By Madla S.B. No. 985 76R5991 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 by a defense readjustment project. 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 RESEARCH AND 1-8 DEVELOPMENT ACTIVITIES BY DEFENSE READJUSTMENT PROJECT 1-9 Sec. 171.721. DEFINITIONS. In this subchapter: 1-10 (1) "Basic research payment" and "qualified research 1-11 expense" have the meanings assigned by Section 41, Internal Revenue 1-12 Code. 1-13 (2) "Defense readjustment project" means a person 1-14 designated by the Texas Department of Economic Development as a 1-15 defense readjustment project under Chapter 2310, Government Code. 1-16 (3) "Readjustment zone" has the meaning assigned by 1-17 Section 2310.001, Government Code. 1-18 Sec. 171.722. ENTITLEMENT. A corporation that is a defense 1-19 readjustment project is entitled to a refund in the amount and 1-20 under the conditions and limitations provided by this subchapter 1-21 against the tax imposed under this chapter. 1-22 Sec. 171.723. AMOUNT. (a) Except as provided by Subsection 1-23 (b), and subject to adjustment under Section 171.726, the refund 1-24 for any privilege period equals five percent of the sum of: 2-1 (1) the qualified research expenses made in a 2-2 readjustment zone; and 2-3 (2) the basic research payments determined under 2-4 Section 41(e)(1)(A), Internal Revenue Code, made in a readjustment 2-5 zone. 2-6 (b) The total refund claimed under this section for a 2-7 privilege period may not exceed 25 percent of the amount of net 2-8 franchise tax due for the privilege period after any other 2-9 applicable tax credits or refunds. 2-10 (c) If a corporation's accounting year does not correspond 2-11 to the privilege period, the base amount and any other amount used 2-12 to calculate the refund shall be multiplied by a ratio the 2-13 numerator of which is the number of days in the corporation's 2-14 accounting year that are also in the privilege period and the 2-15 denominator of which is the number of days in the privilege period. 2-16 Sec. 171.724. APPLICATION. (a) A corporation must apply 2-17 for a refund under this subchapter on or with the tax report for 2-18 the period for which the refund is claimed. 2-19 (b) The comptroller shall promulgate a form for the 2-20 application for the refund. A corporation must use this form in 2-21 applying for the refund. 2-22 Sec. 171.725. DETERMINATION OF TOTAL AMOUNT OF REFUNDS. The 2-23 comptroller shall determine the total amount of refunds claimed for 2-24 a tax year on all reports that are filed on or before November 15. 2-25 Sec. 171.726. ADJUSTMENT AND PAYMENT OF REFUND. (a) On or 2-26 before December 31 of a tax year, the comptroller shall send to a 2-27 corporation entitled to a refund under this subchapter: 3-1 (1) the full amount of the refund determined under 3-2 Section 171.723 if the amount under Section 171.725 is less than or 3-3 equal to $125 million; or 3-4 (2) a portion of the refund determined under Section 3-5 171.723 in accordance with Subsection (b) if the amount under 3-6 Section 171.725 is greater than $125 million. 3-7 (b) If the amount under Section 171.725 is greater than $125 3-8 million, the comptroller shall determine the amount of a 3-9 corporation's refund by multiplying the amount of the corporation's 3-10 refund determined under Section 171.723 by a fraction: 3-11 (1) the numerator of which is $125 million; and 3-12 (2) the denominator of which is the amount under 3-13 Section 171.725. 3-14 Sec. 171.727. CREDIT. (a) The comptroller may, for a tax 3-15 year, allow corporations to take a credit directly against the tax 3-16 owed under this chapter instead of issuing a refund after the tax 3-17 is paid if the comptroller determines that the amount under Section 3-18 171.725 for the tax year is reasonably certain to be less than or 3-19 equal to $125 million. 3-20 (b) If the comptroller makes the determination under 3-21 Subsection (a), the provisions of this subchapter that relate to 3-22 the entitlement to and amount of limitations of a refund apply in 3-23 the same manner to a credit. 3-24 Sec. 171.728. RULES. The comptroller shall adopt rules 3-25 necessary to implement this subchapter. 3-26 SECTION 2. (a) This Act takes effect January 1, 2000. 3-27 (b) This Act applies only to: 4-1 (1) a report originally due on or after the effective 4-2 date of this Act; and 4-3 (2) an expense or payment made on or after January 1, 4-4 1999. 4-5 SECTION 3. The importance of this legislation and the 4-6 crowded condition of the calendars in both houses create an 4-7 emergency and an imperative public necessity that the 4-8 constitutional rule requiring bills to be read on three several 4-9 days in each house be suspended, and this rule is hereby suspended.