Texas 2015 - 84th Regular

Texas House Bill HB246 Compare Versions

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1	1	84R26129 TJB-F
2	2	By: Martinez Fischer H.B. No. 246
3	3	Substitute the following for H.B. No. 246:
4	4	By: Bohac C.S.H.B. No. 246
5	5
6	6
7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to franchise tax credits for businesses that employ
10	10	veterans; adding provisions subject to a criminal penalty.
11	11	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
12	12	SECTION 1. Chapter 171, Tax Code, is amended by adding
13	13	Subchapters P and Q to read as follows:
14	14	SUBCHAPTER P. TAX CREDITS FOR EMPLOYMENT OF VETERANS
15	15	Sec. 171.771. DEFINITIONS. In this subchapter:
16	16	(1) "Agricultural processing" means an establishment
17	17	primarily engaged in activities described in categories 0724,
18	18	2011-2099, or 3111-3199 of the 1987 Standard Industrial
19	19	Classification Manual published by the United States Department of
20	20	Labor.
21	21	(2) "Central administrative offices" means an
22	22	establishment primarily engaged in performing management or
23	23	support services for other establishments of the same enterprise.
24	24	An enterprise consists of all establishments having more than 50
25	25	percent common direct or indirect ownership.
26	26	(3) "Data processing" means an establishment
27	27	primarily engaged in activities described in categories 7371-7379
28	28	of the 1987 Standard Industrial Classification Manual published by
29	29	the United States Department of Labor.
30	30	(4) "Distribution" means an establishment primarily
31	31	engaged in activities described in categories 5012-5199 of the 1987
32	32	Standard Industrial Classification Manual published by the United
33	33	States Department of Labor.
34	34	(5) "Group health benefit plan" means:
35	35	(A) a health plan provided by a health
36	36	maintenance organization established under Chapter 843, Insurance
37	37	Code;
38	38	(B) a health benefit plan approved by the
39	39	commissioner of insurance; or
40	40	(C) a self-funded or self-insured employee
41	41	welfare benefit plan that provides health benefits and is
42	42	established in accordance with the Employee Retirement Income
43	43	Security Act of 1974 (29 U.S.C. Section 1001 et seq.).
44	44	(6) "Manufacturing" means an establishment primarily
45	45	engaged in activities described in categories 2011-3999 of the 1987
46	46	Standard Industrial Classification Manual published by the United
47	47	States Department of Labor.
48	48	(7) "Qualified business" means an establishment
49	49	primarily engaged in agricultural processing, central
50	50	administrative offices, distribution, data processing,
51	51	manufacturing, research and development, or warehousing.
52	52	(8) "Qualifying job" means a new permanent full-time
53	53	job that:
54	54	(A) is held by a veteran;
55	55	(B) pays an annual wage of at least $50,000,
56	56	subject to Section 171.772;
57	57	(C) is covered by a group health benefit plan for
58	58	which the business pays at least 80 percent of the premiums or other
59	59	charges assessed under the plan for the employee; and
60	60	(D) is not created to replace a previous
61	61	employee.
62	62	(9) "Research and development" means an establishment
63	63	primarily engaged in activities described in category 8731 of the
64	64	1987 Standard Industrial Classification Manual published by the
65	65	United States Department of Labor.
66	66	(10) "Veteran" means a person who:
67	67	(A) has served in:
68	68	(i) the armed forces of the United States or
69	69	the United States Public Health Service under 42 U.S.C. Section 201
70	70	et seq.;
71	71	(ii) the Texas military forces, as defined
72	72	by Section 437.001, Government Code; or
73	73	(iii) an auxiliary service of a branch of
74	74	the armed forces described by Subparagraph (i) or (ii); and
75	75	(B) has been honorably discharged from the branch
76	76	of the service in which the person served.
77	77	(11) "Warehousing" means an establishment primarily
78	78	engaged in activities described in categories 4221-4226 of the 1987
79	79	Standard Industrial Classification Manual published by the United
80	80	States Department of Labor.
81	81	Sec. 171.772. BIENNIAL ADJUSTMENT OF WAGE FOR QUALIFYING
82	82	JOB. (a) In this section, "consumer price index" means the average
83	83	over a state fiscal biennium of the Consumer Price Index for All
84	84	Urban Consumers (CPI-U), U.S. City Average, published monthly by
85	85	the United States Bureau of Labor Statistics, or its successor in
86	86	function.
87	87	(b) Beginning in 2018, on January 1 of each even-numbered
88	88	year, the wage amount prescribed by Section 171.771(8) is increased
89	89	or decreased by an amount equal to the amount prescribed by that
90	90	section on December 31 of the preceding year multiplied by the
91	91	percentage increase or decrease during the preceding state fiscal
92	92	biennium in the consumer price index and rounded to the nearest
93	93	dollar.
