Texas 2017 - 85th Regular

Texas House Bill HB3843 Compare Versions

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Version 2 (New)

Old	New		Differences
1		-	~~85R27979~~ ADM-D
	1	+	85R4875 ADM-D
2	2		By: Anderson of Dallas H.B. No. 3843
3		-	Substitute the following for H.B. No. 3843:
4		-	By: Shine C.S.H.B. No. 3843
5	3
6	4
7	5		A BILL TO BE ENTITLED
8	6		AN ACT
9	7		relating to a franchise or insurance premium tax credit for
10	8		low-income housing developments.
11	9		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
12	10		SECTION 1. Chapter 171, Tax Code, is amended by adding
13	11		Subchapter V to read as follows:
14	12		SUBCHAPTER V. TAX CREDIT FOR LOW-INCOME HOUSING DEVELOPMENTS
15	13		Sec. 171.9241. DEFINITIONS. In this subchapter:
16	14		(1) "Allocation certificate" means a statement issued
17	15		by the department certifying that a given development qualifies for
18	16		a credit under this subchapter and specifying the amount of the
19	17		credit.
20	18		(2) "Compliance period" means the period of 15 years
21	19		beginning with the first taxable year of the credit period.
22	20		(3) "Credit" means the low-income housing tax credit
23	21		authorized by this subchapter.
24	22		(4) "Credit period" means the period of six taxable
25	23		years beginning with the taxable year in which a qualified
26	24		development is placed in service. A qualified development
27	25		consisting of more than one building is not considered to be in
28	26		service until all buildings in the qualified development are placed
29	27		in service.
30	28		(5) "Department" means the Texas Department of Housing
31	29		and Community Affairs.
32	30		(6) "Development" has the meaning assigned by Section
33	31		2306.6702, Government Code.
34	32		(7) "Federal tax credit" means the federal low-income
35	33		housing credit created by 26 U.S.C. Section 42.
36		-	(8) "Qualified basis" means the qualified basis of a
	34	+	(8) "Qualified allocation plan" has the meaning
	35	+	assigned by Section 2306.6702, Government Code.
	36	+	(9) "Qualified basis" means the qualified basis of a
37	37		qualified development, as determined under Section 42, Internal
38	38		Revenue Code.
39		-	(9) "Qualified development" means a development in
	39	+	(10) "Qualified development" means a development in
40	40		this state that the department determines is eligible for a federal
41	41		tax credit and that:
42	42		(A) is financed with tax-exempt bonds;
43	43		(B) is the subject of a recorded restrictive
44	44		covenant requiring the development to be maintained and operated as
45	45		a qualified development; and
46	46		(C) for the lesser of 15 years after the
47	47		beginning of the credit period or the period required by the
48	48		department is in compliance with:
49	49		(i) all accessibility and adaptability
50	50		requirements for a federal tax credit; and
51	51		(ii) Title VIII of the Civil Rights Act of
52		-	1968 (42 U.S.C. Section 3601 et seq.).
53		-	(10) "Qualified taxpayer" means a person who owns an
54		-	interest in a qualified development.
55		-	Sec. 171.9242. ENTITLEMENT TO CREDIT. A development is
	52	+	1968 (42 U.S.C. Section 1983).
	53	+	Sec. 171.9242. ENTITLEMENT TO CREDIT. A taxable entity is
56	54		entitled to a credit against the taxes imposed under this chapter in
57		-	the amount and under the limitations provided by ~~this subchapter if~~
58		-	the ~~department classifies the development as~~ a qualified
59		-	~~development~~.
	55	+	the amount and under the conditions and limitations provided by
	56	+	this subchapter if the taxable entity is a qualified taxpayer and
	57	+	receives an allocation certificate under Section 171.9243.
60	58		Sec. 171.9243. ALLOCATION CERTIFICATE; CREDIT. (a) In a
61		-	year during a credit period, a qualified taxpayer or other person
62		-	may apply to the department for an allocation certificate.
63		-	(b) The department shall issue an allocation certificate if
64		-	the development qualifies for a credit.
	59	+	year during a credit period, a taxable entity may apply to the
	60	+	department for an allocation certificate for a franchise tax credit
	61	+	under this subchapter.
