1-10 (1) "Day-care center" has the meaning assigned by 1-11 Section 42.002, Human Resources Code. 1-12 (2) "Family home" has the meaning assigned by Section 1-13 42.002, Human Resources Code. 1-14 Sec. 171.702. CREDIT. A corporation that meets the 1-15 eligibility requirements under this subchapter is entitled to a 1-16 credit in the amount allowed by this subchapter against the tax 1-17 imposed under this chapter. 1-18 Sec. 171.703. CREDIT FOR DAY-CARE CENTER AND PURCHASED CHILD 1-19 CARE. (a) A corporation may claim a credit under this subchapter 1-20 only for a qualifying expenditure relating to: 1-21 (1) the establishment and operation of a day-care 1-22 center primarily to provide care for the children of employees of 1-23 the corporation or of the corporation and one or more other 2-1 entities sharing the costs of establishing and operating the 2-2 center; or 2-3 (2) the purchase of child-care services that are 2-4 actually provided to children of employees of the corporation at a: 2-5 (A) day-care center; or 2-6 (B) family home that is registered or listed 2-7 with the Department of Protective and Regulatory Services under 2-8 Chapter 42, Human Resources Code. 2-9 (b) A qualifying expenditure includes an expenditure for: 2-10 (1) planning the day-care center; 2-11 (2) preparing a site to be used for the day-care 2-12 center; 2-13 (3) constructing the day-care center; 2-14 (4) renovating or remodeling a structure to be used 2-15 for the day-care center; 2-16 (5) purchasing equipment necessary in the use of the 2-17 day-care center and installed for permanent use in or immediately 2-18 adjacent to the day-care center, including kitchen appliances and 2-19 other food preparation equipment; 2-20 (6) expanding the day-care center; 2-21 (7) maintaining and operating the day-care center, 2-22 including paying direct administration and staff costs; or 2-23 (8) purchasing all or part of child-care services that 2-24 are actually provided to children of employees of the corporation 2-25 at a day-care center or registered or listed family home. 2-26 (c) The amount of the credit is equal to the lesser of: 2-27 (1) $50,000; 3-1 (2) 50 percent of the corporation's qualifying 3-2 expenditures; or 3-3 (3) the amount of the limitation provided by Section 3-4 171.705(b). 3-5 (d) If a corporation shares in the cost of establishing and 3-6 operating a day-care center, the corporation is entitled to a 3-7 credit for the qualifying expenditures made by that corporation, 3-8 subject to the limitation prescribed by Subsection (c). 3-9 Sec. 171.704. APPLICATION FOR CREDIT. (a) A corporation 3-10 must apply for a credit under this subchapter on or with the tax 3-11 report for the period for which the credit is claimed. 3-12 (b) If the corporation is claiming a credit for a qualifying 3-13 expenditure for purchasing child-care services, the corporation 3-14 must include proof that the services were actually provided to 3-15 children of employees of the corporation at a day-care center or 3-16 registered or listed family home. 3-17 (c) The comptroller shall adopt a form for the application 3-18 for the credit. A corporation must use this form in applying for 3-19 the credit. 3-20 Sec. 171.705. PERIOD FOR WHICH CREDIT MAY BE CLAIMED. 3-21 (a) A corporation may claim a credit under this subchapter for 3-22 qualifying expenditures made during an accounting period only 3-23 against the tax owed for the corresponding reporting period. 3-24 (b) A corporation may not claim a credit in an amount that 3-25 exceeds 90 percent of the amount of tax due for the report. 3-26 Sec. 171.706. ASSIGNMENT PROHIBITED. A corporation may not 3-27 convey, assign, or transfer the credit allowed under this 4-1 subchapter to another entity unless all of the assets of the 4-2 corporation are conveyed, assigned, or transferred in the same 4-3 transaction. 