Texas 2015 - 84th Regular

Texas House Bill HB1928 Compare Versions

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1	1	84R2006 BEF-F
2	2	By: Lozano H.B. No. 1928
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to franchise tax and insurance premium tax credits for
8	8	investment in certain communities; imposing a monetary penalty;
9	9	authorizing fees.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Title 2, Tax Code, is amended by adding Subtitle
12	12	K to read as follows:
13	13	SUBTITLE K. CREDITS APPLICABLE TO MULTIPLE TAXES
14	14	CHAPTER 221. FRANCHISE TAX AND INSURANCE PREMIUM TAX CREDITS FOR
15	15	INVESTMENT IN CERTAIN COMMUNITIES
16	16	SUBCHAPTER A. GENERAL PROVISIONS
17	17	Sec. 221.001. GENERAL DEFINITIONS. In this chapter:
18	18	(1) "Applicable percentage" means zero percent for the
19	19	first two credit allowance dates, seven percent for the third
20	20	credit allowance date, and eight percent for the next four credit
21	21	allowance dates.
22	22	(2) "Credit allowance date" means, with respect to any
23	23	qualified equity investment:
24	24	(A) the date on which the investment is initially
25	25	made; and
26	26	(B) the anniversary of that date in each of the
27	27	six years immediately following that date.
28	28	(3) "Federal tax regulations" means regulations
29	29	adopted under the Internal Revenue Code of 1986 that are applicable
30	30	to the tax year to which the provisions of the code in effect on
31	31	September 1, 2015, applied.
32	32	(4) "Franchise tax" means the tax imposed under
33	33	Chapter 171.
34	34	(5) "Internal Revenue Code" means the Internal Revenue
35	35	Code of 1986 in effect on September 1, 2015, excluding any changes
36	36	made by federal law after that date, but including any regulations
37	37	adopted under that code that are applicable to the tax year to which
38	38	the provisions of the code in effect on that date applied.
39	39	(6) "Purchase price" means the amount paid to the
40	40	issuer of a qualified equity investment for the qualified equity
41	41	investment, including any underwriter's fees.
42	42	(7) "State premium tax liability" means any premium
43	43	tax liability incurred under Chapter 221, 222, 223, 223A, or 224,
44	44	Insurance Code.
45	45	(8) "Taxable entity" has the meaning assigned by
46	46	Section 171.0002.
47	47	Sec. 221.002. DEFINITION: LONG-TERM DEBT SECURITY. (a) In
48	48	this chapter, "long-term debt security" means a debt instrument
49	49	issued by a qualified community development entity, at par value or
50	50	a premium, with an original maturity date not earlier than the
51	51	seventh year after the date on which the debt instrument is issued,
52	52	with no acceleration of repayment, amortization, or prepayment
53	53	features before its original maturity date.
54	54	(b) The qualified community development entity that issues
55	55	a long-term debt security may not make cash interest payments on the
56	56	security during the period beginning on the date on which the
57	57	security is issued and ending on the final credit allowance date in
58	58	an amount that exceeds the cumulative operating income, as defined
59	59	by federal tax regulations adopted under Section 45D, Internal
60	60	Revenue Code, of the qualified community development entity for
61	61	that period before giving effect to the interest expense of the
62	62	long-term debt security.
63	63	(c) This section does not limit the holder's ability to
64	64	accelerate payments on a long-term debt security in situations in
65	65	which the issuer has defaulted on covenants designed to ensure
66	66	compliance with this chapter or Section 45D, Internal Revenue Code.
67	67	Sec. 221.003. DEFINITION: QUALIFIED ACTIVE LOW-INCOME
68	68	COMMUNITY BUSINESS. (a) In this chapter, "qualified active
69	69	low-income community business" has the meaning assigned by Section
70	70	45D, Internal Revenue Code, and Section 1.45D-1 of the federal tax
71	71	regulations.
72	72	(b) A business is considered a qualified active low-income
73	73	community business for the duration of the qualified community
74	74	development entity's investment in, or loan to, the business if the
75	75	entity reasonably expects, at the time it makes the investment or
76	76	loan, that the business will continue to satisfy the requirements
77	77	for being a qualified active low-income community business
78	78	throughout the entire period of the investment or loan.