94	94	(c) The amount determined under Subsection (b) applies to a
95	95	report originally due on or after the date the determination is
96	96	made.
97	97	(d) The comptroller shall make the determination required
98	98	by this section and may adopt rules related to making that
99	99	determination.
100	100	(e) A determination by the comptroller under this section is
101	101	final and may not be appealed.
102	102	Sec. 171.773. ELIGIBILITY. A taxable entity is eligible for
103	103	a credit against the tax imposed under this chapter if the taxable
104	104	entity:
105	105	(1) is a qualified business; and
106	106	(2) creates a minimum of 10 qualifying jobs.
107	107	Sec. 171.774. AMOUNT OF CREDIT. A taxable entity may
108	108	establish a credit equal to 25 percent of the total wages paid by
109	109	the taxable entity for each qualifying job during each of the first
110	110	12 months of employment of the person hired to perform the job that
111	111	occur during the period on which the report is based.
112	112	Sec. 171.775. LENGTH OF CREDIT. The credit established
113	113	shall be claimed in five equal installments of one-fifth the credit
114	114	amount over the five consecutive reports beginning with the report
115	115	based on the period during which the qualifying jobs were created.
116	116	Sec. 171.776. LIMITATIONS. (a) The total credit claimed
117	117	under this subchapter for a report, including the amount of any
118	118	carryforward credit under Section 171.777, may not exceed 50
119	119	percent of the amount of franchise tax due for the report before any
120	120	other applicable tax credits.
121	121	(b) The total credit claimed under this subchapter and
122	122	Subchapter Q for a report, including the amount of any carryforward
123	123	credits, may not exceed the amount of franchise tax due for the
124	124	report after any other applicable credits.
125	125	Sec. 171.777. CARRYFORWARD. (a) If a taxable entity is
126	126	eligible for a credit that exceeds the limitations under Section
127	127	171.776, the taxable entity may carry the unused credit forward for
128	128	not more than five consecutive reports.
129	129	(b) A carryforward is considered the remaining portion of an
130	130	installment that cannot be claimed in the current year because of a
131	131	limitation under Section 171.776. A carryforward is added to the
132	132	next year's installment of the credit in determining the limitation
133	133	for that year. A credit carryforward from a previous report is
134	134	considered to be used before the current year installment.
135	135	Sec. 171.778. CERTIFICATION OF ELIGIBILITY. (a) For the
136	136	initial and each succeeding report on which a credit is claimed
137	137	under this subchapter, the taxable entity shall file with its
138	138	report, on a form provided by the comptroller, information that
139	139	sufficiently demonstrates that the taxable entity is eligible for
140	140	the credit.
141	141	(b) The burden of establishing entitlement to and the value
142	142	of the credit is on the taxable entity.
143	143	(c) A credit expires under this subchapter and the taxable
144	144	entity may not take any remaining installment of the credit if in
145	145	one of the five years in which the installment of a credit accrues,
146	146	the taxable entity fails to maintain the minimum number of
147	147	qualifying jobs required to be created by Section 171.773.
148	148	(d) Notwithstanding Subsection (c), the taxable entity may
149	149	take the portion of an installment that accrued in a previous year
150	150	and was carried forward to the extent permitted under Section
151	151	171.777.
152	152	Sec. 171.779. ASSIGNMENT PROHIBITED. A taxable entity may
153	153	not convey, assign, or transfer the credit allowed under this
154	154	subchapter to another entity unless all of the assets of the taxable
155	155	entity are conveyed, assigned, or transferred in the same
156	156	transaction.
157	157	Sec. 171.780. BIENNIAL REPORT BY COMPTROLLER. (a) Before
158	158	the beginning of each regular session of the legislature, the
159	159	comptroller shall submit to the governor, the lieutenant governor,
160	160	and the speaker of the house of representatives a report that
161	161	states:
162	162	(1) the total number of jobs created by taxable
163	163	entities that claim a credit under this subchapter and the average
164	164	and median annual wage of those jobs;
165	165	(2) the total amount of credits applied against the
166	166	tax under this chapter and the amount of unused credits including:
167	167	(A) the total amount of franchise tax due by
168	168	taxable entities claiming a credit under this subchapter before and
169	169	after the application of the credit;
170	170	(B) the average percentage reduction in
171	171	franchise tax due by taxable entities claiming a credit under this
172	172	subchapter; and
173	173	(C) the percentage of tax credits that were
174	174	awarded to taxable entities with fewer than 100 employees;
175	175	(3) the two-digit standard industrial classification
176	176	of taxable entities claiming a credit under this subchapter;
177	177	(4) the geographical distribution of the credits
178	178	claimed under this subchapter; and
179	179	(5) the effect of the credit provided under this
180	180	subchapter on employment, personal income, and capital investment
181	181	in this state and on state tax revenues.
