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A BILL TO BE ENTITLED
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AN ACT
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relating to strategies for railroad relocation and improvement, |
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including a franchise tax credit for certain railroad |
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reconstruction or replacement expenditures. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Chapter 171, Tax Code, is amended by adding |
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Subchapter U-1 to read as follows: |
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SUBCHAPTER U-1. TAX CREDIT FOR QUALIFIED RAILROAD RECONSTRUCTION OR |
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REPLACEMENT EXPENDITURES |
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Sec. 171.9231. DEFINITIONS. In this subchapter: |
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(1) "Class II railroad" and "class III railroad" have |
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the meanings assigned by the federal Surface Transportation Board. |
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(2) "Qualified railroad expenditure" means an amount |
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spent by a taxable entity that is a class II railroad or class III |
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railroad: |
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(A) to reconstruct or replace railroad |
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infrastructure that was owned or leased by the taxable entity on |
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January 1, 2019, including a track, a roadbed, a bridge, an |
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industrial lead, or another track-related structure; or |
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(B) for new construction of an industrial lead, |
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switch, spur, or siding or extension of existing siding. |
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Sec. 171.9232. ENTITLEMENT TO CREDIT. A taxable entity is |
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entitled to a credit in the amount and under the conditions provided |
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by this subchapter against the tax imposed under this chapter. |
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Sec. 171.9233. QUALIFICATION. A taxable entity qualifies |
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for a credit under this subchapter if the taxable entity makes a |
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qualified railroad expenditure. |
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Sec. 171.9234. AMOUNT; LIMITATIONS. (a) Subject to |
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Subsection (b), the amount of the credit for a report is equal to |
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the lesser of: |
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(1) 50 percent of the taxable entity's qualified |
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railroad expenditures during the accounting period on which the |
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report is based; or |
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(2) the product of $3,500 and the number of miles of |
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railroad track owned or leased in this state by the taxable entity |
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on the last day of the accounting period on which the report is |
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based. |
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(b) The total credit claimed for a report, including the |
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amount of any carryforward under Section 171.9235, may not exceed |
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the amount of franchise tax due for the report after all other |
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applicable tax credits. |
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Sec. 171.9235. CARRYFORWARD. (a) If a taxable entity is |
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eligible for a credit that exceeds the limitation under Section |
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171.9234(b), the taxable entity may carry the unused credit forward |
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for not more than five consecutive reports. |
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(b) A carryforward is considered the remaining portion of a |
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credit that cannot be claimed in the current year because of the |
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limitation under Section 171.9234(b). A carryforward is added to |
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the next year's credit in determining whether the limitation is met |
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for that year. A credit carryforward from a previous report is |
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considered to be used before the current year credit. |
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Sec. 171.9236. APPLICATION FOR CREDIT. A taxable entity |
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must apply for a credit under this subchapter on or with the report |
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for the period for which the credit is claimed. |
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Sec. 171.9237. SALE OR ASSIGNMENT OF CREDIT. (a) A taxable |
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entity that makes qualified railroad expenditures may sell or |
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assign all or part of the credit that may be claimed for those |
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expenditures to one or more taxable entities, and any taxable |
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entity to which all or part of the credit is sold or assigned may |
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sell or assign all or part of the credit to another taxable entity. |
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There is no limit on the total number of transactions for the sale |
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or assignment of all or part of the total credit authorized under |
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this subchapter. |
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(b) A taxable entity that sells or assigns a credit under |
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this section and the taxable entity to which the credit is sold or |
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assigned shall jointly submit written notice of the sale or |
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assignment to the comptroller not later than the 30th day after the |
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date of the sale or assignment. The notice must include: |
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(1) the date on which the credit was originally |
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established; |
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(2) the date of the sale or assignment; |
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(3) the amount of the credit sold or assigned and the |
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remaining period during which it may be used; |
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(4) the names, addresses, and federal tax |
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identification numbers of the taxable entity that sold or assigned |
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the credit or part of the credit and the taxable entity to which the |
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credit or part of the credit was sold or assigned; and |
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(5) the amount of the credit owned by the selling or |
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assigning taxable entity before the sale or assignment, and the |
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amount the selling or assigning taxable entity retained, if any, |
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after the sale or assignment. |
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(c) The sale or assignment of a credit in accordance with |
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this section does not extend the period for which a credit may be |
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carried forward. |
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Sec. 171.9238. RULES. (a) Except as provided by Subsection |
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(b), the comptroller shall adopt rules necessary to implement this |
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subchapter. |
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(b) The Texas Department of Transportation shall adopt |
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rules to verify qualified railroad expenditures and allow taxable |
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entities to obtain preapproval that a proposed expenditure will |
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qualify as a qualified railroad expenditure. |
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SECTION 2. The Texas Department of Transportation shall |
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complete development of the strategic plan described in Section |
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201.977, Transportation Code, not later than December 31, 2020. |
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SECTION 3. Subchapter U-1, Chapter 171, Tax Code, as added |
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by this Act, applies only to a report originally due under Chapter |
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171, Tax Code, on or after January 1, 2020. |
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SECTION 4. This Act takes effect January 1, 2020. |