Texas 2017 - 85th Regular

Texas House Bill HB1230 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	85R6857 TJB-F
2	2	By: Blanco H.B. No. 1230
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to franchise tax credits for businesses that employ
8	8	veterans.
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	Subchapters X and Y to read as follows:
12	12	SUBCHAPTER X. TAX CREDITS FOR EMPLOYMENT OF VETERANS
13	13	Sec. 171.9281. DEFINITIONS. In this subchapter:
14	14	(1) "Agricultural processing" means an establishment
15	15	primarily engaged in activities described in categories 0724,
16	16	2011-2099, or 3111-3199 of the 1987 Standard Industrial
17	17	Classification Manual published by the United States Department of
18	18	Labor.
19	19	(2) "Central administrative offices" means an
20	20	establishment primarily engaged in performing management or
21	21	support services for other establishments of the same enterprise.
22	22	An enterprise consists of all establishments having more than 50
23	23	percent common direct or indirect ownership.
24	24	(3) "Data processing" means an establishment
25	25	primarily engaged in activities described in categories 7371-7379
26	26	of the 1987 Standard Industrial Classification Manual published by
27	27	the United States Department of Labor.
28	28	(4) "Distribution" means an establishment primarily
29	29	engaged in activities described in categories 5012-5199 of the 1987
30	30	Standard Industrial Classification Manual published by the United
31	31	States Department of Labor.
32	32	(5) "Group health benefit plan" means:
33	33	(A) a health plan provided by a health
34	34	maintenance organization established under Chapter 843, Insurance
35	35	Code;
36	36	(B) a health benefit plan approved by the
37	37	commissioner of insurance; or
38	38	(C) a self-funded or self-insured employee
39	39	welfare benefit plan that provides health benefits and is
40	40	established in accordance with the Employee Retirement Income
41	41	Security Act of 1974 (29 U.S.C. Section 1001 et seq.).
42	42	(6) "Manufacturing" means an establishment primarily
43	43	engaged in activities described in categories 2011-3999 of the 1987
44	44	Standard Industrial Classification Manual published by the United
45	45	States Department of Labor.
46	46	(7) "Qualified business" means an establishment
47	47	primarily engaged in agricultural processing, central
48	48	administrative offices, data processing, distribution,
49	49	manufacturing, research and development, or warehousing.
50	50	(8) "Qualifying job" means a new permanent full-time
51	51	job that:
52	52	(A) is held by a veteran;
53	53	(B) pays an annual wage of at least $50,000,
54	54	subject to Section 171.9282;
55	55	(C) is covered by a group health benefit plan for
56	56	which the business pays at least 80 percent of the premiums or other
57	57	charges assessed under the plan for the employee; and
58	58	(D) is not created to replace a previous
59	59	employee.
60	60	(9) "Research and development" means an establishment
61	61	primarily engaged in activities described in category 8731 of the
62	62	1987 Standard Industrial Classification Manual published by the
63	63	United States Department of Labor.
64	64	(10) "Veteran" means a person who:
65	65	(A) has served in:
66	66	(i) the armed forces of the United States or
67	67	the United States Public Health Service under 42 U.S.C. Section 201
68	68	et seq.;
69	69	(ii) the Texas military forces, as defined
70	70	by Section 437.001, Government Code; or
71	71	(iii) an auxiliary service of a branch of
72	72	the armed forces described by Subparagraph (i) or (ii); and
73	73	(B) has been honorably discharged from the branch
74	74	of the service in which the person served.
75	75	(11) "Warehousing" means an establishment primarily
76	76	engaged in activities described in categories 4221-4226 of the 1987
77	77	Standard Industrial Classification Manual published by the United
78	78	States Department of Labor.
79	79	Sec. 171.9282. BIENNIAL ADJUSTMENT OF WAGE FOR QUALIFYING
80	80	JOB. (a) In this section, "consumer price index" means the average
81	81	over a state fiscal biennium of the Consumer Price Index for All
82	82	Urban Consumers (CPI-U), U.S. City Average, published monthly by
83	83	the United States Bureau of Labor Statistics, or its successor in
84	84	function.
85	85	(b) Beginning in 2020, on January 1 of each even-numbered
86	86	year, the wage amount prescribed by Section 171.9281(8) is
87	87	increased or decreased by an amount equal to the amount prescribed
88	88	by that section on December 31 of the preceding year multiplied by
89	89	the percentage increase or decrease during the preceding state
90	90	fiscal biennium in the consumer price index and rounded to the
91	91	nearest dollar.
92	92	(c) The amount determined under Subsection (b) applies to a
93	93	report originally due on or after the date the determination is
94	94	made.