79	79	Sec. 221.004. DEFINITION: QUALIFIED COMMUNITY DEVELOPMENT
80	80	ENTITY. In this chapter, "qualified community development entity"
81	81	has the meaning assigned by Section 45D, Internal Revenue Code,
82	82	provided that the entity has entered into, for the current year or
83	83	any prior year, an allocation agreement with the community
84	84	development financial institutions fund of the United States
85	85	Department of the Treasury with respect to credits authorized by
86	86	Section 45D, Internal Revenue Code, that includes this state in the
87	87	service area specified in the allocation agreement. The term
88	88	includes a qualified community development entity that is
89	89	controlled by or under common control with another qualified
90	90	community development entity described by this section.
91	91	Sec. 221.005. DEFINITION: QUALIFIED EQUITY INVESTMENT. (a)
92	92	An investment or security is a "qualified equity investment" for
93	93	purposes of this chapter if:
94	94	(1) the investment or security is an equity investment
95	95	in, or long-term debt security issued by, a qualified community
96	96	development entity;
97	97	(2) the investment or security is acquired on or after
98	98	October 1, 2015, at its original issuance solely in exchange for
99	99	cash, except as provided by Subsection (b);
100	100	(3) not later than the second anniversary of the date
101	101	of issuance at least 85 percent of the investment's or security's
102	102	purchase price is used by the issuer to make qualified low-income
103	103	community investments in this state; and
104	104	(4) the investment or security is designated by the
105	105	issuer as a qualified equity investment under this section and is
106	106	certified by the comptroller as not exceeding the limitations
107	107	provided by Section 221.154.
108	108	(b) A qualified equity investment includes an investment or
109	109	security that does not satisfy the requirements of Subsection
110	110	(a)(2) if the investment or security was a qualified equity
111	111	investment in the hands of a prior holder.
112	112	Sec. 221.006. DEFINITION: QUALIFIED INVESTOR. In this
113	113	chapter, "qualified investor" means an entity that invests in a
114	114	qualified equity investment.
115	115	Sec. 221.007. DEFINITION: QUALIFIED LOW-INCOME COMMUNITY
116	116	INVESTMENT. In this chapter, "qualified low-income community
117	117	investment" means a capital or equity investment in, or loan to, a
118	118	qualified active low-income community business made by a qualified
119	119	community development entity.
120	120	Sec. 221.008. RULES. The comptroller shall adopt rules
121	121	necessary to implement this chapter.
122	122	Sec. 221.009. AUDIT BY COMPTROLLER. The comptroller shall
123	123	review or audit the investments of a qualified community
124	124	development entity on a periodic basis. In conducting the review or
125	125	audit, the comptroller shall ensure that the qualified community
126	126	development entity has made and maintained the investment required
127	127	under Section 221.201(a)(3) to avoid recapture of a credit claimed
128	128	in connection with a qualified equity investment.
129	129	Sec. 221.010. ELECTION OF CREDIT. (a) A qualified investor
130	130	or a subsequent holder of a qualified equity investment may not
131	131	claim a credit under both Subchapters B and C for the amount of
132	132	credit accrued on a credit allowance date.
133	133	(b) A qualified investor or a subsequent holder of a
134	134	qualified equity investment who qualifies for a credit under both
135	135	Subchapters B and C for the amount of credit accrued on a credit
136	136	allowance date shall:
137	137	(1) elect under which subchapter to claim a credit for
138	138	the amount of credit accrued on that date; and
139	139	(2) notify the comptroller of that election.
140	140	(c) The limitation specified by Subsection (a) and the
141	141	election required by Subsection (b) do not apply to a credit
142	142	carryforward under Section 221.054 or 221.104.
143	143	SUBCHAPTER B. FRANCHISE TAX CREDIT
144	144	Sec. 221.051. ELIGIBILITY FOR CREDIT. Subject to Section
145	145	221.010, a taxable entity is eligible for a credit against the tax
146	146	imposed under Chapter 171 in the amount provided by this subchapter
147	147	and under the conditions and limitations provided by this chapter.
