Texas 2015 - 84th Regular

Texas House Bill HB590 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	84R17440 TJB/CLG-F
2		-	By: Elkins H.B. No. 590
3		-	Substitute the following for H.B. No. 590:
4		-	By: Elkins C.S.H.B. No. 590
	1	+	By: Elkins, Lucio III, Button H.B. No. 590
5	2
6	3
7	4		A BILL TO BE ENTITLED
8	5		AN ACT
9	6		relating to the creation of research technology corporations for
10	7		the development and commercialization of technologies owned by
11	8		institutions of higher education or by certain medical centers with
12	9		members that are institutions of higher education; providing for
13	10		tax exemptions; providing a penalty.
14	11		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
15	12		SECTION 1. Subtitle H, Title 3, Education Code, is amended
16	13		by adding Chapter 157 to read as follows:
17	14		CHAPTER 157. UNIVERSITY RESEARCH TECHNOLOGY CORPORATIONS
18	15		Sec. 157.001. PURPOSE AND FINDINGS. The legislature finds
19	16		that the development and commercialization of technology owned by
20	17		public and private institutions of higher education and by medical
21	18		centers associated with those institutions are critical components
22	19		of the educational and research missions of those institutions and
23	20		key contributors to the economic development and well-being of this
24	21		state. The activities authorized by this chapter directly support
25	22		those important public purposes.
26	23		Sec. 157.002. DEFINITIONS. In this chapter:
27	24		(1) "Contribution" has the meaning assigned by Section
28	25		1.002, Business Organizations Code.
29	26		(2) "Institution of higher education" means an
30	27		institution of higher education or a private or independent
31	28		institution of higher education as those terms are defined by
32	29		Section 61.003.
33	30		(3) "Medical center development corporation" means a
34	31		nonprofit corporation that is eligible to claim an ad valorem tax
35	32		exemption under Section 11.23(j-1), Tax Code, for all or any part of
36	33		the corporation's properties.
37	34		(4) "Qualified medical center," with respect to an
38	35		institution of higher education, means a medical center development
39	36		corporation that includes among its member institutions, as
40	37		described in the corporation's books and records, one or more
41	38		institutions of higher education, regardless of whether those
42	39		institutions of higher education have membership status in the
43	40		qualified medical center for purposes of the Business Organizations
44	41		Code.
45	42		(5) "Technology" means the application of scientific
46	43		knowledge for practical purposes and includes inventions,
47	44		discoveries, patents, trade secrets, copyrighted materials, tools,
48	45		machines, materials, processes to do work, processes to produce
49	46		goods, processes to perform services, processes to carry out other
50	47		useful activities, trademarks, and computer software.
51	48		Sec. 157.003. CREATION OF SPECIAL-PURPOSE CORPORATION. (a)
52	49		Any person having the capacity to be an organizer of a corporation
53	50		as provided by Section 3.004, Business Organizations Code, may
54	51		create a special-purpose corporation for the exclusive purpose of
55	52		developing and commercializing one or more technologies owned
56	53		wholly or partly by an institution of higher education. To create
57	54		the special-purpose corporation, an organizer of the corporation
58	55		must present to the secretary of state written evidence that the
59	56		organizer has a license to develop and commercialize a specific
60	57		technology owned wholly or partly by an institution of higher
61	58		education. The license may be conditioned on the creation of the
62	59		special-purpose corporation.
63	60		(b) A person described by Subsection (a) may create a
64	61		special-purpose corporation for the exclusive purpose of
65	62		developing and commercializing technology owned wholly or partly by
66	63		a qualified medical center.
67	64		(c) A special-purpose corporation created under Subsection
68	65		(b) may be created in the same form and manner as a special-purpose
69	66		corporation created under Subsection (a). To that extent, a
70	67		qualified medical center that owns wholly or partly the technology
71	68		for which a special-purpose corporation is created under Subsection
72	69		(b) is governed by the same provisions of this chapter that are
73	70		applicable to an institution of higher education.
74	71		(d) A corporation created under this chapter that engages in
75	72		other purposes that are not incidental to the purposes authorized
76	73		by this section is not entitled to the benefits of this chapter,
77	74		including any tax exemption authorized by Section 157.008.
78	75		(e) The certificate of formation of a corporation created
79	76		under this chapter must state that the corporation is governed by
80	77		this chapter and state the name and purposes of the corporation and
81	78		other information required by law. Except as otherwise provided by
82	79		this chapter, a corporation created under this chapter is governed
83	80		by Chapters 20 and 21, Business Organizations Code, and Title 1 of
84	81		that code.
85	82		(f) The organizers of a corporation created under this
86	83		chapter shall register the corporation with the comptroller.
