Text: HF02442 Text: HF02444 Text: HF02400 - HF02499 Text: HF Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 Section 1. Section 422.7, Code Supplement 2001, is amended 1 2 by adding the following new subsection: 1 3 NEW SUBSECTION. 38. a. If the adjusted gross income 1 4 includes income from a small business operated by the 1 5 taxpayer, an additional deduction shall be allowed in 1 6 computing the income from the small business equal to ten 1 7 thousand dollars or the amount of the income, whichever is 1 8 less. 1 9 b. An individual may claim the additional deduction for a 1 10 small business which is a partnership, limited liability 1 11 company, S corporation, estate, or trust electing to have the 1 12 income taxed directly to the individual. The amount of the 1 13 additional deduction for the individual shall be based upon 1 14 the pro rata share of the individual's earnings of the 1 15 partnership, limited liability company, S corporation, estate, 1 16 or trust. 1 17 c. For purposes of this subsection, "small business" means 1 18 any enterprise which is located in this state, which is 1 19 operated for profit under a single management, and which has 1 20 either fewer than twenty full-time equivalent employees or an 1 21 annual income of less than three million dollars computed as 1 22 the average of the three preceding tax years. 1 23 Sec. 2. NEW SECTION. 422.11F FIRST EMPLOYEE TAX CREDIT. 1 24 1. The taxes imposed under this division, less the credits 1 25 allowed under sections 422.12 and 422.12B, shall be reduced by 1 26 a first employee tax credit. A small business that hires 1 27 during the tax year its first full-time employee is entitled 1 28 to the credit based upon the wages paid to the full-time 1 29 employee. However, if the full-time employee is hired to 1 30 replace part-time employees, the credit shall be based upon 1 31 the wages paid the full-time employee minus the wages paid the 1 32 employees that were replaced. The amount of the tax credit 1 33 equals eight percent of the wages upon which the tax credit is 1 34 based. 1 35 2. An individual may claim the tax credit allowed a 2 1 partnership, limited liability company, S corporation, estate, 2 2 or trust electing to have the income taxed directly to the 2 3 individual. The amount claimed by the individual shall be 2 4 based upon the pro rata share of the individual's earnings of 2 5 a partnership, limited liability company, S corporation, 2 6 estate, or trust. 2 7 3. Any credit in excess of the taxpayer's tax liability 2 8 shall be refunded. In lieu of claiming a refund, the taxpayer 2 9 may elect to have the overpayment shown on the taxpayer's 2 10 final, completed return credited to the tax liability for the 2 11 following tax year. 2 12 4. For purposes of this subsection, "small business" means 2 13 any enterprise which is located in this state, which is 2 14 operated for profit under a single management, and which has 2 15 an annual income of less than three million dollars computed 2 16 as the average of the three preceding tax years. 2 17 Sec. 3. Section 422.33, Code Supplement 2001, is amended 2 18 by adding the following new subsection: 2 19 NEW SUBSECTION. 12. a. The taxes imposed under this 2 20 division shall be reduced by a first employee tax credit. A 2 21 small business that hires during the tax year its first full- 2 22 time employee is entitled to the credit based upon the wages 2 23 paid to the full-time employee. However, if the full-time 2 24 employee is hired to replace part-time employees, the credit 2 25 shall be based upon the wages paid the full-time employee 2 26 minus the wages paid to the employees that were replaced. The 2 27 amount of the tax credit equals eight percent of the wages 2 28 upon which the tax credit is based. 2 29 b. Any credit in excess of the taxpayer's tax liability 2 30 shall be refunded. In lieu of claiming a refund, the taxpayer 2 31 may elect to have the overpayment shown on the taxpayer's 2 32 final, completed return credited to the tax liability for the 2 33 following tax year. 2 34 c. For purposes of this subsection, "small business" means 2 35 any enterprise which is located in this state, which is 3 1 operated for profit under a single management, and which has 3 2 an annual income of less than three million dollars computed 3 3 as the average of the three preceding tax years. 3 4 Sec. 4. Section 422.35, Code Supplement 2001, is amended 3 5 by adding the following new subsection: 3 6 NEW SUBSECTION. 19. a. If the taxable income includes 3 7 income from a small business operated by the taxpayer, 3 8 subtract an additional deduction in computing the income from 3 9 the small business equal to ten thousand dollars or the amount 3 10 of the income, whichever is less. 3 11 b. For purposes of this subsection, "small business" means 3 12 either fewer than twenty full-time equivalent employees or any 3 13 enterprise which is located in this state, which is operated 3 14 for profit under a single management, and which has either 3 15 fewer than twenty full-time equivalent employees or an annual 3 16 income of less than three million dollars computed as the 3 17 average of the three preceding tax years. 3 18 Sec. 5. EFFECTIVE AND APPLICABILITY DATE. This Act, being 3 19 deemed of immediate importance, takes effect upon enactment 3 20 and applies retroactively to January 1, 2002, for tax years 3 21 beginning on or after that date. 3 22 EXPLANATION 3 23 This bill provides that for individual and corporate income 3 24 tax purposes if the taxpayer has income from a small business, 3 25 the income is recomputed by deducting from it up to $10,000. 3 26 A "small business" is one that is operated for profit by the 3 27 taxpayer under single management with either 20 or fewer full- 3 28 time equivalent employees or an annual income of less than $3 3 29 million computed as the average of the three preceding tax 3 30 years. 3 31 The bill also provides for an individual and corporate 3 32 income tax credit equal to 8 percent of the wages paid in the 3 33 tax year to the first full-time employee hired by a small 3 34 business in the tax year. If the full-time employee is hired 3 35 to replace part-time employees, the credit is equal to 8 4 1 percent of the wages of the full-time employee minus the wages 4 2 of the part-time employees. The credit is refundable. "Small 4 3 business" is a business operated for profit by the taxpayer 4 4 under single management with annual income of less than $3 4 5 million computed as the average of the three preceding tax 4 6 years. 4 7 The bill takes effect upon enactment and applies 4 8 retroactively to January 1, 2002, for tax years beginning on 4 9 or after that date. 4 10 LSB 5848HH 79 4 11 mg/pj/5
Text: HF02442 Text: HF02444 Text: HF02400 - HF02499 Text: HF Index Bills and Amendments: General Index Bill History: General Index
© 2002 Cornell College and League of Women Voters of Iowa
Comments about this site or page?
webmaster@legis.iowa.gov.
Please remember that the person listed above does not vote on bills. Direct all comments concerning legislation to State Legislators.
Last update: Wed Feb 27 03:35:30 CST 2002
URL: /DOCS/GA/79GA/Legislation/HF/02400/HF02443/020219.html
jhf