Relating to a franchise tax credit for taxable entities that make certain employer child-care contributions and a study on access to and availability of child care in this state.

89(R) HB 3191 - House Committee Report version - Bill Text

89R27959 RDS-D

By: Button, Smithee, Plesa, Bell of Kaufman,

H.B. No. 3191

Longoria

Substitute the following for H.B. No. 3191:

By: Button

C.S.H.B. No. 3191

A BILL TO BE ENTITLED

AN ACT

relating to a franchise tax credit for taxable entities that make

certain employer child-care contributions and a study on access to

and availability of child care in this state.

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. (a) Subject to Subsection (b),

in this subchapter, "child-care contribution" means the dollar

amount of a contribution made by a taxable entity on behalf of an

employee of the entity who is based in this state:

(1)

to a dependent care flexible spending account of

the employee;

(2)

in accordance with the requirements of a qualified

child-care expenditure under 26 U.S.C. Section 45F(c) that is paid

or incurred in relation to a qualified child-care facility, as

defined by that subsection, that is located in this state; or

(3)

in accordance with rules adopted by the

comptroller.

(b)

The term "child-care contribution" does not include

salary or wages paid by the taxable entity to the employee 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.

QUALIFICATION. A taxable entity qualifies

for a credit under this subchapter if the taxable entity subsidizes

at least $1,200 of the annual cost incurred by an employee of the

entity to obtain child care at:

(1)

a child-care facility licensed under Chapter 42,

Human Resources Code; or

(2)

a family home registered or listed under Chapter

42, Human Resources Code.

Sec.

171.724.

AMOUNT OF CREDIT; LIMITATION.

(a)

Subject to

Subsections (b), (c), and (d), 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.

(b)

For purposes of calculating the total amount of

child-care contributions paid by a taxable entity under Subsection

(a):

(1)

the total amount of child-care contributions paid

by the entity may not exceed $3,600 multiplied by the number of

children for whom the entity makes a child-care contribution during

the period described by that subsection; and

(2)

a child who is the child of more than one employee

of the taxable entity may only be included once when performing the

calculation prescribed by Subdivision (1).

(c)

The total credit claimed on a report, including the

amount of any carryforward under Section 171.725, may not exceed

the amount of franchise tax due for the report after applying all

other applicable credits.

(d)

Except as provided by Section 171.728, the total amount

of credits that may be awarded under Subsection (a) in a state

fiscal year may not exceed $25 million.

(e)

The comptroller by rule shall prescribe procedures by

which the comptroller will allocate the amount of credits available

under Subsection (d). The procedures must provide that credits are

allocated to taxable entities that applied for the credit on a pro

rata basis.

Sec.

171.725.

CARRYFORWARD. (a)

If a taxable entity is

eligible for a credit that exceeds the limitation under Section

171.724(c), 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 171.724(c).

(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.

171.726.

APPLICATION FOR CREDIT.

(a)

A taxable entity

must apply for a credit under this subchapter 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.

(b)

The comptroller may award a credit to a taxable entity

that applies for the credit under Subsection (a) if the taxable

entity is eligible for the credit.

The comptroller has discretion

in determining whether to grant or deny an application for a credit.

The award or denial of a credit under this subchapter and the amount

of any credit awarded is not a contested case under Chapter 2001,

Government Code.

(c)

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.

(d)

The comptroller may elect to award a credit under this

subchapter to a taxable entity by issuing a refund warrant to the

entity in lieu of awarding a credit against the tax due on the

entity's report in the manner provided by this subsection.

The

comptroller may not issue a refund warrant in an amount that exceeds

the limitation prescribed by Section 171.724(c).

If a taxable

entity that is issued a refund warrant under this subsection is

eligible for an amount of credit that exceeds the limitation

prescribed by Section 171.724(c), that remaining portion of the

credit is considered a carryforward under Section 171.725.

A

refund warrant issued by the comptroller under this subsection does

not accrue interest under Section 111.064.

(e) The comptroller by rule may:

(1)

prescribe the form to be used to apply for a credit

under this subchapter; and

(2)

establish an enrollment period with application

deadlines during which an application for a credit under this

subchapter must be submitted.

Sec.

171.727.

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 and does not increase the total amount of the credit

that may be claimed.

(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.

171.728.

ASSESSMENT OF IMPROPERLY AWARDED CREDIT;

ADDITIONAL USE. (a) If the comptroller determines that a taxable

entity was improperly awarded a credit under this subchapter, the

comptroller may assess the amount of the improperly awarded credit

against the taxable entity that was originally awarded the credit,

regardless of whether that taxable entity has sold or assigned the

credit in accordance with Section 171.727.

(b)

After the taxable entity has exhausted all available

administrative and judicial remedies in relation to the assessment

under Subsection (a), the comptroller may use any money recovered

through an assessment under that subsection to:

(1)

increase the total amount of credit that may be

awarded during the next state fiscal year under Section 171.724(d);

(2) administer the credit under this subchapter; or

(3) return the money to the state treasury.

Sec.

171.729.

RULES. The comptroller shall adopt rules

necessary to implement and administer this subchapter.

SECTION 2. (a) The Texas Workforce Commission shall

conduct a study to examine strategies that may increase access to

and availability of child care among families in this state,

including strategies that engage employers in child-care solutions

available to their employees.

(b) Not later than December 31, 2026, the Texas Workforce

Commission shall issue a report on the findings of the study

conducted under Subsection (a) of this section to the governor, the

lieutenant governor, the speaker of the house of representatives,

and each legislative standing committee with jurisdiction over

child-care facilities.

SECTION 3. Subchapter N-1, Chapter 171, Tax Code, as added

by this Act, applies only to a report originally due on or after

January 1, 2027.

SECTION 4. This Act takes effect January 1, 2026.