TX
Texas House Bill HB2397

Texas 2019 - 86th Regular

Texas House Bill HB2397 Compare Versions

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1-86R24154 CJC-D
2- By: Clardy, Shine, Guillen H.B. No. 2397
3- Substitute the following for H.B. No. 2397:
4- By: Wray C.S.H.B. No. 2397
1+86R8818 CJC-D
2+ By: Clardy H.B. No. 2397
53
64
75 A BILL TO BE ENTITLED
86 AN ACT
9- relating to a franchise tax credit for certain businesses that make
10- investments in qualified opportunity zones.
7+ relating to a sales and use tax refund and franchise tax credit for
8+ certain businesses that make investments in qualified opportunity
9+ zones.
1110 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
12- SECTION 1. Chapter 171, Tax Code, is amended by adding
11+ SECTION 1. Subchapter I, Chapter 151, Tax Code, is amended
12+ by adding Section 151.4292 to read as follows:
13+ Sec. 151.4292. TAX REFUNDS FOR BUSINESS IN ECONOMIC
14+ OPPORTUNITY ZONE. (a) In this section:
15+ (1) "Economic opportunity zone" has the meaning
16+ assigned by Section 171.9261.
17+ (2) "Qualifying business entity" means an entity that
18+ is eligible to receive a tax credit under Subchapter W, Chapter 171.
19+ (b) After the qualifying business entity becomes eligible
20+ to receive a tax credit under Subchapter W, Chapter 171, and subject
21+ to Subsection (c), the entity is eligible for a one-time refund of
22+ the sales and use taxes paid by the entity for the purchase of:
23+ (1) building materials to remodel, rehabilitate, or
24+ construct a structure owned or leased by the entity that is located
25+ in the economic opportunity zone and that is the basis for the
26+ entity's eligibility for the tax credit under Subchapter W, Chapter
27+ 171;
28+ (2) labor to remodel, rehabilitate, or construct a
29+ structure owned or leased by the entity that is located in the
30+ economic opportunity zone and that is the basis for the entity's
31+ eligibility for the tax credit under Subchapter W, Chapter 171; and
32+ (3) equipment or machinery to be located in, or used in
33+ the operation of, a structure owned or leased by the entity that is
34+ located in the economic opportunity zone and that is the basis for
35+ the entity's eligibility for the tax credit under Subchapter W,
36+ Chapter 171.
37+ (c) The amount of the one-time refund paid to a qualifying
38+ business entity under this section may not exceed the lesser of:
39+ (1) 25 percent of the total amount of sales and use
40+ taxes paid by the business entity on purchases described by
41+ Subsection (b); or
42+ (2) $50,000.
43+ (d) A qualifying business entity must apply to the
44+ comptroller to receive a refund authorized under this section on a
45+ form prescribed by the comptroller.
46+ (e) The comptroller may adopt rules to implement and
47+ administer this section.
48+ SECTION 2. Chapter 171, Tax Code, is amended by adding
1349 Subchapter W to read as follows:
1450 SUBCHAPTER W. TAX CREDIT FOR INVESTMENT IN ECONOMIC OPPORTUNITY
1551 ZONE
1652 Sec. 171.9261. DEFINITIONS. In this subchapter:
1753 (1) "Economic opportunity zone" means a population
18- census tract located in this state that, as of September 1, 2019,
19- was designated as a qualified opportunity zone under Public Law
20- No. 115-97.
21- (2) "Qualifying investment" means an investment made
22- by a taxable entity:
23- (A) to remodel, rehabilitate, or construct a
24- structure owned or leased by the taxable entity that is located in
25- an economic opportunity zone;
26- (B) to purchase equipment or machinery to be
27- located in, or used in the operation of, a structure owned or leased
28- by the taxable entity that is located in an economic opportunity
29- zone; or
30- (C) for one or more of the purposes described by
31- Paragraphs (A) and (B).