4-4 Sec. 171.707. BIENNIAL REPORT BY COMPTROLLER. (a) Before 4-5 the beginning of each regular session of the legislature, the 4-6 comptroller shall submit to the governor, the lieutenant governor, 4-7 and the speaker of the house of representatives a report that 4-8 states: 4-9 (1) the total amount of qualifying expenditures 4-10 incurred by corporations that claim a credit under this subchapter; 4-11 (2) the total amount of credits applied against the 4-12 tax under this chapter and the amount of unused credits including: 4-13 (A) the total amount of franchise tax due by 4-14 corporations claiming a credit under this subchapter before and 4-15 after the application of the credit; 4-16 (B) the average percentage reduction in 4-17 franchise tax due by corporations claiming a credit under this 4-18 subchapter; 4-19 (C) the percentage of tax credits that were 4-20 awarded to corporations with fewer than 100 employees; and 4-21 (D) the two-digit standard industrial 4-22 classification of corporations claiming a credit under this 4-23 subchapter; 4-24 (3) the geographical distribution of qualifying 4-25 expenditures giving rise to a credit authorized by this subchapter; 4-26 (4) the impact of the credit provided by this 4-27 subchapter on promoting economic development in this state; and 5-1 (5) the impact of the credit provided under this 5-2 subchapter on state tax revenues. 5-3 (b) The final report issued prior to the expiration of this 5-4 subchapter shall include historical information on the credit 5-5 authorized under this subchapter. 5-6 (c) The comptroller may not include in the report 5-7 information that is confidential by law. 5-8 (d) For purposes of this section, the comptroller may 5-9 require a corporation that claims a credit under this subchapter to 5-10 submit information, on a form provided by the comptroller, on the 5-11 location of the corporation's qualifying expenditures and any other 5-12 information necessary to complete the report required under this 5-13 section. 5-14 SECTION 2. Chapter 171, Tax Code, is amended by adding 5-15 Subchapter O to read as follows: 5-16 SUBCHAPTER O. TAX CREDIT FOR CERTAIN RESEARCH AND 5-17 DEVELOPMENT ACTIVITIES 5-18 Sec. 171.721. DEFINITIONS. In this subchapter: 5-19 (1) "Base amount," "basic research payment," and 5-20 "qualified research expense" have the meanings assigned those terms 5-21 by Section 41, Internal Revenue Code, except that all such payments 5-22 and expenses must be for research conducted within this state. 5-23 (2) "Strategic investment area" means: 5-24 (A) a county within this state with above state 5-25 average unemployment and below state average per capita income; 5-26 (B) an area that, on or before January 1, 1999, 5-27 is a federally designated urban enterprise community or an urban 6-1 enhanced enterprise community; 6-2 (C) an area within this state that: 6-3 (i) is located in a municipality with a 6-4 population of 500,000 or less; 6-5 (ii) was nominated in 1998 for designation 6-6 as a federal empowerment zone under 26 U.S.C. Section 1391; and 6-7 (iii) is not located in a municipality 6-8 that contains a defense economic readjustment zone designated under 6-9 Chapter 2310, Government Code; or 6-10 (D) a county that is contiguous on at least 6-11 three sides to a county with above state average unemployment and 6-12 below state average per capita income, has a population of less 6-13 than 750 according to the most recent decennial census, borders the 6-14 Gulf of Mexico, and has been designated as the site for a spaceport 6-15 pursuant to the relevant provisions of the Development Corporation 6-16 Act of 1979 (Article 5190.6, Vernon's Texas Civil Statutes). 6-17 Sec. 171.722. ELIGIBILITY. (a) A corporation is eligible 6-18 for a credit against the tax imposed under this chapter in the 6-19 amount and under the conditions and limitations provided by this 6-20 subchapter. 6-21 (b) A corporation may claim a credit under Section 6-22 171.723(d) or take a carryforward credit without regard to whether 6-23 the strategic investment area in which it made qualified research 6-24 expenses and basic research payments subsequently loses its 6-25 designation as a strategic investment area. 6-26 Sec. 171.723. CALCULATION OF CREDIT. (a) The credit for 6-27 any report equals five percent of the sum of: 7-1 (1) the excess of qualified research expenses incurred 7-2 in this state during the period upon which the tax is based over 7-3 the base amount for this state; and 7-4 (2) the basic research payments determined under 7-5 Section 41(e)(1)(A), Internal Revenue Code, for this state during 7-6 the period upon which the tax is based. 