Texas 2021 - 87th Regular

Texas House Bill HB1751 Compare Versions

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1	1	By: Parker H.B. No. 1751
2	2
3	3
4	4	A BILL TO BE ENTITLED
5	5	AN ACT
6	6	relating to a franchise tax credit for enterprise projects for
7	7	certain capital investments.
8	8	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	9	SECTION 1. Chapter 171, Tax Code, is amended by adding
10	10	Subchapter U to read as follows:
11	11	SUBCHAPTER U. TAX CREDITS FOR ENTERPRISE PROJECTS FOR CERTAIN
12	12	CAPITAL INVESTMENTS
13	13	Sec. 171.9221. DEFINITIONS. In this subchapter:
14	14	(1) "Enterprise project" means a person designated as
15	15	an enterprise project under Chapter 2303, Government Code, on or
16	16	after September 1, 2003.
17	17	(2) "Qualified business" has the meaning assigned by
18	18	Section 2303.003, Government Code.
19	19	(3) "Qualified capital investment" means tangible
20	20	personal property first placed in service by an enterprise project
21	21	after January 1, 2021, that is described in Section 1245(a),
22	22	Internal Revenue Code, such as engines, machinery, tools, and
23	23	implements used in a trade or business or held for investment and
24	24	subject to an allowance for depreciation, cost recovery under the
25	25	accelerated cost recovery system, or amortization. The term does
26	26	not include real property or buildings and their structural
27	27	components. Property that is leased under a capitalized lease is
28	28	considered a qualified capital investment, but property that is
29	29	leased under an operating lease is not considered a qualified
30	30	capital investment. Property expensed under Section 179, Internal
31	31	Revenue Code, is not considered a qualified capital investment.
32	32	Sec. 171.9222. TANGIBLE PERSONAL PROPERTY FIRST PLACED IN
33	33	SERVICE BY AN ENTERPRISE PROJECT. For purposes of determining
34	34	whether an investment is a qualified capital investment under
35	35	Section 171.9221, "tangible personal property first placed in
36	36	service by an enterprise project" includes tangible personal
37	37	property:
38	38	(1) purchased by an enterprise project for placement
39	39	in an incomplete improvement that is under active construction or
40	40	other physical preparation;
41	41	(2) identified by a purchase order, invoice, billing,
42	42	sales slip, or contract; and
43	43	(3) physically present at the enterprise project's
44	44	qualified business site, as defined by Section 2303.003, Government
45	45	Code, and in use by the enterprise project on the original due date
46	46	of the report on which the credit is taken.
47	47	Sec. 171.9223. ELIGIBILITY. An enterprise project that is
48	48	a qualified business is eligible for a credit against the tax
49	49	imposed under this chapter in the amount and under the conditions
50	50	provided by this subchapter.
51	51	Sec. 171.9224. CALCULATION OF CREDIT. (a) An enterprise
52	52	project that is eligible for a credit under this subchapter may,
53	53	beginning on January 1 of the year in which the project is
54	54	designated or January 1, 2021, establish a credit equal to 7.5
55	55	percent of the qualified capital investment.
56	56	(b) A taxable entity may file an amended report to claim all
57	57	or part of a credit earned in a previous tax year that has not been
58	58	claimed on another report, subject to Section 171.9225, if the
59	59	applicable period of limitation under Section 111.107 and
60	60	Subchapter D, Chapter 111, for claiming that credit has not
61	61	expired.
62	62	Sec. 171.9225. LIMITATION. The total credit claimed under
63	63	this subchapter for a report, including the amount of any
64	64	carryforward credit under Section 171.9226, may not exceed 50
65	65	percent of the amount of franchise tax due for the report before any
66	66	other applicable tax credits.
67	67	Sec. 171.9226. CARRYFORWARD. (a) If an enterprise project
68	68	is eligible for a credit from an installment that exceeds a
69	69	limitation under Section 171.9225, the enterprise project may carry
70	70	the unused credit forward for not more than five consecutive
71	71	reports.
72	72	(b) A carryforward is considered the remaining portion of an
73	73	installment that cannot be claimed in the current year because of a
74	74	limitation under Section 171.9225. A carryforward is added to the
75	75	next year's installment of the credit in determining the limitation
76	76	for that year. A credit carryforward from a previous report is
77	77	considered to be used before the current year installment.
78	78	Sec. 171.9227. CERTIFICATION OF ELIGIBILITY. (a) For the
79	79	initial and each succeeding report in which a credit is claimed
80	80	under this subchapter, the enterprise project shall file with its
81	81	report, on a form provided by the comptroller, information that
82	82	sufficiently demonstrates that the enterprise project is eligible
83	83	for the credit.
84	84	(b) The burden of establishing entitlement to and the value
85	85	of the credit is on the enterprise project.
86	86	Sec. 171.9228. BIENNIAL REPORT BY COMPTROLLER. (a) Before
87	87	the beginning of each regular session of the legislature, the
88	88	comptroller shall submit to the governor, the lieutenant governor,
89	89	and the speaker of the house of representatives a report that
90	90	states:
91	91	(1) the total amount of qualified capital investments
92	92	made by enterprise projects that claim a credit under this
93	93	subchapter and the average and median wages paid by those
94	94	enterprise projects;
95	95	(2) the total amount of credits applied against the
96	96	tax under this chapter and the amount of unused credits;
97	97	(3) the total amount of franchise tax due by
98	98	enterprise projects claiming a credit under this subchapter before
99	99	and after the application of the credit and the average percentage
100	100	reduction in franchise tax due by the enterprise projects;
101	101	(4) the percentage of tax credits under this
102	102	subchapter that were awarded to enterprise projects with fewer than
103	103	100 employees;
104	104	(5) the two-digit standard industrial classification
105	105	of enterprise projects claiming a credit under this subchapter;
106	106	(6) the geographical distribution of the qualified
107	107	capital investments on which tax credit claims are made under this
108	108	subchapter; and
109	109	(7) the impact of the credit provided under this
110	110	subchapter on employment, capital investment, personal income, and
111	111	state tax revenues.
112	112	(b) The comptroller may not include in the report
113	113	information that is confidential by law.
114	114	(c) For purposes of this section, the comptroller may
115	115	require an enterprise project that claims a credit under this
116	116	subchapter to submit information, on a form provided by the
117	117	comptroller, on the location of the enterprise project's capital
118	118	investment in this state and any other information necessary to
119	119	complete the report required under this section.
120	120	(d) The comptroller shall provide notice to the members of
121	121	the legislature that the report required under this section is
122	122	available on request.
123	123	Sec. 171.9229. COMPTROLLER POWERS AND DUTIES. The
124	124	comptroller shall adopt rules and forms necessary to implement this
125	125	subchapter.
126	126	SECTION 2. Except as provided by Section 171.9224(b), Tax
127	127	Code, as added by this Act, this Act applies only to a report
128	128	originally due on or after January 1, 2021.
129	129	SECTION 3. This Act takes effect immediately if it receives
130	130	a vote of two-thirds of all the members elected to each house, as
131	131	provided by Section 39, Article III, Texas Constitution. If this
132	132	Act does not receive the vote necessary for immediate effect, this
133	133	Act takes effect September 1, 2021.