85R5019 BEF-F
By: Lucio S.B. No. 1295
A BILL TO BE ENTITLED
AN ACT
relating to an insurance premium tax credit for investment in
certain communities; imposing a monetary penalty; authorizing
fees.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle B, Title 3, Insurance Code, is amended
by adding Chapter 231 to read as follows:
CHAPTER 231. PREMIUM TAX CREDIT FOR INVESTMENT IN CERTAIN
COMMUNITIES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 231.001. GENERAL DEFINITIONS. In this chapter:
(1) "Applicable percentage" means zero percent for the
first two credit allowance dates, seven percent for the third
credit allowance date, and eight percent for the next four credit
allowance dates.
(2) "Credit allowance date" means, with respect to any
qualified equity investment:
(A) the date on which the qualified equity
investment is initially made; and
(B) the anniversary of that date in each of the
six years immediately following that date.
(3) "Federal tax regulations" means regulations
adopted under the Internal Revenue Code of 1986 that are applicable
to the tax year to which the provisions of the code in effect on
September 1, 2017, applied.
(4) "Internal Revenue Code" means the Internal Revenue
Code of 1986 in effect on September 1, 2017, excluding any changes
made by federal law after that date, but including any regulations
adopted under that code that are applicable to the tax year to which
the provisions of the code in effect on that date applied.
(5) "Investing entity" means an entity, including an
entity that incurs state premium tax liability, that makes or holds
a qualified equity investment.
(6) "Issuer" means a qualified community development
entity, or a subsidiary or affiliate of a qualified community
development entity, that issues a qualified equity investment.
(7) "Low-income community" has the meaning assigned by
Section 45D, Internal Revenue Code.
(8) "Metropolitan statistical area" means a core base
statistical area associated with at least one urbanized area that
has a population of at least 90,000. A metropolitan statistical
area comprises the central county or counties containing the core,
plus adjacent outlying counties having a high degree of social and
economic integration with the central county or counties as
measured through commuting.
(9) "Purchase price" means the amount paid to the
issuer for a qualified equity investment.
(10) "Report" means a premium tax report or a report
under Subchapter G, as applicable.
(11) "Rural allocation" means the allocation
described by Section 231.104(c)(1).
(12) "Rural area" means a county in this state with a
population less than 90,000.
(13) "State premium tax liability" means any premium
tax liability incurred under Chapter 221, 222, 223, 223A, or 224.
(14) "Statewide low-income community allocation"
means the allocation described by Section 231.104(c)(4).
(15) "Texas education allocation" means the
allocation described by Section 231.104(c)(2).
(16) "Texas seaport allocation" means the allocation
described by Section 231.104(c)(3).
Sec. 231.002. DEFINITION: LONG-TERM DEBT SECURITY. (a) In
this chapter, "long-term debt security" means a debt instrument
issued by a qualified community development entity, at par value or
a premium, with an original maturity date not earlier than the
seventh year after the date on which the debt instrument is issued,
with no acceleration of repayment, amortization, or prepayment
features before its original maturity date.
(b) The qualified community development entity that issues
a long-term debt security may not make cash interest payments on the
security during the period beginning on the date on which the
security is issued and ending on the final credit allowance date in
an amount that exceeds the cumulative operating income, as defined
by federal tax regulations adopted under Section 45D, Internal
Revenue Code, of the qualified community development entity for
that period before giving effect to the interest expense of the
long-term debt security.
(c) This section does not limit the holder's ability to
accelerate payments on a long-term debt security in situations in
which the issuer has defaulted on covenants designed to ensure
compliance with this chapter or Section 45D, Internal Revenue Code.
Sec. 231.003. DEFINITION: QUALIFIED ACTIVE LOW-INCOME
COMMUNITY BUSINESS. (a) In this chapter, "qualified active
low-income community business" has the meaning assigned by Section
45D, Internal Revenue Code, and Section 1.45D-1 of the federal tax
regulations.
(b) A business is considered a qualified active low-income
community business for the duration of the qualified community
development entity's investment in, or loan to, the business if the
entity reasonably expects, at the time it makes the investment or
loan, that the business will continue to satisfy the requirements
for being a qualified active low-income community business
throughout the entire period of the investment or loan.
