79R6648 CLG-F
By: Ritter H.B. No. 3249
A BILL TO BE ENTITLED
AN ACT
relating to the enterprise zone program.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 2303.003(7), Government Code, is amended
to read as follows:
(7) "Qualified employee" means a person who:
(A) works for a qualified business; and
(B) performs services that directly benefit the
qualified business [at least 50 percent of the person's service for
the business in the enterprise zone].
SECTION 2. Section 2303.403, Government Code, is amended to
read as follows:
Sec. 2303.403. PROHIBITION ON QUALIFIED BUSINESS
CERTIFICATION; LIMIT ON ENTERPRISE PROJECT DESIGNATIONS. If the
bank determines that the governing body eligible to nominate an
enterprise project is not complying with this chapter, the bank
shall prohibit the certification of a qualified business until the
bank determines that the governing body is complying with this
chapter. The bank may not designate more than 100 [85] enterprise
projects during any biennium.
SECTION 3. Section 2303.407(b), Government Code, as amended
by Section 3.16, Chapter 814, Acts of the 78th Legislature, Regular
Session, 2003, is amended to read as follows:
(b) A capital investment in a project of:
(1) $40,000 to $399,999 will result in a refund of up
to $2,500 per job with a maximum refund of $25,000 for the creation
or retention of 10 jobs;
(2) $400,000 to $999,999 will result in a refund of up
to $2,500 per job with a maximum refund of $62,500 for the creation
or retention of 25 jobs;
(3) $1,000,000 to $4,999,999 will result in a refund
of up to $2,500 per job with a maximum refund of $312,500 for the
creation or retention of 125 jobs;
(4) $5,000,000 to $19,999,999 [$149,999,999] will
result in a refund of up to $2,500 per job with a maximum refund of
$1,250,000 for the creation or retention of 500 jobs;
(5) $20,000,000 [$150,000,000] to $39,999,999
[$249,999,999] will result in a refund of up to $5,000 per job with
a maximum refund of $2,500,000 for the creation or retention of 500
jobs; or
(6) $40,000,000 [$250,000,000] or more will result in
a refund of up to $7,500 per job with a maximum refund of $3,750,000
for the creation or retention of 500 jobs.
SECTION 4. The heading to Section 2303.504, Government
Code, as amended by Section 2.02, Chapter 1134, Acts of the 77th
Legislature, Regular Session, 2001, is amended to read as follows:
Sec. 2303.504. STATE TAX REFUNDS AND CREDITS; REPORT.
SECTION 5. Section 2303.504(a), Government Code, as amended
by Section 2.02, Chapter 1134, Acts of the 77th Legislature,
Regular Session, 2001, is amended to read as follows:
(a) Subject to Section 2303.516, an enterprise project is
entitled to:
(1) a refund of state taxes under Section 151.429, Tax
Code; and
(2) a franchise tax credit under Subchapter P or Q,
Chapter 171, Tax Code.
SECTION 6. Sections 151.429(a) and (b), Tax Code, as
amended by Section 3.52, Chapter 814, Acts of the 78th Legislature,
Regular Session, 2003, are amended to read as follows:
(a) An enterprise project is eligible for a refund in the
amount provided by this section of the taxes imposed by this chapter
on purchases of:
(1) equipment or machinery sold to an enterprise
project that directly benefits [for use at] the qualified business
and is substantially used for the operation of the qualified
business [site];
(2) building materials sold to an enterprise project
for use in remodeling, rehabilitating, or constructing a structure
at the qualified business site;
(3) labor for remodeling, rehabilitating, or
constructing a structure by an enterprise project at the qualified
business site; [and]
(4) electricity and natural gas purchased and consumed
in the normal course of business at the qualified business site;
(5) tangible personal property purchased and consumed
in the normal course of business at the qualified business site;
and
(6) taxable services.
