83R9177 ADM-F
 
  By: Carter H.B. No. 1668
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to a franchise tax credit for certain taxable entities
  that recruit new taxable entities to this state or that relocate to
  this state.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Chapter 171, Tax Code, is amended by adding
  Subchapter M-1 to read as follows:
  SUBCHAPTER M-1.  TAX CREDIT FOR RECRUITMENT AND RELOCATION OF
  CERTAIN TAXABLE ENTITIES TO THIS STATE
         Sec. 171.681.  DEFINITIONS. In this subchapter:
               (1)  "Affiliate" means a person who, directly or
  indirectly through one or more intermediaries, controls, is
  controlled by, or is under common control with another person or who
  is an officer, director, partner, or trustee of another person.
               (2)  "Bank" includes a banking corporation and a
  savings and loan association.
               (3)  "Certified new taxable entity" means a new taxable
  entity that is certified under Section 171.684.
               (4)  "Certified sponsor taxable entity" means a sponsor
  taxable entity that is certified under Section 171.684.
               (5)  "Commercial rental unit" means one or more rooms
  or offices rented solely or primarily for commercial purposes under
  a single lease to one or more tenants.
               (6)  "Landlord" means the owner, lessor, or sublessor
  of a commercial rental unit but does not include a manager or agent
  of the landlord unless the manager or agent purports to be the
  owner, lessor, or sublessor in a written or oral lease.
               (7)  "Qualifying job" means a new permanent full-time
  job that:
                     (A)  requires at least 1,600 hours of work a year;
  and
                     (B)  requires that not less than 90 percent of
  those work hours are worked in this state.
               (8)  "Real estate developer" means a person who, in the
  ordinary course of business, purchases a tract of land, improves
  the tract of land, and then sells the improved tract of land to a
  purchaser. For purposes of this subchapter, the comptroller shall
  determine whether a person is a real estate developer on a
  tract-by-tract basis.
               (9)  "Real estate license holder" means a person
  licensed under Chapter 1101, Occupations Code.
               (10)  "Tenant" means a person who is authorized by a
  lease to occupy a rental unit to the exclusion of others other than
  cotenants and who is obligated under the lease to pay rent.
         Sec. 171.682.  QUALIFICATION AS SPONSOR TAXABLE ENTITY.  A
  taxable entity may qualify as a sponsor taxable entity if the
  taxable entity:
               (1)  has a place of business in this state;
               (2)  has been doing business in this state for at least
  three years;
               (3)  convinces a new taxable entity to agree to
  relocate to this state as a result of the sponsor taxable entity's
  recruitment efforts, including written solicitations, inducements,
  or other incentives;
               (4)  has not entered into a rental agreement with the
  new taxable entity for a commercial rental unit; and
               (5)  is not:
                     (A)  a real estate license holder, real estate
  developer, or landlord for the new taxable entity;
                     (B)  a bank or other lender providing the new
  taxable entity financing to establish a place of business in this
  state; or
                     (C)  an affiliate of the new taxable entity.
         Sec. 171.683.  QUALIFICATION AS NEW TAXABLE ENTITY.  An
  entity may qualify as a new taxable entity if the entity:
               (1)  has a place of business outside of this state;
               (2)  does not have a place of business in this state;
               (3)  has not had a business location in this state for
  at least three years;
               (4)  intends to relocate to this state as a result of
  recruitment efforts by a sponsor taxable entity;
               (5)  has not entered into a commercial rental agreement
  with the sponsor taxable entity;
               (6)  is not:
                     (A)  a tenant of that sponsor taxable entity; or
                     (B)  an affiliate of that sponsor taxable entity;
  and
               (7)  is subject to the tax imposed under this chapter or
  would be subject to the tax imposed under this chapter if the entity
  were doing business in this state.
         Sec. 171.684.  CERTIFICATION. (a) A sponsor taxable entity
  and a new taxable entity may apply jointly to the comptroller for
  certification. The comptroller shall approve an application for
  certification if:
               (1)  the sponsor taxable entity meets the
  qualifications prescribed by Section 171.682; and
               (2)  the new taxable entity meets the qualifications
  prescribed by Section 171.683 and:
                     (A)  agrees to relocate to this state;
                     (B)  states that the new taxable entity is
  relocating as a result of recruitment efforts by the sponsor
  taxable entity that jointly filed the application;
                     (C)  agrees to establish a business location in
  this state not later than the end of the eighth month after the date
  of filing the application; and
                     (D)  agrees to create at least three qualifying
  jobs not later than the end of the eighth month after the date of
  filing the application.
