By: Hilderbran H.B. No. 3111

A BILL TO BE ENTITLED

AN ACT

relating to a tax credit for eligible costs and expenses incurred during the rehabilitation of a historic structure located in a severely damaged or flooded census tract:

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Chapter 171, Tax Code, is amended by adding Subchapter [__] to read as follows:

SUBCHAPTER [__]. CREDIT FOR REHABILITATION OF A HISTORIC STRUCTURE

Sec. 171.[__]. DEFINITIONS. In this subchapter:

(1) "Commission" means the Texas Historical Commission.

(2) "Eligible costs and expenses" means qualified rehabilitation expenditures as defined in Section 47(c)(2)(A) of the Internal Revenue Code of 1986, as amended, except that "substantially rehabilitated" shall mean that the qualified rehabilitation expenditures must exceed five thousand dollars.

Sec. 171.[__]. CREDIT.

(a) There shall be allowed a credit against the tax imposed under this Chapter 171, Franchise Tax, in an amount equal to twenty-five percent (25%) of the eligible costs and expenses incurred during the rehabilitation of a historic structure.

(b) The credit is earned by the entity that owns the historic structure in the year in which the property attributable to the eligible costs and expenses is placed in service.

(c) In order to qualify for the credit, the historic structure must be listed on the National Register of Historic Places or be certified by the commission as contributing to the historical significance of the census tract or the state.

Sec. 171.[__]. CERTIFICATION

(a) Prior to any credit being claimed or assigned, the commission shall have issued a tax credit certificate providing for the amount of eligible costs and expenses incurred during the rehabilitation of a historic structure.

(b) In order to issue a tax credit certificate, the commission shall, at a minimum, be provided with the following:

(1) an audited cost report issued by a public accountant licensed in this state itemizing and confirming the amounts of eligible costs and expenses incurred during the rehabilitation of the historic structure; and

(2) evidence that the historic structure has been placed into service.

(c) In issuing the tax credit certificate, the commission may rely, without independent investigation, upon the audited cost report.

Sec. 171.[__]. LIMITATIONS; CARRYFORWARD.

(a) The total credit claimed under this subchapter for a report, including the amount of any carryforward credit under Section 171.[__](b), may not exceed the franchise tax due after any other applicable credits.

(b) If total credit exceeds the limitation under Section 171.[__](a), such excess credit may be carried forward for not more than five consecutive reports.

Sec. 171.[__]. ASSIGNMENT; ALLOCATION.

(a) Any entity earning credits, as well as any subsequent assignees of such credits, shall be permitted to sell or assign all or any portion of such credit, and shall not be required to claim such credits, subject to the following conditions:

(1) A sale or assignment may involve one or more transferees and may take place on one or more dates.

(2) The credits may only be sold or assigned three times.

(3) The sale or assignment of the credit does not extend the carryforward period of the credit.

(4) Assignors and assignees shall submit to the commission a written notification of any sale or assignment of credits within thirty days after the sale or assignment of such credits, which notification shall include: the date of the sale or assignment; the amount of credits sold or assigned; the name and federal tax identification number of the assignor and each assignee; the assignor's credit balance with respect to a particular historic structure prior to the sale or assignment, and the assignor's remaining credit balance with respect to a particular historic structure after the sale or assignment.

(b) Credits earned by, or assigned to, a partnership, limited liability company, S-corporation, or other similar pass-through entity shall be allocated among some or all of the partners, members, or shareholders in any manner agreed to by such partners, members, or shareholders which can be without regard to such partners', members', or shareholders' membership or ownership interest.

SECTION 2. Subtitle B, Title 3, Insurance Code, is amended by adding Chapter [__] to read as follows:

SUBCHAPTER [__]. CREDIT FOR REHABILITATION OF A HISTORIC STRUCTURE

Sec. [__].[__]. DEFINITIONS. In this subchapter:

(1) "Commission" means the Texas Historical Commission.

(2) "Eligible costs and expenses" means qualified rehabilitation expenditures as defined in Section 47(c)(2)(A) of the Internal Revenue Code of 1986, as amended, except that "substantially rehabilitated" shall mean that the qualified rehabilitation expenditures must exceed five thousand dollars.

(3) "State premium tax liability" means any liability incurred by an entity under Chapters 221 through 226.

Sec. [__].[__]. CREDIT.

(a) There shall be allowed a credit against state premium tax liability in an amount equal to twenty-five percent (25%) of the eligible costs and expenses incurred during the rehabilitation of a historic structure.

(b) The credit is earned by the entity that owns the historic structure in the year in which the property attributable to the eligible costs and expenses is placed in service.

(c) In order to qualify for the credit, the historic structure must be listed on the National Register of Historic Places or be certified by the commission as contributing to the historical significance of the census tract or the state.

Sec. [__].[__]. CERTIFICATION

(a) Prior to any credit being claimed or assigned, the commission shall have issued a tax credit certificate providing for the amount of eligible costs and expenses incurred during the rehabilitation of a historic structure.

(b) In order to issue a tax credit certificate, the commission shall, at a minimum, be provided with the following:

(1) an audited cost report issued by a public accountant licensed in this state itemizing and confirming the amounts of eligible costs and expenses incurred during the rehabilitation of the historic structure; and

(2) evidence that the historic structure has been placed into service.

(c) In issuing the tax credit certificate, the commission may rely, without independent investigation, upon the audited cost report.

Sec. [__].[__]. LIMITATIONS; CARRYFORWARD.

(a) The total credit claimed under this subchapter for a report, including the amount of any carryforward credit under Section [__].[__](b), may not exceed the state premium tax liability due after any other applicable credits.

(b) If total credit exceeds the limitation under Section [__].[__](a), such excess credit may be carried forward for not more than five consecutive reports.

Sec. [__].[__]. ASSIGNMENT; ALLOCATION.

(a) Any entity earning credits, as well as any subsequent assignees of such credits, shall be permitted to sell or assign all or any portion of such credit, and shall not be required to claim such credits, subject to the following conditions:

(1) A sale or assignment may involve one or more transferees and may take place on one or more dates.

(2) The credits may only be sold or assigned three times.

(3) The sale or assignment of the credit does not extend the carryforward period of the credit.

(4) Assignors and assignees shall submit to the commission a written notification of any sale or assignment of credits within thirty days after the sale or assignment of such credits, which notification shall include: the date of the sale or assignment; the amount of credits sold or assigned; the name and federal tax identification number of the assignor and each assignee; the assignor's credit balance with respect to a particular historic structure prior to the sale or assignment, and the assignor's remaining credit balance with respect to a particular historic structure after the sale or assignment.

(b) Credits earned by, or assigned to, a partnership, limited liability company, S-corporation, or other similar pass-through entity shall be allocated among some or all of the partners, members, or shareholders in any manner agreed to by such partners, members, or shareholders which can be without regard to such partners', members', or shareholders' membership or ownership interest.

Sec. [__].[__]. RETALIATORY TAX. Any entity claiming a credit against state premium tax liability is not required to pay any additional retaliatory tax levied under Chapter 281 as a result of claiming the credit.

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, 2013.