RESULTADO DEL DIAGNOSTICO DE MADUREZ DE LOS

34TAC§3.340

TheComptrollerofPublicAccountsproposesnew§3.340,con- cerningqualifiedresearch. ThissectionimplementsHouseBill 800,83rdLegislature,2013,whichamendedTaxCode,Chapter 151,toaddnew§151.3182(CertainPropertyUsedinResearch andDevelopmentActivities;ReportingofEstimatesandEvalu- ation),relatingtoasalesandusetaxexemptionandafranchise taxcreditrelatedtocertainresearchanddevelopmentactivities. HouseBill800tookeffectJanuary1,2014.

Subsection(a) addresses definitions. Paragraph(1) provides the definition of the term "combined group" as provided by §3.590 of this title (relatingto Margin: Combined Reporting). Paragraph (2) defines the term "directly used in qualified re- search" to specify that items used for activities other than qualified research are not directlyused in qualified research. Paragraph (3) defines the term "franchise tax research and developmentactivitiescredit,"whichreferstothecreditagainst franchise tax for certain research and development activities thatwasalsoenactedbyHouseBill800. Thedefinitionofthe term "Internal Revenue Code," provided in paragraph (4), is takenfromnewTaxCode,§151.3182(a). Thedefinitionofthe term"qualifiedresearch" inparagraph (5)isderivedfrom and includesreferencetoInternalRevenueCode,§41. Paragraph (6)providesadefinitionfortheterm"registrant."Paragraph(7) definestheterm"registrationnumber."Theterm"taxableentity" isdefinedinparagraph(8)byreferencetoTaxCode,§171.0002 (DefinitionofTaxableEntity).

Subsection(b)(1)explainsthescopeofthesalesandusetaxex- emptionfordepreciabletangiblepersonalpropertyusedinqual- ifiedresearch and developmentactivities. Paragraph(2) pro- videsthatapersonmaynotclaimtheexemptionifthatperson willclaimaresearchanddevelopmentactivitiescreditagainstits franchisetaxliabilityforthesameperiod. Paragraph(3)spec- ifiesthataclaimforacarryforwardofanunusedfranchisetax researchanddevelopmentactivitiescreditdoesnotaffectaper- son'sability toclaim thesalestax exemptionfortangibleper- sonalpropertydirectlyusedinqualifiedresearch.

Subsection(c)explainstheprocessforclaimingtheexemption describedinsubsection(b). Toclaim anexemptionunderthis section,apersonmustregisterwiththecomptrollerforaTexas QualifiedResearchRegistrationNumber.Thecomptrollerises- tablishingtheregistrationprocessasameansofcollectingthe dataandinformationnecessarytoperformtheevaluationofthe exemptionforpropertyusedinqualifiedresearchthatisrequired byTaxCode,§151.3182(c).Paragraph(1)explainstheregistra- tionprocess. Paragraph(2)addressesretroactiveregistration, andexplainsthatthecomptrollermayagreetomakearegistra- tionnumbervalidretroactively,eithertoJanuary1,2014,orto adaterequestedbyaregistrantthatisnomorethanfouryears priortothedatetheregistrationisreceived,whicheverislater. Paragraph(3)explainsthataregistrantmustsubmitanannual informationreportforeachyear thatits registrationnumberis effective. This requirement forannual reporting isauthorized byTax Code,§151.3182(d). Paragraph(4)addresses there-

sponsibilities ofdirect paymentpermitholders seeking anex- emptionunderthissection. Thissubsectionalsoaddressesin paragraphs(5),(6),and(7),respectively,whenthecomptroller willrevokeaRegistrationNumber,theeffectofthatrevocation, and themeans by whicha registrant may havea registration numberreinstated.Finally,paragraph(8)ofthissubsectionex- plainsthataregistrantwhohasreceivedaregistrationnumber andsubsequentlychoosestoclaim thefranchisetaxresearch anddevelopmentactivitiescreditforthesameperiodmustfirst canceltheregistrationnumberandremitallapplicablesalesand usetaxdueonpropertypurchasedtax-freeunderthissection, aswellaspenaltyandinterestonsuchtaxfromthedateofpur- chase.

