89R1990 CJD-D     By: Miles S.B. No. 2294       A BILL TO BE ENTITLED   AN ACT   relating to a franchise tax credit for entities that establish a   grocery store or healthy corner store in a food desert.          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 ESTABLISHMENT OF FOOD STORE IN FOOD   DESERT          Sec. 171.701.  DEFINITIONS. In this subchapter:                (1)  "Corner store" means a store that has fewer than   2,000 square feet of retail space.                (2)  "Department" means the Texas Department of Housing   and Community Affairs.                (3)  "Food desert" means a geographic area in this   state determined by the department to be an area that:                      (A)  has limited access to healthy food retailers   and is located in a low-income or high-poverty area; or                      (B)  otherwise has serious healthy food access   limitations.                (4)  "Grocery store" means a store that has at least:                      (A)  66 percent of the store's retail space   reserved for the sale of food products;                      (B)  50 percent of the store's food retail space   reserved for the sale of non-prepared foods or foods intended for   home preparation and consumption; and                      (C)  30 percent of the store's food retail space   reserved for the sale of perishable foods, including dairy   products, fresh produce, fresh meats, poultry, and fish, and frozen   foods.                (5)  "Healthy corner store" means a corner store that:                      (A)  offers a wide variety of fresh produce for   sale; and                      (B)  allocates at least 20 percent of the store's   retail space to fresh produce and other perishable foods, including   dairy products.                (6)  "Supplemental nutrition assistance program" means   the nutritional assistance program operated under Chapter 33, Human   Resources Code, and formerly referred to as the food stamp program.                (7)  "WIC program" means the federal special   supplemental nutrition program for women, infants, and children   authorized by 42 U.S.C. Section 1786.          Sec. 171.702.  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. 171.703.  QUALIFICATION. A taxable entity qualifies   for a credit under this subchapter if, on or after January 1, 2026,   the taxable entity opens a grocery store or healthy corner store:                (1)  located in a food desert;                (2)  located in a low or moderate income area, as   determined by the United States Department of Housing and Urban   Development, or that serves a customer base living in a low or   moderate income area;                (3)  that begins accepting benefits under the WIC   program and the supplemental nutrition assistance program not later   than the 90th day after the date the store opens; and                (4)  that is open year-round.          Sec. 171.704.  CERTIFICATION OF ELIGIBILITY. (a) Before   claiming a credit under this subchapter, a taxable entity must   request from the department a certificate of eligibility on which   the department certifies that the taxable entity qualifies for a   credit under Section 171.703.  The taxable entity must include with   the taxable entity's request information required by the department   to determine whether the taxable entity meets the requirements of   Section 171.703.          (b)  The department shall issue a certificate of eligibility   to a taxable entity that qualifies for a credit under Section   171.703.          (c)  The taxable entity must forward the certificate of   eligibility and the following documentation to the comptroller to   claim the credit:                (1)  an audited cost report issued by a certified   public accountant, as defined by Section 901.002, Occupations Code,   that itemizes the taxable entity's expenditures to which Section   171.705 applies;                (2)  the date the grocery store or healthy corner store   first opened for business and evidence of that opening; and                (3)  an attestation of the total amount of the taxable   entity's expenditures to which Section 171.705 applies.          (d)  For purposes of approving a credit under this   subchapter, the comptroller may rely on the audited cost report   provided by the taxable entity applying for the credit.          Sec. 171.705.  AMOUNT OF CREDIT. (a)  A taxable entity may   claim a credit for each store described by Section 171.703 equal to   five percent of the amount the taxable entity spends to establish   the store during the earliest 12-month period:                (1)  in which the taxable entity makes an expenditure   to which this section applies; and                (2)  that includes the date the store opens for   business.          (b)  Subsection (a) applies to amounts spent to:                (1)  purchase or lease the land or building for the   store;                (2)  construct or remodel the store; and                (3)  furnish and equip the store.          (c)  Subsection (a) does not apply to amounts spent to   acquire inventory for the store.          Sec. 171.706.  LIMITATIONS. (a)  The total credit a taxable   entity may claim under this subchapter on a report, including the   amount of any credit carryforward under Section 171.708, may not   exceed 50 percent of the amount of franchise tax due after applying   all other applicable credits.          (b)  A taxable entity may not convey, assign, or transfer a   credit under this subchapter to another entity unless substantially   all of the assets of the taxable entity are conveyed, assigned, or   transferred in the same transaction.          Sec. 171.707.  PERIOD FOR WHICH CREDIT MAY BE CLAIMED.   Subject to Section 171.708, a taxable entity may claim a credit   under this subchapter on a report only for an expenditure made   during the period on which the report is based.          Sec. 171.708.  CARRYFORWARD. (a)  If a taxable entity is   eligible for a credit that exceeds the limitation under Section   171.706(a), the taxable entity may carry the unused credit forward   for not more than five consecutive reports.          (b)  Credits, including credit carryforwards, are considered   to be used in the following order:                (1)  a credit carryforward under this section; and                (2)  a credit for the period on which the report is   based.          Sec. 171.709.  APPLICATION FOR CREDIT. 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.  The comptroller may   prescribe an application form for the credit under this subchapter.          Sec. 171.710.  RULES. (a) The department may adopt rules   governing the requirements to qualify for a credit under Section   171.703, including rules governing the stores that qualify as   grocery stores or healthy corner stores and the areas that qualify   as food deserts.          (b)  The comptroller may adopt any rules necessary to   administer this subchapter other than rules described by Subsection   (a).          SECTION 2.  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, 2026.