HF 2290 (LSB 5268YH (7) 88)

HOUSE FILE 2290

BY  PRICHARD, KONFRST, WESSEL-KROESCHELL, B. MEYER, OLDSON, STECKMAN, M. SMITH, BROWN-POWERS, WILLIAMS, MATSON, DONAHUE, McCONKEY, STAED, KURTH, McKEAN, JAMES, KACENA, BRECKENRIDGE, JACOBY, OLSON, SUNDE, ISENHART, THEDE, GAINES, HUNTER, COHOON, DERRY, WILBURN, HALL, NIELSEN, BENNETT, JUDGE, EHLERT, WOLFE, FORBES, ANDERSON, MASCHER, WINCKLER, R. SMITH, ABDUL-SAMAD, GASKILL, and LENSING

A BILL FOR

An Act providing small businesses with income, franchise, moneys and credits, and gross premiums tax credits for providing child care benefits to employees of the small business, and including applicability date provisions. 
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  237A.31  Small business child care tax credit.
   1.  As used in this section “small business” means any enterprise which is located in this state, which is operated for profit and under a single management, and which has either fewer than twenty employees or an annual gross income of less than four million dollars computed as the average of the three preceding fiscal years. This definition does not apply to any program or activity for which a definition for small business is provided for the program or activity by federal law or regulation or other state law.
   2.  A small business may receive a child care tax credit for providing child care employee benefits to employees of the business. The credit may be applied against income tax imposed under chapter 422, division II or III, the franchise tax imposed under chapter 422, division V, the gross premiums tax imposed under chapter 432, or the moneys and credits tax imposed in section 533.329. The amount of the credit equals the costs to provide the benefit up to three thousand dollars per employee per year. 
   3.  The aggregate amount of tax credits authorized pursuant to this section shall not exceed a total of two million dollars per fiscal year, and shall be awarded on a first-come, first-served basis.
   4.  To be eligible for a small business child care tax credit, the small business must provide child care employee benefits to employees of the business through any of the following:
   a.  Build a new structure or rehabilitate an existing structure to be used as a child care center at or near the small business where the children of the employees of the business are provided child care. A small business may construct or rehabilitate the structure in conjunction with another business but only the actual cost of the business shall be considered in determining the credit. 
   b.  Operate or lease a child care center at or near the small business where the children of the employees of the business are provided child care. 
   5.  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 five years or until depleted, whichever is earlier. The director of revenue shall adopt rules to implement this section. 
    Sec. 2.  NEW SECTION.  422.12O  Small business child care tax credit.
   1.  The taxes imposed under this division, less the credits allowed under section 422.12, shall be reduced by a small business child care tax credit received pursuant to section 237A.31.
   2.  An individual may claim the tax credit allowed a partnership, S corporation, limited liability company, 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 a partnership, S corporation, limited liability company, estate, or trust.
    Sec. 3.  Section 422.33, Code 2020, is amended by adding the following new subsection:
   NEW SUBSECTION.  31.  The taxes imposed under this division shall be reduced by a small business child care tax credit received pursuant to section 237A.31. 
    Sec. 4.  Section 422.60, Code 2020, is amended by adding the following new subsection:
   NEW SUBSECTION.  14.  The taxes imposed under this division shall be reduced by a small business child care tax credit received pursuant to section 237A.31. 
    Sec. 5.  NEW SECTION.  432.12N  Small business child care tax credit.
   The taxes imposed under this chapter shall be reduced by a small business child care tax credit received pursuant to section 237A.31.
    Sec. 6.  Section 533.329, subsection 2, Code 2020, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  l.  The moneys and credits tax imposed under this section shall be reduced by a small business child care tax credit received pursuant to section 237A.31.
    Sec. 7.  APPLICABILITY.  This Act applies to tax years beginning on or after January 1, 2021.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill provides small businesses with income, franchise, moneys and credits, and gross premiums tax credits for providing child care benefits to employees of the small business.
   The bill defines “small business” to mean any enterprise which is located in this state, which is operated for profit and under a single management, and which has either fewer than 20 employees or an annual gross income of less than $4 million computed as the average of the three preceding fiscal years.
   The child care employee benefits include the following: building or rehabilitating an existing structure at or near the small business as a child care center for employee use, or operating or leasing a child care center for children of employees to attend at or near the small business. 
   The amount of the credit equals the costs to provide the benefit up to $3,000 per employee per year. The aggregate amount of tax credits authorized pursuant to the bill shall not exceed a total of $2 million per fiscal year, and shall be awarded on a first-come, first-served basis. The credit is nonrefundable but any excess may be carried forward for up to five tax years.
   The bill applies to tax years beginning on or after January 1, 2021.