CHAPTER 228. PREMIUM TAX CREDIT FOR CERTAIN INVESTMENTS
INSURANCE CODE
TITLE 3. DEPARTMENT FUNDS, FEES, AND TAXES
SUBTITLE B. INSURANCE PREMIUM TAXES
CHAPTER 228. PREMIUM TAX CREDIT FOR CERTAIN INVESTMENTS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 228.001. GENERAL DEFINITIONS. In this chapter:
(1) "Allocation date" means the date on which certified
investors are allocated premium tax credits.
(2) "Certified capital" means cash invested by a certified
investor that fully funds the purchase price of an equity
interest in a certified capital company or a qualified debt
instrument issued by the company.
(3) "Certified capital company" means a partnership,
corporation, or trust or limited liability company, whether
organized on a profit or nonprofit basis, that:
(A) has as the company's primary business activity the
investment of cash in qualified businesses; and
(B) is certified as meeting the criteria of this chapter.
(4) "Certified investor" means an insurer or other person that
has state premium tax liability and that contributes certified
capital pursuant to a premium tax credit allocation under this
chapter.
(5) "Early stage business" means a business described by Section
228.152(a).
(5-a) "Low-income community" has the meaning assigned by Section
45D(e), Internal Revenue Code of 1986.
(6) "Person" means an individual or entity, including a
corporation, general or limited partnership, or trust or limited
liability company.
(7) "Premium tax credit allocation claim" means a claim for
allocation of premium tax credits.
(7-a) "Program One" means the program for allocation and
investment of certified capital under this chapter before January
1, 2007.
(7-b) "Program Two" means the program for allocation and
investment of certified capital under this chapter on or after
January 1, 2007.
(8) "Qualified business" means a business described by Section
228.201.
(9) "Qualified debt instrument" means a debt instrument issued
by a certified capital company, at par value or a premium, that:
(A) has an original maturity date that is a date on or after the
fifth anniversary of the date of issuance;
(B) has a repayment schedule that is not faster than a level
principal amortization over five years; and
(C) does not have interest, distribution, or payment features
that are related to:
(i) the profitability of the company; or
(ii) the performance of the company's investment portfolio.
(10) "Qualified investment" means the investment of cash by a
certified capital company in a qualified business for the
purchase of any debt, debt participation, equity, or hybrid
security of any nature or description, including a debt
instrument or security that has the characteristics of debt but
that provides for conversion into equity or equity participation
instruments such as options or warrants.
(11) "State premium tax liability" means:
(A) any liability incurred by any person under Chapter 221, 222,
223, or 224; or
(B) if the tax liability imposed under Chapter 221, 222, 223, or
224 is eliminated or reduced, any tax liability imposed on an
insurer or other person that had premium tax liability under
Subchapter A, Chapter 4, or Article 9.59 as those laws existed on
January 1, 2003.
(12) "Strategic investment business" means a business described
by Section 228.153(a).
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
87, Sec. 14.001(a), eff. September 1, 2009.
Sec. 228.002. DEFINITION OF AFFILIATE. In this chapter,
"affiliate" of another person means:
(1) a person that is an affiliate for purposes of Section
823.003;
(2) a person that directly or indirectly:
(A) beneficially owns 10 percent or more of the outstanding
voting securities or other voting or management interests of the
other person, whether through rights, options, convertible
interests, or otherwise; or
(B) controls or holds power to vote 10 percent or more of the
outstanding voting securities or other voting or management
interests of the other person;
(3) a person 10 percent or more of the outstanding voting
securities or other voting or management interests of which are
directly or indirectly:
(A) beneficially owned by the other person, whether through
rights, options, convertible interests, or otherwise; or
(B) controlled or held with power to vote by the other person;
(4) a partnership in which the other person is a general
partner;
(5) an officer, director, employee, or agent of the other
person; or
(6) an immediate family member of an officer, director,
employee, or agent described by Subdivision (5).
