By George H.B. No. 3216
Line and page numbers may not match official copy.
Bill not drafted by TLC or Senate E&E.
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to franchise tax incentives for corporations conducting
1-3 certain research 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 S to read as follows:
1-7 SUBCHAPTER S. BUSINESS LOSS CARRYOVERS AND REFUNDS FOR
1-8 CERTAIN RESEARCH AND DEVELOPMENT ACTIVITIES
1-9 Sec. 171.851. DEFINITIONS. In this subchapter:
1-10 (1) "Advanced computing technology" means the
1-11 technology used in designing and developing computing hardware and
1-12 software, including innovations in designing the full spectrum of
1-13 hardware from handheld calculators to supercomputers, and
1-14 peripheral equipment associated with the hardware.
1-15 (2) "Advanced materials technology" means the
1-16 specialized processing and synthesis technology used to create
1-17 materials with engineered properties, including ceramics, high
1-18 value-added metals, electronic materials, composites, polymers, and
1-19 biomaterials.
1-20 (3) "Basic research payment" and "qualified research
1-21 expense" have the meanings assigned those terms by Section 41,
1-22 Internal Revenue Code.
1-23 (4) "Biotechnology" means the technology, including
2-1 products, services, and subtechnologies, involving the functioning
2-2 of biological systems from the macro level to the molecular and
2-3 subatomic levels.
2-4 (5) "Electronic device technology" means the
2-5 technology involving:
2-6 (A) microelectronics;
2-7 (B) semiconductors;
2-8 (C) electronic equipment and instrumentation;
2-9 (D) radio frequency, microwave, and millimeter
2-10 electronics;
2-11 (E) optical and optic-electrical devices; and
2-12 (F) data and digital communications an imaging
2-13 devices.
2-14 (6) "Environmental technology" means the technology
2-15 used:
2-16 (A) to assess and prevent threats or damage to
2-17 human health or the environment;
2-18 (B) for environmental cleanup; and
2-19 (C) to develop alternative energy sources.
2-20 (7) "Medical device technology" means the technology
2-21 involving any medical equipment or product that:
2-22 (A) is not a pharmaceutical product;
2-23 (B) has a therapeutic value, diagnostic value,
2-24 or both; and
2-25 (C) is regulated by the federal Food and Drug
2-26 Administration.
3-1 Sec. 171.852. BUSINESS LOSS CARRYOVER. Notwithstanding
3-2 Section 171.110(e), a corporation that has a business loss for a
3-3 privilege period may carry the loss forward for not more than 15
3-4 consecutive privilege periods if:
3-5 (1) during the privilege period the corporation
3-6 incurred or paid qualified research expenses; and
3-7 (2) the qualified research expenses were in the fields
3-8 of:
3-9 (A) advanced computing technology;
3-10 (B) advanced materials technology;
3-11 (C) biotechnology;
3-12 (D) electronic device technology;
3-13 (E) environmental technology; or
3-14 (F) medical device technology.
3-15 Sec. 171.853. REFUND OF BUSINESS LOSS OR CREDIT FOR CERTAIN
3-16 CORPORATIONS. (a) A corporation is entitled to receive a refund as
3-17 provided by this section if the corporation:
3-18 (1) has product revenues for the year preceding the
3-19 privilege period equal to or less than $5 million; and
3-20 (2) has:
3-21 (A) a business loss carryover described by
3-22 Section 171.852; or
3-23 (B) a research and development tax credit under
3-24 Subchapter O.
3-25 (b) The amount of the refund is 75 percent of the value of
3-26 the unused business loss or credit.
4-1 (c) A corporation may not receive an amount under this
4-2 section that would result in the corporation and its affiliated
4-3 taxpayers receiving, over the lifetime of the corporation or the
4-4 affiliated taxpayer, an amount greater than $30 million of
4-5 cumulative refunds under this section. A corporation is affiliated
4-6 with a taxpayer for the purposes of this subsection if:
4-7 (1) the taxpayer directly or indirectly owns or
4-8 controls 10 percent or more of the voting rights or 10 percent or
4-9 more of the value of all classes of stock of the corporation; or
4-10 (2) another organization directly or indirectly owns
4-11 or controls 10 percent or more of the voting rights or 10 percent
4-12 or more of the value of all classes of stock of both the taxpayer
4-13 and the corporation.
4-14 Sec. 171.854. RULES. The comptroller shall adopt rules
4-15 necessary to implement this subchapter.
4-16 SECTION 2. This Act takes effect January 1, 2002, and
4-17 applies only to a report originally due on or after that date.