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.