Subsection (d) addresses exemption certificates. Beginning January 1, 2014, a retailer may accept Form 01-931, Texas QualifiedResearchSalesand UseTax ExemptionCertificate, in lieuof sales and usetax on the sale of tangible personal propertyexemptedunderthissection, providedtheexemption certificatebearstheregistrationnumberissuedtotheregistrant andthesignatureoftheregistrantortheregistrant'sauthorized agent.Thissubsectionalsoexplainstherequirementsof§3.287 of thistitle (relatingto ExemptionCertificates)apply to Texas QualifiedResearchSalesandUseTaxExemptionCertificates. Subsection (e) addresses the divergent use of property pur- chasedunderavalidTexasQualifiedResearchSalesandUse TaxExemptionCertificate. Taxisdueonitemspurchasedwith anexemptioncertificatethataresubsequentlyusedinataxable manner.Registrantsmakingadivergenttaxableuseofresearch anddevelopmentitemsmustremittaxundertheprovisionsof TaxCode,§151.155(ExemptionCertificate).

Subsection(f)addressesrefunds,andexplainsthataregistrant witha validregistrationnumbermay file a claim forrefundin accordancewiththerequirementsof§3.325ofthistitle(relating toRefundsandPaymentsUnderProtest).

Subsection(g)identifiestheexpirationdatefortheexemptionas providedbyTaxCode,§151.3182(f).

TomCurrah,ChiefRevenueEstimator,hasdeterminedthatfor thefirstfive-yearperiodtherulewillbeineffect,therewillbeno significantrevenueimpactonthestateorunitsoflocalgovern- ment.

Mr.Currahalsohasdeterminedthatforeachyearofthefirstfive yearstheruleisineffect,thepublicbenefitanticipatedasaresult ofenforcingtherulewillbebyprovidingdetailedinformationto businessessubjecttothesalesandusetaxexemptionprovided byTaxCode,§151.3182.ThisruleisproposedunderTaxCode, Title2,anddoesnotrequireastatementoffiscalimplicationsfor smallbusinesses. Thereisnosignificantanticipatedeconomic costtoindividualswhoarerequiredtocomplywiththeproposed rule.

Comments on the proposal may be submitted to Teresa G. Bostick,Director, TaxPolicyDivision,P.O.Box13528, Austin, Texas78711-3528. Commentsmustbereceivednolaterthan 30daysfromthedateofpublicationoftheproposalintheTexas Register.

ThisnewsectionisproposedunderTaxCode,§111.002,which providesthecomptrollerwiththeauthoritytoprescribe,adopt, andenforcerulesrelatingtotheadministrationandenforcement oftheprovisionsofTaxCode,Title2.

ThesectionimplementsTaxCode,§151.3182(CertainProperty UsedinResearchandDevelopmentActivities).

§3.340. QualifiedResearch.

(a) Definitions. Thefollowingwordsandterms,whenused inthissection,shallhavethefollowingmeanings,unlessthecontext clearlyindicatesotherwise.

(1) Combinedgroup--Taxableentitiesthat arepartofan affiliatedgroupengagedinaunitarybusinessandthatarerequiredto fileacombinedgroupreportunderTaxCode,§171.1014.

(A) Acombinedgroupmaynotincludeataxableentity thatconductsbusinessoutsidetheUnitedStatesif80%ormoreofthe taxableentity'spropertyandpayrollareassignedtolocationsoutside theUnitedStates.Ifeitherthepropertyfactororpayrollfactoriszero, thedenominatorisone.Forexample,ifCorporationZhasnoproperty, butdoeshavepayrolllocatedentirelyoutsidetheUnitedStates,Cor- porationZwillnotbeincludedinthecombinedgroup.Thecombined groupmaynotincludeataxableentitythatconductsbusinessoutside theUnitedStatesandhasnopropertyorpayrollif80%ormoreof thetaxableentity'sgrossreceiptsareassignedtolocationsoutsidethe UnitedStates. SeeTaxCode,§171.1014.

(B) Acombinedgroupmaynotincludeanexempten- tity.

