By Haywood S.B. No. 224
76R2192 CBH-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to tax incentives for certain agricultural processing
1-3 companies locating or expanding in this state.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subchapter H, Chapter 151, Tax Code, is amended
1-6 by adding Section 151.3185 to read as follows:
1-7 Sec. 151.3185. TAXABLE ITEMS SOLD OR USED BY CERTAIN
1-8 AGRICULTURAL PROCESSORS. (a) In this section:
1-9 (1) "Agricultural processor" means a person who is or
1-10 proposes to be engaged in processing an agricultural product.
1-11 (2) "Agricultural product" means an agricultural,
1-12 horticultural, viticultural, or vegetable product, bees, honey,
1-13 fish or other seafood, livestock, and poultry.
1-14 (3) "Economically distressed county" means a county
1-15 that:
1-16 (A) has a per capita income that averaged 25
1-17 percent below the state average for the most recent three
1-18 consecutive years for which statistics are available and an
1-19 unemployment rate that averaged 25 percent above the state average
1-20 for the most recent three consecutive years for which statistics
1-21 are available; or
1-22 (B) is adjacent to an international border.
1-23 (4) "Qualified agricultural processor" means an
1-24 agricultural processor who meets the qualifications prescribed by
2-1 Subsection (c).
2-2 (5) "Rural county" means a county with a population of
2-3 less than 250,000.
2-4 (b) A taxable item purchased, leased, rented, stored, or
2-5 used by the agricultural processing business of a qualified
2-6 agricultural processor is exempted from the taxes imposed by this
2-7 chapter.
2-8 (c) An agricultural processor qualifies for the exemption
2-9 provided by this section only if the processor:
2-10 (1) establishes a new agricultural processing business
2-11 in a rural county or economically distressed county or expands an
2-12 existing agricultural processing business located in a rural county
2-13 or economically distressed county; and
2-14 (2) makes a capital investment of not less than
2-15 $100,000 in establishing or expanding the business in the location
2-16 described by Subdivision (1).
2-17 (d) A qualified agricultural processor that is not a
2-18 corporation subject to taxation under Chapter 171 may claim the
2-19 exemption provided by this section only until the third anniversary
2-20 of the date on which the processor begins constructing or expanding
2-21 a facility that is necessary or essential to the agricultural
2-22 processing business described by Subsection (c) or enters into a
2-23 lease for such a facility.
2-24 (e) A qualified agricultural processor that is a corporation
2-25 subject to taxation under Chapter 171 may claim the exemption
2-26 provided by this section only until the first anniversary of the
2-27 date on which the processor begins constructing or expanding a
3-1 facility that is necessary or essential to the agricultural
3-2 processing business described by Subsection (c) or enters into a
3-3 lease for such a facility.
3-4 (f) A corporation must apply to the comptroller for the
3-5 exemption provided by this section. The burden of establishing
3-6 entitlement to the exemption is on the agricultural processor.
3-7 SECTION 2. Chapter 171, Tax Code, is amended by adding
3-8 Subchapter N to read as follows:
3-9 SUBCHAPTER N. CREDIT FOR CERTAIN AGRICULTURAL PROCESSORS
3-10 Sec. 171.701. DEFINITIONS. In this subchapter:
3-11 (1) "Agricultural processor" has the meaning assigned
3-12 by Section 151.3185.
3-13 (2) "Agricultural product" has the meaning assigned by
3-14 Section 151.3185.
3-15 (3) "Economically distressed county" has the meaning
3-16 assigned by Section 151.3185.
3-17 (4) "New permanent employee" means a new employee,
3-18 other than a private contractor, hired by a corporation for a
3-19 position that requires at least 1,600 hours of work a year and is
3-20 intended to be held by one employee during the entire year.
3-21 (5) "Rural county" has the meaning assigned by Section
3-22 151.3185.
3-23 Sec. 171.702. ENTITLEMENT TO CREDIT. A corporation is
3-24 entitled to a credit in the amount and under the conditions and
3-25 limitations provided by this subchapter against the tax imposed
3-26 under this chapter.
3-27 Sec. 171.703. TYPES OF CORPORATIONS THAT QUALIFY FOR CREDIT.
4-1 (a) A corporation qualifies for a credit under this subchapter if
4-2 the corporation is an agricultural processor that:
4-3 (1) establishes a new agricultural processing business
4-4 in a rural county or economically distressed county or expands an
4-5 existing agricultural processing business located in a rural county
4-6 or economically distressed county; and
4-7 (2) makes an overall investment relating to the
4-8 establishment or expansion in a privilege period that is equal to
4-9 at least $250,000 as computed under Subsection (b).
