Texas 2019 - 86th Regular

Texas House Bill HB1937 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	~~By: Goldman, Murphy, Rodriguez, Guillen, H.B. No. 1937~~
2		-	et al.
	1	+	86R6131 SMT-D
	2	+	By: Goldman, Murphy, Rodriguez, et al. H.B. No. 1937
3	3
4	4
5	5		A BILL TO BE ENTITLED
6	6		AN ACT
7		-	relating to a franchise or insurance tax credit for ~~certain~~
8		-	~~low-income~~ housing developments.
	7	+	relating to a franchise or insurance tax credit for low-income
	8	+	housing developments.
9	9		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10		SECTION 1. Chapter 171, Tax Code, is amended by adding
11	11		Subchapter V to read as follows:
12	12		SUBCHAPTER V. TAX CREDIT FOR LOW-INCOME HOUSING DEVELOPMENTS
13	13		Sec. 171.9241. DEFINITIONS. In this subchapter:
14	14		(1) "Allocation certificate" means a statement issued
15	15		by the department certifying that a qualified development qualifies
16	16		for credits under this subchapter and Chapter 233, Insurance Code,
17	17		and specifying the total amount of the credits awarded in
18	18		connection with the qualified development.
19	19		(2) "Credit" means the low-income housing development
20	20		tax credit authorized by this subchapter.
21	21		(3) "Credit period" means the period of 10 tax years
22	22		beginning with the tax year in which a qualified development is
23	23		placed in service. A qualified development consisting of more than
24	24		one building is not considered to be in service until all buildings
25	25		in the qualified development are placed in service.
26	26		(4) "Department" means the Texas Department of Housing
27	27		and Community Affairs.
28	28		(5) "Development" has the meaning assigned by Section
29	29		2306.6702, Government Code.
30	30		(6) "Federal tax credit" means the federal low-income
31	31		housing credit created by Section 42, Internal Revenue Code.
32	32		(7) "Qualified basis" means the qualified basis of a
33	33		qualified development, as determined under Section 42, Internal
34	34		Revenue Code.
35	35		(8) "Qualified development" means a development in
36		-	this state, other than in a county with a population of four million
37		-	or more, that the department determines is eligible for a federal
	36	+	this state that the department determines is eligible for a federal
38	37		tax credit and that:
39	38		(A) is financed with tax-exempt bonds;
40	39		(B) is the subject of a recorded restrictive
41	40		covenant requiring the development to be maintained and operated as
42	41		a qualified development; and
43	42		(C) for the lesser of 15 years after the
44	43		beginning of the credit period or the period required by the
45	44		department, is in compliance with:
46	45		(i) all accessibility and adaptability
47	46		requirements for a federal tax credit; and
48	47		(ii) Title VIII of the Civil Rights Act of
49	48		1968 (42 U.S.C. Section 3601 et seq.).
50	49		Sec. 171.9242. ENTITLEMENT TO CREDIT. A taxable entity is
51	50		entitled to a credit against the taxes imposed under this chapter in
52	51		the amount and under the limitations provided by this subchapter if
53	52		the taxable entity owns an interest in a qualified development.
54	53		Sec. 171.9243. ALLOCATION CERTIFICATE; CREDIT. (a) In a
55	54		year during a credit period, a taxable entity or an entity subject
56	55		to state insurance tax liability as defined by Section 233.0001,
57	56		Insurance Code, may apply to the department for an allocation
58	57		certificate in connection with a development in which the taxable
59	58		entity or other entity owns an interest.
60	59		(b) The department shall issue an allocation certificate if
61	60		the development is a qualified development.
62	61		(c) The department may determine the total amount of credits
63	62		under this subchapter and Chapter 233, Insurance Code, awarded in
64	63		connection with a qualified development, subject to the following:
65	64		(1) the amount of credits awarded in connection with a
66	65		qualified development must be the minimum amount necessary for the
67	66		financial feasibility of the qualified development after
68	67		considering any federal tax credit;
69	68		(2) the amount of credits awarded in connection with a
70	69		qualified development over the credit period may not exceed the
71	70		total federal tax credit awarded to the owner or owners of the
72	71		qualified development over the 10-year federal tax credit period;
73	72		(3) the manner in which the department awards the
74	73		amount of credits must be consistent with criteria established by
75	74		the department; and
76	75		(4) in a year, the total amount of credits awarded in
77	76		connection with all qualified developments may not exceed the sum
78	77		of:
79	78		(A) $35 million;
80	79		(B) any unallocated credits for the preceding
81	80		year; and
82	81		(C) any credit recaptured or otherwise returned
83	82		to the department in the year.
