86R24154 CJC-D
By: Clardy, Shine, Guillen H.B. No. 2397
Substitute the following for H.B. No. 2397:
By: Wray C.S.H.B. No. 2397
A BILL TO BE ENTITLED
AN ACT
relating to a franchise tax credit for certain businesses that make
investments in qualified opportunity zones.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 171, Tax Code, is amended by adding
Subchapter W to read as follows:
SUBCHAPTER W. TAX CREDIT FOR INVESTMENT IN ECONOMIC OPPORTUNITY
ZONE
Sec. 171.9261. DEFINITIONS. In this subchapter:
(1) "Economic opportunity zone" means a population
census tract located in this state that, as of September 1, 2019,
was designated as a qualified opportunity zone under Public Law
No. 115-97.
(2) "Qualifying investment" means an investment made
by a taxable entity:
(A) to remodel, rehabilitate, or construct a
structure owned or leased by the taxable entity that is located in
an economic opportunity zone;
(B) to purchase equipment or machinery to be
located in, or used in the operation of, a structure owned or leased
by the taxable entity that is located in an economic opportunity
zone; or
(C) for one or more of the purposes described by
Paragraphs (A) and (B).
Sec. 171.9262. ELIGIBILITY FOR CREDIT. A taxable entity is
eligible to apply for a credit in the amount and under the
conditions provided by this subchapter against the tax imposed
under this chapter.
Sec. 171.9263. QUALIFICATION. A taxable entity qualifies
for a credit under this subchapter if the taxable entity makes a
qualifying investment:
(1) on or after September 1, 2019; and
(2) under Section 171.9261(2)(A), (B), or (C) in a
total amount that is at least $100,000.
Sec. 171.9264. CERTIFICATION OF ELIGIBILITY. (a) Before
claiming a credit under this subchapter, the taxable entity that
made the qualifying investment must request from the comptroller a
certificate of eligibility on a form prescribed by the comptroller.
The taxable entity must include with the taxable entity's request
information sufficient to allow the comptroller to determine
whether the taxable entity has made a qualifying investment under
this subchapter. At a minimum, the taxable entity must provide an
audited cost report prepared by a certified public accountant that
includes:
(1) the total amount of the qualifying investment made
by the taxable entity; and
(2) the date on which each expenditure used to
determine the total amount of the qualifying investment made by the
taxable entity was made.
(b) The comptroller shall issue a certificate of
eligibility to a taxable entity that has made a qualifying
investment under this subchapter.
Sec. 171.9265. AMOUNT OF CREDIT; LIMITATIONS. (a) Subject
to Subsections (b) and (c), the amount of the credit under this
subchapter is equal to 25 percent of the total amount of the
qualifying investment.
(b) A taxable entity may not claim more than one credit
under this subchapter.
(c) The total credit claimed for a report may not exceed the
amount of franchise tax due for the report after all other
applicable tax credits.
(d) A qualifying investment may be counted only once in
determining the amount of the tax credit available, and more than
one taxable entity may not claim a credit for the same qualifying
investment.
Sec. 171.9266. APPLICATION FOR CREDIT. (a) A taxable
entity must apply for a credit under this subchapter on or with the
report for the period for which the credit is claimed.
(b) A taxable entity shall file with any report on which the
credit is claimed a copy of the certificate of eligibility issued by
the comptroller under Section 171.9264 and any other information
required by the comptroller to sufficiently demonstrate that the
taxable entity is eligible for the credit.
(c) The burden of establishing eligibility for and the value
of the credit is on the taxable entity.
Sec. 171.9267. RULES. The comptroller shall adopt rules
necessary to implement and administer this subchapter.
SECTION 2. Subchapter W, Chapter 171, Tax Code, as added by
this Act, applies only to a report originally due on or after the
effective date of this Act.
SECTION 3. This Act takes effect January 1, 2020.