81R980 CBH-F
By: Shapleigh S.B. No. 247
A BILL TO BE ENTITLED
AN ACT
relating to the computation of the cost of goods sold for franchise
tax purposes by certain taxable entities.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter C, Chapter 171, Tax Code, is amended
by adding Section 171.10125 to read as follows:
Sec. 171.10125. COMPUTATION OF COST OF GOODS SOLD BY
TAXABLE ENTITY DOING BUSINESS NEAR BORDER. (a) In this section:
(1) "Border" means the border between this state and
the United Mexican States.
(2) "Strategic investment area" means an area
determined by the comptroller under Subsection (h) that is:
(A) a county in this state with above state
average unemployment and below state average per capita income; or
(B) an area within this state that is a federally
designated urban enterprise community or an urban enhanced
enterprise community.
(b) This section applies only to a taxable entity that:
(1) has a business or facility located within a
strategic investment area; and
(2) conducts at least 90 percent of the taxable
entity's total business in the strategic investment area.
(c) In addition to Subsection (b), at least two of the
following conditions must apply for this section to apply to a
taxable entity:
(1) the taxable entity is licensed by the appropriate
local, state, and federal agencies on both sides of the border to
conduct border trade;
(2) the taxable entity is enrolled in the
Customs-Trade Partnership Against Terrorism (C-TPAT) and Free and
Secure Trade (FAST) programs or is participating with companies
that are enrolled;
(3) the taxable entity invests in and implements
security, tracking, communication, and surveillance technology
systems used on commercial vehicles that operate in the strategic
investment area or in manufacturing and distribution plants located
on this state's side of the border or makes investment expenditures
specifically related to and incurs direct costs related to the
implementation of advanced technologies that protect elements of
the supply chain, including:
(A) secure trailers with intelligent locking
devices and seals;
(B) systems that detect tampering or
compromising of cargo;
(C) systems and protocols that provide instant
alarms and response to cargo deviation;
(D) efforts required to collaborate with
appropriate federal and state agencies on both sides of the border;
and
(E) systems and software that allow for the
tracking and monitoring of vehicles and manufacturing and logistics
facilities engaged in border trade;
(4) the taxable entity makes direct expenditures
related to a business that implements or operates security systems
that conduct or share information with appropriate federal and
state agencies relating to the assessment of drivers' dock
personnel and other individuals who are fundamentally important to
the border trade process;
(5) the taxable entity incurs direct costs of
creating, and training personnel for, new jobs in specialized,
highly skilled positions related to biotechnology, defense,
medical, software, and other value-added manufacturing fields in
the border region; or
(6) the taxable entity makes other direct investments
in integrated supply chain transportation systems that incorporate
sophisticated, embedded broadband communications technology that
integrates with public sector disaster, hazardous materials
transfer, congestion relief, vehicle tracking, or emergency
management systems.
(d) Subject to Subsection (f), a taxable entity to which
this section applies may subtract as a cost of goods sold under
Section 171.1012 any expenditure made or cost incurred relating to
an item or event listed in Subsection (c) that is not otherwise
included as a cost of goods sold under Section 171.1012.
(e) An expenditure made or cost incurred relating to an item
or event listed in Subsection (c) that is for not more than $150,000
must be subtracted or depreciated on the report for the period in
which the expenditure is made or the cost incurred. An expenditure
made or cost incurred that is for more than $150,000 may be
subtracted or depreciated equally in three consecutive reports.
(f) The total amount that may be subtracted under this
section by all taxable entities during a reporting period may not
exceed $3 million. If the total amount subtracted as a cost of
goods sold under this section will exceed $3 million during a
reporting period, the comptroller shall allocate the $3 million
that may be subtracted on a pro rata basis. The comptroller may
require a taxable entity to notify the comptroller of the amount the
taxable entity intends to subtract under this section before the
due date of the report on which the taxable entity will subtract the
amount.
(g) If the comptroller decreases the amount that a taxable
entity may subtract under Subsection (f), the taxable entity may,
subject to the limitation provided by Subsection (f), carry the
difference in the amounts backward for not more than three
consecutive reports or forward for not more than seven consecutive
reports.
(h) Not later than September 1 each year, the comptroller
shall determine areas that qualify as strategic investment areas
using the most recently completed full calendar year data available
on that date and, not later than October 1, the comptroller shall
publish a list and map of the designated areas. The designation is
effective for the following calendar year for purposes of this
section.
(i) A taxable entity may not establish a credit under this
section on or after January 1, 2017.
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.