Bill Text: TX HB4247 | 2017-2018 | 85th Legislature | Introduced
Bill Title: Relating to franchise tax credits for small businesses that create quality jobs.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2017-04-03 - Referred to Ways & Means [HB4247 Detail]
Download: Texas-2017-HB4247-Introduced.html
85R13311 CBH-F | ||
By: Walle | H.B. No. 4247 |
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relating to franchise tax credits for small businesses that create | ||
quality jobs. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Chapter 171, Tax Code, is amended by adding | ||
Subchapter P-1 to read as follows: | ||
SUBCHAPTER P-1. TAX CREDITS FOR SMALL BUSINESSES FOR CREATION OF | ||
QUALITY JOBS | ||
Sec. 171.821. DEFINITIONS. In this subchapter: | ||
(1) "Estimated direct state benefits" means the tax | ||
revenues projected by the comptroller to accrue to this state as a | ||
result of the creation of qualifying new direct jobs by a qualified | ||
small business. | ||
(2) "Estimated direct state cost" means the cost to | ||
this state that the comptroller projects will result because of the | ||
creation of qualifying new direct jobs by a qualified small | ||
business, including: | ||
(A) the cost of educating the children of new | ||
state residents; | ||
(B) the cost of public health, public safety, and | ||
transportation services provided to new state residents; | ||
(C) the cost of other state services provided to | ||
new state residents; and | ||
(D) the cost of providing additional state | ||
services to existing state residents. | ||
(3) "Estimated net direct state benefits" means the | ||
estimated direct state benefits minus the estimated direct state | ||
cost as determined by the comptroller. | ||
(4) "Full-time employment" means employment of a | ||
person residing in this state and working for at least 30 hours a | ||
week in this state for more than six months during any 12-month | ||
period. | ||
(5) "Gross taxable payroll" means wages for new direct | ||
jobs that are subject to federal income taxation. | ||
(6) "Group health benefit plan" means: | ||
(A) a health plan provided by a health | ||
maintenance organization established under Chapter 843, Insurance | ||
Code; | ||
(B) a health benefit plan approved by the | ||
commissioner of insurance; or | ||
(C) a self-funded or self-insured employee | ||
welfare benefit plan that provides health benefits and is | ||
established in accordance with the Employee Retirement Income | ||
Security Act of 1974 (29 U.S.C. Section 1001 et seq.). | ||
(7) "Manufacturing" means being primarily engaged in | ||
activities described in industry sectors 31, 32, and 33 of the 2017 | ||
North American Industry Classification System. | ||
(8) "Net benefit rate" means the estimated net direct | ||
state benefits computed as a percentage of gross taxable payroll as | ||
determined by the comptroller. | ||
(9) "New direct job" means full-time employment that | ||
did not exist in this state preceding the first day of the period on | ||
which margin is based. A job is considered to exist in this state | ||
preceding the first day of the period on which margin is based if | ||
the activities and functions for which the particular job exists | ||
had been ongoing at any time during the six-month period preceding | ||
that date. | ||
(10) "Qualified small business" means a business | ||
primarily engaged in manufacturing that: | ||
(A) has not more than 90 full-time employees on | ||
the date preceding the first day of the period on which margin is | ||
based or had an average of not more than 90 full-time employees | ||
during the year preceding the first day of the period on which | ||
margin is based; and | ||
(B) creates the applicable number of qualifying | ||
new direct jobs required by Section 171.823 during the period on | ||
which margin is based. | ||
(11) "Qualifying new direct job" means a new direct | ||
job: | ||
(A) that pays an annual wage in an amount not less | ||
than the wage prescribed by Section 171.822; and | ||
(B) for which the qualified small business offers | ||
a group health benefit plan. | ||
Sec. 171.822. WAGE REQUIREMENTS FOR QUALIFYING NEW DIRECT | ||
JOB. (a) A qualifying new direct job must pay an average | ||
annualized wage that equals or exceeds: | ||
(1) 110 percent of the county average wage paid to | ||
employees of small businesses located in the county in which the | ||
qualifying new direct job is located, as computed by the Texas | ||
Workforce Commission, at the time the qualifying new direct job is | ||
created if the cost to the qualified small business of providing a | ||
health benefit plan for each person hired for a qualifying new | ||
direct job is not included; or | ||
(2) 125 percent of the county average wage paid to | ||
employees of small businesses located in the county in which the | ||
qualifying new direct job is located, as computed by the Texas | ||
Workforce Commission, at the time the qualifying new direct job is | ||
created if the cost to the qualified small business of providing a | ||
health benefit plan for each person hired for a qualifying new | ||
