Texas 2017 - 85th Regular

Texas House Bill HB906 Compare Versions

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

Old	New	Differences
1	1	85R4256 TJB/CLG-F
2	2	By: Elkins H.B. No. 906
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the creation of research technology corporations for
8	8	the development and commercialization of technologies owned by
9	9	institutions of higher education or by certain medical centers with
10	10	members that are institutions of higher education; providing for
11	11	tax exemptions; providing a penalty.
12	12	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
13	13	SECTION 1. Subtitle H, Title 3, Education Code, is amended
14	14	by adding Chapter 157 to read as follows:
15	15	CHAPTER 157. UNIVERSITY RESEARCH TECHNOLOGY CORPORATIONS
16	16	Sec. 157.0001. PURPOSE AND FINDINGS. The legislature finds
17	17	that the development and commercialization of technology owned by
18	18	public and private institutions of higher education and by medical
19	19	centers associated with those institutions are critical components
20	20	of the educational and research missions of those institutions and
21	21	key contributors to the economic development and well-being of this
22	22	state. The activities authorized by this chapter directly support
23	23	those important public purposes.
24	24	Sec. 157.0002. DEFINITIONS. In this chapter:
25	25	(1) "Contribution" has the meaning assigned by Section
26	26	1.002, Business Organizations Code.
27	27	(2) "Institution of higher education" means an
28	28	institution of higher education or a private or independent
29	29	institution of higher education as those terms are defined by
30	30	Section 61.003.
31	31	(3) "Medical center development corporation" means a
32	32	nonprofit corporation that is eligible to claim an ad valorem tax
33	33	exemption under Section 11.23(j-1), Tax Code, for all or any part of
34	34	the corporation's properties.
35	35	(4) "Qualified medical center," with respect to an
36	36	institution of higher education, means a medical center development
37	37	corporation that includes among its member institutions, as
38	38	described in the corporation's books and records, one or more
39	39	institutions of higher education, regardless of whether those
40	40	institutions of higher education have membership status in the
41	41	qualified medical center for purposes of the Business Organizations
42	42	Code.
43	43	(5) "Technology" means the application of scientific
44	44	knowledge for practical purposes and includes inventions,
45	45	discoveries, patents, trade secrets, copyrighted materials, tools,
46	46	machines, materials, processes to do work, processes to produce
47	47	goods, processes to perform services, processes to carry out other
48	48	useful activities, trademarks, and computer software.
49	49	Sec. 157.0003. CREATION OF SPECIAL-PURPOSE CORPORATION.
50	50	(a) Any person having the capacity to be an organizer of a
51	51	corporation as provided by Section 3.004, Business Organizations
52	52	Code, may create a special-purpose corporation for the exclusive
53	53	purpose of developing and commercializing one or more technologies
54	54	owned wholly or partly by an institution of higher education. To
55	55	create the special-purpose corporation, an organizer of the
56	56	corporation must present to the secretary of state written evidence
57	57	that the organizer has a license to develop and commercialize a
58	58	specific technology owned wholly or partly by an institution of
59	59	higher education. The license may be conditioned on the creation of
60	60	the special-purpose corporation.
61	61	(b) A person described by Subsection (a) may create a
62	62	special-purpose corporation for the exclusive purpose of
63	63	developing and commercializing technology owned wholly or partly by
64	64	a qualified medical center.
65	65	(c) A special-purpose corporation created under Subsection
66	66	(b) may be created in the same form and manner as a special-purpose
67	67	corporation created under Subsection (a). To that extent, a
68	68	qualified medical center that owns wholly or partly the technology
69	69	for which a special-purpose corporation is created under Subsection
70	70	(b) is governed by the same provisions of this chapter that are
71	71	applicable to an institution of higher education.
72	72	(d) A corporation created under this chapter that engages in
73	73	other purposes that are not incidental to the purposes authorized
74	74	by this section is not entitled to the benefits of this chapter,
75	75	including any tax exemption authorized by Section 157.0008.
76	76	(e) The certificate of formation of a corporation created
77	77	under this chapter must state that the corporation is governed by
78	78	this chapter and state the name and purposes of the corporation and
79	79	other information required by law. Except as otherwise provided by
80	80	this chapter, a corporation created under this chapter is governed
81	81	by Chapters 20 and 21, Business Organizations Code, and Title 1 of
82	82	that code.
