79S31151 KLA-D
By: Keffer of Eastland H.B. No. 131
A BILL TO BE ENTITLED
AN ACT
relating to authority of certain enterprise projects to receive
franchise tax credits for job creation and capital investment.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 171.751, Tax Code, is amended by adding
Subdivision (5-a) and amending Subdivisions (8) and (9) to read as
follows:
(5-a) "Enterprise project" means a person designated
as an enterprise project under Chapter 2303, Government Code.
(8) "Qualified business" means an establishment:
(A) primarily engaged in agricultural
processing, central administrative offices, distribution, data
processing, manufacturing, research and development, or
warehousing; or
(B) that has been designated as an enterprise
project under Chapter 2303, Government Code, and approved as a
triple jumbo enterprise project, as described by Section 2303.407,
Government Code, on or after September 1, 2004, and on or before
November 30, 2004.
(9) "Qualifying job" means:
(A) a new permanent full-time job that:
(i) [(A)] is located in:
(a) [(i)] a strategic investment
area; or
(b) [(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;
(ii) [(B)] requires at least 1,600 hours of
work a year;
(iii) [(C)] pays at least 110 percent of
the county average weekly wage for the county where the job is
located;
(iv) [(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;
(v) [(E)] is not transferred from one area
in this state to another area in this state; and
(vi) [(F)] is not created to replace a
previous employee; or
(B) a new permanent full-time job created by an
enterprise project at a qualified business site, as defined by
Section 2303.003(6-a), Government Code, regardless of whether the
job meets the qualifications prescribed by Paragraph (A).
SECTION 2. Section 171.752, Tax Code, is amended by
amending Subsection (a) and adding Subsection (c) to read as
follows:
(a) Subject to Subsection (c), a [A] corporation is eligible
for a credit against the tax imposed under this chapter if the
corporation:
(1) is a qualified business as defined in Section
171.751;
(2) creates a minimum of 10 qualifying jobs; and
(3) pays an average weekly wage, for the year in which
credits are claimed, of at least 110 percent of the county average
weekly wage for the county where the qualifying jobs are located.
(c) In addition to any state benefit available under Chapter
2303, Government Code, a corporation that has been designated as an
enterprise project is eligible for a credit under this subchapter
against the tax imposed under this chapter only if:
(1) the corporation meets the requirements specified
by Subsection (a); and
(2) the corporation was:
(A) designated as an enterprise project on or
after September 1, 2004; and
(B) approved as a triple jumbo enterprise project
as described by Section 2303.407, Government Code, on or after
September 1, 2004, and on or before November 30, 2004.
SECTION 3. Subchapter P, Chapter 171, Tax Code, is amended
by adding Section 171.7542 to read as follows:
Sec. 171.7542. LENGTH OF CREDIT. (a) This section applies
only to a corporation that was designated as an enterprise project
on or after September 1, 2004, and approved as a triple jumbo
enterprise project, as described by Section 2303.407, Government
Code, on or after September 1, 2004, and on or before November 30,
2004.
(b) Notwithstanding Section 171.753 and subject to Section
171.755, a corporation to which this section applies may establish
a credit equal to 25 percent of the total wages and salaries paid by
the corporation for qualifying jobs created during the period
beginning on the date the project is designated as an enterprise
project through the ending date used to determine net taxable
earned surplus for the report on which the credit is claimed.
(c) Notwithstanding Subsection (b), the corporation may
claim:
(1) on the first report originally due on or after
September 1, 2006, a credit for the total amount of wages and
salaries paid by the corporation for qualifying jobs created during
the period on which earned surplus is based for the report; and
(2) on each subsequent report originally due before
January 1, 2010, a credit equal to 25 percent of the total wages and
salaries paid by the corporation for qualifying jobs created during
the period on which earned surplus is based for the report.
SECTION 4. Section 171.801(2), Tax Code, is amended 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 by an enterprise project at a
qualified business site, as defined by Section 2303.003(6-a),
Government Code, 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 5. Section 171.8015, Tax Code, is amended to read as
follows:
Sec. 171.8015. TANGIBLE PERSONAL PROPERTY FIRST PLACED IN
SERVICE BY [IN] AN ENTERPRISE PROJECT [ZONE]. For purposes of
determining whether an investment is a "qualified capital
investment" under Section 171.801, "tangible personal property
first placed in service by [in] an enterprise project [zone]"
includes tangible personal property:
(1) purchased [by a qualified business] for placement
in an incomplete improvement that is under active construction or
other physical preparation by an enterprise project that was
designated as an enterprise project on or after September 1, 2004,
and approved as a triple jumbo enterprise project, as described by
Section 2303.407, Government Code, on or after September 1, 2004,
and on or before November 30, 2004;
(2) identified by a purchase order, invoice, billing,
sales slip, or contract; and
(3) physically present at the enterprise project's
qualified business site, as defined by Section 2303.003(6-a),
Government Code, [zone] and in use by the enterprise project on the
original due date of the report on which the credit is established
[qualified business not later than September 30, 2005].
SECTION 6. Section 171.802, Tax Code, is amended by adding
Subsection (d-1) to read as follows:
(d-1) In addition to any state benefit available under
Chapter 2303, Government Code, a corporation designated as an
enterprise project may qualify for the credit provided by this
subchapter only if the corporation was designated as an enterprise
project on or after September 1, 2004, and approved as a triple
jumbo enterprise project, as described by Section 2303.407,
Government Code, on or after September 1, 2004, and on or before
November 30, 2004. The corporation may qualify for the credit
provided by this subchapter regardless of whether the corporation
meets the qualifications prescribed by Subsection (b).
SECTION 7. 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) This subsection applies only to a corporation that was
designated as an enterprise project on or after September 1, 2004,
and approved as a triple jumbo enterprise project, as described by
Section 2303.407, Government Code, on or after September 1, 2004,
and on or before November 30, 2004. Notwithstanding Section
171.803 and subject to Section 171.805, a corporation to which this
subsection applies may establish a credit equal to 7.5 percent of
the qualified capital investment made during the period beginning
on the date the project is designated as an enterprise project
through the ending date used to determine net taxable earned
surplus for the report.
(c) Notwithstanding Subsection (b), a corporation described
by Subsection (b) may claim:
(1) on the first report originally due on or after
September 1, 2006, a credit for the entire amount of qualified
capital investment made during the period on which earned surplus
is based for the report; and
(2) on each subsequent report originally due before
January 1, 2010, a credit equal to 7.5 percent of the qualified
capital investment made during the period on which earned surplus
is based for the report.
SECTION 8. This Act takes effect September 1, 2006.