86R4647 BEF-F
	By: Parker	H.B. No. 983

	A BILL TO BE ENTITLED
	AN ACT
	relating to a franchise tax credit for enterprise projects for
	certain capital investments.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Chapter 171, Tax Code, is amended by adding
	Subchapter U to read as follows:
	SUBCHAPTER U. TAX CREDITS FOR ENTERPRISE PROJECTS FOR CERTAIN
	CAPITAL INVESTMENTS
	Sec. 171.9221.  DEFINITIONS. In this subchapter:
	(1)  "Enterprise project" means a person designated as
	an enterprise project under Chapter 2303, Government Code, on or
	after September 1, 2003.
	(2)  "Qualified business" has the meaning assigned by
	Section 2303.003, Government Code.
	(3)  "Qualified capital investment" means tangible
	personal property first placed in service by an enterprise project
	after January 1, 2015, 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. 171.9222.  TANGIBLE PERSONAL PROPERTY FIRST PLACED IN
	SERVICE BY AN ENTERPRISE PROJECT. For purposes of determining
	whether an investment is a qualified capital investment under
	Section 171.9221, "tangible personal property first placed in
	service by an enterprise project" includes tangible personal
	property:
	(1)  purchased by an enterprise project for placement
	in an incomplete improvement that is under active construction or
	other physical preparation;
	(2)  identified by a purchase order, invoice, billing,
	sales slip, or contract; and
	(3)  physically present at the enterprise project's
	qualified business site, as defined by Section 2303.003, Government
	Code, and in use by the enterprise project on the original due date
	of the report on which the credit is taken.
	Sec. 171.9223.  ELIGIBILITY.  An enterprise project that is
	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.
	Sec. 171.9224.  CALCULATION OF CREDIT. (a)  An enterprise
	project that is eligible for a credit under this subchapter may,
	beginning on January 1 of the year in which the project is
	designated or January 1, 2015, establish a credit equal to 7.5
	percent of the qualified capital investment.
	(b)  A taxable entity may file an amended report to claim all
	or part of a credit earned in a previous tax year that has not been
	claimed on another report, subject to Section 171.9225, if the
	applicable period of limitation under Section 111.107 and
	Subchapter D, Chapter 111, for claiming that credit has not
	expired.
	Sec. 171.9225.  LIMITATION. The total credit claimed under
	this subchapter for a report, including the amount of any
	carryforward credit under Section 171.9226, may not exceed 50
	percent of the amount of franchise tax due for the report before any
	other applicable tax credits.
	Sec. 171.9226.  CARRYFORWARD. (a) If an enterprise project
	is eligible for a credit from an installment that exceeds a
	limitation under Section 171.9225, the enterprise project 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
	tax limitation under Section 171.9225. A carryforward is added to
	the next year's installment of the credit in determining the tax
	limitation for that year. A credit carryforward from a previous
	report is considered to be used before the current year
	installment.
	Sec. 171.9227.  CERTIFICATION OF ELIGIBILITY. (a) For the
	initial and each succeeding report in which a credit is claimed
	under this subchapter, the enterprise project shall file with its
	report, on a form provided by the comptroller, information that
	sufficiently demonstrates that the enterprise project is eligible
	for the credit.
	(b)  The burden of establishing entitlement to and the value
	of the credit is on the enterprise project.
	Sec. 171.9228.  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 enterprise projects that claim a credit under this
	subchapter and the average and median wages paid by those
	enterprise projects;
	(2)  the total amount of credits applied against the
	tax under this chapter and the amount of unused credits;
	(3)  the total amount of franchise tax due by
	enterprise projects claiming a credit under this subchapter before
	and after the application of the credit and the average percentage
	reduction in franchise tax due by the enterprise projects;
	(4)  the percentage of tax credits under this
	subchapter that were awarded to enterprise projects with fewer than
	100 employees;
	(5)  the two-digit standard industrial classification
	of enterprise projects claiming a credit under this subchapter;
	(6)  the geographical distribution of the qualified
	capital investments on which tax credit claims are made under this
	subchapter; and
	(7)  the impact of the credit provided under this
	subchapter on employment, capital investment, personal income, and
	state tax revenues.
	(b)  The comptroller may not include in the report
	information that is confidential by law.
	(c)  For purposes of this section, the comptroller may
	require an enterprise project that claims a credit under this
	subchapter to submit information, on a form provided by the
	comptroller, on the location of the enterprise project's capital
	investment in this state and any other information necessary to
	complete the report required under this section.
	(d)  The comptroller shall provide notice to the members of
	the legislature that the report required under this section is
	available on request.
	Sec. 171.9229.  COMPTROLLER POWERS AND DUTIES. The
	comptroller shall adopt rules and forms necessary to implement this
	subchapter.
	SECTION 2.  Except as provided by Section 171.9224(b), Tax
	Code, as added by this Act, this Act applies only to a report
	originally due on or after the effective date of this Act.
	SECTION 3.  This Act takes effect immediately if it receives
	a vote of two-thirds of all the members elected to each house, as
	provided by Section 39, Article III, Texas Constitution.  If this
	Act does not receive the vote necessary for immediate effect, this
	Act takes effect September 1, 2019.