HOUSE FILE 2183

BY  KRESSIG

A BILL FOR

An Act establishing a long-term unemployed worker tax credit for taxpayers who hire a long-term unemployed individual and including effective date and applicability provisions. 
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  422.11I  Long-term unemployed worker tax credit.
   1.  As used in this section, unless the context otherwise requires:
   a.  “Full-time basis” means an average of forty hours of work per week, including all paid holidays, vacations, sick leave, and other paid leave.
   b.  “Long-term unemployed individual” means a resident of this state who has been totally unemployed for at least eight consecutive months.
   c.  “Totally unemployed” means the same as defined in section 96.19, subsection 38, paragraph “a”.
   2.  The taxes imposed under this division, less the credits allowed under section 422.12, shall be reduced by a long-term unemployed worker tax credit equal to one thousand five hundred dollars for hiring a long-term unemployed individual for employment in this state on or after the effective date of this Act. To be eligible for the credit, the taxpayer must employ the long-term unemployed individual on a full-time basis for twelve consecutive months.
   3.  The credit shall not be allowed for a long-term unemployed individual who was hired to replace an individual whose employment was terminated within the twelve-month period preceding the date the long-term unemployed individual is hired. However, if the individual being replaced left employment voluntarily without good cause attributable to the employer or if the individual was discharged for misconduct in connection with the individual’s employment as determined by the department of workforce development, the credit shall be allowed.
   4.  To receive the long-term unemployed worker tax credit, a taxpayer must submit an application to the department, made in the manner and form prescribed by the department. If the taxpayer meets the criteria for eligibility, the department shall issue to the taxpayer a tax certificate for the long-term unemployed worker tax credit. The certificate shall contain the taxpayer’s name, address, tax identification number, the amount of the credit, the tax year for which the certificate applies, and an expiration date for the certificate. The taxpayer must file the tax credit certificate with the taxpayer’s income tax return for the tax year in which the twelfth month of employment falls in order to claim the tax credit.
   5.  The tax credit certificates shall be issued on an earliest filed basis. The aggregate total amount of tax credit certificates that may be issued by the department shall not exceed five million dollars.
   6.  Any credit in excess of the tax liability is not refundable but the excess for the tax year may be credited to the tax liability for the following three tax years or until depleted, whichever is earlier.
   7.  An individual may claim the tax credit allowed a partnership, limited liability company, S corporation, estate, or trust electing to have the income taxed directly to the individual. The amount claimed by the individual shall be based upon the pro rata share of the individual’s earnings of the partnership, limited liability company, S corporation, estate, or trust.
   8.  This section is repealed thirty days following the date on which five million dollars in total credits under this section, section 422.33, subsection 29, and section 422.60, subsection 14, have been allowed.
    Sec. 2.  Section 422.33, Code Supplement 2011, is amended by adding the following new subsection:
   NEW SUBSECTION.  29.
  a.  The taxes imposed under this division shall be reduced by a long-term unemployed worker tax credit allowed under section 422.11I.
   b.  This subsection is subject to repeal pursuant to section 422.11I, subsection 8.
    Sec. 3.  Section 422.60, Code Supplement 2011, is amended by adding the following new subsection:
   NEW SUBSECTION.  14.
  a.  The taxes imposed under this division shall be reduced by a long-term unemployed worker tax credit allowed under section 422.11I.
   b.  This subsection is subject to repeal pursuant to section 422.11I, subsection 8.
    Sec. 4.  EFFECTIVE UPON ENACTMENT.  This Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 5.  APPLICABILITY.  This Act applies to long-term unemployed individuals hired on or after the effective date of this Act.
EXPLANATION
   This bill provides an individual and corporate income tax credit and franchise tax credit for the hiring and employment of a long-term unemployed individual in this state. “Long-term unemployed individual” is defined as a resident of this state who has been totally unemployed for at least eight consecutive months. 
   The credit is available to a taxpayer who hires and employs a long-term unemployed individual for employment on a full-time basis for 12 consecutive months in this state on or after the effective date of the bill. “Full-time basis” is defined as an average of 40 hours of work per week. The credit is equal to $1,500. The credit is nonrefundable, but may be carried forward for three years.
   The credit is not allowed if the long-term unemployed individual was hired to replace an individual whose employment was terminated within the 12-month period preceding the date the long-term unemployed individual was hired, unless the individual left employment voluntarily without good cause attributable to the employer or was discharged for misconduct as determined by the department of workforce development.
   To receive the tax credit, a taxpayer must submit an application to the department of revenue and receive a tax credit certificate, then attach the certificate to the taxpayer’s tax return.
   The total amount of tax credits that may be issued by the department of revenue for tax years beginning on or after January 1, 2012, shall not exceed $5 million. Tax credit certificates shall be issued on an earliest filed basis.
   An individual may claim the tax credit allowed a partnership, limited liability company, S corporation, estate, or trust electing to have the income taxed directly to the individual. The amount claimed by the individual shall be based upon the pro rata share of the individual’s earnings of the partnership, limited liability company, S corporation, estate, or trust.
   The credit is repealed 30 days following the date on which $5 million in total credits have been allowed.
   The bill takes effect upon enactment and applies to long-term unemployed individuals hired on or after that date.