$10M Tax Credit Covers Donations To A Narrow Set Of Nonprofits

The text as introduced · 2,933 words

89R10422 SRA-D

By: Harris
H.B. No. 3232

A BILL TO BE ENTITLED

AN ACT

relating to the strong families credit against certain taxes for

entities that contribute to certain organizations.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Chapter 201, Alcoholic Beverage Code, is amended

by adding Subchapter D to read as follows:

SUBCHAPTER D. STRONG FAMILIES TAX CREDIT

Sec. 201.101. DEFINITIONS. In this subchapter:

(1) "Designated contribution," "eligible

organization," and "strong families credit" have the meanings

assigned by Section 171.801, Tax Code.

(2) "Taxpayer" means a person who pays a tax under this

chapter.

Sec. 201.102. ELIGIBILITY. A taxpayer that makes a

designated contribution that meets the requirements of Subchapter

P, Chapter 171, Tax Code, is entitled to apply for a strong families

credit in the amount and under the conditions provided by this

subchapter against taxes paid under this chapter.

Sec. 201.103. AMOUNT OF CREDIT; LIMITATIONS. (a) Subject

to Subsections (b) and (c), the amount of a taxpayer's credit for a

state fiscal year is equal to the lesser of:

(1) the amount of designated contributions made to

eligible organizations during the state fiscal year; or

(2) the amount of taxes paid by the taxpayer under this

chapter during the state fiscal year.

(b) The maximum amount of strong families credits that may

be awarded is the amount provided by Section 171.805(c), Tax Code.

(c) The maximum amount of designated contributions a

taxpayer may make to all eligible organizations in a state fiscal

year is the amount provided by Section 171.805(b), Tax Code.

(d) The comptroller shall allocate strong families credits

as provided by Section 171.805(d), Tax Code.

Sec. 201.104. APPLICATION. (a) A taxpayer must apply to

claim a strong families credit against a tax imposed under this

chapter.

(b) A taxpayer must apply for the credit in the manner

prescribed by the comptroller and include with the application any

information requested by the comptroller to determine whether the

taxpayer is eligible for the credit under this subchapter.

(c) The comptroller may award a credit to a taxpayer who

applies for the credit under Subsection (a) if the taxpayer is

eligible for the credit and the credit is available under Section

171.805(c), Tax Code.

(d) The comptroller shall notify a taxpayer in writing of

the comptroller's decision to grant or deny the application under

Subsection (a). If the comptroller denies a taxpayer's

application, the comptroller shall include in the notice of denial

the reasons for the comptroller's decision.

Sec. 201.105. RULES. The comptroller may adopt rules and

procedures necessary to implement, administer, and enforce this

subchapter.

Sec. 201.106. EXPIRATION. (a) This subchapter expires

January 1, 2028.

(b) The expiration of this subchapter does not affect

credits for which a taxpayer is eligible after the date this

subchapter expires based on designated contributions made before

that date.

SECTION 2. Subtitle B, Title 3, Insurance Code, is amended

by adding Chapter 230 to read as follows:

CHAPTER 230. STRONG FAMILIES TAX CREDIT

Sec. 230.001. DEFINITIONS. In this chapter:

(1) "Designated contribution," "eligible

organization," and "strong families credit" have the meanings

assigned by Section 171.801, Tax Code.

(2) "State insurance tax liability" means any tax

liability incurred by an entity under Chapters 221 through 226 or

Chapter 281.

Sec. 230.002. ELIGIBILITY. An entity that makes a

designated contribution that meets the requirements of Subchapter

P, Chapter 171, Tax Code, is entitled to apply for a strong families

credit in the amount and under the conditions provided by this

chapter against the entity's state insurance tax liability.

Sec. 230.003. AMOUNT OF CREDIT; LIMITATION ON TOTAL

CREDITS. (a) Subject to Subsections (b) and (c), the amount of an

entity's credit for a report is equal to the lesser of:

(1) the amount of designated contributions made to an

eligible organization during the year covered by the report; or

(2) the amount of the entity's state insurance tax

liability for the year covered by the report after applying all

other applicable credits.