95	95	(d) The comptroller shall make the determination required
96	96	by this section and may adopt rules related to making that
97	97	determination.
98	98	(e) A determination by the comptroller under this section is
99	99	final and may not be appealed.
100	100	Sec. 171.9283. ELIGIBILITY. A taxable entity is eligible
101	101	for a credit against the tax imposed under this chapter if the
102	102	taxable entity:
103	103	(1) is a qualified business; and
104	104	(2) creates a minimum of 10 qualifying jobs.
105	105	Sec. 171.9284. AMOUNT OF CREDIT. A taxable entity may
106	106	establish a credit equal to 25 percent of the total wages paid by
107	107	the taxable entity for each qualifying job during each of the first
108	108	12 months of employment of the person hired to perform the job that
109	109	occur during the period on which the report is based.
110	110	Sec. 171.9285. LENGTH OF CREDIT. A credit established
111	111	shall be claimed in five equal installments of one-fifth the credit
112	112	amount over consecutive reports beginning with the report based on
113	113	the period during which the qualifying jobs were created.
114	114	Sec. 171.9286. LIMITATIONS. (a) The total credit claimed
115	115	under this subchapter for a report, including the amount of any
116	116	carryforward credit under Section 171.9287, may not exceed 50
117	117	percent of the amount of franchise tax due for the report before any
118	118	other applicable tax credits.
119	119	(b) The total credit claimed under this subchapter and
120	120	Subchapter Y for a report, including the amount of any carryforward
121	121	credits, may not exceed the amount of franchise tax due for the
122	122	report after any other applicable credits.
123	123	Sec. 171.9287. CARRYFORWARD. (a) If a taxable entity is
124	124	eligible for a credit that exceeds the limitations under Section
125	125	171.9286, the taxable entity may carry the unused credit forward
126	126	for not more than five consecutive reports.
127	127	(b) A carryforward is considered the remaining portion of an
128	128	installment that cannot be claimed in the current year because of a
129	129	limitation under Section 171.9286. A carryforward is added to the
130	130	next year's installment of the credit in determining the limitation
131	131	for that year. A credit carryforward from a previous report is
132	132	considered to be used before the current year installment.
133	133	Sec. 171.9288. CERTIFICATION OF ELIGIBILITY. (a) For the
134	134	initial and each succeeding report on which a credit is claimed
135	135	under this subchapter, the taxable entity shall file with its
136	136	report, on a form provided by the comptroller, information that
137	137	sufficiently demonstrates that the taxable entity is eligible for
138	138	the credit.
139	139	(b) The burden of establishing entitlement to and the value
140	140	of the credit is on the taxable entity.
141	141	(c) A credit expires under this subchapter and the taxable
142	142	entity may not take any remaining installment of the credit if in
143	143	one of the five years in which the installment of a credit accrues,
144	144	the taxable entity fails to maintain the minimum number of
145	145	qualifying jobs required to be created by Section 171.9283.
146	146	(d) Notwithstanding Subsection (c), the taxable entity may
147	147	take the portion of an installment that accrued in a previous year
148	148	and was carried forward to the extent permitted under Section
149	149	171.9287.
150	150	Sec. 171.9289. ASSIGNMENT PROHIBITED. A taxable entity may
151	151	not convey, assign, or transfer the credit allowed under this
152	152	subchapter to another entity unless all of the assets of the taxable
153	153	entity are conveyed, assigned, or transferred in the same
154	154	transaction.
155	155	Sec. 171.9290. BIENNIAL REPORT BY COMPTROLLER. (a) Before
156	156	the beginning of each regular session of the legislature, the
157	157	comptroller shall submit to the governor, the lieutenant governor,
158	158	and the speaker of the house of representatives a report that
159	159	states:
160	160	(1) the total number of jobs created by taxable
161	161	entities that claim a credit under this subchapter and the average
162	162	and median annual wage of those jobs;
163	163	(2) the total amount of credits applied against the
164	164	tax under this chapter and the amount of unused credits including:
165	165	(A) the total amount of franchise tax due by
166	166	taxable entities claiming a credit under this subchapter before and
167	167	after the application of the credit;
168	168	(B) the average percentage reduction in
169	169	franchise tax due by taxable entities claiming a credit under this
170	170	subchapter; and
171	171	(C) the percentage of tax credits that were
172	172	awarded to taxable entities with fewer than 100 employees;
173	173	(3) the two-digit standard industrial classification
174	174	of taxable entities claiming a credit under this subchapter;
175	175	(4) the geographical distribution of the credits
176	176	claimed under this subchapter; and
177	177	(5) the effect of the credit provided under this
178	178	subchapter on employment, personal income, and capital investment
179	179	in this state and on state tax revenues.
