Bill Text: TX SB325 | 2023-2024 | 88th Legislature | Introduced


Bill Title: Relating to a franchise or insurance premium tax credit for certain housing developments.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2023-02-15 - Referred to Finance [SB325 Detail]

Download: Texas-2023-SB325-Introduced.html
  88R992 BEF-D
 
  By: Perry S.B. No. 325
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to a franchise or insurance premium tax credit for certain
  housing developments.
         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 CERTAIN HOUSING DEVELOPMENTS
         Sec. 171.551.  DEFINITIONS. In this subchapter:
               (1)  "Allocation certificate" means a statement issued
  by the department certifying that a qualified development qualifies
  for credits under this subchapter and Chapter 233, Insurance Code,
  and specifying the total amount of the credits awarded in
  connection with the qualified development for the credit period.
               (2)  "Credit" means the low-income housing development
  tax credit authorized by this subchapter.
               (3)  "Credit period" means, with respect to a building
  that is part of a qualified development, the period of 10 tax years
  beginning with the tax year in which the building is placed in
  service.
               (4)  "Department" means the Texas Department of Housing
  and Community Affairs.
               (5)  "Development" has the meaning assigned by Section
  2306.6702, Government Code.
               (6)  "Federal tax credit" means the federal low-income
  housing credit created by Section 42, Internal Revenue Code.
               (7)  "Qualified basis" means the qualified basis of a
  qualified development, as determined under Section 42, Internal
  Revenue Code.
               (8)  "Qualified development" means a development in
  this state that the department determines is eligible for a federal
  tax credit and that:
                     (A)  is the subject of a recorded restrictive
  covenant requiring the development to be maintained and operated as
  a qualified development; and
                     (B)  for the lesser of 15 years after the
  beginning of the credit period or the period required by the
  department, is in compliance with:
                           (i)  all accessibility and adaptability
  requirements for a federal tax credit; and
                           (ii)  Title VIII of the Civil Rights Act of
  1968 (42 U.S.C. Section 3601 et seq.).
               (9)  "State housing credit ceiling" means $25 million
  each year.
         Sec. 171.552.  ENTITLEMENT TO CREDIT. A taxable entity is
  entitled to a credit against the taxes imposed under this chapter in
  the amount and under the limitations provided by this subchapter if
  the taxable entity owns a direct or indirect interest in a qualified
  development.
         Sec. 171.553.  ALLOCATION CERTIFICATE. (a) In a year during
  a credit period, a taxable entity or an entity subject to state
  premium tax liability as defined by Section 233.0001, Insurance
  Code, may apply to the department for an allocation certificate in
  connection with a development in which the taxable entity or other
  entity owns an interest.
         (b)  The department shall issue an allocation certificate if
  the development is a qualified development.
         Sec. 171.554.  AMOUNT OF CREDITS. (a) The department shall
  in the manner provided by this section determine the total amount of
  credits under this subchapter and Chapter 233, Insurance Code,
  awarded for the credit period in connection with a qualified
  development and indicate the amount of credits awarded on the
  allocation certificate.
         (b)  The amount of credits awarded in connection with a
  qualified development over the credit period must be the minimum
  amount necessary for the financial feasibility of the qualified
  development after considering any federal tax credit, subject to
  the limitations of this section.
         (c)  The amount of credits awarded in connection with a
  qualified development over the credit period may not exceed the
  total federal tax credit awarded to the owner or owners of the
  qualified development over the 10-year federal tax credit period.
         (d)  The manner in which the department awards the amount of
  credits must be consistent with criteria established by the
  department.
         (e)  The total amount of credits awarded for a year in
  connection with all qualified developments financed through tax
  exempt bonds may not exceed the sum of:
               (1)  50 percent of the state housing credit ceiling for
  the year;
               (2)  any unallocated credits for the preceding year;
  and
               (3)  any credit recaptured or otherwise returned to the
  department in the year.
         (f)  The total amount of credits awarded for a year in
  connection with all qualified developments not financed through tax
  exempt bonds may not exceed the sum of:
               (1)  50 percent of the state housing credit ceiling for
  the year;
               (2)  any unallocated credits for the preceding year;
  and
               (3)  any credit recaptured or otherwise returned to the
  department in the year.
         Sec. 171.555.  APPORTIONMENT OF CREDIT. The direct or
  indirect owners of a qualified development who intend to claim a
  credit under this subchapter or Chapter 233, Insurance Code, may by
  agreement determine the portion of the total amount of credits
  awarded under Section 171.554 that each owner is entitled to claim.  
  If the owners do not agree, the department shall determine the
  portion each owner is entitled to claim based on each owner's
  ownership interest in the qualified development.
         Sec. 171.556.  LENGTH OF CREDIT; LIMITATION. (a) A taxable
  entity entitled to a credit under this subchapter shall claim the
  credit in equal installments during each year of the credit period.
         (b)  The total credit claimed under this subchapter for a
  report, including any carry forward or backward under Section
  171.557, may not exceed the amount of franchise tax due for the
  report after any other applicable credit.
         Sec. 171.557.  CARRY FORWARD OR BACKWARD. (a)  If a taxable
  entity is eligible for a credit that exceeds the limitations under
  Section 171.556, the taxable entity may carry the unused credit
  back for not more than three tax years or forward for not more than
  10 consecutive reports following the tax year in which the
  allocation was made.  A credit carryforward from a previous report
  is considered to be used before the current year installment.
         (b)  A credit that is not used may not be refunded.
         Sec. 171.558.  RECAPTURE. (a)  The comptroller shall
  recapture the amount of a credit claimed on a report filed under
  this chapter from a taxable entity if, on the last day of a tax year,