7-7 (b) A corporation may elect to compute the credit for 7-8 qualified research expenses incurred in this state in a manner 7-9 consistent with the alternative incremental credit described in 7-10 Section 41(c)(4), Internal Revenue Code, only if for the 7-11 corresponding federal tax period: 7-12 (1) a federal election was made to compute the federal 7-13 credit under Section 41(c)(4), Internal Revenue Code; 7-14 (2) the corporation was a member of a consolidated 7-15 group for which a federal election was made under Section 41(c)(4), 7-16 Internal Revenue Code; or 7-17 (3) the corporation did not claim the federal credit 7-18 under Section 41(a)(1), Internal Revenue Code. 7-19 (c) For purposes of the alternate credit computation method 7-20 in Subsection (b), the credit percentages applicable to qualified 7-21 research expenses described in Sections 41(c)(4)(A)(i), (ii), and 7-22 (iii), Internal Revenue Code, are 0.41 percent, 0.55 percent, and 7-23 0.69 percent, respectively. 7-24 (d) In computing the credit under this section, a 7-25 corporation may multiply by two the amount of any qualified 7-26 research expenses and basic research payments made in a strategic 7-27 investment area as determined by the comptroller under Section 8-1 171.726. 8-2 (e) The burden of establishing entitlement to and the value 8-3 of the credit is on the corporation. 8-4 (f) For the purposes of this section, "gross receipts" as 8-5 used in Section 41, Internal Revenue Code, means gross receipts as 8-6 determined under Section 171.1032. 8-7 Sec. 171.724. LIMITATIONS. (a) The total credit claimed 8-8 under this subchapter for a report, including the amount of any 8-9 carryforward credit under Section 171.725, may not exceed 50 8-10 percent of the amount of franchise tax due for the report before 8-11 any other applicable tax credits. 8-12 (b) The total credit claimed under this subchapter and 8-13 Subchapters P and Q for a report, including the amount of any 8-14 carryforward credits, may not exceed the amount of franchise tax 8-15 due for the report after any other applicable credits. 8-16 (c) A corporation that establishes its eligibility for a 8-17 credit under this subchapter is not eligible to establish a credit 8-18 under Subchapter P. 8-19 Sec. 171.725. CARRYFORWARD. If a corporation is eligible 8-20 for a credit that exceeds the limitation under Section 171.724(a) 8-21 or (b), the corporation may carry the unused credit forward for not 8-22 more than 20 consecutive reports. A credit carryforward from a 8-23 previous report is considered to be utilized before the current 8-24 year credit. 8-25 Sec. 171.726. DETERMINATION OF STRATEGIC INVESTMENT AREAS. 8-26 The comptroller shall determine strategic investment areas on an 8-27 annual basis using the most current available data and shall 9-1 publish a list and map of strategic investment areas by September 1 9-2 of each year. 9-3 Sec. 171.727. BIENNIAL REPORT BY COMPTROLLER. (a) Before 9-4 the beginning of each regular session of the legislature, the 9-5 comptroller shall submit to the governor, the lieutenant governor, 9-6 and the speaker of the house of representatives a report that 9-7 states: 9-8 (1) the total amount of expenses and payments incurred 9-9 by corporations that claim a credit under this subchapter; 9-10 (2) the total amount of credits applied against the 9-11 tax under this chapter and the amount of unused credits including: 9-12 (A) the total amount of franchise tax due by 9-13 corporations claiming a credit under this subchapter before and 9-14 after the application of the credit; 9-15 (B) the average percentage reduction in 9-16 franchise tax due by corporations claiming a credit under this 9-17 subchapter; 9-18 (C) the percentage of tax credits that were 9-19 awarded to corporations with fewer than 100 employees; and 9-20 (D) the two-digit standard industrial 9-21 classification of corporations claiming a credit under this 9-22 subchapter; 9-23 (3) the geographical distribution of expenses and 9-24 payments giving rise to a credit authorized by this subchapter; 9-25 (4) the impact of the credit provided by this 9-26 subchapter on the amount of research and development performed in 9-27 this state and employment in research and development in this 10-1 state; and 10-2 (5) the impact of the credit provided under this 10-3 subchapter on employment, capital investment, and personal income 10-4 in this state and on state tax revenues. 10-5 (b) The final report issued prior to the expiration of this 10-6 subchapter shall include historical information on the credit 10-7 authorized under this subchapter. 