180	180	(b) The final report issued before the expiration of this
181	181	subchapter must include historical information on the credit
182	182	authorized under this subchapter.
183	183	(c) The comptroller may not include in the report
184	184	information that is confidential by law.
185	185	(d) For purposes of this section, the comptroller may
186	186	require a taxable entity that claims a credit under this subchapter
187	187	to submit information, on a form provided by the comptroller, on the
188	188	location of the taxable entity's job creation in this state and any
189	189	other information necessary to complete the report required under
190	190	this section.
191	191	(e) The comptroller shall provide notice to the members of
192	192	the legislature that the report required under this section is
193	193	available on request.
194	194	Sec. 171.9291. COMPTROLLER POWERS AND DUTIES. The
195	195	comptroller shall adopt rules and forms necessary to implement this
196	196	subchapter.
197	197	Sec. 171.9292. EXPIRATION. (a) This subchapter expires
198	198	December 31, 2027.
199	199	(b) The expiration of this subchapter does not affect the
200	200	carryforward of a credit under Section 171.9287 or those credits
201	201	for which a taxable entity is eligible before the date this
202	202	subchapter expires. The provisions of this subchapter in effect
203	203	immediately before this subchapter expires remain in effect for
204	204	purposes of claiming a credit or carryforward after the date this
205	205	subchapter expires.
206	206	SUBCHAPTER Y. TAX CREDITS FOR CERTAIN CAPITAL INVESTMENTS MADE BY
207	207	BUSINESSES THAT EMPLOY VETERANS
208	208	Sec. 171.9301. DEFINITIONS. In this subchapter:
209	209	(1) "Agricultural processing," "group health benefit
210	210	plan," "qualified business," "qualifying job," and "veteran" have
211	211	the meanings assigned by Section 171.9281.
212	212	(2) "Qualified capital investment" means tangible
213	213	personal property first placed in service in this state by a taxable
214	214	entity primarily engaged in agricultural processing and that is
215	215	described in Section 1245(a), Internal Revenue Code, such as
216	216	engines, machinery, tools, and implements used in a trade or
217	217	business or held for investment and subject to an allowance for
218	218	depreciation, cost recovery under the accelerated cost recovery
219	219	system, or amortization. The term does not include real property or
220	220	buildings and their structural components. Property that is leased
221	221	under a capitalized lease is considered a "qualified capital
222	222	investment," but property that is leased under an operating lease
223	223	is not considered a "qualified capital investment." Property
224	224	expensed under Section 179, Internal Revenue Code, is not
225	225	considered a "qualified capital investment."
226	226	Sec. 171.9302. ELIGIBILITY. (a) A qualified business is
227	227	eligible for a credit against the tax imposed under this chapter in
228	228	the amount and under the conditions and limitations provided by
229	229	this subchapter.
230	230	(b) To qualify for the credit authorized under this
231	231	subchapter, a qualified business must:
232	232	(1) pay an annual wage to each veteran employed by the
233	233	qualified business of at least the amount required for a qualifying
234	234	job for the period on which the report 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 for which the business
238	238	pays at least 80 percent of the premiums or other charges assessed
239	239	under the plan for the employees; and
240	240	(3) make a minimum $500,000 qualified capital
241	241	investment.
242	242	Sec. 171.9303. AMOUNT OF CREDIT. A taxable entity may
243	243	establish a credit equal to 7.5 percent of the qualified capital
244	244	investment during the period on which the report is based.
245	245	Sec. 171.9304. LENGTH OF CREDIT. The credit established
246	246	shall be claimed in five equal installments of one-fifth the credit
247	247	amount over the five consecutive reports beginning with the report
248	248	based on the period during which the qualified capital investment
249	249	was made.
250	250	Sec. 171.9305. LIMITATIONS. (a) The total credit claimed
251	251	under this subchapter for a report, including the amount of any
252	252	carryforward credit under Section 171.9306, may not exceed 50
253	253	percent of the amount of franchise tax due for the report before any
254	254	other applicable tax credits.
255	255	(b) The total credit claimed under this subchapter and
256	256	Subchapter X for a report, including the amount of any carryforward
257	257	credits, may not exceed the amount of franchise tax due for the
258	258	report after any other applicable tax credits.
259	259	Sec. 171.9306. CARRYFORWARD. (a) If a taxable entity is
260	260	eligible for a credit from an installment that exceeds the
261	261	limitation under Section 171.9305, the taxable entity may carry the
262	262	unused credit forward for not more than five consecutive reports.
