85R13318 GRM-D
By: Ashby H.B. No. 3566
A BILL TO BE ENTITLED
AN ACT
relating to a franchise credit for entities that make certain
railroad reconstruction or replacement expenditures.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 171, Tax Code, is amended by adding
Subchapter U-1 to read as follows:
SUBCHAPTER U-1. TAX CREDIT FOR QUALIFIED RAILROAD RECONSTRUCTION OR
REPLACEMENT EXPENDITURES
Sec. 171.9231. DEFINITIONS. In this subchapter:
(1) "Class II railroad" and "class III railroad" have
the meanings assigned by the United States Surface Transportation
Board.
(2) "Qualified railroad expenditure" means an amount
spent by a taxable entity that is a class II railroad or class III
railroad:
(A) to reconstruct or replace railroad
infrastructure that was owned or leased by the taxable entity on
January 1, 2017, including a track, a roadbed, a bridge, an
industrial lead, or another track-related structure; or
(B) for new construction of an industrial lead,
switch, spur, or siding or extension of existing siding.
Sec. 171.9232. ENTITLEMENT TO CREDIT. A taxable entity is
entitled to a credit in the amount and under the conditions provided
by this subchapter against the tax imposed under this chapter.
Sec. 171.9233. QUALIFICATION. A taxable entity qualifies
for a credit under this subchapter if the taxable entity makes a
qualified railroad expenditure.
Sec. 171.9234. AMOUNT; LIMITATIONS. (a) Subject to
Subsection (b), the amount of the credit for a report is equal to
the lesser of:
(1) 50 percent of the taxable entity's qualified
railroad expenditures during the accounting period on which the
report is based; or
(2) the product of $3,500 and the number of miles of
railroad track owned or leased in this state by the entity on the
last day of the accounting period on which the report is based.
(b) The total credit claimed for a report, including the
amount of any carryforward under Section 171.9235, may not exceed
the amount of franchise tax due for the report after any other
applicable tax credits.
Sec. 171.9235. CARRYFORWARD. (a) If a taxable entity is
eligible for a credit that exceeds the limitation under Section
171.9234(b), the taxable entity may carry the unused credit forward
for not more than five consecutive reports.
(b) A carryforward is considered the remaining portion of a
credit that cannot be claimed in the current year because of the
limitation under Section 171.9234(b). A carryforward is added to
the next year's credit in determining whether the limitation is met
for that year. A credit carryforward from a previous report is
considered to be used before the current year credit.
Sec. 171.9236. APPLICATION FOR CREDIT. A taxable entity
must apply for a credit under this subchapter on or with the report
for the period for which the credit is claimed.
Sec. 171.9237. SALE OR ASSIGNMENT OF CREDIT. (a) A taxable
entity that makes qualified railroad expenditures may sell or
assign all or part of the credit that may be claimed for those
expenditures to one or more taxable entities, and any taxable
entity to which all or part of the credit is sold or assigned may
sell or assign all or part of the credit to another taxable entity.
There is no limit on the total number of transactions for the sale
or assignment of all or part of the total credit authorized under
this subchapter.
(b) A taxable entity that sells or assigns a credit under
this section and the taxable entity to which the credit is sold or
assigned shall jointly submit written notice of the sale or
assignment to the comptroller not later than the 30th day after the
date of the sale or assignment. The notice must include:
(1) the date on which the credit was originally
established;
(2) the date of the sale or assignment;
(3) the amount of the credit sold or assigned and the
remaining period during which it may be used;
(4) the names, addresses, and federal tax
identification numbers of the taxable entity that sold or assigned
the credit or part of the credit and the taxable entity to which the
credit or part of the credit was sold or assigned; and
(5) the amount of the credit owned by the selling or
assigning taxable entity before the sale or assignment, and the
amount the selling or assigning taxable entity retained, if any,
after the sale or assignment.
(c) The sale or assignment of a credit in accordance with
this section does not extend the period for which a credit may be
carried forward.
Sec. 171.9238. RULES. (a) Except as provided by Subsection
(b), the comptroller shall adopt rules necessary to implement this
subchapter.
(b) The Texas Department of Transportation shall adopt
rules to verify qualified railroad expenditures and allow taxable
entities to obtain preapproval that a proposed expenditure will
qualify as a qualified railroad expenditure.
SECTION 2. This Act applies only to a report originally due
under Chapter 171, Tax Code, on or after the effective date of this
Act.
SECTION 3. This Act takes effect January 1, 2018.