HBA-RBT H.B. 1821 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 1821
By: Dukes
Ways & Means
3/8/1999
Introduced



BACKGROUND AND PURPOSE 

A significant barrier to women entering the workforce is that quality
affordable child care can be difficult to find.  H.B. 1821 provides a
franchise tax credit of 50 percent for all expenses incurred to plan,
build, renovate, supply, contract-out, expand, maintain, or operate a child
care facility for employees.  The tax credit is limited to $150,000.  The
tax credit can only be taken if the facility is not in the residence of an
officer or employee of the corporation, is licensed under Chapter 42 of the
Human Resources Code, is open to all employees of the company without
regard to compensation, and is not the principal trade or business of the
corporation claiming credit. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Chapter 171, Tax Code, by adding Subchapter N, as
follows: 

SUBCHAPTER N.  TAX CREDIT FOR ESTABLISHING DAY-CARE CENTER
 OR PURCHASING CHILD-CARE SERVICES

Sec.  171.701.  DEFINITION.  Defines "day-care center."

Sec.  171.702.  CREDIT.  Entitles a corporation that meets the eligibility
requirements under this subchapter to a credit in the amount allowed by
this subchapter against the tax imposed under this chapter. 

Sec.  171.703.  CREDIT FOR DAY-CARE CENTER AND PURCHASED CHILD-CARE
SERVICES.  Authorizes a corporation to claim a credit under this subchapter
only for a qualifying expenditure relating to the establishment and
operation of a day-care center primarily to provide care for the children
of employees of the corporation and other entities sharing the costs of
establishing the center or the purchase of child-care services that are
actually provided to children of employees of the corporation.  Provides a
list of the types of qualifying expenditures.  Authorizes a corporation to
claim a credit in relation to the establishment and operation of a day-care
center only if: 
 _the corporation is authorized to claim a deduction on the corporation's
federal income taxes for depreciation of the facility or for amortization
instead of depreciation;  
 _the center is not part of the principal residence of an officer or
employee of the corporation; 
 _the center operates under a license issued under Chapter 42, Human
Resources Code (Regulation of Certain Facilities, Homes, and Agencies that
Provide Child-Care Services); 
 _enrollment in the center is open to employees of the corporation during
the period for which the corporation claims the credit; 
 _the center is not the principal trade or business of the corporation,
unless at least 30 percent of the children enrolled in the center are
children of employees; 
  _eligibility requirements for use of the facility do not discriminate in
favor of employees who are "highly compensated employees"; 
 _the employees pay less than the local market rate for child-care services
provided at the center.  

Provides that the amount of the credit is equal to the lesser of $150,000
or 50 percent of the corporation's qualifying expenditures.  Entitles the
corporation to a credit for the qualifying expenditures made by the
corporation, subject to the limitation prescribed by Subsection (d), if a
corporation shares in the cost of establishing a day-care center. 

Sec.  171.704.  APPLICATION FOR CREDIT.  Provides that a corporation must
apply for a credit under this subchapter on or with the tax report for the
period for which the credit is claimed.  Requires the comptroller to adopt
a form for the application for the credit. Provides that a corporation must
use the form in applying for the credit. 

Sec.  171.705.  PERIOD FOR WHICH CREDIT MAY BE CLAIMED.  Authorizes a
corporation to claim a credit under this subchapter for qualifying
expenditures made during an accounting period only against the tax owed for
the corresponding reporting period, except that a corporation is prohibited
from claiming a credit in an amount that exceeds the amount of tax due for
the report.  Authorizes a corporation to carry a credit that exceeds the
amount of tax due for the period forward to the next report if the day-care
center is in operation during that reporting period.  Prohibits the total
amount claimed as a credit on any report from exceeding the amount
prescribed by Section 171.703(d). 

Sec.  171.706.  ASSIGNMENT PROHIBITED.  Prohibits a corporation from
conveying, assigning, or transferring the credit allowed under this
subchapter to another entity unless all of the assets of the corporation
are conveyed, assigned, or transferred in the same transaction. 

SECTION 2.  Provides that a corporation may claim the tax credit
established by this Act only for qualifying expenditures made on or after
the effective date of this Act and only on a franchise tax report due under
Chapter 171, Tax Code, on or after January 1, 2000. 

SECTION 3.  Emergency clause.
            Effective date: 90 days after adjournment