Texas 2019 - 86th Regular

Texas Senate Bill SB1590 Compare Versions

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

Old	New	Differences
1	1	86R6131 SMT-D
2	2	By: Whitmire S.B. No. 1590
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to a franchise or insurance tax credit for low-income
8	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	36	this state that the department determines is eligible for a federal
37	37	tax credit and that:
38	38	(A) is financed with tax-exempt bonds;
39	39	(B) is the subject of a recorded restrictive
40	40	covenant requiring the development to be maintained and operated as
41	41	a qualified development; and
42	42	(C) for the lesser of 15 years after the
43	43	beginning of the credit period or the period required by the
44	44	department, is in compliance with:
45	45	(i) all accessibility and adaptability
46	46	requirements for a federal tax credit; and
47	47	(ii) Title VIII of the Civil Rights Act of
48	48	1968 (42 U.S.C. Section 3601 et seq.).
49	49	Sec. 171.9242. ENTITLEMENT TO CREDIT. A taxable entity is
50	50	entitled to a credit against the taxes imposed under this chapter in
51	51	the amount and under the limitations provided by this subchapter if
52	52	the taxable entity owns an interest in a qualified development.
53	53	Sec. 171.9243. ALLOCATION CERTIFICATE; CREDIT. (a) In a
54	54	year during a credit period, a taxable entity or an entity subject
55	55	to state insurance tax liability as defined by Section 233.0001,
56	56	Insurance Code, may apply to the department for an allocation
57	57	certificate in connection with a development in which the taxable
58	58	entity or other entity owns an interest.
59	59	(b) The department shall issue an allocation certificate if
60	60	the development is a qualified development.
61	61	(c) The department may determine the total amount of credits
62	62	under this subchapter and Chapter 233, Insurance Code, awarded in
63	63	connection with a qualified development, subject to the following:
64	64	(1) the amount of credits awarded in connection with a
65	65	qualified development must be the minimum amount necessary for the
66	66	financial feasibility of the qualified development after
67	67	considering any federal tax credit;
68	68	(2) the amount of credits awarded in connection with a
69	69	qualified development over the credit period may not exceed the
70	70	total federal tax credit awarded to the owner or owners of the
71	71	qualified development over the 10-year federal tax credit period;
72	72	(3) the manner in which the department awards the
73	73	amount of credits must be consistent with criteria established by
74	74	the department; and
75	75	(4) in a year, the total amount of credits awarded in
76	76	connection with all qualified developments may not exceed the sum
77	77	of:
78	78	(A) $35 million;
79	79	(B) any unallocated credits for the preceding
80	80	year; and
81	81	(C) any credit recaptured or otherwise returned
82	82	to the department in the year.
83	83	(d) The owners of a qualified development who intend to
84	84	claim a credit under this subchapter or Chapter 233, Insurance
85	85	Code, may by agreement determine the portion of the total amount of
86	86	credits awarded under Subsection (c) that each owner is entitled to
87	87	claim. If the owners do not agree, the department shall determine
88	88	the portion each owner is entitled to claim based on each owner's
89	89	ownership interest in the qualified development.
90	90	Sec. 171.9244. LENGTH OF CREDIT; LIMITATION. (a) A taxable
91	91	entity entitled to a credit under this subchapter shall claim the
92	92	credit in equal installments during each year of the credit period.
93	93	(b) The total credit claimed under this subchapter for a
94	94	report, including any carry forward or backward under Section
95	95	171.9245, may not exceed the amount of franchise tax due for the
96	96	report after any other applicable credit.
97	97	Sec. 171.9245. CARRY FORWARD OR BACKWARD. (a) If a taxable
98	98	entity is eligible for a credit that exceeds the limitations under
99	99	Section 171.9244, the taxable entity may carry the unused credit
100	100	back for not more than three tax years or forward for not more than
101	101	10 consecutive reports following the tax year in which the
102	102	allocation was made. A credit carryforward from a previous report
103	103	is considered to be used before the current year installment.
104	104	(b) A credit that is not used may not be refunded.
105	105	Sec. 171.9246. RECAPTURE. (a) The comptroller shall
106	106	recapture the amount of a credit claimed on a franchise tax report
107	107	filed under this chapter from a taxable entity if, on the last day
108	108	of a tax year, the amount of the qualified basis of the qualified
109	109	development is less than the amount of the qualified basis as of the
110	110	last day of the prior tax year. The comptroller shall determine the
111	111	amount required to be recaptured using the formula provided by
112	112	Section 42(j), Internal Revenue Code, as that section existed on
113	113	January 1, 2019.
114	114	(b) A franchise tax report must include any portion of
115	115	credit required to be recaptured, the identity of any taxable
116	116	entity subject to the recapture, and the amount of any credit
117	117	previously allocated to the taxable entity.
118	118	Sec. 171.9247. ASSIGNMENT OF CREDIT. (a) If a taxable
119	119	entity receiving a credit under this subchapter is a partnership,
120	120	limited liability company, S corporation, or similar pass-through
121	121	entity, the taxable entity may assign the credit to its partners,
122	122	shareholders, members, or other constituent taxable entities in any
123	123	manner agreed by those entities.