10-8 (c) The comptroller may not include in the report 10-9 information that is confidential by law. 10-10 (d) For purposes of this section, the comptroller may 10-11 require a corporation that claims a credit under this subchapter to 10-12 submit information, on a form provided by the comptroller, on the 10-13 location of the corporation's research expenses and payments in 10-14 this state and any other information necessary to complete the 10-15 report required under this section. 10-16 Sec. 171.728. COMPTROLLER POWERS AND DUTIES. The 10-17 comptroller shall adopt rules and forms necessary to implement this 10-18 subchapter. 10-19 Sec. 171.729. EXPIRATION. (a) This subchapter expires 10-20 December 31, 2009. 10-21 (b) The expiration of this subchapter does not affect the 10-22 carryforward of a credit under Section 171.725 for those credits to 10-23 which a corporation is eligible before the date this subchapter 10-24 expires. 10-25 SECTION 3. Chapter 171, Tax Code, is amended by adding 10-26 Subchapter P to read as follows: 11-1 SUBCHAPTER P. TAX CREDITS FOR CERTAIN JOB CREATION ACTIVITIES 11-2 Sec. 171.751. DEFINITIONS. In this subchapter: 11-3 (1) "Agricultural processing" means an establishment 11-4 primarily engaged in activities described in categories 2011-2099, 11-5 2211, 2231, or 3111-3199 of the 1987 Standard Industrial 11-6 Classification Manual published by the federal Office of Management 11-7 and Budget. 11-8 (2) "Central administrative offices" means an 11-9 establishment primarily engaged in performing management or support 11-10 services for other establishments of the same enterprise. An 11-11 enterprise consists of all establishments having more than 50 11-12 percent common direct or indirect ownership. 11-13 (3) "County average weekly wage" means the average 11-14 weekly wage for all covered employment in the county as computed by 11-15 the Texas Workforce Commission. 11-16 (4) "Data processing" means an establishment primarily 11-17 engaged in activities described in categories 7371-7379 of the 1987 11-18 Standard Industrial Classification Manual published by the federal 11-19 Office of Management and Budget. 11-20 (5) "Distribution" means an establishment primarily 11-21 engaged in activities described in categories 5012-5199 of the 1987 11-22 Standard Industrial Classification Manual published by the federal 11-23 Office of Management and Budget. 11-24 (6) "Group health benefit plan" means: 11-25 (A) a health plan provided by a health 11-26 maintenance organization established under the Texas Health 11-27 Maintenance Organization Act (Chapter 20A, Vernon's Texas Insurance 12-1 Code); 12-2 (B) a health benefit plan approved by the 12-3 commissioner of insurance; or 12-4 (C) a self-funded or self-insured employee 12-5 welfare benefit plan that provides health benefits and is 12-6 established in accordance with the Employee Retirement Income 12-7 Security Act of 1974 (29 U.S.C. Section 1001 et seq.), as amended. 12-8 (7) "Manufacturing" means an establishment primarily 12-9 engaged in activities described in categories 2011-3999 of the 1987 12-10 Standard Industrial Classification Manual published by the federal 12-11 Office of Management and Budget. 12-12 (8) "Qualified business" means an establishment 12-13 primarily engaged in agricultural processing, central 12-14 administrative offices, distribution, data processing, 12-15 manufacturing, research and development, or warehousing. 12-16 (9) "Qualifying job" means a new permanent full-time 12-17 job that: 12-18 (A) is located in: 12-19 (i) a strategic investment area; or 12-20 (ii) a county with a population of less 12-21 than 50,000, if the job is created by a business primarily engaged 12-22 in agricultural processing; 12-23 (B) requires at least 1,600 hours of work a 12-24 year; 12-25 (C) pays at least 110 percent of the county 12-26 average weekly wage for the county where the job is located; 12-27 (D) is covered by a group health benefit plan 13-1 for which the business pays at least 80 percent of the premiums or 13-2 other charges assessed under the plan for the employee; 13-3 (E) is not transferred from one area in this 13-4 state to another area in this state; and 13-5 (F) is not created to replace a previous 13-6 employee. 13-7 (10) "Research and development" means an establishment 13-8 primarily engaged in activities described in category 8731 of the 13-9 1987 Standard Industrial Classification Manual published by the 13-10 federal Office of Management and Budget. 13-11 (11) "Strategic investment area" has the meaning 13-12 assigned that term by Section 171.721. 