Sec. 231.004. DEFINITION: QUALIFIED COMMUNITY DEVELOPMENT
ENTITY. In this chapter, "qualified community development entity"
has the meaning assigned by Section 45D, Internal Revenue Code,
provided that the entity has entered into, for the current year or a
prior year with an allocation effective date on or after July 1,
2016, an allocation agreement with the Community Development
Financial Institutions Fund of the United States Department of the
Treasury with respect to credits authorized by Section 45D,
Internal Revenue Code, that includes this state in the service area
specified in the allocation agreement. The term includes a
subsidiary or affiliate of a qualified community development entity
and any other qualified community development entity that is
controlled by or under common control with a qualified community
development entity.
Sec. 231.005. DEFINITION: QUALIFIED EQUITY INVESTMENT. (a)
An investment is a "qualified equity investment" for purposes of
this chapter if:
(1) the investment is an equity investment in, or
long-term debt security issued by, a qualified community
development entity;
(2) the investment is acquired on or after October 1,
2017, at its original issuance solely in exchange for cash, except
as provided by Subsection (b);
(3) not later than the 20th month after the date of
issuance at least 85 percent of the investment's purchase price is
used by the issuer to make qualified low-income community
investments in this state; and
(4) the investment is designated by the issuer as a
qualified equity investment under this section and is certified by
the comptroller as not exceeding the limitations provided by
Section 231.104.
(b) A qualified equity investment includes an investment
that does not satisfy the requirements of Subsection (a)(2) if the
investment was a qualified equity investment in the hands of a prior
holder.
Sec. 231.006. DEFINITION: QUALIFIED LOW-INCOME COMMUNITY
INVESTMENT. In this chapter, "qualified low-income community
investment" means an equity investment in, or loan to, a qualified
active low-income community business made by a qualified community
development entity.
Sec. 231.007. DEFINITION: RURAL COMMUNITY DEVELOPMENT
ENTITY. In this chapter, "rural community development entity" means
a qualified community development entity:
(1) whose allocation agreement with the Community
Development Financial Institutions Fund of the United States
Department of the Treasury requires the entity to invest at least 25
percent of that allocation in rural areas; or
(2) that demonstrates to the comptroller in writing
that the entity or its affiliates invested at least 25 percent of
the entity's most recent federal allocation outside the boundaries
of a metropolitan statistical area.
Sec. 231.008. RULES. The comptroller shall adopt rules
necessary to implement this chapter.
Sec. 231.009. REVIEW BY COMPTROLLER. The comptroller shall
review the qualified low-income community investments of a
qualified community development entity not later than the sixth
month after each anniversary of the investment. In conducting the
review, the comptroller shall ensure that the qualified community
development entity has made and maintained the qualified low-income
community investments required under Sections 231.151(a)(3) and
(4) to avoid recapture of a credit claimed in connection with a
qualified equity investment.
SUBCHAPTER B. PREMIUM TAX CREDIT
Sec. 231.051. ELIGIBILITY FOR CREDIT. An investing entity
is eligible for a credit against the entity's state premium tax
liability in the amount provided by this subchapter and under the
conditions and limitations provided by this chapter.
Sec. 231.052. QUALIFICATION. An investing entity is
eligible for a credit if the investing entity holds a qualified
equity investment on a credit allowance date.
Sec. 231.053. AMOUNT OF CREDIT; LIMITATION. (a) The amount
of credit for a tax year is equal to the credit accrued, as
determined under Subsection (b), on each credit allowance date:
(1) that occurs during the tax year; and
(2) on which the investing entity holds the qualified
equity investment.
(b) The amount of credit accrued on a credit allowance date
equals the applicable percentage for the credit allowance date
multiplied by the purchase price paid to the issuer of the qualified
equity investment.
(c) The total credit claimed for a tax year, including the
amount of any carryforward under Section 231.054, may not exceed
the amount of state premium tax liability due for the tax year after
applying all other applicable tax credits.
(d) Credits may be applied to the investing entity's
estimated or final tax payments for the tax year.
Sec. 231.054. CARRYFORWARD. If an investing entity is
eligible for a credit that exceeds the limitation under Section
231.053(c), the investing entity may carry the unused credit
forward for not more than 20 consecutive tax reports. Credits,
including credit carryforwards, are considered to be used in the
following order:
(1) a credit carryforward under this subchapter; and
(2) a current year credit.
