| 1 | 1 | | 87R253 GRM-D |
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| 2 | 2 | | By: Hinojosa H.B. No. 864 |
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| 3 | 3 | | |
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| 4 | 4 | | |
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| 5 | 5 | | A BILL TO BE ENTITLED |
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| 6 | 6 | | AN ACT |
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| 7 | 7 | | relating to a franchise tax credit pilot program for taxable |
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| 8 | 8 | | entities that contribute to an employee dependent care flexible |
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| 9 | 9 | | spending account. |
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| 10 | 10 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 11 | 11 | | SECTION 1. Chapter 171, Tax Code, is amended by adding |
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| 12 | 12 | | Subchapter P to read as follows: |
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| 13 | 13 | | SUBCHAPTER P. TAX CREDIT PILOT PROGRAM FOR EMPLOYER CONTRIBUTIONS |
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| 14 | 14 | | TO DEPENDENT CARE FLEXIBLE SPENDING ACCOUNTS |
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| 15 | 15 | | Sec. 171.801. DEFINITION. In this subchapter, "dependent |
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| 16 | 16 | | care flexible spending account" means a pretax benefit account used |
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| 17 | 17 | | to pay eligible dependent care services as authorized by the |
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| 18 | 18 | | Internal Revenue Code of 1986, as effective on January 1, 2021. |
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| 19 | 19 | | Sec. 171.802. ENTITLEMENT TO CREDIT. A taxable entity is |
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| 20 | 20 | | entitled to a credit in the amount and under the conditions provided |
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| 21 | 21 | | by this subchapter against the tax imposed under this chapter. |
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| 22 | 22 | | Sec. 171.803. QUALIFICATION. (a) Subject to Subsection |
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| 23 | 23 | | (b), a taxable entity qualifies for a credit under this subchapter |
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| 24 | 24 | | if the taxable entity: |
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| 25 | 25 | | (1) has an average of not more than 500 employees |
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| 26 | 26 | | during the period on which the report is based; and |
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| 27 | 27 | | (2) contributes to the dependent care flexible |
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| 28 | 28 | | spending account of each employee of the taxable entity who |
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| 29 | 29 | | maintains an account and receives from the taxable entity an annual |
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| 30 | 30 | | salary or wage of not more than $65,000. |
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| 31 | 31 | | (b) A combined group qualifies for a credit under this |
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| 32 | 32 | | subchapter in connection with any member of the combined group that |
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| 33 | 33 | | satisfies the requirements of Subsection (a). |
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| 34 | 34 | | Sec. 171.804. AMOUNT OF CREDIT; LIMITATIONS. (a) Subject |
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| 35 | 35 | | to Subsection (b), the amount of the credit for a report in |
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| 36 | 36 | | connection with each employee described by Section 171.803(a)(2) is |
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| 37 | 37 | | equal to the lesser of: |
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| 38 | 38 | | (1) 50 percent of the contributions made by the |
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| 39 | 39 | | taxable entity to the employee's dependent care flexible spending |
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| 40 | 40 | | account, excluding any portion of a contribution returned to the |
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| 41 | 41 | | taxable entity; or |
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| 42 | 42 | | (2) $2,500. |
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| 43 | 43 | | (b) The total amount of the credit for each report is equal |
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| 44 | 44 | | to the lesser of: |
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| 45 | 45 | | (1) the total of the credits allowed under Subsection |
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| 46 | 46 | | (a) for the reporting period for all employees; or |
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| 47 | 47 | | (2) the amount of franchise tax due after applying all |
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| 48 | 48 | | other applicable credits. |
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| 49 | 49 | | Sec. 171.805. APPLICATION FOR CREDIT. (a) A taxable entity |
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| 50 | 50 | | must apply for a credit under this subchapter on or with the tax |
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| 51 | 51 | | report for the period for which the credit is claimed. |
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| 52 | 52 | | (b) The comptroller shall promulgate a form for the |
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| 53 | 53 | | application for the credit. A taxable entity must use the form in |
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| 54 | 54 | | applying for the credit. |
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| 55 | 55 | | Sec. 171.806. PERIOD FOR WHICH CREDIT MAY BE CLAIMED. A |
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| 56 | 56 | | taxable entity may claim a credit under this subchapter for a report |
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| 57 | 57 | | only in connection with contributions made during the accounting |
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| 58 | 58 | | period on which the report is based. |
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| 59 | 59 | | Sec. 171.807. DEPOSIT OF CERTAIN REVENUE. Notwithstanding |
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| 60 | 60 | | any other law, for each state fiscal year, the comptroller shall |
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| 61 | 61 | | deposit to the credit of the property tax relief fund an amount of |
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| 62 | 62 | | revenue received from the tax imposed under this chapter sufficient |
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| 63 | 63 | | to offset any decrease in deposits to that fund for the state fiscal |
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| 64 | 64 | | year that results from the implementation of this subchapter. |
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| 65 | 65 | | Sec. 171.808. EXPIRATION. This subchapter expires December |
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| 66 | 66 | | 31, 2023. |
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| 67 | 67 | | SECTION 2. (a) Not later than September 1, 2024, the |
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| 68 | 68 | | comptroller shall prepare and deliver to the governor, the |
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| 69 | 69 | | lieutenant governor, the speaker of the house of representatives, |
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| 70 | 70 | | and the presiding officer of each legislative standing committee |
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| 71 | 71 | | with primary jurisdiction over taxation a report that evaluates the |
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| 72 | 72 | | effect of the pilot program established under Subchapter P, Chapter |
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| 73 | 73 | | 171, Tax Code, as added by this Act, on employer contributions to |
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| 74 | 74 | | employees' dependent care flexible spending accounts for which |
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| 75 | 75 | | credits are granted under the pilot program. The report must |
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| 76 | 76 | | include a recommendation regarding whether the credit allowed under |
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| 77 | 77 | | the pilot program should be reestablished. |
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| 78 | 78 | | (b) A taxable entity that claims a credit under Subchapter |
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| 79 | 79 | | P, Chapter 171, Tax Code, as added by this Act, shall provide to the |
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| 80 | 80 | | comptroller information the comptroller requests to prepare the |
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| 81 | 81 | | report described by Subsection (a) of this section. |
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| 82 | 82 | | SECTION 3. A taxable entity may claim the credit under |
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| 83 | 83 | | Subchapter P, Chapter 171, Tax Code, as added by this Act, only for |
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| 84 | 84 | | contributions made on or after September 1, 2021, and before |
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| 85 | 85 | | January 1, 2024, and only on a franchise tax report originally due |
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| 86 | 86 | | under Chapter 171, Tax Code, on or after January 1, 2022, and before |
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| 87 | 87 | | January 1, 2025, notwithstanding the expiration of Subchapter P, |
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| 88 | 88 | | Chapter 171, Tax Code, as added by this Act. |
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| 89 | 89 | | SECTION 4. This Act takes effect September 1, 2021. |
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