Amend HB 2686 by striking all below the enacting clause and
substituting the following:
ARTICLE 1
SECTION 1.01. Section 2303.407, Government Code, is amended
to read as follows:
Sec. 2303.407. ALLOCATION OF JOBS ELIGIBLE FOR TAX REFUND.
When the department designates a business as an enterprise project,
the department shall allocate to the project the maximum number of
new permanent jobs or retained jobs eligible to be included in a
computation of a tax refund for the project. The number may not
exceed 250 <625> or a number equal to 110 percent of the number of
anticipated new permanent jobs or retained jobs specified in the
application for designation of the business as an enterprise
project under Section 2303.405, whichever is less.
SECTION 1.02. Section 2303.504, Government Code, is amended
to read as follows:
Sec. 2303.504. STATE TAX REFUNDS AND CREDITS <DEDUCTION>;
REPORT. (a) Subject to Section 2303.516, an <An> enterprise
project is entitled to:
(1) a refund of state taxes under Section 151.429, Tax
Code; and
(2) a franchise tax credit under Subchapter P or Q,
Chapter 171 <deduction from taxable capital under Section
171.1015>, Tax Code.
(b) Subject to Section 2303.516, a <A> qualified business is
entitled to a refund of state taxes under Sections 151.431 and
171.501, Tax Code.
(c) Not later than the 60th day after the last day of each
fiscal year, the comptroller shall report to the department the
statewide total of the tax refunds and credits made under this
section during that fiscal year.
SECTION 1.03. Subchapter G, Chapter 2303, Government Code,
is amended by adding Section 2303.516 to read as follows:
Sec. 2303.516. (a) The department may monitor a qualified
business or enterprise project to determine whether and to what
extent the business or project has followed through on any
commitments made by it or on its behalf under this chapter.
(b) The department may determine that the business or
project is not entitled to a refund or credit of state taxes under
Section 2303.504 if the department finds that:
(1) the business or project is not willing to
cooperate with the department in providing the department with the
information the department needs to make the determination under
Subsection (a); or
(2) the business or project has substantially failed
to follow through on any commitments made by it or on its behalf
under this chapter.
SECTION 1.04. Section 2310.404, Government Code, is amended
to read as follows:
Sec. 2310.404. STATE TAX REFUNDS AND CREDITS <DEDUCTION>;
REPORT. (a) Subject to Section 2310.413, a <A> defense
readjustment project is eligible for:
(1) a refund of state taxes under Section 151.4291,
Tax Code;
(2) a franchise tax credit under Subchapter P or Q,
Chapter 171 <deduction from taxable capital under Section
171.1016>, Tax Code; and
(3) the exclusion of receipts from service performed
in a readjustment zone in the determination of gross receipts from
business done in this state under Sections 171.103 and 171.1032,
Tax Code.
(b) Not later than the 60th day after the last day of each
fiscal year, the comptroller shall report to the department the
statewide total of the tax refunds or credits made under this
section during that fiscal year.
SECTION 1.05. Subchapter F, Chapter 2303, Government Code,
is amended by adding Section 2310.413 to read as follows:
Sec. 2310.413. (a) The department may monitor a defense
readjustment project to determine whether and to what extent the
project has followed through on any commitments made by it or on
its behalf under this chapter.
(b) The department may determine that the defense
readjustment project is not eligible for state tax refunds and
credits under Section 2310.404 if the department finds that:
(1) the project is not willing to cooperate with the
department in providing the department with the information the
department needs to make the determination under Subsection (a); or
(2) the project has substantially failed to follow
through on its commitments made by it or on its behalf under this
chapter.
SECTION 1.06. Sections 151.429(a) and (b), Tax Code, are
amended to read as follows:
(a) An enterprise project is eligible for a refund in the
amount provided by this section of the taxes imposed by this
chapter on purchases of:
(1) equipment or machinery sold to an enterprise
project for use in an enterprise zone;
(2) building materials sold to an enterprise project
for use in remodeling, rehabilitating, or constructing a structure
in an enterprise zone;
(3) labor for remodeling, rehabilitating, or
constructing a structure by an enterprise project in an enterprise
zone; <and>
(4) electricity and natural gas purchased and consumed
in the normal course of business in the enterprise zone;
(5) tangible personal property purchased and consumed
in the normal course of business in the enterprise zone; and
(6) taxable services.
