85R5748 GRM-D

By: Raymond H.B. No. 1127

A BILL TO BE ENTITLED

AN ACT

relating to a franchise tax credit pilot program for taxable entities that employ certain apprentices.

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

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

SUBCHAPTER N. TAX CREDIT PILOT PROGRAM FOR WAGES PAID TO CERTAIN

APPRENTICES

Sec. 171.701. DEFINITION. In this subchapter, "registered apprenticeship" means an apprenticeship program that is:

(1) registered with the United States Department of Labor; and

(2) qualified to receive funding provided through the Texas Workforce Commission under Chapter 133, Education Code.

Sec. 171.702. ENTITLEMENT TO CREDIT. A taxable entity is entitled to a credit in the amount and under the conditions provided by this subchapter against the tax imposed under this chapter.

Sec. 171.703. QUALIFICATION. (a) A taxable entity qualifies for a credit under this subchapter for wages paid to each apprentice who meets the requirements of Subsection (b) and is employed by the taxable entity in a registered apprenticeship position that is located or based in a county that borders the United Mexican States.

(b) The apprentice must:

(1) be a member of a household with a total income that is at or below the income guidelines necessary to qualify for the national free or reduced-price lunch program established under 42 U.S.C. Section 1751 et seq.; or

(2) reside in a census tract in which 30 percent or more of the population has a household income at or below 185 percent of the federal poverty level.

Sec. 171.704. AMOUNT; LIMITATIONS. (a) Subject to Subsection (b), the amount of the credit for a report in connection with each apprentice described by Section 171.703 is equal to the lesser of:

(1) 50 percent of the wages paid by the taxable entity to the apprentice; or

(2) $5,000.

(b) The total amount of the credit for each report is equal to the lesser of:

(1) the total of the credits allowed under Subsection (a) for the reporting period for all apprentices; or

(2) the amount of franchise tax due after applying all other applicable credits.

Sec. 171.705. APPLICATION FOR CREDIT. (a) A taxable entity must apply for a credit under this subchapter on or with the tax report for the period for which the credit is claimed.

(b) The comptroller shall promulgate a form for the application for the credit. A taxable entity must use the form in applying for the credit.

Sec. 171.706. PERIOD FOR WHICH CREDIT MAY BE CLAIMED. A taxable entity may claim a credit under this subchapter for a report only in connection with wages paid during the accounting period on which the report is based.

Sec. 171.707. REPORT ON PILOT PROGRAM. (a) Not later than September 1, 2022, the comptroller shall prepare and deliver to the governor, the lieutenant governor, the speaker of the house of representatives, and the presiding officer of each legislative standing committee with primary jurisdiction over taxation a report that evaluates the effect of the pilot program on the employment outcomes and earnings of apprentices with respect to whom credits are granted under the pilot program under this subchapter. The report must include a recommendation regarding whether the pilot program should be continued, expanded, or terminated.

(b) A taxable entity that claims a credit under this subchapter shall provide to the comptroller information the comptroller requests to prepare the report described by Subsection (a).

Sec. 171.708. EXPIRATION. This subchapter expires December 31, 2024.

SECTION 2. A taxable entity may claim the credit under Subchapter N, Chapter 171, Tax Code, as added by this Act, only for wages paid on or after the effective date of this Act and only on a franchise tax report originally due under Chapter 171, Tax Code, on or after that date.

SECTION 3. This Act takes effect January 1, 2018.