(b) The maximum amount of strong families credits that may

be awarded is the amount provided by Section 171.805(c), Tax Code.

(c) The maximum amount of designated contributions an

entity may make to all eligible organizations in a state fiscal year

is the amount provided by Section 171.805(b), Tax Code.

(d) The comptroller shall allocate strong families credits

as provided by Section 171.805(d), Tax Code.

Sec. 230.004. APPLICATION FOR CREDIT. (a) An entity must

apply to claim a strong families credit under this chapter on or

with the report covering the year in which the designated

contribution was made.

(b) An entity must apply for the credit 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 chapter.

(c) The comptroller may award a credit to an entity that

applies for the credit under Subsection (a) if the entity is

eligible for the credit and the credit is available under Section

171.805(c), Tax Code.

Sec. 230.005. ASSIGNMENT PROHIBITED; EXCEPTION. An entity

may not convey, assign, or transfer a strong families credit to

another entity unless substantially all of the assets of the entity

are conveyed, assigned, or transferred in the same transaction.

Sec. 230.006. RULES. The comptroller may adopt rules and

procedures necessary to implement, administer, and enforce this

chapter.

Sec. 230.007. EXPIRATION. (a) This chapter expires

January 1, 2028.

(b) The expiration of this chapter does not affect credits

for which an entity is eligible after the date this chapter expires

based on designated contributions made before that date.

SECTION 3. Chapter 171, Tax Code, is amended by adding

Subchapter P to read as follows:

SUBCHAPTER P. STRONG FAMILIES TAX CREDIT

Sec. 171.801. DEFINITIONS. In this subchapter:

(1) "At-risk family" has the meaning assigned by

Section 137.002, Human Resources Code.

(2) "Commission" means the Health and Human Services

Commission.

(3) "Designated contribution" means a monetary

contribution to an eligible organization that the contributor

designates at the time of contribution as being made for the purpose

of the strong families credit.

(4) "Eligible organization" means an organization

that is certified by the commission as an eligible organization

under this subchapter.

(5) "Strong families credit" means the tax credit

established under this subchapter that may be claimed under:

(A) Subchapter D, Chapter 201, Alcoholic

Beverage Code;

(B) Chapter 230, Insurance Code;

(C) this subchapter; or

(D) Chapter 203.

Sec. 171.802. ELIGIBILITY FOR CREDIT. A taxable entity

that makes a designated contribution that meets the requirements of

this subchapter is eligible to apply for a strong families credit in

the amount and under the conditions provided by this subchapter

against the tax imposed under this chapter.

Sec. 171.803. QUALIFICATIONS FOR ELIGIBLE ORGANIZATION;

CERTIFICATION OF ELIGIBILITY. (a) An organization may apply to the

commission for certification as an eligible organization under this

subchapter if the organization:

(1) is exempt from federal income taxation under

Section 501(a), Internal Revenue Code of 1986, as an organization

described by Section 501(c)(3) of that code;

(2) is authorized to transact business in this state;

(3) has provided the following in this state for at

least three years preceding the organization's initial application

for certification as an eligible organization:

(A) comprehensive case management services for

at-risk families based on an assessment of family strengths and

needs, including assisting families in achieving self-sufficiency,

stability, and encouraging workforce participation; and

(B) services and resources to assist fathers in

learning and improving parenting skills and being more engaged in

their children's lives through in-school programs and online

resources;

(4) does not directly or indirectly provide abortion

services, or offer information related to abortion services; and

(5) has not received, either directly or indirectly

through a contractor, more than 50 percent of its total annual

revenue from this state or a political subdivision of this state in

the preceding state fiscal year.

(b) Services and resources described by Subsection (a)(3)

must be implemented with a continuous quality improvement process

and evaluated based on outcomes.