124	124	(b) A taxable entity that makes an assignment under this
125	125	section shall certify to the comptroller the amount of credit
126	126	assigned to each constituent taxable entity or shall notify the
127	127	comptroller that it has delegated the duty of certification to one
128	128	constituent taxable entity that shall provide the notification to
129	129	the comptroller. Each constituent taxable entity is entitled to
130	130	claim the assigned amount subject to any restrictions prescribed by
131	131	this subchapter.
132	132	(c) An assignment under this section is not a transfer for
133	133	purposes of state law.
134	134	Sec. 171.9248. FILING REQUIREMENTS AFTER ASSIGNMENT. A
135	135	taxable entity that assigns a portion of the credit under Section
136	136	171.9247, and each taxable entity to which a portion was assigned,
137	137	shall file with the taxable entity's report a copy of the allocation
138	138	certificate received for that year.
139	139	Sec. 171.9249. RULES; PROCEDURES. The department and
140	140	comptroller, in consultation with each other, shall adopt rules and
141	141	procedures to implement, administer, and enforce this subchapter.
142	142	Sec. 171.9250. COMPLIANCE MONITORING. (a) The department,
143	143	in consultation with the comptroller, shall monitor compliance with
144	144	this subchapter in the same manner as the department monitors
145	145	compliance with the federal tax credit program.
146	146	(b) The department shall report any instances of
147	147	noncompliance with this subchapter to the comptroller.
148	148	Sec. 171.9251. REPORT. (a) Not later than December 31 of
149	149	each year, the department shall deliver a written report to the
150	150	legislature. The report must:
151	151	(1) specify the number of qualified developments for
152	152	which allocation certificates were issued during the year and the
153	153	total number of units supported by the developments;
154	154	(2) describe each qualified development for which an
155	155	allocation certificate was issued during the year, including:
156	156	(A) location;
157	157	(B) household type;
158	158	(C) available demographic information for the
159	159	residents intended to be served by the development;
160	160	(D) the income levels intended to be served by
161	161	the development; and
162	162	(E) the rents or set-asides authorized for the
163	163	development;
164	164	(3) include housing market and demographic
165	165	information to demonstrate how the qualified developments,
166	166	supported by the tax credits under this subchapter and Chapter 233,
167	167	Insurance Code, are addressing the need for affordable housing in
168	168	their communities; and
169	169	(4) analyze any remaining disparities in the
170	170	affordability of housing within those communities.
171	171	(b) The department shall make a report delivered under this
172	172	section available to the public.
173	173	SECTION 2. Subtitle B, Title 3, Insurance Code, is amended
174	174	by adding Chapter 233 to read as follows:
175	175	CHAPTER 233. CREDIT AGAINST CERTAIN TAXES
176	176	FOR LOW-INCOME HOUSING DEVELOPMENTS
177	177	SUBCHAPTER A. GENERAL PROVISIONS
178	178	Sec. 233.0001. DEFINITIONS. In this chapter:
179	179	(1) "Allocation certificate" and "qualified
180	180	development" have the meanings assigned by Section 171.9241, Tax
181	181	Code.
182	182	(2) "State insurance tax liability" means any tax
183	183	liability incurred by an entity under Chapters 221 through 226 or
184	184	Chapter 281.
185	185	SUBCHAPTER B. CREDIT
186	186	Sec. 233.0051. CREDIT. An entity is eligible for a credit
187	187	against the entity's state insurance tax liability in the amount
188	188	and under the conditions and limitations provided by this chapter
189	189	if the entity owns an interest in a qualified development.
190	190	Sec. 233.0052. LENGTH OF CREDIT; LIMITATION. The entity
191	191	shall claim the credit in the manner provided by Section
192	192	171.9244(a), Tax Code, subject to the limitation provided by
193	193	Section 171.9244(b), Tax Code. The entity may carry a surplus
194	194	credit forward or backward as provided by Section 171.9245, Tax
195	195	Code.
196	196	Sec. 233.0053. APPLICATION FOR CREDIT. (a) An entity must
197	197	apply for a credit under this chapter on or with the tax report for
198	198	the tax year for which the credit is claimed and submit with the
199	199	application a copy of the allocation certificate issued in
200	200	connection with the qualified development and any other information
201	201	required by Subchapter V, Chapter 171, Tax Code.
202	202	(b) The comptroller shall adopt a form for the application
203	203	for the credit. An entity must use this form in applying for the
204	204	credit.
205	205	Sec. 233.0054. RULES; PROCEDURES. The comptroller and the
206	206	Texas Department of Housing and Community Affairs, in consultation
207	207	with each other, shall adopt rules and procedures to implement,
208	208	administer, and enforce this chapter.
209	209	Sec. 233.0055. APPLICABLE PROVISIONS. The provisions of
210	210	Subchapter V, Chapter 171, Tax Code, relating to recapture,
211	211	allocation of credit, filing requirements after allocation, and
212	212	compliance monitoring apply to the credit authorized by this
213	213	chapter.
214	214	SECTION 3. (a) The Texas Department of Housing and
215	215	Community Affairs may begin issuing allocation certificates under
216	216	Section 171.9243, Tax Code, as added by this Act, in an open cycle
217	217	beginning on January 1, 2020.
218	218	(b) Subchapter V, Chapter 171, Tax Code, as added by this
219	219	Act, and Chapter 233, Insurance Code, as added by this Act, apply
220	220	only to a tax report originally due on or after January 1, 2021.
221	221	SECTION 4. This Act takes effect January 1, 2020.