Texas 2013 - 83rd Regular

Texas House Bill HB2390 Compare Versions

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1	1	83R9590 KLA-D
2	2	By: Menendez H.B. No. 2390
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 by taxable entities in the aerospace
9	9	industry.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Chapter 171, Tax Code, is amended by adding
12	12	Subchapter R to read as follows:
13	13	SUBCHAPTER R. TAX CREDIT FOR CERTAIN RESEARCH AND DEVELOPMENT
14	14	ACTIVITIES
15	15	Sec. 171.851. DEFINITIONS. In this subchapter:
16	16	(1) "Base amount," "basic research payment,"
17	17	"qualified research," and "qualified research expense" have the
18	18	meanings assigned those terms by Section 41, Internal Revenue Code,
19	19	except that the qualified research must be conducted within this
20	20	state, and all of the payments and expenses must be for research
21	21	conducted within this state.
22	22	(2) "Defense base development authority" means an
23	23	authority established under Chapter 379B, Local Government Code, or
24	24	Subtitle B, Title 4, Special District Local Laws Code.
25	25	Sec. 171.852. ELIGIBILITY. A taxable entity is eligible
26	26	for a credit against the tax imposed under this chapter in the
27	27	amount and under the conditions and limitations provided by this
28	28	subchapter if the entity:
29	29	(1) is primarily engaged in a business involved in the
30	30	aerospace industry; and
31	31	(2) performs qualified research in the territory of a
32	32	defense base development authority.
33	33	Sec. 171.853. CALCULATION OF CREDIT. (a) The credit for
34	34	any report equals five percent of the sum of:
35	35	(1) the excess of qualified research expenses incurred
36	36	in this state during the period on which the tax is based over the
37	37	base amount for this state; and
38	38	(2) the basic research payments determined under
39	39	Section 41(e)(1)(A), Internal Revenue Code, for this state during
40	40	the period on which the tax is based.
41	41	(b) A taxable entity may elect to compute the credit for
42	42	qualified research expenses incurred in this state in a manner
43	43	consistent with the alternative incremental credit described in
44	44	Section 41(c)(4), Internal Revenue Code, only if for the
45	45	corresponding federal tax period:
46	46	(1) a federal election was made to compute the federal
47	47	credit under Section 41(c)(4), Internal Revenue Code;
48	48	(2) the taxable entity was a member of a consolidated
49	49	group for which a federal election was made under Section 41(c)(4),
50	50	Internal Revenue Code; or
51	51	(3) the taxable entity did not claim the federal
52	52	credit under Section 41(a)(1), Internal Revenue Code.
53	53	(c) For purposes of the alternate credit computation method
54	54	in Subsection (b), the credit percentages applicable to qualified
55	55	research expenses described in Sections 41(c)(4)(A)(i), (ii), and
56	56	(iii), Internal Revenue Code, are 0.41 percent, 0.55 percent, and
57	57	0.69 percent, respectively.
58	58	(d) The burden of establishing entitlement to and the value
59	59	of the credit is on the taxable entity.
60	60	(e) For the purposes of this section, "gross receipts" as
61	61	used in Section 41, Internal Revenue Code, means gross receipts as
62	62	determined under Section 171.103.
63	63	Sec. 171.854. LIMITATIONS. The sum of the total credit
64	64	claimed under this subchapter for a report, including the amount of
65	65	any carryforward credit under Section 171.855, and the amount of
66	66	unused credits accrued under Subchapter O before its repeal on
67	67	January 1, 2008, and claimed on the report as authorized by Section
68	68	18(d), Chapter 1 (H.B. 3), Acts of the 79th Legislature, 3rd Called
69	69	Session, 2006, may not exceed 50 percent of the amount of franchise
70	70	tax due for the report before any other applicable tax credits.
