S.F. 2211 Section 1. Section 15.119, subsection 2, Code Supplement 1 2011, is amended by adding the following new paragraph: 2 NEW PARAGRAPH . i. The Iowans first tax credit pursuant to 3 section 15E.371. In allocating tax credits pursuant to this 4 subsection, the authority shall allocate twenty million dollars 5 for purposes of this paragraph. 6 Sec. 2. NEW SECTION . 15E.371 Iowans first tax credit. 7 1. For purposes of this section, unless the context 8 otherwise requires: 9 a. “Full-time basis” means an average of forty hours of work 10 per week, including all paid holidays, vacations, sick leave, 11 and other paid leave. 12 b. “Qualified individual” means a resident of this state who 13 is legally authorized to work in this state. 14 c. “Qualifying wage threshold” means the county wage or 15 the regional wage, as calculated by the authority pursuant to 16 subsection 3, whichever is lower. 17 2. a. A tax credit shall be allowed against the taxes 18 imposed in chapter 422, divisions II, III, and V, and in 19 chapter 432, and against the moneys and credits tax imposed 20 in section 533.329, for hiring a qualified individual for 21 employment in this state on or after the effective date of 22 this Act. The credit shall be an amount equal to two thousand 23 dollars. 24 b. In order to qualify for the credit in this section, all 25 of the following must apply: 26 (1) The taxpayer must employ the qualified individual on a 27 full-time basis for twelve consecutive months. 28 (2) The taxpayer must provide a sufficient package of 29 benefits to the qualified individual for twelve consecutive 30 months. The economic development authority board, at the 31 recommendation of the director of the authority, shall adopt 32 rules determining what constitutes a sufficient package of 33 benefits. 34 (3) The taxpayer must pay the qualified individual at least 35 -1- LSB 5467XS (8) 84 mm/sc 1/ 6

S.F. 2211 one hundred percent of the qualifying wage threshold for twelve 1 consecutive months. 2 (4) The qualified individual was not employed by the 3 taxpayer before the date the qualified individual is hired 4 for employment which qualifies for this credit and was not 5 hired to replace an individual whose employment was terminated 6 within the six-month period preceding the date the qualified 7 individual is hired. 8 (5) The taxpayer has received, in the aggregate, less 9 than two hundred thousand dollars in credits pursuant to this 10 section. 11 (6) The taxpayer does not have a record of violations of 12 the law, including but not limited to environmental and worker 13 safety statutes, rules, and regulations, over a period of time 14 that tends to show a consistent pattern, unless the authority 15 finds that the violations did not seriously affect public 16 health or safety, or the environment, or if it did, that there 17 were mitigating circumstances. In making the findings and 18 determinations regarding violations, mitigating circumstances, 19 and whether the business is disqualified for the credit in this 20 section, the authority shall be exempt from chapter 17A. 21 (7) The position for which the qualified individual is 22 hired was not created because of the relocation of the position 23 from another area of this state after the taxpayer closed or 24 substantially reduced operations in one area of this state and 25 relocated substantially the same operations in a community in 26 another area of this state. This subparagraph shall not be 27 construed to prohibit a business from expanding its operation 28 in a community if existing operations of a similar nature in 29 this state are not closed or substantially reduced. 30 (8) The taxpayer does not receive any assistance, 31 incentive, or benefit under the quality jobs enterprise zone 32 program in section 15A.9 or the high quality jobs program in 33 sections 15.326 through 15.336 for the tax year in which this 34 credit is claimed. 35 -2- LSB 5467XS (8) 84 mm/sc 2/ 6

S.F. 2211 3. County and regional wage calculations. 1 a. In administering the credit program, the authority 2 shall annually calculate a county wage and a regional wage for 3 each county for purposes of determining the eligibility of 4 applicants for the credit. 5 (1) The county wage and the regional wage shall be an hourly 6 wage rate based on data from the most recent four quarters of 7 wage and employment information from the quarterly covered 8 wage and employment data report issued by the department of 9 workforce development. 10 (2) The authority shall not include the value of benefits 11 when calculating the county wage or the regional wage. 12 b. The county wage shall be the average of the wages paid 13 for jobs performed in the county by employers in all employment 14 categories except the employment categories of government, 15 agriculture, and mining. 16 c. The regional wage shall be calculated as follows: 17 (1) Multiplying by four the county wage of a county. 18 (2) Adding together the county wage of each of the counties 19 adjacent to the county. 20 (3) Adding the result obtained in subparagraph (1) to the 21 result obtained in subparagraph (2). 22 (4) Dividing the result obtained in subparagraph (3) by the 23 sum of the number of counties adjacent to the county plus four. 24 4. To receive the Iowans first tax credit, a taxpayer must 25 submit an application to the authority, made in the manner and 26 form prescribed by the authority. If the taxpayer meets the 27 criteria for eligibility, the authority shall issue to the 28 taxpayer a tax certificate for the Iowans first tax credit. 29 The authority shall issue such certificates so that not more 30 than the amount allocated for such tax credits under section 31 15.119, subsection 2, may be claimed for any one fiscal year. 32 Tax certificates shall be issued on an earliest filed basis. 33 The certificate shall contain the taxpayer’s name, address, 34 tax identification number, the amount of the credit, the tax 35 -3- LSB 5467XS (8) 84 mm/sc 3/ 6