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
SUBCHAPTER B. ADMINISTRATION AND PROMOTION
Sec. 228.051. ADMINISTRATION BY COMPTROLLER. The comptroller
shall administer this chapter.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Sec. 228.052. RULES; FORMS. The comptroller shall adopt rules
and forms as necessary to implement this chapter, including rules
that:
(1) establish the application procedures for certified capital
companies; and
(2) facilitate the transfer or assignment of premium tax credits
by certified investors.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Sec. 228.053. REPORT TO LEGISLATURE. (a) The comptroller shall
prepare a biennial report concerning the results of the
implementation of this chapter. The report must include:
(1) the number of certified capital companies holding certified
capital;
(2) the amount of certified capital invested in each certified
capital company;
(3) the amount of certified capital the certified capital
company invested in qualified businesses as of January 1, 2006,
and the cumulative total for each subsequent year;
(4) the total amount of tax credits granted under this chapter
for each year that credits have been granted;
(5) the performance of each certified capital company with
respect to renewal and reporting requirements imposed under this
chapter;
(6) with respect to the qualified businesses in which certified
capital companies have invested:
(A) the classification of the qualified businesses according to
the industrial sector and size of the business;
(B) the total number of jobs created by the investment and the
average wages paid for the jobs; and
(C) the total number of jobs retained as a result of the
investment and the average wages paid for the jobs; and
(7) the certified capital companies that have been decertified
or that have failed to renew the certification and the reason for
any decertification.
(b) The comptroller shall file the report with the governor, the
lieutenant governor, and the speaker of the house of
representatives not later than December 15 of each even-numbered
year.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Sec. 228.054. PROMOTION OF PROGRAM. The Texas Economic
Development and Tourism Office shall promote the program
established under this chapter in the Texas Business and
Community Economic Development Clearinghouse.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
SUBCHAPTER C. APPLICATION FOR AND GENERAL OPERATION OF CERTIFIED
CAPITAL COMPANIES
Sec. 228.101. APPLICATION FOR CERTIFICATION. (a) An applicant
for certification must file the application in the form
prescribed by the comptroller. The application must be
accompanied by a nonrefundable application fee of $7,500.
(b) The application must include an audited balance sheet of the
applicant, with an unqualified opinion from an independent
certified public accountant, as of a date not more than 35 days
before the date of the application.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Sec. 228.102. QUALIFICATION. To qualify as a certified capital
company:
(1) the applicant must have, at the time of application for
certification, an equity capitalization of at least $500,000 in
unencumbered cash or cash equivalents;
(2) at least two principals or persons employed to manage the
funds of the applicant must have at least four years of
experience in the venture capital industry; and
(3) the applicant must satisfy any additional requirement
imposed by the comptroller by rule.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Sec. 228.103. MANAGEMENT BY AND CERTAIN OWNERSHIP INTERESTS OF
INSURANCE ENTITIES PROHIBITED. (a) An insurer, group of
insurers, or other persons who may have state premium tax
liability or the insurer's or person's affiliates may not
directly or indirectly:
(1) manage a certified capital company;
(2) beneficially own, whether through rights, options,
convertible interests, or otherwise, more than 10 percent of the
outstanding voting securities of a certified capital company; or
(3) control the direction of investments for a certified capital
company.
(b) Subsection (a) applies without regard to whether the insurer
or other person or the affiliate of the insurer or other person
is authorized by or engages in business in this state.
(c) Subsections (a) and (b) do not preclude an insurer,
certified investor, or any other party from exercising its legal
rights and remedies, including interim management of a certified
capital company, if authorized by law, with respect to a
certified capital company that is in default of the company's
statutory or contractual obligations to the insurer, certified
investor, or other party.
(d) This chapter does not limit an insurer's ownership of
nonvoting equity interests in a certified capital company.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Sec. 228.104. ACTION ON APPLICATION. (a) The comptroller
shall:
(1) review the application, organizational documents, and
business history of each applicant; and
(2) ensure that the applicant satisfies the requirements of this
chapter.
(b) Not later than the 30th day after the date an application is
filed, the comptroller shall:
(1) issue the certification; or
(2) refuse to issue the certification and communicate in detail
to the applicant the grounds for the refusal, including
suggestions for the removal of those grounds.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Sec. 228.105. CONTINUATION OF CERTIFICATION. To continue to be
certified, a certified capital company must make qualified
investments according to the schedule established by Section
228.151.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Sec. 228.106. REPORTS TO COMPTROLLER; AUDITED FINANCIAL
STATEMENT. (a) Each certified capital company shall report to
the comptroller as soon as practicable after the receipt of
certified capital:
(1) the name of each certified investor from whom the certified
capital was received, including the certified investor's
insurance premium tax identification number;
(2) the amount of each certified investor's investment of
certified capital and premium tax credits; and
(3) the date on which the certified capital was received.