(b) Subject to the limitations provided by Subsection (c) of
this section, an enterprise project qualifies for a refund of taxes
under this section of $5,000 <$2,000> for each new permanent job or
job that has been retained by the enterprise project for a
qualified employee.
SECTION 1.07. Section 151.4291(a), Tax Code, is amended to
read as follows:
(a) A defense readjustment project is eligible for a refund
in the amount provided by this section of the taxes imposed by this
chapter on purchases of:
(1) equipment or machinery sold to a defense
readjustment project for use in a readjustment zone;
(2) building materials sold to a defense readjustment
project for use in remodeling, rehabilitating, or constructing a
structure in a readjustment zone;
(3) labor for remodeling, rehabilitating, or
constructing a structure by a defense readjustment project in a
readjustment zone; <and>
(4) electricity and natural gas purchased and consumed
in the normal course of business in the readjustment zone;
(5) tangible personal property purchased and consumed
in the normal course of business in the readjustment zone; and
(6) taxable services.
SECTION 1.08. Section 171.751, Tax Code, is amended by
amending Subdivision (9) and adding Subdivisions (13)-(16) to read
as follows:
(9) "Qualifying job" means a new permanent full-time
job that:
(A) is located in:
(i) a strategic investment area; <or>
(ii) a county within this state with a
population of less than 50,000, if the job is created by a business
primarily engaged in agricultural processing; or
(iii) an enterprise zone or a readjustment
zone, regardless of whether the job meets the qualifications
prescribed by Paragraphs (B)-(F), if the job is created by a
qualified business that has been designated as an enterprise
project or defense readjustment project, respectively;
(B) requires at least 1,600 hours of work a
year;
(C) pays at least 110 percent of the county
average weekly wage for the county where the job is located;
(D) is covered by a group health benefit plan
for which the business pays at least 80 percent of the premiums or
other charges assessed under the plan for the employee;
(E) is not transferred from one area in this
state to another area in this state; and
(F) is not created to replace a previous
employee.
(13) "Defense readjustment project" means a person
designated by the Texas Department of Economic Development as a
defense readjustment project under Chapter 2310, Government Code,
on or after September 1, 2001.
(14) "Enterprise project" means a person designated by
the Texas Department of Economic Development as an enterprise
project under Chapter 2303, Government Code, on or after September
1, 2001.
(15) "Enterprise zone" has the meaning assigned that
term by Section 2303.003, Government Code.
(16) "Readjustment zone" has the meaning assigned that
term by Section 2310.001, Government Code.
SECTION 1.09. Section 171.752(b), Tax Code, is amended to
read as follows:
(b) A corporation may claim a credit or take a carryforward
credit without regard to whether the strategic investment area,
enterprise zone, or readjustment zone in which it created the
qualifying jobs subsequently loses its designation as a strategic
investment area, enterprise zone, or readjustment zone, if
applicable.
SECTION 1.10. Section 171.754, Tax Code, is amended to read
as follows:
Sec. 171.754. LENGTH OF CREDIT. (a) Except as provided by
Subsection (b), the <The> credit established shall be claimed in
five equal installments of one-fifth the credit amount over the
five consecutive reports beginning with the report based upon the
period during which the qualifying jobs were created.
(b) Subject to Section 171.755, a corporation that has been
designated as an enterprise project or as a defense readjustment
project may claim the entire credit earned during an accounting
period against the taxes imposed for the corresponding reporting
period.