(c) An organization must reapply for certification as an

eligible organization each calendar year by submitting to the

commission a signed application form containing:

(1) a description of the qualifying services and

resources provided by the organization;

(2) the total number of individuals served through the

services and resources described by Subdivision (1) during the

previous calendar year and the number of those individuals served

and provided with resources that year using designated

contributions;

(3) outcomes for services and resources described by

Subdivision (1);

(4) the organization's financial information;

(5) the organization's contact information;

(6) a statement, signed under penalty of perjury by an

officer of the organization, that the organization meets all

criteria to qualify as an eligible organization, has fulfilled the

requirements for the previous calendar year, and intends to fulfill

the requirements for the next calendar year; and

(7) any other documentation requested by the

commission to verify eligibility or compliance with this section.

(d) The commission shall:

(1) issue a certificate of eligibility to an eligible

applicant stating that the organization meets the qualifications of

an eligible organization;

(2) revoke an organization's certificate of

eligibility if the organization violates this subchapter or fails

to maintain the eligibility requirements of this subchapter;

(3) publish information about the strong families

credit on the commission's Internet website, including:

(A) the requirements and process for an

organization to be certified as an eligible organization; and

(B) a list of organizations currently certified

as eligible organizations; and

(4) require the return of designated contributions

made to an organization that has had the organization's

certification as an eligible organization revoked or that otherwise

fails to comply with the requirements of this subchapter.

(e) An organization that is required to return

contributions under Subsection (d)(4) is ineligible for

certification as an eligible organization.

(f) An organization whose certification as an eligible

organization lapses or is revoked for a reason other than the reason

described by Subsection (d)(4) may reapply for certification as an

eligible organization.

Sec. 171.804. DUTIES OF ELIGIBLE ORGANIZATION. (a) An

eligible organization shall:

(1) conduct a local, state, and national criminal

background check for all individuals working directly with children

in a program funded by designated contributions that includes the

use of:

(A) a commercial multistate and

multijurisdiction criminal records locator or other similar

commercial nationwide database; and

(B) the national sex offender registry database

maintained by the United States Department of Justice or a

successor agency;

(2) spend all designated contributions, other than the

amount described by Subdivision (3), to provide services or

resources for residents of this state;

(3) spend no more than five percent of the total dollar

amount of designated contributions on administrative expenses; and

(4) annually submit to the comptroller:

(A) the report of an audit of the eligible

organization conducted by an independent certified public

accountant in accordance with generally accepted auditing

principles completed not later than the 180th day after the end of

the eligible organization's fiscal year; and

(B) a copy of the eligible organization's most

recent Form 990 filed with the Internal Revenue Service.

(b) On receipt of a designated contribution, an eligible

organization shall provide the entity making the contribution with

a certificate of contribution that includes:

(1) the entity's name;

(2) the eligible organization's name;

(3) the entity's federal employer identification

number, if applicable;

(4) the amount of the designated contribution; and

(5) the date the designated contribution was made.

Sec. 171.805. AMOUNT OF CREDIT; LIMITATION ON TOTAL

CREDITS. (a) Subject to Subsections (b) and (c), the amount of a

taxable entity's credit for a report is equal to the lesser of:

(1) the amount of designated contributions made to

eligible organizations during the period covered by the report; or

(2) the amount of franchise tax due for the report

after applying all other applicable credits.

(b) A taxable entity may not apply for a credit for a report

in connection with more than $1 million in designated

contributions.

(c) The total amount of strong families credits awarded may

not exceed $10 million.

(d) The comptroller by rule shall prescribe procedures by

which the comptroller will allocate strong families credits. The

procedures must provide that any credits are allocated to entities

that apply on a first-come, first-served basis.

Sec. 171.806. CARRYFORWARD. (a) If a taxable entity is

eligible for a credit that exceeds the limitation under Section

171.805(a), 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 171.805(a).

Sec. 171.807. APPLICATION FOR CREDIT. (a) A taxable entity

must apply to claim a strong families credit under this subchapter

on or with the report covering the period in which the designated

contribution was made.

(b) A taxable entity must apply for the credit 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.

(c) 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 and the credit is available under

Section 171.805(c).