71	71	Sec. 171.855. CARRYFORWARD. If a taxable entity is
72	72	eligible for a credit that exceeds the limitation under Section
73	73	171.854, the taxable entity may carry the unused credit forward for
74	74	not more than 20 consecutive reports. Credits, including credit
75	75	carryforwards, are considered to be used in the following order:
76	76	(1) a credit carryforward of unused credits accrued
77	77	under Subchapter O before its repeal on January 1, 2008, and claimed
78	78	as authorized by Section 18(d), Chapter 1 (H.B. 3), Acts of the 79th
79	79	Legislature, 3rd Called Session, 2006;
80	80	(2) a credit carryforward under this subchapter; and
81	81	(3) a current year credit.
82	82	Sec. 171.856. BIENNIAL REPORT BY COMPTROLLER. (a) Before
83	83	the beginning of each regular session of the legislature, the
84	84	comptroller shall submit to the governor, the lieutenant governor,
85	85	and the speaker of the house of representatives a report that
86	86	states:
87	87	(1) the total amount of expenses and payments incurred
88	88	by taxable entities that claim a credit under this subchapter;
89	89	(2) the total amount of credits applied against the
90	90	tax under this chapter and the amount of unused credits including:
91	91	(A) the total amount of franchise tax due by
92	92	taxable entities claiming a credit under this subchapter before and
93	93	after the application of the credit;
94	94	(B) the average percentage reduction in
95	95	franchise tax due by taxable entities claiming a credit under this
96	96	subchapter;
97	97	(C) the percentage of tax credits that were
98	98	awarded to taxable entities with fewer than 100 employees; and
99	99	(D) the two-digit standard industrial
100	100	classification of taxable entities claiming a credit under this
101	101	subchapter;
102	102	(3) the geographical distribution of expenses and
103	103	payments giving rise to a credit authorized by this subchapter;
104	104	(4) the effect of the credit provided by this
105	105	subchapter on the amount of research and development performed in
106	106	this state and employment in research and development in this
107	107	state; and
108	108	(5) the effect of the credit provided under this
109	109	subchapter on employment, capital investment, and personal income
110	110	in this state and on state tax revenues.
111	111	(b) The final report issued prior to the expiration of this
112	112	subchapter shall include historical information on the credit
113	113	authorized under this subchapter.
114	114	(c) The comptroller may not include in the report
115	115	information that is confidential by law.
116	116	(d) For purposes of this section, the comptroller may
117	117	require a taxable entity that claims a credit under this subchapter
118	118	to submit information, on a form provided by the comptroller, on the
119	119	location of the taxable entity's research expenses and payments in
120	120	this state and any other information necessary to complete the
121	121	report required by this section.
122	122	Sec. 171.857. COMPTROLLER POWERS AND DUTIES. The
123	123	comptroller shall adopt rules and forms necessary to implement this
124	124	subchapter.
125	125	Sec. 171.858. ASSIGNMENT PROHIBITED. A taxable entity may
126	126	not convey, assign, or transfer the credit allowed under this
127	127	subchapter to another entity unless all of the assets of the taxable
128	128	entity are conveyed, assigned, or transferred in the same
129	129	transaction.
130	130	Sec. 171.859. EXPIRATION. (a) This subchapter expires
131	131	December 31, 2023.
132	132	(b) The expiration of this subchapter does not affect the
133	133	carryforward of a credit under Section 171.855 that was accrued
134	134	before the date this subchapter expires.
135	135	SECTION 2. (a) This Act applies only to a report originally
136	136	due on or after the effective date of this Act.
137	137	(b) The change in law made by this Act does not affect the
138	138	obligation for or the payment, computation, and collection of the
139	139	franchise tax for a report originally due before the effective date
140	140	of this Act. The obligation for and the payment, computation, and
141	141	collection of the franchise tax for a report originally due before
142	142	the effective date of this Act is governed by the law in effect on
143	143	the date the report was originally due, and that law is continued in
144	144	effect for those purposes.
145	145	SECTION 3. This Act takes effect January 1, 2014.