13-13 (12) "Warehousing" means an establishment primarily 13-14 engaged in activities described in categories 4221-4226 of the 1987 13-15 Standard Industrial Classification Manual published by the federal 13-16 Office of Management and Budget. 13-17 Sec. 171.752. ELIGIBILITY. (a) A corporation is eligible 13-18 for a credit against the tax imposed under this chapter if the 13-19 corporation: 13-20 (1) is a qualified business as defined in Section 13-21 171.751; 13-22 (2) creates a minimum of 10 qualifying jobs; and 13-23 (3) pays an average weekly wage, for the year in which 13-24 credits are claimed, of at least 110 percent of the county average 13-25 weekly wage for the county where the qualifying jobs are located. 13-26 (b) A corporation may claim a credit or take a carryforward 13-27 credit without regard to whether the strategic investment area in 14-1 which it created the qualifying jobs subsequently loses its 14-2 designation as a strategic investment area, if applicable. 14-3 Sec. 171.753. CALCULATION OF CREDIT. A corporation may 14-4 establish a credit equal to 25 percent of the total wages and 14-5 salaries paid by the corporation for qualifying jobs during the 14-6 period upon which the tax is based. 14-7 Sec. 171.754. LENGTH OF CREDIT. The credit established 14-8 shall be claimed in five equal installments of one-fifth the credit 14-9 amount over the five consecutive reports beginning with the report 14-10 based upon the period during which the qualifying jobs were 14-11 created. 14-12 Sec. 171.755. LIMITATIONS. (a) The total credit claimed 14-13 under this subchapter for a report, including the amount of any 14-14 carryforward credit under Section 171.756, may not exceed 50 14-15 percent of the amount of franchise tax due for the report before 14-16 any other applicable tax credits. 14-17 (b) The total credit claimed under this subchapter and 14-18 Subchapters O and Q for a report, including the amount of any 14-19 carryforward credits, may not exceed the amount of franchise tax 14-20 due for the report after any other applicable credits. 14-21 (c) A corporation that establishes its eligibility for a 14-22 credit under this subchapter is not eligible to establish a credit 14-23 under Subchapter O. 14-24 Sec. 171.756. CARRYFORWARD. (a) If a corporation is 14-25 eligible for a credit from an installment that exceeds the 14-26 limitations under Section 171.755(a) or (b), the corporation may 14-27 carry the unused credit forward for not more than five consecutive 15-1 reports. 15-2 (b) A carryforward is considered the remaining portion of an 15-3 installment that cannot be claimed in the current year because of 15-4 the tax limitation under Section 171.755. A carryforward is added 15-5 to the next year's installment of the credit in determining the tax 15-6 limitation for that year. A credit carryforward from a previous 15-7 report is considered to be utilized before the current year 15-8 installment. 15-9 Sec. 171.757. CERTIFICATION OF ELIGIBILITY. (a) For the 15-10 initial and each succeeding report in which a credit is claimed 15-11 under this subchapter, the corporation shall file with its report, 15-12 on a form provided by the comptroller, information that 15-13 sufficiently demonstrates that the corporation is eligible for the 15-14 credit and is in compliance with Section 171.752. 15-15 (b) The burden of establishing entitlement to and the value 15-16 of the credit is on the corporation. 15-17 (c) If, in one of the five years in which the installment of 15-18 a credit accrues, the number of the corporation's full-time 15-19 employees falls below the number of full-time employees the 15-20 corporation had in the year in which the corporation qualified for 15-21 the credit, the credit expires and the corporation may not take any 15-22 remaining installment of the credit. 15-23 (d) Notwithstanding Subsection (c), the corporation may, 15-24 however, take the portion of an installment that accrued in a 15-25 previous year and was carried forward to the extent permitted under 15-26 Section 171.756. 15-27 Sec. 171.758. ASSIGNMENT PROHIBITED. A corporation may not 16-1 convey, assign, or transfer the credit allowed under this 16-2 subchapter to another entity unless all of the assets of the 16-3 corporation are conveyed, assigned, or transferred in the same 16-4 transaction. 