(C) Acombined group must include eligible entities evenifthoseentitiesdonothavenexusasdescribedin§3.586ofthis title(relatingtoMargin: Nexus).

(D) Eligible pass-through entities including partner- ships,limitedliabilitycompaniestaxedaspartnershipsunderfederal law,limitedliabilitycompaniesthataredisregardedunderfederallaw andScorporationsareincludedinacombinedgroup.

(E) Passive entitiesarenotincluded inthe combined group;however,theproratashareofnetincomefromapassiveentity shallbeincludedintotalrevenuetotheextentitwasnotgeneratedby themarginofanothertaxableentity.

(2) Directlyusedinqualifiedresearch--Havinganimmedi- ateuseinqualifiedresearchactivity,withoutaninterveningorancillary use.

(3) Franchise tax research and development activities credit--Acreditagainstfranchisetaxforqualifiedresearchactivities that is allowedunder TaxCode, Chapter171, SubchapterM (Tax CreditforCertainResearchandDevelopmentActivities).

(4) InternalRevenueCode--TheInternalRevenueCodeof 1986ineffectonDecember31,2011,excludinganychangesmadeby federallawafterthatdate,butincludinganyregulationsadoptedunder thecodeapplicabletothetaxyeartowhichtheprovisionsofthecode ineffectonthatdateapplied.

(5) Qualifiedresearch--Thistermhasthemeaninggivenin InternalRevenueCode,§41.

(A) Qualifiedresearchmeansresearchundertakenfor discoveringinformationthatistechnologicalinnature,anditsapplica- tionmustbeintendedforuseindevelopinganeworimprovedbusi- nesscomponentofthepersonundertakingtheresearch. Substantially alloftheactivitiesoftheresearchmustbeelementsofaprocessof experimentationrelatingtoaneworimprovedfunction,performance, reliability,orquality.

(B) Qualifiedresearchdoesnotincludethefollowing activities:

(i) researchrelatedtostyle,taste,cosmeticorsea- sonaldesignfactors;

(ii) researchconductedafterthebeginningofcom- mercialproductionofthebusinesscomponent;

(iii) researchadaptinganexistingproductorprocess toaparticularcustomer'sneed;

(iv) duplicationofanexistingproductorprocess; (v) surveysorstudies;

(vi) research relating to certain internal-use com- putersoftware;

(vii) researchconductedoutsidetheUnitedStates, PuertoRico,oraU.S.possession;

(viii) researchinthesocialsciences,arts,orhuman- ities;or

(ix) researchfunded byanother personorgovern- mentalentity.

(6) Registrant--ApersonwhoholdsaTexasQualifiedRe- searchRegistrationNumberissuedbythecomptroller.

(7) Registration number--The Texas Qualified Research RegistrationNumberissuedbythecomptrollertoapersonwhosub- mitstheTexasRegistrationforQualifiedResearchandDevelopment SalesTaxExemptionform.

(8) Taxableentity--ThistermhasthemeaninggivenbyTax Code,§171.0002(DefinitionofTaxableEntity).

(b) Depreciabletangiblepersonalpropertyusedin qualified research.

(1) Subjectto paragraph(2)ofthis subsection, thesale, storage,oruseoftangiblepersonalpropertyisexemptfromTexassales andusetaxiftheproperty:

(A) hasausefullifethatexceedsoneyear; (B) issubjecttodepreciationunder:

(i) generallyacceptedaccountingprinciples;or (ii) InternalRevenueCode,§167or§168of1986, ineffectonDecember31,2011;and

(C) issold,leased,rentedto,orusedorstoredbyaper- sonengagedinqualifiedresearch;and

(D) isdirectlyusedinqualifiedresearch. Depreciable

tangible personal property is directly used in qualified research if it is usedintheactualperformanceofactivitiesthatarepartofthequal- ifiedresearch. Forexample,machinery,equipment,computers,soft- ware,tools,laboratoryfurnituresuchasdesks,laboratorytables,stools, benches,and storagecabinets, and othertangiblepersonalproperty usedbypersonnelintheprocessofexperimentationaredirectlyused inqualifiedresearch. Tangiblepersonalpropertyisnotdirectlyused inqualifiedresearchifitisusedinancillaryorsupportactivitiessuch asadministration,maintenance,marketing,distribution,ortransporta- tionactivities,orifitisusedinactivitiesexcludedfromqualifiedre- search. Forexample,machineryandequipmentusedbyadministra- tive,accounting,orclericalpersonnelarenotdirectlyusedinqualified research.

