| 1 | 1 | | 85R12997 TJB-D |
|---|
| 2 | 2 | | By: Hinojosa H.B. No. 3714 |
|---|
| 3 | 3 | | |
|---|
| 4 | 4 | | |
|---|
| 5 | 5 | | A BILL TO BE ENTITLED |
|---|
| 6 | 6 | | AN ACT |
|---|
| 7 | 7 | | relating to a franchise tax credit pilot program for taxable |
|---|
| 8 | 8 | | entities that contribute to an employee dependent care flexible |
|---|
| 9 | 9 | | spending account. |
|---|
| 10 | 10 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
|---|
| 11 | 11 | | SECTION 1. Chapter 171, Tax Code, is amended by adding |
|---|
| 12 | 12 | | Subchapter P to read as follows: |
|---|
| 13 | 13 | | SUBCHAPTER P. TAX CREDIT PILOT PROGRAM FOR EMPLOYER CONTRIBUTIONS |
|---|
| 14 | 14 | | TO DEPENDENT CARE FLEXIBLE SPENDING ACCOUNTS |
|---|
| 15 | 15 | | Sec. 171.801. DEFINITION. In this subchapter, "dependent |
|---|
| 16 | 16 | | care flexible spending account" means a pre-tax benefit account |
|---|
| 17 | 17 | | used to pay eligible dependent care services as authorized by the |
|---|
| 18 | 18 | | Internal Revenue Code of 1986, as effective on January 1, 2017. |
|---|
| 19 | 19 | | Sec. 171.802. ENTITLEMENT TO CREDIT. A taxable entity is |
|---|
| 20 | 20 | | entitled to a credit in the amount and under the conditions provided |
|---|
| 21 | 21 | | by this subchapter against the tax imposed under this chapter. |
|---|
| 22 | 22 | | Sec. 171.803. QUALIFICATION. A taxable entity with not |
|---|
| 23 | 23 | | more than 500 employees qualifies for a credit under this |
|---|
| 24 | 24 | | subchapter for contributions made to the dependent care flexible |
|---|
| 25 | 25 | | spending account of each employee of the taxable entity who |
|---|
| 26 | 26 | | receives from the taxable entity an annual salary or wage of not |
|---|
| 27 | 27 | | more than $65,000. |
|---|
| 28 | 28 | | Sec. 171.804. AMOUNT OF CREDIT; LIMITATIONS. (a) Subject |
|---|
| 29 | 29 | | to Subsection (b), the amount of the credit for a report in |
|---|
| 30 | 30 | | connection with each employee described by Section 171.803 is equal |
|---|
| 31 | 31 | | to the lesser of: |
|---|
| 32 | 32 | | (1) 50 percent of the contributions made by the |
|---|
| 33 | 33 | | taxable entity to the employee's dependent care flexible spending |
|---|
| 34 | 34 | | account; or |
|---|
| 35 | 35 | | (2) $2,500. |
|---|
| 36 | 36 | | (b) The total amount of the credit for each report is equal |
|---|
| 37 | 37 | | to the lesser of: |
|---|
| 38 | 38 | | (1) the total of the credits allowed under Subsection |
|---|
| 39 | 39 | | (a) for the reporting period for all employees; or |
|---|
| 40 | 40 | | (2) the amount of franchise tax due after applying all |
|---|
| 41 | 41 | | other applicable credits. |
|---|
| 42 | 42 | | Sec. 171.805. APPLICATION FOR CREDIT. (a) A taxable entity |
|---|
| 43 | 43 | | must apply for a credit under this subchapter on or with the tax |
|---|
| 44 | 44 | | report for the period for which the credit is claimed. |
|---|
| 45 | 45 | | (b) The comptroller shall promulgate a form for the |
|---|
| 46 | 46 | | application for the credit. A taxable entity must use the form in |
|---|
| 47 | 47 | | applying for the credit. |
|---|
| 48 | 48 | | Sec. 171.806. PERIOD FOR WHICH CREDIT MAY BE CLAIMED. A |
|---|
| 49 | 49 | | taxable entity may claim a credit under this subchapter for a report |
|---|
| 50 | 50 | | only in connection with contributions made during the accounting |
|---|
| 51 | 51 | | period on which the report is based. |
|---|
| 52 | 52 | | Sec. 171.807. EXPIRATION. This subchapter expires December |
|---|
| 53 | 53 | | 31, 2019. |
|---|
| 54 | 54 | | SECTION 2. (a) Not later than September 1, 2020, the |
|---|
| 55 | 55 | | comptroller shall prepare and deliver to the governor, the |
|---|
| 56 | 56 | | lieutenant governor, the speaker of the house of representatives, |
|---|
| 57 | 57 | | and the presiding officer of each legislative standing committee |
|---|
| 58 | 58 | | with primary jurisdiction over taxation a report that evaluates the |
|---|
| 59 | 59 | | effect of the pilot program established under Subchapter P, Chapter |
|---|
| 60 | 60 | | 171, Tax Code, as added by this Act, on employer contributions to |
|---|
| 61 | 61 | | employees' dependent care flexible spending accounts for which |
|---|
| 62 | 62 | | credits are granted under the pilot program under that subchapter. |
|---|
| 63 | 63 | | The report must include a recommendation regarding whether the |
|---|
| 64 | 64 | | credit allowed under the pilot program should be reestablished. |
|---|
| 65 | 65 | | (b) A taxable entity that claims a credit under Subchapter |
|---|
| 66 | 66 | | P, Chapter 171, Tax Code, as added by this Act, shall provide to the |
|---|
| 67 | 67 | | comptroller information the comptroller requests to prepare the |
|---|
| 68 | 68 | | report described by Subsection (a). |
|---|
| 69 | 69 | | SECTION 3. A taxable entity may claim the credit under |
|---|
| 70 | 70 | | Subchapter P, Chapter 171, Tax Code, as added by this Act, only for |
|---|
| 71 | 71 | | contributions made on or after September 1, 2017, and only on a |
|---|
| 72 | 72 | | franchise tax report originally due under Chapter 171, Tax Code, on |
|---|
| 73 | 73 | | or after January 1, 2018. |
|---|
| 74 | 74 | | SECTION 4. This Act takes effect September 1, 2017. |
|---|