85R2997 BEF-F
 
  By: Hinojosa S.B. No. 1389
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to a franchise tax credit for enterprise projects for
  certain capital investments.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Chapter 171, Tax Code, is amended by adding
  Subchapter U to read as follows:
  SUBCHAPTER U. TAX CREDITS FOR ENTERPRISE PROJECTS FOR CERTAIN
  CAPITAL INVESTMENTS
         Sec. 171.9221.  DEFINITIONS. In this subchapter:
               (1)  "Enterprise project" means a person designated as
  an enterprise project under Chapter 2303, Government Code, on or
  after September 1, 2003.
               (2)  "Qualified business" has the meaning assigned by
  Section 2303.003, Government Code.
               (3)  "Qualified capital investment" means tangible
  personal property first placed in service by an enterprise project
  after January 1, 2013, that is described in Section 1245(a),
  Internal Revenue Code, such as engines, machinery, tools, and
  implements used in a trade or business or held for investment and
  subject to an allowance for depreciation, cost recovery under the
  accelerated cost recovery system, or amortization. The term does
  not include real property or buildings and their structural
  components. Property that is leased under a capitalized lease is
  considered a qualified capital investment, but property that is
  leased under an operating lease is not considered a qualified
  capital investment. Property expensed under Section 179, Internal
  Revenue Code, is not considered a qualified capital investment.
         Sec. 171.9222.  TANGIBLE PERSONAL PROPERTY FIRST PLACED IN
  SERVICE BY AN ENTERPRISE PROJECT. For purposes of determining
  whether an investment is a qualified capital investment under
  Section 171.9221, "tangible personal property first placed in
  service by an enterprise project" includes tangible personal
  property:
               (1)  purchased by an enterprise project for placement
  in an incomplete improvement that is under active construction or
  other physical preparation;
               (2)  identified by a purchase order, invoice, billing,
  sales slip, or contract; and
               (3)  physically present at the enterprise project's
  qualified business site, as defined by Section 2303.003, Government
  Code, and in use by the enterprise project on the original due date
  of the report on which the credit is taken.
         Sec. 171.9223.  ELIGIBILITY.  An enterprise project that is
  a qualified business is eligible for a credit against the tax
  imposed under this chapter in the amount and under the conditions
  and limitations provided by this subchapter.
         Sec. 171.9224.  CALCULATION OF CREDIT. (a)  An enterprise
  project that is eligible for a credit under this subchapter may,
  beginning on January 1 of the year in which the project is
  designated or January 1, 2013, establish a credit equal to 7.5
  percent of the qualified capital investment.
         (b)  A taxable entity may file an amended report to claim all
  or part of a credit earned in a previous tax year that has not been
  claimed on another report, subject to Section 171.9225, if the
  applicable period of limitation under Section 111.107 and
  Subchapter D, Chapter 111, for claiming that credit has not
  expired.
         Sec. 171.9225.  LIMITATION. The total credit claimed under
  this subchapter for a report, including the amount of any
  carryforward credit under Section 171.9226, may not exceed 50
  percent of the amount of franchise tax due for the report before any
  other applicable tax credits.
         Sec. 171.9226.  CARRYFORWARD. (a) If an enterprise project
  is eligible for a credit from an installment that exceeds a
  limitation under Section 171.9225, the enterprise project may carry
  the unused credit forward for not more than five consecutive
  reports.
         (b)  A carryforward is considered the remaining portion of an
  installment that cannot be claimed in the current year because of a
  tax limitation under Section 171.9225. A carryforward is added to
  the next year's installment of the credit in determining the tax
  limitation for that year. A credit carryforward from a previous
  report is considered to be used before the current year
  installment.
         Sec. 171.9227.  CERTIFICATION OF ELIGIBILITY. (a) For the
  initial and each succeeding report in which a credit is claimed
  under this subchapter, the enterprise project shall file with its
  report, on a form provided by the comptroller, information that
  sufficiently demonstrates that the enterprise project is eligible
  for the credit.
         (b)  The burden of establishing entitlement to and the value
  of the credit is on the enterprise project.
         Sec. 171.9228.  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,
  and the speaker of the house of representatives a report that
  states:
               (1)  the total amount of qualified capital investments
  made by enterprise projects that claim a credit under this
  subchapter and the average and median wages paid by those
  enterprise projects;
               (2)  the total amount of credits applied against the
  tax under this chapter and the amount of unused credits, including:
                     (A)  the total amount of franchise tax due by
  enterprise projects claiming a credit under this subchapter before
  and after the application of the credit;
                     (B)  the average percentage reduction in
  franchise tax due by enterprise projects claiming a credit under
  this subchapter;
                     (C)  the percentage of tax credits that were
  awarded to enterprise projects with fewer than 100 employees; and
                     (D)  the two-digit standard industrial
  classification of enterprise projects claiming a credit under this
  subchapter;
               (3)  the geographical distribution of the qualified
  capital investments on which tax credit claims are made under this
  subchapter; and
               (4)  the impact of the credit provided under this
  subchapter on employment, capital investment, personal income, and
  state tax revenues.
         (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 an enterprise project that claims a credit under this
  subchapter to submit information, on a form provided by the
  comptroller, on the location of the enterprise project's capital
  investment in this state and any other information necessary to
  complete the report required under this section.
         (d)  The comptroller shall provide notice to the members of
  the legislature that the report required under this section is
  available on request.
         Sec. 171.9229.  COMPTROLLER POWERS AND DUTIES. The
  comptroller shall adopt rules and forms necessary to implement this
  subchapter.
         SECTION 2.  Except as provided by Section 171.9224(b), Tax
  Code, as added by this Act, this Act applies only to a report
  originally due on or after the effective date of this Act.
         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, 2017.