H.F. 2057 Section 1. NEW SECTION . 422.11L Veteran employment tax 1 credit. 2 1. As used in this section, unless the context otherwise 3 requires: 4 a. “Full-time basis” means an average of forty hours of work 5 per week, including all paid holidays, vacations, sick leave, 6 and other paid leave. 7 b. “Qualified veteran” means an individual who meets all the 8 following requirements: 9 (1) The individual is a veteran, as defined in section 35.1, 10 subsection 2. 11 (2) The individual is totally unemployed, as defined in 12 section 96.19, subsection 38, paragraph “a” , prior to being 13 hired for employment which qualifies for the tax credit under 14 this section. 15 2. a. The taxes imposed under this division, less the 16 credits allowed under section 422.12, shall be reduced by a 17 veteran employment tax credit for a taxpayer who hires and 18 employs a qualified veteran on a full-time basis in this state 19 on or after the effective date of this Act. The credit shall be 20 equal to the following amounts: 21 (1) Five hundred eighty dollars if the qualified veteran 22 is employed by the taxpayer for one hundred eighty consecutive 23 days. 24 (2) Five hundred eighty dollars if the qualified veteran is 25 employed by the taxpayer for eighteen consecutive months 26 b. The aggregate total amount of tax credit certificates 27 that may be issued by the department under paragraph “a” shall 28 not exceed five hundred eighty thousand dollars. The aggregate 29 total amount of tax credit certificates that may be issued by 30 the department under paragraph “b” shall not exceed five hundred 31 eighty thousand dollars. 32 3. The credit shall not be allowed for a qualified veteran 33 who was hired to replace an individual whose employment 34 was terminated within the twelve-month period preceding 35 -1- LSB 5042HH (5) 84 mm/sc 1/ 5

H.F. 2057 the date the veteran is hired. However, if the individual 1 being replaced left employment voluntarily without good 2 cause attributable to the employer or if the individual was 3 discharged for misconduct in connection with the individual’s 4 employment as determined by the department of workforce 5 development, the credit shall be allowed. 6 4. To receive the veteran employment tax credit, a taxpayer 7 must submit an application to the department, made in the 8 manner and form prescribed by the department. If the taxpayer 9 meets the criteria for eligibility, the department shall issue 10 to the taxpayer a tax certificate for the veteran employment 11 tax credit. The certificate shall contain the taxpayer’s 12 name, address, tax identification number, the amount of the 13 credit, the tax year for which the certificate applies, and 14 an expiration date for the certificate. The taxpayer must 15 file the tax credit certificate with the taxpayer’s income tax 16 return in order to claim the tax credit. 17 5. Tax credit certificates shall be issued on an earliest 18 filed basis. A taxpayer who fails to apply for and receive a 19 tax credit certificate under subsection 2, paragraph “a” , for a 20 qualified veteran shall be ineligible to receive a tax credit 21 for that qualified veteran under subsection 2, paragraph “b” . 22 6. Any credit in excess of the tax liability shall be 23 refunded. In lieu of claiming a refund, a taxpayer may 24 elect to have the overpayment shown on the taxpayer’s final, 25 completed return credited to the tax liability for the 26 following tax year. 27 7. An individual may claim the tax credit allowed a 28 partnership, limited liability company, S corporation, estate, 29 or trust electing to have the income taxed directly to the 30 individual. The amount claimed by the individual shall be 31 based upon the pro rata share of the individual’s earnings of 32 the partnership, limited liability company, S corporation, 33 estate, or trust. 34 8. This section is repealed June 30, 2016, or thirty days 35 -2- LSB 5042HH (5) 84 mm/sc 2/ 5

