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.