263	263	(b) A carryforward is considered the remaining portion of an
264	264	installment that cannot be claimed in the current year because of a
265	265	limitation under Section 171.9305. A carryforward is added to the
266	266	next year's installment of the credit in determining the limitation
267	267	for that year. A credit carryforward from a previous report is
268	268	considered to be used before the current year installment.
269	269	Sec. 171.9307. CERTIFICATION OF ELIGIBILITY. (a) For the
270	270	initial and each succeeding report on which a credit is claimed
271	271	under this subchapter, the taxable entity shall file with its
272	272	report, on a form provided by the comptroller, information that
273	273	sufficiently demonstrates that the taxable entity is eligible for
274	274	the credit.
275	275	(b) The burden of establishing entitlement to and the value
276	276	of the credit is on the taxable entity.
277	277	(c) A credit expires under this subchapter and the taxable
278	278	entity may not take any remaining installment of the credit if in
279	279	one of the five years in which the installment of a credit accrues,
280	280	the taxable entity:
281	281	(1) disposes of the qualified capital investment;
282	282	(2) takes the qualified capital investment out of
283	283	service;
284	284	(3) moves the qualified capital investment out of this
285	285	state; or
286	286	(4) fails to pay in accordance with Section
287	287	171.9302(b)(1) the annual wage required for a qualifying job for
288	288	the period covered by the report on which the taxable entity would
289	289	otherwise claim the credit.
290	290	(d) Notwithstanding Subsection (c), the taxable entity may
291	291	take the portion of an installment that accrued in a previous year
292	292	and was carried forward to the extent permitted under Section
293	293	171.9306.
294	294	Sec. 171.9308. ASSIGNMENT PROHIBITED. A taxable entity may
295	295	not convey, assign, or transfer the credit allowed under this
296	296	subchapter to another entity unless all of the assets of the taxable
297	297	entity are conveyed, assigned, or transferred in the same
298	298	transaction.
299	299	Sec. 171.9309. BIENNIAL REPORT BY COMPTROLLER. (a) Before
300	300	the beginning of each regular session of the legislature, the
301	301	comptroller shall submit to the governor, the lieutenant governor,
302	302	and the speaker of the house of representatives a report that
303	303	states:
304	304	(1) the total amount of qualified capital investments
305	305	made by taxable entities that claim a credit under this subchapter
306	306	and the average and median wages paid by those taxable entities;
307	307	(2) the total amount of credits applied against the
308	308	tax under this chapter and the amount of unused credits, including:
309	309	(A) the total amount of franchise tax due by
310	310	taxable entities claiming a credit under this subchapter before and
311	311	after the application of the credit;
312	312	(B) the average percentage reduction in
313	313	franchise tax due by taxable entities claiming a credit under this
314	314	subchapter; and
315	315	(C) the percentage of tax credits that were
316	316	awarded to taxable entities with fewer than 100 employees;
317	317	(3) the two-digit standard industrial classification
318	318	of taxable entities claiming a credit under this subchapter;
319	319	(4) the geographical distribution of the qualified
320	320	capital investments on which tax credit claims are made under this
321	321	subchapter; and
322	322	(5) the effect of the credit provided under this
323	323	subchapter on employment, personal income, and capital investment
324	324	in this state and on state tax revenues.
325	325	(b) The final report issued before the expiration of this
326	326	subchapter must include historical information on the credit
327	327	authorized under this subchapter.
328	328	(c) The comptroller may not include in the report
329	329	information that is confidential by law.
330	330	(d) For purposes of this section, the comptroller may
331	331	require a taxable entity that claims a credit under this subchapter
332	332	to submit information, on a form provided by the comptroller, on the
333	333	location of the taxable entity's capital investment in this state
334	334	and any other information necessary to complete the report required
335	335	under this section.
336	336	(e) The comptroller shall provide notice to the members of
337	337	the legislature that the report required under this section is
338	338	available on request.
339	339	Sec. 171.9310. COMPTROLLER POWERS AND DUTIES. The
340	340	comptroller shall adopt rules and forms necessary to implement this
341	341	subchapter.
342	342	Sec. 171.9311. EXPIRATION. (a) This subchapter expires
343	343	December 31, 2027.
344	344	(b) The expiration of this subchapter does not affect the
345	345	carryforward of a credit under Section 171.9306 or those credits
346	346	for which a taxable entity is eligible before the date this
347	347	subchapter expires. The provisions of this subchapter in effect
348	348	immediately before this subchapter expires remain in effect for
349	349	purposes of claiming a credit or carryforward after the date this
350	350	subchapter expires.
351	351	SECTION 2. This Act applies only to a report originally due
352	352	on or after the effective date of this Act.
353	353	SECTION 3. This Act takes effect January 1, 2018.