87	84		Sec. 157.004. MANAGEMENT OF CORPORATION; RIGHTS OF CREATING
88	85		INSTITUTION. (a) The organizers of a corporation created under
89	86		this chapter shall name the persons constituting the initial board
90	87		of directors of the corporation. Directors other than the initial
91	88		directors shall be determined as provided by Chapter 21, Business
92	89		Organizations Code.
93	90		(b) An institution of higher education that owns wholly or
94	91		partly the technology for which a corporation is created under this
95	92		chapter must at all times be a shareholder in the corporation. The
96	93		institution of higher education shall be issued shares in the
97	94		corporation when the corporation is created as agreed on by the
98	95		organizers of the corporation according to any contribution of the
99	96		institution.
100	97		(c) The institution of higher education described by
101	98		Subsection (b) may be issued shares in the corporation in exchange
102	99		for the contribution of rights in the technology of the institution
103	100		of higher education or of other contractual obligations, as agreed
104	101		on by the corporation's board of directors.
105	102		Sec. 157.005. TECHNOLOGY LICENSING. The institution of
106	103		higher education that owns wholly or partly the technology for
107	104		which a corporation is created under this chapter may license to the
108	105		corporation any technology owned by the institution of higher
109	106		education.
110	107		Sec. 157.006. REQUIRED OPERATIONS IN TEXAS. The principal
111	108		offices of the corporation must be located in this state, and more
112	109		than 50 percent of any goods produced or services performed by the
113	110		corporation must be produced or performed in this state.
114	111		Sec. 157.007. DURATION. (a) A corporation created under
115	112		this chapter is limited in duration to 15 years. At the expiration
116	113		of that period, the corporation may file a restated and amended
117	114		certificate of formation under which the corporation continues in
118	115		existence as a for-profit corporation governed by Chapters 20 and
119	116		21, Business Organizations Code, and Title 1 of that code. A
120	117		corporation that files a restated and amended certificate of
121	118		formation as authorized by this subsection is not governed by the
122		-	other provisions of this chapter, except that the corporation must
123		-	comply with Section 157.008 to obtain a tax exemption authorized by
124		-	that section and is subject to the penalty provided by Section
125		-	157.009 for noncompliance.
	119	+	other provisions of this chapter and is not entitled to an exemption
	120	+	authorized by Section 157.008.
126	121		(b) Subsection (a) does not limit the time or manner in
127	122		which the corporation may be terminated as otherwise provided by
128	123		law.
129	124		Sec. 157.008. TAX-EXEMPT STATUS OF CORPORATION. (a) This
130	125		section applies only to a corporation created under this chapter,
131		-	~~including~~ a corporation that files a restated and amended
	126	+	other than a corporation that files a restated and amended
132	127		certificate of formation as authorized by Section 157.007, that:
133	128		(1) is engaged exclusively in developing and
134	129		commercializing one or more technologies owned wholly or partly by
135	130		an institution of higher education or by a qualified medical
136	131		center, including activities that are incidental to developing and
137	132		commercializing those technologies; and
138	133		(2) complies with Section 157.006.
139	134		(b) The corporation is entitled to an exemption from ad
140	135		valorem taxation of real and tangible personal property as provided
141	136		by Section 11.232, Tax Code.
142	137		(c) The corporation is exempted from the sales and use tax
143	138		imposed by Chapter 151, Tax Code, as provided by Section 151.3183 of
144	139		that code.
145	140		(d) The corporation is exempted from the franchise tax
146	141		imposed by Chapter 171, Tax Code, as provided by Section 171.089 of
147	142		that code.
148	143		(e) This section does not limit the eligibility of the
149	144		corporation for any other available tax benefit, including a tax
150	145		benefit under Chapter 312 or 313, Tax Code.
151	146		(f) The corporation must maintain a complete record of all
152	147		taxes for which the corporation would have been liable if the
153	148		corporation had not been entitled to the exemptions authorized by
154	149		this section. The corporation shall report that information
155	150		annually to the comptroller in the form and manner required by the
156	151		comptroller.
157	152		(g) The comptroller shall adopt rules necessary to
158	153		implement this section and administer the exemptions under
159	154		Subsections (c) and (d).
160	155		Sec. 157.009. PENALTY FOR NONCOMPLIANCE WITH CORPORATE
161	156		OPERATIONS REQUIREMENTS. (a) A corporation created under this
162		-	chapter, including a corporation that files a restated and amended
163		-	certificate of formation as authorized by Section 157.007, that
164		-	ceases to comply with Section 157.006 is liable to the state for a
165		-	penalty in an amount equal to any taxes, including ad valorem taxes,
166		-	for which the corporation received an exemption under Section
167		-	157.008 for the four calendar years preceding the year in which the
168		-	noncompliance began. The comptroller shall determine the
169		-	corporation's liability for the penalty and assess the amount owed.
