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A BILL TO BE ENTITLED
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AN ACT
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relating to a deduction under the franchise tax for certain |
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contracts with the federal government. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. The legislature finds that: |
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(1) Texas is an epicenter of this nation's aerospace, |
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aviation, defense, and military industries; |
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(2) with NASA's Johnson Space Center in Houston, the |
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new Army Futures Command, 15 active military bases across the |
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state, and major military aircraft manufacturing and maintenance |
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operations, the Texas economy and our nation's aerospace and |
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defense capabilities are inextricably linked; |
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(3) these crucial industries employ tens of thousands |
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of Texans and support dozens of our communities across the state; |
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and |
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(4) it is therefore paramount that state tax policy |
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foster a competitive economic climate to ensure growth and |
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retention of jobs related to the development, manufacture, |
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maintenance, and ongoing services for military hardware, aircraft, |
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spacecraft, and weapons systems used by and produced for our armed |
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forces, related federal government agencies, and our global allies. |
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SECTION 2. Section 171.101, Tax Code, is amended by adding |
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Subsections (e) and (f) to read as follows: |
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(e) For purposes of Subsection (f), "aerospace costs" means |
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any costs not already subtracted under Subsection (a)(1)(B)(ii)(a) |
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that are properly allocated and incurred under the Federal |
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Acquisition Regulation (48 C.F.R. Chapter 1) and subject to the |
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requirements of 48 C.F.R. Chapter 2 or Chapter 18 for contracts, or |
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subcontracts supporting those contracts, for the sale of goods or |
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services to the federal government by a taxable entity in the |
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aerospace industry that is engaged in activities described by North |
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American Industry Classification System code 334511, 3364, 3399, |
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5413, 5415, 5416, or 5419. For purposes of this subsection, a |
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reference to a federal regulation includes a successor regulation. |
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(f) In computing the sum for purposes of Subsection |
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(a)(1)(B)(ii), a taxable entity may add to other amounts described |
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by that subparagraph: |
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(1) for a report originally due on or after January 1, |
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2020, and before January 1, 2021, 20 percent of aerospace costs; |
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(2) for a report originally due on or after January 1, |
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2021, and before January 1, 2022, 40 percent of aerospace costs; |
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(3) for a report originally due on or after January 1, |
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2022, and before January 1, 2023, 60 percent of aerospace costs; |
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(4) for a report originally due on or after January 1, |
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2023, and before January 1, 2024, 80 percent of aerospace costs; and |
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(5) for a report originally due on or after January 1, |
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2024, 100 percent of aerospace costs. |
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SECTION 3. This Act takes effect January 1, 2020. |