  the amount of the qualified basis of the qualified development is
  less than the amount of the qualified basis as of the last day of the
  prior tax year.  The comptroller shall determine the amount
  required to be recaptured using the formula provided by Section
  42(j), Internal Revenue Code, as that section existed on January 1,
  2023.
         (b)  A report must include any portion of credit required to
  be recaptured, the identity of any taxable entity subject to the
  recapture, and the amount of any credit previously allocated to the
  taxable entity.
         Sec. 171.559.  ALLOCATION OF CREDIT. (a)  If a taxable
  entity receiving a credit under this subchapter is a partnership,
  limited liability company, S corporation, or similar pass-through
  entity, the taxable entity may allocate the credit to its partners,
  shareholders, members, or other constituent taxable entities in any
  manner agreed to by those entities.
         (b)  A taxable entity that makes an allocation under this
  section shall certify to the comptroller the amount of credit
  allocated to each constituent taxable entity or shall notify the
  comptroller that it has delegated the duty of certification to one
  constituent taxable entity that shall provide the notification to
  the comptroller. Each constituent taxable entity is entitled to
  claim the allocated amount subject to any restrictions prescribed
  by this subchapter.
         (c)  An allocation under this section is not a transfer for
  purposes of state law.
         Sec. 171.560.  FILING REQUIREMENTS AFTER ALLOCATION. A
  taxable entity that allocates a portion of the credit under Section
  171.559, and each taxable entity to which a portion was allocated,
  shall file with the taxable entity's report a copy of the allocation
  certificate on which the credit is based.
         Sec. 171.561.  RULES; PROCEDURES. The department and
  comptroller, in consultation with each other, shall adopt rules and
  procedures to implement, administer, and enforce this subchapter.
         Sec. 171.562.  COMPLIANCE MONITORING. (a)  The department,
  in consultation with the comptroller, shall monitor compliance with
  this subchapter in the same manner as the department monitors
  compliance with the federal tax credit program.
         (b)  The department shall report any instances of
  noncompliance with this subchapter to the comptroller.
         Sec. 171.563.  REPORT TO LEGISLATURE. (a)  Not later than
  December 31 of each year, the department shall deliver a written
  report to the legislature. The report must:
               (1)  specify the number of qualified developments for
  which allocation certificates were issued during the year and the
  total number of units supported by the developments;
               (2)  describe each qualified development for which an
  allocation certificate was issued during the year, including:
                     (A)  location;
                     (B)  household type;
                     (C)  available demographic information for the
  residents intended to be served by the development;
                     (D)  the income levels intended to be served by
  the development; and
                     (E)  the rents or set-asides authorized for the
  development;
               (3)  include housing market and demographic
  information to demonstrate how the qualified developments,
  supported by the tax credits under this subchapter and Chapter 233,
  Insurance Code, are addressing the need for affordable housing in
  their communities; and
               (4)  analyze any remaining disparities in the
  affordability of housing within those communities.
         (b)  The department shall make a report delivered under this
  section available to the public.
         SECTION 2.  Subtitle B, Title 3, Insurance Code, is amended
  by adding Chapter 233 to read as follows:
  CHAPTER 233. CREDIT AGAINST CERTAIN TAXES FOR CERTAIN HOUSING
  DEVELOPMENTS
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 233.0001.  DEFINITIONS. In this chapter:
               (1)  "Allocation certificate" and "qualified
  development" have the meanings assigned by Section 171.551, Tax
  Code.
               (2)  "State premium tax liability" means any tax
  liability incurred by an entity under Chapters 221 through 226.
  SUBCHAPTER B. CREDIT
         Sec. 233.0051.  CREDIT.  An entity is eligible for a credit
  against the entity's state premium tax liability in the amount and
  under the limitations provided by this chapter if the entity owns a
  direct or indirect interest in a qualified development.
         Sec. 233.0052.  LENGTH OF CREDIT; LIMITATIONS.  (a)  The
  entity shall claim the credit in the manner provided by Section
  171.556(a), Tax Code.
         (b)  The total credit claimed under this chapter for a
  report, including any carry forward or backward described by
  Subsection (c), may not exceed the amount of the entity's state
  premium tax liability due for the report after any other applicable
  credit.
         (c)  The entity may carry a surplus credit forward or
  backward as provided by Section 171.557, Tax Code.
         Sec. 233.0053.  APPLICATION FOR CREDIT.  (a)  An entity must
  apply for a credit under this chapter on or with the tax report for
  the tax year for which the credit is claimed and submit with the
  application a copy of the allocation certificate issued in
  connection with the qualified development and any other information
  required by Subchapter K, Chapter 171, Tax Code.
         (b)  The comptroller shall adopt a form for the application
  for the credit. An entity must use this form in applying for the
  credit.
         Sec. 233.0054.  RULES; PROCEDURES. The comptroller and the
  Texas Department of Housing and Community Affairs, in consultation
  with each other, shall adopt rules and procedures to implement,
  administer, and enforce this chapter.
         Sec. 233.0055.  APPLICABLE PROVISIONS.  The provisions of
  Subchapter K, Chapter 171, Tax Code, relating to recapture,
  allocation of credit, filing requirements after allocation, and
  compliance monitoring apply to the credit authorized by this
  chapter.
         SECTION 3.  (a) The Texas Department of Housing and
  Community Affairs may begin issuing allocation certificates under
  Section 171.553, Tax Code, as added by this Act, in an open cycle
  beginning on January 1, 2024.
         (b)  Subchapter K, Chapter 171, Tax Code, as added by this
  Act, and Chapter 233, Insurance Code, as added by this Act, apply
  only to a tax report originally due on or after January 1, 2026.
         (c)  An entity may not carry back a credit under Section
  171.557, Tax Code, as added by this Act, to a tax year the report for
  which is originally due before January 1, 2026.
         SECTION 4.  This Act takes effect January 1, 2024.
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