Senate File 454 - Introduced SENATE FILE BY McKINLEY Passed Senate, Date Passed House, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act providing for a new jobs tax credit and including an 2 effective and applicability date provision. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 2452XS 83 5 tw/sc:mg/24 PAG LIN 1 1 Section 1. NEW SECTION. 422.11X NEW JOBS TAX CREDIT. 1 2 1. a. The taxes imposed under this division, less the 1 3 credits allowed under section 422.12, shall be reduced by a 1 4 new jobs tax credit in an amount equal to fifty percent of the 1 5 amount of wages paid in a tax year for each new job created. 1 6 b. The amount of the credit that may be claimed by a 1 7 taxpayer is computed on the greater of the following: 1 8 (1) The first fifty jobs created by the employer. 1 9 (2) A five percent expansion of the employer's current 1 10 workforce. 1 11 2. To be eligible for the tax credit, an employer shall 1 12 not be an applicant for or a recipient of financial assistance 1 13 from the department of economic development or a recipient of 1 14 moneys under the federal American Recovery and Reinvestment 1 15 Act of 2009, Pub. L. No. 111=5. 1 16 3. A job must meet the following conditions to qualify for 1 17 the new jobs tax credit: 1 18 a. The job is a permanent full=time equivalent position 1 19 that did not exist in the business within the previous six 1 20 months in the state. 1 21 b. The job is filled by a new employee for at least twelve 1 22 months. 1 23 c. The job shall be filled by a resident of the state. 1 24 d. The job was not created as a result of a change in 1 25 ownership or as a result of a consolidation, merger, or 1 26 restructuring of a business entity if the job does not 1 27 represent a new job in the state. 1 28 e. The job shall not have been previously filled by the 1 29 same employee in the state. 1 30 f. The job was not relocated from another location in the 1 31 state. 1 32 g. The job pays at least one hundred percent of the lower 1 33 of the average county or average regional wage, excluding 1 34 benefits, as calculated by the department of revenue based on 1 35 data from the wage and employment information from the 2 1 quarterly covered wage and employment data report issued by 2 2 the department of workforce development. 2 3 h. The job is created on or after the effective date of 2 4 this Act but before June 30, 2011. 2 5 4. a. A new jobs tax credit may only be claimed once for 2 6 each qualifying new job. 2 7 b. A taxpayer is entitled to claim the tax credit upon the 2 8 end of the twelfth month of the job having been filled. 2 9 However, if the job is eliminated within twelve months from 2 10 the date the taxpayer is entitled to claim the tax credit, the 2 11 taxpayer is subject to repayment of the amount of the tax 2 12 credit received. 2 13 5. An individual may claim a tax credit under this section 2 14 of a partnership, limited liability company, S corporation, 2 15 estate, or trust electing to have income taxed directly to the 2 16 individual. The amount claimed by the individual shall be 2 17 based upon the pro rata share of the individual's earnings 2 18 from the partnership, limited liability company, S 2 19 corporation, estate, or trust. 2 20 6. a. Any tax credit in excess of the taxpayer's 2 21 liability for the tax year is not refundable, but the taxpayer 2 22 may elect to have the excess credited to the tax liability for 2 23 the following five years or until depleted, whichever is 2 24 earlier. 2 25 b. A tax credit shall not be carried back to a tax year 2 26 prior to the tax year in which the taxpayer first receives the 2 27 tax credit. 2 28 7. A taxpayer eligible for the tax credit shall include 2 29 with the taxpayer's return information relating to each new 2 30 job created during the tax year and shall include information 2 31 establishing the total amount of wages paid for those jobs 2 32 during the tax year pursuant to rules of the department. 2 33 8. The tax credit authorized in this section is in lieu of 2 34 the new jobs tax credits authorized in sections 422.11A and 2 35 422.33, subsection 6. 3 1 9. This section is repealed June 30, 2017. This repeal 3 2 does not affect the ability to carry forward tax credits 3 3 pursuant to subsection 6. 