Texas 2021 - 87th Regular

Texas House Bill HB3907 Compare Versions

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1	1		87R10219 SMT-D
2		-	By: Goldman, Meyer, Rodriguez, Thierry, H.B. No. 3907
3		-	Button
	2	+	By: Goldman H.B. No. 3907
4	3
5	4
6	5		A BILL TO BE ENTITLED
7	6		AN ACT
8	7		relating to a franchise or insurance tax credit for certain housing
9	8		developments.
10	9		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	10		SECTION 1. Chapter 171, Tax Code, is amended by adding
12	11		Subchapter K to read as follows:
13	12		SUBCHAPTER K. TAX CREDIT FOR CERTAIN HOUSING DEVELOPMENTS
14	13		Sec. 171.551. DEFINITIONS. In this subchapter:
15	14		(1) "Allocation certificate" means a statement issued
16	15		by the department certifying that a qualified development qualifies
17	16		for credits under this subchapter and Chapter 233, Insurance Code,
18	17		and specifying the total amount of the credits awarded in
19	18		connection with the qualified development for the credit period.
20	19		(2) "Credit" means the low-income housing development
21	20		tax credit authorized by this subchapter.
22	21		(3) "Credit period" means, with respect to a building
23	22		that is part of a qualified development, the period of 10 tax years
24	23		beginning with the tax year in which the building is placed in
25	24		service.
26	25		(4) "Department" means the Texas Department of Housing
27	26		and Community Affairs.
28	27		(5) "Development" has the meaning assigned by Section
29	28		2306.6702, Government Code.
30	29		(6) "Federal tax credit" means the federal low-income
31	30		housing credit created by Section 42, Internal Revenue Code.
32	31		(7) "Qualified basis" means the qualified basis of a
33	32		qualified development, as determined under Section 42, Internal
34	33		Revenue Code.
35	34		(8) "Qualified development" means a development in
36	35		this state that the department determines is eligible for a federal
37	36		tax credit and that:
38	37		(A) is the subject of a recorded restrictive
39	38		covenant requiring the development to be maintained and operated as
40	39		a qualified development; and
41	40		(B) for the lesser of 15 years after the
42	41		beginning of the credit period or the period required by the
43	42		department, is in compliance with:
44	43		(i) all accessibility and adaptability
45	44		requirements for a federal tax credit; and
46	45		(ii) Title VIII of the Civil Rights Act of
47	46		1968 (42 U.S.C. Section 3601 et seq.).
48	47		(9) "State housing credit ceiling" means the number
49	48		calculated under Section 42(h)(3)(C), Internal Revenue Code.
50	49		Sec. 171.552. ENTITLEMENT TO CREDIT. A taxable entity is
51	50		entitled to a credit against the taxes imposed under this chapter in
52	51		the amount and under the limitations provided by this subchapter if
53	52		the taxable entity owns a direct or indirect interest in a qualified
54	53		development.
55	54		Sec. 171.553. ALLOCATION CERTIFICATE. (a) In a year during
56	55		a credit period, a taxable entity or an entity subject to state
57	56		insurance tax liability as defined by Section 233.0001, Insurance
58	57		Code, may apply to the department for an allocation certificate in
59	58		connection with a development in which the taxable entity or other
60	59		entity owns an interest.
61	60		(b) The department shall issue an allocation certificate if
62	61		the development is a qualified development.
63	62		Sec. 171.554. AMOUNT OF CREDITS. (a) The department shall
64	63		in the manner provided by this section determine the total amount of
65	64		credits under this subchapter and Chapter 233, Insurance Code,
66	65		awarded for the credit period in connection with a qualified
67	66		development and indicate the amount of credits awarded on the
68	67		allocation certificate.
69	68		(b) The amount of credits awarded in connection with a
70	69		qualified development over the credit period must be the minimum
71	70		amount necessary for the financial feasibility of the qualified
72	71		development after considering any federal tax credit, subject to
73	72		the limitations of this section.
74	73		(c) The amount of credits awarded in connection with a
75	74		qualified development over the credit period may not exceed the
76	75		total federal tax credit awarded to the owner or owners of the
77	76		qualified development over the 10-year federal tax credit period.
78	77		(d) The manner in which the department awards the amount of
79	78		credits must be consistent with criteria established by the
80	79		department.
81	80		(e) The total amount of credits awarded for a year in
82	81		connection with all qualified developments financed through tax
83	82		exempt bonds may not exceed the sum of:
84	83		(1) 50 percent of the state housing credit ceiling for
85	84		this state;
86	85		(2) any unallocated credits for the preceding year;
87	86		and
88	87		(3) any credit recaptured or otherwise returned to the
89	88		department in the year.
