By: Miles, et al. S.B. No. 518     A BILL TO BE ENTITLED   AN ACT   relating to a franchise tax credit for entities that employ certain   students in certain paid internship or similar programs.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Chapter 171, Tax Code, is amended by adding   Subchapter R to read as follows:   SUBCHAPTER R. TAX CREDIT FOR PAID INTERNSHIPS GIVEN TO CERTAIN HIGH   SCHOOL STUDENTS          Sec. 171.871.  DEFINITIONS. In this subchapter:                (1)  "Commission" means the Texas Workforce   Commission.                (2)  "Eligible internship program" means a paid   internship or similar program that meets the requirements of rules   adopted by the commission under Section 171.875 and requires an   eligible student to work at least the number of hours equivalent to   five hours per week for one semester.                (3)  "Eligible student" means a home-schooled student   or a student enrolled in a public, private, or charter school who   has reached the minimum age required under Chapter 51, Labor Code,   to legally work in the eligible internship program.          Sec. 171.872.  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. 171.873.  QUALIFICATION FOR CREDIT. A taxable entity   qualifies for a credit under this subchapter for each eligible   student who completes an eligible internship program offered by the   taxable entity.          Sec. 171.874.  AMOUNT OF CREDIT; LIMITATIONS. (a)  The   amount of the credit is $1,000 for each eligible student who   completes an eligible internship program offered by the taxable   entity.          (b)  A taxable entity may claim the credit only for an   eligible internship program offered by the taxable entity that is   located or based in this state.          (c)  A taxable entity may not claim the credit in connection   with an eligible student if an owner of the taxable entity is   related to the eligible student within the third degree of   consanguinity as determined under Subchapter B, Chapter 573,   Government Code.          (d)  The total amount of tax credits that may be awarded   under this subchapter may not exceed $5 million in a state fiscal   biennium.          (e)  The comptroller by rule shall prescribe procedures by   which the comptroller may allocate credits under this subchapter.   The procedures must provide that credits are allocated to taxable   entities that apply under Section 171.876 on a first-come,   first-served basis.          Sec. 171.875.  COMMISSION RULES. The commission, after   consulting with the commissioner of education, shall adopt rules   providing the requirements that an internship or similar program   must meet to be considered an eligible internship program under   this subchapter.          Sec. 171.876.  APPLICATION FOR CREDIT. (a)  A taxable   entity must apply for a credit under this subchapter on or with the   tax report for the period for which the credit is claimed.          (b)  The comptroller shall promulgate a form for the   application for the credit. A taxable entity must use the form in   applying for the credit.          Sec. 171.877.  PERIOD FOR WHICH CREDIT MAY BE CLAIMED. A   taxable entity may claim a credit under this subchapter against the   tax owed for a privilege period only in connection with an eligible   student who completes an eligible internship program during the   privilege period.          Sec. 171.878.  BIENNIAL STUDY AND REPORT. (a)  In this   section, "school" refers to the school of public affairs at Texas   Southern University.          (b)  The school shall biennially study and report on the   effectiveness of the tax credit established by this subchapter in   creating jobs.  The report must include, to the extent available,   for each privilege period covered by the report:                (1)  the total number of eligible internship programs   offered in which eligible students participated and the total   amount of credits claimed by taxable entities for those internship   programs;                (2)  the total number of eligible students who   completed an eligible internship program and who were subsequently   hired for a permanent job in this state by the taxable entity that   offered the program;                (3)  for the permanent jobs described by Subdivision   (2):                      (A)  the median wage of those jobs;                      (B)  the North American Industry Classification   System classification of each of those jobs; and                      (C)  the number of those jobs that provide health   benefits coverage;                (4)  the number of taxable entities receiving a credit   that are historically underutilized businesses, as that term is   defined by Section 2161.001, Government Code, and the total amount   of credits claimed by those entities;                (5)  demographic information on students participating   in eligible internship programs under this subchapter, including   the schools in which the students are enrolled, to the extent   allowed under state and federal law; and                (6)  an assessment of the number of eligible internship   programs that would not have been offered in the absence of the   credit and the total number of students who completed those   programs, including:                      (A)  for the 2018 privilege period, a comparison   of the number of students for which a credit is reported under   Subdivision (1) to the number of public high school students of   legal working age who were employed in this state for any period of   time during the 2017 privilege period by the taxable entities that   offered eligible internship programs reported under Subdivision   (1) for the 2018 privilege period; and                      (B)  for the 2018 privilege period and each   subsequent period, an estimate of the number of public high school   students of legal working age who were employed in this state for   any period of time during the privilege period outside of an   eligible internship program.          (c)  To the extent allowed by law, the comptroller, the Texas   Higher Education Coordinating Board, and any other appropriate   state agency shall assist the school in obtaining the information   needed to prepare the report required under Subsection (b).          (d)  Not later than December 1 of each even-numbered year,   the school shall submit the report required under Subsection (b) to   the governor, the lieutenant governor, and the legislature. The   report may be submitted electronically.          Sec. 171.879.  EXPIRATION.  (a)  This subchapter expires   December 31, 2023.          (b)  The expiration of this subchapter does not affect the   carryforward of a credit authorized under this subchapter   established before the date this subchapter expires.          SECTION 2.  A taxable entity may claim the credit under   Subchapter R, Chapter 171, Tax Code, as added by this Act, only in   connection with an eligible student who completes a paid internship   or similar program on or after the effective date of this Act and   only on a franchise tax report originally due under Chapter 171, Tax   Code, on or after that date.          SECTION 3.  The first report required by Section 171.878,   Tax Code, as added by this Act, is due not later than December 1,   2018.          SECTION 4.  This Act takes effect January 1, 2018.