(b) Not later than January 31 of each year, each certified
capital company shall report to the comptroller:
(1) the amount of the company's certified capital at the end of
the preceding year;
(2) whether or not the company has invested more than 15 percent
of the company's total certified capital in a single business;
(3) each qualified investment that the company made during the
preceding year and, with respect to each qualified investment,
the number of employees of the qualified business at the time the
qualified investment was made; and
(4) any other information required by the comptroller, including
any information required by the comptroller to comply with
Section 228.053.
(c) Not later than April 1 of each year, each certified capital
company shall provide to the comptroller an annual audited
financial statement that includes the opinion of an independent
certified public accountant. The audit must address the methods
of operation and conduct of the business of the company to
determine whether:
(1) the company is complying with this chapter and the rules
adopted under this chapter;
(2) the funds received by the company have been invested as
required within the time provided by Section 228.151; and
(3) the company has invested the funds in qualified businesses.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Sec. 228.107. RENEWAL FEE; LATE FEE; EXCEPTION. (a) Not later
than January 31 of each year, each certified capital company
shall pay a nonrefundable renewal fee of $5,000 to the
comptroller.
(b) If a certified capital company fails to pay the renewal fee
on or before the date specified by Subsection (a), the company
must pay, in addition to the renewal fee, a late fee of $5,000 to
continue the company's certification.
(c) Notwithstanding Subsection (a), a renewal fee is not
required within six months of the date on which a certified
capital company's initial certification is issued under Section
228.104(b).
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Sec. 228.108. OFFERING MATERIAL USED BY CERTIFIED CAPITAL
COMPANY. Any offering material involving the sale of securities
of the certified capital company must include the following
statement:
By authorizing the formation of a certified capital company, the
State of Texas does not endorse the quality of management or the
potential for earnings of the company and is not liable for
damages or losses to a certified investor in the company. Use of
the word "certified" in an offering does not constitute a
recommendation or endorsement of the investment by the
comptroller of public accounts. If applicable provisions of law
are violated, the State of Texas may require forfeiture of unused
premium tax credits and repayments of used premium tax credits.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
SUBCHAPTER D. INVESTMENT BY CERTIFIED CAPITAL COMPANIES
Sec. 228.151. REQUIRED SCHEDULE OF INVESTMENT. (a) Before the
third anniversary of a certified capital company's allocation
date, the company must make qualified investments in an amount
cumulatively equal to at least 30 percent of the company's
certified capital, subject to Section 228.153(b).
(b) Before the fifth anniversary of a certified capital
company's allocation date, the company must make qualified
investments in an amount cumulatively equal to at least 50
percent of the company's certified capital, subject to Sections
228.152(b) and 228.153(b).
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Sec. 228.152. INVESTMENT IN EARLY STAGE BUSINESS REQUIRED. (a)
In this section, "early stage business" means a qualified
business that:
(1) is involved, at the time of a certified capital company's
first investment, in activities related to the development of
initial product or service offerings, such as prototype
development or establishment of initial production or service
processes;
(2) was initially organized less than two years before the date
of the certified capital company's first investment; or
(3) during the fiscal year immediately preceding the year of the
certified capital company's first investment had, on a
consolidated basis with the business's affiliates, gross revenues
of not more than $2 million as determined in accordance with
generally accepted accounting principles.
(b) A certified capital company must place at least 50 percent
of the amount of qualified investments required by Section
228.151(b) in early stage businesses.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Sec. 228.153. INVESTMENT IN STRATEGIC INVESTMENT BUSINESS
REQUIRED. (a) In this section:
(1) "Strategic investment area" means an area of this state that
qualifies as a strategic investment area under Subchapter O,
Chapter 171, Tax Code, or, after the date that subchapter
expires, an area that qualified as a strategic investment area
under that subchapter immediately before that date.
(2) "Strategic investment business" means a qualified business
that:
(A) has the business's principal business operations located in
one or more strategic investment areas; and
(B) intends to maintain business operations in the strategic
investment areas after receipt of the investment by the certified
capital company.
