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.