By: Martinez Fischer	H.B. No. 246

	A BILL TO BE ENTITLED
	AN ACT
	relating to franchise tax credits for creating quality jobs for
	veterans.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Chapter 171, Tax Code, is amended by adding
	Subchapters P and Q to read as follows:
	SUBCHAPTER P. TAX CREDITS FOR CERTAIN
	VETERAN JOB CREATION ACTIVITIES
	Sec. 171.701.  DEFINITIONS. In this subchapter:
	(1)  "Agricultural processing" means an establishment
	primarily engaged in activities described in categories 0724,
	2011-2099, 2211, 2231, 2824, 2833, 2834, 2835, 2836, 2841,
	3111-3199, 3262, or 3952, in product classes 28692 or 28698 of
	category 2869, or in product classes 28992 or 28994 of category 2899
	of the 1987 Standard Industrial Classification Manual published by
	the United States Department of Labor.
	(2)  "Central administrative offices" means an
	establishment primarily engaged in performing management or
	support services for other establishments of the same enterprise.
	An enterprise consists of all establishments having more than 50
	percent common direct or indirect ownership.
	(3)  "Data processing" means an establishment
	primarily engaged in activities described in categories 7371-7379
	of the 1987 Standard Industrial Classification Manual published by
	the United States Department of Labor.
	(4)  "Distribution" means an establishment primarily
	engaged in activities described in categories 5012-5199 of the 1987
	Standard Industrial Classification Manual published by the United
	States Department of Labor.
	(5)  "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.).
	(6)  "Manufacturing" means an establishment primarily
	engaged in activities described in categories 2011-3999 of the 1987
	Standard Industrial Classification Manual published by the United
	States Department of Labor.
	(7)  "Qualified business" means an establishment
	primarily engaged in agricultural processing, central
	administrative offices, distribution, data processing,
	manufacturing, research and development, or warehousing.
	(8)  "Qualifying job" means a new permanent full-time
	job that:
	(A)  pays an annual wage of at least $50,000,
	subject to Section 171.772;
	(B)  is covered by a group health benefit plan for
	which the business pays at least 80 percent of the premiums or other
	charges assessed under the plan for the employee; and
	(C)  is not created to replace a previous
	employee.
	(9)  "Research and development" means an establishment
	primarily engaged in activities described in category 8731 of the
	1987 Standard Industrial Classification Manual published by the
	United States Department of Labor.
	(10)  "Veteran" means a person who:
	(A)  has served in:
	(i)  the army, navy, air force, coast guard,
	or marine corps of the United States or the United States Public
	Health Service under 42 U.S.C. Section 201 et seq., as amended;
	(ii)  the Texas military forces as defined
	by Section 437.001; or
	(iii)  an auxiliary service of one of those
	branches of the armed forces; and
	(B)  has been honorably discharged from the branch
	of the service in which the person served.
	(10)  "Warehousing" means an establishment primarily
	engaged in activities described in categories 4221-4226 of the 1987
	Standard Industrial Classification Manual published by the United
	States Department of Labor.
	Sec. 171.702.  BIENNIAL ADJUSTMENT OF WAGE FOR QUALIFYING
	JOB. (a) In this section, "consumer price index" means the average
	over a state fiscal biennium of the Consumer Price Index for All
	Urban Consumers (CPI-U), U.S. City Average, published monthly by
	the United States Bureau of Labor Statistics, or its successor in
	function.
	(b)  Beginning in 2016, on January 1 of each even-numbered
	year, the wage amount prescribed by Section 171.771(8) is increased
	or decreased by an amount equal to the amount prescribed by that
	section on December 31 of the preceding year multiplied by the
	percentage increase or decrease during the preceding state fiscal
	biennium in the consumer price index and rounded to the nearest
	dollar.
	(c)  The amount determined under Subsection (b) applies to a
	report originally due on or after the date the determination is
	made.
	(d)  The comptroller shall make the determination required
	by this section and may adopt rules related to making that
	determination.
	(e)  A determination by the comptroller under this section is
	final and may not be appealed.
	Sec. 171.703.  ELIGIBILITY. A taxable entity is eligible
	for a credit against the tax imposed under this chapter if the
	taxable entity:
	(1)  is a qualified business; and
	(2)  creates a minimum of 10 qualifying jobs.
	Sec. 171.704.  AMOUNT OF CREDIT. A taxable entity may
	establish a credit equal to 25 percent of the total wages paid by
	the taxable entity for each qualifying job filled by a veteran
	during each of the first 12 months of employment of the person hired
	to perform the job that occur during the period on which the report
	is based.