(2) Apersonmaynotclaimtheexemptionifthatperson will,asataxableentityorasamemberofacombinedgroup,claima franchisetaxresearchanddevelopmentactivitiescreditonafranchise taxreportbasedontheaccountingperiodduringwhichthedeprecia- bletangiblepersonalpropertyusedinqualifiedresearchwouldfirstbe subjecttoTexassalesorusetax.

(3) Aclaimforacarryforwardofanunusedfranchisetax researchanddevelopmentactivitiescreditunderTaxCode,§171.659 doesnotaffectaperson'sability,asataxableentityorasamemberof acombinedgroup,toclaimthesalesandusetaxexemptionprovided byparagraph(1)ofthissubsection.

(c) Texas Qualified Research and Development Exemption Registration. In order to claimanexemptionunder this section, a personmustfirstregisterwiththecomptrollerandobtainaregistration number.

(1) Registration procedure. To obtain a registration number, aperson mustcomplete FormAP-234, TexasRegistration forQualified Research and Development Sales Tax Exemption, its electronicequivalent,oranyformpromulgatedbythecomptrollerthat succeedssuchform.

(A) Thepersonrequestingtheregistrationnumbermust certifythatitwillnot,asataxableentityorasamemberofacombined group,claimafranchisetaxresearchanddevelopmentactivitiescredit onafranchisetaxreportbasedonanaccountingperiodduringwhich itclaimsanexemptionundersubsection(b)ofthissection.

(B) Thepersonrequestingtheregistrationnumbermust providealldataandinformationrequiredbythecomptrollertoadmin- istertheexemptionandcomplywithTaxCode,§151.3182(c).

(2) Retroactiveregistration. Apersonmayrequestthata registrationnumberbegivenretroactiveeffect.

(A) Apersonmayrequest thataregistration number haveretroactiveeffectbysubmittingaregistrationasrequiredunder paragraph(1)ofthissubsectionandbycompletinganannualinforma- tionreport,describedinparagraph(3)ofthissubsection,foreachprior yearforwhichtheregistrationnumberistobeeffective.

(B) Theregistrationnumbermaybemaderetroactive tothelaterofJanuary1,2014,oradaterequestedbyaregistrantthat isnomorethanfouryearspriortothedatetheregistrationisreceived, ifthedaterequestedisnotwithinanaccountingperiodduringwhich theregistrant,asataxableentityorasamemberofacombinedgroup, claimedthefranchisetaxresearchanddevelopmentactivitiescredit.

(C) Aregistrantwhoisissuedaretroactiveregistration numbermayfileaclaimforrefundofTexassalesandusetaxpaidon purchasesmadeonorafterthelaterofJanuary1,2014,ortheeffec- tivedateoftheregistrationnumber,thatqualifyforexemptionunder subsection(b)ofthissection,inaccordancewiththerequirementsof §3.325ofthistitle(relatingtoRefundsandPaymentsUnderProtest).

(D) A claim for a carryforward of an unused fran- chisetaxresearchanddevelopmentactivitiescreditunderTaxCode, §171.659doesnotaffectaperson'sability,asataxableentityorasa memberofacombinedgroup,torequestaretroactiveregistration.

(3) Annualinformationreport.Aregistrantmustsubmitan annualinformationreportforeachcalendaryearitsregistrationnumber iseffective,irrespectiveofthedateonwhichtheoriginalregistration occurred.

(A) Theregistrantmustprovidealldataandinforma- tionrequiredbythecomptrollertoadministertheexemptionandcom- plywithTaxCode,§151.3182(c).

(B) Theannualinformationreportmustbesubmitted electronicallyunlessthecomptrollerissuesawaiver.Aregistrantwho cannotcomplywiththisrequirementduetohardship,impracticality,or othervalidreasonmustsubmitawrittenrequesttothecomptrollerfor awaiveroftherequirement.

