Bill Text: TX SB412 | 2019-2020 | 86th Legislature | Introduced
Bill Title: Relating to a franchise tax credit based on the ad valorem taxes paid by a taxable entity on certain inventory.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2019-04-15 - Left pending in committee [SB412 Detail]
Download: Texas-2019-SB412-Introduced.html
86R491 CJC-D | ||
By: Hughes | S.B. No. 412 |
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relating to a franchise tax credit based on the ad valorem taxes | ||
paid by a taxable entity on certain inventory. | ||
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 BUSINESS AD VALOREM TAX PAYMENTS ON | ||
INVENTORY | ||
Sec. 171.701. DEFINITIONS. In this subchapter: | ||
(1) "Qualified entity" means a taxable entity that: | ||
(A) is a retailer; and | ||
(B) pays ad valorem taxes on retail inventory | ||
owned by the entity and located in this state. | ||
(2) "Retail inventory" means all tangible personal | ||
property that a retailer holds for sale in this state during a | ||
12-month period and for which the retailer is not otherwise | ||
entitled to an exemption from taxation. For purposes of this | ||
section, the term does not include: | ||
(A) real property; or | ||
(B) inventory that qualifies for appraisal under | ||
Section 23.121, 23.124, 23.1241, or 23.127. | ||
(3) "Retailer" means a person who is engaged in the | ||
business in this state of selling retail inventory. For purposes of | ||
this section, the term does not include: | ||
(A) a bank, savings bank, savings and loan | ||
association, credit union, or other finance company; or | ||
(B) a person who was not engaged in the business | ||
in this state of selling retail inventory on January 1 of the | ||
preceding tax year. | ||
(4) "Sales price" means the total amount of money paid | ||
or to be paid to a retailer for the purchase of an item of retail | ||
inventory. | ||
(5) "Total annual sales" means the total of the sales | ||
price from every sale from a retailer's retail inventory for a | ||
12-month period, other than a sale at wholesale or a sale to another | ||
retailer. | ||
Sec. 171.702. ELIGIBILITY FOR CREDIT. A qualified entity | ||
is eligible to apply for a credit in the amount and under the | ||
conditions and limitations provided by this subchapter against the | ||
tax imposed under this chapter. | ||
Sec. 171.703. AMOUNT OF CREDIT; LIMITATIONS. (a) Subject | ||
to Subsection (c), the total amount of the credit under this | ||
subchapter is equal to the difference between the following | ||
amounts: | ||
(1) the amount of the ad valorem taxes paid by the | ||
qualified entity during the period on which a report is based that | ||
are derived from the taxable value of the entity's retail | ||
inventory; and | ||
(2) the amount of the ad valorem taxes the entity would | ||
have paid during the period described by Subdivision (1) on the | ||
taxable value of the entity's retail inventory if the taxable value | ||
of that inventory were an amount determined by dividing the | ||
entity's total annual sales, as reported to the comptroller under | ||
Section 171.705, by 12. | ||
(b) The comptroller may request assistance from the chief | ||
appraiser of the appraisal district in which a qualified entity's | ||
retail inventory is located to determine the amount described by | ||
Subsection (a)(2). The chief appraiser shall provide the requested | ||
assistance. | ||
(c) A qualified entity is not eligible for a credit under | ||
this subchapter for a year in which the amount described by | ||
Subsection (a)(2) is greater than the amount described by | ||
Subsection (a)(1). | ||
(d) The total credit claimed for a report, including the | ||
amount of any carryforward under Section 171.704, may not exceed | ||
the amount of franchise tax due for the report after all other | ||
applicable tax credits. | ||
Sec. 171.704. CARRYFORWARD. (a) If a qualified entity is | ||
eligible for a credit that exceeds the limitation under Section | ||
171.703(d), the entity may carry the unused credit forward for not | ||
more than three consecutive reports. | ||
(b) A carryforward is considered the remaining portion of a | ||
credit that cannot be claimed in the current year because of the | ||
limitation under Section 171.703(d). A carryforward is added to | ||
the next year's credit in determining the limitation for that year. | ||
A credit carryforward from a previous report is considered to be | ||
used before the current year credit. | ||
Sec. 171.705. APPLICATION FOR CREDIT. (a) A qualified | ||
entity must apply for a credit under this subchapter on or with the | ||
report for the period for which the credit is claimed. | ||
(b) The comptroller shall promulgate a form for the | ||
application for the credit. A qualified entity must use the form in | ||
applying for the credit. The application must require the entity to | ||
state the entity's total annual sales for the 12-month period for | ||
which the credit is claimed. The comptroller may require the entity | ||
to include any other information the comptroller determines is | ||
necessary to demonstrate that the entity is eligible for the | ||
credit. | ||
(c) The burden of establishing eligibility for and the value | ||
of the credit is on the qualified entity. | ||
(d) The comptroller may request permission to examine the | ||
books and records of a qualified entity in the manner provided by | ||
this subsection. A request made under this subsection must be made | ||
in writing, be delivered personally to the custodian of the records | ||
at a location at which the entity conducts business, provide a | ||
period of not less than 15 days for the person to respond to the | ||
request, and state that the person to whom the request is addressed | ||
has the right to seek judicial relief from compliance with the | ||
request. In a request made under this subsection, the comptroller | ||
may examine: | ||
(1) documentation appropriate to allow the | ||
comptroller to determine if the entity is eligible for the credit; | ||
and | ||
(2) sales records to substantiate information | ||
included in the entity's application for the credit. | ||
Sec. 171.706. SALE OR ASSIGNMENT OF CREDIT. (a) A | ||
qualified entity that earns a credit under this subchapter may sell | ||
or assign all or part of the credit, and any entity to which all or | ||
part of the credit is sold or assigned may sell or assign all or part | ||
of the credit to another entity. There is no limit on the total | ||
number of transactions for the sale or assignment of all or part of | ||
the total credit authorized under this subchapter, however, | ||
collectively all transferred and retained credits claimed for a | ||
period are subject to the limitation under Section 171.703(d). | ||
(b) An entity that sells or assigns a credit under this | ||
section and the entity to which the credit is sold or assigned shall | ||
jointly submit written notice of the sale or assignment to the | ||
comptroller on a form promulgated by the comptroller not later than | ||
the 30th day after the date of the sale or assignment. The notice | ||
must include: | ||
(1) the date of the sale or assignment; | ||
(2) the amount of the credit sold or assigned; | ||
(3) the names and federal tax identification numbers | ||
of the entity that sold or assigned the credit or part of the credit | ||
and the entity to which the credit or part of the credit was sold or | ||
assigned; and | ||
(4) the amount of the credit owned by the selling or | ||
assigning entity before the sale or assignment, and the amount the | ||
selling or assigning entity retained, if any, after the sale or | ||
assignment. | ||
(c) The sale or assignment of a credit in accordance with | ||
this section does not extend the period for which a credit may be | ||
carried forward and does not increase the total amount of the credit | ||
that may be claimed. | ||
Sec. 171.707. RULES. The comptroller shall adopt rules | ||
necessary to implement and administer this subchapter. | ||
SECTION 2. Subchapter N, Chapter 171, Tax Code, as added by | ||
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, 2020. |