Sec. 231.055. ASSIGNMENT PROHIBITED. (a) Except as
provided by Subsection (b), an investing entity may not convey,
assign, or transfer the credit allowed under this subchapter to
another entity.
(b) A partnership, limited liability company, S
corporation, or other pass-through entity for federal income tax
purposes may allocate the credit to the entity's partners, members,
or shareholders for their direct use in accordance with an
agreement between the partners, members, or shareholders.
Sec. 231.056. RETALIATORY TAX. (a) An entity claiming a
credit under this subchapter is not required to pay any additional
retaliatory tax levied under Chapter 281 as a result of claiming
that credit.
(b) In addition to the exclusion provided by Subsection (a),
an entity claiming a credit under this subchapter is not required to
pay any additional tax that may arise as a result of claiming that
credit.
SUBCHAPTER C. CERTIFICATION AS QUALIFIED EQUITY INVESTMENT
Sec. 231.101. APPLICATION FOR CERTIFICATION AS QUALIFIED
EQUITY INVESTMENT. (a) A qualified community development entity
that seeks to have an equity investment or long-term debt security
certified as a qualified equity investment eligible for credits
under this chapter must apply to the comptroller as provided by this
section.
(b) The comptroller shall provide an application date each
year for applications under Subsection (a). The date may not be
later than October 2. The comptroller shall consider all
applications received on or before the application date to be
received simultaneously on the application date.
(c) An application under this section must include the
following:
(1) evidence of the applicant's certification as a
qualified community development entity, including evidence of the
service area of the entity that includes this state;
(2) a copy of an allocation agreement executed by the
applicant, or its controlling entity, and the Community Development
Financial Institutions Fund of the United States Department of the
Treasury;
(3) a certificate executed by an executive officer of
the applicant attesting that the allocation agreement remains in
effect and has not been revoked or canceled by the Community
Development Financial Institutions Fund;
(4) a description of the amount and structure of the
equity investment or long-term debt security proposed to be
certified;
(5) examples of the types of qualified active
low-income community businesses in which the applicant, its
controlling entity, or affiliates of its controlling entity have
invested under the federal New Markets Tax Credit Program or a state
new markets tax credit program, including written proof that the
applicant or an affiliate has made at least one qualified
low-income community investment or a similar loan to a business in a
low-income census tract in this state;
(6) evidence that:
(A) the entity qualifies as a rural community
development entity, if the entity is applying for a rural
allocation;
(B) the entity or the entity's affiliate has
previously made at least one qualified low-income community
investment that would meet the investment requirements for a Texas
education allocation, if the entity is applying for a Texas
education allocation; or
(C) the entity or the entity's affiliate has
previously made at least one qualified low-income community
investment that would meet the investment requirements for a Texas
seaport allocation, if the entity is applying for a Texas seaport
allocation;
(7) a nonrefundable application fee of $5,000 to be
paid to the comptroller; and
(8) the refundable performance deposit required by
Subchapter E.
Sec. 231.102. ACTION ON APPLICATION. (a) Not later than
the 30th day after the date an application under Section 231.101 is
received, the comptroller shall grant or deny the application in
full or part.
(b) If the comptroller denies the application, the
comptroller shall inform the applicant of the denial.
(c) If the comptroller denies an application because the
application is incomplete, the applicant may, not later than the
15th day after the date the applicant receives notice under
Subsection (b), provide additional information required by the
comptroller to complete the application. The comptroller shall
consider an application completed under this subsection to be
completed on the date the application was initially submitted.
(d) If an applicant does not complete an application in the
time required under Subsection (c), the application is finally
denied and the applicant must submit a new application if the
applicant wishes to reapply. The comptroller shall determine the
application date for the new application without regard to the
previously denied application.
Sec. 231.103. CERTIFICATION OF QUALIFIED EQUITY
INVESTMENT. (a) If an application under Section 231.101 is
granted, the comptroller shall certify the proposed equity
investment or long-term debt security as a qualified equity
investment that is eligible for credits under this chapter, subject
to Section 231.104.
