By Giddings                                           H.B. No. 3566
         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 a franchise tax credit for certain corporations that
 1-3     provide group health benefit plan for employees.
 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.  TAX CREDIT FOR CERTAIN CORPORATIONS THAT
 1-8             PROVIDE A GROUP HEALTH BENEFIT PLAN FOR EMPLOYEES.
 1-9           Sec. 171.851.  DEFINITIONS. In this subchapter:
1-10                 (1)  "Corporation" has the meaning assigned by Section
1-11     171.001(b)(3).
1-12                 (2)  "Full-time employee" means an employee in a
1-13     permanent job that requires at least 1600 hours of work a year.
1-14                 (3)  "Health Insurance Expenditures" means the total
1-15     amount of premiums or other charges that the corporation pays each
1-16     year to provide benefits to full time employees under a Group
1-17     Health Benefit Plan.
1-18                 (4)  "Group Health Benefit Plan" has the meaning
1-19     assigned by Section 171.751(6).
1-20           Sec. 171.852.  CREDIT. A corporation is eligible for a credit
1-21     against the tax imposed by this chapter if the corporation has no
1-22     more than 100 employees and pays at least 80% of the premiums or
1-23     other charges assessed under a group health benefit plan that is
 2-1     applicable to the corporation's full-time employees.
 2-2           Sec. 171.853.  CALCULATION OF CREDIT. (a)  The base for
 2-3     determining the amount of credit available under this subchapter
 2-4     each year is corporation's health insurance expenditures.
 2-5           (b)  The maximum credit available to a corporation with not
 2-6     more than 25 employees is an amount equal to 100% of the
 2-7     corporation's franchise tax liability calculated before applying
 2-8     any other credits for which the corporation is eligible.
 2-9           (c)  The maximum credit available to a corporation with more
2-10     than 25 but fewer than 51 employees is an amount equal to 75% of
2-11     the corporation's franchise tax liability calculated before
2-12     applying any other credits for which the corporation is eligible.
2-13           (d)  The maximum credit available to a corporation with more
2-14     than 50 but fewer than 76 employees is an amount equal to 50% of
2-15     the corporation's franchise tax liability calculated before
2-16     applying any other credits for which the corporation is eligible.
2-17           (e)  The maximum credit available to a corporation with more
2-18     than 75 but fewer than 101 employees is an amount equal to 25% of
2-19     the corporation's franchise tax liability calculated before
2-20     applying any other credits for which the corporation is eligible.
2-21           (d)  No credit is available to a corporation with more than
2-22     100 employees.
2-23           Sec. 171.854.  CARRYFORWARD OR ASSIGNMENT OF CREDIT
2-24     PROHIBITED. (a)  No unused portion of a credit authorized by this
2-25     subchapter may be carried forward to another report.
2-26           (b)  No portion of a credit authorized by this subchapter may
 3-1     be conveyed, assigned, transferred to or claimed by another entity
 3-2     except pursuant to a transaction in which all of the assets of the
 3-3     corporation are conveyed, assigned or transferred in the same
 3-4     transaction.
 3-5           Sec. 171.855.  BIENNIAL REPORT TO THE LEGISLATURE. (a)
 3-6     Before the beginning of each regular session of the legislature,
 3-7     the comptroller shall submit to the governor, the lieutenant
 3-8     governor, and the speaker of the house of representatives a report
 3-9     that states the amount of credits claimed under this subchapter
3-10     during the previous two report periods.
3-11           (b)  The comptroller may require a corporation that claims a
3-12     credit authorized by this subchapter to submit such documentation
3-13     as the comptroller considers necessary to support its claim and to
3-14     enable the comptroller to compile the report required by this
3-15     section.
3-16           (c)  The comptroller shall provide notice to the members of
3-17     the legislature that the report required under this section is
3-18     available on request.
3-19           SECTION 2. This Act takes effect on January 1, 2002, and
3-20     applies to reports originally due on or after that date.  A
3-21     corporation may claim a credit under Subchapter S, Chapter 171, Tax
3-22     Code, as added by this Act, only for an expenditure made on or
3-23     after January 1, 2002.