86R482 CJC-D
By: Hughes S.B. No. 410
A BILL TO BE ENTITLED
AN ACT
relating to a franchise tax credit for ad valorem taxes paid by a
taxable entity on certain inventory.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 171, Tax Code, is amended by adding
Subchapter N to read as follows:
SUBCHAPTER N. TAX CREDIT FOR BUSINESS AD VALOREM TAX PAYMENTS ON
INVENTORY
Sec. 171.701. DEFINITIONS. In this subchapter:
(1) "Qualified entity" means a taxable entity that
pays ad valorem taxes on qualified inventory owned by the entity and
located in this state.
(2) "Qualified inventory" means tangible personal
property held for sale at retail other than:
(A) a dealer's motor vehicle inventory as defined
by Section 23.121;
(B) a dealer's heavy equipment inventory as
defined by Section 23.1241;
(C) a dealer's vessel and outboard motor
inventory as defined by Section 23.124; and
(D) retail manufactured housing inventory as
defined by Section 23.127.
Sec. 171.702. ELIGIBILITY FOR CREDIT. A qualified entity
is eligible to apply for a credit in the amount and under the
conditions and limitations provided by this subchapter against the
tax imposed under this chapter.
Sec. 171.703. AMOUNT OF CREDIT; LIMITATIONS. (a) The total
amount of the credit under this subchapter is equal to the amount of
the ad valorem taxes paid by the qualified entity during the period
on which a report is based that are derived from the taxable value
of qualified inventory owned by the entity and located in this
state.
(b) The total credit claimed for a report, including the
amount of any carryforward under Section 171.704, may not exceed
the amount of franchise tax due for the report after any other
applicable tax credits.
Sec. 171.704. CARRYFORWARD. (a) If a qualified entity is
eligible for a credit that exceeds the limitation under Section
171.703(b), the entity may carry the unused credit forward for not
more than three consecutive reports.
(b) A carryforward is considered the remaining portion of a
credit that cannot be claimed in the current year because of the
limitation under Section 171.703(b). A carryforward is added to
the next year's installment of the credit in determining the
limitation for that year. A credit carryforward from a previous
report is considered to be used before the current year
installment.
Sec. 171.705. APPLICATION FOR CREDIT. (a) A qualified
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 qualified entity shall file with a report on which the
credit is claimed any information required by the comptroller to
sufficiently demonstrate that the entity is eligible for the
credit.
(c) The burden of establishing eligibility for and the value
of the credit is on the qualified entity.
Sec. 171.706. SALE OR ASSIGNMENT OF CREDIT. (a) A
qualified entity that earns a credit under this subchapter may sell
or assign all or part of the credit, and any entity to which all or
part of the credit is sold or assigned may sell or assign all or part
of the credit to another entity. There is no limit on the total
number of transactions for the sale or assignment of all or part of
the total credit authorized under this subchapter, however,
collectively all transferred and retained credits claimed for a
period are subject to the maximum total limitations provided by
Section 171.703.
(b) An entity that sells or assigns a credit under this
section and the entity to which the credit is sold or assigned shall
jointly submit written notice of the sale or assignment to the
comptroller on a form promulgated by the comptroller not later than
the 30th day after the date of the sale or assignment. The notice
must include:
(1) the date of the sale or assignment;
(2) the amount of the credit sold or assigned;
(3) the names and federal tax identification numbers
of the entity that sold or assigned the credit or part of the credit
and the entity to which the credit or part of the credit was sold or
assigned; and
(4) the amount of the credit owned by the selling or
assigning entity before the sale or assignment, and the amount the
selling or assigning entity retained, if any, after the sale or
assignment.
(c) The sale or assignment of a credit in accordance with
this section does not extend the period for which a credit may be
carried forward and does not increase the total amount of the credit
that may be claimed.
Sec. 171.707. RULES. The comptroller shall adopt rules
necessary to implement this subchapter.
SECTION 2. 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.