32- Sec. 171.9262. ELIGIBILITY FOR CREDIT. A taxable entity is
54+ census tract that, as of September 1, 2019, was designated as a
55+ qualified opportunity zone under Public Law No. 115-97.
56+ (2) "Qualifying investment" means an investment to:
57+ (A) remodel, rehabilitate, or construct a
58+ structure owned or leased by the entity that is located in an
59+ economic opportunity zone; or
60+ (B) purchase equipment or machinery to be located
61+ in, or used in the operation of, a structure owned or leased by the
62+ entity that is located in an economic opportunity zone.
63+ Sec. 171.9262. ELIGIBILITY FOR CREDIT. An entity is
3364 eligible to apply for a credit in the amount and under the
3465 conditions provided by this subchapter against the tax imposed
3566 under this chapter.
36- Sec. 171.9263. QUALIFICATION. A taxable entity qualifies
37- for a credit under this subchapter if the taxable entity makes a
38- qualifying investment:
67+ Sec. 171.9263. QUALIFICATION. An entity qualifies for a
68+ credit under this subchapter if the entity makes a qualifying
69+ investment:
3970 (1) on or after September 1, 2019; and
40- (2) under Section 171.9261(2)(A), (B), or (C) in a
41- total amount that is at least $100,000.
71+ (2) in an amount that is at least $100,000.
4272 Sec. 171.9264. CERTIFICATION OF ELIGIBILITY. (a) Before
43- claiming a credit under this subchapter, the taxable entity that
44- made the qualifying investment must request from the comptroller a
45- certificate of eligibility on a form prescribed by the comptroller.
46- The taxable entity must include with the taxable entity's request
73+ claiming, selling, or assigning a credit under this subchapter, the
74+ entity that made the qualifying investment must request from the
75+ comptroller a certificate of eligibility on a form prescribed by
76+ the comptroller. The entity must include with the entity's request
4777 information sufficient to allow the comptroller to determine
48- whether the taxable entity has made a qualifying investment under
49- this subchapter. At a minimum, the taxable entity must provide an
50- audited cost report prepared by a certified public accountant that
51- includes:
78+ whether the entity has made a qualifying investment under this
79+ subchapter. At a minimum, the entity must provide documentation
80+ certified by the chief financial officer of the entity
81+ demonstrating:
5282 (1) the total amount of the qualifying investment made
53- by the taxable entity; and
54- (2) the date on which each expenditure used to
55- determine the total amount of the qualifying investment made by the
56- taxable entity was made.
83+ by the entity; and
84+ (2) the date on which the qualifying investment was
85+ made.
5786 (b) The comptroller shall issue a certificate of
58- eligibility to a taxable entity that has made a qualifying
59- investment under this subchapter.
87+ eligibility to an entity that has made a qualifying investment
88+ under this subchapter.
89+ (c) An entity that sells or assigns a credit under this
90+ subchapter to another entity shall provide a copy of the
91+ certificate of eligibility to the purchaser or assignee.
6092 Sec. 171.9265. AMOUNT OF CREDIT; LIMITATIONS. (a) Subject
6193 to Subsections (b) and (c), the amount of the credit under this
6294 subchapter is equal to 25 percent of the total amount of the
6395 qualifying investment.
64- (b) A taxable entity may not claim more than one credit
65- under this subchapter.
66- (c) The total credit claimed for a report may not exceed the
67- amount of franchise tax due for the report after all other
96+ (b) An entity may not claim more than one credit under this
97+ subchapter.
98+ (c) The total credit claimed for a report, including the
99+ amount of any carryforward under Section 171.9266, may not exceed
100+ the amount of franchise tax due for the report after any other
68101 applicable tax credits.
69102 (d) A qualifying investment may be counted only once in
70103 determining the amount of the tax credit available, and more than
71- one taxable entity may not claim a credit for the same qualifying
104+ one entity may not claim a credit for the same qualifying
72105 investment.