(b) A certified capital company must place at least 30 percent
of the amount of qualified investments required by Sections
228.151(a) and (b) in a strategic investment business.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Sec. 228.154. CERTIFIED CAPITAL NOT INVESTED IN QUALIFIED
INVESTMENTS. A certified capital company shall invest any
certified capital not invested in qualified investments only in:
(1) cash deposited with a federally insured financial
institution;
(2) certificates of deposit in a federally insured financial
institution;
(3) investment securities that are:
(A) obligations of the United States or agencies or
instrumentalities of the United States; or
(B) obligations that are guaranteed fully as to principal and
interest by the United States;
(4) debt instruments rated at least "A" or the equivalent by a
nationally recognized credit rating organization, or issued by,
or guaranteed with respect to payment by, an entity whose
unsecured indebtedness is rated at least "A" or the equivalent by
a nationally recognized credit rating organization, and which
indebtedness is not subordinated to other unsecured indebtedness
of the issuer or the guarantor;
(5) obligations of this state or a municipality or political
subdivision of this state; or
(6) any other investment approved in advance in writing by the
comptroller.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Sec. 228.155. COMPUTATION OF AMOUNT OF INVESTMENTS. (a) The
aggregate cumulative amount of all qualified investments made by
a certified capital company after the company's allocation date
shall be considered in the computation of the percentage
requirements under this subchapter.
(b) A certified capital company may invest proceeds received
from a qualified investment in another qualified investment, and
that investment counts toward any requirement of this chapter
with respect to investments of certified capital.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Sec. 228.156. LIMIT ON QUALIFIED INVESTMENT. A certified
capital company may not make a qualified investment at a cost to
the company that is greater than 15 percent of the company's
total certified capital at the time of investment.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Sec. 228.157. DISTRIBUTIONS BY CERTIFIED CAPITAL COMPANY. (a)
In this section, "qualified distribution" means any distribution
or payment from certified capital by a certified capital company
in connection with:
(1) the reasonable costs and expenses of forming, syndicating,
managing, and operating the company, provided that the
distribution or payment is not made directly or indirectly to a
certified investor, including:
(A) reasonable and necessary fees paid for professional
services, including legal and accounting services, related to the
company's formation and operation; and
(B) an annual management fee in an amount that does not exceed
2.5 percent of the company's certified capital; and
(2) a projected increase in federal or state taxes, including
penalties and interest related to state and federal income taxes,
of the company's equity owners resulting from the earnings or
other tax liability of the company to the extent that the
increase is related to the ownership, management, or operation of
the company.
(b) A certified capital company may make a qualified
distribution at any time. To make a distribution or payment
other than a qualified distribution, a company must have made
qualified investments in an amount cumulatively equal to 100
percent of the company's certified capital.
(c) If a business in which a qualified investment is made
relocates the business's principal business operations to another
state during the term of the certified capital company's
investment in the business, the cumulative amount of qualified
investments made by the certified capital company for purposes of
satisfying the requirements of Subsection (b) only is reduced by
the amount of the certified capital company's qualified
investments in the business that has relocated.
(d) Subsection (c) does not apply if the business demonstrates
that the business has returned the business's principal business
operations to this state not later than the 90th day after the
date of the relocation.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Sec. 228.158. REPAYMENT OF DEBT. Notwithstanding Section
228.157(b), a certified capital company may make repayments of
principal and interest on the company's indebtedness without any
restriction, including repaying the company's indebtedness on
which certified investors earned premium tax credits.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
SUBCHAPTER E. QUALIFIED BUSINESS
Sec. 228.201. DEFINITION OF QUALIFIED BUSINESS. (a) In this
chapter, "qualified business" means a business that complies with
this section at the time of a certified capital company's first
investment in the business.
(b) A qualified business must:
(1) be headquartered in this state and intend to remain in this
state after receipt of the certified capital company's
investment; and
(2) have the business's principal business operations located in
this state and intend to maintain business operations in this
state after receipt of the certified capital company's
investment.
(c) A qualified business must agree to use the qualified
investment primarily to:
(1) support business operations in this state, other than
advertising, promotion, and sales operations which may be
conducted outside of this state; or
(2) in the case of a start-up company, establish and support
business operations in this state, other than advertising,
promotion, and sales operations which may be conducted outside of
this state.
(d) A qualified business may not have more than 100 employees
and must:
(1) employ at least 80 percent of the business's employees in
this state; or
(2) pay 80 percent of the business's payroll to employees in
this state.
