81R10505 CBH-D
By: Rodriguez H.B. No. 1992
A BILL TO BE ENTITLED
AN ACT
relating to a franchise tax credit for certain investments made in
relation to certain renewable energy generation projects.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 171, Tax Code, is amended by adding
Subchapter V to read as follows:
SUBCHAPTER V. TAX CREDIT FOR INVESTMENTS IN CERTAIN RENEWABLE
ENERGY GENERATION PROJECTS
Sec. 171.901. DEFINITIONS. In this subchapter:
(1) "Renewable energy generation project" means the
construction of a facility or the purchase and installation of
equipment in this state that will use a renewable energy technology
to generate electricity to:
(A) replace a substantial part of an existing use
of petroleum or natural gas, or electricity generated by a
nonrenewable energy technology;
(B) provide the initial use of energy in a
situation in which petroleum or natural gas, or electricity
generated by a nonrenewable energy technology, would otherwise have
been used; or
(C) generate electricity to replace an existing
source of electricity generated by a nonrenewable energy
technology or to provide a new source of electricity for sale by or
for use in a trade or business.
(2) "Renewable energy technology" has the meaning
assigned by Section 39.904(d), Utilities Code.
Sec. 171.902. ENTITLEMENT TO CREDIT. A taxable entity is
entitled to a credit in the amount and under the conditions and
limitations provided by this subchapter against the tax imposed
under this chapter.
Sec. 171.903. QUALIFICATION. (a) Except as provided by
Section 171.906, a taxable entity qualifies for a credit under this
subchapter only if the taxable entity:
(1) submits to the comptroller an application for
preliminary certification of a renewable energy generation project
in this state that the taxable entity owns or has contracted to
purchase before the taxable entity financially commits to start the
project;
(2) receives a preliminary certification from the
comptroller that the taxable entity appears to be eligible for the
credit;
(3) begins work on the project not later than the third
anniversary of the date the taxable entity receives the preliminary
certification; and
(4) receives a final certification from the
comptroller after the project is completed that the taxable entity
is eligible for the credit.
(b) Notwithstanding Subsection (a), a taxable entity that
financially commits to start a renewable energy generation project
may submit to the comptroller a request for a waiver from the
requirement that the application for preliminary certification be
submitted before the taxable entity financially commits to the
project. The request must state the reasons why the taxable entity
did not submit the application before financially committing to the
project. The taxable entity must submit the request and an
application for preliminary certification of the project to the
comptroller not later than the 90th day after the project's start
date. The comptroller may approve a waiver request only on good
cause shown.
Sec. 171.904. AMOUNT; LIMITATIONS. (a) The amount of a
credit under this subchapter is equal to 50 percent of the cost of
the renewable energy project after deducting any federal or state
grant or other state or federal tax credit relating to the project.
(b) Except as provided by Subsection (c), a taxable entity
must claim a credit under this subchapter in five installments that
are as equal as possible over five consecutive reports beginning
with the report based on the period during which the taxable entity
receives final certification for the renewable energy generation
project to which the credit relates.
(c) A taxable entity may claim the entire amount of the
credit on the report based on the period during which the taxable
entity receives final certification for the renewable energy
generation project to which the credit relates if the amount of the
cost determined under Subsection (a) does not exceed $20,000.
(d) The total credit claimed under this subchapter for a
report may not exceed the amount of franchise tax due after any
other applicable credits.
Sec. 171.905. CARRYFORWARD. (a) If a taxable entity is
eligible for a credit that exceeds the limitation under Section
171.904(d), the taxable entity may carry the unused credit forward
for not more than eight consecutive reports.
(b) A carryforward is considered the remaining portion of a
credit that cannot be claimed in the current year because of the
limitation under Section 171.904(d). A carryforward is added to
the next year's credit in determining whether the limitation is met
for that year. A credit carryforward from a previous report is
considered to be used before the current year credit.
Sec. 171.906. SALE OF TAX CREDIT. (a) An entity that is not
a taxable entity accrues a credit under this subchapter if the
entity complies with the requirements of Section 171.903.
(b) An entity that accrues a credit under this section may
sell the rights to the credit to one or more taxable entities. The
entity and the taxable entity must submit a joint application to the
comptroller for approval of the sale.
(c) A taxable entity must purchase the rights to the credit
with a lump-sum cash payment that is at least equal to the credit's
net present value at the time the comptroller received the joint
application for approval of the sale. Not later than January 1 each
year, the comptroller shall prescribe the net present value of
credits for that taxable year and shall publish that value in the
Texas Register.
(d) An entity that sells the rights to an accrued credit to
more than one taxable entity may divide those rights in any manner
the entity believes is appropriate provided that:
(1) the entity sells the rights to the entire credit;
and
(2) the entity receives total compensation for that
credit that is at least equal to the appropriate amount required by
Subsection (c).
Sec. 171.907. CERTIFICATION OF ELIGIBILITY. (a) For the
initial and each succeeding report on which a credit is claimed
under this subchapter, the taxable entity must file with its
report, on a form prescribed by the comptroller, information that
sufficiently demonstrates that the taxable entity is eligible for
the credit. If the taxable entity purchases the rights to a credit
under Section 171.906, the taxable entity must also file
information that sufficiently demonstrates that the entity that
sold the credit was eligible to accrue the credit.
(b) The burden of establishing eligibility for, entitlement
to, and the value of the credit is on the taxable entity.
Sec. 171.908. ASSIGNMENT PROHIBITED. A taxable entity may
not convey, assign, or transfer the credit allowed under this
subchapter to another entity unless all of the assets of the taxable
entity are conveyed, assigned, or transferred.
Sec. 171.909. RULES. The comptroller shall adopt rules
necessary to implement this subchapter.
SECTION 2. This Act applies only to a report originally due
on or after the effective date of this Act.
SECTION 3. This Act takes effect January 1, 2010.