HBA-JRA H.B. 1994 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 1994
By: Najera
Ways & Means
3/9/1999
Introduced



BACKGROUND AND PURPOSE 

Small businesses in the U.S. generate more than half the nation's gross
domestic product, employ more than 50 percent of the private workforce, and
are the principal source of new jobs.  The federal Small Business
Administration's primary business loan program, the "7(a) Loan Guaranty
Program," charges lenders a guarantee fee of 0.25 to 3.875 percent of the
guaranteed portion of a loan which may be passed on to the borrower.  State
assistance in paying this guarantee fee may increase the formation and
expansion of small business and jobs in Texas and bring more federal
dollars into the state through the Small Business Administration's loan
program.  H.B. 1994 authorizes a franchise tax credit equal to the amount
of the guarantee fees paid by the small business owner for obtaining a loan
from the Small Business Administration. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Chapter 171, Tax Code, by adding Subchapter N, as
follows: 

SUBCHAPTER N.  TAX CREDIT FOR SMALL BUSINESS ADMINISTRATION LOAN GUARANTEE
FEE 

Sec. 171.701.  CREDIT.  Entitles a corporation to a franchise tax credit
for a guarantee fee paid by the corporation to obtain a loan guaranteed by
the federal Small Business Administration. 

Sec. 171.702.  APPLICATION FOR CREDIT.  Provides that a corporation must
apply for the tax credit on or with the tax report for the period for which
the credit is claimed. Requires the Comptroller of Public Accounts for the
State of Texas to adopt a form for the application for the credit and
requires a corporation to use this form. 

Sec. 171.703.  PERIOD FOR WHICH CREDIT MAY BE CLAIMED.  Authorizes a
corporation to claim a credit for the costs of a guarantee fee paid during
an accounting period only against the tax owed for the corresponding
reporting period.  Prohibits a corporation from claiming a credit in an
amount that exceeds the amount of tax due for the report. Prohibits a
credit from being carried forward or backward. 

Sec. 171.704.  ASSIGNMENT PROHIBITED.  Prohibits a corporation from
conveying, assigning, or transferring the credit to another entity unless
all of the assets of the corporation are conveyed, assigned, or transferred
in the same transaction. 

SECTION 2.  Makes application of this Act prospective to January 1, 2000.

SECTION 3.Emergency clause.
  Effective date: upon passage.