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79R9543 T
By: Brimer S.B. No. 1254
A BILL TO BE ENTITLED
AN ACT
relating to extending the terms and conditions under which an
enterprise project may continue to receive franchise tax credit for
job creation and capital investment.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter P, Section 171.751, Tax Code, is
amended to read as follows:
Sec. 171.751. DEFINITIONS. In this subchapter:
(1) "Agricultural processing" means an establishment
primarily engaged in activities described in categories 0724,
2011-2099, 2211, 2231, 2824, 2833, 2834, 2835, 2836, 2841,
3111-3199, 3262, or 3952, in product classes 28692 or 28698 of
category 2869, or in product classes 28992 or 28994 of category 2899
of the 1987 Standard Industrial Classification Manual published by
the federal Office of Management and Budget.
(2) "Central administrative offices" means an
establishment primarily engaged in performing management or
support services for other establishments of the same enterprise.
An enterprise consists of all establishments having more than 50
percent common direct or indirect ownership.
(3) "County average weekly wage" means the average
weekly wage for all covered employment in the county as computed by
the Texas Workforce Commission.
(4) "Data processing" means an establishment
primarily engaged in activities described in categories 7371-7379
of the 1987 Standard Industrial Classification Manual published by
the federal Office of Management and Budget.
(5) "Distribution" means an establishment primarily
engaged in activities described in categories 5012-5199 of the 1987
Standard Industrial Classification Manual published by the federal
Office of Management and Budget.
(6) "Group health benefit plan" means:
(A) a health plan provided by a health
maintenance organization established 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.
(7) "Manufacturing" means an establishment primarily
engaged in activities described in categories 2011-3999 of the 1987
Standard Industrial Classification Manual published by the federal
Office of Management and Budget.
(8) "Qualified business" means an establishment
primarily engaged in agricultural processing, central
administrative offices, distribution, data processing,
manufacturing, research and development, [or] warehousing or which
has been designated as an enterprise project under Chapter 2303,
Government Code, without regard to whether the enterprise project
is located in an enterprise zone.
(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 project, without regard
to whether the enterprise project is located in 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.
(10) "Research and development" means an
establishment primarily engaged in activities described in
category 8731 of the 1987 Standard Industrial Classification Manual
published by the federal Office of Management and Budget.
(11) "Strategic investment area" has the meaning
assigned that term by Section 171.721.
(12) "Warehousing" means an establishment primarily
engaged in activities described in categories 4221-4226 of the 1987
Standard Industrial Classification Manual published by the federal
Office of Management and Budget.
(13) "Defense readjustment project" means:
(A) a person designated by the Texas Department
of Economic Development as a defense readjustment project under
Chapter 2310, Government Code, on or after September 1, 2001, but
before September 1, 2003; and
(B) a person designated by the Texas Economic
Development Bank as a defense readjustment project under Chapter
2310, Government Code, on or after September 1, 2003.
(14) "Enterprise project" means[:
[(A) a person designated by the Texas Department
of Economic Development as an enterprise project under Chapter
2303, Government Code, on or after September 1, 2001, but before
September 1, 2003; and
[(B)] a person designated as an enterprise
project under Chapter 2303, Government Code[, on or after September
1, 2003].
(15) "Enterprise zone" has the meaning assigned that
term by Section 2303.003, Government Code.
(16) "Readjustment zone" has the meaning assigned that
term by Section 2310.001, Government Code.
SECTION 2. 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;
(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 in
which it created the qualifying jobs subsequently loses its
designation as a strategic investment area, if applicable.
SECTION 3. Section 171.7541, Tax Code, is amended to read as
follows:
Sec. 171.7541. LENGTH OF CREDIT.
Notwithstanding Section 171.753, a corporation that has been
designated as an enterprise project or as a defense readjustment
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, 2005].
SECTION 4. Subchapter Q, Section 171.801, 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 the population of less than
50,000 by a corporation primarily engaged in agricultural
processing, or first placed in service in an enterprise project,
regardless of whether the enterprise project is located in an
enterprise zone, 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 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 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; (2) identified by a
purchase order, invoice, billing, sales slip, or contract; and (3)
physically present at the enterprise project [zone] and in use by
the qualified business at the time the credit is taken [not later
than September 30, 2005].
SECTION 6. Section 171.802, Tax Code, is amended to read as
follows:
Sec. 171.802. ELIGIBILITY.