83	83	(f) The organizers of a corporation created under this
84	84	chapter shall register the corporation with the comptroller.
85	85	Sec. 157.0004. MANAGEMENT OF CORPORATION; RIGHTS OF
86	86	CREATING INSTITUTION. (a) The organizers of a corporation created
87	87	under this chapter shall name the persons constituting the initial
88	88	board of directors of the corporation. Directors other than the
89	89	initial directors shall be determined as provided by Chapter 21,
90	90	Business Organizations Code.
91	91	(b) An institution of higher education that owns wholly or
92	92	partly the technology for which a corporation is created under this
93	93	chapter must at all times be a shareholder in the corporation. The
94	94	institution of higher education shall be issued shares in the
95	95	corporation when the corporation is created as agreed on by the
96	96	organizers of the corporation according to any contribution of the
97	97	institution.
98	98	(c) The institution of higher education described by
99	99	Subsection (b) may be issued shares in the corporation in exchange
100	100	for the contribution of rights in the technology of the institution
101	101	of higher education or of other contractual obligations, as agreed
102	102	on by the corporation's board of directors.
103	103	Sec. 157.0005. TECHNOLOGY LICENSING. The institution of
104	104	higher education that owns wholly or partly the technology for
105	105	which a corporation is created under this chapter may license to the
106	106	corporation any technology owned by the institution of higher
107	107	education.
108	108	Sec. 157.0006. REQUIRED OPERATIONS IN TEXAS. The principal
109	109	offices of the corporation must be located in this state, and more
110	110	than 50 percent of any goods produced or services performed by the
111	111	corporation must be produced or performed in this state.
112	112	Sec. 157.0007. DURATION. (a) A corporation created under
113	113	this chapter is limited in duration to 15 years. At the expiration
114	114	of that period, the corporation may file a restated and amended
115	115	certificate of formation under which the corporation continues in
116	116	existence as a for-profit corporation governed by Chapters 20 and
117	117	21, Business Organizations Code, and Title 1 of that code. A
118	118	corporation that files a restated and amended certificate of
119	119	formation as authorized by this subsection is not governed by the
120	120	other provisions of this chapter and is not entitled to an exemption
121	121	authorized by Section 157.0008.
122	122	(b) Subsection (a) does not limit the time or manner in
123	123	which the corporation may be terminated as otherwise provided by
124	124	law.
125	125	Sec. 157.0008. TAX-EXEMPT STATUS OF CORPORATION. (a) This
126	126	section applies only to a corporation created under this chapter,
127	127	other than a corporation that files a restated and amended
128	128	certificate of formation as authorized by Section 157.0007, that:
129	129	(1) is engaged exclusively in developing and
130	130	commercializing one or more technologies owned wholly or partly by
131	131	an institution of higher education or by a qualified medical
132	132	center, including activities that are incidental to developing and
133	133	commercializing those technologies; and
134	134	(2) complies with Section 157.0006.
135	135	(b) The corporation is entitled to an exemption from ad
136	136	valorem taxation of real and tangible personal property as provided
137	137	by Section 11.232, Tax Code.
138	138	(c) The corporation is exempted from the sales and use tax
139	139	imposed by Chapter 151, Tax Code, as provided by Section 151.3184 of
140	140	that code.
141	141	(d) The corporation is exempted from the franchise tax
142	142	imposed by Chapter 171, Tax Code, as provided by Section 171.089 of
143	143	that code.
144	144	(e) This section does not limit the eligibility of the
145	145	corporation for any other available tax benefit, including a tax
146	146	benefit under Chapter 312 or 313, Tax Code.
147	147	(f) The corporation must maintain a complete record of all
148	148	taxes for which the corporation would have been liable if the
149	149	corporation had not been entitled to the exemptions authorized by
150	150	this section. The corporation shall report that information
151	151	annually to the comptroller in the form and manner required by the
152	152	comptroller.
153	153	(g) The comptroller shall adopt rules necessary to
154	154	implement this section and administer the exemptions under
155	155	Subsections (c) and (d).
156	156	Sec. 157.0009. PENALTY FOR NONCOMPLIANCE WITH CORPORATE
157	157	OPERATIONS REQUIREMENTS. (a) A corporation created under this
158	158	chapter that ceases to comply with Section 157.0006 is liable to the
159	159	state for a penalty in an amount equal to any taxes, including ad
160	160	valorem taxes, for which the corporation received an exemption
161	161	under Section 157.0008 for the four calendar years preceding the
162	162	year in which the noncompliance began. The comptroller shall
163	163	determine the corporation's liability for the penalty and assess
164	164	the amount owed.