84	83		(d) The owners of a qualified development who intend to
85	84		claim a credit under this subchapter or Chapter 233, Insurance
86	85		Code, may by agreement determine the portion of the total amount of
87	86		credits awarded under Subsection (c) that each owner is entitled to
88	87		claim. If the owners do not agree, the department shall determine
89	88		the portion each owner is entitled to claim based on each owner's
90	89		ownership interest in the qualified development.
91	90		Sec. 171.9244. LENGTH OF CREDIT; LIMITATION. (a) A taxable
92	91		entity entitled to a credit under this subchapter shall claim the
93	92		credit in equal installments during each year of the credit period.
94	93		(b) The total credit claimed under this subchapter for a
95	94		report, including any carry forward or backward under Section
96	95		171.9245, may not exceed the amount of franchise tax due for the
97	96		report after any other applicable credit.
98	97		Sec. 171.9245. CARRY FORWARD OR BACKWARD. (a) If a taxable
99	98		entity is eligible for a credit that exceeds the limitations under
100	99		Section 171.9244, the taxable entity may carry the unused credit
101	100		back for not more than three tax years or forward for not more than
102	101		10 consecutive reports following the tax year in which the
103	102		allocation was made. A credit carryforward from a previous report
104	103		is considered to be used before the current year installment.
105	104		(b) A credit that is not used may not be refunded.
106	105		Sec. 171.9246. RECAPTURE. (a) The comptroller shall
107	106		recapture the amount of a credit claimed on a franchise tax report
108	107		filed under this chapter from a taxable entity if, on the last day
109	108		of a tax year, the amount of the qualified basis of the qualified
110	109		development is less than the amount of the qualified basis as of the
111	110		last day of the prior tax year. The comptroller shall determine the
112	111		amount required to be recaptured using the formula provided by
113	112		Section 42(j), Internal Revenue Code, as that section existed on
114	113		January 1, 2019.
115	114		(b) A franchise tax report must include any portion of
116	115		credit required to be recaptured, the identity of any taxable
117	116		entity subject to the recapture, and the amount of any credit
118	117		previously allocated to the taxable entity.
119	118		Sec. 171.9247. ASSIGNMENT OF CREDIT. (a) If a taxable
120	119		entity receiving a credit under this subchapter is a partnership,
121	120		limited liability company, S corporation, or similar pass-through
122	121		entity, the taxable entity may assign the credit to its partners,
123	122		shareholders, members, or other constituent taxable entities in any
124	123		manner agreed by those entities.
125	124		(b) A taxable entity that makes an assignment under this
126	125		section shall certify to the comptroller the amount of credit
127	126		assigned to each constituent taxable entity or shall notify the
128	127		comptroller that it has delegated the duty of certification to one
129	128		constituent taxable entity that shall provide the notification to
130	129		the comptroller. Each constituent taxable entity is entitled to
131	130		claim the assigned amount subject to any restrictions prescribed by
132	131		this subchapter.
133	132		(c) An assignment under this section is not a transfer for
134	133		purposes of state law.
135	134		Sec. 171.9248. FILING REQUIREMENTS AFTER ASSIGNMENT. A
136	135		taxable entity that assigns a portion of the credit under Section
137	136		171.9247, and each taxable entity to which a portion was assigned,
138	137		shall file with the taxable entity's report a copy of the allocation
139	138		certificate received for that year.
140	139		Sec. 171.9249. RULES; PROCEDURES. The department and
141	140		comptroller, in consultation with each other, shall adopt rules and
142	141		procedures to implement, administer, and enforce this subchapter.
143	142		Sec. 171.9250. COMPLIANCE MONITORING. (a) The department,
144	143		in consultation with the comptroller, shall monitor compliance with
145	144		this subchapter in the same manner as the department monitors
146	145		compliance with the federal tax credit program.