SECTION 1.11. Section 171.801, Tax Code, is amended by
amending Subdivision (2) and adding Subdivision (4) to read as
follows:
(2) "Qualified capital investment" means tangible
personal property first placed in service in a strategic investment
area, <or> first placed in service in a county with a population of
less than 50,000 by a corporation primarily engaged in agricultural
processing, or first placed in service in an enterprise zone or
defense readjustment zone by a qualified business that has been
designated as an enterprise project or readjustment project,
respectively, and that is described in Section 1245(a), Internal
Revenue Code, such as engines, machinery, tools, and implements
used in a trade or business or held for investment and subject to
an allowance for depreciation, cost recovery under the accelerated
cost recovery system, or amortization. The term does not include
real property or buildings and their structural components.
Property that is leased under a capitalized lease is considered a
"qualified capital investment," but property that is leased under
an operating lease is not considered a "qualified capital
investment." Property expensed under Section 179, Internal Revenue
Code, is not considered a "qualified capital investment."
(4) "Defense readjustment project," "enterprise
project," "enterprise zone," and "readjustment zone" have the
meanings assigned by Section 171.751.
SECTION 1.12. Section 171.802(c), Tax Code, is amended to
read as follows:
(c) A corporation may claim a credit or take a carryforward
credit without regard to whether the strategic investment area,
enterprise zone, or readjustment zone in which it made the
qualified capital investment subsequently loses its designation as
a strategic investment area, enterprise zone, or readjustment zone,
if applicable.
SECTION 1.13. Section 171.804, Tax Code, is amended to read
as follows:
Sec. 171.804. LENGTH OF CREDIT. (a) Except as provided by
Subsection (b), the <The> credit established shall be claimed in
five equal installments of one-fifth the credit amount over the
five consecutive reports beginning with the report based upon the
period during which the qualified capital investment was made.
(b) Subject to Section 171.805, a corporation that has been
designated as an enterprise project or as a defense readjustment
project may claim the entire credit earned during an accounting
period against the taxes imposed for the corresponding reporting
period.
SECTION 1.14. Section 171.721, Tax Code, is amended to read
as follows:
Sec. 171.721. DEFINITIONS. In this subchapter:
(1) "Base amount," "basic research payment," and
"qualified research expense" have the meanings assigned those terms
by Section 41, Internal Revenue Code, except that all such payments
and expenses must be for research conducted within this state.
(2) "Strategic investment area" means an area that is
determined by the comptroller under Section 171.726 that is:
(A) a county within this state with above state
average unemployment and below state average per capita income;
<or>
(B) an area within this state that is a
federally designated urban enterprise community or an urban
enhanced enterprise community; or
(C) a county within this state that has a
spaceport, as defined by Section 4D, Development Corporation Act of
1979 (Article 5190.6, Vernon's Texas Civil Statutes), as added by
Chapter 1537, Acts of the 76th Legislature, Regular Session, 1999,
within its boundaries.
SECTION 1.15. Sections 171.1015, 171.1016, and 171.805(c),
Tax Code, are repealed.
SECTION 1.16. (a) Except as provided by Subsection (b) of
this section, this Article takes effect September 1, 2001. The
changes in law made by this Article apply only to an enterprise
project or defense readjustment project designated by the Texas
Department of Economic Development as such a project on or after
September 1, 2001. An enterprise project or defense readjustment
project designated before that date is governed by the law in
effect on the date it was designated, and that law is continued in
effect for that purpose.
(b) Sections 1.08-1.14 of this Article take effect September
1, 2003, and apply to a report originally due on or after that
date. Notwithstanding any other law, an enterprise project or
defense readjustment project designated on or after September 1,
2001, may, beginning on the date the project is designated,
establish credits as provided by the changes in law made by
Sections 1.08-1.13 of this Article but may only claim the credits
on reports originally due on or after September 1, 2003.
(c) Subject to Section 151.429(f), Tax Code, an enterprise
project or defense readjustment project designated on or after
September 1, 2001, may apply for a refund for which the project is
entitled under Sections 151.429(a)(1)-(4), Tax Code, as provided by
Section 151.429, Tax Code. The comptroller may pay the refund as
provided by Section 151.429, Tax Code, and other law.
