88R6707 BEF-F
By: Hughes S.B. No. 1013
A BILL TO BE ENTITLED
AN ACT
relating to the franchise and insurance premium tax credit for the
certified rehabilitation of certified historic structures.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The heading to Subtitle F, Title 2, Tax Code, is
amended to read as follows:
SUBTITLE F. FRANCHISE TAX; CREDITS
SECTION 2. Subchapter S, Chapter 171, Tax Code, is
transferred to Subtitle F, Title 2, Tax Code, redesignated as
Chapter 172, Tax Code, and amended to read as follows:
CHAPTER 172 [SUBCHAPTER S]. TAX CREDIT FOR CERTIFIED
REHABILITATION OF CERTIFIED HISTORIC STRUCTURES
Sec. 172.101 [171.901]. DEFINITIONS. (a) Terms used in
this chapter and defined by Chapter 171 have the meanings assigned
by Chapter 171.
(b) In this chapter [subchapter]:
(1) "Certified historic structure" means a property in
this state that is:
(A) listed individually in the National Register
of Historic Places;
(B) designated as a Recorded Texas Historic
Landmark under Section 442.006, Government Code, or as a state
archeological landmark under Chapter 191, Natural Resources Code;
or
(C) certified by the commission as contributing
to the historic significance of:
(i) a historic district listed in the
National Register of Historic Places; or
(ii) a local district certified by the
United States Department of the Interior in accordance with 36
C.F.R. Section 67.9.
(2) "Certified rehabilitation" means the
rehabilitation of a certified historic structure that the
commission has certified as meeting the United States secretary of
the interior's Standards for Rehabilitation as defined in 36 C.F.R.
Section 67.7.
(3) "Commission" means the Texas Historical
Commission.
Sec. 172.102 [171.9015]. ELIGIBLE COSTS AND EXPENSES. (a)
Subject to Subsections (b) and (c), in this chapter [subchapter],
"eligible costs and expenses" means qualified rehabilitation
expenditures as defined by Section 47(c)(2), Internal Revenue Code.
(b) Except as provided by Subsection (c), the depreciation
and tax-exempt use provisions of Section 47(c)(2), Internal Revenue
Code, do not apply to costs and expenses incurred by an entity
exempted from the federal income tax under Section 501(a), Internal
Revenue Code [exempt from the tax imposed under this chapter by
Section 171.063], and those costs and expenses are eligible costs
and expenses if the other provisions of Section 47(c)(2), Internal
Revenue Code, are satisfied.
(c) Expenditures by an entity described by Subsection (b) to
rehabilitate a structure that is leased to a tax-exempt entity in a
disqualified lease, as those terms are defined by Section 168(h),
Internal Revenue Code, are not eligible costs and expenses.
Sec. 172.103 [171.902]. ELIGIBILITY FOR CREDIT. An entity
is eligible to apply for a credit in the amount and under the
conditions and limitations provided by this chapter [subchapter]
against the taxes [tax] imposed under Chapter 171 of this code and,
as provided by Section 172.109(e), Chapters 221, 222, 223, and 224,
Insurance Code [this chapter].
Sec. 172.104 [171.903]. QUALIFICATION. An entity is
eligible for a credit for eligible costs and expenses incurred in
the certified rehabilitation of a certified historic structure as
provided by this chapter [subchapter] if:
(1) the rehabilitated certified historic structure is
placed in service on or after September 1, 2013;
(2) the entity has an ownership interest in the
certified historic structure in the year during which the structure
is placed in service after the rehabilitation; and
(3) the total amount of the eligible costs and
expenses incurred exceeds $5,000.
Sec. 172.105 [171.904]. CERTIFICATION OF ELIGIBILITY. (a)
Before claiming, selling, or assigning a credit under this chapter
[subchapter], the entity that incurred the eligible costs and
expenses in the rehabilitation of a certified historic structure
must request from the commission a certificate of eligibility on
which the commission certifies that the work performed meets the
definition of a certified rehabilitation. The entity must include
with the entity's request:
(1) information on the property that is sufficient for
the commission to determine whether the property meets the
definition of a certified historic structure; and
(2) information on the rehabilitation, and
photographs before and after work is performed, sufficient for the
commission to determine whether the rehabilitation meets the United
States secretary of the interior's Standards for Rehabilitation as
defined in 36 C.F.R. Section 67.7.
(b) The commission shall issue a certificate of eligibility
to an entity that has incurred eligible costs and expenses as
provided by this chapter [subchapter]. The certificate must:
(1) confirm that:
(A) the property to which the eligible costs and
expenses relate is a certified historic structure; and
(B) the rehabilitation qualifies as a certified
rehabilitation; and
(2) specify the date the certified historic structure
was first placed in service after the rehabilitation.
(c) The entity must forward the certificate of eligibility
and the following documentation to the comptroller to claim the tax
credit:
(1) an audited cost report issued by a certified
public accountant, as defined by Section 901.002, Occupations Code,
that itemizes the eligible costs and expenses incurred in the
certified rehabilitation of the certified historic structure by the
entity;
(2) the date the certified historic structure was
first placed in service after the rehabilitation and evidence of
that placement in service; and
(3) an attestation of the total eligible costs and
expenses incurred by the entity on the rehabilitation of the
certified historic structure.