148	148	Sec. 221.052. QUALIFICATION. A taxable entity is eligible
149	149	for a credit if the taxable entity is:
150	150	(1) a qualified investor who holds a qualified equity
151	151	investment on a credit allowance date; or
152	152	(2) a subsequent holder of a qualified equity
153	153	investment who holds the investment on a credit allowance date.
154	154	Sec. 221.053. AMOUNT OF CREDIT; LIMITATION. (a) The amount
155	155	of credit for a report is equal to the credit accrued, as determined
156	156	under Subsection (b), on each credit allowance date:
157	157	(1) that occurs during the period on which the report
158	158	is based; and
159	159	(2) on which the taxable entity holds the qualified
160	160	equity investment.
161	161	(b) The amount of credit accrued on a credit allowance date
162	162	equals the applicable percentage for the credit allowance date
163	163	multiplied by the purchase price paid to the issuer of the qualified
164	164	equity investment.
165	165	(c) The total credit claimed for a report, including the
166	166	amount of any carryforward under Section 221.054, may not exceed
167	167	the amount of franchise tax due for the report after applying all
168	168	other applicable tax credits.
169	169	Sec. 221.054. CARRYFORWARD. If a taxable entity is
170	170	eligible for a credit that exceeds the limitation under Section
171	171	221.053(c), the taxable entity may carry the unused credit forward
172	172	for not more than 20 consecutive reports. Credits, including
173	173	credit carryforwards, are considered to be used in the following
174	174	order:
175	175	(1) a credit carryforward under this subchapter; and
176	176	(2) a current year credit.
177	177	Sec. 221.055. BURDEN OF ESTABLISHING CREDIT. The burden of
178	178	establishing entitlement to and the value of the credit is on the
179	179	taxable entity.
180	180	Sec. 221.056. ASSIGNMENT PROHIBITED. A taxable entity may
181	181	not convey, assign, or transfer the credit allowed under this
182	182	subchapter to another entity.
183	183	Sec. 221.057. APPLICATION FOR CREDIT. A taxable entity
184	184	must apply for a credit under this subchapter on or with the tax
185	185	report for the period for which the credit is claimed.
186	186	SUBCHAPTER C. INSURANCE PREMIUM TAX CREDIT
187	187	Sec. 221.101. ELIGIBILITY FOR CREDIT. Subject to Section
188	188	221.010, an entity is eligible for a credit against the entity's
189	189	state premium tax liability in the amount provided by this
190	190	subchapter and under the conditions and limitations provided by
191	191	this chapter.
192	192	Sec. 221.102. QUALIFICATION. An entity is eligible for a
193	193	credit if the entity is:
194	194	(1) a qualified investor who holds a qualified equity
195	195	investment on a credit allowance date; or
196	196	(2) a subsequent holder of a qualified equity
197	197	investment who holds the investment on a credit allowance date.
198	198	Sec. 221.103. AMOUNT OF CREDIT; LIMITATION. (a) The amount
199	199	of credit for a tax year is equal to the credit accrued, as
200	200	determined under Subsection (b), on each credit allowance date:
201	201	(1) that occurs during the tax year; and
202	202	(2) on which the entity holds the qualified equity
203	203	investment.
204	204	(b) The amount of credit accrued on a credit allowance date
205	205	equals the applicable percentage for the credit allowance date
206	206	multiplied by the purchase price paid to the issuer of the qualified
207	207	equity investment.
208	208	(c) The total credit claimed for a tax year, including the
209	209	amount of any carryforward under Section 221.104, may not exceed
210	210	the amount of state premium tax liability due for the tax year after
211	211	applying all other applicable tax credits.
212	212	Sec. 221.104. CARRYFORWARD. If an entity is eligible for a
213	213	credit that exceeds the limitation under Section 221.103(c), the
214	214	entity may carry the unused credit forward for not more than 20
215	215	consecutive tax reports. Credits, including credit carryforwards,
216	216	are considered to be used in the following order:
217	217	(1) a credit carryforward under this subchapter; and
218	218	(2) a current year credit.
219	219	Sec. 221.105. BURDEN OF ESTABLISHING CREDIT. The burden of
220	220	establishing entitlement to and the value of the credit is on the
221	221	entity.