182	182	(b) The final report issued before the expiration of this
183	183	subchapter must include historical information on the credit
184	184	authorized under this subchapter.
185	185	(c) The comptroller may not include in the report
186	186	information that is confidential by law.
187	187	(d) For purposes of this section, the comptroller may
188	188	require a taxable entity that claims a credit under this subchapter
189	189	to submit information, on a form provided by the comptroller, on the
190	190	location of the taxable entity's job creation in this state and any
191	191	other information necessary to complete the report required under
192	192	this section.
193	193	(e) The comptroller shall provide notice to the members of
194	194	the legislature that the report required under this section is
195	195	available on request.
196	196	Sec. 171.781. COMPTROLLER POWERS AND DUTIES. The
197	197	comptroller shall adopt rules and forms necessary to implement this
198	198	subchapter.
199	199	Sec. 171.782. EXPIRATION. (a) This subchapter expires
200	200	December 31, 2025.
201	201	(b) The expiration of this subchapter does not affect the
202	202	carryforward of a credit under Section 171.777 or those credits for
203	203	which a taxable entity is eligible before the date this subchapter
204	204	expires.
205	205	SUBCHAPTER Q. TAX CREDITS FOR CERTAIN CAPITAL INVESTMENTS MADE BY
206	206	BUSINESSES THAT EMPLOY VETERANS
207	207	Sec. 171.821. DEFINITIONS. In this subchapter:
208	208	(1) "Agricultural processing" and "qualified
209	209	business" have the meanings assigned those terms by Section
210	210	171.771.
211	211	(2) "Qualified capital investment" means tangible
212	212	personal property first placed in service in this state by a taxable
213	213	entity primarily engaged in agricultural processing, and that is
214	214	described in Section 1245(a), Internal Revenue Code, such as
215	215	engines, machinery, tools, and implements used in a trade or
216	216	business or held for investment and subject to an allowance for
217	217	depreciation, cost recovery under the accelerated cost recovery
218	218	system, or amortization. The term does not include real property or
219	219	buildings and their structural components. Property that is leased
220	220	under a capitalized lease is considered a "qualified capital
221	221	investment," but property that is leased under an operating lease
222	222	is not considered a "qualified capital investment." Property
223	223	expensed under Section 179, Internal Revenue Code, is not
224	224	considered a "qualified capital investment."
225	225	Sec. 171.822. ELIGIBILITY. (a) A qualified business is
226	226	eligible for a credit against the tax imposed under this chapter in
227	227	the amount and under the conditions and limitations provided by
228	228	this subchapter.
229	229	(b) To qualify for the credit authorized under this
230	230	subchapter, a qualified business must:
231	231	(1) pay an annual wage to each veteran employed by the
232	232	qualified business of at least the amount required for a qualifying
233	233	job as defined by Section 171.771 for the period on which the report
234	234	is based;
235	235	(2) offer health benefits coverage to all full-time
236	236	employees at the location with respect to which the credit is
237	237	claimed through a group health benefit plan, as defined by Section
238	238	171.771, for which the business pays at least 80 percent of the
239	239	premiums or other charges assessed under the plan for the
240	240	employees; and
241	241	(3) make a minimum $500,000 qualified capital
242	242	investment.
243	243	Sec. 171.823. AMOUNT OF CREDIT. A taxable entity may
244	244	establish a credit equal to 7.5 percent of the qualified capital
245	245	investment during the period on which the report is based.
246	246	Sec. 171.824. LENGTH OF CREDIT. The credit established
247	247	shall be claimed in five equal installments of one-fifth the credit
248	248	amount over the five consecutive reports beginning with the report
249	249	based on the period during which the qualified capital investment
250	250	was made.
251	251	Sec. 171.825. LIMITATIONS. (a) The total credit claimed
252	252	under this subchapter for a report, including the amount of any
253	253	carryforward credit under Section 171.826, may not exceed 50
254	254	percent of the amount of franchise tax due for the report before any
255	255	other applicable tax credits.
256	256	(b) The total credit claimed under this subchapter and
257	257	Subchapter P for a report, including the amount of any carryforward
258	258	credits, may not exceed the amount of franchise tax due for the
259	259	report after any other applicable tax credits.
260	260	Sec. 171.826. CARRYFORWARD. (a) If a taxable entity is
261	261	eligible for a credit from an installment that exceeds the
262	262	limitation under Section 171.825, the taxable entity may carry the
263	263	unused credit forward for not more than five consecutive reports.