(d) Subject to Section 151.429(f), Tax Code, an enterprise
project or defense readjustment project designated on or after
September 1, 2001, may accrue the right to a refund for which the
project is entitled under Sections 151.429(a)(5) and (6), Tax Code,
as added by this Article, and may apply for that refund as provided
by Section 151.429, Tax Code. However, the comptroller may not pay
a refund described by this subsection before September 1, 2003.
Notwithstanding any other law, for purposes of determining whether
interest accrues on a refund application submitted before September
1, 2003, the comptroller is considered to have made a final
decision on the application for the refund on September 1, 2003.
(e) The change in law made by this Article does not affect
taxes imposed before the effective date of this Article, and the
former law is continued in effect for purposes of the liability for
and collection of those taxes.
ARTICLE 2
SECTION 2.01. Section 2303.407, Government Code, is amended
to read as follows:
Sec. 2303.407. ALLOCATION OF JOBS ELIGIBLE FOR TAX REFUND.
When the department designates a business as an enterprise project,
the department shall allocate to the project the maximum number of
new permanent jobs or retained jobs eligible to be included in a
computation of a tax refund for the project. The number may not
exceed 625 or a number equal to 110 percent of the number of
anticipated new permanent jobs or retained jobs specified in the
application for designation of the business as an enterprise
project under Section 2303.405, whichever is less.
SECTION 2.02. Section 2303.504, Government Code, is amended
to read as follows:
Sec. 2303.504. STATE TAX REFUNDS <AND DEDUCTION>; REPORT.
(a) Subject to Section 2303.516, an <An> enterprise project is
entitled to<:>
<(1)> a refund of state taxes under Section 151.429,
Tax Code<; and>
<(2) a deduction from taxable capital under Section
171.1015, Tax Code>.
(b) Subject to Section 2303.516, a <A> qualified business is
entitled to a refund of state taxes under Sections 151.431 and
171.501, Tax Code.
(c) Not later than the 60th day after the last day of each
fiscal year, the comptroller shall report to the department the
statewide total of the tax refunds made under this section during
that fiscal year.
SECTION 2.03. Section 2310.404, Government Code, is amended
to read as follows:
Sec. 2310.404. STATE TAX REFUNDS <AND DEDUCTION>; REPORT.
(a) Subject to Section 2310.413, a <A> defense readjustment
project is eligible for:
(1) a refund of state taxes under Section 151.4291,
Tax Code; and
(2) <a deduction from taxable capital under Section
171.1016, Tax Code; and>
<(3)> the exclusion of receipts from service performed
in a readjustment zone in the determination of gross receipts from
business done in this state under Sections 171.103 and 171.1032,
Tax Code.
(b) Not later than the 60th day after the last day of each
fiscal year, the comptroller shall report to the department the
statewide total of the tax refunds made under this section during
that fiscal year.
SECTION 2.04. Sections 151.429(a) and (b), Tax Code, are
amended to read as follows:
(a) An enterprise project is eligible for a refund in the
amount provided by this section of the taxes imposed by this
chapter on purchases of:
(1) equipment or machinery sold to an enterprise
project for use in an enterprise zone;
(2) building materials sold to an enterprise project
for use in remodeling, rehabilitating, or constructing a structure
in an enterprise zone;
(3) labor for remodeling, rehabilitating, or
constructing a structure by an enterprise project in an enterprise
zone; and
(4) electricity and natural gas purchased and consumed
in the normal course of business in the enterprise zone.
(b) Subject to the limitations provided by Subsection (c) of
this section, an enterprise project qualifies for a refund of taxes
under this section of $2,000 for each new permanent job or job that
has been retained by the enterprise project for a qualified
employee.
SECTION 2.05. Section 151.4291(a), Tax Code, is amended to
read as follows:
(a) A defense readjustment project is eligible for a refund
in the amount provided by this section of the taxes imposed by this
chapter on purchases of:
(1) equipment or machinery sold to a defense
readjustment project for use in a readjustment zone;
(2) building materials sold to a defense readjustment
project for use in remodeling, rehabilitating, or constructing a
structure in a readjustment zone;
(3) labor for remodeling, rehabilitating, or
constructing a structure by a defense readjustment project in a
readjustment zone; and
(4) electricity and natural gas purchased and consumed
in the normal course of business in the readjustment zone.
