| (a) Effective date. This section is effective for reports originally
due on or after January 1, 1996, and applies only for wages paid or incurred
on or after January 1, 1996.
(b) Definitions. The following terms, when used in this section,
shall have the following meanings, unless the context clearly indicates otherwise.
(1) Due date--The due date of the franchise tax report, including
extensions, if any.
(2) Eligible child--A person who:
(A) is committed to the Texas Youth Commission (TYC) under
the Family Code, Title 3, other than a commitment under a determinate sentence
under the Family Code, §54.04(d)(3), §54.04(m), or §54.05(f);
and
(B) resides at a facility of the TYC.
(c) Amount of credit--eligible child.
(1) A corporation may claim a credit on its report for 10%
of the wages the corporation paid to an eligible child, or to the TYC for
the benefit of the child, during the period upon which the report is based.
(2) By the due date, the eligible child must have been continuously
employed by the corporation for at least six months. However, the eligible
child need not be employed on the due date.
(3) For purposes of claiming the credit, there is no maximum
limit on the length of time the eligible child may be employed.
(4) A certification from TYC must accompany the report and
must be filed on or before the due date of the report. The certification must
include:
(A) the name of the corporation paying the wages;
(B) the name of each eligible child to which or for which the
corporation paid wages;
(C) the amount of wages paid by the corporation to each eligible
child or to TYC for the benefit of the eligible child during the period upon
which the report is based; and
(D) the date each wage was paid.
(d) Amount of credit--former eligible child.
(1) On or before the due date of the report, a corporation
may claim a credit on its report for 10% of the wages the corporation paid
to a former eligible child (employee) during the period upon which the report
is based.
(2) By the due date, the employee must have been continuously
employed by the corporation for at least six months while the employee was
an eligible child and for at least one year after the employee was released
from commitment to TYC or released under supervision by TYC. However, the
person need not be employed on the due date.
(3) The credit may only be claimed for one year's wages for
each employee. The credit does not have to be claimed for the first year's
wages after release.
(4) The corporation must be able to prove, upon audit, that
the employment is substantially similar to, requires more skill than, or provides
greater opportunity than the employee had with the corporation while the employee
was an eligible child. This can be done by showing that the hours worked per
week and the hourly rate are equal to or greater than the hours worked per
week and hourly rate while the employee was an eligible child.
(e) Limitations--eligible child and former eligible child.
(1) For reports that are originally due before January 1, 2002,
the credit may not exceed 50% of the amount of tax due for the report after
all other credits and deductions, including, but not limited to, the business
loss carryover, are taken. For reports that are originally due on or after
January 1, 2002, the credit may not exceed 50% of the amount of franchise
tax due for the report before any other tax credits are applied.
(2) The credit must be claimed on the report form.
(3) Only one credit for each wage paid may be taken.
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