Senate File 179 - Introduced
SENATE FILE
BY McKIBBEN, ANGELO, PUTNEY,
LUNDBY, BEHN, GASKILL, SEYMOUR,
NOBLE, ZAUN, McKINLEY, MULDER,
JOHNSON, WARD, HARTSUCH, ZIEMAN,
BOETTGER, KETTERING, WIECK,
HOUSER, and HAHN
Passed Senate, Date Passed House, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act providing a small business health care tax credit, and
2 providing for a retroactive applicability date.
3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
4 TLSB 2008XS 82
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PAG LIN
1 1 Section 1. NEW SECTION. 422.11T SMALL BUSINESS HEALTH
1 2 CARE TAX CREDIT.
1 3 1. a. The taxes imposed under this division, less the
1 4 amounts of nonrefundable credits allowed under this division,
1 5 shall be reduced by a small business health care tax credit,
1 6 to the extent available, for the cost to a small business of
1 7 providing health care benefits or contributions to employees
1 8 of the business. The amount of the credit for each employee
1 9 equals the first one thousand dollars of the cost of providing
1 10 health care benefits to the employee or the first one thousand
1 11 dollars of the contribution made on behalf of the employee to
1 12 a health savings account of that employee.
1 13 b. The total amount of all credits for all employees under
1 14 paragraph "a" shall not exceed twenty=five thousand dollars.
1 15 c. For purposes of this section:
1 16 (1) "Health savings account" means a health savings
1 17 account as defined in section 223(d) of the Internal Revenue
1 18 Code.
1 19 (2) "Small business" means a for=profit enterprise that
1 20 employed during the tax year less than fifty full=time
1 21 equivalent employees.
1 22 d. Any credit in excess of the tax liability shall be
1 23 refunded. In lieu of claiming a refund, a taxpayer may elect
1 24 to have the overpayment shown on the taxpayer's final,
1 25 completed return credited to the tax liability for the
1 26 following taxable year.
1 27 2. An individual may claim a small business health care
1 28 tax credit allowed a partnership, limited liability company, S
1 29 corporation, estate, or trust electing to have the income
1 30 taxed directly to the individual. The amount claimed by the
1 31 individual shall be based upon the pro rata share of the
1 32 individual's earnings of the partnership, limited liability
1 33 company, S corporation, estate, or trust.
1 34 3. A taxpayer claiming a credit under this section shall
1 35 not be precluded, in computing taxable income, from deducting
2 1 the amount of costs for providing health care benefits allowed
2 2 under any section of the Internal Revenue Code.
2 3 4. To receive the small business health care tax credit, a
2 4 small business must submit an application to the department.
2 5 If the taxpayer meets the criteria for eligibility, the
2 6 department shall issue to the taxpayer a certification of
2 7 entitlement for the small business health care tax credit.
2 8 However, the combined amount of tax credits that may be
2 9 approved for a fiscal year under this section, section 422.33,
2 10 subsection 24, section 422.60, subsection 13, section 432.12J,
2 11 and section 533.24, subsection 11, shall not exceed the amount
2 12 specified in subsection 5. Tax credit certificates shall be
2 13 issued on an earliest filed application basis. The
2 14 certification must contain the taxpayer's name, address, tax
2 15 identification number, the amount of the credit, and tax year
2 16 for which the certificate applies. The taxpayer shall file
2 17 the tax credit certificate with the taxpayer's tax return in
2 18 order to claim the tax credit. The department shall adopt
2 19 rules to administer this section and shall provide by rule for
2 20 the method to be used to determine for which fiscal year the
2 21 tax credits are approved.
2 22 5. For purposes of subsection 4, the combined amount of
2 23 small business health care tax credits that may be approved in
2 24 a fiscal year is as follows:
2 25 a. For the fiscal year beginning July 1, 2007, the
2 26 combined amount equals fifty million dollars.
2 27 b. For the fiscal year beginning July 1, 2008, the
2 28 combined amount equals one hundred million dollars.
2 29 c. For the fiscal year beginning July 1, 2009, the
2 30 combined amount equals one hundred fifty million dollars.
2 31 d. For the fiscal year beginning July 1, 2010, the
2 32 combined amount equals two hundred million dollars.
2 33 e. For each fiscal year beginning on or after July 1,
2 34 2011, the combined amount equals two hundred fifty million
2 35 dollars.
3 1 Sec. 2. Section 422.33, Code 2007, is amended by adding
3 2 the following new subsection:
3 3 NEW SUBSECTION. 24. The taxes imposed under this division
3 4 shall be reduced by a small business health care tax credit,
3 5 to the extent available, provided for in section 422.11T. The
3 6 tax credit shall be subject to the same conditions,
3 7 requirements, and dollar limitations as provided for in
3 8 section 422.11T.
3 9 Sec. 3. Section 422.60, Code 2007, is amended by adding
3 10 the following new subsection:
3 11 NEW SUBSECTION. 13. The taxes imposed under this division
3 12 shall be reduced by a small business health care tax credit,
3 13 to the extent available, provided for in section 422.11T. The
3 14 tax credit shall be subject to the same conditions,
3 15 requirements, and dollar limitations as provided for in
3 16 section 422.11T.
3 17 Sec. 4. NEW SECTION. 432.12J SMALL BUSINESS HEALTH CARE
3 18 TAX CREDIT.
3 19 The taxes imposed under this chapter shall be reduced by a
3 20 small business health care tax credit, to the extent
3 21 available, provided for in section 422.11T. The tax credit
3 22 shall be subject to the same conditions, requirements, and
3 23 dollar limitations as provided for in section 422.11T.
3 24 Sec. 5. Section 533.24, Code 2007, is amended by adding
3 25 the following new subsection:
3 26 NEW SUBSECTION. 11. The moneys and credits tax imposed
3 27 under this section shall be reduced by a small business health
3 28 care tax credit, to the extent available, provided for in
3 29 section 422.11T. The tax credit shall be subject to the same
3 30 conditions, requirements, and dollar limitations as provided
3 31 for in section 422.11T.
3 32 Sec. 6. EFFECTIVE AND RETROACTIVE APPLICABILITY DATE.
3 33 This Act applies retroactively to January 1, 2007, for tax
3 34 years beginning on or after that date.
3 35 EXPLANATION
4 1 This bill provides for a small business health care tax
4 2 credit. The credit can be used to reduce the individual and
4 3 corporate income taxes, franchise tax, premiums tax, and
4 4 moneys and credits tax liabilities. A small business is a
4 5 for=profit enterprise with fewer than 50 permanent full=time
4 6 equivalent employees during the tax year. To be eligible for
4 7 the credit, the small business must provide health care
4 8 benefits to its employees or contribute to health savings
4 9 accounts established for them pursuant to federal law. The
4 10 amount of the credit equals the first $1,000 of the cost of
4 11 the benefits or the first $1,000 of the contribution to the
4 12 account. The total credits for the business cannot exceed
4 13 $25,000. Any excess credit is refundable or the excess may be
4 14 carried forward to the next tax year.
4 15 The bill provides for a limit on the combined amount of
4 16 credits that may be approved in a fiscal year. For the first
4 17 fiscal year, FY 2007=2008, $50 million may be approved. The
4 18 amount increases by $50 million for each subsequent fiscal
4 19 year until the maximum of $250 million may be approved for FY
4 20 2011=2012 and each subsequent fiscal year.
4 21 The bill applies retroactively to January 1, 2007, for tax
4 22 years beginning on or after that date.
4 23 LSB 2008XS 82
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