Senate File 154 - Introduced
SENATE FILE
BY WIECK
Passed Senate, Date Passed House, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act providing for income tax credits for the cost of
2 purchasing health insurance coverage by certain small
3 employers and providing effective and retroactive
4 applicability dates.
5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN
1 1 Section 1. NEW SECTION. 422.11K SMALL EMPLOYER HEALTH
1 2 INSURANCE COVERAGE TAX CREDIT.
1 3 1. The taxes imposed under this division, less the credits
1 4 allowed under sections 422.12 and 422.12B, shall be reduced by
1 5 a small employer health insurance coverage tax credit. The
1 6 tax credit may be claimed by a small employer, as defined in
1 7 section 513B.2, that purchases health insurance coverage, as
1 8 defined in section 513B.2, for the small employer's employees
1 9 and their dependents for the first time. The amount of the
1 10 tax credit equals one hundred percent of the cost to the small
1 11 employer of purchasing the first year of the health insurance
1 12 coverage. The tax credit shall be taken over five tax years
1 13 as provided in subsection 2.
1 14 2. a. A small employer is entitled to claim twenty
1 15 percent of the amount of the small employer health insurance
1 16 coverage tax credit for the first tax year for which the
1 17 health insurance coverage is purchased and twenty percent of
1 18 the amount of the credit for each consecutive year thereafter
1 19 that the small employer continues to purchase health insurance
1 20 coverage for a total of five tax years. However, any credit
1 21 in excess of the tax liability for the tax year is
1 22 nonrefundable but may be credited to the tax liability for the
1 23 following seven years or until depleted, whichever is the
1 24 earlier.
1 25 b. If a small employer that has claimed the small employer
1 26 health insurance coverage tax credit is merged with another
1 27 business or is divided into separate businesses, any resulting
1 28 business which is at least fifteen percent directly or
1 29 indirectly owned or controlled by the owners or controllers of
1 30 the original small employer, is entitled to claim any amounts
1 31 of the small employer health insurance coverage credit that
1 32 remain so long as the resulting business continues to purchase
1 33 the health insurance coverage during each tax year for which
1 34 the credit is claimed.
1 35 3. An individual may claim a small employer health
2 1 insurance coverage tax credit allowed a partnership, limited
2 2 liability company, S corporation, estate, or trust electing to
2 3 have the income taxed directly to the individual. The amount
2 4 claimed by the individual shall be based on the pro rata share
2 5 of the individual's earnings of the partnership, limited
2 6 liability company, S corporation, estate, or trust.
2 7 Sec. 2. Section 422.33, Code 2005, is amended by adding
2 8 the following new subsection:
2 9 NEW SUBSECTION. 17. a. The taxes imposed under this
2 10 division shall be reduced by a small employer health insurance
2 11 coverage tax credit. The tax credit may be claimed by a small
2 12 employer, as defined in section 513B.2, that purchases health
2 13 insurance coverage, as defined in section 513B.2, for the
2 14 small employer's employees and their dependents for the first
2 15 time. The amount of the tax credit equals one hundred percent
2 16 of the cost to the small employer of purchasing the first year
2 17 of such health insurance coverage. The credit shall be taken
2 18 over five tax years as provided in paragraph "b".
2 19 b. (1) A small employer is entitled to claim twenty
2 20 percent of the amount of the small employer health insurance
2 21 coverage tax credit for the first tax year for which the
2 22 health insurance coverage is purchased and twenty percent of
2 23 the amount of the credit for each consecutive year thereafter
2 24 that the small employer continues to purchase the health
2 25 insurance coverage for a total of five tax years. However,
2 26 any credit in excess of the tax liability for the tax year is
2 27 nonrefundable but may be credited to the tax liability for the
2 28 following seven years or until depleted, whichever is the
2 29 earlier.
2 30 (2) If a small employer that has claimed the small
2 31 employer health insurance coverage tax credit is merged with
2 32 another business or is divided into separate businesses, any
2 33 resulting business which is at least fifteen percent directly
2 34 or indirectly owned or controlled by the owners or controllers
2 35 of the original small employer, is entitled to claim any
3 1 amounts of the small employer health insurance coverage credit
3 2 that remain so long as the resulting business continues to
3 3 purchase the health insurance coverage during each tax year
3 4 for which the credit is claimed.
3 5 Sec. 3. EFFECTIVE AND RETROACTIVE APPLICABILITY DATES.
3 6 This Act, being deemed of immediate importance, takes effect
3 7 upon enactment and applies retroactively to January 1, 2005,
3 8 for tax years beginning on or after that date.
3 9 EXPLANATION
3 10 This bill provides an individual and corporate income tax
3 11 credit for a small employer that purchases health insurance
3 12 coverage for its employees and their dependents for the first
3 13 time.
3 14 A small employer is defined as a person actively engaged in
3 15 business, who, on at least 50 percent of the employer's
3 16 working days during the preceding year, employed not less than
3 17 two and not more than 50 full=time equivalent eligible
3 18 employees. In determining the number of eligible employees,
3 19 companies which are affiliated companies or which are eligible
3 20 to file a combined tax return for purposes of state taxation
3 21 are considered one employer.
3 22 "Health insurance coverage" is defined to mean benefits
3 23 consisting of health care provided directly through insurance
3 24 or reimbursement, or otherwise, and including items and
3 25 services paid for as health care under a hospital or health
3 26 service policy or certificate, hospital or health service plan
3 27 contract, or health maintenance organization contract offered
3 28 by a carrier.
3 29 The amount of the credit equals 100 percent of the first
3 30 year's cost to a small employer of purchasing health insurance
3 31 coverage for its employees and their dependents for the first
3 32 time. A small employer is entitled to claim 20 percent of the
3 33 amount of the small employer health insurance coverage credit
3 34 for the first tax year for which the health insurance coverage
3 35 is purchased and 20 percent of the amount of the credit for
4 1 each consecutive year thereafter that the small employer
4 2 continues to purchase the health insurance coverage for a
4 3 total of five tax years.
4 4 The bill takes effect upon enactment and applies
4 5 retroactively to January 1, 2005, for tax years beginning on
4 6 or after that date.
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