(d) The comptroller shall notify a taxable entity in writing

of the comptroller's decision to grant or deny the application

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.

Sec. 171.808. ASSIGNMENT PROHIBITED; EXCEPTION. A taxable

entity may not convey, assign, or transfer a strong families credit

awarded under this subchapter to another taxable entity unless

substantially all of the assets of the taxable entity are conveyed,

assigned, or transferred in the same transaction.

Sec. 171.809. RULES. The commission and the comptroller

may adopt rules and procedures necessary to implement, administer,

and enforce this subchapter.

Sec. 171.810. EXPIRATION. (a) This subchapter expires

January 1, 2028.

(b) The expiration of this subchapter does not affect the

carryforward of a credit under Section 171.806 or those credits for

which a taxable entity is eligible after the date this subchapter

expires based on designated contributions made before that date.

SECTION 4. Subtitle I, Title 2, Tax Code, is amended by

adding Chapter 203 to read as follows:

CHAPTER 203. STRONG FAMILIES TAX CREDIT

Sec. 203.001. DEFINITIONS. In this chapter, "designated

contribution," "eligible organization," and "strong families

credit" have the meanings assigned by Section 171.801.

Sec. 203.002. ELIGIBILITY. A producer that makes a

designated contribution that meets the requirements of Subchapter

P, Chapter 171, is entitled to apply for a strong families credit in

the amount and under the conditions provided by this chapter

against tax paid under Chapter 201 or 202.

Sec. 203.003. AMOUNT OF CREDIT; LIMITATIONS. (a) Subject

to Subsections (b) and (c), the amount of a producer's credit for a

state fiscal year is equal to the lesser of:

(1) the amount of designated contributions made to

eligible organizations during the state fiscal year; or

(2) the amount of taxes paid by the producer under

Chapter 201 or 202, as applicable, during the state fiscal year.

(b) The maximum amount of strong families credits that may

be awarded is the amount provided by Section 171.805(c).

(c) The maximum amount of designated contributions a

producer may make to all eligible organizations in a state fiscal

year is the amount provided by Section 171.805(b).

(d) The comptroller shall allocate strong families credits

as provided by Section 171.805(d).

Sec. 203.004. APPLICATION. (a) The person responsible for

paying the tax under Chapter 201 or 202 must apply to claim a strong

families credit against that tax.

(b) The person responsible for paying the tax must apply for

the credit in the manner prescribed by the comptroller and include

with the application any information requested by the comptroller

to determine whether the person is eligible for the credit under

this section.

(c) The comptroller may award a credit to a person who

applies for the credit under Subsection (a) if the person is

eligible for the credit and the credit is available under Section

171.805(c).

(d) The comptroller shall notify a person in writing of the

comptroller's decision to grant or deny the application under

Subsection (a). If the comptroller denies a person's application,

the comptroller shall include in the notice of denial the reasons

for the comptroller's decision.

Sec. 203.005. RULES. The comptroller may adopt rules and

procedures necessary to implement, administer, and enforce this

chapter.

Sec. 203.006. EXPIRATION. (a) This chapter expires

January 1, 2028.

(b) The expiration of this chapter does not affect credits

for which a person is eligible after the date this chapter expires

based on designated contributions made before that date.

SECTION 5. (a) An entity may apply for a credit under

Subchapter D, Chapter 201, Alcoholic Beverage Code, as added by

this Act, Chapter 230, Insurance Code, as added by this Act,

Subchapter P, Chapter 171, Tax Code, as added by this Act, or

Chapter 203, Tax Code, as added by this Act, only for a designated

contribution made on or after January 1, 2026.

(b) Subchapter D, Chapter 201, Alcoholic Beverage Code, as

added by this Act, Chapter 230, Insurance Code, as added by this

Act, Subchapter P, Chapter 171, Tax Code, as added by this Act, and

Chapter 203, Tax Code, as added by this Act, apply only to a report

originally due on or after January 1, 2026.

SECTION 6. This Act takes effect January 1, 2026.