(b) Subject to the limitations provided by Subsection (c) of
this section, an enterprise project qualifies for a refund of taxes
under this section based on the amount of capital investment made in
the project that directly benefits [at] the qualified business and
is substantially used for the operation of the qualified business
[site] and the refund per job with a maximum refund to be included
in a computation of a tax refund for the project. A capital
investment made under this subsection [at the qualified business
site] of:
(1) $40,000 to $399,999 will result in a refund of up
to $2,500 per job with a maximum refund of $25,000 for the creation
or retention of 10 jobs;
(2) $400,000 to $999,999 will result in a refund of up
to $2,500 per job with a maximum refund of $62,500 for the creation
or retention of 25 jobs;
(3) $1,000,000 to $4,999,999 will result in a refund
of up to $2,500 per job with a maximum refund of $312,500 for the
creation or retention of 125 jobs;
(4) $5,000,000 to $19,999,999 [$149,999,999] will
result in a refund of up to $2,500 per job with a maximum refund of
$1,250,000 for the creation or retention of 500 jobs;
(5) $20,000,000 [$150,000,000] to $39,999,999
[$249,999,999] will result in a refund of up to $5,000 per job with
a maximum refund of $2,500,000 for the creation or retention of 500
jobs; or
(6) $40,000,000 [$250,000,000] or more will result in
a refund of up to $7,500 per job with a maximum refund of $3,750,000
for the creation or retention of 500 jobs.
SECTION 7. Section 171.751(9), Tax Code, is amended to read
as follows:
(9) "Qualifying job" means a new permanent full-time
job that:
(A) is located in:
(i) a strategic investment area; [or]
(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; or
(iii) an enterprise zone, regardless of
whether the job meets the qualifications prescribed by Paragraphs
(B)-(F), if the job is created by a qualified business that has been
designated as an enterprise project;
(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.
SECTION 8. Subchapter P, Chapter 171, Tax Code, is amended
by adding Section 171.7515 to read as follows:
Sec. 171.7515. "QUALIFIED BUSINESS." In addition to the
meaning assigned by Section 171.751(8), "qualified business" also
means a corporation that has been designated as an enterprise
project and is certified by the Texas Economic Development Bank as a
qualified business under Section 2303.402, Government Code.
SECTION 9. Section 171.752, Tax Code, is amended to read as
follows:
Sec. 171.752. ELIGIBILITY. (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 or 171.7515;
(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.
(b) A corporation may claim a credit or take a carryforward
credit without regard to whether the strategic investment area or
enterprise zone in which it created the qualifying jobs
subsequently loses its designation as a strategic investment area
or enterprise zone, if applicable.
SECTION 10. Subchapter P, Chapter 171, Tax Code, is amended
by adding Section 171.7541 to read as follows:
Sec. 171.7541. LENGTH OF CREDIT. Notwithstanding Section
171.753, a corporation that has been designated as an enterprise
project on or after September 1, 2001, may, beginning on the date
the project is designated, establish a credit equal to 25 percent of
the total wages and salaries paid by the corporation for qualifying
jobs. Subject to Section 171.755, the corporation may claim the
entire credit earned on a report originally due on or after
September 1, 2003, and before January 1, 2010.
SECTION 11. 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 in an enterprise zone by a
qualified business that has been designated as an enterprise
project, 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 12. Section 171.8015, Tax Code, is amended to read
as follows:
Sec. 171.8015. TANGIBLE PERSONAL PROPERTY FIRST PLACED IN
SERVICE IN AN ENTERPRISE ZONE. For purposes of determining whether
an investment is a "qualified capital investment" under Section
171.801, "tangible personal property first placed in service in an
enterprise 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;
(2) identified by a purchase order, invoice, billing,
sales slip, or contract; and
(3) physically present at the enterprise zone and in
use by the qualified business not later than December 31, 2009
[September 30, 2005].
SECTION 13. Section 171.802, Tax Code, is amended by
amending Subsection (c) and adding Subsection (d) to read as
follows:
(c) A corporation may claim a credit or take a carryforward
credit without regard to whether the strategic investment area or
enterprise zone in which it made the qualified capital investment
subsequently loses its designation as a strategic investment area
or enterprise zone, if applicable.
(d) A corporation that has been designated as an enterprise
project and is certified by the Texas Economic Development Bank as a
qualified business under Section 2303.402, Government Code, may
qualify for the credit provided by this subchapter, regardless of
whether the corporation meets the qualifications prescribed by
Subsection (b).
SECTION 14. Section 171.803, Tax Code, is amended by adding
Subsection (b) to read as follows:
(b) A corporation that has been designated as an enterprise
project on or after September 1, 2001, may, beginning on the date
the project is designated, establish a credit equal to 7.5 percent
of the qualified capital investment.
SECTION 15. 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) Subject to Section 171.805, a corporation that has been
designated as an enterprise project may claim the entire credit
earned on a report originally due on or after September 1, 2003, and
before December 31, 2009.
SECTION 16. This Act takes effect September 1, 2005.