	62	+	(b) The department shall issue an allocation certificate to
	63	+	a taxable entity that applies under this section and meets the
	64	+	requirements to receive an allocation certificate.
65	65		(c) The department may determine the amount of a credit
66		-	~~awarded~~ to ~~a qualified development~~, subject to the following:
67		-	(1) ~~the~~ credit must be the minimum amount necessary
68		-	~~for~~ the financial feasibility of the qualified development after
69		-	considering any federal ~~tax~~ credit;
70		-	(2) the amount of the credit ~~during the credit period~~
71		-	may not exceed the total federal tax credit ~~awarded to the qualified~~
72		-	development over the 10-year federal ~~tax credit period;~~
73		-	~~(3) the manner in which the department awards the~~
74		-	credit must be consistent with ~~criteria established by the~~
75		-	~~department~~; and
	66	+	allowed to taxable entities, subject to the following:
	67	+	(1) a credit must be the minimum amount necessary to
	68	+	the financial feasibility of the qualified development after
	69	+	considering any federal credit;
	70	+	(2) the amount of the credit given to a taxable entity
	71	+	during the credit period may not exceed the total federal tax credit
	72	+	awarded to the qualified development over the 10-year federal
	73	+	credit period;
	74	+	(3) the credit must be consistent with the qualified
	75	+	allocation plan for the qualified development; and
76	76		(4) in a year, the total amount awarded may not exceed
77	77		the sum of:
78		-	(A) $0;
	78	+	(A) $20 million;
79	79		(B) any unallocated credits for the preceding
80	80		year; and
81	81		(C) any credit recaptured or otherwise returned
82	82		to the department in the year.
83	83		Sec. 171.9244. LENGTH OF CREDIT; LIMITATION. (a) The
84	84		credit established shall be claimed in equal installments during
85	85		each year of the credit period.
86	86		(b) The total credit claimed under this subchapter for a
87	87		report, including any carryforward under Section 171.9245, may not
88	88		exceed the amount of franchise tax due for the report after any
89	89		other applicable credit.
90		-	Sec. 171.9245. CARRY FORWARD OR BACKWARD. (a) If a
91		-	qualified taxpayer is eligible for a credit that exceeds the
92		-	limitations under Section 171.9244, the qualified taxpayer may
93		-	carry the unused credit back for not more than three taxable years
94		-	or forward for not more than 10 consecutive reports following the
95		-	taxable year in which the allocation was made. A credit
96		-	carryforward from a previous report is considered to be used before
97		-	the current year installment.
	90	+	Sec. 171.9245. CARRY FORWARD OR BACKWARD. (a) If a taxable
	91	+	entity is eligible for a credit that exceeds the limitations under
	92	+	Section 171.9244, the taxable entity may carry the unused credit
	93	+	back for not more than three taxable years or forward for not more
	94	+	than 10 consecutive reports following the taxable year in which the
	95	+	allocation was made. A credit carryforward from a previous report
	96	+	is considered to be used before the current year installment.
98	97		(b) A credit that is not used may not be refunded to the
99		-	~~qualified taxpayer~~.
	98	+	taxable entity.
100	99		Sec. 171.9246. RECAPTURE. (a) The comptroller shall
101	100		recapture the amount of a credit claimed on a franchise tax report
102		-	filed under this chapter from a ~~qualified taxpayer~~ if, on the last
103		-	~~day~~ of a taxable year, the amount of the qualified basis of ~~the~~
104		-	~~qualified~~ development is less than the amount ~~of the qualified~~
105		-	basis as of the last day of the prior taxable year. ~~The comptroller~~
106		-	shall determine the amount required to be ~~recaptured using the~~
107		-	formula provided by Section 42(j), Internal ~~Revenue Code, as~~
108		-	effective January 1, 2017.
	101	+	filed under this chapter from a taxable entity if, on the last day
	102	+	of a taxable year, the amount of the qualified basis of a qualified
	103	+	development with respect to a taxable entity is less than the amount
	104	+	of the qualified basis as of the last day of the prior taxable year.
	105	+	The comptroller shall determine the amount required to be
	106	+	recaptured using the formula provided by Section 42(j), Internal
	107	+	Revenue Code, as effective January 1, 2017.
