Texas 2021 - 87th Regular

Texas Senate Bill SB1654 Compare Versions

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

Old	New	Differences
1	1	87R10219 SMT-D
2	2	By: Lucio S.B. No. 1654
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 certain housing
8	8	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 K to read as follows:
12	12	SUBCHAPTER K. TAX CREDIT FOR CERTAIN HOUSING DEVELOPMENTS
13	13	Sec. 171.551. 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 for the credit period.
19	19	(2) "Credit" means the low-income housing development
20	20	tax credit authorized by this subchapter.
21	21	(3) "Credit period" means, with respect to a building
22	22	that is part of a qualified development, the period of 10 tax years
23	23	beginning with the tax year in which the building is placed in
24	24	service.
25	25	(4) "Department" means the Texas Department of Housing
26	26	and Community Affairs.
27	27	(5) "Development" has the meaning assigned by Section
28	28	2306.6702, Government Code.
29	29	(6) "Federal tax credit" means the federal low-income
30	30	housing credit created by Section 42, Internal Revenue Code.
31	31	(7) "Qualified basis" means the qualified basis of a
32	32	qualified development, as determined under Section 42, Internal
33	33	Revenue Code.
34	34	(8) "Qualified development" means a development in
35	35	this state that the department determines is eligible for a federal
36	36	tax credit and that:
37	37	(A) is the subject of a recorded restrictive
38	38	covenant requiring the development to be maintained and operated as
39	39	a qualified development; and
40	40	(B) for the lesser of 15 years after the
41	41	beginning of the credit period or the period required by the
42	42	department, is in compliance with:
43	43	(i) all accessibility and adaptability
44	44	requirements for a federal tax credit; and
45	45	(ii) Title VIII of the Civil Rights Act of
46	46	1968 (42 U.S.C. Section 3601 et seq.).
47	47	(9) "State housing credit ceiling" means the number
48	48	calculated under Section 42(h)(3)(C), Internal Revenue Code.
49	49	Sec. 171.552. 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 a direct or indirect interest in a qualified
53	53	development.
54	54	Sec. 171.553. ALLOCATION CERTIFICATE. (a) In a year during
55	55	a credit period, a taxable entity or an entity subject to state
56	56	insurance tax liability as defined by Section 233.0001, Insurance
57	57	Code, may apply to the department for an allocation certificate in
58	58	connection with a development in which the taxable entity or other
59	59	entity owns an interest.
60	60	(b) The department shall issue an allocation certificate if
61	61	the development is a qualified development.
62	62	Sec. 171.554. AMOUNT OF CREDITS. (a) The department shall
63	63	in the manner provided by this section determine the total amount of
64	64	credits under this subchapter and Chapter 233, Insurance Code,
65	65	awarded for the credit period in connection with a qualified
66	66	development and indicate the amount of credits awarded on the
67	67	allocation certificate.
68	68	(b) The amount of credits awarded in connection with a
69	69	qualified development over the credit period must be the minimum
70	70	amount necessary for the financial feasibility of the qualified
71	71	development after considering any federal tax credit, subject to
72	72	the limitations of this section.
73	73	(c) The amount of credits awarded in connection with a
74	74	qualified development over the credit period may not exceed the
75	75	total federal tax credit awarded to the owner or owners of the
76	76	qualified development over the 10-year federal tax credit period.
77	77	(d) The manner in which the department awards the amount of
78	78	credits must be consistent with criteria established by the
79	79	department.
80	80	(e) The total amount of credits awarded for a year in
81	81	connection with all qualified developments financed through tax
82	82	exempt bonds may not exceed the sum of:
83	83	(1) 50 percent of the state housing credit ceiling for
84	84	this state;
85	85	(2) any unallocated credits for the preceding year;
86	86	and
87	87	(3) any credit recaptured or otherwise returned to the
88	88	department in the year.
89	89	(f) The total amount of credits awarded for a year in
90	90	connection with all qualified developments not financed through tax
91	91	exempt bonds may not exceed the sum of:
92	92	(1) 50 percent of the state housing credit ceiling for
93	93	this state;
94	94	(2) any unallocated credits for the preceding year;
95	95	and
96	96	(3) any credit recaptured or otherwise returned to the
97	97	department in the year.
