Does the Boys and Girls Clubs of America qualify as a qualified after-school care program operator for the Texas franchise-tax after-school care credit?

Plain-English summary

An employer (or its representative) wanted to claim the Texas franchise-tax after-school care credit and asked the Comptroller to confirm that a local Boys and Girls Club counts as a qualified after-school care program operator.

• The rule's test. Franchise Tax Rule 3.579 (Child Care Credits) says an organization is a qualified program operator if it is a charter member of a national organization that establishes school-age child-care guidelines as a prerequisite for national affiliation or membership.
• Boys and Girls Clubs meet it. Because joining the Boys and Girls Clubs of America requires meeting numerous requirements, the Comptroller confirmed that the Boys and Girls Clubs of America is the type of organization considered a qualified program operator for the franchise-tax after-school care credit.
• Fact-based. The confirmation rests on the facts presented and could change if the facts change.

Currency note: This 2001 letter applies the pre-2008 franchise tax and its Rule 3.579 after-school care credit (replaced by the margin tax effective January 1, 2008 under House Bills 3 and 3928). Pre-2008 franchise-tax credits generally did not carry into the margin tax; confirm whether any comparable credit exists today.

What this means for you

Employers who paid for employees' after-school care

Under the old franchise tax, contributing to or providing after-school care through a qualified program operator could support a credit - and a Boys and Girls Club qualified because the national organization sets the required school-age child-care guidelines as a membership prerequisite. If you relied on a different provider, the same charter-member / national-guidelines test in Rule 3.579 determined whether it qualified.

Tax professionals

The letter is a straightforward application of Rule 3.579's qualified program operator definition to a national youth organization. Note the credit lived in the pre-2008 franchise tax; because most of those credits were not carried into the margin tax, treat this as historical guidance and verify current availability before advising a client to claim anything comparable.

Common questions

Q: Does a Boys and Girls Club qualify as an after-school care program operator for the credit?
A: Yes. The Comptroller confirmed the Boys and Girls Clubs of America is the type of organization considered a qualified program operator under Franchise Tax Rule 3.579.

Q: What makes an organization a "qualified program operator"?
A: Being a charter member of a national organization that establishes school-age child-care guidelines as a prerequisite for national affiliation or membership.

Q: Can I still claim this franchise-tax credit today?
A: Probably not as described. The pre-2008 franchise tax was replaced by the margin tax effective January 1, 2008, and most old credits did not carry over. Confirm current law.

Citations and references

Rule:

• 34 Tex. Admin. Code Sec. 3.579 (Franchise Tax Rule 3.579, Child Care Credits) - an organization that is a charter member of a national organization setting school-age child-care guidelines as a membership prerequisite is a qualified after-school care program operator

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=FIT
• Opinion: https://star.comptroller.texas.gov/view/200105230L

Original ruling text

May 17, 2001

Dear **:

Thank you for your recent letters. For purposes of the franchise tax credit
for after-school care, you have asked that we verify that the Boys and Girls
Club of COUNTY is a qualified after-school care program operator.

Franchise Tax Rule 3.579, Child Care Credits, describes types of organizations
that are considered qualified program operators for purposes of the
after-school care credit. The rule provides that an organization that is a
charter member of a national organization that establishes school-age
child-care guidelines as a prerequisite for national affiliation or membership
is a qualified program operator.

It is our understanding that there are numerous requirements that an
organization must meet in order to become a member organization in the Boys and
Girls Clubs of America. Information available to us about the Boys and Girls
Clubs of America indicates that they are a type of organization that is
considered a qualified program operator for purposes of the franchise tax
after-school care credit.

This response is based on the facts presented. If the facts change or if there
are additional relevant facts, the response may change.

If you have additional franchise tax questions, please write me or call me at
1-800-531-5441. My extension is 3-3958.

Sincerely,

Teresa Comer
Tax Policy Division