Texas 2013 - 83rd Regular

Texas House Bill HB1499 Compare Versions

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1	1	83R5309 KLA-D
2	2	By: Alvarado H.B. No. 1499
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to a franchise tax credit for certain research and
8	8	development activities.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Chapter 171, Tax Code, is amended by adding
11	11	Subchapter O-1 to read as follows:
12	12	SUBCHAPTER O-1. TAX CREDIT FOR CERTAIN RESEARCH AND DEVELOPMENT
13	13	ACTIVITIES
14	14	Sec. 171.741. DEFINITIONS. In this subchapter:
15	15	(1) "Base amount," "basic research payment," and
16	16	"qualified research expense" have the meanings assigned those terms
17	17	by Section 41, Internal Revenue Code, except that all of those
18	18	payments and expenses must be for research conducted within this
19	19	state.
20	20	(2) "Strategic investment area" means an area that is
21	21	determined by the comptroller under Section 171.746 that is:
22	22	(A) a county within this state with above state
23	23	average unemployment and below state average per capita income;
24	24	(B) an area within this state that is a federally
25	25	designated urban enterprise community or an urban enhanced
26	26	enterprise community; or
27	27	(C) a defense economic readjustment zone
28	28	designated under Chapter 2310, Government Code.
29	29	Sec. 171.742. ELIGIBILITY. (a) A taxable entity is
30	30	eligible for a credit against the tax imposed under this chapter in
31	31	the amount and under the conditions and limitations provided by
32	32	this subchapter.
33	33	(b) A taxable entity may claim a credit under Section
34	34	171.743(d) or take a carryforward credit without regard to whether
35	35	the strategic investment area in which the entity incurred
36	36	qualified research expenses or made basic research payments
37	37	subsequently loses its designation as a strategic investment area.
38	38	Sec. 171.743. CALCULATION OF CREDIT. (a) The credit for
39	39	any report equals five percent of the sum of:
40	40	(1) the excess of qualified research expenses incurred
41	41	in this state during the period on which the tax is based over the
42	42	base amount for this state; and
43	43	(2) the basic research payments determined under
44	44	Section 41(e)(1)(A), Internal Revenue Code, for this state during
45	45	the period on which the tax is based.
46	46	(b) A taxable entity may elect to compute the credit for
47	47	qualified research expenses incurred in this state in a manner
48	48	consistent with the alternative incremental credit described in
49	49	Section 41(c)(4), Internal Revenue Code, only if for the
50	50	corresponding federal tax period:
51	51	(1) a federal election was made to compute the federal
52	52	credit under Section 41(c)(4), Internal Revenue Code;
53	53	(2) the taxable entity was a member of a consolidated
54	54	group for which a federal election was made under Section 41(c)(4),
55	55	Internal Revenue Code; or
56	56	(3) the taxable entity did not claim the federal
57	57	credit under Section 41(a)(1), Internal Revenue Code.
58	58	(c) For purposes of the alternate credit computation method
59	59	in Subsection (b), the credit percentages applicable to qualified
60	60	research expenses described in Sections 41(c)(4)(A)(i), (ii), and
61	61	(iii), Internal Revenue Code, are 0.41 percent, 0.55 percent, and
62	62	0.69 percent, respectively.
63	63	(d) In computing the credit under this section, a taxable
64	64	entity may multiply by two the amount of any qualified research
65	65	expenses and basic research payments made in a strategic investment
66	66	area.
67	67	(e) The burden of establishing entitlement to and the value
68	68	of the credit is on the taxable entity.
69	69	(f) For the purposes of this section, "gross receipts" as
70	70	used in Section 41, Internal Revenue Code, means gross receipts as
71	71	determined under Section 171.103.
72	72	Sec. 171.744. LIMITATIONS. The sum of the total credit
73	73	claimed under this subchapter for a report, including the amount of
74	74	any carryforward credit under Section 171.745, and the amount of
75	75	unused credits accrued under Subchapter O before its repeal on
76	76	January 1, 2008, and claimed on the report as authorized by Section
77	77	18(d), Chapter 1 (H.B. 3), Acts of the 79th Legislature, 3rd Called
78	78	Session, 2006, may not exceed 50 percent of the amount of franchise
79	79	tax due for the report before any other applicable tax credits.
80	80	Sec. 171.745. CARRYFORWARD. If a taxable entity is
81	81	eligible for a credit that exceeds the limitation under Section
82	82	171.744, the taxable entity may carry the unused credit forward for
83	83	not more than 20 consecutive reports. Credits, including credit
84	84	carryforwards, are considered to be used in the following order:
85	85	(1) a credit carryforward of unused credits accrued
86	86	under Subchapter O before its repeal on January 1, 2008, and claimed
87	87	as authorized by Section 18(d), Chapter 1 (H.B. 3), Acts of the 79th
88	88	Legislature, 3rd Called Session, 2006;
89	89	(2) a credit carryforward under this subchapter; and
90	90	(3) a current year credit.