90	89		(f) The total amount of credits awarded for a year in
91	90		connection with all qualified developments not financed through tax
92	91		exempt bonds may not exceed the sum of:
93	92		(1) 50 percent of the state housing credit ceiling for
94	93		this state;
95	94		(2) any unallocated credits for the preceding year;
96	95		and
97	96		(3) any credit recaptured or otherwise returned to the
98	97		department in the year.
99	98		Sec. 171.555. APPORTIONMENT OF CREDIT. The direct or
100	99		indirect owners of a qualified development who intend to claim a
101	100		credit under this subchapter or Chapter 233, Insurance Code, may by
102	101		agreement determine the portion of the total amount of credits
103	102		awarded under Section 171.554 that each owner is entitled to claim.
104	103		If the owners do not agree, the department shall determine the
105	104		portion each owner is entitled to claim based on each owner's
106	105		ownership interest in the qualified development.
107	106		Sec. 171.556. LENGTH OF CREDIT; LIMITATION. (a) A taxable
108	107		entity entitled to a credit under this subchapter shall claim the
109	108		credit in equal installments during each year of the credit period.
110	109		(b) The total credit claimed under this subchapter for a
111	110		report, including any carry forward or backward under Section
112	111		171.557, may not exceed the amount of franchise tax due for the
113	112		report after any other applicable credit.
114	113		Sec. 171.557. CARRY FORWARD OR BACKWARD. (a) If a taxable
115	114		entity is eligible for a credit that exceeds the limitations under
116	115		Section 171.556, the taxable entity may carry the unused credit
117	116		back for not more than three tax years or forward for not more than
118	117		10 consecutive reports following the tax year in which the
119	118		allocation was made. A credit carryforward from a previous report
120	119		is considered to be used before the current year installment.
121	120		(b) A credit that is not used may not be refunded.
122	121		Sec. 171.558. RECAPTURE. (a) The comptroller shall
123	122		recapture the amount of a credit claimed on a report filed under
124	123		this chapter from a taxable entity if, on the last day of a tax year,
125	124		the amount of the qualified basis of the qualified development is
126	125		less than the amount of the qualified basis as of the last day of the
127	126		prior tax year. The comptroller shall determine the amount
128	127		required to be recaptured using the formula provided by Section
129	128		42(j), Internal Revenue Code, as that section existed on January 1,
130	129		2021.
131	130		(b) A report must include any portion of credit required to
132	131		be recaptured, the identity of any taxable entity subject to the
133	132		recapture, and the amount of any credit previously allocated to the
134	133		taxable entity.
135	134		Sec. 171.559. ALLOCATION OF CREDIT. (a) If a taxable
136	135		entity receiving a credit under this subchapter is a partnership,
137	136		limited liability company, S corporation, or similar pass-through
138	137		entity, the taxable entity may allocate the credit to its partners,
139	138		shareholders, members, or other constituent taxable entities in any
140	139		manner agreed by those entities.
141	140		(b) A taxable entity that makes an allocation under this
142	141		section shall certify to the comptroller the amount of credit
143	142		allocated to each constituent taxable entity or shall notify the
144	143		comptroller that it has delegated the duty of certification to one
145	144		constituent taxable entity that shall provide the notification to
146	145		the comptroller. Each constituent taxable entity is entitled to
147	146		claim the allocated amount subject to any restrictions prescribed
148	147		by this subchapter.
149	148		(c) An allocation under this section is not a transfer for
150	149		purposes of state law.
151	150		Sec. 171.560. FILING REQUIREMENTS AFTER ALLOCATION. A
152	151		taxable entity that allocates a portion of the credit under Section
153	152		171.559, and each taxable entity to which a portion was allocated,
154	153		shall file with the taxable entity's report a copy of the allocation
155	154		certificate on which the credit is based.
156	155		Sec. 171.561. RULES; PROCEDURES. The department and
157	156		comptroller, in consultation with each other, shall adopt rules and
158	157		procedures to implement, administer, and enforce this subchapter.
159	158		Sec. 171.562. COMPLIANCE MONITORING. (a) The department,
160	159		in consultation with the comptroller, shall monitor compliance with
161	160		this subchapter in the same manner as the department monitors
162	161		compliance with the federal tax credit program.
163	162		(b) The department shall report any instances of
164	163		noncompliance with this subchapter to the comptroller.