4-10 (b) The value of a corporation's overall investment in
4-11 establishing or expanding an agricultural processing business in a
4-12 rural county or economically distressed county is computed by
4-13 multiplying the corporation's capital investment made in
4-14 establishing or expanding the business by the value of the new
4-15 permanent jobs created by the corporation as computed under
4-16 Subsection (c).
4-17 (c) The value of a new permanent job created by a
4-18 corporation is equal to:
4-19 (1) $0 for each new permanent employee hired by the
4-20 corporation to work at an agricultural processing business
4-21 established or expanded in a rural county or economically
4-22 distressed area if the corporation hires 14 or fewer new permanent
4-23 employees;
4-24 (2) $5,000 for each permanent employee hired by the
4-25 corporation to work at an agricultural processing business
4-26 established or expanded in a rural county or economically
4-27 distressed area if the corporation hires at least 15 and not more
5-1 than 49 new permanent employees; and
5-2 (3) $10,000 for each permanent employee hired by the
5-3 corporation to work at an agricultural processing business
5-4 established or expanded in a rural county or economically
5-5 distressed area if the corporation hires more than 49 new permanent
5-6 employees.
5-7 Sec. 171.704. AMOUNT OF CREDIT. (a) The total amount of
5-8 the credit for which a corporation may qualify during a privilege
5-9 period is equal to:
5-10 (1) two percent of the value of the corporation's
5-11 overall investment for the privilege period if the value is at
5-12 least $250,000 but not more than $500,000;
5-13 (2) four percent of the value of the corporation's
5-14 overall investment for the privilege period if the value is more
5-15 than $500,000 but not more than $1 million;
5-16 (3) six percent of the value of the corporation's
5-17 overall investment for the privilege period if the value is more
5-18 than $1 million but not more than $5 million;
5-19 (4) eight percent of the value of the corporation's
5-20 overall investment for the privilege period if the value is more
5-21 than $5 million but not more than $10 million; and
5-22 (5) 10 percent of the value of the corporation's
5-23 overall investment for the privilege period if the value is more
5-24 than $10 million.
5-25 (b) A credit related to a particular new permanent employee
5-26 expires if:
5-27 (1) the employee does not remain continuously employed
6-1 with the business for at least 90 days; or
6-2 (2) the number of full-time employees working at that
6-3 employee's location falls below the number of employees at that
6-4 location on the day after that employee was hired.
6-5 (c) A corporation that qualifies for a credit under this
6-6 subchapter must take the credit in five equal installments.
6-7 Sec. 171.705. LIMITATIONS. (a) The total credit claimed
6-8 under this subchapter for a privilege period may not exceed 50
6-9 percent of the amount of net franchise tax due for the privilege
6-10 period after any other applicable tax credits.
6-11 (b) The amount of the credit may not reduce the tax below
6-12 zero.
6-13 Sec. 171.706. CARRYOVER. If a corporation is entitled to
6-14 take a credit that exceeds the limitation prescribed by Section
6-15 171.705 for a privilege period, the corporation may carry the
6-16 credit forward to consecutive reports.
6-17 Sec. 171.707. CONVEYANCE, ASSIGNMENT, OR TRANSFER. A
6-18 corporation may not convey, assign, or transfer a credit to another
6-19 person.
6-20 Sec. 171.708. RULES. The comptroller shall adopt rules
6-21 necessary to implement this subchapter.
6-22 SECTION 3. Subchapter B, Chapter 403, Government Code, is
6-23 amended by adding Section 403.0255 to read as follows:
6-24 Sec. 403.0255. INCENTIVES FOR AGRICULTURAL PROCESSORS. (a)
6-25 The comptroller shall promote awareness of incentives available to
6-26 companies that want to establish or expand an agricultural
6-27 processing business in this state.
7-1 (b) The comptroller shall recruit the governor's office and
7-2 other state agencies, including the department of agriculture, to
7-3 participate in a coordinated campaign to increase awareness of the
7-4 incentives available.
7-5 SECTION 4. (a) This Act takes effect January 1, 2000.
7-6 (b) A corporation may claim an exemption or credit under
7-7 this Act only for a capital investment made or new permanent
7-8 employee hired on or after the effective date of this Act.
7-9 SECTION 5. The importance of this legislation and the
7-10 crowded condition of the calendars in both houses create an
7-11 emergency and an imperative public necessity that the
7-12 constitutional rule requiring bills to be read on three several
7-13 days in each house be suspended, and this rule is hereby suspended.