165	165	(b) A penalty assessed under this section is due on the date
166	166	designated by the comptroller, not later than the 90th day after the
167	167	date assessed, and shall be collected in the same manner as a state
168	168	tax. A lien exists on any property of the corporation to secure the
169	169	payment of any amount assessed under this section. The comptroller
170	170	is entitled to collect interest and penalties on the unpaid amount
171	171	of a delinquent penalty in the same manner as the manner prescribed
172	172	for the collection of a delinquent state tax. The comptroller by
173	173	rule shall establish the methods of payment and shall adopt other
174	174	rules necessary to administer and enforce this section.
175	175	(c) Amounts received under this section shall be deposited
176	176	to the credit of the general revenue fund.
177	177	Sec. 157.0010. CONFLICT WITH BUSINESS ORGANIZATIONS CODE.
178	178	To the extent of any conflict between a provision of this chapter
179	179	and a provision of the Business Organizations Code, the provision
180	180	of this chapter controls.
181	181	SECTION 2. Subchapter B, Chapter 11, Tax Code, is amended by
182	182	adding Section 11.232 to read as follows:
183	183	Sec. 11.232. PROPERTY OWNED BY OR LEASED TO UNIVERSITY
184	184	RESEARCH TECHNOLOGY CORPORATION. (a) In this section,
185	185	"institution of higher education," "medical center development
186	186	corporation," "qualified medical center," and "technology" have
187	187	the meanings assigned by Section 157.0002, Education Code.
188	188	(b) Except as provided by Subsection (c), a corporation that
189	189	qualifies as a university research technology corporation as
190	190	provided by Subsection (g) is entitled to an exemption from ad
191	191	valorem taxation of:
192	192	(1) the real and tangible personal property owned by
193	193	the corporation that is used for a purpose described by Subsection
194	194	(g)(2); and
195	195	(2) the real property owned by the corporation that
196	196	consists of:
197	197	(A) an incomplete improvement that is under
198	198	active construction or other physical preparation to make the
199	199	property suitable to be used for a purpose described by Subsection
200	200	(g)(2); and
201	201	(B) the land on which the incomplete improvement
202	202	is located that will be reasonably necessary for the corporation's
203	203	use of the improvement.
204	204	(c) A qualified university research technology corporation
205	205	is not entitled to an exemption from taxation of real or tangible
206	206	personal property:
207	207	(1) owned by an organizer or director of the
208	208	corporation before the creation of the corporation; and
209	209	(2) subject to taxation in this state before being
210	210	devoted exclusively to a purpose described by Subsection (g)(2).
211	211	(d) Notwithstanding Subsection (c), a qualified university
212	212	research technology corporation is entitled to an exemption from
213	213	taxation of the value of that portion of an improvement that
214	214	consists of an expansion of an improvement described by that
215	215	subsection if the improvement is devoted exclusively to a purpose
216	216	described by Subsection (g)(2).
217	217	(e) A medical center development corporation is entitled to
218	218	an exemption from taxation of the corporation's real and tangible
219	219	personal property that is leased to or used or occupied primarily by
220	220	a qualified university research technology corporation and used
221	221	exclusively for a purpose described by Subsection (g)(2).
222	222	(f) Notwithstanding Section 25.07, a qualified university
223	223	research technology corporation is entitled to an exemption from
224	224	taxation of a possessory interest in property described by
225	225	Subsection (e).
226	226	(g) To qualify as a university research technology
227	227	corporation for purposes of this section, a corporation must:
228	228	(1) be a corporation created under Chapter 157,
229	229	Education Code, other than a corporation created under that chapter
230	230	that files a restated and amended certificate of formation as
231	231	authorized by Section 157.0007 of that code;
232	232	(2) be engaged exclusively in developing and
233	233	commercializing one or more technologies owned wholly or partly by
234	234	an institution of higher education or by a qualified medical
235	235	center, including activities that are incidental to developing and
236	236	commercializing those technologies; and
237	237	(3) be in compliance with Section 157.0006, Education
238	238	Code.
