85R13314 BEF-F

By: Lucio III H.B. No. 3630

A BILL TO BE ENTITLED

AN ACT

relating to an insurance premium tax credit for investment in certain communities.

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

SECTION 1. Subtitle B, Title 3, Insurance Code, is amended by adding Chapter 231 to read as follows:

CHAPTER 231. PREMIUM TAX CREDIT FOR INVESTMENT IN CERTAIN

COMMUNITIES

Sec. 231.001. GENERAL DEFINITIONS. In this chapter:

(1) "Internal Revenue Code" means the Internal Revenue Code of 1986 in effect on September 1, 2017, excluding any changes made by federal law after that date, but including any regulations adopted under that code that are applicable to the tax year to which the provisions of the code in effect on that date applied.

(2) "State premium tax liability" means any premium tax liability incurred under Chapter 221, 222, 223, 223A, or 224.

(3) "Low-income community," "qualified equity investment," and "qualified low-income community investment" have the meanings assigned by Section 45D, Internal Revenue Code.

Sec. 231.002. DEFINITION: QUALIFIED COMMUNITY DEVELOPMENT ENTITY. In this chapter, "qualified community development entity" has the meaning assigned by Section 45D, Internal Revenue Code, provided that the entity has entered into, for the current year or a prior year with an allocation effective date on or after July 1, 2015, an allocation agreement with the Community Development Financial Institutions Fund of the United States Department of the Treasury with respect to credits authorized by Section 45D, Internal Revenue Code, that includes this state in the service area specified in the allocation agreement. The term includes a qualified community development entity that is controlled by or under common control with another qualified community development entity described by this section.

Sec. 231.003. RULES ESTABLISHING CREDIT. (a) The comptroller, in consultation with the Texas Workforce Commission, by rule shall establish a credit against state premium tax liability for entities that make qualified equity investments in qualified community development entities in this state. The rules must comply with this section.

(b) The purpose of the credit is to promote new job creation, job retention, and capital investment in economically distressed and low-income communities.

(c) Available credits must be allocated so that an equal amount of credits are available in connection with qualified low-income community investments in:

(1) rural communities;

(2) seaports;

(3) educational institutions that provide prekindergarten, primary education, secondary education, higher education, and workforce skills training; and

(4) distressed metropolitan communities throughout the state.

(d) The amount of the credit in connection with a qualified equity investment may not exceed 39 percent of the purchase price of the investment. An entity must be able to claim the entire amount of the credit in connection with an investment not later than the seventh anniversary of the date the investment is made.

(e) A qualified community development entity must place a refundable deposit of at least $500,000 with the state during the period in which tax credits may be claimed in connection with qualified equity investments in the entity. An entity that violates rules under this section is subject to forfeiture of all or part of the deposit.

(f) At least $300 million in credits must be made available.

Sec. 231.004. ELIGIBILITY FOR CREDIT. An entity is eligible for a credit against the entity's state premium tax liability in the amount and under the conditions and limitations provided by rules adopted under Section 231.003.

Sec. 231.005. RETALIATORY TAX. An entity claiming a credit under this chapter is not required to pay any additional retaliatory tax levied under Chapter 281 as a result of claiming that credit.

SECTION 2. As soon as practicable after this Act becomes law for purposes of Section 2001.006, Government Code, the comptroller shall adopt rules under Section 231.003, Insurance Code, as added by this Act.

SECTION 3. This Act applies only to an insurance premium tax report originally due on or after January 1, 2018.

SECTION 4. 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, 2017.