109	108		(b) A franchise tax return must include any proportion of
110		-	credit required to be recaptured, the identity of any ~~qualified~~
111		-	~~taxpayer~~ subject to the recapture, and the amount of credit
112		-	previously allocated to the ~~qualified taxpayer~~.
113		-	Sec. 171.9247. ALLOCATION OF CREDIT. (a) If a ~~qualified~~
114		-	~~taxpayer~~ receiving a credit under this subchapter is a partnership,
	109	+	credit required to be recaptured, the identity of any taxable
	110	+	entity subject to the recapture, and the amount of credit
	111	+	previously allocated to the taxable entity.
	112	+	Sec. 171.9247. ALLOCATION OF CREDIT. (a) If a taxable
	113	+	entity receiving a credit under this subchapter is a partnership,
115	114		limited liability company, S corporation, or similar pass-through
116		-	entity, the ~~qualified taxpayer~~ may allocate credit among its
117		-	~~partners,~~ shareholders, members, or other constituent taxable
118		-	~~entities in any~~ manner agreed by those entities.
119		-	(b) A ~~qualified taxpayer~~ that makes an allocation under this
	115	+	entity, the taxable entity may allocate credit among its partners,
	116	+	shareholders, members, or other constituent taxable entities in any
	117	+	manner agreed by those entities.
	118	+	(b) A taxable entity that makes an allocation under this
120	119		section shall certify to the comptroller the amount of credit
121	120		allocated to each constituent taxable entity or shall notify the
122	121		comptroller that it has assigned the duty of certification to one
123	122		constituent taxable entity that shall provide the notification to
124	123		the comptroller. Each constituent taxable entity is entitled to
125	124		claim the allocated amount subject to any restrictions prescribed
126	125		by this subchapter.
127	126		(c) An assignment under this section is not a transfer.
128	127		Sec. 171.9248. FILING REQUIREMENTS AFTER ALLOCATION. A
129		-	qualified taxpayer that allocates a portion of the credit under
130		-	Section 171.9247, and each taxable entity to which a portion was
131		-	allocated, shall file with the qualified taxpayer's or taxable
132		-	entity's report a copy of the allocation certificate received for
133		-	that year.
	128	+	taxable entity that allocates a portion of the credit under Section
	129	+	171.9247, and each taxable entity to which a portion was allocated,
	130	+	shall file with the taxable entity's report a copy of the allocation
	131	+	certificate received by the taxpayer for that year.
134	132		Sec. 171.9249. RULES; PROCEDURES. The department and
135	133		comptroller, in consultation with each other, shall adopt rules and
136	134		procedures to implement, administer, and enforce this subchapter.
137	135		Sec. 171.9250. COMPLIANCE MONITORING. (a) The department,
138	136		in consultation with the comptroller, shall monitor compliance with
139		-	this subchapter in the same manner as the department monitors
140		-	compliance with the federal tax credit program.
	137	+	this subchapter.
141	138		(b) The department shall report any instances of
142	139		noncompliance with this subchapter to the comptroller.
143	140		Sec. 171.9251. REPORT. (a) Not later than December 31 of
144	141		each year, the department shall deliver a written report to the
145	142		legislature. A report delivered in this section must:
146	143		(1) specify the number of qualified developments to
147	144		have been allocated a tax credit during the year under this
148	145		subchapter or Chapter 230, Insurance Code, and the total number of
149	146		units supported by the developments;
150	147		(2) describe each qualified development to receive a
151	148		tax credit under this subchapter or Chapter 230, Insurance Code,
152	149		including:
153	150		(A) location;
154	151		(B) household type;
155	152		(C) demographic information available on the
156	153		residents intended to be served by the development;
157	154		(D) the income levels intended to be served by
158	155		the development; and
159	156		(E) the rents or set-asides authorized for the
160	157		development;
161	158		(3) include housing market and demographic
162	159		information to demonstrate how the qualified developments,
163	160		supported by the tax credit, are addressing the need for affordable
164	161		housing in their community; and
165	162		(4) analyze any remaining disparities in the
166	163		affordability of housing within those communities.
167	164		(b) The department shall make a report delivered under this
168	165		section available to the public.