91	91	Sec. 171.746. DETERMINATION OF STRATEGIC INVESTMENT AREAS.
92	92	(a) Not later than September 1 each year, the comptroller shall
93	93	determine areas that qualify as strategic investment areas using
94	94	the most recently completed full calendar year data available on
95	95	that date and, not later than October 1, shall publish a list and
96	96	map of the designated areas.
97	97	(b) The designation is effective for the following calendar
98	98	year for purposes of credits available under this subchapter.
99	99	Sec. 171.747. BIENNIAL REPORT BY COMPTROLLER. (a) Before
100	100	the beginning of each regular session of the legislature, the
101	101	comptroller shall submit to the governor, the lieutenant governor,
102	102	and the speaker of the house of representatives a report that
103	103	states:
104	104	(1) the total amount of expenses and payments incurred
105	105	by taxable entities that claim a credit under this subchapter;
106	106	(2) the total amount of credits applied against the
107	107	tax under this chapter and the amount of unused credits including:
108	108	(A) the total amount of franchise tax due by
109	109	taxable entities claiming a credit under this subchapter before and
110	110	after the application of the credit;
111	111	(B) the average percentage reduction in
112	112	franchise tax due by taxable entities claiming a credit under this
113	113	subchapter;
114	114	(C) the percentage of tax credits that were
115	115	awarded to taxable entities with fewer than 100 employees; and
116	116	(D) the two-digit standard industrial
117	117	classification of taxable entities claiming a credit under this
118	118	subchapter;
119	119	(3) the geographical distribution of expenses and
120	120	payments giving rise to a credit authorized by this subchapter;
121	121	(4) the effect of the credit provided by this
122	122	subchapter on the amount of research and development performed in
123	123	this state and employment in research and development in this
124	124	state; and
125	125	(5) the effect of the credit provided under this
126	126	subchapter on employment, capital investment, and personal income
127	127	in this state and on state tax revenues.
128	128	(b) The final report issued prior to the expiration of this
129	129	subchapter shall include historical information on the credit
130	130	authorized under this subchapter.
131	131	(c) The comptroller may not include in the report
132	132	information that is confidential by law.
133	133	(d) For purposes of this section, the comptroller may
134	134	require a taxable entity that claims a credit under this subchapter
135	135	to submit information, on a form provided by the comptroller, on the
136	136	location of the taxable entity's research expenses and payments in
137	137	this state and any other information necessary to complete the
138	138	report required by this section.
139	139	Sec. 171.748. COMPTROLLER POWERS AND DUTIES. The
140	140	comptroller shall adopt rules and forms necessary to implement this
141	141	subchapter.
142	142	Sec. 171.749. ASSIGNMENT PROHIBITED. A taxable entity may
143	143	not convey, assign, or transfer the credit allowed under this
144	144	subchapter to another entity unless all of the assets of the taxable
145	145	entity are conveyed, assigned, or transferred in the same
146	146	transaction.
147	147	Sec. 171.750. EXPIRATION. (a) This subchapter expires
148	148	December 31, 2022.
149	149	(b) The expiration of this subchapter does not affect the
150	150	carryforward of a credit under Section 171.745 that was accrued
151	151	before the date this subchapter expires.
152	152	SECTION 2. Section 228.153(a)(1), Insurance Code, is
153	153	amended to read as follows:
154	154	(1) "Strategic investment area" means an area of this
155	155	state that qualifies as a strategic investment area under
156	156	Subchapter O-1 [O], Chapter 171, Tax Code, or, after the date that
157	157	subchapter expires, an area that qualified as a strategic
158	158	investment area under that subchapter immediately before that date.
159	159	SECTION 3. Section 313.051(a), Tax Code, is amended to read
160	160	as follows:
161	161	(a) This subchapter applies only to a school district that
162	162	has territory in:
163	163	(1) an area that qualifies [qualified] as a strategic
164	164	investment area under Subchapter O-1 [O], Chapter 171[, immediately
165	165	before that subchapter expired]; or
166	166	(2) a county:
167	167	(A) that has a population of less than 50,000;
168	168	and
169	169	(B) in which, from 1990 to 2000, according to the
170	170	federal decennial census, the population:
171	171	(i) remained the same;
172	172	(ii) decreased; or
173	173	(iii) increased, but at a rate of not more
174	174	than three percent per annum.
175	175	SECTION 4. (a) This Act applies only to a report originally
176	176	due on or after the effective date of this Act.
177	177	(b) The change in law made by this Act does not affect the
178	178	obligation for or the payment, computation, and collection of the
179	179	franchise tax for a report originally due before the effective date
180	180	of this Act. The obligation for and the payment, computation, and
181	181	collection of the franchise tax for a report originally due before
182	182	the effective date of this Act is governed by the law in effect on
183	183	the date the report was originally due and that law is continued in
184	184	effect for those purposes.
185	185	SECTION 5. This Act takes effect January 1, 2014.