	Sec. 171.705.  LENGTH OF CREDIT. The credit established
	shall be claimed in five equal installments of one-fifth the credit
	amount over the five consecutive reports beginning with the report
	based on the period during which the qualifying jobs were created.
	Sec. 171.706.  LIMITATIONS. (a) The total credit claimed
	under this subchapter for a report, including the amount of any
	carryforward credit under Section 171.707, may not exceed 50
	percent of the amount of franchise tax due for the report before any
	other applicable tax credits.
	(b)  The total credit claimed under this subchapter and
	Subchapter Q for a report, including the amount of any carryforward
	credits, may not exceed the amount of franchise tax due for the
	report after any other applicable credits.
	Sec. 171.707.  CARRYFORWARD. (a) If a taxable entity is
	eligible for a credit that exceeds the limitations under Section
	171.706, the taxable entity may carry the unused credit forward for
	not more than five consecutive reports.
	(b)  A carryforward is considered the remaining portion of an
	installment that cannot be claimed in the current year because of a
	limitation under Section 171.706. A 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. 171.708.  CERTIFICATION OF ELIGIBILITY. (a) For the
	initial and each succeeding 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.
	(c)  A credit expires under this subchapter and the taxable
	entity may not take any remaining installment of the credit if in
	one of the five years in which the installment of a credit accrues,
	the taxable entity fails to maintain the minimum number of
	qualifying jobs required to be created by Section 171.703.
	(d)  Notwithstanding Subsection (c), the taxable entity may
	take the portion of an installment that accrued in a previous year
	and was carried forward to the extent permitted under Section
	171.707.
	Sec. 171.709.  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. 171.710.  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;
	(2)  the total amount of credits applied against the
	tax under this chapter and the amount of unused credits including:
	(A)  the total amount of franchise tax due by
	taxable entities claiming a credit under this subchapter before and
	after the application of the credit;
	(B)  the average percentage reduction in
	franchise tax due by taxable entities claiming a credit under this
	subchapter; and
	(C)  the percentage of tax credits that were
	awarded to taxable entities with fewer than 100 employees;
	(3)  the two-digit standard industrial classification
	of businesses claiming a credit under this subchapter;
	(4)  the geographical distribution of the credits
	claimed under this subchapter; and
	(5)  the effect of the credit provided under this
	subchapter on employment, personal income, and capital investment
	in this state and on state tax revenues.
	(b)  The final report issued before the expiration of this
	subchapter must include historical information on the credit
	authorized under this subchapter.
	(c)  The comptroller may not include in the report
	information that is confidential by law.
	(d)  For purposes of this section, the comptroller may
	require a taxable entity that claims a credit under this subchapter
	to submit information, on a form provided by the comptroller, on the
	location of the taxable entity's job creation in this state and any
	other information necessary to complete the report required under
	this section.
	(e)  The comptroller shall provide notice to the members of
	the legislature that the report required under this section is
	available on request.
	Sec. 171.711.  COMPTROLLER POWERS AND DUTIES. The
	comptroller shall adopt rules and forms necessary to implement this
	subchapter.
	Sec. 171.712.  EXPIRATION. (a) This subchapter expires
	December 31, 2025.
	(b)  The expiration of this subchapter does not affect the
	carryforward of a credit under Section 171.707 or those credits for
	which a taxable entity is eligible before the date this subchapter
	expires.
	SUBCHAPTER Q. TAX CREDITS FOR CERTAIN CAPITAL INVESTMENTS IN
	VETERAN JOB CREATION
	Sec. 171.801.  DEFINITIONS. In this subchapter:
	(1)  "Agricultural processing" and "qualified
	business" have the meanings assigned those terms by Section
	171.771.
	(2)  "Qualified capital investment" means tangible
	personal property first placed in service in this state by a taxable
	entity primarily engaged in agricultural processing, and that is
	described in Section 1245(a), Internal Revenue Code, such as
	engines, machinery, tools, and implements used in a trade or
	business or held for investment and subject to an allowance for
	depreciation, cost recovery under the accelerated cost recovery
	system, or amortization. The term does not include real property or
	buildings and their structural components. Property that is leased
	under a capitalized lease is considered a "qualified capital
	investment," but property that is leased under an operating lease
	is not considered a "qualified capital investment." Property
	expensed under Section 179, Internal Revenue Code, is not
	considered a "qualified capital investment."
	Sec. 171.802.  ELIGIBILITY. (a) A qualified business 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.