98	98	Sec. 171.555. APPORTIONMENT OF CREDIT. The direct or
99	99	indirect owners of a qualified development who intend to claim a
100	100	credit under this subchapter or Chapter 233, Insurance Code, may by
101	101	agreement determine the portion of the total amount of credits
102	102	awarded under Section 171.554 that each owner is entitled to claim.
103	103	If the owners do not agree, the department shall determine the
104	104	portion each owner is entitled to claim based on each owner's
105	105	ownership interest in the qualified development.
106	106	Sec. 171.556. LENGTH OF CREDIT; LIMITATION. (a) A taxable
107	107	entity entitled to a credit under this subchapter shall claim the
108	108	credit in equal installments during each year of the credit period.
109	109	(b) The total credit claimed under this subchapter for a
110	110	report, including any carry forward or backward under Section
111	111	171.557, may not exceed the amount of franchise tax due for the
112	112	report after any other applicable credit.
113	113	Sec. 171.557. CARRY FORWARD OR BACKWARD. (a) If a taxable
114	114	entity is eligible for a credit that exceeds the limitations under
115	115	Section 171.556, the taxable entity may carry the unused credit
116	116	back for not more than three tax years or forward for not more than
117	117	10 consecutive reports following the tax year in which the
118	118	allocation was made. A credit carryforward from a previous report
119	119	is considered to be used before the current year installment.
120	120	(b) A credit that is not used may not be refunded.
121	121	Sec. 171.558. RECAPTURE. (a) The comptroller shall
122	122	recapture the amount of a credit claimed on a report filed under
123	123	this chapter from a taxable entity if, on the last day of a tax year,
124	124	the amount of the qualified basis of the qualified development is
125	125	less than the amount of the qualified basis as of the last day of the
126	126	prior tax year. The comptroller shall determine the amount
127	127	required to be recaptured using the formula provided by Section
128	128	42(j), Internal Revenue Code, as that section existed on January 1,
129	129	2021.
130	130	(b) A report must include any portion of credit required to
131	131	be recaptured, the identity of any taxable entity subject to the
132	132	recapture, and the amount of any credit previously allocated to the
133	133	taxable entity.
134	134	Sec. 171.559. ALLOCATION OF CREDIT. (a) If a taxable
135	135	entity receiving a credit under this subchapter is a partnership,
136	136	limited liability company, S corporation, or similar pass-through
137	137	entity, the taxable entity may allocate the credit to its partners,
138	138	shareholders, members, or other constituent taxable entities in any
139	139	manner agreed by those entities.
140	140	(b) A taxable entity that makes an allocation under this
141	141	section shall certify to the comptroller the amount of credit
142	142	allocated to each constituent taxable entity or shall notify the
143	143	comptroller that it has delegated the duty of certification to one
144	144	constituent taxable entity that shall provide the notification to
145	145	the comptroller. Each constituent taxable entity is entitled to
146	146	claim the allocated amount subject to any restrictions prescribed
147	147	by this subchapter.
148	148	(c) An allocation under this section is not a transfer for
149	149	purposes of state law.
150	150	Sec. 171.560. FILING REQUIREMENTS AFTER ALLOCATION. A
151	151	taxable entity that allocates a portion of the credit under Section
152	152	171.559, and each taxable entity to which a portion was allocated,
153	153	shall file with the taxable entity's report a copy of the allocation
154	154	certificate on which the credit is based.
155	155	Sec. 171.561. RULES; PROCEDURES. The department and
156	156	comptroller, in consultation with each other, shall adopt rules and
157	157	procedures to implement, administer, and enforce this subchapter.
158	158	Sec. 171.562. COMPLIANCE MONITORING. (a) The department,
159	159	in consultation with the comptroller, shall monitor compliance with
160	160	this subchapter in the same manner as the department monitors
161	161	compliance with the federal tax credit program.
162	162	(b) The department shall report any instances of
163	163	noncompliance with this subchapter to the comptroller.