16-5 Sec. 171.759. BIENNIAL REPORT BY COMPTROLLER. (a) Before 16-6 the beginning of each regular session of the legislature, the 16-7 comptroller shall submit to the governor, the lieutenant governor, 16-8 and the speaker of the house of representatives a report that 16-9 states: 16-10 (1) the total number of jobs created by corporations 16-11 that claim a credit under this subchapter and the average and 16-12 median annual wage of those jobs; 16-13 (2) the total amount of credits applied against the 16-14 tax under this chapter and the amount of unused credits including: 16-15 (A) the total amount of franchise tax due by 16-16 corporations claiming a credit under this subchapter before and 16-17 after the application of the credit; 16-18 (B) the average percentage reduction in 16-19 franchise tax due by corporations claiming a credit under this 16-20 subchapter; and 16-21 (C) the percentage of tax credits that were 16-22 awarded to corporations with fewer than 100 employees; 16-23 (3) a breakdown of the two-digit standard industrial 16-24 classification of businesses claiming a credit under this 16-25 subchapter; 16-26 (4) the geographical distribution of the credits 16-27 claimed under this subchapter; and 17-1 (5) the impact of the credit provided under this 17-2 subchapter on employment, personal income, and capital investment 17-3 in this state and on state tax revenues. 17-4 (b) The final report issued prior to the expiration of this 17-5 subchapter shall include historical information on the credit 17-6 authorized under this subchapter. 17-7 (c) The comptroller may not include in the report 17-8 information that is confidential by law. 17-9 (d) For purposes of this section, the comptroller may 17-10 require a corporation that claims a credit under this subchapter to 17-11 submit information, on a form provided by the comptroller, on the 17-12 location of the corporation's job creation in this state and any 17-13 other information necessary to complete the report required under 17-14 this section. 17-15 (e) The comptroller shall provide notice to the members of 17-16 the legislature that the report required under this section is 17-17 available on request. 17-18 Sec. 171.760. COMPTROLLER POWERS AND DUTIES. The 17-19 comptroller shall adopt rules and forms necessary to implement this 17-20 subchapter. 17-21 Sec. 171.761. EXPIRATION. (a) This subchapter expires 17-22 December 31, 2009. 17-23 (b) The expiration of this subchapter does not affect the 17-24 carryforward of a credit under Section 171.756 or those credits for 17-25 which a corporation is eligible before the date this subchapter 17-26 expires. 17-27 SECTION 4. Chapter 171, Tax Code, is amended by adding 18-1 Subchapter Q to read as follows: 18-2 SUBCHAPTER Q. TAX CREDITS FOR CERTAIN CAPITAL INVESTMENTS 18-3 Sec. 171.801. DEFINITIONS. In this subchapter: 18-4 (1) "Agricultural processing," "central administrative 18-5 offices," "county average weekly wage," "data processing," 18-6 "distribution," "manufacturing," "qualified business," "research 18-7 and development," and "warehousing" have the meanings assigned 18-8 those terms by Section 171.751. 18-9 (2) "Project" means a single qualified capital 18-10 investment or a combination of related qualified capital 18-11 investments and may encompass multiple locations, provided the 18-12 locations are functionally related and are not more than 20 miles 18-13 apart. 18-14 (3) "Qualified capital investment" means the purchase 18-15 or lease of tangible personal property that is first placed in 18-16 service in a strategic investment area, as determined by the 18-17 comptroller under Section 171.726, or is first placed in service in 18-18 a county with a population of less than 50,000 by a corporation 18-19 primarily engaged in agricultural processing, and that is described 18-20 in Section 1245(a), Internal Revenue Code, such as engines, 18-21 machinery, tools, and implements used in a trade or business or 18-22 held for investment and subject to an allowance for depreciation, 18-23 cost recovery under the accelerated cost recovery system, or 18-24 amortization. The term does not include real property or buildings 18-25 and their structural components. 18-26 (4) "Strategic investment area" has the meaning 18-27 assigned that term by Section 171.721. 19-1 Sec. 171.802. ELIGIBILITY. (a) A qualified business is 19-2 eligible for a credit against the tax imposed under this chapter in 19-3 the amount and under the conditions and limitations provided by 19-4 this subchapter. 