147	146		(b) The department shall report any instances of
148	147		noncompliance with this subchapter to the comptroller.
149	148		Sec. 171.9251. REPORT. (a) Not later than December 31 of
150	149		each year, the department shall deliver a written report to the
151	150		legislature. The report must:
152	151		(1) specify the number of qualified developments for
153	152		which allocation certificates were issued during the year and the
154	153		total number of units supported by the developments;
155	154		(2) describe each qualified development for which an
156	155		allocation certificate was issued during the year, including:
157	156		(A) location;
158	157		(B) household type;
159	158		(C) available demographic information for the
160	159		residents intended to be served by the development;
161	160		(D) the income levels intended to be served by
162	161		the development; and
163	162		(E) the rents or set-asides authorized for the
164	163		development;
165	164		(3) include housing market and demographic
166	165		information to demonstrate how the qualified developments,
167	166		supported by the tax credits under this subchapter and Chapter 233,
168	167		Insurance Code, are addressing the need for affordable housing in
169	168		their communities; and
170	169		(4) analyze any remaining disparities in the
171	170		affordability of housing within those communities.
172	171		(b) The department shall make a report delivered under this
173	172		section available to the public.
174	173		SECTION 2. Subtitle B, Title 3, Insurance Code, is amended
175	174		by adding Chapter 233 to read as follows:
176	175		CHAPTER 233. CREDIT AGAINST CERTAIN TAXES
177	176		FOR LOW-INCOME HOUSING DEVELOPMENTS
178	177		SUBCHAPTER A. GENERAL PROVISIONS
179	178		Sec. 233.0001. DEFINITIONS. In this chapter:
180	179		(1) "Allocation certificate" and "qualified
181	180		development" have the meanings assigned by Section 171.9241, Tax
182	181		Code.
183	182		(2) "State insurance tax liability" means any tax
184	183		liability incurred by an entity under Chapters 221 through 226 or
185	184		Chapter 281.
186	185		SUBCHAPTER B. CREDIT
187	186		Sec. 233.0051. CREDIT. An entity is eligible for a credit
188	187		against the entity's state insurance tax liability in the amount
189	188		and under the conditions and limitations provided by this chapter
190	189		if the entity owns an interest in a qualified development.
191	190		Sec. 233.0052. LENGTH OF CREDIT; LIMITATION. The entity
192	191		shall claim the credit in the manner provided by Section
193	192		171.9244(a), Tax Code, subject to the limitation provided by
194	193		Section 171.9244(b), Tax Code. The entity may carry a surplus
195	194		credit forward or backward as provided by Section 171.9245, Tax
196	195		Code.
197	196		Sec. 233.0053. APPLICATION FOR CREDIT. (a) An entity must
198	197		apply for a credit under this chapter on or with the tax report for
199	198		the tax year for which the credit is claimed and submit with the
200	199		application a copy of the allocation certificate issued in
201	200		connection with the qualified development and any other information
202	201		required by Subchapter V, Chapter 171, Tax Code.
203	202		(b) The comptroller shall adopt a form for the application
204	203		for the credit. An entity must use this form in applying for the
205	204		credit.
206	205		Sec. 233.0054. RULES; PROCEDURES. The comptroller and the
207	206		Texas Department of Housing and Community Affairs, in consultation
208	207		with each other, shall adopt rules and procedures to implement,
209	208		administer, and enforce this chapter.
210	209		Sec. 233.0055. APPLICABLE PROVISIONS. The provisions of
211	210		Subchapter V, Chapter 171, Tax Code, relating to recapture,
212	211		allocation of credit, filing requirements after allocation, and
213	212		compliance monitoring apply to the credit authorized by this
214	213		chapter.
215	214		SECTION 3. (a) The Texas Department of Housing and
216	215		Community Affairs may begin issuing allocation certificates under
217	216		Section 171.9243, Tax Code, as added by this Act, in an open cycle
218	217		beginning on January 1, 2020.
219	218		(b) Subchapter V, Chapter 171, Tax Code, as added by this
220	219		Act, and Chapter 233, Insurance Code, as added by this Act, apply
221	220		only to a tax report originally due on or after January 1, 2021.
222	221		SECTION 4. This Act takes effect January 1, 2020.