By Barrientos S.B. No. 696
76R5574 CBH-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to a franchise tax credit for a corporation that
1-3 establishes and operates a day-care center for children of
1-4 employees or purchases services for employees.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Chapter 171, Tax Code, is amended by adding
1-7 Subchapter N to read as follows:
1-8 SUBCHAPTER N. TAX CREDIT FOR ESTABLISHING DAY-CARE
1-9 CENTER OR PURCHASING CHILD-CARE SERVICES
1-10 Sec. 171.701. DEFINITION. In this subchapter, "day-care
1-11 center" has the meaning assigned by Section 42.002, Human Resources
1-12 Code.
1-13 Sec. 171.702. CREDIT. A corporation that meets the
1-14 eligibility requirements under this subchapter is entitled to a
1-15 credit in the amount allowed by this subchapter against the tax
1-16 imposed under this chapter.
1-17 Sec. 171.703. CREDIT FOR DAY-CARE CENTER AND PURCHASED
1-18 CHILD-CARE SERVICES. (a) A corporation may claim a credit under
1-19 this subchapter only for a qualifying expenditure relating to:
1-20 (1) the establishment and operation of a day-care
1-21 center primarily to provide care for the children of employees of
1-22 the corporation or of the corporation and one or more other
1-23 entities sharing the costs of establishing the center; or
1-24 (2) the purchase of child-care services that are
2-1 actually provided to children of employees of the corporation.
2-2 (b) A qualifying expenditure is an expenditure for:
2-3 (1) planning the day-care center;
2-4 (2) preparing a site to be used for the day-care
2-5 center;
2-6 (3) constructing the day-care center;
2-7 (4) renovating or remodeling a structure to be used
2-8 for the day-care center;
2-9 (5) purchasing equipment necessary in the use of the
2-10 day-care center and installed for permanent use in or immediately
2-11 adjacent to the day-care center, including kitchen appliances;
2-12 (6) expanding the day-care center;
2-13 (7) maintaining and operating the day-care center,
2-14 including costs related to training employees, providing
2-15 scholarships, and obtaining and retaining accreditation from a
2-16 child-care credentialing or accreditation entity; or
2-17 (8) purchasing child-care services that are actually
2-18 provided to children of employees of the corporation.
2-19 (c) A corporation may claim a credit in relation to the
2-20 establishment and operation of a day-care center only if:
2-21 (1) the corporation may claim a deduction on the
2-22 corporation's federal income taxes for depreciation of the facility
2-23 or for amortization instead of depreciation;
2-24 (2) the center is not part of the principal residence
2-25 of an officer or employee of the corporation;
2-26 (3) the center operates under a license issued under
2-27 Chapter 42, Human Resources Code;
3-1 (4) enrollment in the center is open to employees of
3-2 the corporation during the period for which the corporation claims
3-3 the credit;
3-4 (5) the center is not the principal trade or business
3-5 of the corporation, unless at least 30 percent of the children
3-6 enrolled in the center are children of employees;
3-7 (6) eligibility requirements for use of the facility
3-8 do not discriminate in favor of employees who are "highly
3-9 compensated employees," as that term is defined by Section 414(q),
3-10 Internal Revenue Code; and
3-11 (7) the employees pay less than the local market rate
3-12 for child-care services provided at the center.
3-13 (d) The amount of the credit is equal to the lesser of:
3-14 (1) $150,000; or
3-15 (2) 50 percent of the corporation's qualifying
3-16 expenditures.
3-17 (e) If a corporation shares in the cost of establishing a
3-18 day-care center, the corporation is entitled to a credit for the
3-19 qualifying expenditures made by the corporation, subject to the
3-20 limitation prescribed by Subsection (d).
3-21 Sec. 171.704. APPLICATION FOR CREDIT. (a) A corporation
3-22 must apply for a credit under this subchapter on or with the tax
3-23 report for the period for which the credit is claimed.
3-24 (b) The comptroller shall adopt a form for the application
3-25 for the credit. A corporation must use the form in applying for
3-26 the credit.
3-27 Sec. 171.705. PERIOD FOR WHICH CREDIT MAY BE CLAIMED. (a)
4-1 Except as provided by Subsection (b), a corporation may claim a
4-2 credit under this subchapter for qualifying expenditures made
4-3 during an accounting period only against the tax owed for the
4-4 corresponding reporting period.
4-5 (b) A corporation may not claim a credit in an amount that
4-6 exceeds the amount of tax due for the report. If a credit exceeds
4-7 the amount of tax due for that report, the corporation may carry
4-8 the remaining credit forward to the next report if the day-care
4-9 center is in operation during that reporting period.
4-10 (c) The total amount claimed as a credit under this
4-11 subchapter on any report may not exceed the amount prescribed by
4-12 Section 171.703(d).
4-13 Sec. 171.706. ASSIGNMENT PROHIBITED. A corporation may not
4-14 convey, assign, or transfer the credit allowed under this
4-15 subchapter to another entity unless all of the assets of the
4-16 corporation are conveyed, assigned, or transferred in the same
4-17 transaction.
4-18 SECTION 2. A corporation may claim the credit under
4-19 Subchapter N, Chapter 171, Tax Code, as added by this Act, only for
4-20 a qualifying expenditure made on or after the effective date of
4-21 this Act and only on a franchise tax report due under Chapter 171,
4-22 Tax Code, on or after January 1, 2000.
4-23 SECTION 3. The importance of this legislation and the
4-24 crowded condition of the calendars in both houses create an
4-25 emergency and an imperative public necessity that the
4-26 constitutional rule requiring bills to be read on three several
4-27 days in each house be suspended, and this rule is hereby suspended.