House File 608 HOUSE FILE BY TYMESON, JENKINS, KURTENBACH, and BOAL Passed House, Date Passed Senate, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act providing a corporate income tax, franchise tax, or 2 insurance premiums tax credit for continuation of salary or 3 wages, or health benefits coverage for employees that are 4 members of the national guard or military service reserve and 5 are ordered to active duty, and including effective and 6 retroactive applicability date provisions. 7 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 8 TLSB 2724HH 80 9 mg/pj/5 PAG LIN 1 1 Section 1. Section 422.33, Code 2003, is amended by adding 1 2 the following new subsection: 1 3 NEW SUBSECTION. 14. a. The taxes imposed under this 1 4 division shall be reduced by an active duty continuation of 1 5 benefits tax credit. A business is entitled to the credit if 1 6 it has an employee who is a member of the national guard or 1 7 military service reserve who is ordered to active duty, other 1 8 than for annual training exercises, for whom the business does 1 9 either of the following: 1 10 (1) Continues to include on its payroll at a salary or 1 11 wages equal to at least the difference between the average 1 12 monthly salary or wages paid by the business to the employee 1 13 during the six months immediately preceding the employee's 1 14 commencement of active duty and the monthly active duty pay. 1 15 (2) Continues to pay for health benefits coverage for the 1 16 employee which coverage was the same as provided during the 1 17 six months immediately preceding the employee's commencement 1 18 of active duty. 1 19 b. The amount of the credit for a business entitled to the 1 20 credit equals one thousand dollars for each employee for whom 1 21 the business meets the requirements of paragraph "a", 1 22 subparagraph (1) or (2), during the tax year. However, if the 1 23 business qualifies for the credit for the same employee in 1 24 more than one tax year, the business shall select the year for 1 25 which the credit will be claimed. 1 26 c. Any credit in excess of the tax liability for the tax 1 27 year may be credited to the tax liability for the following 1 28 ten tax years or until depleted, whichever is the earlier. 1 29 Sec. 2. Section 422.60, Code 2003, is amended by adding 1 30 the following new subsection: 1 31 NEW SUBSECTION. 7. a. The taxes imposed under this 1 32 division shall be reduced by an active duty continuation of 1 33 benefits tax credit. A business is entitled to the credit if 1 34 it has an employee who is a member of the national guard or 1 35 military service reserve who is ordered to active duty, other 2 1 than for annual training exercises, for whom the business does 2 2 either of the following: 2 3 (1) Continues to include on its payroll at a salary or 2 4 wages equal to at least the difference between the average 2 5 monthly salary or wages paid by the business to the employee 2 6 during the six months immediately preceding the employee's 2 7 commencement of active duty and the monthly active duty pay. 2 8 (2) Continues to pay for health benefits coverage for the 2 9 employee which coverage was the same as provided during the 2 10 six months immediately preceding the employee's commencement 2 11 of active duty. 2 12 b. The amount of the credit for a business entitled to the 2 13 credit equals one thousand dollars for each employee for whom 2 14 the business meets the requirements of paragraph "a", 2 15 subparagraph (1) or (2), during the tax year. However, if the 2 16 business qualifies for the credit for the same employee in 2 17 more than one tax year, the business shall select the year for 2 18 which the credit will be claimed. 2 19 c. Any credit in excess of the tax liability for the tax 2 20 year may be credited to the tax liability for the following 2 21 ten tax years or until depleted, whichever is the earlier. 2 22 Sec. 3. NEW SECTION. 432.12D ACTIVE DUTY CONTINUATION OF 2 23 BENEFITS TAX CREDIT. 2 24 1. The taxes imposed under this chapter shall be reduced 2 25 by an active duty continuation of benefits tax credit. A 2 26 business is entitled to the credit if it has an employee who 2 27 is a member of the national guard or military service reserve 2 28 who is ordered to active duty, other than for annual training 2 29 exercises, for whom the business does either of the following: 2 30 a. Continues to include on its payroll at a salary or 2 31 wages equal to at least the difference between the average 2 32 monthly salary or wages paid by the business to the employee 2 33 during the six months immediately preceding the employee's 2 34 commencement of active duty and the monthly active duty pay. 2 35 b. Continues to pay for health benefits coverage for the 3 1 employee which coverage was the same as provided during the 3 2 six months immediately preceding the employee's commencement 3 3 of active duty. 3 4 2. The amount of the credit for a business entitled to the 3 5 credit equals one thousand dollars for each employee for whom 3 6 the business meets the requirements of subsection 1, paragraph 3 7 "a" or "b", during the tax year. However, if the business 3 8 qualifies for the credit for the same employee in more than 3 9 one tax year, the business shall select the year for which the 3 10 credit will be claimed. 3 11 c. Any credit in excess of the tax liability for the tax 3 12 year may be credited to the tax liability for the following 3 13 ten tax years or until depleted, whichever is the earlier. 3 14 Sec. 4. EFFECTIVE AND APPLICABILITY DATE. This Act, being 3 15 deemed of immediate importance, takes effect upon enactment 3 16 and applies retroactively to January 1, 2003, for tax years 3 17 beginning on or after that date. 3 18 EXPLANATION 3 19 This bill provides corporate income tax, franchise tax, and 3 20 insurance premiums tax credits for a business that has an 3 21 employee who is a member of the national guard or military 3 22 service reserve who is called to active duty and that either 3 23 continues the employee on the business's payroll or continues 3 24 providing health benefit coverage. The amount of the credit 3 25 equals $1,000 per such employee. The credit is nonrefundable 3 26 but may be carried forward 10 tax years or until depleted. 3 27 The bill takes effect upon enactment and applies 3 28 retroactively to January 1, 2003, for tax years beginning on 3 29 or after that date. 3 30 LSB 2724HH 80 3 31 mg/pj/5