HB3011 - Relating to a franchise tax credit for taxable entities that make certain employer child-care contributions.

  89R8661 RDS-D     By: Button H.B. No. 3011       A BILL TO BE ENTITLED   AN ACT   relating to a franchise tax credit for taxable entities that make   certain employer child-care contributions.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Chapter 171, Tax Code, is amended by adding   Subchapter N-1 to read as follows:   SUBCHAPTER N-1. TAX CREDIT FOR CHILD-CARE CONTRIBUTION           Sec.   171.721.     DEFINITION. In this subchapter, "child-care   contribution" means the dollar amount of a contribution made by a   taxable entity to an employee of the entity for use by the employee   to secure child care at a child-care facility or family home   licensed under Chapter 42, Human Resources Code, including a   licensed child-care facility operated by the entity. The term does   not include wages paid by the taxable entity to the employee or a   payment to the employee that is considered compensation for the   employee's service.           Sec.   171.722.     ENTITLEMENT TO CREDIT.   A taxable entity is   entitled to a credit in the amount and under the conditions provided   by this subchapter against the tax imposed under this chapter.           Sec.   171.723.     AMOUNT OF CREDIT; LIMITATION.   (a)   Subject to   Subsections (b) and (c), the amount of the credit a taxable entity   may claim on a report is equal to the total amount of child-care   contributions paid by the entity during the period on which the   report is based.   For purposes of computing the total amount of   child-care contributions paid by the taxable entity, a child-care   contribution in an amount that exceeds $3,600 for a child is   considered to be a child-care contribution in the amount of $3,600   for that child.           (b)     The total credit claimed on a report, including the   amount of any carryforward under Section 171.724, may not exceed   the amount of franchise tax due for the report after applying all   other applicable credits.             (c)     The total amount of credits that may be awarded under   Subsection (a) in a state fiscal year may not exceed $25 million.           (d)     The comptroller by rule shall prescribe procedures by   which the comptroller will allocate the amount of credits available   under Subsection (c). The procedures must provide that credits are   allocated to taxable entities that applied for the credit on a pro   rata basis.             Sec.   171.724.     CARRYFORWARD. (a)   If a taxable entity is   eligible for a credit that exceeds the limitation under Section   171.723(b), the entity may carry the unused credit forward for not   more than five consecutive reports.           (b)     A carryforward is considered the remaining portion of a   credit that cannot be claimed on a report because of the limitation   under Section 171.723(b).           (c)     Credits, including a carryforward, are considered to be   used in the following order:                 (1)  a carryforward under this section; and                 (2)     a credit for the period on which the report is   based.           Sec.   171.725.     APPLICATION FOR CREDIT.   (a)   A taxable entity   must apply for a credit under this subchapter on or with the report   for the period for which the credit is claimed.           (b)     A taxable entity must apply for the credit in the manner   prescribed by the comptroller and include with the application any   information requested by the comptroller to determine whether the   entity is eligible for the credit under this subchapter.           (c)     The comptroller may award a credit to a taxable entity   that applies for the credit under Subsection (a) of this section if   the taxable entity is eligible for the credit and the credit is   available under Section 171.723(c).   The comptroller has discretion   in determining whether to grant or deny an application for a credit.           (d)     The comptroller shall notify a taxable entity in writing   of the comptroller's decision to grant or deny the application   submitted under Subsection (a).   If the comptroller denies a   taxable entity's application, the comptroller shall include in the   notice of denial the reasons for the comptroller's decision.           Sec.   171.726.     SALE OR ASSIGNMENT OF CREDIT. (a) A taxable   entity that makes a child-care contribution may sell or assign all   or part of the credit that may be claimed for that contribution to   one or more taxable entities, and any taxable 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 taxable 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.           (b)     A taxable entity that sells or assigns a credit under   this section and the taxable entity to which the credit is sold or   assigned shall jointly submit written notice of the sale or   assignment to the comptroller not later than the 30th day after the   date of the sale or assignment. The notice must include:                 (1)     the date on which the credit was originally   established;                 (2)  the date of the sale or assignment;                 (3)     the amount of the credit sold or assigned and the   remaining period during which it may be used;                 (4)     the names, addresses, and federal tax   identification numbers of the taxable entity that sold or assigned   the credit or part of the credit and the taxable entity to which the   credit or part of the credit was sold or assigned; and                 (5)     the amount of the credit owned by the selling or   assigning taxable entity before the sale or assignment, and the   amount the selling or assigning taxable 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.           (d)     After a taxable entity claims a credit for a child-care   contribution under this subchapter, another entity may not use the   same expenditure as the basis for another credit.           Sec.   171.727.     RULES. The comptroller shall adopt rules   necessary to implement and administer this subchapter.          SECTION 2.  Subchapter N-1, Chapter 171, Tax Code, as added   by this Act, applies only to a report originally due on or after   January 1, 2026.          SECTION 3.  This Act takes effect January 1, 2026.