	(b)  To qualify for the credit authorized under this
	subchapter, a qualified business must:
	(1)  pay an annual wage of at least the amount required
	for a qualifying job to a veteran as defined by Section 171.701 for
	the period on which the report is based;
	(2)  offer health benefits coverage to all full-time
	employees at the location with respect to which the credit is
	claimed through a group health benefit plan, as defined by Section
	171.701, for which the business pays at least 80 percent of the
	premiums or other charges assessed under the plan for the
	employees; and
	(3)  make a minimum $500,000 qualified capital
	investment.
	Sec. 171.803.  AMOUNT OF CREDIT. A taxable entity may
	establish a credit equal to 7.5 percent of the qualified capital
	investment during the period on which the report is based.
	Sec. 171.804.  LENGTH OF CREDIT. The credit established
	shall be claimed in five equal installments of one-fifth the credit
	amount over the five consecutive reports beginning with the report
	based on the period during which the qualified capital investment
	was made.
	Sec. 171.805.  LIMITATIONS. (a) The total credit claimed
	under this subchapter for a report, including the amount of any
	carryforward credit under Section 171.806, may not exceed 50
	percent of the amount of franchise tax due for the report before any
	other applicable tax credits.
	(b)  The total credit claimed under this subchapter and
	Subchapter P for a report, including the amount of any carryforward
	credits, may not exceed the amount of franchise tax due for the
	report after any other applicable tax credits.
	Sec. 171.826.  CARRYFORWARD. (a) If a taxable entity is
	eligible for a credit from an installment that exceeds the
	limitation under Section 171.805, the taxable entity may carry the
	unused credit forward for not more than five consecutive reports.
	(b)  A carryforward is considered the remaining portion of an
	installment that cannot be claimed in the current year because of a
	limitation under Section 171.805. A 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. 171.807.  CERTIFICATION OF ELIGIBILITY. (a) For the
	initial and each succeeding 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.
	(c)  A credit expires under this subchapter and the taxable
	entity may not take any remaining installment of the credit if in
	one of the five years in which the installment of a credit accrues,
	the taxable entity:
	(1)  disposes of the qualified capital investment;
	(2)  takes the qualified capital investment out of
	service;
	(3)  moves the qualified capital investment out of this
	state; or
	(4)  fails to pay the annual wage required for a
	qualifying job under Section 171.701 for the period covered by the
	report on which the taxable entity would otherwise claim the
	credit.
	(d)  Notwithstanding Subsection (c), the taxable entity may
	take the portion of an installment that accrued in a previous year
	and was carried forward to the extent permitted under Section
	171.806.
	Sec. 171.808.  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. 171.809.  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 amount of qualified capital investments
	made by taxable entities that claim a credit under this subchapter
	and the average and median wages paid by those taxable entities;
	(2)  the total amount of credits applied against the
	tax under this chapter and the amount of unused credits, including:
	(A)  the total amount of franchise tax due by
	taxable entities claiming a credit under this subchapter before and
	after the application of the credit;
	(B)  the average percentage reduction in
	franchise tax due by taxable entities claiming a credit under this
	subchapter;
	(C)  the percentage of tax credits that were
	awarded to taxable entities with fewer than 100 employees; and
	(D)  the two-digit standard industrial
	classification of taxable entities claiming a credit under this
	subchapter;
	(3)  the geographical distribution of the qualified
	capital investments on which tax credit claims are made under this
	subchapter; and
	(4)  the effect of the credit provided under this
	subchapter on employment, personal income, and capital investment
	in this state and on state tax revenues.
	(b)  The final report issued before the expiration of this
	subchapter must include historical information on the credit
	authorized under this subchapter.
	(c)  The comptroller may not include in the report
	information that is confidential by law.
	(d)  For purposes of this section, the comptroller may
	require a taxable entity that claims a credit under this subchapter
	to submit information, on a form provided by the comptroller, on the
	location of the taxable entity's capital investment in this state
	and any other information necessary to complete the report required
	under this section.
	(e)  The comptroller shall provide notice to the members of
	the legislature that the report required under this section is
	available on request.
	Sec. 171.810.  COMPTROLLER POWERS AND DUTIES. The
	comptroller shall adopt rules and forms necessary to implement this
	subchapter.
	Sec. 171.811.  EXPIRATION. (a) This subchapter expires
	December 31, 2025.
	(b)  The expiration of this subchapter does not affect the
	carryforward of a credit under Section 171.806 or those credits for
	which a taxable entity is eligible before the date this subchapter
	expires.
	SECTION 2.  This Act applies only to a report originally due
	on or after the effective date of this Act.
	SECTION 32.  This Act takes effect January 1, 2016.