165	164		Sec. 171.563. REPORT TO LEGISLATURE. (a) Not later than
166	165		December 31 of each year, the department shall deliver a written
167	166		report to the legislature. The report must:
168	167		(1) specify the number of qualified developments for
169	168		which allocation certificates were issued during the year and the
170	169		total number of units supported by the developments;
171	170		(2) describe each qualified development for which an
172	171		allocation certificate was issued during the year, including:
173	172		(A) location;
174	173		(B) household type;
175	174		(C) available demographic information for the
176	175		residents intended to be served by the development;
177	176		(D) the income levels intended to be served by
178	177		the development; and
179	178		(E) the rents or set-asides authorized for the
180	179		development;
181	180		(3) include housing market and demographic
182	181		information to demonstrate how the qualified developments,
183	182		supported by the tax credits under this subchapter and Chapter 233,
184	183		Insurance Code, are addressing the need for affordable housing in
185	184		their communities; and
186	185		(4) analyze any remaining disparities in the
187	186		affordability of housing within those communities.
188	187		(b) The department shall make a report delivered under this
189	188		section available to the public.
190	189		SECTION 2. Subtitle B, Title 3, Insurance Code, is amended
191	190		by adding Chapter 233 to read as follows:
192	191		CHAPTER 233. CREDIT AGAINST CERTAIN TAXES FOR CERTAIN HOUSING
193	192		DEVELOPMENTS
194	193		SUBCHAPTER A. GENERAL PROVISIONS
195	194		Sec. 233.0001. DEFINITIONS. In this chapter:
196	195		(1) "Allocation certificate" and "qualified
197	196		development" have the meanings assigned by Section 171.551, Tax
198	197		Code.
199	198		(2) "State insurance tax liability" means any tax
200	199		liability incurred by an entity under Chapters 221 through 226 or
201	200		Chapter 281.
202	201		SUBCHAPTER B. CREDIT
203	202		Sec. 233.0051. CREDIT. An entity is eligible for a credit
204	203		against the entity's state insurance tax liability in the amount
205	204		and under the limitations provided by this chapter if the entity
206	205		owns a direct or indirect interest in a qualified development.
207	206		Sec. 233.0052. LENGTH OF CREDIT; LIMITATIONS. (a) The
208	207		entity shall claim the credit in the manner provided by Section
209	208		171.556(a), Tax Code.
210	209		(b) The total credit claimed under this chapter for a
211	210		report, including any carry forward or backward described by
212	211		Subsection (c), may not exceed the amount of the entity's state
213	212		insurance tax liability due for the report after any other
214	213		applicable credit.
215	214		(c) The entity may carry a surplus credit forward or
216	215		backward as provided by Section 171.557, Tax Code.
217	216		Sec. 233.0053. APPLICATION FOR CREDIT. (a) An entity must
218	217		apply for a credit under this chapter on or with the tax report for
219	218		the tax year for which the credit is claimed and submit with the
220	219		application a copy of the allocation certificate issued in
221	220		connection with the qualified development and any other information
222	221		required by Subchapter K, Chapter 171, Tax Code.
223	222		(b) The comptroller shall adopt a form for the application
224	223		for the credit. An entity must use this form in applying for the
225	224		credit.
226	225		Sec. 233.0054. RULES; PROCEDURES. The comptroller and the
227	226		Texas Department of Housing and Community Affairs, in consultation
228	227		with each other, shall adopt rules and procedures to implement,
229	228		administer, and enforce this chapter.
230	229		Sec. 233.0055. APPLICABLE PROVISIONS. The provisions of
231	230		Subchapter K, Chapter 171, Tax Code, relating to recapture,
232	231		allocation of credit, filing requirements after allocation, and
233	232		compliance monitoring apply to the credit authorized by this
234	233		chapter.
235	234		SECTION 3. (a) The Texas Department of Housing and
236	235		Community Affairs may begin issuing allocation certificates under
237	236		Section 171.553, Tax Code, as added by this Act, in an open cycle
238	237		beginning on January 1, 2022.
239	238		(b) Subchapter K, Chapter 171, Tax Code, as added by this
240	239		Act, and Chapter 233, Insurance Code, as added by this Act, apply
241	240		only to a tax report originally due on or after January 1, 2023.
242	241		(c) An entity may not carry back a credit under Section
243	242		171.557, Tax Code, as added by this Act, to a tax year the report for
244	243		which is originally due before January 1, 2023.
245	244		SECTION 4. This Act takes effect January 1, 2022.