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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 certain watershed protection |
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activities. |
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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 CERTAIN WATERSHED PROTECTION |
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ACTIVITIES |
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Sec. 171.701. DEFINITIONS. In this subchapter: |
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(1) "Agricultural waste" has the meaning assigned by |
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Section 26.001, Water Code. |
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(2) "Concentrated animal feeding operation" has the |
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meaning assigned by 30 T.A.C. Section 321.32 on the effective date |
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of this subchapter. |
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(3) "Major sole source impairment zone" has the |
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meaning assigned by Section 26.502, Water Code. |
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Sec. 171.702. ELIGIBILITY FOR CREDIT. A taxable entity is |
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eligible for a credit against the tax imposed under this chapter in |
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the amount and under the conditions provided by this subchapter. |
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Sec. 171.703. QUALIFICATION. A taxable entity qualifies |
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for a credit under this subchapter if during the period covered by a |
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report the taxable entity: |
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(1) operates a concentrated animal feeding operation: |
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(A) under a permit issued under Subchapter L, |
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Chapter 26, Water Code; and |
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(B) that is located in a major sole source |
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impairment zone; and |
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(2) transports agricultural waste outside of the major |
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sole source impairment zone for disposal, use, or application to a |
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waste management unit or waste application field located outside of |
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the zone. |
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Sec. 171.704. AMOUNT OF CREDIT; LIMITATION. (a) Subject to |
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Subsection (b), the amount of credit for a report is equal to the |
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total costs of fuel, labor, and equipment used to transport waste as |
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described by Section 171.703(2) during the period covered by the |
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report. |
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(b) The total credit for a report, including the amount of |
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any carryforward under Section 171.705, may not exceed 50 percent |
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of the franchise tax due for the report after all other applicable |
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tax credits. |
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Sec. 171.705. CARRYFORWARD. (a) A taxable entity that is |
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eligible for a credit that exceeds the limitation under Section |
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171.704(b) may carry the unused credit forward for not more than 10 |
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consecutive reports. |
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(b) Credits, including credit carryforwards, are considered |
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to be used in the following order: |
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(1) a credit carryforward under this subchapter; and |
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(2) a credit for the period on which the report is |
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based. |
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Sec. 171.706. ASSIGNMENT PROHIBITED; EXCEPTION. A taxable |
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entity may not convey, assign, or transfer the credit allowed under |
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this subchapter to another entity unless substantially all of the |
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assets of the taxable entity are conveyed, assigned, or transferred |
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in the same transaction. |
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Sec. 171.707. 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 and submit any |
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information requested by the comptroller to determine the entity's |
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eligibility for the credit or the amount of the credit. |
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Sec. 171.708. RULES. The comptroller shall adopt rules and |
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forms necessary to implement this subchapter. |
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Sec. 171.709. REPORTING OF ESTIMATES AND COLLECTION OF |
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INFORMATION. (a) Before the beginning of each regular session of |
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the legislature, the comptroller shall submit to the legislature |
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and the governor an estimate for the preceding fiscal biennium of: |
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(1) the total number of taxable entities that applied |
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for a credit under this subchapter; |
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(2) the total amount of credits received under this |
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subchapter; and |
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(3) the total amount of credits carried forward under |
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Section 171.705. |
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(b) The comptroller shall provide the estimate required by |
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this section as part of the report required by Section 403.014, |
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Government Code. |
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Sec. 171.710. EXPIRATION; EXCEPTION. (a) This subchapter |
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expires December 31, 2035. |
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(b) The expiration of this subchapter does not affect the |
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carryforward of a credit under Section 171.705 or a credit for which |
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an entity applies after the date this subchapter expires based on a |
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cost for which a taxable entity became eligible for a credit before |
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that date. |
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SECTION 2. Subchapter N, Chapter 171, Tax Code, as added by |
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this Act, applies only to a report originally due on or after the |
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effective date of this Act. |
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SECTION 3. This Act takes effect January 1, 2026. |