239	239	SECTION 3. Section 11.42(d), Tax Code, is amended to read as
240	240	follows:
241	241	(d) A person who acquires property after January 1 of a tax
242	242	year may receive an exemption authorized by Section 11.17, 11.18,
243	243	11.19, 11.20, 11.21, 11.23, 11.231, 11.232, or 11.30 for the
244	244	applicable portion of that tax year immediately on qualification
245	245	for the exemption.
246	246	SECTION 4. The heading to Section 26.113, Tax Code, is
247	247	amended to read as follows:
248	248	Sec. 26.113. PRORATING TAXES--ACQUISITION BY NONPROFIT
249	249	ORGANIZATION OR UNIVERSITY RESEARCH TECHNOLOGY CORPORATION.
250	250	SECTION 5. Subchapter H, Chapter 151, Tax Code, is amended
251	251	by adding Section 151.3184 to read as follows:
252	252	Sec. 151.3184. UNIVERSITY RESEARCH TECHNOLOGY CORPORATION.
253	253	(a) In this section, "university research technology corporation"
254	254	means a corporation to which Section 157.0008, Education Code,
255	255	applies.
256	256	(b) A taxable item sold, leased, or rented to, or stored,
257	257	used, or consumed by, a university research technology corporation
258	258	is exempted from the taxes imposed by this chapter if the item is
259	259	classified by the corporation as a capital asset. An item is
260	260	considered to be classified by the corporation as a capital asset if
261	261	the item is considered to be a capital asset according to generally
262	262	accepted accounting principles adopted by the Financial Accounting
263	263	Standards Board and is recognized by the corporation as a capital
264	264	asset on the corporation's federal income tax returns.
265	265	(c) The comptroller shall adopt rules necessary to
266	266	implement this section, including rules to ensure that a taxable
267	267	item with respect to which an exemption from the taxes imposed by
268	268	this chapter is granted under this section meets the requirements
269	269	of Subsection (b).
270	270	SECTION 6. Subchapter B, Chapter 171, Tax Code, is amended
271	271	by adding Section 171.089 to read as follows:
272	272	Sec. 171.089. EXEMPTION--UNIVERSITY RESEARCH TECHNOLOGY
273	273	CORPORATION. (a) In this section, "university research technology
274	274	corporation" means a corporation to which Section 157.0008,
275	275	Education Code, applies.
276	276	(b) A university research technology corporation is
277	277	exempted from the franchise tax.
278	278	(c) A corporation created as a university research
279	279	technology corporation that files at the expiration of the period
280	280	described by Section 157.0007(a), Education Code, a restated and
281	281	amended certificate of formation as authorized by that section is
282	282	no longer exempted from the franchise tax by Subsection (b) on the
283	283	expiration of that period. Unless the corporation is otherwise
284	284	exempted from the franchise tax, the date of the expiration of that
285	285	period is considered the corporation's beginning date for purposes
286	286	of determining the corporation's privilege periods and for all
287	287	other purposes of this chapter.
288	288	SECTION 7. Section 11.232, Tax Code, as added by this Act,
289	289	applies only to an ad valorem tax year that begins on or after the
290	290	effective date of this Act.
291	291	SECTION 8. Section 151.3184, Tax Code, as added by this Act,
292	292	does not affect tax liability accruing before the effective date of
293	293	this Act. That liability continues in effect as if this Act had not
294	294	been enacted, and the former law is continued in effect for the
295	295	collection of taxes due and for civil and criminal enforcement of
296	296	the liability for those taxes.
297	297	SECTION 9. The change in law made by this Act to Chapter
298	298	171, Tax Code, applies only to a report originally due on or after
299	299	the effective date of this Act.
300	300	SECTION 10. (a) Except as provided by Subsection (b) of
301	301	this section, this Act takes effect January 1, 2018.
302	302	(b) Section 157.0008(b), Education Code, and Section
303	303	11.232, Tax Code, as added by this Act, and Sections 11.42(d) and
304	304	26.113, Tax Code, as amended by this Act, take effect January 1,
305	305	2018, but only if the constitutional amendment proposed by the 85th
306	306	Legislature, Regular Session, 2017, authorizing the legislature to
307	307	provide for an exemption from ad valorem taxation of certain
308	308	property owned by or leased to or by a university research
309	309	technology corporation is approved by the voters. If that
310	310	amendment is not approved by the voters, Section 157.0008(b),
311	311	Education Code, and Section 11.232, Tax Code, as added by this Act,
312	312	and Sections 11.42(d) and 26.113, Tax Code, as amended by this Act,
313	313	have no effect.