House File 730 - Introduced
HOUSE FILE
BY KAUFMANN, WIENCEK, and
PETTENGILL
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to the providing of income tax, premium tax, and
2 moneys and credits tax credits for employers paying part of
3 their employees' student loans and including a retroactive
4 applicability date provision.
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. 261.130 DEFINITIONS.
1 2 As used in this division, unless the context otherwise
1 3 requires:
1 4 1. "Accredited higher education institution" means an
1 5 institution of higher education as defined in section 261.92.
1 6 2. "Commission" means the college student aid commission
1 7 created in section 261.1.
1 8 3. "Qualified undergraduate loan" means a federally
1 9 guaranteed student loan authorized under the federal Higher
1 10 Education Act of 1965, 20 U.S.C. } 1071 et seq., or a loan
1 11 originated by banks, savings and loans, or credit unions
1 12 located in Iowa for purposes of attending an accredited higher
1 13 education institution.
1 14 Sec. 2. NEW SECTION. 261.131 STUDENT LOAN REPAYMENT TAX
1 15 CREDIT PROGRAM.
1 16 1. The commission shall establish a student loan repayment
1 17 tax credit program for employers who repay qualified
1 18 undergraduate loans of students employed in this state by the
1 19 employer. Under the program eligible employers shall be
1 20 entitled to a tax credit to be allowed against the taxes
1 21 imposed under chapter 422, division II, III, or V, or chapter
1 22 432, or against the moneys and credits tax imposed in section
1 23 533.24.
1 24 2. An eligible employer shall receive a credit equal to
1 25 thirty percent of the amount of the qualified undergraduate
1 26 loan repaid by the employer for an employee in the tax year.
1 27 However, in computing the amount of the tax credit only the
1 28 following repayment amount shall be used in the computation:
1 29 a. For the first tax year, not more than twenty percent of
1 30 the maximum qualified undergraduate loan.
1 31 b. For the second tax year, not more than thirty percent
1 32 of the maximum qualified undergraduate loan.
1 33 c. For the third tax year, not more than fifty percent of
1 34 the maximum qualified undergraduate loan.
1 35 For purposes of the computation of the tax credit pursuant
2 1 to this subsection, "maximum qualified undergraduate loan"
2 2 equals twenty=five thousand dollars.
2 3 3. To qualify as an eligible employer for purposes of the
2 4 tax credit under subsection 2, an employer shall meet all of
2 5 the following:
2 6 a. Pay the employee for whom the loan repayment is to be
2 7 made an annualized salary or wage of at least twenty=five
2 8 thousand dollars.
2 9 b. Employ the individual primarily in this state.
2 10 c. Begin repayment of the qualified undergraduate loan
2 11 within six months of the initial hiring date of the employee.
2 12 For purposes of this paragraph, an employee who is already
2 13 employed by the employer as of July 1, 2007, shall be
2 14 considered to be initially hired as of that date.
2 15 4. If the employer is a partnership, S corporation,
2 16 limited liability company, estate, or trust electing to have
2 17 the income taxed directly to the individual, an individual may
2 18 claim the tax credit allowed. The amount claimed by the
2 19 individual shall be based upon the pro rata share of the
2 20 individual's earnings of the partnership, S corporation,
2 21 limited liability company, estate, or trust.
2 22 5. Any credit in excess of the tax liability for the tax
2 23 year shall be refunded with interest computed under section
2 24 422.25. In lieu of claiming a refund, a taxpayer may elect to
2 25 have the overpayment shown on its final, completed return
2 26 credited to the tax liability for the following tax year.
2 27 Sec. 3. NEW SECTION. 261.132 TAX CREDIT CERTIFICATE
2 28 PROCEDURE.
2 29 1. An employer seeking the student loan repayment tax
2 30 credit under this division shall apply to the commission on
2 31 the form prescribed by the commission, provide verification
2 32 that the employer is eligible as required under section
2 33 261.131, subsection 3, and any other information required by
2 34 the commission or the department of revenue.
2 35 2. After verifying the eligibility for the tax credit, the
3 1 commission, in consultation with the department of revenue,
3 2 shall issue a student loan repayment tax credit certificate to
3 3 be attached to the person's tax return. The tax credit
3 4 certificate shall contain the taxpayer's name, address, tax
3 5 identification number, the dates of loan repayment, the amount
3 6 of credit, and other information required by the department of
3 7 revenue.
3 8 Sec. 4. NEW SECTION. 422.11T STUDENT LOAN REPAYMENT TAX
3 9 CREDIT.
3 10 The taxes imposed under this division, less the credits
3 11 allowed under sections 422.12 and 422.12B, shall be reduced by
3 12 a student loan repayment tax credit authorized pursuant to
3 13 sections 261.130 through 261.132.
3 14 Sec. 5. Section 422.33, Code 2007, is amended by adding
3 15 the following new subsection:
3 16 NEW SUBSECTION. 24. The taxes imposed under this division
3 17 shall be reduced by a student loan repayment tax credit
3 18 authorized pursuant to sections 261.130 through 261.132.
3 19 Sec. 6. Section 422.60, Code 2007, is amended by adding
3 20 the following new subsection:
3 21 NEW SUBSECTION. 13. The taxes imposed under this division
3 22 shall be reduced by a student loan repayment tax credit
3 23 authorized pursuant to sections 261.130 through 261.132.
3 24 Sec. 7. NEW SECTION. 432.12J STUDENT LOAN REPAYMENT TAX
3 25 CREDIT.
3 26 The taxes imposed under this chapter shall be reduced by a
3 27 student loan repayment tax credit authorized pursuant to
3 28 sections 261.130 through 261.132.
3 29 Sec. 8. Section 533.24, Code 2007, is amended by adding
3 30 the following new subsection:
3 31 NEW SUBSECTION. 11. The moneys and credits tax imposed
3 32 under this section shall be reduced by a student loan
3 33 repayment tax credit authorized pursuant to sections 261.130
3 34 through 261.132.
3 35 Sec. 9. RETROACTIVE APPLICABILITY DATE. This Act applies
4 1 retroactively to January 1, 2007, for tax years beginning on
4 2 or after that date.
4 3 EXPLANATION
4 4 This bill provides a tax credit for an employer who repays
4 5 any portion of an employee's undergraduate student loan. The
4 6 tax credits are allowable under the individual and corporate
4 7 income taxes, franchise tax, insurance premiums tax, and
4 8 moneys and credits tax of credit unions.
4 9 To be eligible for the tax credit the employer must pay an
4 10 annualized salary or wage of at least $25,000, employ the
4 11 person in this state, and begin repayment of the student loan
4 12 within six months of the hiring date. However, the bill
4 13 provides that the hiring date for an employee already employed
4 14 as of July 1, 2007, shall be considered July 1, 2007.
4 15 The amount of the tax credit equals 30 percent of the
4 16 amount of the loan repaid not to exceed a certain percentage
4 17 of the first $25,000 of the student loan. This percentage
4 18 equals 20 percent for the first tax year, 30 percent for the
4 19 second tax year, and 50 percent for the third tax year.
4 20 The bill applies retroactively to January 1, 2007, for tax
4 21 years beginning on or after that date.
4 22 LSB 1766YH 82
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