(b) The comptroller shall provide written notice of the
certification to the qualified community development entity.
(c) The certification of a qualified equity investment is
effective on the date the comptroller provides notice under
Subsection (b).
Sec. 231.104. LIMIT ON CERTIFIED INVESTMENTS. (a) Subject
to Subsections (b) and (c), the comptroller shall limit the amount
of qualified equity investments that may be certified under Section
231.103 to an amount the comptroller estimates will result in not
more than:
(1) $60 million in credits being claimed under this
chapter in any state fiscal year; and
(2) $300 million in total credits being claimed under
this chapter.
(b) The comptroller shall estimate the amounts under
Subsection (a) without regard to the carryforward provision under
Section 231.054.
(c) The comptroller shall allocate 25 percent, or as nearly
as possible to 25 percent, of the amount available under Subsection
(a) for each of the following:
(1) a rural allocation, which may be used only by
rural community development entities to make qualified low-income
community investments in rural areas;
(2) a Texas education allocation, which may be used
only to make qualified low-income community investments in
nonprofit or for-profit entities offering primary, secondary, or
higher education in low-income communities in this state;
(3) a Texas seaport allocation, which may be used only
to make qualified low-income community investments in businesses
operating at a port, harbor, or municipality:
(A) accessible to seagoing ships that are limited
to 35 miles from the coastline; and
(B) located in a low-income community in this
state; and
(4) a statewide low-income community allocation,
which may be used to make qualified low-income community
investments in any low-income community in this state.
(d) A qualified community development entity may apply in a
single application for and receive certification of qualified
equity investments in more than one allocation category under
Subsection (c).
(e) Subject to Subsection (f), if a pending application
cannot be fully certified due to the limit specified by Subsection
(a) or (c), the comptroller shall certify the portion that can be
certified.
(f) The comptroller shall certify qualified equity
investments in the order in which applications are received by the
comptroller. Applications received on or before the application
date provided under Section 231.101(b) are considered to have been
received simultaneously on the application date. For applications
that are complete and received on or before the application date
provided under Section 231.101(b) and for which the total amounts
requested cannot be certified because of the limit specified by
Subsection (a) or (c), the comptroller shall certify qualified
equity investments in each allocation category under Subsection (c)
on a pro rata basis based on the ratio of the amount of qualified
equity investments available in an allocation category to the total
amount of qualified equity investments requested in that allocation
category.
Sec. 231.105. TRANSFER OF INVESTMENT AUTHORITY. A
qualified community development entity whose application for
certification of a qualified equity investment is approved under
this subchapter may transfer all or a portion of its certified
qualified equity investment authority to its controlling entity or
to a qualified community development entity controlled by or under
common control with the transferring entity, if the transferring
entity:
(1) provides the information required in the
application under Section 231.101(c) with respect to the recipient
of the transfer; and
(2) notifies the comptroller of the transfer not later
than the 30th day after the date of the transfer.
Sec. 231.106. ISSUANCE OF QUALIFIED EQUITY INVESTMENT; FEE.
(a) Not later than the 20th month after the date the qualified
community development entity receives notice of certification, the
entity or a recipient of a transfer under Section 231.105 shall
issue the qualified equity investment and receive cash in the
amount certified.
(b) The qualified community development entity or a
recipient of a transfer under Section 231.105 must provide the
comptroller with evidence of the receipt of the cash investment not
later than the 10th business day after the date the cash investment
is received.
(c) At the time the qualified community development entity
or a recipient of a transfer under Section 231.105 issues the
qualified equity investment, the qualified community development
entity or transfer recipient shall pay to the comptroller a fee
equal to 20 basis points, or 0.2 percent, of the amount issued.
Fees collected under this subsection may be appropriated only to
pay the cost of preparing a report under Section 231.302.
Sec. 231.107. LAPSE OF CERTIFICATION. (a) If the qualified
community development entity or a recipient of a transfer under
Section 231.105 does not issue the qualified equity investment and
receive the cash investment before the 20th month after the date the
certification notice is received as required by Section 231.106,
the certification lapses and the qualified community development
entity or recipient of the transfer may not accept an equity
investment or issue a long-term debt security as a qualified equity
investment without reapplying to the comptroller for
certification.