(C) Theduedatefortheannualinformationreportfor theprecedingcalendaryearisMarch31.IfMarch31fallsonaSatur- day,Sunday,oralegalholiday,theduedateisthenextbusinessday.

(i) Anannualinformationreportfiledelectronically mustbecompletedandsubmittedby11:59p.m. centraltimeonthe duedatetobeconsideredtimely.

(ii) Reportssubmittedonpapermustbepostmarked onorbeforetheduedatetobeconsideredtimely.

(D) Aregistrantwhofailstotimelyfileanannualinfor- mationreportforitsregistrationnumberwillbegivenwrittennotice ofthefailuretofile. Ifanannualinformationreportisnotsubmitted within60daysofthedateofthenoticeoffailuretofile,theregistra- tionnumberwillbecancelledbythecomptrollerinaccordancewith paragraph(5)ofthissubsection.

(4) Directpaymentpermitholders. Adirectpaymentper- mitholdermustobtainaregistrationnumberasrequiredbyparagraph (1)ofthissubsectioninordertoclaimanexemptionunderthissection. Adirectpaymentpermitholderwitharegistrationnumbermustfile anannualinformationreportforeachyearthenumberiseffectiveas requiredbyparagraph(3)ofthissubsection.

(5) Cancellationofregistrationnumberby thecomptrol- ler.Thecomptrollerwillcanceltheregistrationnumberofaregistrant whofailstocomplywiththeprovisionsofthissection. Forexample, thecomptrollerwillcanceltheregistrationnumberofaregistrantwho failstofileanannualinformationreportorwhoclaimsthefranchise taxresearchanddevelopmentactivitiescreditwithoutfirstcancelling itsregistrationnumber,asrequiredbyparagraph(8)ofthissubsection. Thecomptrollershallgivewrittennoticeofthecancellationtothereg- istrant. Thenoticemaybepersonallyservedontheregistrantorsent byregularmailtotheregistrant'saddressasshowninthecomptroller's records.Theformerregistrantmaynotclaimanexemptionunderthis sectionduringtheperiodwhentheregistrationnumberiscancelled.A formerregistrantthatpurchasesanitemunderacancelledregistration numbermaybesubjecttoacriminalpenaltyunderTaxCode,§151.707 and§3.287(d)(3)ofthistitle(relatingtoExemptionCertificates).

(6) Effectivedateofcancellation. Aregistrantwhosereg- istrationnumberiscancelledbythecomptrollerisresponsibleforre- mittingTexassalesandusetax,andpenaltyandinterestfromthedate ofpurchase,onany itemspurchasedtax-freepursuanttoTaxCode, §151.3182onoraftertheeffectivedateofcancellation.Inthecaseof aregistrantwhoseregistrationnumberiscancelledbecausetheregis- trant,asataxableentityorasamemberofacombinedgroup,claimed thefranchisetaxresearchanddevelopmentactivitiescredit,theeffec- tivedateofcancellationisthebeginningdateoftheaccountingperiod coveredbythefranchisetaxreportonwhichthecreditwasclaimed.

(7) Reinstatementfollowingcancellation. Aformerregis- trantwhohashaditsregistrationnumbercancelledbythecomptroller maysubmitarequestinwritingtohavetheregistrationnumberrein- stated.

(A) Aformerregistrantwhoseregistrationnumberhas been cancelledmay request reinstatement of the number be given retroactiveeffect.Theregistrantmustfileanannualinformationreport foreachprioryearforwhichtheregistrationnumberistobeeffective. (B) Aregistrationnumberwillnotbereinstatedforpe- riodsduringwhichtheformerregistrantisnoteligiblefortheexemp- tionunderthissection.

(C) Beforethecomptrollerwillreinstatearegistration number,theformerregistrantmustremitanyTexassalesandusetaxes, aswellasapplicablepenaltiesandinterestfromthedateofpurchase,

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onallpurchasesmadetax-freeunderthissectionduringperiodswhen theregistrantwasnoteligiblefortheexemptionunderthissection.