Bill Text: TX HB2397 | 2019-2020 | 86th Legislature | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Relating to a franchise tax credit for certain businesses that make investments in qualified opportunity zones.
Spectrum: Partisan Bill (Republican 3-0)
Status: (Introduced - Dead) 2019-05-03 - Committee report sent to Calendars [HB2397 Detail]
Download: Texas-2019-HB2397-Introduced.html
Bill Title: Relating to a franchise tax credit for certain businesses that make investments in qualified opportunity zones.
Spectrum: Partisan Bill (Republican 3-0)
Status: (Introduced - Dead) 2019-05-03 - Committee report sent to Calendars [HB2397 Detail]
Download: Texas-2019-HB2397-Introduced.html
86R8818 CJC-D | ||
By: Clardy | H.B. No. 2397 |
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relating to a sales and use tax refund and franchise tax credit for | ||
certain businesses that make investments in qualified opportunity | ||
zones. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Subchapter I, Chapter 151, Tax Code, is amended | ||
by adding Section 151.4292 to read as follows: | ||
Sec. 151.4292. TAX REFUNDS FOR BUSINESS IN ECONOMIC | ||
OPPORTUNITY ZONE. (a) In this section: | ||
(1) "Economic opportunity zone" has the meaning | ||
assigned by Section 171.9261. | ||
(2) "Qualifying business entity" means an entity that | ||
is eligible to receive a tax credit under Subchapter W, Chapter 171. | ||
(b) After the qualifying business entity becomes eligible | ||
to receive a tax credit under Subchapter W, Chapter 171, and subject | ||
to Subsection (c), the entity is eligible for a one-time refund of | ||
the sales and use taxes paid by the entity for the purchase of: | ||
(1) building materials to remodel, rehabilitate, or | ||
construct a structure owned or leased by the entity that is located | ||
in the economic opportunity zone and that is the basis for the | ||
entity's eligibility for the tax credit under Subchapter W, Chapter | ||
171; | ||
(2) labor to remodel, rehabilitate, or construct a | ||
structure owned or leased by the entity that is located in the | ||
economic opportunity zone and that is the basis for the entity's | ||
eligibility for the tax credit under Subchapter W, Chapter 171; and | ||
(3) equipment or machinery to be located in, or used in | ||
the operation of, a structure owned or leased by the entity that is | ||
located in the economic opportunity zone and that is the basis for | ||
the entity's eligibility for the tax credit under Subchapter W, | ||
Chapter 171. | ||
(c) The amount of the one-time refund paid to a qualifying | ||
business entity under this section may not exceed the lesser of: | ||
(1) 25 percent of the total amount of sales and use | ||
taxes paid by the business entity on purchases described by | ||
Subsection (b); or | ||
(2) $50,000. | ||
(d) A qualifying business entity must apply to the | ||
comptroller to receive a refund authorized under this section on a | ||
form prescribed by the comptroller. | ||
(e) The comptroller may adopt rules to implement and | ||
administer this section. | ||
SECTION 2. Chapter 171, Tax Code, is amended by adding | ||
Subchapter W to read as follows: | ||
SUBCHAPTER W. TAX CREDIT FOR INVESTMENT IN ECONOMIC OPPORTUNITY | ||
ZONE | ||
Sec. 171.9261. DEFINITIONS. In this subchapter: | ||
(1) "Economic opportunity zone" means a population | ||
census tract that, as of September 1, 2019, was designated as a | ||
qualified opportunity zone under Public Law No. 115-97. | ||
(2) "Qualifying investment" means an investment to: | ||
(A) remodel, rehabilitate, or construct a | ||
structure owned or leased by the entity that is located in an | ||
economic opportunity zone; or | ||
(B) purchase equipment or machinery to be located | ||
in, or used in the operation of, a structure owned or leased by the | ||
entity that is located in an economic opportunity zone. | ||
Sec. 171.9262. ELIGIBILITY FOR CREDIT. An entity is | ||
eligible to apply for a credit in the amount and under the | ||
conditions provided by this subchapter against the tax imposed | ||
under this chapter. | ||
Sec. 171.9263. QUALIFICATION. An entity qualifies for a | ||
credit under this subchapter if the entity makes a qualifying | ||
investment: | ||
(1) on or after September 1, 2019; and | ||
(2) in an amount that is at least $100,000. | ||
Sec. 171.9264. CERTIFICATION OF ELIGIBILITY. (a) Before | ||
claiming, selling, or assigning a credit under this subchapter, the | ||
entity that made the qualifying investment must request from the | ||
comptroller a certificate of eligibility on a form prescribed by | ||
the comptroller. The entity must include with the entity's request | ||
information sufficient to allow the comptroller to determine | ||
whether the entity has made a qualifying investment under this | ||
subchapter. At a minimum, the entity must provide documentation | ||
certified by the chief financial officer of the entity | ||
demonstrating: | ||
(1) the total amount of the qualifying investment made | ||
by the entity; and | ||
(2) the date on which the qualifying investment was | ||
made. | ||
(b) The comptroller shall issue a certificate of | ||
eligibility to an entity that has made a qualifying investment | ||
under this subchapter. | ||
(c) An entity that sells or assigns a credit under this | ||
subchapter to another entity shall provide a copy of the | ||
certificate of eligibility to the purchaser or assignee. | ||
Sec. 171.9265. AMOUNT OF CREDIT; LIMITATIONS. (a) Subject | ||
to Subsections (b) and (c), the amount of the credit under this | ||
subchapter is equal to 25 percent of the total amount of the | ||
qualifying investment. | ||
(b) An entity may not claim more than one credit under this | ||
subchapter. | ||
(c) The total credit claimed for a report, including the | ||
amount of any carryforward under Section 171.9266, may not exceed | ||
the amount of franchise tax due for the report after any other | ||
applicable tax credits. | ||
(d) A qualifying investment may be counted only once in | ||
determining the amount of the tax credit available, and more than | ||
one entity may not claim a credit for the same qualifying | ||
investment. | ||
Sec. 171.9266. CARRYFORWARD. (a) If an entity is eligible | ||
for a credit that exceeds the limitation under Section 171.9265(c), | ||
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 171.9265(c). | ||
Sec. 171.9267. APPLICATION FOR CREDIT. (a) An entity must | ||
apply for a credit under this 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 | ||
comptroller under Section 171.9264 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. 171.9268. SALE OR ASSIGNMENT OF CREDIT. (a) An entity | ||
that makes a qualifying investment may sell or assign all or part of | ||
the credit that may be claimed for that investment 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 subchapter, however, collectively all transfers are | ||
subject to the limitations provided by Section 171.9265. | ||
(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. | ||
(d) Notwithstanding the requirements of this 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 subchapter in accordance with | ||
the provisions of any agreement among the partners, members, or | ||
shareholders, provided that the entity that claims the credit must | ||
be subject to the tax imposed under this chapter. | ||
Sec. 171.9269. RULES. The comptroller shall adopt rules | ||
necessary to implement and administer this subchapter. | ||
SECTION 3. Subchapter W, Chapter 171, Tax Code, as added by | ||
this Act, applies only to a report originally due on or after the | ||
effective date of this Act. | ||
SECTION 4. This Act takes effect January 1, 2020. |