78R3016 SMJ-F

By:  Giddings                                                     H.B. No. 611



A BILL TO BE ENTITLED

AN ACT

relating to a franchise tax credit for certain corporations that 
provide group health benefit plans to their employees.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Chapter 171, Tax Code, is amended by adding 
Subchapter V to read as follows:

SUBCHAPTER V.  TAX CREDIT FOR CONTRIBUTIONS BY CERTAIN CORPORATIONS 
TO HEALTH PLANS FOR EMPLOYEES
	Sec. 171.901.  DEFINITIONS.  In this subchapter:                        
		(1)  "Full-time employee" means an employee in a 
permanent position who is required to work at least 1,600 hours a 
year.
		(2)  "Group health benefit plan" has the meaning 
assigned by Section 171.751.
	Sec. 171.902.  APPLICATION OF SUBCHAPTER.  This subchapter 
applies only to a corporation that:
		(1)  has 100 or fewer employees; and                                   
		(2)  offers a group health benefit plan to full-time 
employees.      
	Sec. 171.903.  CREDIT.  A corporation that meets the 
eligibility requirements under this subchapter is entitled to a 
credit in the amount allowed by this subchapter against the tax 
imposed under this chapter.
	Sec. 171.904.  EXPENDITURES ELIGIBLE FOR CREDIT.  A 
corporation may claim a credit under this subchapter only for a 
qualifying expenditure.  A qualifying expenditure is an expenditure 
for at least 80 percent of the premiums or other charges assessed to 
provide benefits to a full-time employee under a group health 
benefit plan.
	Sec. 171.905.  AMOUNT; LIMITATIONS.  (a)  A corporation may 
claim a credit under this subchapter for a qualifying expenditure 
during an accounting period only against the tax owed for the 
corresponding reporting period.
	(b)  A corporation with 25 or fewer employees may not claim a 
credit in an amount that exceeds the amount of franchise tax due, 
before applying any other credits, for the reporting period.
	(c)  A corporation with more than 25 and fewer than 51 
employees may not claim a credit in an amount that exceeds 75 
percent of the amount of franchise tax due, before applying any 
other credits, for the reporting period.
	(d)  A corporation with more than 50 and fewer than 76 
employees may not claim a credit in an amount that exceeds 50 
percent of the amount of franchise tax due, before applying any 
other credits, for the reporting period.
	(e)  A corporation with more than 75 and fewer than 101 
employees may not claim a credit in an amount that exceeds 25 
percent of the amount of franchise tax due, before applying any 
other credits, for the reporting period.
	Sec. 171.906.  APPLICATION FOR CREDIT.  (a)  A corporation 
must apply for a credit under this subchapter on or with the tax 
report for the period for which the credit is claimed.
	(b)  The comptroller shall adopt a form for the application 
for the credit.  A corporation must use this form in applying for 
the credit.
	Sec. 171.907.  ASSIGNMENT PROHIBITED.  A corporation may not 
convey, assign, or transfer a credit allowed under this subchapter 
to another entity unless all of the assets of the corporation are 
conveyed, assigned, or transferred in the same transaction.
	Sec. 171.908.  BIENNIAL REPORT BY COMPTROLLER.  (a)  Before 
the beginning of each regular session of the legislature, the 
comptroller shall submit to the governor, the lieutenant governor, 
and the speaker of the house of representatives a report that states 
the total amount of credits applied under this subchapter against 
the tax imposed under this chapter during the two preceding 
reporting periods.
	(b)  The comptroller may require a corporation that claims a 
credit under this subchapter to submit information that the 
comptroller considers necessary to support the claim and to 
complete the report required by this section.
	(c)  The comptroller shall provide notice to the members of 
the legislature that the report is available on request.
	SECTION 2.  A corporation may claim the credit under 
Subchapter V, Chapter 171, Tax Code, as added by this Act, only:
		(1)  for an expenditure made on or after January 1, 
2004; and               
		(2)  on a franchise tax report due under Chapter 171, 
Tax Code, on or after January 1, 2004.