(e) A qualified business must be primarily engaged in:
(1) manufacturing, processing, or assembling products;
(2) conducting research and development; or
(3) providing services.
(f) A qualified business may not be primarily engaged in:
(1) retail sales;
(2) real estate development;
(3) the business of insurance, banking, or lending; or
(4) the provision of professional services provided by
accountants, attorneys, or physicians.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Sec. 228.202. RELOCATION OF PRINCIPAL BUSINESS OPERATIONS. If,
before the 90th day after the date a certified capital company
makes an investment in a qualified business, the qualified
business moves the business's principal business operations from
this state, the investment may not be considered a qualified
investment for purposes of the percentage requirements under this
chapter.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Sec. 228.203. EVALUATION OF BUSINESS BY COMPTROLLER. (a) A
certified capital company may, before making an investment in a
business, request a written opinion from the comptroller as to
whether the business in which the company proposes to invest is a
qualified business, an early stage business, or a strategic
investment or low-income community business.
(b) Not later than the 15th business day after the date of the
receipt of a request under Subsection (a), the comptroller shall:
(1) determine whether the business meets the definition of a
qualified business, an early stage business, or a strategic
investment or low-income community business, as applicable, and
notify the certified capital company of the determination and
provide an explanation of the determination; or
(2) notify the company that an additional 15 days will be needed
to review the request and make the determination.
(c) If the comptroller fails to notify the certified capital
company with respect to the proposed investment within the period
specified by Subsection (b), the business in which the company
proposes to invest is considered to be a qualified business, an
early stage business, or a strategic investment or low-income
community business, as appropriate.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
87, Sec. 14.003(a), eff. September 1, 2009.
Sec. 228.204. CONTINUATION OF CLASSIFICATION AS QUALIFIED
BUSINESS; FOLLOW-ON INVESTMENTS AUTHORIZED. (a) A business that
is classified as a qualified business at the time of the first
investment in the business by a certified capital company:
(1) remains classified as a qualified business; and
(2) may receive follow-on investments from any certified capital
company.
(b) Except as provided by Subsection (c), a follow-on investment
made under Subsection (a) is a qualified investment even though
the business may not meet the definition of a qualified business
at the time of the follow-on investment.
(c) A follow-on investment does not qualify as a qualified
investment if, at the time of the follow-on investment, the
qualified business no longer has the business's principal
business operations in this state.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
SUBCHAPTER F. PREMIUM TAX CREDIT
Sec. 228.251. PREMIUM TAX CREDIT. (a) A certified investor who
makes an investment of certified capital shall earn in the year
of investment a vested credit against state premium tax liability
equal to 100 percent of the certified investor's investment of
certified capital, subject to the limits imposed by this chapter.
(b) With respect to credits earned as a result of investments
made under Program One, beginning with the tax report due March
1, 2009, for the 2008 tax year, a certified investor may take up
to 25 percent of the vested premium tax credit in any taxable
year of the certified investor. The credit may not be applied to
estimated payments due in 2008.
(c) With respect to credits earned as a result of investments
made under Program Two, beginning with the tax report due March
1, 2013, for the 2012 tax year, a certified investor may take up
to 25 percent of the vested premium tax credit in any taxable
year of the certified investor. The credit may not be applied to
estimated payments due in 2012.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
87, Sec. 14.004(a), eff. September 1, 2009.
Sec. 228.252. LIMIT ON PREMIUM TAX CREDIT. (a) The credit to
be applied against state premium tax liability of a certified
investor in any one year may not exceed the state premium tax
liability of the investor for the taxable year.
(b) A certified investor may carry forward any unused credit
against state premium tax liability indefinitely until the
premium tax credits are used.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Sec. 228.253. PREMIUM TAX CREDIT ALLOCATION CLAIM REQUIRED. (a)
A certified investor must prepare and execute a premium tax
credit allocation claim on a form provided by the comptroller.
(b) The certified capital company must have filed the claim with
the comptroller on the date on which the comptroller accepted
premium tax credit allocation claims on behalf of certified
investors with respect to Program One or Program Two, as
applicable, under the comptroller's rules.
(c) The premium tax credit allocation claim form must include an
affidavit of the certified investor under which the certified
investor becomes legally bound and irrevocably committed to make
an investment of certified capital in a certified capital company
in the amount allocated even if the amount allocated is less than
the amount of the claim, subject only to the receipt of an
allocation under Section 228.255.
