Bill Text: TX HB953 | 2013-2014 | 83rd Legislature | Engrossed
Bill Title: Relating to a franchise tax credit for research and development activities performed in conjunction with institutions of higher education; authorizing a tax credit.
Spectrum: Slight Partisan Bill (Republican 18-9)
Status: (Engrossed - Dead) 2013-05-10 - Referred to s/c on Fiscal Matters by Chair [HB953 Detail]
Download: Texas-2013-HB953-Engrossed.html
| By: Button, J. Davis of Harris, | H.B. No. 953 | |
| Rodriguez of Travis, Branch, Vo, et al. | ||
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| relating to a franchise tax credit for research and development | ||
| activities performed in conjunction with institutions of higher | ||
| education; authorizing a tax credit. | ||
| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
| SECTION 1. Chapter 171, Tax Code, is amended by adding | ||
| Subchapter N to read as follows: | ||
| SUBCHAPTER N. TAX CREDIT FOR RESEARCH AND DEVELOPMENT ACTIVITIES | ||
| PERFORMED IN CONJUNCTION WITH INSTITUTIONS OF HIGHER EDUCATION | ||
| Sec. 171.701. DEFINITIONS. In this subchapter: | ||
| (1) "Public or private institution of higher | ||
| education" means: | ||
| (A) an institution of higher education, as | ||
| defined by Section 61.003, Education Code; or | ||
| (B) a private or independent institution of | ||
| higher education, as defined by Section 61.003, Education Code. | ||
| (2) "Qualified research" has the meaning assigned by | ||
| Section 41, Internal Revenue Code, except that the research must be | ||
| conducted in this state. | ||
| (3) "Qualified research expense" has the meaning | ||
| assigned by Section 41, Internal Revenue Code. | ||
| Sec. 171.702. ELIGIBILITY FOR CREDIT. A taxable entity is | ||
| eligible for a credit against the tax imposed under this chapter in | ||
| the amount and under the conditions and limitations provided by | ||
| this subchapter if the taxable entity contracts with one or more | ||
| public or private institutions of higher education for the | ||
| performance of qualified research. | ||
| Sec. 171.703. AMOUNT OF CREDIT. (a) Subject to Section | ||
| 171.704, the credit for any report equals 20 percent of the | ||
| difference between: | ||
| (1) the total amount of qualified research expenses | ||
| incurred in this state by the taxable entity under contracts | ||
| described by Section 171.702 during the period on which the report | ||
| is based; and | ||
| (2) 50 percent of the average amount of qualified | ||
| research expenses incurred in this state by the taxable entity | ||
| under contracts described by Section 171.702 during the three tax | ||
| years preceding the period on which the report is based. | ||
| (b) The burden of establishing entitlement to and the value | ||
| of the credit is on the taxable entity. | ||
| Sec. 171.704. LIMITATIONS. (a) Subject to Subsection (b), | ||
| the total credit claimed under this subchapter for a report, | ||
| including the amount of any carryforward credit under Section | ||
| 171.705, may not exceed 50 percent of the amount of franchise tax | ||
| due for the report before any other applicable tax credits. | ||
| (b) For each state fiscal year, the total amount of tax | ||
| credits, including credit carryforwards, that may be claimed by all | ||
| taxable entities under this subchapter may not exceed $15 million. | ||
| The comptroller by rule shall prescribe procedures by which the | ||
| comptroller will allocate credits under this subchapter on a pro | ||
| rata basis. | ||
| (c) The comptroller may require a taxable entity to notify | ||
| the comptroller of the amount the taxable entity intends or expects | ||
| to claim under this subchapter before the beginning of a state | ||
| fiscal year or at any other time required by the comptroller. | ||
| Sec. 171.705. CARRYFORWARD. If a taxable entity is | ||
| eligible for a credit that exceeds the limitation under Section | ||
| 171.704, the taxable entity may carry the unused credit forward for | ||
| not more than 20 consecutive reports. A credit carryforward from a | ||
| previous report is considered to be used before the current year | ||
| credit. | ||
| Sec. 171.706. 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. 171.707. APPLICATION FOR CREDIT. A taxable entity | ||
| must apply for a credit under this subchapter on or with the tax | ||
| report for the period for which the credit is claimed. | ||
| Sec. 171.708. RULES. The comptroller shall adopt rules | ||
| necessary to implement this subchapter. | ||
| Sec. 171.709. REPORT. Not later than December 1, 2016, and | ||
| each fourth year thereafter, the comptroller shall conduct a study | ||
| of the credit under this subchapter and submit a report on the | ||
| results of the study to the governor and the legislature. The | ||
| purpose of the study is to determine: | ||
| (1) if the credit accomplishes the credit's intended | ||
| purpose; | ||
| (2) if the credit complies with the intent of the | ||
| legislature in enacting this subchapter; | ||
| (3) if the economic benefit of the credit to the state | ||
| exceeds the amount of tax revenue lost as a result of the credit; | ||
| and | ||
| (4) if legislative action is needed to increase the | ||
| efficiency or effectiveness of any part of the 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, 2014. | ||