222	222	Sec. 221.106. ASSIGNMENT PROHIBITED. An entity may not
223	223	convey, assign, or transfer the credit allowed under this
224	224	subchapter to another entity.
225	225	Sec. 221.107. APPLICATION FOR CREDIT. An entity must apply
226	226	for a credit under this subchapter on or with the tax report for the
227	227	tax year for which the credit is claimed.
228	228	Sec. 221.108. RETALIATORY TAX. (a) An entity claiming a
229	229	credit under this subchapter is not required to pay any additional
230	230	retaliatory tax levied under Chapter 281, Insurance Code, as a
231	231	result of claiming that credit.
232	232	(b) In addition to the exclusion provided by Subsection (a),
233	233	an entity claiming a credit under this subchapter is not required to
234	234	pay any additional tax that may arise as a result of claiming that
235	235	credit.
236	236	SUBCHAPTER D. CERTIFICATION AS QUALIFIED EQUITY INVESTMENT
237	237	Sec. 221.151. APPLICATION FOR CERTIFICATION AS QUALIFIED
238	238	EQUITY INVESTMENT. (a) A qualified community development entity
239	239	that seeks to have an equity investment or long-term debt security
240	240	certified as a qualified equity investment eligible for credits
241	241	under this chapter must apply to the comptroller as provided by this
242	242	section.
243	243	(b) An application under this section must include the
244	244	following:
245	245	(1) evidence of the applicant's certification as a
246	246	qualified community development entity, including evidence of the
247	247	service area of the entity that includes this state;
248	248	(2) a copy of an allocation agreement executed by the
249	249	applicant, or its controlling entity, and the community development
250	250	financial institutions fund of the United States Department of the
251	251	Treasury;
252	252	(3) a certificate executed by an executive officer of
253	253	the applicant attesting that the allocation agreement remains in
254	254	effect and has not been revoked or canceled by the community
255	255	development financial institutions fund;
256	256	(4) a description of the amount and structure of the
257	257	equity investment or long-term debt security proposed to be
258	258	certified;
259	259	(5) examples of the types of qualified active
260	260	low-income community businesses in which the applicant, its
261	261	controlling entity, or affiliates of its controlling entity have
262	262	invested under the federal New Markets Tax Credit Program;
263	263	(6) a nonrefundable application fee of $5,000 to be
264	264	paid to the comptroller; and
265	265	(7) the refundable performance deposit required by
266	266	Subchapter F.
267	267	Sec. 221.152. ACTION ON APPLICATION. (a) Not later than
268	268	the 30th day after the date an application under Section 221.151 is
269	269	received, the comptroller shall grant or deny the application in
270	270	full or part.
271	271	(b) If the comptroller denies the application, the
272	272	comptroller shall inform the applicant of the denial.
273	273	Sec. 221.153. CERTIFICATION OF QUALIFIED EQUITY
274	274	INVESTMENT. (a) If an application under Section 221.151 is
275	275	granted, the comptroller shall certify the proposed equity
276	276	investment or long-term debt security as a qualified equity
277	277	investment that is eligible for credits under this chapter, subject
278	278	to Section 221.154.
279	279	(b) The comptroller shall provide written notice of the
280	280	certification to the qualified community development entity.
281	281	Sec. 221.154. LIMIT ON CERTIFIED INVESTMENTS. (a) Subject
282	282	to Subsection (b), not more than $250 million in qualified equity
283	283	investments may be certified under Section 221.153.
284	284	(b) The comptroller shall allocate at least 50 percent of
285	285	the amount available under Subsection (a) to certify applications
286	286	from applicants that:
287	287	(1) have an allocation agreement with the community
288	288	development financial institutions fund of the United States
289	289	Department of the Treasury that requires the applicant to invest at
290	290	least 50 percent of the applicant's qualified equity investments in
291	291	nonmetropolitan areas; and
292	292	(2) will invest the amount certified in census tracts
293	293	that are not part of a metropolitan statistical area or
294	294	municipality with a population of more than 50,000.
295	295	(c) Subject to Subsection (d), if a pending application
296	296	cannot be fully certified due to the limit under Subsection (a) or
297	297	(b), the comptroller shall certify the portion that can be
298	298	certified.
