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79S30413 DAK-D
By: Shapleigh S.B. No. 26
A BILL TO BE ENTITLED
AN ACT
relating to a franchise tax credit for certain corporations
developing ISO (International Organization for Standardization)
25,000 manufacturing protocols.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 171, Tax Code, is amended by adding
Subchapter W to read as follows:
SUBCHAPTER W. TAX CREDIT FOR CERTAIN CORPORATIONS DEVELOPING ISO
25,000 MANUFACTURING PROTOCOLS
Sec. 171.911. DEFINITIONS. In this subchapter:
(1) "County average weekly wage" means the average
weekly wage for all covered employment in the county as computed by
the Texas Workforce Commission.
(2) "Group health benefit plan" means:
(A) a health plan provided by a health
maintenance organization operating under Chapter 843, Insurance
Code;
(B) a health benefit plan approved by the
commissioner of insurance; or
(C) a self-funded or self-insured employee
welfare benefit plan that provides health benefits and is
established in accordance with the Employee Retirement Income
Security Act of 1974 (29 U.S.C. Section 1001 et seq.), as amended.
(3) "Qualifying job" means a new permanent full-time
job that:
(A) is located in a strategic investment area;
(B) requires at least 1,600 hours of work a year;
(C) pays at least 110 percent of the county
average weekly wage for the county where the job is located;
(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;
(E) is not transferred from one area in this
state to another area in this state; and
(F) is not created to replace a previous
employee.
(4) "Research and development" means activities
described in category 8731 of the 1987 Standard Industrial
Classification Manual published by the federal Office of Management
and Budget.
(5) "Strategic investment area" has the meaning
assigned that term by Section 171.721 as that section existed on
January 1, 2006.
Sec. 171.912. ELIGIBILITY. (a) A corporation is eligible
for a credit against the tax imposed under this chapter if the
corporation has developed or is in the process of developing ISO
(International Organization for Standardization) 25,000
manufacturing protocols (Software product Quality Requirements and
Evaluation or SQuaRE) with secure manufacturing protocols and:
(1) is engaged in activities relating to:
(A) the defense industry; or
(B) research and development in the area of
facilitating the movement of people and commerce;
(2) creates a minimum of 10 qualifying jobs; and
(3) pays an average weekly wage to its employees, 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.
(b) A corporation may claim a credit or take a carryforward
credit without regard to whether the strategic investment area in
which it created the qualifying jobs subsequently loses its
designation as a strategic investment area, if applicable.
Sec. 171.913. CALCULATION OF CREDIT. A corporation may
establish a credit equal to 25 percent of the total wages and
salaries paid by the corporation for qualifying jobs during the
period on which the tax is based.
Sec. 171.914. LENGTH OF CREDIT. 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 on the period during which the qualifying jobs were created.
Sec. 171.915. LIMITATIONS. (a) The total credit claimed
under this subchapter for a report, including the amount of any
carryforward credit under Section 171.916, may not exceed 50
percent of the amount of franchise tax due for the report before any
other applicable tax credits.
(b) A corporation that establishes its eligibility for a
credit under this subchapter is not eligible to establish a credit
under Subchapters O or P.
Sec. 171.916. CARRYFORWARD. (a) If a corporation is
eligible for a credit that exceeds the limitations under Section
171.915, the corporation may carry the unused credit forward for
not more than five consecutive reports.
(b) A carryforward is considered the remaining portion of a
credit that cannot be claimed in the current year because of the tax
limitation under Section 171.915. A carryforward is added to the
next year's credit in determining the tax limitation for that year.
A credit carryforward from a previous report is considered to be
utilized before the current year credit.
Sec. 171.917. CERTIFICATION OF ELIGIBILITY. (a) For the
initial and each succeeding report in which a credit is claimed
under this subchapter, the corporation shall file with its report,
on a form provided by the comptroller, information that
sufficiently demonstrates that the corporation is eligible for the
credit and is in compliance with Section 171.912.
(b) The burden of establishing entitlement to and the value
of the credit is on the corporation.
Sec. 171.918. ASSIGNMENT PROHIBITED. A corporation may not
convey, assign, or transfer the 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. 171.919. RULES. The comptroller shall adopt rules
necessary to implement this subchapter.
Sec. 171.920. EXPIRATION. (a) This subchapter expires
December 31, 2011.
(b) The expiration of this subchapter does not affect the
carryforward of a credit under Section 171.916 or those credits for
which a corporation is eligible before the date this subchapter
expires.
SECTION 2. The Act applies only to a report originally due
on or after the effective date of this Act.
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, 2006.