88R1606 CJD-D
By: Thierry H.B. No. 1118
A BILL TO BE ENTITLED
AN ACT
relating to a franchise tax credit for entities that establish a
grocery store or healthy corner store in a food desert.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 171, Tax Code, is amended by adding
Subchapter K to read as follows:
SUBCHAPTER K. TAX CREDIT FOR ESTABLISHMENT OF FOOD STORE IN FOOD
DESERT
Sec. 171.551. DEFINITIONS. In this subchapter:
(1) "Corner store" means a store that has fewer than
2,000 square feet of retail space.
(2) "Department" means the Texas Department of Housing
and Community Affairs.
(3) "Food desert" means a geographic area in this
state determined by the department to be an area that:
(A) has limited access to healthy food retailers
and is located in a low-income or high-poverty area; or
(B) otherwise has serious healthy food access
limitations.
(4) "Grocery store" means a store that has at least:
(A) 66 percent of the store's retail space
reserved for the sale of food products;
(B) 50 percent of the store's food retail space
reserved for the sale of non-prepared foods or foods intended for
home preparation and consumption; and
(C) 30 percent of the store's food retail space
reserved for the sale of perishable foods, including dairy
products, fresh produce, fresh meats, poultry, and fish, and frozen
foods.
(5) "Healthy corner store" means a corner store that:
(A) offers a wide variety of fresh produce for
sale; and
(B) allocates at least 20 percent of the store's
retail space to fresh produce and other perishable foods, including
dairy products.
(6) "Supplemental nutrition assistance program" means
the nutritional assistance program operated under Chapter 33, Human
Resources Code, and formerly referred to as the food stamp program.
(7) "WIC program" means the federal special
supplemental nutrition program for women, infants, and children
authorized by 42 U.S.C. Section 1786.
Sec. 171.552. ENTITLEMENT TO CREDIT. A taxable entity is
entitled to a credit in the amount and under the conditions provided
by this subchapter against the tax imposed under this chapter.
Sec. 171.553. QUALIFICATION. A taxable entity qualifies
for a credit under this subchapter if, on or after January 1, 2024,
the taxable entity opens a grocery store or healthy corner store:
(1) located in a food desert;
(2) located in a low or moderate income area, as
determined by the United States Department of Housing and Urban
Development, or that serves a customer base living in a low or
moderate income area;
(3) that begins accepting benefits under the WIC
program and the supplemental nutrition assistance program not later
than the 90th day after the date the store opens; and
(4) that is open year-round.
Sec. 171.554. CERTIFICATION OF ELIGIBILITY. (a) Before
claiming a credit under this subchapter, a taxable entity must
request from the department a certificate of eligibility on which
the department certifies that the taxable entity qualifies for a
credit under Section 171.553. The taxable entity must include with
the taxable entity's request information required by the department
to determine whether the taxable entity meets the requirements of
Section 171.553.
(b) The department shall issue a certificate of eligibility
to a taxable entity that qualifies for a credit under Section
171.553.
(c) The taxable entity must forward the certificate of
eligibility and the following documentation to the comptroller to
claim the credit:
(1) an audited cost report issued by a certified
public accountant, as defined by Section 901.002, Occupations Code,
that itemizes the taxable entity's expenditures to which Section
171.555 applies;
(2) the date the grocery store or healthy corner store
first opened for business and evidence of that opening; and
(3) an attestation of the total amount of the taxable
entity's expenditures to which Section 171.555 applies.
(d) For purposes of approving a credit under this
subchapter, the comptroller may rely on the audited cost report
provided by the taxable entity applying for the credit.
Sec. 171.555. AMOUNT OF CREDIT. (a) A taxable entity may
claim a credit for each store described by Section 171.553 equal to
five percent of the amount the taxable entity spends to establish
the store during the earliest 12-month period:
(1) in which the taxable entity makes an expenditure
to which this section applies; and
(2) that includes the date the store opens for
business.
(b) Subsection (a) applies to amounts spent to:
(1) purchase or lease the land or building for the
store;
(2) construct or remodel the store; and
(3) furnish and equip the store.
(c) Subsection (a) does not apply to amounts spent to
acquire inventory for the store.
Sec. 171.556. LIMITATIONS. (a) The total credit a taxable
entity may claim under this subchapter for a report, including the
amount of any credit carryforward under Section 171.558, may not
exceed 50 percent of the amount of franchise tax due after applying
all other applicable credits.
(b) A taxable entity may not convey, assign, or transfer a
credit under this subchapter to another entity unless all of the
assets of the taxable entity are conveyed, assigned, or transferred
in the same transaction.
Sec. 171.557. PERIOD FOR WHICH CREDIT MAY BE CLAIMED.
Subject to Section 171.558, a taxable entity may claim a credit
under this subchapter on a report only for an expenditure made
during the period on which the report is based.
Sec. 171.558. CARRYFORWARD. (a) If a taxable entity is
eligible for a credit that exceeds the limitation under Section
171.556(a), the taxable entity may carry the unused credit forward
for not more than five consecutive reports.
(b) Credits, including credit carryforwards, are considered
to be used in the following order:
(1) a credit carryforward under this subchapter; and
(2) a current year credit.
Sec. 171.559. APPLICATION FOR CREDIT. A taxable entity
must apply for a credit under this subchapter on or with the report
for the period for which the credit is claimed. The comptroller may
promulgate an application form for the credit under this
subchapter.
Sec. 171.560. RULES. (a) The department may adopt rules
governing the requirements to qualify for a credit under Section
171.553, including rules governing the stores that qualify as
grocery stores or healthy corner stores and the areas that qualify
as food deserts.
(b) The comptroller may adopt any rules necessary to
administer this subchapter other than rules described by Subsection
(a).
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, 2024.