Text of section effective until December 31, 2009
(a) A qualified business is eligible for a credit against
the tax imposed under this chapter in the amount and under the
conditions and limitations provided by this subchapter.
(b) To qualify for the credit authorized under this
subchapter, a qualified business must:
(1) pay an average weekly wage, at the location with
respect to which the credit is claimed, that is at least 110 percent
of the county average weekly wage;
(2) offer coverage to all full-time employees at the
location with respect to which the credit is claimed by a group
health benefit plan, as defined by Section 171.751, for which the
business pays at least 80 percent of the premiums or other charges
assessed under the plan for the employees; and
(3) make a minimum $500,000 qualified capital
investment.
Text of subsec. (c) effective from September 1, 2003 until January
1, 2005
(c) A corporation may claim a credit or take a carryforward
credit without regard to whether the strategic investment area,
enterprise zone, or readjustment zone in which it made the
qualified capital investment subsequently loses its designation as
a strategic investment area, enterprise zone, or readjustment zone,
if applicable.
Text of subsec. (c) effective January 1, 2005
(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 or as a defense readjustment project and is certified by the
Texas Department of Economic Development as a qualified business
under Section 2303.402 or 2310.302, Government Code, may qualify
for the credit provided by this subchapter, regardless of whether
the corporation meets the qualifications prescribed by Subsection
(b). [This subsection expires January 1, 2005.]
(e) A corporation may claim a credit or take a carryforward
credit for a qualified capital investment made on or after January
1, 2003, without regard to whether the county in which it makes the
qualified capital investment has lost its designation as a
strategic investment area if:
(1) the corporation committed to the investment in
that county before January 2003;
(2) at the time the corporation made the commitment,
the county was designated as a strategic investment area;
(3) the total investment is at least $100 million;
(4) the county has a population of less than 15,700;
and
(5) the corporation made a qualified capital
investment in the county in each of the two years preceding the year
in which the corporation made the qualified capital investment
under this subsection.
SECTION 7. Section 171.803, Tax Code, is amended to read as
follows:
Sec. 171.803. CALCULATION OF CREDIT. (a) Except as
provided by Subsection (b), a corporation may establish a credit
equal to 7.5 percent of the qualified capital investment during the
period upon which the tax is based.
(b) A corporation that has been designated as an enterprise
project without regard to whether the enterprise project is located
in an enterprise zone or as a defense readjustment 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. [This subsection expires January 1,
2005.]
SECTION 8. Section 171.804, Tax Code, is amended to read as
follows:
Sec. 171.804. LENGTH OF CREDIT. (a) 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 without regard to whether the
enterprise project is located in an enterprise zone or as a defense
readjustment project may claim the entire credit earned on a report
originally due on or after September 1, 2003.
SECTION 9. Section 2303.504, Government Code, is amended to
read as follows:
Sec. 2303.504. STATE TAX REFUNDS AND CREDITS; REPORT.
[Text of section effective until September 1, 2005]
(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.
(b) At the time of receipt of any tax benefit available as a
result of participating in the enterprise zone program, including a
state sales and use tax refund or franchise tax credit, three
percent of the amount of the tax benefit shall be transferred to the
Texas economic development bank fund under Subchapter B, Chapter
489, to defray the cost of administering this chapter.
(c) Not later than the 60th day after the last day of each
fiscal year, the comptroller shall report to the bank the statewide
total of actual jobs created, actual jobs retained, and the tax
refunds and credits made under this section during that fiscal
year.
[Sec. 2303.504. STATE TAX REFUNDS; REPORT.
[Text of section effective September 1, 2005
[(a) Subject to Section 2303.516, an enterprise project is
entitled to a refund of state taxes under Section 151.429, Tax Code.
[(b) At the time of receipt of any tax benefit available as a
result of participating in the enterprise zone program, including a
state sales and use tax refund or franchise tax credit, three
percent of the amount of the tax benefit shall be transferred to the
Texas economic development bank fund under Subchapter B, Chapter
489, to defray the cost of administering this chapter.
[(c) Not later than the 60th day after the last day of each
fiscal year, the comptroller shall report to the bank the statewide
total of actual jobs created, actual jobs retained, and the tax
refunds made under this section during that fiscal year.]
SECTION 10. This Act applies to any enterprise project
whose designation is in effect as of the effective date of this Act
or which becomes designated thereafter. Enterprise projects whose
designations have expired are governed by prior law.
SECTION 11. This takes effect January 1, 2005.