Ordaz Bill Gives Broadband Firms A $5,000 Tax Credit Per Apprentice

The text as introduced · 1,317 words

89R10421 RDS-F

By: Ordaz
H.B. No. 3605

A BILL TO BE ENTITLED

AN ACT

relating to a franchise tax credit for taxable entities that employ

certain apprentices in broadband utility engineering or

construction jobs.

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 EMPLOYMENT OF APPRENTICES FOR

BROADBAND UTILITY CONSTRUCTION

Sec. 171.721. GENERAL DEFINITIONS. In this subchapter:

(1) "Broadband utility engineering or construction

job" means a job described in category 237130 of the 2022 North

American Industry Classification System.

(2) "Commission" means the Texas Workforce

Commission.

Sec. 171.722. DEFINITION: QUALIFYING APPRENTICE. (a) For

purposes of this subchapter, "qualifying apprentice" means an

apprentice employed by a taxable entity:

(1) in a broadband utility engineering or construction

job; and

(2) as part of an apprenticeship program that is:

(A) certified as an industry-recognized

apprenticeship program by an entity determined to meet United

States Department of Labor criteria; or

(B) registered with the United States Department

of Labor and qualified to receive funding provided through the

commission under Chapter 133, Education Code.

(b) An individual who otherwise meets the definition of

qualifying apprentice under Subsection (a) may not be considered a

qualifying apprentice of a taxable entity for purposes of this

subchapter:

(1) beyond the earlier of:

(A) the fourth anniversary of the date the

individual was employed by the entity as a qualifying apprentice;

or

(B) the conclusion of the initial term of the

apprenticeship program in which the individual is participating; or

(2) if the individual was employed by the entity in

another capacity immediately before being employed by the entity as

a qualifying apprentice.

Sec. 171.723. 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. 171.724. QUALIFICATION. A taxable entity qualifies

for a credit under this subchapter if, during the period for which

the credit is claimed, the entity employs at least one qualifying

apprentice for at least three months and, in accordance with

criteria adopted by the commission by rule, provides the apprentice

with training and skills development in pole climbing, rigging,

fiber and coax splicing, or other tasks required of an aerial

lineman.

Sec. 171.725. CERTIFICATE OF ELIGIBILITY. (a) Before

claiming a credit under this subchapter, a taxable entity must

request a certificate of eligibility from the commission stating

that the entity qualifies for a credit under this subchapter by

satisfying the requirements of Section 171.724. The entity must

request the certificate of eligibility in the manner prescribed by

the commission.

(b) On receipt of a request under Subsection (a), the

commission shall:

(1) determine whether the taxable entity is eligible

for a credit under this subchapter; and

(2) if the commission determines that the taxable

entity is eligible for a credit, issue the requested certificate of

eligibility.

Sec. 171.726. AMOUNT OF CREDIT; LIMITATION. (a) Subject to

Subsections (b) and (c), the amount of the credit a taxable entity

may claim on a report is an amount equal to $5,000 multiplied by the

number of qualifying apprentices employed by the entity during the

period covered by the report.

(b) The total credit claimed on a report may not exceed the

amount of franchise tax due for the report after the application of

any other applicable credits.

(c) The total amount of credits that may be awarded under

Subsection (a) in a state fiscal biennium may not exceed $10

million.

Sec. 171.727. CARRYFORWARD. (a) If a taxable entity is

eligible for a credit that exceeds the limitation under Section

171.726(b), 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 171.726(b).

(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. 171.728. APPLICATION FOR CREDIT. (a) 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.

(b) A taxable entity must apply for the credit in the manner

prescribed by the comptroller and include with the application:

(1) the certificate of eligibility issued under

Section 171.725; and

(2) any information requested by the comptroller to

determine the amount of the credit.

(c) The comptroller shall award a credit to a taxable entity

that submits an application that complies with the provisions of

this section if the entity is eligible for the credit and the credit

is available under Section 171.726(c).

Sec. 171.729. SALE OR ASSIGNMENT OF CREDIT. (a) A taxable

entity that employs a qualifying apprentice may sell or assign all

or part of the credit that may be claimed in relation to that

qualifying apprentice 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.

Sec. 171.730. RULES. The comptroller may adopt rules

necessary to implement and administer this subchapter.

Sec. 171.731. REPORT. (a) Not later than November 1 of

each even-numbered year, the commission shall prepare and deliver

to the governor, the lieutenant governor, the speaker of the house

of representatives, and the presiding officer of each legislative

standing committee with primary jurisdiction over taxation a report

that evaluates the effect of the tax credits issued under this

subchapter on the employment outcomes and earnings of qualifying

apprentices with respect to whom credits are issued under this

subchapter. The report must include a recommendation regarding

whether the tax credit should be expanded or terminated.

(b) A taxable entity that requests a certificate of

eligibility under Section 171.725 shall provide, on request of the

commission, information the commission determines is necessary to

prepare the report under this section.

SECTION 2. Subchapter N-1, Chapter 171, Tax Code, as added

by this Act, applies only to a report originally due on or after

January 1, 2026.

SECTION 3. An entity may apply for a franchise tax credit

under Subchapter N-1, Chapter 171, Tax Code, as added by this Act,

only in connection with an apprentice first employed on or after the

effective date of this Act.

SECTION 4. This Act takes effect January 1, 2026.