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A BILL TO BE ENTITLED
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AN ACT
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relating to a franchise tax credit for ad valorem taxes paid by a |
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taxable entity on certain inventory. |
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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 N to read as follows: |
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SUBCHAPTER N. TAX CREDIT FOR BUSINESS AD VALOREM TAX PAYMENTS ON |
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INVENTORY |
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Sec. 171.701. DEFINITIONS. In this subchapter: |
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(1) "Qualified entity" means a taxable entity that |
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pays ad valorem taxes on qualified inventory owned by the entity and |
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located in this state. |
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(2) "Qualified inventory" means tangible personal |
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property held for sale at retail other than: |
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(A) a dealer's motor vehicle inventory as defined |
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by Section 23.121; |
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(B) a dealer's heavy equipment inventory as |
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defined by Section 23.1241; |
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(C) a dealer's vessel and outboard motor |
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inventory as defined by Section 23.124; and |
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(D) retail manufactured housing inventory as |
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defined by Section 23.127. |
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Sec. 171.702. ELIGIBILITY FOR CREDIT. A qualified entity |
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is eligible to apply for a credit in the amount and under the |
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conditions and limitations provided by this subchapter against the |
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tax imposed under this chapter. |
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Sec. 171.703. AMOUNT OF CREDIT; LIMITATIONS. (a) The total |
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amount of the credit under this subchapter is equal to the amount of |
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the ad valorem taxes paid by the qualified entity during the period |
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on which a report is based that are derived from the taxable value |
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of qualified inventory owned by the entity and located in this |
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state. |
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(b) The total credit claimed for a report, including the |
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amount of any carryforward under Section 171.704, may not exceed |
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the amount of franchise tax due for the report after any other |
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applicable tax credits. |
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Sec. 171.704. CARRYFORWARD. (a) If a qualified entity is |
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eligible for a credit that exceeds the limitation under Section |
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171.703(b), the entity may carry the unused credit forward for not |
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more than three 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 171.703(b). A carryforward is added to |
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the next year's installment of the credit in determining the |
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limitation for that year. A credit carryforward from a previous |
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report is considered to be used before the current year |
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installment. |
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Sec. 171.705. APPLICATION FOR CREDIT. (a) A qualified |
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entity must apply for a credit under this subchapter on or with the |
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report for the period for which the credit is claimed. |
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(b) A qualified entity shall file with a report on which the |
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credit is claimed any information required by the comptroller to |
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sufficiently demonstrate that the entity is eligible for the |
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credit. |
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(c) The burden of establishing eligibility for and the value |
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of the credit is on the qualified entity. |
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Sec. 171.706. SALE OR ASSIGNMENT OF CREDIT. (a) A |
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qualified entity that earns a credit under this subchapter may sell |
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or assign all or part of the credit, and any entity to which all or |
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part of the credit is sold or assigned may sell or assign all or part |
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of the credit to another entity. There is no limit on the total |
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number of transactions for the sale or assignment of all or part of |
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the total credit authorized under this subchapter, however, |
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collectively all transferred and retained credits claimed for a |
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period are subject to the maximum total limitations provided by |
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Section 171.703. |
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(b) An entity that sells or assigns a credit under this |
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section and the entity to which the credit is sold or assigned shall |
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jointly submit written notice of the sale or assignment to the |
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comptroller on a form promulgated by the comptroller not later than |
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the 30th day after the date of the sale or assignment. The notice |
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must include: |
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(1) the date of the sale or assignment; |
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(2) the amount of the credit sold or assigned; |
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(3) the names and federal tax identification numbers |
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of the entity that sold or assigned the credit or part of the credit |
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and the entity to which the credit or part of the credit was sold or |
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assigned; and |
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(4) the amount of the credit owned by the selling or |
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assigning entity before the sale or assignment, and the amount the |
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selling or assigning entity retained, if any, after the sale or |
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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 and does not increase the total amount of the credit |
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that may be claimed. |
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Sec. 171.707. RULES. The comptroller shall adopt rules |
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necessary to implement this subchapter. |
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SECTION 2. This Act applies only to a report originally due |
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on or after the effective date of this Act. |
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SECTION 3. This Act takes effect January 1, 2020. |