85R2997 BEF-F
By: Parker H.B. No. 1614
A BILL TO BE ENTITLED
AN ACT
relating to a franchise tax credit for enterprise projects for
certain capital investments.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 171, Tax Code, is amended by adding
Subchapter U to read as follows:
SUBCHAPTER U. TAX CREDITS FOR ENTERPRISE PROJECTS FOR CERTAIN
CAPITAL INVESTMENTS
Sec. 171.9221. DEFINITIONS. In this subchapter:
(1) "Enterprise project" means a person designated as
an enterprise project under Chapter 2303, Government Code, on or
after September 1, 2003.
(2) "Qualified business" has the meaning assigned by
Section 2303.003, Government Code.
(3) "Qualified capital investment" means tangible
personal property first placed in service by an enterprise project
after January 1, 2013, that is described in Section 1245(a),
Internal Revenue Code, such as engines, machinery, tools, and
implements used in a trade or business or held for investment and
subject to an allowance for depreciation, cost recovery under the
accelerated cost recovery system, or amortization. The term does
not include real property or buildings and their structural
components. Property that is leased under a capitalized lease is
considered a qualified capital investment, but property that is
leased under an operating lease is not considered a qualified
capital investment. Property expensed under Section 179, Internal
Revenue Code, is not considered a qualified capital investment.
Sec. 171.9222. TANGIBLE PERSONAL PROPERTY FIRST PLACED IN
SERVICE BY AN ENTERPRISE PROJECT. For purposes of determining
whether an investment is a qualified capital investment under
Section 171.9221, "tangible personal property first placed in
service by an enterprise project" includes tangible personal
property:
(1) purchased by an enterprise project for placement
in an incomplete improvement that is under active construction or
other physical preparation;
(2) identified by a purchase order, invoice, billing,
sales slip, or contract; and
(3) physically present at the enterprise project's
qualified business site, as defined by Section 2303.003, Government
Code, and in use by the enterprise project on the original due date
of the report on which the credit is taken.
Sec. 171.9223. ELIGIBILITY. An enterprise project that is
a qualified business is eligible for a credit against the tax
imposed under this chapter in the amount and under the conditions
and limitations provided by this subchapter.
Sec. 171.9224. CALCULATION OF CREDIT. (a) An enterprise
project that is eligible for a credit under this subchapter may,
beginning on January 1 of the year in which the project is
designated or January 1, 2013, establish a credit equal to 7.5
percent of the qualified capital investment.
(b) A taxable entity may file an amended report to claim all
or part of a credit earned in a previous tax year that has not been
claimed on another report, subject to Section 171.9225, if the
applicable period of limitation under Section 111.107 and
Subchapter D, Chapter 111, for claiming that credit has not
expired.
Sec. 171.9225. LIMITATION. The total credit claimed under
this subchapter for a report, including the amount of any
carryforward credit under Section 171.9226, may not exceed 50
percent of the amount of franchise tax due for the report before any
other applicable tax credits.
Sec. 171.9226. CARRYFORWARD. (a) If an enterprise project
is eligible for a credit from an installment that exceeds a
limitation under Section 171.9225, the enterprise project may carry
the unused credit forward for not more than five consecutive
reports.
(b) A carryforward is considered the remaining portion of an
installment that cannot be claimed in the current year because of a
tax limitation under Section 171.9225. A carryforward is added to
the next year's installment of the credit in determining the tax
limitation for that year. A credit carryforward from a previous
report is considered to be used before the current year
installment.
Sec. 171.9227. CERTIFICATION OF ELIGIBILITY. (a) For the
initial and each succeeding report in which a credit is claimed
under this subchapter, the enterprise project shall file with its
report, on a form provided by the comptroller, information that
sufficiently demonstrates that the enterprise project is eligible
for the credit.
(b) The burden of establishing entitlement to and the value
of the credit is on the enterprise project.
Sec. 171.9228. BIENNIAL REPORT BY COMPTROLLER. (a) Before
the beginning of each regular session of the legislature, the
comptroller shall submit to the governor, the lieutenant governor,
and the speaker of the house of representatives a report that
states:
(1) the total amount of qualified capital investments
made by enterprise projects that claim a credit under this
subchapter and the average and median wages paid by those
enterprise projects;
(2) the total amount of credits applied against the
tax under this chapter and the amount of unused credits, including:
(A) the total amount of franchise tax due by
enterprise projects claiming a credit under this subchapter before
and after the application of the credit;
(B) the average percentage reduction in
franchise tax due by enterprise projects claiming a credit under
this subchapter;
(C) the percentage of tax credits that were
awarded to enterprise projects with fewer than 100 employees; and
(D) the two-digit standard industrial
classification of enterprise projects claiming a credit under this
subchapter;
(3) the geographical distribution of the qualified
capital investments on which tax credit claims are made under this
subchapter; and
(4) the impact of the credit provided under this
subchapter on employment, capital investment, personal income, and
state tax revenues.
(b) The comptroller may not include in the report
information that is confidential by law.
(c) For purposes of this section, the comptroller may
require an enterprise project that claims a credit under this
subchapter to submit information, on a form provided by the
comptroller, on the location of the enterprise project's capital
investment in this state and any other information necessary to
complete the report required under this section.
(d) The comptroller shall provide notice to the members of
the legislature that the report required under this section is
available on request.
Sec. 171.9229. COMPTROLLER POWERS AND DUTIES. The
comptroller shall adopt rules and forms necessary to implement this
subchapter.
SECTION 2. Except as provided by Section 171.9224(b), Tax
Code, as added by this Act, this Act applies only to a report
originally due on or after the effective date of this Act.
SECTION 3. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2017.