H.F. 2057 following the date on which one million one hundred sixty 1 thousand dollars in total credits have been allowed, whichever 2 is earlier. 3 Sec. 2. Section 422.33, Code Supplement 2011, is amended by 4 adding the following new subsection: 5 NEW SUBSECTION . 29. a. The taxes imposed under this 6 division shall be reduced by a veteran employment tax credit 7 allowed under section 422.11L. 8 b. This subsection is subject to repeal pursuant to section 9 422.11L, subsection 8. 10 Sec. 3. Section 422.60, Code Supplement 2011, is amended by 11 adding the following new subsection: 12 NEW SUBSECTION . 14. a. The taxes imposed under this 13 division shall be reduced by a veteran employment tax credit 14 authorized pursuant to section 422.11L. 15 b. This subsection is subject to repeal pursuant to section 16 422.11L, subsection 8. 17 Sec. 4. PILOT PROJECT —— EVALUATION. The tax credit 18 provided in this Act for taxpayers who hire and employ 19 qualified veterans is viewed as a pilot project to gauge 20 the feasibility of using such an approach to increase the 21 employment of veterans in this state. 22 The department of workforce development and the department 23 of revenue shall review and evaluate the pilot project 24 established in this Act and determine the benefits to the 25 state. A report from each department shall be filed with 26 the general assembly no later than January 15, 2014, and 27 shall contain its evaluation and recommendations, especially 28 with regard to the creation of a permanent qualified veteran 29 employment tax credit as part of the state’s effort to increase 30 the employment of veterans in this state. However, the 31 departments may file a joint report if this would prove more 32 beneficial to the general assembly and the evaluation of the 33 pilot project. 34 Sec. 5. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 35 -3- LSB 5042HH (5) 84 mm/sc 3/ 5

H.F. 2057 immediate importance, takes effect upon enactment. 1 Sec. 6. APPLICABILITY. This Act applies to qualified 2 veterans hired on or after the effective date of this Act. 3 EXPLANATION 4 This bill provides a refundable individual and corporate 5 income tax credit and franchise tax credit for the hiring and 6 employment of qualified veterans in this state. “Qualified 7 veteran” is defined as an individual who is a veteran and is 8 totally unemployed. 9 The credit is available to a taxpayer who hires and employs 10 a qualified veteran for employment on a full-time basis in this 11 state on or after the effective date of the bill. “Full-time” 12 basis is defined as an average of 40 hours of work per week. 13 The credit is available in two parts. The first part of the 14 credit is equal to $580 if the qualified veteran is employed 15 by the taxpayer for 180 consecutive days. The second part 16 is equal to $580 if the qualified veteran is employed by the 17 taxpayer for 18 consecutive months. The second part of the 18 credit is unavailable to a taxpayer for the employment of a 19 qualified veteran if the taxpayer did not receive the first 20 part of the credit for that particular qualified veteran. 21 The credit is not allowed if the qualified veteran was 22 hired to replace an individual whose employment was terminated 23 within the 12-month period preceding the date the qualified 24 veteran was hired, unless the individual left employment 25 voluntarily without good cause attributable to the employer or 26 was discharged for misconduct as determined by the department 27 of workforce development. 28 To receive the tax credit, a taxpayer must submit an 29 application to the department of revenue and receive a tax 30 credit certificate, then attach the certificate to the 31 taxpayer’s tax return. 32 The total amount of tax credits that may be issued by the 33 department of revenue shall not exceed $580,000 for each 34 part of the credit, for a total of $1,160,000. Tax credit 35 -4- LSB 5042HH (5) 84 mm/sc 4/ 5

H.F. 2057 certificates shall be issued on an earliest filed basis. 1 An individual may claim the tax credit allowed a 2 partnership, limited liability company, S corporation, estate, 3 or trust electing to have the income taxed directly to the 4 individual. The amount claimed by the individual shall be 5 based upon the pro rata share of the individual’s earnings of 6 the partnership, limited liability company, S corporation, 7 estate, or trust. 8 The credit is repealed on June 30, 2016, or 30 days following 9 the date on which $1,160,000 in total credits have been 10 provided, whichever is earlier. 11 The bill provides that the veteran employment tax credit 12 is a pilot project to gauge the feasibility of using such an 13 approach to increase the employment of veterans in this state. 14 The department of workforce development and the department of 15 revenue are required to evaluate the pilot project and submit 16 a joint or separate report to the general assembly no later 17 than January 15, 2014. The report shall contain evaluations 18 and recommendations with regard to the creation of a permanent 19 qualified veteran employment tax credit as part of the state’s 20 effort to increase employment of veterans in this state. 21 The bill takes effect upon enactment and applies to 22 qualified veterans hired on or after that date. 23 -5- LSB 5042HH (5) 84 mm/sc 5/ 5