73- Sec. 171.9266. APPLICATION FOR CREDIT. (a) A taxable
74- entity must apply for a credit under this subchapter on or with the
75- report for the period for which the credit is claimed.
76- (b) A taxable entity shall file with any report on which the
77- credit is claimed a copy of the certificate of eligibility issued by
78- the comptroller under Section 171.9264 and any other information
106+ Sec. 171.9266. CARRYFORWARD. (a) If an entity is eligible
107+ for a credit that exceeds the limitation under Section 171.9265(c),
108+ the entity may carry the unused credit forward for not more than
109+ five consecutive reports.
110+ (b) A carryforward is considered the remaining portion of a
111+ credit that cannot be claimed in the current year because of the
112+ limitation under Section 171.9265(c).
113+ Sec. 171.9267. APPLICATION FOR CREDIT. (a) An entity must
114+ apply for a credit under this subchapter on or with the report for
115+ the period for which the credit is claimed.
116+ (b) An entity shall file with any report on which the credit
117+ is claimed a copy of the certificate of eligibility issued by the
118+ comptroller under Section 171.9264 and any other information
79119 required by the comptroller to sufficiently demonstrate that the
80- taxable entity is eligible for the credit.
120+ entity is eligible for the credit.
81121 (c) The burden of establishing eligibility for and the value
82- of the credit is on the taxable entity.
83- Sec. 171.9267. RULES. The comptroller shall adopt rules
122+ of the credit is on the entity.
123+ Sec. 171.9268. SALE OR ASSIGNMENT OF CREDIT. (a) An entity
124+ that makes a qualifying investment may sell or assign all or part of
125+ the credit that may be claimed for that investment to one or more
126+ entities, and any entity to which all or part of the credit is sold
127+ or assigned may sell or assign all or part of the credit to another
128+ entity. There is no limit on the total number of transactions for
129+ the sale or assignment of all or part of the total credit authorized
130+ under this subchapter, however, collectively all transfers are
131+ subject to the limitations provided by Section 171.9265.
132+ (b) An entity that sells or assigns a credit under this
133+ section and the entity to which the credit is sold or assigned shall
134+ jointly submit written notice of the sale or assignment to the
135+ comptroller on a form promulgated by the comptroller not later than
136+ the 30th day after the date of the sale or assignment. The notice
137+ must include:
138+ (1) the date of the sale or assignment;
139+ (2) the amount of the credit sold or assigned;
140+ (3) the names and federal tax identification numbers
141+ of the entity that sold or assigned the credit or part of the credit
142+ and the entity to which the credit or part of the credit was sold or
143+ assigned; and
144+ (4) the amount of the credit owned by the selling or
145+ assigning entity before the sale or assignment, and the amount the
146+ selling or assigning entity retained, if any, after the sale or
147+ assignment.
148+ (c) The sale or assignment of a credit in accordance with
149+ this section does not extend the period for which a credit may be
150+ carried forward and does not increase the total amount of the credit
151+ that may be claimed.
152+ (d) Notwithstanding the requirements of this subchapter, a
153+ credit earned or purchased by, or assigned to, a partnership,
154+ limited liability company, S corporation, or other pass-through
155+ entity may be allocated to the partners, members, or shareholders
156+ of that entity and claimed under this subchapter in accordance with
157+ the provisions of any agreement among the partners, members, or
158+ shareholders, provided that the entity that claims the credit must
159+ be subject to the tax imposed under this chapter.
160+ Sec. 171.9269. RULES. The comptroller shall adopt rules
84161 necessary to implement and administer this subchapter.
85- SECTION 2. Subchapter W, Chapter 171, Tax Code, as added by
162+ SECTION 3. Subchapter W, Chapter 171, Tax Code, as added by
86163 this Act, applies only to a report originally due on or after the
87164 effective date of this Act.
88- SECTION 3. This Act takes effect January 1, 2020.
165+ SECTION 4. This Act takes effect January 1, 2020.