299	299	(d) The comptroller shall certify qualified equity
300	300	investments in the order in which applications are received by the
301	301	comptroller. Applications received on the same day are considered
302	302	to have been received simultaneously. For applications that are
303	303	complete and received on the same day and for which the total
304	304	amounts requested cannot be certified because of the limit
305	305	specified by Subsection (a) or (b), the comptroller shall certify,
306	306	consistent with remaining qualified equity investment capacity,
307	307	the qualified equity investments in proportionate percentages
308	308	based on the proportion that the amount of qualified equity
309	309	investment requested in an application bears to the total amount of
310	310	qualified equity investments requested in all applications
311	311	received on the same day.
312	312	Sec. 221.155. TRANSFER OF INVESTMENT AUTHORITY. A
313	313	qualified community development entity whose application for
314	314	certification of a qualified equity investment is approved under
315	315	this subchapter may transfer all or a portion of its certified
316	316	qualified equity investment authority to its controlling entity or
317	317	to a qualified community development entity controlled by or under
318	318	common control with the transferring entity, if the transferring
319	319	entity:
320	320	(1) provides the information required in the
321	321	application under Section 221.151(b) with respect to the recipient
322	322	of the transfer; and
323	323	(2) notifies the comptroller of the transfer not later
324	324	than the 30th day after the date of the transfer.
325	325	Sec. 221.156. ISSUANCE OF QUALIFIED EQUITY INVESTMENT; FEE.
326	326	(a) Not later than the second anniversary of the date the qualified
327	327	community development entity receives notice of certification, the
328	328	entity or a recipient of a transfer under Section 221.155 shall
329	329	issue the qualified equity investment and receive cash in the
330	330	amount certified.
331	331	(b) The qualified community development entity or a
332	332	recipient of a transfer under Section 221.155 must provide the
333	333	comptroller with evidence of the receipt of the cash investment not
334	334	later than the 10th business day after the date the cash investment
335	335	is received.
336	336	(c) At the time the qualified community development entity
337	337	or a recipient of a transfer under Section 221.155 issues the
338	338	qualified equity investment, the qualified community development
339	339	entity or transfer recipient shall pay to the comptroller a fee
340	340	equal to 20 basis points of the amount issued. Fees collected under
341	341	this subsection may be appropriated only to pay the cost of
342	342	preparing a report under Section 221.352.
343	343	Sec. 221.157. LAPSE OF CERTIFICATION. (a) If the qualified
344	344	community development entity or a recipient of a transfer under
345	345	Section 221.155 does not issue the qualified equity investment and
346	346	receive the cash investment before the second anniversary of the
347	347	date the certification notice is received as required by Section
348	348	221.156, the certification lapses and the qualified community
349	349	development entity or recipient of the transfer may not accept an
350	350	equity investment or issue a long-term debt security as a qualified
351	351	equity investment without reapplying to the comptroller for
352	352	certification.
353	353	(b) If a certification lapses under this section, the
354	354	comptroller shall reissue the previously certified amount, giving
355	355	preference to an applicant for reissuance of certification whose
356	356	proposed amount for certification was previously certified in a
357	357	reduced amount under Section 221.154. If more than one applicant
358	358	for reissuance of certification had its proposed amount reduced,
359	359	the comptroller shall reissue the certified amount to those
360	360	applicants in amounts determined by the comptroller, subject to the
361	361	limits specified by Section 221.154.
362	362	(c) After reissuing certifications under Subsection (b),
363	363	the comptroller shall reissue any certified amounts remaining to
364	364	applicants in amounts determined by the comptroller, subject to the
365	365	limits specified by Section 221.154.