	157	+	chapter that ceases to comply with Section 157.006 is liable to the
	158	+	state for a penalty in an amount equal to any taxes, including ad
	159	+	valorem taxes, for which the corporation received an exemption
	160	+	under Section 157.008 for the four calendar years preceding the
	161	+	year in which the noncompliance began. The comptroller shall
	162	+	determine the corporation's liability for the penalty and assess
	163	+	the amount owed.
170	164		(b) A penalty assessed under this section is due on the date
171	165		designated by the comptroller, not later than the 90th day after the
172	166		date assessed, and shall be collected in the same manner as a state
173	167		tax. A lien exists on any property of the corporation to secure the
174	168		payment of any amount assessed under this section. The comptroller
175	169		is entitled to collect interest and penalties on the unpaid amount
176	170		of a delinquent penalty in the same manner as the manner prescribed
177	171		for the collection of a delinquent state tax. The comptroller by
178	172		rule shall establish the methods of payment and shall adopt other
179	173		rules necessary to administer and enforce this section.
180	174		(c) Amounts received under this section shall be deposited
181	175		in the state treasury to the credit of the general revenue fund.
182	176		Sec. 157.010. CONFLICT WITH BUSINESS ORGANIZATIONS CODE.
183	177		To the extent of any conflict between a provision of this chapter
184	178		and a provision of the Business Organizations Code, the provision
185	179		of this chapter controls.
186	180		SECTION 2. Subchapter B, Chapter 11, Tax Code, is amended by
187	181		adding Section 11.232 to read as follows:
188	182		Sec. 11.232. PROPERTY OWNED BY OR LEASED TO UNIVERSITY
189	183		RESEARCH TECHNOLOGY CORPORATION. (a) In this section,
190	184		"institution of higher education," "medical center development
191	185		corporation," "qualified medical center," and "technology" have
192	186		the meanings assigned by Section 157.002, Education Code.
193	187		(b) Except as provided by Subsection (c), a corporation that
194	188		qualifies as a university research technology corporation as
195	189		provided by Subsection (g) is entitled to an exemption from ad
196	190		valorem taxation of:
197	191		(1) the real and tangible personal property owned by
198	192		the corporation that is used for a purpose described by Subsection
199	193		(g)(2); and
200	194		(2) the real property owned by the corporation that
201	195		consists of:
202	196		(A) an incomplete improvement that is under
203	197		active construction or other physical preparation to make the
204	198		property suitable to be used for a purpose described by Subsection
205	199		(g)(2); and
206	200		(B) the land on which the incomplete improvement
207	201		is located that will be reasonably necessary for the corporation's
208	202		use of the improvement.
209	203		(c) A qualified university research technology corporation
210	204		is not entitled to an exemption from taxation of real or tangible
211	205		personal property:
212	206		(1) owned by an organizer or director of the
213	207		corporation before the creation of the corporation; and
214	208		(2) subject to taxation in this state before being
215	209		devoted exclusively to a purpose described by Subsection (g)(2).
216	210		(d) Notwithstanding Subsection (c), a qualified university
217	211		research technology corporation is entitled to an exemption from
218	212		taxation of the value of that portion of an improvement that
219	213		consists of an expansion of an improvement described by that
220	214		subsection if the improvement is devoted exclusively to a purpose
221	215		described by Subsection (g)(2).
222	216		(e) A medical center development corporation is entitled to
223	217		an exemption from taxation of the corporation's real and tangible
224	218		personal property that is leased to or used or occupied primarily by
225	219		a qualified university research technology corporation and used
226	220		exclusively for a purpose described by Subsection (g)(2).
227	221		(f) Notwithstanding Section 25.07, a qualified university
228	222		research technology corporation is entitled to an exemption from
229	223		taxation of a possessory interest in property described by
230	224		Subsection (e).
231	225		(g) To qualify as a university research technology
232	226		corporation for purposes of this section, a corporation must:
233	227		(1) be a corporation created under Chapter 157,
234		-	Education Code, ~~including~~ a corporation created under that chapter
	228	+	Education Code, other than a corporation created under that chapter
235	229		that files a restated and amended certificate of formation as
236	230		authorized by Section 157.007 of that code;
237	231		(2) be engaged exclusively in developing and
238	232		commercializing one or more technologies owned wholly or partly by
239	233		an institution of higher education or by a qualified medical
240	234		center, including activities that are incidental to developing and
241	235		commercializing those technologies; and
242	236		(3) be in compliance with Section 157.006, Education
243	237		Code.
