By Shapiro S.B. No. 704
76R6879 DAK-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to a franchise tax refund or credit for certain research
1-3 and development activities.
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 O to read as follows:
1-7 SUBCHAPTER O. TAX REFUND OR CREDIT FOR CERTAIN
1-8 RESEARCH AND DEVELOPMENT ACTIVITIES
1-9 Sec. 171.721. DEFINITIONS. In this subchapter, "basic
1-10 research payment" and "qualified research expense" have the
1-11 meanings assigned those terms by Section 41, Internal Revenue Code.
1-12 Sec. 171.722. ENTITLEMENT. A corporation is entitled to a
1-13 refund in the amount and under the conditions and limitations
1-14 provided by this subchapter of the tax imposed under this chapter.
1-15 Sec. 171.723. AMOUNT. (a) Except as provided by Section
1-16 171.724, and subject to adjustment under Section 171.727, the
1-17 refund for any privilege period equals 4.5 percent of the sum of:
1-18 (1) the qualified research expenses for this state;
1-19 and
1-20 (2) the basic research payments determined under
1-21 Section 41(e)(1)(A), Internal Revenue Code, for this state.
1-22 (b) If a corporation's accounting year does not correspond
1-23 to the privilege period, any amount used to calculate the refund
1-24 shall be multiplied by a ratio the numerator of which is the number
2-1 of days in the corporation's accounting year that are also in the
2-2 privilege period and the denominator of which is the number of days
2-3 in the privilege period.
2-4 Sec. 171.724. LIMITATIONS. (a) Except as provided by
2-5 Subsection (b), the total refund claimed under this subchapter for
2-6 a privilege period may not exceed 25 percent of the amount of net
2-7 franchise tax due for the privilege period after any other
2-8 applicable tax credits or refunds are taken.
2-9 (b) The total refund claimed under this subchapter for a
2-10 privilege period may exceed 25 percent and be equal to not more
2-11 than the amount of net franchise tax due for the privilege period,
2-12 after any other applicable tax credits or refunds are taken, if the
2-13 corporation makes a grant of an amount of money equal to at least
2-14 25 percent of the refund to a public senior college or university
2-15 or a medical and dental unit, as those terms are defined by Section
2-16 61.003, Education Code.
2-17 (c) The grant of money under Subsection (b) must be:
2-18 (1) in addition to any ongoing or regular grants or
2-19 donations made by the corporation; and
2-20 (2) for the purpose of:
2-21 (A) endowing a faculty chair;
2-22 (B) providing a scholarship for a student
2-23 pursuing a specific line of study as determined by the corporation;
2-24 (C) making certain qualified research expenses
2-25 as agreed by the corporation and the recipient of the grant; or
2-26 (D) purchasing certain research equipment as
2-27 agreed by the corporation and the recipient of the grant.
3-1 Sec. 171.725. APPLICATION. (a) A corporation must apply
3-2 for a refund under this subchapter on or with the tax report for
3-3 the period for which the refund is claimed.
3-4 (b) The comptroller shall promulgate a form for the
3-5 application for the refund. A corporation must use this form in
3-6 applying for the refund.
3-7 Sec. 171.726. DETERMINATION OF TOTAL AMOUNT OF REFUNDS. The
3-8 comptroller shall determine the total amount of refunds claimed for
3-9 a tax year on all reports that are filed on or before November 15.
3-10 Sec. 171.727. ADJUSTMENT AND PAYMENT OF REFUND. (a) On or
3-11 before December 31 of a tax year, the comptroller shall send to a
3-12 corporation entitled to a refund under this subchapter:
3-13 (1) the full amount of the refund determined under
3-14 Section 171.723 if the amount under Section 171.726 is less than or
3-15 equal to $125 million; or
3-16 (2) a portion of the refund determined under Section
3-17 171.723 in accordance with Subsection (b) if the amount under
3-18 Section 171.726 is greater than $125 million.
3-19 (b) If the amount under Section 171.726 is greater than $125
3-20 million, the comptroller shall determine the amount of a
3-21 corporation's refund by multiplying the amount of the corporation's
3-22 refund determined under Section 171.723 by a fraction:
3-23 (1) the numerator of which is $125 million; and
3-24 (2) the denominator of which is the amount under
3-25 Section 171.726.
3-26 Sec. 171.728. CREDIT. (a) The comptroller may, for a tax
3-27 year, allow corporations to take a credit directly against the tax
4-1 owed under this chapter instead of issuing a refund after the tax
4-2 is paid if the comptroller determines that the amount under Section
4-3 171.726 for the tax year is reasonably certain to be less than or
4-4 equal to $125 million.
4-5 (b) If the comptroller makes the determination under
4-6 Subsection (a), the provisions of this subchapter that relate to
4-7 the entitlement to and amount of limitations of a refund apply in
4-8 the same manner to a credit.
4-9 Sec. 171.729. RULES. The comptroller shall adopt rules
4-10 necessary to implement this subchapter.
4-11 SECTION 2. (a) This Act takes effect January 1, 2000.
4-12 (b) This Act applies only to:
4-13 (1) a report originally due on or after the effective
4-14 date of this Act; and
4-15 (2) an expense or payment made on or after January 1,
4-16 1999.
4-17 SECTION 3. The importance of this legislation and the
4-18 crowded condition of the calendars in both houses create an
4-19 emergency and an imperative public necessity that the
4-20 constitutional rule requiring bills to be read on three several
4-21 days in each house be suspended, and this rule is hereby suspended.