(b) If a certification lapses under this section, the
comptroller shall reissue the previously certified amount, giving
preference to an applicant for reissuance of certification whose
proposed amount for certification was previously certified in a
reduced amount under Section 231.104. If more than one applicant
for reissuance of certification had its proposed amount reduced,
the comptroller shall reissue the certified amount to those
applicants on a pro rata basis, subject to the limits specified by
Section 231.104.
(c) After reissuing certifications under Subsection (b),
the comptroller shall reissue any certified amounts remaining to
applicants in amounts determined by the comptroller, subject to the
limits specified by Section 231.104.
SUBCHAPTER D. RECAPTURE OF CREDIT
Sec. 231.151. RECAPTURE. (a) Subject to Section 231.152,
the comptroller shall recapture the amount of a credit claimed on a
premium tax report filed under Chapter 221, 222, 223, 223A, or 224
from the investing entity if:
(1) any amount of a federal tax credit available with
respect to a qualified equity investment that is eligible for a
credit under this chapter is recaptured under Section 45D, Internal
Revenue Code, in which case the comptroller's recapture must be
proportionate to the federal recapture with respect to the
qualified equity investment;
(2) the issuer redeems or makes principal repayment
with respect to a qualified equity investment before the seventh
anniversary of the date the qualified equity investment is issued,
in which case the comptroller's recapture must be proportionate to
the amount of the redemption or repayment with respect to the
qualified equity investment;
(3) the issuer fails to invest an amount equal to 85
percent of the purchase price of the qualified equity investment in
qualified low-income community investments in this state not later
than the 20th month after the date the qualified equity investment
is issued, in which case the comptroller's recapture may not exceed
the amount of tax credits associated with the portion of the
purchase price received but not invested on the date of the
recapture; or
(4) the issuer fails to maintain an amount of
investment equal to 85 percent of the purchase price of the
qualified equity investment in qualified low-income community
investments in this state until the last credit allowance date for
the qualified equity investment, in which case the comptroller's
recapture may not exceed the amount of tax credits associated with
the portion of the purchase price received but not maintained in
qualified low-income community investments on the date of
recapture.
(b) For purposes of this chapter, a qualified low-income
community investment is considered held by an issuer even if the
investment has been sold or repaid if the issuer reinvests an amount
equal to the capital returned to or recovered by the issuer from the
original investment, exclusive of any profits realized, in another
qualified low-income community investment not later than the 12th
month after the date the issuer receives the capital.
(c) An issuer is not required to reinvest capital returned
from a qualified low-income community investment after the sixth
anniversary of the date the qualified equity investment whose
proceeds were used to make the qualified low-income community
investment was issued. The qualified low-income community
investment is considered held by the issuer through the seventh
anniversary of the date the qualified equity investment was issued.
(d) Periodic amounts received during a calendar year as
repayment of principal on a loan that is a qualified low-income
community investment shall be treated as continuously invested in a
qualified low-income community investment if the amounts are
reinvested in one or more qualified low-income community
investments not later than the last day of the following calendar
year.
(e) After the seventh anniversary of the date a qualified
equity investment is issued, the qualified community development
entity may request that the comptroller certify that tax credits
associated with the qualified equity investment are not subject to
recapture under this section.
(f) Not later than the 60th day after the date the
comptroller receives a request under Subsection (e), the
comptroller shall:
(1) certify in writing to the qualified community
development entity that tax credits associated with the qualified
equity investment are not subject to recapture and that the
qualified community development entity has satisfied all the
requirements of this chapter; or
(2) notify the qualified community development entity
that tax credits associated with the qualified equity investment
are subject to recapture and that the qualified community
development entity has not satisfied the requirements of this
chapter and shall provide a written explanation of the reason for
that determination.
(g) After the comptroller certifies under Subsection (f)(1)
that tax credits associated with a qualified equity investment are
not subject to recapture:
(1) the comptroller may not recapture any tax credits
associated with that qualified equity investment; and
(2) the qualified community development entity is not
subject to regulation by the comptroller or to the reporting
requirements under Section 231.301 in connection with that
qualified equity investment.