SECTION 2.06. Section 171.751(9), Tax Code, is amended to
read as follows:
(9) "Qualifying job" means a new permanent full-time
job that:
(A) is located in:
(i) a strategic investment area; or
(ii) a county within this state with a
population of less than 50,000, if the job is created by a business
primarily engaged in agricultural processing;
(B) requires at least 1,600 hours of work a
year;
(C) pays at least 110 percent of the county
average weekly wage for the county where the job is located;
(D) is covered by a group health benefit plan
for which the business pays at least 80 percent of the premiums or
other charges assessed under the plan for the employee;
(E) is not transferred from one area in this
state to another area in this state; and
(F) is not created to replace a previous
employee.
SECTION 2.07. Section 171.752(b), Tax Code, is amended to
read as follows:
(b) A corporation may claim a credit or take a carryforward
credit without regard to whether the strategic investment area in
which it created the qualifying jobs subsequently loses its
designation as a strategic investment area, if applicable.
SECTION 2.08. Section 171.754, Tax Code, is amended to read
as follows:
Sec. 171.754. LENGTH OF CREDIT. The credit established shall
be claimed in five equal installments of one-fifth the credit
amount over the five consecutive reports beginning with the report
based upon the period during which the qualifying jobs were
created.
SECTION 2.09. Section 171.801(2), Tax Code, is to read as
follows:
(2) "Qualified capital investment" means tangible
personal property first placed in service in a strategic investment
area, or first placed in service in a county with a population of
less than 50,000 by a corporation primarily engaged in agricultural
processing, and that is described in Section 1245(a), Internal
Revenue Code, such as engines, machinery, tools, and implements
used in a trade or business or held for investment and subject to
an allowance for depreciation, cost recovery under the accelerated
cost recovery system, or amortization. The term does not include
real property or buildings and their structural components.
Property that is leased under a capitalized lease is considered a
"qualified capital investment," but property that is leased under
an operating lease is not considered a "qualified capital
investment." Property expensed under Section 179, Internal Revenue
Code, is not considered a "qualified capital investment."
SECTION 2.10. Section 171.802(c), Tax Code, is amended to
read as follows:
(c) A corporation may claim a credit or take a carryforward
credit without regard to whether the strategic investment area in
which it made the qualified capital investment subsequently loses
its designation as a strategic investment area, if applicable.
SECTION 2.11. Section 171.804, Tax Code, is amended to read
as follows:
Sec. 171.804. LENGTH OF CREDIT. The credit established shall
be claimed in five equal installments of one-fifth the credit
amount over the five consecutive reports beginning with the report
based upon the period during which the qualified capital investment
was made.
SECTION 2.12. Section 171.721, Tax Code, is amended to read
as follows:
Sec. 171.721. DEFINITIONS. In this subchapter:
(1) "Base amount," "basic research payment," and
"qualified research expense" have the meanings assigned those terms
by Section 41, Internal Revenue Code, except that all such payments
and expenses must be for research conducted within this state.
(2) "Strategic investment area" means an area that is
determined by the comptroller under Section 171.726 that is:
(A) a county within this state with above state
average unemployment and below state average per capita income; or
(B) an area within this state that is a
federally designated urban enterprise community or an urban
enhanced enterprise community.
SECTION 2.13. Sections 171.751(13)-(16), and Section
171.801(4), Tax Code, are repealed.
SECTION 2.14. (a) Except as provided by Subsection (b) of
this section, this Article takes effect September 1, 2005.
(b) Sections 2.06-2.13 of this Article take effect January
1, 2005, and apply to a report originally due on or after that
date.
(c) The change in law made by this Article does not affect
taxes imposed before the effective date of this Article, and the
former law is continued in effect for purposes of the liability for
and collection of those taxes.