78R2056 SMJ-D

By:  Jones of Bexar                                               H.B. No. 2956


A BILL TO BE ENTITLED
AN ACT
relating to a franchise tax credit for oil and gas producers that make financial contributions to institutions of higher education. 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 GAS AND OIL PRODUCERS TO INSTITUTIONS OF HIGHER EDUCATION
Sec. 171.901. DEFINITIONS. In this subchapter: (1) "Gas" has the meaning assigned by Section 201.001(4). (2) "Institution of higher education" means a public or private institution of higher education in this state that is accredited by a recognized accrediting agency. (3) "Oil" has the meaning assigned by Section 202.001(3). Sec. 171.902. APPLICATION OF SUBCHAPTER. This subchapter applies only to a corporation that: (1) takes gas or oil from the earth or water; (2) owns, controls, manages, or leases a gas well or an oil well; or (3) owns an interest, including a royalty interest, in gas or its value or in oil or its value, regardless of whether the gas or oil is produced by the corporation owning the interest or by another person on the corporation's behalf by lease, contract, or other arrangement. 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 that is: (1) used for teaching or research, or services that support teaching or research, at an institution of higher education; (2) used for an acquisition by a library or museum that is owned by an institution of higher education; or (3) a contribution to the endowment of an institution of higher education. Sec. 171.905. AMOUNT; LIMITATIONS. (a) The amount of the credit allowed under this subchapter is equal to 50 percent of the portion of a corporation's qualifying expenditure that is less than or equal to $100,000 and 100 percent of the portion of a corporation's qualifying expenditure that exceeds $100,000. (b) A corporation may not claim a credit under this subchapter in an amount that, when added to all other credits claimed for the reporting period, results in a sum that exceeds $150,000. (c) 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. 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. RULES. The comptroller shall adopt rules for implementing this subchapter, including rules requiring an institution of higher education to report a qualifying expenditure received under this subchapter in the institution's biennial budget request. Sec. 171.908. 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. SECTION 2. A corporation may claim the credit under Subchapter V, Chapter 171, Tax Code, as added by this Act, only: (1) for a qualifying expenditure made on or after the effective date of this Act; and (2) on a franchise tax report due under Chapter 171, Tax Code, on or after January 1, 2004. SECTION 3. This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2003.