(d) A certified investor may not claim a premium tax credit
under Section 228.251 for an investment that has not been funded,
without regard to whether the certified investor has committed to
fund the investment.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
87, Sec. 14.005(a), eff. September 1, 2009.
Sec. 228.254. TOTAL LIMIT ON PREMIUM TAX CREDITS. (a) The
total amount of certified capital for which premium tax credits
may be allowed under this chapter for all years in which premium
tax credits are allowed is:
(1) $200 million for Program One; and
(2) $200 million for Program Two.
(b) The total amount of certified capital for which premium tax
credits may be allowed for all certified investors under this
chapter may not exceed the amount that would entitle all
certified investors in certified capital companies to take total
credits of $50 million in a year with respect to Program One and
$50 million in a year with respect to Program Two.
(c) A certified capital company and the company's affiliates may
not file premium tax credit allocation claims with respect to
Program One or Program Two, as applicable, in excess of the
maximum amount of certified capital for which premium tax credits
may be allowed for that program as provided by this section.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
87, Sec. 14.006(a), eff. September 1, 2009.
Sec. 228.255. ALLOCATION OF PREMIUM TAX CREDIT. (a) If the
total premium tax credits claimed by all certified investors with
respect to Program One or Program Two, as applicable, exceeds the
total limits on premium tax credits established for that program
by Section 228.254(a), the comptroller shall allocate the total
amount of premium tax credits allowed under this chapter to
certified investors in certified capital companies on a pro rata
basis in accordance with this section.
(b) The pro rata allocation for each certified investor shall be
the product of:
(1) a fraction, the numerator of which is the amount of the
premium tax credit allocation claim filed on behalf of the
investor with respect to Program One or Program Two, as
applicable, and the denominator of which is the total amount of
all premium tax credit allocation claims filed on behalf of all
certified investors with respect to that program; and
(2) the total amount of certified capital for which premium tax
credits may be allowed with respect to that program under this
chapter.
(c) The maximum amount of certified capital for which premium
tax credit allocation may be allowed on behalf of a single
certified investor and the investor's affiliates with respect to
Program One or Program Two, as applicable, whether by one or more
certified capital companies, may not exceed the greater of:
(1) $10 million; or
(2) 15 percent of the maximum aggregate amount available with
respect to that program under Section 228.254(a).
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
87, Sec. 14.007(a), eff. September 1, 2009.
Sec. 228.256. TREATMENT OF CREDITS AND CAPITAL. In any case
under this code or another insurance law of this state in which
the assets of a certified investor are examined or considered,
the certified capital may be treated as an admitted asset,
subject to the applicable statutory valuation procedures.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Sec. 228.257. TRANSFERABILITY OF CREDIT. (a) A certified
investor may transfer or assign premium tax credits only in
compliance with the rules adopted under Section 228.052.
(b) The transfer or assignment of a premium tax credit does not
affect the schedule for taking the premium tax credit under this
chapter.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Sec. 228.258. IMPACT OF PREMIUM TAX CREDIT ON INSURANCE
RATEMAKING. A certified investor is not required to reduce the
amount of premium tax included by the investor in connection with
ratemaking for an insurance contract written in this state
because of a reduction in the investor's Texas premium tax
derived from premium tax credits granted under this chapter.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Sec. 228.259. RETALIATORY TAX. A certified investor claiming a
credit against state premium tax liability earned through an
investment in a company is not required to pay any additional
retaliatory tax levied under Chapter 281 as a result of claiming
that credit.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
SUBCHAPTER G. ENFORCEMENT
Sec. 228.301. ANNUAL REVIEW BY COMPTROLLER. (a) The
comptroller shall conduct an annual review of each certified
capital company to:
(1) ensure that the company:
(A) continues to satisfy the requirements of this chapter; and
(B) has not made any investment in violation of this chapter;
and
(2) determine the eligibility status of the company's qualified
investments.
(b) Each certified capital company shall pay the cost of the
annual review according to a reasonable fee schedule adopted by
the comptroller.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Sec. 228.302. DECERTIFICATION OF CERTIFIED CAPITAL COMPANY. (a)
A material violation of Section 228.105, 228.106, 228.107,
228.151, 228.152, 228.153, 228.154, 228.155, 228.156, 228.202, or
228.204 is grounds for decertification of a certified capital
company.