Sec. 231.152. NOTICE OF NONCOMPLIANCE. (a) The
comptroller shall notify a qualified community development entity
and an investing entity that has claimed a credit on a report if the
credit is subject to recapture under Section 231.151.
(b) The comptroller may not recapture a credit under this
subchapter if the qualified community development entity cures the
noncompliance described by Section 231.151 before the 90th day
after the date the qualified community development entity receives
notice under Subsection (a).
SUBCHAPTER E. SECURITY FOR PERFORMANCE
Sec. 231.201. SECURITY REQUIRED. (a) Not later than the
14th day after the date a qualified equity investment is certified
under Subchapter C, the qualified community development entity that
received investment authority for the qualified equity investment
must deposit $500,000 with the comptroller as a refundable
performance deposit to be deposited as required by Section 231.204.
(b) This section applies regardless of whether the
investment authority is for a rural allocation, a Texas education
allocation, a Texas seaport allocation, or a statewide low-income
community allocation.
Sec. 231.202. FAILURE TO PROVIDE SECURITY: LOSS OF
CERTIFICATION. The comptroller shall revoke the certification of
the qualified equity investment of a qualified community
development entity that fails to make a deposit under Section
231.201.
Sec. 231.203. FORFEITURE OF SECURITY. (a) A qualified
community development entity that makes a performance deposit under
Section 231.201 forfeits the deposit in its entirety if:
(1) the qualified community development entity or any
qualified community development entity to which a transfer is made
under Section 231.105 fails to issue the total amount of qualified
equity investments certified by the comptroller and receive cash in
the amount certified under Section 231.103 not later than the date
specified by Section 231.106; or
(2) subject to Subsection (b), the qualified community
development entity or a qualified community development entity to
which a transfer is made under Section 231.105 that issues a
qualified equity investment certified under Section 231.103 fails
to make or maintain the investment required under Sections
231.151(a)(3) and (4) to avoid recapture of a credit claimed in
connection with the qualified equity investment.
(b) A deposit is not subject to forfeiture under Subsection
(a)(2) if the qualified community development entity cures the
noncompliance before the 90th day after the date the qualified
community development entity receives notice under Subsection (c).
(c) The comptroller shall notify a qualified community
development entity that made a deposit under Section 231.201 in
writing if the deposit is subject to forfeiture under this section.
Sec. 231.204. NEW MARKETS PERFORMANCE GUARANTEE FUND. (a)
The new markets performance guarantee fund is an interest-bearing
fund outside the state treasury with the comptroller. The fund
consists of money the comptroller deposits under Subsection (b).
The comptroller shall administer the fund.
(b) The comptroller shall deposit a performance deposit
made under Section 231.201 to the credit of the new markets
performance guarantee fund. The deposit must remain on deposit with
the fund until the comptroller determines that:
(1) the qualified community development entity has
complied with the provisions of this chapter; or
(2) the deposit has been forfeited and will be
deposited in accordance with Section 231.206.
Sec. 231.205. RELEASE OF SECURITY. (a) Not earlier than
the 30th day after the date the requirements that must be satisfied
to avoid forfeiture of a deposit as described by Section 231.203 are
satisfied, a qualified community development entity that made the
deposit may request a refund of the deposit from the comptroller.
(b) The comptroller shall refund the deposit or, if
applicable, give notice of noncompliance as described by Section
231.203 not later than the 30th day after the date of receiving a
request under Subsection (a).
Sec. 231.206. DEPOSIT OF FORFEITED SECURITY. The
comptroller shall deposit in the general revenue fund a deposit
forfeited under Section 231.203.
SUBCHAPTER F. EVALUATION OF BUSINESS BY COMPTROLLER
Sec. 231.251. EVALUATION REQUIRED. (a) Except as provided
by Subsection (c), a qualified community development entity or a
recipient of a transfer under Section 231.105 must, before making
an investment in a business, request a written opinion from the
comptroller as to whether:
(1) the business in which the qualified community
development entity proposes to invest would qualify as a qualified
active low-income community business under Section 231.003; and
(2) the location where the qualified community
development entity proposes to invest would meet the location
requirements for a rural allocation, a Texas education allocation,
or a Texas seaport allocation, as applicable.
(b) Not later than the 10th business day after the date of
the receipt of a request under Subsection (a), the comptroller
shall make the requested determinations and issue the written
opinion, including explanations for the determinations.