3 4 Sec. 2. Section 422.33, Code 2009, is amended by adding 3 5 the following new subsection: 3 6 NEW SUBSECTION. 27. The taxes imposed under this division 3 7 shall be reduced by a new jobs tax credit in the same manner, 3 8 for the same amount, and under the same conditions as provided 3 9 in section 422.11X. 3 10 Sec. 3. Section 422.60, Code 2009, is amended by adding 3 11 the following new subsection: 3 12 NEW SUBSECTION. 15. The taxes imposed under this division 3 13 shall be reduced by a new jobs tax credit in the same manner, 3 14 for the same amount, and under the same conditions as provided 3 15 in section 422.11X. 3 16 Sec. 4. NEW SECTION. 432.12M NEW JOBS TAX CREDIT. 3 17 The taxes imposed under this chapter shall be reduced by a 3 18 new jobs tax credit in the same manner, for the same amount, 3 19 and under the same conditions as provided in section 422.11X. 3 20 Sec. 5. Section 533.329, subsection 2, Code 2009, is 3 21 amended by adding the following new paragraph: 3 22 NEW PARAGRAPH. n. The moneys and credits tax imposed 3 23 under this section shall be reduced by a new jobs tax credit 3 24 in the same manner, for the same amount, and under the same 3 25 conditions as provided in section 422.11X. 3 26 Sec. 6. EFFECTIVE AND APPLICABILITY DATE. This Act, being 3 27 deemed of immediate importance, takes effect upon enactment 3 28 and applies to new jobs created on or after that date. 3 29 EXPLANATION 3 30 This bill provides a tax credit to employers in an amount 3 31 equal to 50 percent of the wages paid for new jobs created in 3 32 the next two years. The amount of the tax credit is computed 3 33 on 50 new jobs or a 5 percent expansion of the workforce, 3 34 whichever is greater. 3 35 To be eligible for the tax credit, an employer must not be 4 1 an applicant for or a recipient of financial assistance from 4 2 the department of economic development or a recipient of 4 3 moneys from the federal American Recovery and Reinvestment Act 4 4 of 2009. 4 5 A qualifying new job: 4 6 1. Must be a full=time equivalent position that did not 4 7 exist in the business within the previous six months in the 4 8 state. 4 9 2. Must be filled by a new employee for at least 12 months 4 10 before the credit can be claimed. 4 11 3. Must be filled by a resident of the state. 4 12 4. Must not be created as a result of a change in 4 13 ownership or as a result of a consolidation, merger, or 4 14 restructuring of a business entity if the job does not 4 15 represent a new job in the state. 4 16 5. Must not have been previously filled by the same 4 17 employee in the state. 4 18 6. Must not have been relocated from another location in 4 19 the state. 4 20 7. Must pay at least 100 percent of the lower of the 4 21 average county or average regional wage, excluding benefits. 4 22 8. Must have been created on or after the effective date 4 23 of the bill but before June 30, 2011. 4 24 The tax credit is available against the individual and 4 25 corporate income taxes, the franchise tax, the insurance 4 26 companies tax, and the moneys and credits tax. 4 27 A tax credit may only be claimed once for each qualifying 4 28 new job. A taxpayer is entitled to claim the credit upon the 4 29 end of the twelfth month of the job having been filled. 4 30 However, if the job is eliminated within 12 months from the 4 31 date the taxpayer is entitled to claim the credit, the 4 32 taxpayer is subject to repayment of the amount of the tax 4 33 credit received. 4 34 Any tax credit in excess of the taxpayer's liability for 4 35 the tax year is not refundable, but the taxpayer may elect to 5 1 have the excess credited to the tax liability for the 5 2 following five years or until depleted, whichever is earlier. 5 3 A tax credit shall not be carried back to a tax year prior to 5 4 the tax year in which the taxpayer first receives the tax 5 5 credit. 5 6 The tax credit is in lieu of the existing new jobs tax 5 7 credit allowed against the individual and corporate income 5 8 taxes. 5 9 The bill takes effect upon enactment and applies to new 5 10 jobs created on or after that date. 5 11 LSB 2452XS 83 5 12 tw/sc:mg/24.1