366	366	SUBCHAPTER E. RECAPTURE OF CREDIT
367	367	Sec. 221.201. RECAPTURE. (a) Subject to Section 221.202,
368	368	the comptroller shall recapture the amount of a credit claimed on a
369	369	report filed under Chapter 171 or a premium tax report filed under
370	370	Chapter 221, 222, 223, 223A, or 224, Insurance Code, from the
371	371	qualified investor or a subsequent holder of the qualified equity
372	372	investment that claims the credit if:
373	373	(1) any amount of a federal tax credit available with
374	374	respect to a qualified equity investment that is eligible for a
375	375	credit under this chapter is recaptured under Section 45D, Internal
376	376	Revenue Code, in which case the comptroller's recapture must be
377	377	proportionate to the federal recapture with respect to the
378	378	qualified equity investment;
379	379	(2) the issuer redeems or makes principal repayment
380	380	with respect to a qualified equity investment before the seventh
381	381	anniversary of the date the qualified equity investment is issued,
382	382	in which case the comptroller's recapture must be proportionate to
383	383	the amount of the redemption or repayment with respect to the
384	384	qualified equity investment; or
385	385	(3) the issuer fails to invest an amount equal to 85
386	386	percent of the purchase price of the qualified equity investment in
387	387	qualified low-income community investments in this state not later
388	388	than the second anniversary of the date the qualified equity
389	389	investment is issued, or fails to maintain 85 percent of that level
390	390	of investment in qualified low-income community investments in this
391	391	state until the last credit allowance date for the qualified equity
392	392	investment.
393	393	(b) For purposes of this chapter, a qualified low-income
394	394	community investment is considered held by an issuer even if the
395	395	investment has been sold or repaid if the issuer reinvests an amount
396	396	equal to the capital returned to or recovered by the issuer from the
397	397	original investment, exclusive of any profits realized, in another
398	398	qualified low-income community investment not later than the 12th
399	399	month after the date the issuer receives the capital.
400	400	(c) An issuer is not required to reinvest capital returned
401	401	from a qualified low-income community investment after the sixth
402	402	anniversary of the date the qualified equity investment whose
403	403	proceeds were used to make the qualified low-income community
404	404	investment was issued. The qualified low-income community
405	405	investment is considered held by the issuer through the seventh
406	406	anniversary of the date the qualified equity investment was issued.
407	407	(d) Periodic amounts received during a calendar year as
408	408	repayment of principal on a loan that is a qualified low-income
409	409	community investment shall be treated as continuously invested in a
410	410	qualified low-income community investment if the amounts are
411	411	reinvested in one or more qualified low-income community
412	412	investments not later than the last day of the following calendar
413	413	year.
414	414	Sec. 221.202. NOTICE OF NONCOMPLIANCE. (a) The
415	415	comptroller shall notify a qualified community development entity
416	416	and a qualified investor that has claimed a credit on a report if
417	417	the credit is subject to recapture under Section 221.201.
418	418	(b) The comptroller may not recapture a credit under this
419	419	subchapter if the qualified community development entity cures the
420	420	noncompliance described by Section 221.201 before the 90th day
421	421	after the date the qualified community development entity receives
422	422	notice under Subsection (a).
423	423	SUBCHAPTER F. SECURITY FOR PERFORMANCE
424	424	Sec. 221.251. SECURITY REQUIRED. Not later than the 14th
425	425	day after the date a qualified equity investment is certified under
426	426	Subchapter D, the qualified community development entity that
427	427	received investment authority for the qualified equity investment
428	428	must deposit $500,000 with the comptroller as a refundable
429	429	performance deposit to be deposited as required by Section 221.254.
430	430	Sec. 221.252. FAILURE TO PROVIDE SECURITY: LOSS OF
431	431	CERTIFICATION. The comptroller shall revoke the certification of
432	432	the qualified equity investment of a qualified community
433	433	development entity that fails to make a deposit under Section
434	434	221.251.
435	435	Sec. 221.253. FORFEITURE OF SECURITY. (a) A qualified
436	436	community development entity that makes a performance deposit under
437	437	Section 221.251 forfeits the deposit in its entirety if:
438	438	(1) the qualified community development entity and any
439	439	qualified community development entity to which a transfer is made
440	440	by the qualified community development entity under Section 221.155
441	441	fail to issue the total amount of qualified equity investments
442	442	certified by the comptroller and receive cash in the amount
443	443	certified under Section 221.153 not later than the date specified
444	444	by Section 221.156; or
445	445	(2) subject to Subsection (b), the qualified community
446	446	development entity or a qualified community development entity to
447	447	which a transfer is made by the qualified community development
448	448	entity under Section 221.155 that issues a qualified equity
449	449	investment certified under Section 221.153 fails to make or
450	450	maintain the investment required under Section 221.201(a)(3) to
451	451	avoid recapture of a tax credit claimed in connection with the
452	452	qualified equity investment.
