HBA-GUM S.B. 783 76(R) BILL ANALYSIS Office of House Bill AnalysisS.B. 783 By: Moncrief Ways & Means 5/21/1999 Engrossed BACKGROUND AND PURPOSE Currently, federal law allows businesses that hire qualified disabled workers to apply for a federal Work Opportunity Tax Credit. Texas, however, does not offer such a credit at the state level. S.B. 783 creates a franchise tax credit for wages paid to persons with certain disabilities. This bill provides that the amount of the credit is 10 percent of the wages paid by the corporation for each qualified employee, but not more 50 percent of the amount of net franchise tax due, after any other applicable credits, for the privilege period. In addition, this bill requires the comptroller of public accounts to adopt rules necessary to implement the tax credit. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the comptroller of public accounts in SECTION 1 (Section 171.756, Tax Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Chapter 171, Tax Code, by adding Subchapter P, as follows: SUBCHAPTER P. TAX CREDIT FOR WAGES PAID TO PERSONS WITH CERTAIN DISABILITIES Sec. 171.751. ENTITLEMENT TO CREDIT. Entitles a corporation to a credit in the amount and under the conditions and limitations provided by this subchapter against the tax imposed under this chapter. Sec. 171.752. QUALIFICATION. Provides that a corporation qualifies for a credit under this subchapter for each employee with certain disabilities hired on or after January 1, 2000, who meets certain specified conditions. Sec. 171.753. AMOUNT; LIMITATIONS. (a) Provides that the amount of the credit is 10 percent of the wages paid by the corporation for each qualified employee. (b) Authorizes a corporation to claim the credit only for wages paid to the qualified employee during the first two years of employment. (c) Prohibits the credit claimed for each privilege period from exceeding 50 percent of the amount of net franchise tax due, after any other applicable credits, for the privilege period. Sec. 171.754. APPLICATION FOR CREDIT. (a) 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. (b) Requires the comptroller of public accounts (comptroller) to promulgate a form for the application for the credit. Provides that a corporation must use this form in applying for the credit. Sec. 171.755. PERIOD FOR WHICH CREDIT MAY BE CLAIMED. Authorizes a corporation to claim a credit under this subchapter for wages paid during an accounting period only against the tax owed for the corresponding privilege period. Sec. 171.756. RULES. Requires the comptroller to adopt rules necessary to implement this subchapter. SECTION 2. Effective date: January 1, 2000. Makes application of this Act prospective. SECTION 3. Emergency clause.