Texas 2019 - 86th Regular

Texas House Bill HB4425 Compare Versions

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

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1	1	By: Longoria H.B. No. 4425
2	2
3	3
4	4	A BILL TO BE ENTITLED
5	5	AN ACT
6	6	relating to the exemption for depreciable tangible personal
7	7	property used in qualified research from the sales and use tax and
8	8	the tax credit for certain research and development credit
9	9	activities for franchise tax purposes.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Section 151.3182, Tax Code, is amended by
12	12	amending Subsections (a) and (b) to read as follows:
13	13	(a) In this section:
14	14	(1) "Depreciable tangible personal property" means
15	15	tangible personal property that:
16	16	(A) has a useful life that exceeds one year; and
17	17	(B) is subject to depreciation under:
18	18	(i) generally accepted accounting
19	19	principles; or
20	20	(ii) Section 167 or 168, Internal Revenue
21	21	Code.
22	22	(2) "Exclusively used in qualified research" means
23	23	used in qualified research without an intervening, simultaneous, or
24	24	subsequent use, unless the intervening, simultaneous, or
25	25	subsequent use is otherwise exempt under this Chapter.
26	26	(3) "Good" means real or tangible personal property
27	27	sold in the ordinary course of business.
28	28	(4) "Internal Revenue Code" has the meaning assigned
29	29	by Section 171.651.
30	30	[(3)] (5) "Qualified research" has the meaning
31	31	assigned by Section 41, Internal Revenue Code, except it does not
32	32	include the use of depreciable tangible personal property in the
33	33	production of a good or activities involved in the provision of
34	34	services for a customer.
35	35	(b) The sale, storage, or use of depreciable tangible
36	36	personal property directly and exclusively used in qualified
37	37	research is exempted from the taxes imposed by this chapter if the
38	38	property is sold, leased, or rented to, or stored or used by, a
39	39	person who:
40	40	(1) is engaged in qualified research; and
41	41	(2) will not, as a taxable entity as defined by Section
42	42	171.0002 or as a member of a combined group that is a taxable
43	43	entity, claim a credit under Subchapter M, Chapter 171, on a
44	44	franchise tax report for the period during which the sale, storage,
45	45	or use occurs.
46	46	SECTION 2. Section 171.651, Tax Code, is amended by
47	47	amending Paragraphs (1), (3), (4), and (5) to read as follows:
48	48	(1) "Internal Revenue Code" means the Internal Revenue
49	49	Code of 1986 in effect on December 31, 2011, including regulations
50	50	adopted as of December 31, 2011, excluding any changes made by
51	51	federal law after that date[, but including any regulations adopted
52	52	under that code applicable to the tax year to which the provisions
53	53	of the code in effect on that date applied].
54	54	(3) "Qualified research" has the meaning assigned by
55	55	Section 41, Internal Revenue Code, except that:
56	56	(A) the research must be conducted in this state;
57	57	and
58	58	(B) it does not include activities performed in
59	59	the production of a good or the performance of a service for a
60	60	customer.
61	61	(4) "Qualified research expense" has the meaning
62	62	assigned by Section 41, Internal Revenue Code, except that:
63	63	(A) the expense must be for research conducted in
64	64	this state; and
65	65	(B) if an employee has performed both qualified
66	66	services and nonqualified services, only wages for actual time
67	67	spent for the performance of qualified services constitutes a
68	68	qualified research expense and the "substantially-all" provisions
69	69	of Section 41(b)(2)(B) do not apply.
70	70	(5) "Goods" has the meaning assigned by Section
71	71	171.1012.
72	72	SECTION 3. Section 171.652, Tax Code, is amended to read as
73	73	follows:
74	74	Sec. 171.652. ELIGIBILITY FOR CREDIT. A taxable entity is
75	75	eligible for a credit against the tax imposed under this chapter in
76	76	the amount and under the conditions and limitations provided by
77	77	this subchapter. Eligibility and acceptance by the Internal
78	78	Revenue Service for credit under Section 41, Internal Revenue Code,
79	79	on a taxable entity's federal tax return is not binding on the
80	80	eligibility for credit under this Subchapter.
81	81	SECTION 4. Section 171.654, Tax Code, is amended by
82	82	amending Subsections (a) and (b) to read as follows:
83	83	(a) Except as provided by Subsections (b), (c), and (d), the
84	84	credit for any report equals five percent of the difference
85	85	between:
86	86	(1) the qualified research expenses incurred during
87	87	the period on which the report is based[, subject to Section
88	88	171.655]; and
89	89	(2) 50 percent of the average amount of qualified
90	90	research expenses incurred during the three tax periods preceding
91	91	the period on which the report is based[, subject to Section
92	92	171.655].
93	93	(b) If the taxable entity contracts with one or more public
94	94	or private institutions of higher education for the performance of
95	95	qualified research and the taxable entity has qualified research
96	96	expenses incurred in this state by the taxable entity under the
97	97	contract during the period on which the report is based, the credit
98	98	for the report equals 6.25 percent of the difference between:
99	99	(1) all qualified research expenses incurred during
100	100	the period on which the report is based[, subject to Section
101	101	171.655]; and
102	102	(2) 50 percent of the average amount of all qualified
103	103	research expenses incurred during the three tax periods preceding
104	104	the period on which the report is based[, subject to Section
105	105	171.655].
106	106	SECTION 5. Section 171.6541, Tax Code, is added to read as
107	107	follows:
108	108	Sec. 171.6541. DETERMINATION OF THE AMOUNT OF CREDIT. (a)
109	109	A taxable entity may use sampling to determine the amount of the
110	110	credit using a generally accepted sampling method approved by the
111	111	comptroller.
112	112	(b) The taxable entity must record the sampling method
113	113	performed and must make available, on request by the comptroller,
114	114	the records on which the computation was based.
115	115	SECTION 6. Section 171.656, Tax Code, is amended by
116	116	amending Subsection (a) to read as follows:
117	117	(a) A credit under this subchapter for qualified research
118	118	expenses incurred by a member of a combined group must be claimed on
119	119	the combined report required by Section 171.1014 for the group[,
120	120	and the combined group is the taxable entity for purposes of this
121	121	subchapter
122	122	].
123	123	(1) Each member of the combined group shall determine
124	124	its credit as if it were an individual taxable entity. The total
125	125	credits of the members determined in this section shall be added
126	126	together to determine the total credit claimed on the combined
127	127	report.
128	128	(2) Any carryforward credit belongs to the member of
129	129	the combined group that established that portion of the credit for
130	130	future reports.
131	131	SECTION 7. Section 171.655, Tax Code, is deleted.
132	132	SECTION 8. The amendments made by this Act are a
133	133	clarification of existing law and do not imply that existing law may
134	134	be construed as inconsistent with the law as amended by this Act.