453	453	(b) A deposit is not subject to forfeiture under Subsection
454	454	(a)(2) if the qualified community development entity cures the
455	455	noncompliance before the 90th day after the date the qualified
456	456	community development entity receives notice under Subsection (c).
457	457	(c) The comptroller shall notify a qualified community
458	458	development entity that made a deposit under Section 221.251 if the
459	459	deposit is subject to forfeiture under this section.
460	460	Sec. 221.254. NEW MARKETS PERFORMANCE GUARANTEE FUND. (a)
461	461	The new markets performance guarantee fund is an interest-bearing
462	462	fund outside the state treasury with the comptroller. The fund
463	463	consists of money the comptroller deposits under Subsection (b).
464	464	The comptroller shall administer the fund.
465	465	(b) The comptroller shall deposit a performance deposit
466	466	made under Section 221.251 to the credit of the new markets
467	467	performance guarantee fund. The deposit must remain on deposit with
468	468	the fund until the comptroller determines that:
469	469	(1) the qualified community development entity has
470	470	complied with the provisions of this chapter; or
471	471	(2) the deposit has been forfeited and will be
472	472	deposited in accordance with Section 221.256.
473	473	Sec. 221.255. RELEASE OF SECURITY. (a) Not earlier than
474	474	the 30th day after the date the requirements that must be satisfied
475	475	to avoid forfeiture of a deposit as described by Section 221.253 are
476	476	satisfied, a qualified community development entity that made the
477	477	deposit may request a refund of the deposit from the comptroller.
478	478	(b) The comptroller shall refund the deposit or, if
479	479	applicable, give notice of noncompliance as described by Section
480	480	221.253 not later than the 30th day after the date of receiving a
481	481	request under Subsection (a).
482	482	Sec. 221.256. DEPOSIT OF FORFEITED SECURITY. The
483	483	comptroller shall deposit in the general revenue fund a deposit
484	484	forfeited under Section 221.253.
485	485	SUBCHAPTER G. EVALUATION OF BUSINESS BY COMPTROLLER
486	486	Sec. 221.301. EVALUATION REQUIRED. (a) Except as provided
487	487	by Subsection (c), a qualified community development entity or a
488	488	recipient of a transfer under Section 221.155 must, before making
489	489	an investment in a business, request a written opinion from the
490	490	comptroller as to whether the business in which the qualified
491	491	community development entity proposes to invest would qualify as a
492	492	qualified active low-income community business under Section
493	493	221.003.
494	494	(b) Not later than the 15th business day after the date of
495	495	the receipt of a request under Subsection (a), the comptroller
496	496	shall determine whether the business is a qualified active
497	497	low-income community business, notify the qualified community
498	498	development entity of the determination, and provide an explanation
499	499	of the determination.
500	500	(c) A qualified community development entity or a recipient
501	501	of a transfer under Section 221.155 is not required to request a
502	502	written opinion under Subsection (a) before making an investment in
503	503	a business if the qualified community development entity or
504	504	transfer recipient concurrently makes a federal qualified
505	505	low-income community investment in the business.
506	506	Sec. 221.302. CONSIDERATION OF FEDERAL TAX LAWS. In
507	507	issuing a written opinion and making other determinations under
508	508	this chapter, the comptroller shall consider Section 45D, Internal
509	509	Revenue Code, and the federal tax regulations issued under that
510	510	code, to the extent that those provisions are applicable.
511	511	SUBCHAPTER H. REPORTING
512	512	Sec. 221.351. REPORT TO COMPTROLLER. (a) Except as
513	513	provided by this subsection, a qualified community development
514	514	entity that issues a qualified equity investment under Section
515	515	221.156 shall submit an annual report to the comptroller not later
516	516	than the fifth business day after the anniversary of a credit
517	517	allowance date applicable to the investment. The qualified
518	518	community development entity is not required to submit any report
519	519	under this subsection after the annual report following the final
520	520	credit allowance date.