264	264	(b) A carryforward is considered the remaining portion of an
265	265	installment that cannot be claimed in the current year because of a
266	266	limitation under Section 171.825. A carryforward is added to the
267	267	next year's installment of the credit in determining the limitation
268	268	for that year. A credit carryforward from a previous report is
269	269	considered to be used before the current year installment.
270	270	Sec. 171.827. CERTIFICATION OF ELIGIBILITY. (a) For the
271	271	initial and each succeeding report on which a credit is claimed
272	272	under this subchapter, the taxable entity shall file with its
273	273	report, on a form provided by the comptroller, information that
274	274	sufficiently demonstrates that the taxable entity is eligible for
275	275	the credit.
276	276	(b) The burden of establishing entitlement to and the value
277	277	of the credit is on the taxable entity.
278	278	(c) A credit expires under this subchapter and the taxable
279	279	entity may not take any remaining installment of the credit if in
280	280	one of the five years in which the installment of a credit accrues,
281	281	the taxable entity:
282	282	(1) disposes of the qualified capital investment;
283	283	(2) takes the qualified capital investment out of
284	284	service;
285	285	(3) moves the qualified capital investment out of this
286	286	state; or
287	287	(4) fails to pay in accordance with Section
288	288	171.822(b)(1) the annual wage required for a qualifying job under
289	289	Section 171.771 for the period covered by the report on which the
290	290	taxable entity would otherwise claim the credit.
291	291	(d) Notwithstanding Subsection (c), the taxable entity may
292	292	take the portion of an installment that accrued in a previous year
293	293	and was carried forward to the extent permitted under Section
294	294	171.826.
295	295	Sec. 171.828. ASSIGNMENT PROHIBITED. A taxable entity may
296	296	not convey, assign, or transfer the credit allowed under this
297	297	subchapter to another entity unless all of the assets of the taxable
298	298	entity are conveyed, assigned, or transferred in the same
299	299	transaction.
300	300	Sec. 171.829. BIENNIAL REPORT BY COMPTROLLER. (a) Before
301	301	the beginning of each regular session of the legislature, the
302	302	comptroller shall submit to the governor, the lieutenant governor,
303	303	and the speaker of the house of representatives a report that
304	304	states:
305	305	(1) the total amount of qualified capital investments
306	306	made by taxable entities that claim a credit under this subchapter
307	307	and the average and median wages paid by those taxable entities;
308	308	(2) the total amount of credits applied against the
309	309	tax under this chapter and the amount of unused credits, including:
310	310	(A) the total amount of franchise tax due by
311	311	taxable entities claiming a credit under this subchapter before and
312	312	after the application of the credit;
313	313	(B) the average percentage reduction in
314	314	franchise tax due by taxable entities claiming a credit under this
315	315	subchapter;
316	316	(C) the percentage of tax credits that were
317	317	awarded to taxable entities with fewer than 100 employees; and
318	318	(D) the two-digit standard industrial
319	319	classification of taxable entities claiming a credit under this
320	320	subchapter;
321	321	(3) the geographical distribution of the qualified
322	322	capital investments on which tax credit claims are made under this
323	323	subchapter; and
324	324	(4) the effect of the credit provided under this
325	325	subchapter on employment, personal income, and capital investment
326	326	in this state and on state tax revenues.
327	327	(b) The final report issued before the expiration of this
328	328	subchapter must include historical information on the credit
329	329	authorized under this subchapter.
330	330	(c) The comptroller may not include in the report
331	331	information that is confidential by law.
332	332	(d) For purposes of this section, the comptroller may
333	333	require a taxable entity that claims a credit under this subchapter
334	334	to submit information, on a form provided by the comptroller, on the
335	335	location of the taxable entity's capital investment in this state
336	336	and any other information necessary to complete the report required
337	337	under this section.
338	338	(e) The comptroller shall provide notice to the members of
339	339	the legislature that the report required under this section is
340	340	available on request.
341	341	Sec. 171.830. COMPTROLLER POWERS AND DUTIES. The
342	342	comptroller shall adopt rules and forms necessary to implement this
343	343	subchapter.
344	344	Sec. 171.831. EXPIRATION. (a) This subchapter expires
345	345	December 31, 2025.
346	346	(b) The expiration of this subchapter does not affect the
347	347	carryforward of a credit under Section 171.826 or those credits for
348	348	which a taxable entity is eligible before the date this subchapter
349	349	expires.
350	350	SECTION 2. This Act applies only to a report originally due
351	351	on or after the effective date of this Act.
352	352	SECTION 3. This Act takes effect January 1, 2016.