         (b)  A sponsor taxable entity may file jointly for
  certification under this section with more than one new taxable
  entity.
         (c)  A new taxable entity may not jointly file for
  certification under this section with more than one sponsor taxable
  entity.
         Sec. 171.685.  ENTITLEMENT TO CREDIT. (a)  A certified
  sponsor taxable entity is entitled to a credit in the amount and
  under the conditions and limitations provided by this subchapter
  against the tax imposed by this chapter in relation to each
  certified new taxable entity that the sponsor taxable entity
  jointly applied with and received certification under Section
  171.684.
         (b)  A certified new taxable entity is entitled to a credit
  in the amount and under the conditions and limitations provided by
  this subchapter.
         Sec. 171.686.  AMOUNTS; LIMITATION ON TOTAL CREDITS. (a)
  Subject to Subsection (c), the amount of credit to which a certified
  sponsor taxable entity is entitled in relation to each certified
  new taxable entity is equal to the lesser of:
               (1)  an amount equal to $500 multiplied by the total
  number of qualifying jobs created or maintained in that tax year by
  the certified new taxable entity; or
               (2)  the certified sponsor taxable entity's tax
  liability under this chapter.
         (b)  Subject to Subsection (c), the amount of credit to which
  a certified new taxable entity is entitled is equal to the lesser
  of:
               (1)  an amount equal to $500 multiplied by the total
  number of qualifying jobs created or maintained in that tax year by
  the certified new taxable entity; or
               (2)  the certified new taxable entity's tax liability
  under this chapter.
         (c)  The total amount of credits that may be claimed under
  this subchapter each year may not exceed $3 million.
         (d)  The comptroller by rule shall prescribe procedures by
  which the comptroller may allocate credits under this subchapter.
  The procedures must provide that credits are allocated on a "first
  come, first served" basis, based on the date the application for
  certification was initially made.
         (e)  The comptroller may require a taxable entity to notify
  the comptroller of the amount the taxable entity intends or expects
  to claim under this subchapter before the beginning of a state
  fiscal year or at any other time required by the comptroller.
         Sec. 171.687.  LENGTH OF CREDIT. A certified sponsor
  taxable entity and a certified new taxable entity that jointly file
  for certification under Section 171.684 must claim the credit under
  this subchapter over the first three consecutive reports beginning
  with the first report after the date of certification.
         Sec. 171.688.  APPLICATION FOR CREDIT. A taxable entity
  must apply for a credit under this subchapter on or with the report
  for the period for which the credit is claimed.
         Sec. 171.689.  CARRYFORWARD. (a) If a taxable entity is
  eligible for a credit that exceeds the limitation under Section
  171.686, the taxable entity may carry the unused credit forward one
  report.
         (b)  A carryforward is considered the remaining portion of a
  credit that cannot be claimed in the current year because of the
  limitation under Section 171.686. A carryforward is added to the
  next year's credit in determining whether the limitation is met for
  that year. A credit carryforward from a previous report is
  considered to be used before the current year credit.
         Sec. 171.690.  ASSIGNMENT PROHIBITED. A taxable entity may
  not convey, assign, or transfer the credit allowed under this
  subchapter to another entity unless all of the assets of the taxable
  entity are conveyed, assigned, or transferred.
         Sec. 171.691.  BIENNIAL REPORT BY COMPTROLLER. (a) Before
  the beginning of each regular session of the legislature, the
  comptroller shall submit to the governor, the lieutenant governor,
  the speaker of the house of representatives, and each member of the
  legislature a report that includes for the preceding 24-month
  period ending September 1:
               (1)  the names of all certified sponsor taxable
  entities and certified new taxable entities that applied for a
  credit under this subchapter;
               (2)  the total amount of credits applied for under this
  subchapter; and
               (3)  the total number of qualifying jobs created by
  certified new taxable entities.
         (b)  The comptroller may not include in the report
  information that is confidential by law.
         (c)  For purposes of this section, the comptroller may
  require a taxable entity that claims a credit under this subchapter
  to submit any information necessary to complete the report required
  under this section.
         Sec. 171.692.  RULES. The comptroller shall adopt rules
  necessary to implement this subchapter.
         SECTION 2.  This Act applies only to a report originally due
  on or after the effective date of this Act.
         SECTION 3.  This Act takes effect January 1, 2014.