164	164	Sec. 171.563. REPORT TO LEGISLATURE. (a) Not later than
165	165	December 31 of each year, the department shall deliver a written
166	166	report to the legislature. The report must:
167	167	(1) specify the number of qualified developments for
168	168	which allocation certificates were issued during the year and the
169	169	total number of units supported by the developments;
170	170	(2) describe each qualified development for which an
171	171	allocation certificate was issued during the year, including:
172	172	(A) location;
173	173	(B) household type;
174	174	(C) available demographic information for the
175	175	residents intended to be served by the development;
176	176	(D) the income levels intended to be served by
177	177	the development; and
178	178	(E) the rents or set-asides authorized for the
179	179	development;
180	180	(3) include housing market and demographic
181	181	information to demonstrate how the qualified developments,
182	182	supported by the tax credits under this subchapter and Chapter 233,
183	183	Insurance Code, are addressing the need for affordable housing in
184	184	their communities; and
185	185	(4) analyze any remaining disparities in the
186	186	affordability of housing within those communities.
187	187	(b) The department shall make a report delivered under this
188	188	section available to the public.
189	189	SECTION 2. Subtitle B, Title 3, Insurance Code, is amended
190	190	by adding Chapter 233 to read as follows:
191	191	CHAPTER 233. CREDIT AGAINST CERTAIN TAXES FOR CERTAIN HOUSING
192	192	DEVELOPMENTS
193	193	SUBCHAPTER A. GENERAL PROVISIONS
194	194	Sec. 233.0001. DEFINITIONS. In this chapter:
195	195	(1) "Allocation certificate" and "qualified
196	196	development" have the meanings assigned by Section 171.551, Tax
197	197	Code.
198	198	(2) "State insurance tax liability" means any tax
199	199	liability incurred by an entity under Chapters 221 through 226 or
200	200	Chapter 281.
201	201	SUBCHAPTER B. CREDIT
202	202	Sec. 233.0051. CREDIT. An entity is eligible for a credit
203	203	against the entity's state insurance tax liability in the amount
204	204	and under the limitations provided by this chapter if the entity
205	205	owns a direct or indirect interest in a qualified development.
206	206	Sec. 233.0052. LENGTH OF CREDIT; LIMITATIONS. (a) The
207	207	entity shall claim the credit in the manner provided by Section
208	208	171.556(a), Tax Code.
209	209	(b) The total credit claimed under this chapter for a
210	210	report, including any carry forward or backward described by
211	211	Subsection (c), may not exceed the amount of the entity's state
212	212	insurance tax liability due for the report after any other
213	213	applicable credit.
214	214	(c) The entity may carry a surplus credit forward or
215	215	backward as provided by Section 171.557, Tax Code.
216	216	Sec. 233.0053. APPLICATION FOR CREDIT. (a) An entity must
217	217	apply for a credit under this chapter on or with the tax report for
218	218	the tax year for which the credit is claimed and submit with the
219	219	application a copy of the allocation certificate issued in
220	220	connection with the qualified development and any other information
221	221	required by Subchapter K, Chapter 171, Tax Code.
222	222	(b) The comptroller shall adopt a form for the application
223	223	for the credit. An entity must use this form in applying for the
224	224	credit.
225	225	Sec. 233.0054. RULES; PROCEDURES. The comptroller and the
226	226	Texas Department of Housing and Community Affairs, in consultation
227	227	with each other, shall adopt rules and procedures to implement,
228	228	administer, and enforce this chapter.
229	229	Sec. 233.0055. APPLICABLE PROVISIONS. The provisions of
230	230	Subchapter K, Chapter 171, Tax Code, relating to recapture,
231	231	allocation of credit, filing requirements after allocation, and
232	232	compliance monitoring apply to the credit authorized by this
233	233	chapter.
234	234	SECTION 3. (a) The Texas Department of Housing and
235	235	Community Affairs may begin issuing allocation certificates under
236	236	Section 171.553, Tax Code, as added by this Act, in an open cycle
237	237	beginning on January 1, 2022.
238	238	(b) Subchapter K, Chapter 171, Tax Code, as added by this
239	239	Act, and Chapter 233, Insurance Code, as added by this Act, apply
240	240	only to a tax report originally due on or after January 1, 2023.
241	241	(c) An entity may not carry back a credit under Section
242	242	171.557, Tax Code, as added by this Act, to a tax year the report for
243	243	which is originally due before January 1, 2023.
244	244	SECTION 4. This Act takes effect January 1, 2022.