19-5 (b) To qualify for the credit authorized under this 19-6 subchapter, a qualified business must: 19-7 (1) pay an average weekly wage, at the location with 19-8 respect to which the credit is claimed, that is at least 110 19-9 percent of the county average weekly wage; 19-10 (2) cover all the employees at the location with 19-11 respect to which the credit is claimed by a group health benefit 19-12 plan, as defined by Section 171.751, for which the business pays at 19-13 least 80 percent of the premiums or other charges assessed under 19-14 the plan for the employees; and 19-15 (3) make: 19-16 (A) a minimum $500,000 qualified capital 19-17 investment; or 19-18 (B) a qualified capital investment on or after 19-19 January 1, 2001, in a project located in this state that exceeds 19-20 $500 million. 19-21 (c) A corporation may claim a credit or take a carryforward 19-22 credit without regard to whether the strategic investment area in 19-23 which it made the qualified capital investment subsequently loses 19-24 its designation as a strategic investment area, if applicable. 19-25 Sec. 171.803. CALCULATION OF CREDIT. A corporation may 19-26 establish a credit equal to 7.5 percent of the qualified capital 19-27 investment. 20-1 Sec. 171.804. LENGTH OF CREDIT. (a) The credit established 20-2 shall be claimed in five equal installments of one-fifth the credit 20-3 amount over the five consecutive reporting periods beginning with 20-4 the reporting period in which the criteria of Section 171.802(b) 20-5 are first achieved. 20-6 (b) The credit includes all qualified capital investments 20-7 between the date the criteria of Section 171.802(b) are first 20-8 achieved and the end of that reporting period. Credit for 20-9 qualified capital investments made in subsequent reporting periods 20-10 must also be taken in five equal installments of one-fifth of the 20-11 credit amount over the five consecutive reporting periods beginning 20-12 with the reporting period in which the investment is made. 20-13 Sec. 171.805. LIMITATIONS. (a) The total credit claimed 20-14 under this subchapter for a report, including the amount of any 20-15 carryforward credit under Section 171.806, may not exceed 50 20-16 percent of the amount of franchise tax due for the report before 20-17 any other applicable tax credits. 20-18 (b) The total credit claimed under this subchapter and 20-19 Subchapters O and P for a report, including the amount of any 20-20 carryforward credits, may not exceed the amount of franchise tax 20-21 due for the report after any other applicable tax credits. 20-22 (c) A corporation that establishes its eligibility for a 20-23 credit under this subchapter is not eligible to claim a franchise 20-24 tax reduction authorized under Section 171.1015. 20-25 Sec. 171.806. CARRYFORWARD. (a) If a corporation is 20-26 eligible for a credit from an installment that exceeds the 20-27 limitation under Section 171.805(a) or (b), the corporation may 21-1 carry the unused credit forward for not more than five consecutive 21-2 reports. 21-3 (b) A carryforward is considered the remaining portion of an 21-4 installment that cannot be claimed in the current year because of 21-5 the tax limitation under Section 171.805. A carryforward is added 21-6 to the next year's installment of the credit in determining the tax 21-7 limitation for that year. A credit carryforward from a previous 21-8 report is considered to be utilized before the current year 21-9 installment. 21-10 Sec. 171.807. CERTIFICATION OF ELIGIBILITY. (a) For the 21-11 initial and each succeeding report in which a credit is claimed 21-12 under this subchapter, the corporation shall file with its report, 21-13 on a form provided by the comptroller, information that 21-14 sufficiently demonstrates that the corporation is eligible for the 21-15 credit and is in compliance with Section 171.802. 21-16 (b) The burden of establishing entitlement to and the value 21-17 of the credit is on the qualified business. 21-18 (c) A credit expires under this subchapter and the 21-19 corporation may not take any remaining installment of the credit if 21-20 in one of the five years in which the installment of a credit 21-21 accrues, the qualified business: 21-22 (1) disposes of the qualified capital investment; 21-23 (2) takes the qualified capital investment out of 21-24 service; 21-25 (3) moves the qualified capital investment out of this 21-26 state; or 21-27 (4) fails to pay an average weekly wage as required by 22-1 Section 171.802. 