Texas 2019 - 86th Regular

Texas House Bill HB3866 Compare Versions

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

Old	New	Differences
1	1	86R491 CJC-D
2	2	By: Sanford H.B. No. 3866
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to a franchise tax credit based on the ad valorem taxes
8	8	paid by a taxable entity on certain inventory.
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 N to read as follows:
12	12	SUBCHAPTER N. TAX CREDIT FOR BUSINESS AD VALOREM TAX PAYMENTS ON
13	13	INVENTORY
14	14	Sec. 171.701. DEFINITIONS. In this subchapter:
15	15	(1) "Qualified entity" means a taxable entity that:
16	16	(A) is a retailer; and
17	17	(B) pays ad valorem taxes on retail inventory
18	18	owned by the entity and located in this state.
19	19	(2) "Retail inventory" means all tangible personal
20	20	property that a retailer holds for sale in this state during a
21	21	12-month period and for which the retailer is not otherwise
22	22	entitled to an exemption from taxation. For purposes of this
23	23	section, the term does not include:
24	24	(A) real property; or
25	25	(B) inventory that qualifies for appraisal under
26	26	Section 23.121, 23.124, 23.1241, or 23.127.
27	27	(3) "Retailer" means a person who is engaged in the
28	28	business in this state of selling retail inventory. For purposes of
29	29	this section, the term does not include:
30	30	(A) a bank, savings bank, savings and loan
31	31	association, credit union, or other finance company; or
32	32	(B) a person who was not engaged in the business
33	33	in this state of selling retail inventory on January 1 of the
34	34	preceding tax year.
35	35	(4) "Sales price" means the total amount of money paid
36	36	or to be paid to a retailer for the purchase of an item of retail
37	37	inventory.
38	38	(5) "Total annual sales" means the total of the sales
39	39	price from every sale from a retailer's retail inventory for a
40	40	12-month period, other than a sale at wholesale or a sale to another
41	41	retailer.
42	42	Sec. 171.702. ELIGIBILITY FOR CREDIT. A qualified entity
43	43	is eligible to apply for a credit in the amount and under the
44	44	conditions and limitations provided by this subchapter against the
45	45	tax imposed under this chapter.
46	46	Sec. 171.703. AMOUNT OF CREDIT; LIMITATIONS. (a) Subject
47	47	to Subsection (c), the total amount of the credit under this
48	48	subchapter is equal to the difference between the following
49	49	amounts:
50	50	(1) the amount of the ad valorem taxes paid by the
51	51	qualified entity during the period on which a report is based that
52	52	are derived from the taxable value of the entity's retail
53	53	inventory; and
54	54	(2) the amount of the ad valorem taxes the entity would
55	55	have paid during the period described by Subdivision (1) on the
56	56	taxable value of the entity's retail inventory if the taxable value
57	57	of that inventory were an amount determined by dividing the
58	58	entity's total annual sales, as reported to the comptroller under
59	59	Section 171.705, by 12.
60	60	(b) The comptroller may request assistance from the chief
61	61	appraiser of the appraisal district in which a qualified entity's
62	62	retail inventory is located to determine the amount described by
63	63	Subsection (a)(2). The chief appraiser shall provide the requested
64	64	assistance.
65	65	(c) A qualified entity is not eligible for a credit under
66	66	this subchapter for a year in which the amount described by
67	67	Subsection (a)(2) is greater than the amount described by
68	68	Subsection (a)(1).
69	69	(d) The total credit claimed for a report, including the
70	70	amount of any carryforward under Section 171.704, may not exceed
71	71	the amount of franchise tax due for the report after all other
72	72	applicable tax credits.
73	73	Sec. 171.704. CARRYFORWARD. (a) If a qualified entity is
74	74	eligible for a credit that exceeds the limitation under Section
75	75	171.703(d), the entity may carry the unused credit forward for not
76	76	more than three consecutive reports.
77	77	(b) A carryforward is considered the remaining portion of a
78	78	credit that cannot be claimed in the current year because of the
79	79	limitation under Section 171.703(d). A carryforward is added to
80	80	the next year's credit in determining the limitation for that year.
81	81	A credit carryforward from a previous report is considered to be
82	82	used before the current year credit.
83	83	Sec. 171.705. APPLICATION FOR CREDIT. (a) A qualified
84	84	entity must apply for a credit under this subchapter on or with the
85	85	report for the period for which the credit is claimed.
86	86	(b) The comptroller shall promulgate a form for the
87	87	application for the credit. A qualified entity must use the form in
88	88	applying for the credit. The application must require the entity to
89	89	state the entity's total annual sales for the 12-month period for
90	90	which the credit is claimed. The comptroller may require the entity
91	91	to include any other information the comptroller determines is
92	92	necessary to demonstrate that the entity is eligible for the
93	93	credit.
94	94	(c) The burden of establishing eligibility for and the value
95	95	of the credit is on the qualified entity.
96	96	(d) The comptroller may request permission to examine the
97	97	books and records of a qualified entity in the manner provided by
98	98	this subsection. A request made under this subsection must be made
99	99	in writing, be delivered personally to the custodian of the records
100	100	at a location at which the entity conducts business, provide a
101	101	period of not less than 15 days for the person to respond to the
102	102	request, and state that the person to whom the request is addressed
103	103	has the right to seek judicial relief from compliance with the
104	104	request. In a request made under this subsection, the comptroller
105	105	may examine:
106	106	(1) documentation appropriate to allow the
107	107	comptroller to determine if the entity is eligible for the credit;
108	108	and
109	109	(2) sales records to substantiate information
110	110	included in the entity's application for the credit.
111	111	Sec. 171.706. SALE OR ASSIGNMENT OF CREDIT. (a) A
112	112	qualified entity that earns a credit under this subchapter may sell
113	113	or assign all or part of the credit, and any entity to which all or
114	114	part of the credit is sold or assigned may sell or assign all or part
115	115	of the credit to another entity. There is no limit on the total
116	116	number of transactions for the sale or assignment of all or part of
117	117	the total credit authorized under this subchapter, however,
118	118	collectively all transferred and retained credits claimed for a
119	119	period are subject to the limitation under Section 171.703(d).
120	120	(b) An entity that sells or assigns a credit under this
121	121	section and the entity to which the credit is sold or assigned shall
122	122	jointly submit written notice of the sale or assignment to the
123	123	comptroller on a form promulgated by the comptroller not later than
124	124	the 30th day after the date of the sale or assignment. The notice
125	125	must include:
126	126	(1) the date of the sale or assignment;
127	127	(2) the amount of the credit sold or assigned;
128	128	(3) the names and federal tax identification numbers
129	129	of the entity that sold or assigned the credit or part of the credit
130	130	and the entity to which the credit or part of the credit was sold or
131	131	assigned; and
132	132	(4) the amount of the credit owned by the selling or
133	133	assigning entity before the sale or assignment, and the amount the
134	134	selling or assigning entity retained, if any, after the sale or
135	135	assignment.
136	136	(c) The sale or assignment of a credit in accordance with
137	137	this section does not extend the period for which a credit may be
138	138	carried forward and does not increase the total amount of the credit
139	139	that may be claimed.
140	140	Sec. 171.707. RULES. The comptroller shall adopt rules
141	141	necessary to implement and administer this subchapter.
142	142	SECTION 2. Subchapter N, Chapter 171, Tax Code, as added by
143	143	this Act, applies only to a report originally due on or after the
144	144	effective date of this Act.
145	145	SECTION 3. This Act takes effect January 1, 2020.