244	238		SECTION 3. Section 11.42(d), Tax Code, is amended to read as
245	239		follows:
246	240		(d) A person who acquires property after January 1 of a tax
247	241		year may receive an exemption authorized by Section 11.17, 11.18,
248	242		11.19, 11.20, 11.21, 11.23, 11.231, 11.232, or 11.30 for the
249	243		applicable portion of that tax year immediately on qualification
250	244		for the exemption.
251	245		SECTION 4. The heading to Section 26.113, Tax Code, is
252	246		amended to read as follows:
253	247		Sec. 26.113. PRORATING TAXES--ACQUISITION BY NONPROFIT
254	248		ORGANIZATION OR UNIVERSITY RESEARCH TECHNOLOGY CORPORATION.
255	249		SECTION 5. Subchapter H, Chapter 151, Tax Code, is amended
256	250		by adding Section 151.3183 to read as follows:
257	251		Sec. 151.3183. UNIVERSITY RESEARCH TECHNOLOGY CORPORATION.
258	252		(a) In this section, "university research technology corporation"
259		-	means a corporation ~~described by~~ Section 157.008~~(a)~~, Education
260		-	~~Code~~.
	253	+	means a corporation to which Section 157.008, Education Code,
	254	+	applies.
261	255		(b) A taxable item sold, leased, or rented to, or stored,
262	256		used, or consumed by, a university research technology corporation
263	257		is exempted from the taxes imposed by this chapter if the item is
264	258		classified by the corporation as a capital asset. An item is
265	259		considered to be classified by the corporation as a capital asset if
266	260		the item is considered to be a capital asset according to generally
267	261		accepted accounting principles adopted by the Financial Accounting
268	262		Standards Board and is recognized by the corporation as a capital
269	263		asset on the corporation's federal income tax returns.
270	264		(c) The comptroller shall adopt rules necessary to
271	265		implement this section, including rules to ensure that a taxable
272	266		item with respect to which an exemption from the taxes imposed by
273	267		this chapter is granted under this section meets the requirements
274	268		of Subsection (b).
275	269		SECTION 6. Subchapter B, Chapter 171, Tax Code, is amended
276	270		by adding Section 171.089 to read as follows:
277	271		Sec. 171.089. EXEMPTION--UNIVERSITY RESEARCH TECHNOLOGY
278	272		CORPORATION. (a) In this section, "university research technology
279		-	corporation" means a corporation ~~described by~~ Section 157.008~~(a)~~,
280		-	Education Code.
281		-	(b) A university technology ~~research~~ corporation is
	273	+	corporation" means a corporation to which Section 157.008,
	274	+	Education Code, applies.
	275	+	(b) A university research technology corporation is
282	276		exempted from the franchise tax.
	277	+	(c) A corporation created as a university research
	278	+	technology corporation that files at the expiration of the period
	279	+	described by Section 157.007(a), Education Code, a restated and
	280	+	amended certificate of formation as authorized by that section is
	281	+	no longer exempted from the franchise tax by Subsection (b) on the
	282	+	expiration of that period. Unless the corporation is otherwise
	283	+	exempted from the franchise tax, the date of the expiration of that
	284	+	period is considered the corporation's beginning date for purposes
	285	+	of determining the corporation's privilege periods and for all
	286	+	other purposes of this chapter.
283	287		SECTION 7. Section 11.232, Tax Code, as added by this Act,
284	288		applies only to an ad valorem tax year that begins on or after the
285	289		effective date of this Act.
286	290		SECTION 8. Section 151.3183, Tax Code, as added by this Act,
287	291		does not affect tax liability accruing before the effective date of
288	292		this Act. That liability continues in effect as if this Act had not
289	293		been enacted, and the former law is continued in effect for the
290	294		collection of taxes due and for civil and criminal enforcement of
291	295		the liability for those taxes.
292	296		SECTION 9. The change in law made by this Act to Chapter
293	297		171, Tax Code, applies only to a report originally due on or after
294	298		the effective date of this Act.
295	299		SECTION 10. (a) Except as provided by Subsection (b) of
296	300		this section, this Act takes effect January 1, 2016.
297	301		(b) Section 157.008(b), Education Code, and Section 11.232,
298	302		Tax Code, as added by this Act, and Sections 11.42(d) and 26.113,
299	303		Tax Code, as amended by this Act, take effect January 1, 2016, but
300	304		only if the constitutional amendment proposed by the 84th
301	305		Legislature, Regular Session, 2015, authorizing the legislature to
302	306		provide for an exemption from ad valorem taxation of certain
303	307		property owned by or leased to or by a university research
304	308		technology corporation is approved by the voters. If that
305	309		amendment is not approved by the voters, Section 157.008(b),
306	310		Education Code, and Section 11.232, Tax Code, as added by this Act,
307	311		and Sections 11.42(d) and 26.113, Tax Code, as amended by this Act,
308	312		have no effect.