(c) A qualified community development entity or a recipient
of a transfer under Section 231.105 may, but is not required to,
request a written opinion under Subsection (a) before making an
investment in a business if the qualified community development
entity or transfer recipient concurrently makes a federal qualified
low-income community investment in the business.
Sec. 231.252. CONSIDERATION OF FEDERAL TAX LAWS. In
issuing a written opinion and making other determinations under
this chapter, the comptroller shall consider Section 45D, Internal
Revenue Code, and the federal tax regulations issued under that
code, to the extent that those provisions are applicable.
SUBCHAPTER G. REPORTING
Sec. 231.301. REPORT TO COMPTROLLER. (a) Except as
provided by this subsection, a qualified community development
entity that issues a qualified equity investment under Section
231.106 shall submit an annual report to the comptroller not later
than the fifth business day after the anniversary of a credit
allowance date applicable to the investment. The qualified
community development entity is not required to submit any report
under this subsection after the annual report following the final
credit allowance date.
(b) The report must:
(1) provide evidence that the qualified community
development entity has made and maintained the investment required
under Sections 231.151(a)(3) and (4) to avoid recapture of a credit
claimed in connection with the qualified equity investment;
(2) include one or more bank statements for the
qualified community development entity that reflect each qualified
low-income community investment made by the qualified community
development entity in connection with the qualified equity
investment;
(3) state the name, location, and industry code of
each qualified active low-income community business receiving a
qualified low-income community investment in connection with the
qualified equity investment;
(4) state the number of employment positions created
and retained as a result of each qualified low-income community
investment made in connection with the qualified equity investment;
(5) state whether the qualified community development
entity has been subject to a recapture of any amount of a federal
tax credit available under Section 45D, Internal Revenue Code, with
respect to the qualified equity investment; and
(6) include a copy of the most recent annual report
submitted by the qualified community development entity to the
United States Department of the Treasury regarding Section 45D,
Internal Revenue Code.
(c) A qualified community development entity that fails to
submit a report to the comptroller within the time prescribed by
Subsection (a) shall pay to the comptroller a penalty equal to the
sum of:
(1) $25,000; and
(2) $5,000 for each day the report is not submitted
after the date the report is due under Subsection (a).
Sec. 231.302. COMPTROLLER'S REPORT TO LEGISLATURE. (a)
The comptroller shall contract with an independent researcher at a
center for education research established under Section 1.005,
Education Code, to prepare a biennial report with respect to the
implementation of this chapter.
(b) The report must include:
(1) the number of qualified community development
entities holding certified qualified equity investments;
(2) the amount of qualified equity investments of each
qualified community development entity;
(3) the investments each qualified community
development entity has made in qualified active low-income
community businesses as of the most recent annual report submitted
to the comptroller by the qualified community development entity;
(4) the total amount of credits earned under this
chapter;
(5) the performance of each qualified community
development entity with respect to reporting requirements imposed
by this chapter;
(6) with respect to each qualified active low-income
community business in which a qualified community development
entity has invested:
(A) the classification of the qualified active
low-income community business according to the industrial sector
and the size of the business;
(B) the total number of jobs created by the
qualified low-income community investment and the average wages
paid for the jobs; and
(C) the total number of jobs retained as a result
of the qualified low-income community investment and the average
wages paid for the jobs; and
(7) an analysis of the effect implementation of this
chapter has had during the period covered by the report on:
(A) economic activity in this state; and
(B) state tax revenue.
(c) The comptroller shall file the report with the governor,
the lieutenant governor, and the speaker of the house of
representatives not later than December 15 of each even-numbered
year.
SECTION 2. (a) As soon as practicable after the effective
date of this Act, the comptroller of public accounts shall adopt
rules necessary to implement the provisions of Chapter 231,
Insurance Code, as added by this Act.
(b) The comptroller of public accounts shall provide an
initial application date under Section 231.101(b), Insurance Code,
as added by this Act, of October 2, 2017.
SECTION 3. Subchapter B, Chapter 231, Insurance Code, as
added by this Act, applies only to a tax report originally due on or
after January 1, 2018.
SECTION 4. This Act takes effect September 1, 2017.