(b) If the comptroller determines that a certified capital
company is not in compliance with a law listed in Subsection (a),
the comptroller shall notify the company's officers in writing
that the company may be subject to decertification after the
120th day after the date the notice is mailed unless the company:
(1) corrects the deficiencies; and
(2) returns to compliance with the law.
(c) The comptroller may decertify a certified capital company,
after opportunity for hearing, if the comptroller finds that the
company is not in compliance with a law listed in Subsection (a)
at the end of the period established by Subsection (b).
(d) Decertification under this section is effective on receipt
of notice of decertification by the certified capital company.
(e) The comptroller shall notify any appropriate state agency of
a decertification of a certified capital company.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Sec. 228.303. ADMINISTRATIVE PENALTY. (a) The comptroller may
impose an administrative penalty on a certified capital company
that violates this chapter.
(b) The amount of the penalty may not exceed $25,000. Each day a
violation continues or occurs is a separate violation for the
purpose of imposing the penalty. The amount of the penalty shall
be based on:
(1) the seriousness of the violation, including the nature,
circumstances, extent, and gravity of the violation;
(2) the economic harm caused by the violation;
(3) the history of previous violations;
(4) the amount necessary to deter a future violation;
(5) efforts to correct the violation; and
(6) any other matter that justice may require.
(c) A certified capital company assessed a penalty under this
chapter may request a redetermination as provided by Chapter 111,
Tax Code.
(d) The attorney general may sue to collect the penalty.
(e) A proceeding to impose the penalty is a contested case under
Chapter 2001, Government Code.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
SUBCHAPTER H. RECAPTURE AND FORFEITURE OF PREMIUM TAX CREDITS
Sec. 228.351. RECAPTURE AND FORFEITURE OF PREMIUM TAX CREDIT
FOLLOWING DECERTIFICATION. (a) Decertification of a certified
capital company may, in accordance with this section, cause:
(1) the recapture of premium tax credits previously claimed by
the company's certified investors; and
(2) the forfeiture of future premium tax credits to be claimed
by the investors.
(b) Decertification of a certified capital company on or before
the third anniversary of the company's allocation date causes the
recapture of any premium tax credits previously claimed and the
forfeiture of any future premium tax credits to be claimed by a
certified investor with respect to the company.
(c) For a certified capital company that meets the requirements
for continued certification under Section 228.151(a) and
subsequently fails to meet the requirements for continued
certification under Subsection (b) of that section:
(1) any premium tax credit that has been or will be taken by a
certified investor on or before the third anniversary of the
allocation date is not subject to recapture or forfeiture; and
(2) any premium tax credit that has been or will be taken by a
certified investor after the third anniversary of the company's
allocation date is subject to recapture or forfeiture.
(d) For a certified capital company that has met the
requirements for continued certification under Section 228.151
and is subsequently decertified:
(1) any premium tax credit that has been or will be taken by a
certified investor on or before the fifth anniversary of the
allocation date is not subject to recapture or forfeiture; and
(2) any premium tax credit to be taken after the fifth
anniversary of the allocation date is subject to forfeiture only
if the company is decertified on or before the fifth anniversary
of the company's allocation date.
(e) For a certified capital company that has invested an amount
cumulatively equal to 100 percent of the company's certified
capital in qualified investments, any premium tax credit claimed
or to be claimed by a certified investor is not subject to
recapture or forfeiture under this section.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Sec. 228.352. NOTICE OF RECAPTURE AND FORFEITURE OF PREMIUM TAX
CREDIT. The comptroller shall send written notice to the address
of each certified investor whose premium tax credit is subject to
recapture or forfeiture, using the address shown on the
investor's last premium tax filing.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.
Sec. 228.353. INDEMNITY AGREEMENTS AND INSURANCE AUTHORIZED.
(a) A certified capital company may agree to indemnify, or
purchase insurance for the benefit of, a certified investor for
losses resulting from the recapture or forfeiture of premium tax
credits under Section 228.351.
(b) Any guaranty, indemnity, bond, insurance policy, or other
payment undertaking made under this section may not be provided
by more than one certified investor of the certified capital
company or affiliate of the certified investor.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 1B.001, eff. April 1, 2009.