S.F. 2211 year for which the certificate applies, and an expiration date 1 for the certificate. The taxpayer must file the tax credit 2 certificate with the taxpayer’s income tax return for the tax 3 year in which the twelfth month of employment falls in order 4 to claim the tax credit. 5 5. The tax credit certificate, unless otherwise void, shall 6 be accepted by the department of revenue as payment for taxes 7 imposed pursuant to chapter 422, divisions II, III, and V, 8 chapter 432, and section 533.329, subject to any conditions or 9 restrictions placed by the authority upon the face of the tax 10 credit and subject to the limitations of this section. 11 6. Tax credits issued under this section are not 12 transferable to any person or entity. 13 7. Any credit in excess of the tax liability is not 14 refundable, but the excess for the tax year may be credited to 15 the tax liability for the following five tax years or until 16 depleted, whichever is earlier. 17 8. An individual may claim the tax credit allowed a 18 partnership, limited liability company, S corporation, estate, 19 or trust electing to have the income taxed directly to the 20 individual. The amount claimed by the individual shall be 21 based upon the pro rata share of the individual’s earnings of 22 the partnership, limited liability company, S corporation, 23 estate, or trust. 24 Sec. 3. NEW SECTION . 422.11I Iowans first tax credit. 25 The taxes imposed under this division, less the credits 26 allowed under section 422.12, shall be reduced by an Iowans 27 first tax credit allowed under section 15E.371. 28 Sec. 4. Section 422.33, Code Supplement 2011, is amended by 29 adding the following new subsection: 30 NEW SUBSECTION . 29. The taxes imposed under this division 31 shall be reduced by an Iowans first tax credit allowed under 32 section 15E.371. 33 Sec. 5. Section 422.60, Code Supplement 2011, is amended by 34 adding the following new subsection: 35 -4- LSB 5467XS (8) 84 mm/sc 4/ 6

S.F. 2211 NEW SUBSECTION . 14. The taxes imposed under this division 1 shall be reduced by an Iowans first tax credit allowed under 2 section 15E.371. 3 Sec. 6. NEW SECTION . 432.12N Iowans first tax credit. 4 The taxes imposed under this chapter shall be reduced by an 5 Iowans first tax credit allowed under section 15E.371. 6 Sec. 7. Section 533.329, subsection 2, Code Supplement 7 2011, is amended by adding the following new paragraph: 8 NEW PARAGRAPH . m. The moneys and credits tax imposed under 9 this section shall be reduced by an Iowans first tax credit 10 allowed under section 15E.371. 11 Sec. 8. EFFECTIVE DATE. This Act, being deemed of immediate 12 importance, takes effect upon enactment. 13 Sec. 9. APPLICABILITY. This Act applies to qualified 14 individuals hired on or after the effective date of this Act. 15 EXPLANATION 16 This bill provides a credit against the individual and 17 corporate income taxes, franchise tax, insurance premiums tax, 18 and moneys and credits tax for hiring a qualified individual 19 for employment in this state. “Qualified individual” is 20 defined as a resident of this state who is legally authorized 21 to work in this state. The credit is an amount equal to $2,000. 22 In order to qualify for the credit, several factors must be 23 met. First, the taxpayer must employ the qualified individual 24 on a full-time basis, provide a sufficient package of benefits, 25 and pay the qualified individual at least 100 percent of 26 the qualifying wage threshold, for 12 consecutive months. 27 The qualifying wage threshold is calculated by the economic 28 development authority as provided in the bill. Second, 29 the qualified individual must not have been employed by the 30 taxpayer before the date of hire and must not have been hired 31 to replace a person whose employment was terminated within the 32 last six months. Third, the taxpayer has received less than 33 $200,000 in Iowans first tax credits. Fourth, the taxpayer 34 must not have a consistent pattern of violations of the law, 35 -5- LSB 5467XS (8) 84 mm/sc 5/ 6

S.F. 2211 including but not limited to environmental and worker safety 1 laws. Fifth, the position for which the qualified individual 2 was hired must not have been relocated from another area of 3 this state after the taxpayer closed or substantially reduced 4 operations in that area. Sixth, the taxpayer must not be 5 currently receiving any assistance, incentive, or benefit under 6 the quality jobs enterprise zone program or the high quality 7 jobs program for the tax year in which this credit is claimed. 8 To receive the tax credit, a taxpayer must submit an 9 application to the economic development authority and receive a 10 tax credit certificate, and then attach the certificate to the 11 taxpayer’s tax return. The tax credits are nontransferable and 12 nonrefundable, but may be carried forward for five years. 13 The bill also places the Iowans first tax credit under the 14 aggregate tax credit limit cap of the economic development 15 authority and allocates $20 million of the cap to the credit. 16 The economic development authority is required to issue 17 certificates so that not more than $20 million in credits are 18 claimed in any one fiscal year. Certificates are to be issued 19 on an earliest filed basis. 20 An individual may claim the tax credit allowed a 21 partnership, limited liability company, S corporation, estate, 22 or trust electing to have the income taxed directly to the 23 individual. The amount claimed by the individual shall be 24 based upon the pro rata share of the individual’s earnings of 25 the partnership, limited liability company, S corporation, 26 estate, or trust. 27 The bill takes effect upon enactment and applies to 28 qualified individuals hired on or after that date. 29 -6- LSB 5467XS (8) 84 mm/sc 6/ 6