169	166		SECTION 2. Subtitle B, Title 3, Insurance Code, is amended
170	167		by adding Chapter 230 to read as follows:
171	168		CHAPTER 230. CREDIT AGAINST PREMIUM TAXES
172	169		FOR LOW-INCOME HOUSING DEVELOPMENTS
173	170		SUBCHAPTER A. GENERAL PROVISIONS
174	171		Sec. 230.001. DEFINITIONS. In this chapter:
175		-	(1) "Allocation certificate," "qualified
176		-	development," and "qualified taxpayer" have the meanings assigned
177		-	by Section 171.9241, Tax Code.
178		-	(2) "State premium tax liability" means any liability
	172	+	(1) "Allocation certificate" and "credit period" have
	173	+	the meanings assigned by Section 171.9241, Tax Code.
	174	+	(2) "Qualified taxpayer" means a person that owns an
	175	+	interest in a qualified development, as that term is defined in
	176	+	Subchapter V, Chapter 171, Tax Code.
	177	+	(3) "State premium tax liability" means any liability
179	178		incurred by an entity under Chapters 221 through 226.
180	179		SUBCHAPTER B. CREDIT
181	180		Sec. 230.051. CREDIT. (a) An entity is eligible for a
182	181		credit against the entity's state premium tax liability in the
183	182		amount and under the conditions and limitations provided by this
184		-	chapter if the entity is a qualified taxpayer and the qualified
185		-	development in which the entity owns an interest receives an
	183	+	chapter if the entity is a qualified taxpayer and receives an
186	184		allocation certificate issued in the manner prescribed by Section
187	185		171.9243, Tax Code.
188	186		(b) The amount of the credit is equal to the amount provided
189	187		by the allocation certificate.
190	188		Sec. 230.052. LENGTH OF CREDIT; LIMITATION. The entity
191	189		shall claim the credit in the manner provided by Section
192	190		171.9244(a), Tax Code, subject to the limitation provided by
193	191		Section 171.9244(b), Tax Code. The entity may carry a surplus
194	192		credit forward or backward as provided by Section 171.9245, Tax
195	193		Code.
196	194		Sec. 230.053. APPLICATION FOR CREDIT. (a) An entity must
197	195		apply for a credit under this chapter on or with the tax return for
198	196		the taxable year for which the credit is claimed and submit with the
199		-	application the allocation certificate issued to the qualified
200		-	development and any other information required by Subchapter V,
201		-	Chapter 171, Tax Code.
	197	+	application the allocation certificate issued to the entity and any
	198	+	other information required by Subchapter V, Chapter 171, Tax Code.
202	199		(b) The comptroller shall adopt a form for the application
203	200		for the credit. An entity must use this form in applying for the
204	201		credit.
205	202		Sec. 230.054. RULES; PROCEDURES. The comptroller and the
206	203		Texas Department of Housing and Community Affairs, in consultation
207	204		with each other, shall adopt rules and procedures to implement,
208	205		administer, and enforce this chapter.
209		-	Sec. 230.055. APPLICABLE PROVISIONS. The provisions of
210		-	Subchapter V, Chapter 171, Tax Code, relating to recapture,
211		-	allocation of credit, filing requirements after allocation, and
212		-	compliance monitoring apply to the credit authorized by this
213		-	chapter.
214		-	SECTION 3. (a) The Texas Department of Housing and
215		-	Community Affairs may begin issuing allocation certificates under
216		-	Section 171.9243, Tax Code, as added by this Act, in an open cycle
217		-	beginning on January 1, 2018.
218		-	(b) A taxable entity may not claim a tax credit under
219		-	Subchapter V, Chapter 171, Tax Code, as added by this Act, in
220		-	connection with a privilege period that begins before January 1,
221		-	2019, or on a report filed before January 1, 2020.
	206	+	Sec. 230.055. The provisions of Subchapter V, Chapter 171,
	207	+	Tax Code, relating to recapture, allocation of credit, filing
	208	+	requirements after allocation, and compliance monitoring apply to
	209	+	the credit authorized by this chapter.
	210	+	SECTION 3. This Act applies only to an original report due
	211	+	on or after the effective date of this Act.
222	212		SECTION 4. This Act takes effect January 1, 2018.