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.