direct job is included. | ||
(b) Notwithstanding Subsection (a), a qualifying new direct | ||
job is required to pay only an amount that equals or exceeds 100 | ||
percent of the county average wage paid to employees of small | ||
businesses located in the county in which the qualifying new direct | ||
job is located, as computed by the Texas Workforce Commission, at | ||
the time the qualifying new direct job is created if the qualifying | ||
new direct job is located in a county that: | ||
(1) has an unemployment rate that is more than 10 | ||
percent higher than the state unemployment rate; and | ||
(2) has a county personal poverty rate of more than 15 | ||
percent according to the most recent data from the United States | ||
Census Bureau. | ||
Sec. 171.823. ELIGIBILITY. A taxable entity that is a | ||
qualified small business is eligible for a credit against the tax | ||
imposed under this chapter if the taxable entity, during the period | ||
on which margin is based, creates at least: | ||
(1) five qualifying new direct jobs if: | ||
(A) the qualifying new direct jobs are located in | ||
a municipality with a population of less than 3,500; or | ||
(B) the qualifying new direct jobs are located in | ||
an unincorporated area and the largest municipality within 20 miles | ||
of that location is a municipality described by Paragraph (A); | ||
(2) 10 qualifying new direct jobs if: | ||
(A) the qualifying new direct jobs are located in | ||
a municipality with a population of at least 3,500 but less than | ||
7,000; or | ||
(B) the qualifying new direct jobs are located in | ||
an unincorporated area and the largest municipality within 20 miles | ||
of that location is a municipality described by Paragraph (A); or | ||
(3) 15 qualifying new direct jobs if: | ||
(A) the qualifying new direct jobs are located in | ||
a municipality with a population of at least 7,000; or | ||
(B) the qualifying new direct jobs are located in | ||
an unincorporated area and the largest municipality within 20 miles | ||
of that location is a municipality described by Paragraph (A). | ||
Sec. 171.824. AMOUNT OF CREDIT. (a) A taxable entity is | ||
entitled to a credit equal to the taxable entity's annual gross | ||
taxable payroll for qualifying new direct jobs created during the | ||
reporting period multiplied by the lesser of five percent or the net | ||
benefit rate. | ||
(b) The comptroller shall compute a taxable entity's net | ||
benefit rate and provide that rate to the taxable entity on request. | ||
Sec. 171.825. LIMITATIONS. The total credit claimed under | ||
this subchapter for a report, including the amount of any credit | ||
carryforward under Section 171.826, may not exceed the amount of | ||
franchise tax due for the report before any other applicable tax | ||
credits. | ||
Sec. 171.826. CARRYFORWARD. (a) If a taxable entity is | ||
eligible for a credit that exceeds the limitations under Section | ||
171.825, the taxable entity may carry the unused credit forward for | ||
not more than seven consecutive reports. | ||
(b) A credit carryforward is considered the remaining | ||
portion of an installment that cannot be claimed in the current year | ||
because of a limitation under Section 171.825. A credit | ||
carryforward is added to the next year's installment of the credit | ||
in determining the limitation for that year. A credit carryforward | ||
from a previous report is considered to be used before the current | ||
year installment. | ||
Sec. 171.827. CERTIFICATION OF ELIGIBILITY. (a) For each | ||
report on which a credit is claimed under this subchapter, the | ||
taxable entity shall file with its report, on a form provided by the | ||
comptroller, information that sufficiently demonstrates that the | ||
taxable entity is eligible for the credit. | ||
(b) The burden of establishing entitlement to and the value | ||
of the credit is on the taxable entity. | ||
Sec. 171.828. ASSIGNMENT PROHIBITED. A taxable entity may | ||
not convey, assign, or transfer the credit allowed 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. 171.829. BIENNIAL REPORT BY COMPTROLLER. (a) Before | ||
the beginning of each regular session of the legislature, the | ||
comptroller shall submit to the governor, the lieutenant governor, | ||
and the speaker of the house of representatives a report that | ||
states: | ||
(1) the total number of jobs created by taxable | ||
entities that claim a credit under this subchapter and the average | ||
and median annual wage of those jobs; and | ||
(2) a fiscal analysis of the costs and benefits of this | ||
subchapter to this state. | ||
(b) The comptroller may not include in the report | ||
information that is confidential by law. | ||
(c) The comptroller shall provide notice to the members of | ||
the legislature that the report required under this section is | ||
available on request. | ||
Sec. 171.830. COMPTROLLER POWERS AND DUTIES. The | ||
comptroller shall adopt rules and forms necessary to implement this | ||
subchapter. | ||
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, 2018. |