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.

A BILL TO BE ENTITLED
AN ACT
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.