By: Miles, et al. S.B. No. 518

(In the Senate - Filed January 18, 2017; February 6, 2017, read first time and referred to Committee on Finance; April 5, 2017, reported adversely, with favorable Committee Substitute by the following vote: Yeas 11, Nays 3; April 5, 2017, sent to printer.) Click here to see the committee vote

COMMITTEE SUBSTITUTE FOR S.B. No. 518 By: Uresti

A BILL TO BE ENTITLED

AN ACT

relating to a franchise tax credit for entities that employ certain students in certain paid internship or similar programs.

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

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

SUBCHAPTER R. TAX CREDIT FOR PAID INTERNSHIPS GIVEN TO CERTAIN HIGH

SCHOOL STUDENTS

Sec. 171.871. DEFINITIONS. In this subchapter:

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

(2) "Eligible internship program" means a paid internship or similar program that:

(A) meets the requirements of rules adopted by the commission under Section 171.875; and

(B) is part of the curriculum requirements for an endorsement under Section 28.025(c-1), Education Code.

(3) "Eligible student" means a student enrolled in a public high school who has reached the minimum age required under Chapter 51, Labor Code, to legally work in the eligible internship program.

Sec. 171.872. 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. 171.873. QUALIFICATION FOR CREDIT. A taxable entity qualifies for a credit under this subchapter for each eligible student who completes an eligible internship program offered by the taxable entity.

Sec. 171.874. AMOUNT OF CREDIT; LIMITATIONS. (a) The amount of the credit is $1,000 for each eligible student who completes an eligible internship program offered by the taxable entity.

(b) A taxable entity may claim the credit only for an eligible internship program offered by the taxable entity that is located or based in this state.

(c) A taxable entity may not claim the credit in connection with an eligible student if an owner of the taxable entity is related to the eligible student within the third degree of consanguinity as determined under Subchapter B, Chapter 573, Government Code.

(d) The total amount of tax credits that may be awarded under this subchapter may not exceed $5 million in a state fiscal biennium.

(e) 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 to taxable entities that apply under Section 171.876 on a first-come, first-served basis.

Sec. 171.875. COMMISSION RULES. The commission, after consulting with the commissioner of education, shall adopt rules providing the requirements that an internship or similar program must meet to be considered an eligible internship program under this subchapter.

Sec. 171.876. 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. 171.877. PERIOD FOR WHICH CREDIT MAY BE CLAIMED. A taxable entity may claim a credit under this subchapter against the tax owed for a privilege period only in connection with an eligible student who completes an eligible internship program during the privilege period.

Sec. 171.878. BIENNIAL STUDY AND REPORT. (a) In this section, "school" refers to the school of public affairs at Texas Southern University.

(b) The school shall biennially study and report on the effectiveness of the tax credit established by this subchapter in creating jobs. The report must include, to the extent available, for the period covered by the report:

(1) the total number of eligible internship programs offered in which eligible students participated and the total amount of credits claimed by taxable entities for those internship programs;

(2) the total number of eligible students who completed an eligible internship program and who were subsequently hired for a permanent job in this state by the taxable entity that offered the program;

(3) for the permanent jobs described by Subdivision (2):

(A) the median wage of those jobs;

(B) the North American Industry Classification System classification of each of those jobs; and

(C) the number of those jobs that provide health benefits coverage;

(4) the number of taxable entities receiving a credit that are historically underutilized businesses, as that term is defined by Section 2161.001, Government Code, and the total amount of credits claimed by those entities; and

(5) demographic information on students participating in eligible internship programs under this subchapter, including the schools in which the students are enrolled, to the extent allowed under state and federal law.

(c) To the extent allowed by law, the comptroller, the Texas Higher Education Coordinating Board, and any other appropriate state agency shall assist the school in obtaining the information needed to prepare the report required under Subsection (b).

(d) Not later than December 1 of each even-numbered year, the school shall submit the report required under Subsection (b) to the governor, the lieutenant governor, and the legislature. The report may be submitted electronically.

SECTION 2. A taxable entity may claim the credit under Subchapter R, Chapter 171, Tax Code, as added by this Act, only in connection with an eligible student who completes a paid internship or similar program 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. The first report required by Section 171.878, Tax Code, as added by this Act, is due not later than December 1, 2018.

SECTION 4. This Act takes effect January 1, 2018.

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