22-2 (d) Notwithstanding Subsection (c), the corporation may take 22-3 the portion of an installment that accrued in a previous year and 22-4 was carried forward to the extent permitted under Section 171.806. 22-5 Sec. 171.808. ASSIGNMENT PROHIBITED. A corporation may not 22-6 convey, assign, or transfer the credit allowed under this 22-7 subchapter to another entity unless all of the assets of the 22-8 corporation are conveyed, assigned, or transferred in the same 22-9 transaction. 22-10 Sec. 171.809. BIENNIAL REPORT BY COMPTROLLER. (a) Before 22-11 the beginning of each regular session of the legislature, the 22-12 comptroller shall submit to the governor, the lieutenant governor, 22-13 and the speaker of the house of representatives a report that 22-14 states: 22-15 (1) the total amount of qualified capital investments 22-16 made by corporations that claim a credit under this subchapter and 22-17 the average and median wages paid by those corporations; 22-18 (2) the total amount of credits applied against the 22-19 tax under this chapter and the amount of unused credits, including: 22-20 (A) the total amount of franchise tax due by 22-21 corporations claiming a credit under this subchapter before and 22-22 after the application of the credit; 22-23 (B) the average percentage reduction in 22-24 franchise tax due by corporations claiming a credit under this 22-25 subchapter; 22-26 (C) the percentage of tax credits that were 22-27 awarded to corporations with fewer than 100 employees; and 23-1 (D) the two-digit standard industrial 23-2 classification of corporations claiming a credit under this 23-3 subchapter; 23-4 (3) the geographical distribution of the qualified 23-5 capital investments on which tax credit claims are made under this 23-6 subchapter; and 23-7 (4) the impact of the credit provided under this 23-8 subchapter on employment, capital investment, personal income, and 23-9 state tax revenues. 23-10 (b) The final report issued before the expiration of this 23-11 subchapter shall include historical information on the credit 23-12 authorized under this subchapter. 23-13 (c) The comptroller may not include in the report 23-14 information that is confidential by law. 23-15 (d) For purposes of this section, the comptroller may 23-16 require a corporation that claims a credit under this subchapter to 23-17 submit information, on a form provided by the comptroller, on the 23-18 location of the corporation's capital investment in this state and 23-19 any other information necessary to complete the report required 23-20 under this section. 23-21 (e) The comptroller shall provide notice to the members of 23-22 the legislature that the report required under this section is 23-23 available on request. 23-24 Sec. 171.810. COMPTROLLER POWERS AND DUTIES. The 23-25 comptroller shall adopt rules and forms necessary to implement this 23-26 subchapter. 23-27 Sec. 171.811. EXPIRATION. (a) This subchapter expires 24-1 December 31, 2009. 24-2 (b) The expiration of this subchapter does not affect the 24-3 carryforward of a credit under Section 171.806 or those credits for 24-4 which a corporation is eligible before the date this subchapter 24-5 expires. 24-6 SECTION 5. The comptroller may combine the reports required 24-7 under Subchapters N, O, P, and Q, Chapter 171, Tax Code, as added 24-8 by this Act, into a single report. 24-9 SECTION 6. (a) This Act takes effect January 1, 2000. 24-10 (b) The changes in law made by this Act apply only to a 24-11 report originally due on or after January 1, 2000. A corporation 24-12 may claim a credit under Subchapters N, O, P, and Q, Chapter 171, 24-13 Tax Code, as added by this Act, only for expenses and payments 24-14 incurred, qualified investments made, or new jobs created on or 24-15 after January 1, 2000. 24-16 (c) Section 171.721(2)(D), Tax Code, as added by this Act, 24-17 expires on September 1, 2003, unless a county qualifying under that 24-18 section has been designated as the site for a spaceport pursuant to 24-19 the relevant provisions of the Development Corporation Act of 1979 24-20 (Article 5190.6, Vernon's Texas Civil Statutes). 24-21 SECTION 7. The importance of this legislation and the 24-22 crowded condition of the calendars in both houses create an 24-23 emergency and an imperative public necessity that the 24-24 constitutional rule requiring bills to be read on three several 24-25 days in each house be suspended, and this rule is hereby suspended.