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.