521	521	(b) The report must:
522	522	(1) provide evidence that the qualified community
523	523	development entity has made and maintained the investment required
524	524	under Section 221.201(a)(3) to avoid recapture of a credit claimed
525	525	in connection with the qualified equity investment;
526	526	(2) include one or more bank statements for the
527	527	qualified community development entity that reflect each qualified
528	528	low-income community investment made by the qualified community
529	529	development entity in connection with the qualified equity
530	530	investment;
531	531	(3) state the name, location, and industry code of
532	532	each qualified active low-income community business receiving a
533	533	qualified low-income community investment in connection with the
534	534	qualified equity investment;
535	535	(4) state the number of employment positions created
536	536	and retained as a result of each qualified low-income community
537	537	investment made in connection with the qualified equity investment;
538	538	(5) state whether the qualified community development
539	539	entity has been subject to a recapture of any amount of a federal
540	540	tax credit available under Section 45D, Internal Revenue Code, with
541	541	respect to the qualified equity investment; and
542	542	(6) include a copy of the most recent annual report
543	543	submitted by the qualified community development entity to the
544	544	United States Department of the Treasury regarding Section 45D,
545	545	Internal Revenue Code.
546	546	(c) A qualified community development entity that fails to
547	547	submit a report to the comptroller within the time prescribed by
548	548	Subsection (a) shall pay to the comptroller a penalty equal to the
549	549	sum of:
550	550	(1) $25,000; and
551	551	(2) $5,000 for each day the report is not submitted
552	552	after the date the report is due under Subsection (a).
553	553	Sec. 221.352. COMPTROLLER'S REPORT TO THE LEGISLATURE. (a)
554	554	The comptroller shall contract with an independent researcher at a
555	555	center for research established under Section 1.005, Education
556	556	Code, to prepare a biennial report with respect to the
557	557	implementation of this chapter.
558	558	(b) The report must include:
559	559	(1) the number of qualified community development
560	560	entities holding certified qualified equity investments;
561	561	(2) the amount of qualified equity investments of each
562	562	qualified community development entity;
563	563	(3) the investments each qualified community
564	564	development entity has made in qualified active low-income
565	565	community businesses as of the most recent annual report submitted
566	566	to the comptroller by the qualified community development entity;
567	567	(4) the total amount of credits earned under this
568	568	chapter;
569	569	(5) the performance of each qualified community
570	570	development entity with respect to reporting requirements imposed
571	571	by this chapter;
572	572	(6) with respect to each qualified active low-income
573	573	community business in which a qualified community development
574	574	entity has invested:
575	575	(A) the classification of the qualified active
576	576	low-income community business according to the industrial sector
577	577	and the size of the business;
578	578	(B) the total number of jobs created by the
579	579	qualified low-income community investment and the average wages
580	580	paid for the jobs; and
581	581	(C) the total number of jobs retained as a result
582	582	of the qualified low-income community investment and the average
583	583	wages paid for the jobs; and
584	584	(7) an analysis of the effect implementation of this
585	585	chapter has had during the period covered by the report on:
586	586	(A) economic activity in this state; and
587	587	(B) state tax revenue.
588	588	(c) The comptroller shall file the report with the governor,
589	589	the lieutenant governor, and the speaker of the house of
590	590	representatives not later than December 15 of each even-numbered
591	591	year.
592	592	SECTION 2. (a) As soon as practicable after the effective
593	593	date of this Act, the comptroller of public accounts shall adopt
594	594	rules necessary to implement the provisions of Chapter 221, Tax
595	595	Code, as added by this Act.
596	596	(b) The comptroller of public accounts shall accept
597	597	applications for certification of qualified equity investments as
598	598	required by Chapter 221, Tax Code, as added by this Act, beginning
599	599	not later than October 2, 2015.
600	600	SECTION 3. Subchapter B, Chapter 221, Tax Code, as added by
601	601	this Act, applies only to a report under Chapter 171, Tax Code,
602	602	originally due on or after January 1, 2016.
603	603	SECTION 4. Subchapter C, Chapter 221, Tax Code, as added by
604	604	this Act, applies only to a tax report originally due on or after
605	605	January 1, 2016.
606	606	SECTION 5. This Act takes effect September 1, 2015.