(d) For purposes of approving the tax credit under
Subsection (c), the comptroller may rely on the audited cost report
provided by the entity that requested the tax credit.
(e) An entity that sells or assigns a credit under this
chapter [subchapter] to another entity shall provide a copy of the
certificate of eligibility, together with the audited cost report,
to the purchaser or assignee.
Sec. 172.106 [171.905]. AMOUNT OF CREDIT; LIMITATIONS.
(a) The total amount of the credit under this chapter [subchapter]
with respect to the rehabilitation of a single certified historic
structure that may be claimed may not exceed 25 percent of the total
eligible costs and expenses incurred in the certified
rehabilitation of the certified historic structure.
(b) The total credit claimed for a report, including the
amount of any carryforward under Section 172.107 [171.906], may not
exceed the amount of franchise tax due for the report after any
other applicable tax credits.
(c) Eligible costs and expenses may only be counted once in
determining the amount of the tax credit available, and more than
one entity may not claim a credit for the same eligible costs and
expenses.
Sec. 172.107 [171.906]. CARRYFORWARD. (a) If an entity is
eligible for a credit that exceeds the limitation under Section
172.106(b) [171.905(b)], the entity may carry the unused credit
forward for not more than five consecutive reports.
(b) A carryforward is considered the remaining portion of a
credit that cannot be claimed in the current year because of the
limitation under Section 172.106(b) [171.905(b)].
Sec. 172.108 [171.907]. APPLICATION FOR CREDIT. (a) An
entity must apply for a credit under this chapter [subchapter] on or
with the report for the period for which the credit is claimed.
(b) An entity shall file with any report on which the credit
is claimed a copy of the certificate of eligibility issued by the
commission under Section 172.105 [171.904] and any other
information required by the comptroller to sufficiently
demonstrate that the entity is eligible for the credit.
(c) The burden of establishing eligibility for and the value
of the credit is on the entity.
Sec. 172.109 [171.908]. SALE OR ASSIGNMENT OF CREDIT. (a)
An entity that incurs eligible costs and expenses may sell or assign
all or part of the credit that may be claimed for those costs and
expenses to one or more entities, and any entity to which all or
part of the credit is sold or assigned may sell or assign all or part
of the credit to another entity. There is no limit on the total
number of transactions for the sale or assignment of all or part of
the total credit authorized under this chapter [subchapter],
however, collectively all transfers are subject to the maximum
total limits provided by Section 172.106 [171.905].
(b) An entity that sells or assigns a credit under this
section and the entity to which the credit is sold or assigned shall
jointly submit written notice of the sale or assignment to the
comptroller on a form promulgated by the comptroller not later than
the 30th day after the date of the sale or assignment. The notice
must include:
(1) the date of the sale or assignment;
(2) the amount of the credit sold or assigned;
(3) the names and federal tax identification numbers
of the entity that sold or assigned the credit or part of the credit
and the entity to which the credit or part of the credit was sold or
assigned; and
(4) the amount of the credit owned by the selling or
assigning entity before the sale or assignment, and the amount the
selling or assigning entity retained, if any, after the sale or
assignment.
(c) The sale or assignment of a credit in accordance with
this section does not extend the period for which a credit may be
carried forward and does not increase the total amount of the credit
that may be claimed. After an entity claims a credit for eligible
costs and expenses, another entity may not use the same costs and
expenses as the basis for claiming a credit.
(d) Notwithstanding the requirements of this chapter
[subchapter], a credit earned or purchased by, or assigned to, a
partnership, limited liability company, S corporation, or other
pass-through entity may be allocated to the partners, members, or
shareholders of that entity and claimed under this chapter
[subchapter] in accordance with the provisions of any agreement
among the partners, members, or shareholders and without regard to
the ownership interest of the partners, members, or shareholders in
the rehabilitated certified historic structure, provided that the
entity that claims the credit must be subject to the tax imposed
under Chapter 171 [this chapter].
(e) An entity that incurs eligible costs and expenses or to
which all or part of a credit is sold or assigned and that is subject
to a premium tax imposed under Chapter 221, 222, 223, or 224,
Insurance Code, may claim all or part of the credit against that
tax. The provisions of this chapter [subchapter], including
provisions relating to the total amount of the credit that may be
claimed for a report, the carryforward of the credit, and the sale
or assignment of the credit, apply with respect to a credit claimed
against a tax imposed under Chapter 221, 222, 223, or 224, Insurance
Code, to the same extent those provisions apply to a credit claimed
against the tax imposed under Chapter 171 of this code [this
chapter]. An entity claiming all or part of a credit as authorized
by this subsection is not required to pay any additional
retaliatory tax levied under Chapter 281, Insurance Code, as a
result of claiming that credit.
Sec. 172.110 [171.909]. RULES. The commission and the
comptroller shall adopt rules necessary to implement this chapter
[subchapter].
SECTION 3. The changes in law made by this Act do not affect
the validity of a credit that accrued under Subchapter S, Chapter
171, Tax Code, before the effective date of this Act. The credit
continues in effect as a credit under Chapter 172, Tax Code, as
transferred, redesignated, and amended by this Act.
SECTION 4. This Act takes effect September 1, 2023.