H.F. 25 Section 1. NEW SECTION . 422.11E 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 available in two parts, 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” , 28 subparagraph (1), shall not exceed five hundred eighty thousand 29 dollars. The aggregate total amount of tax credit certificates 30 that may be issued by the department under paragraph “a” , 31 subparagraph (2), shall not exceed five hundred eighty thousand 32 dollars. 33 3. The credit shall not be allowed for a qualified veteran 34 who was hired to replace an individual whose employment 35 -1- LSB 1113YH (2) 85 mm/sc 1/ 5

H.F. 25 was terminated within the twelve-month period preceding 1 the date the veteran is hired. However, if the individual 2 being replaced left employment voluntarily without good 3 cause attributable to the employer or if the individual was 4 discharged for misconduct in connection with the individual’s 5 employment as determined by the department of workforce 6 development, the credit shall be allowed. 7 4. To receive the veteran employment tax credit, a taxpayer 8 must submit an application to the department, made in the 9 manner and form prescribed by the department. If the taxpayer 10 meets the criteria for eligibility, the department shall issue 11 to the taxpayer a tax certificate for the veteran employment 12 tax credit. The certificate shall contain the taxpayer’s 13 name, address, tax identification number, the amount of the 14 credit, the tax year for which the certificate applies, and 15 an expiration date for the certificate. The taxpayer must 16 file the tax credit certificate with the taxpayer’s income tax 17 return in order to claim the tax credit. 18 5. Tax credit certificates shall be issued on an earliest 19 filed basis. A taxpayer who fails to apply for and receive 20 a tax credit certificate under subsection 2, paragraph “a” , 21 subparagraph (1), for a qualified veteran shall be ineligible 22 to receive a tax credit for that qualified veteran under 23 subsection 2, paragraph “a” , subparagraph (2). 24 6. Any credit in excess of the tax liability shall be 25 refunded. In lieu of claiming a refund, a taxpayer may 26 elect to have the overpayment shown on the taxpayer’s final, 27 completed return credited to the tax liability for the 28 following tax year. 29 7. An individual may claim the tax credit allowed a 30 partnership, limited liability company, S corporation, estate, 31 or trust electing to have the income taxed directly to the 32 individual. The amount claimed by the individual shall be 33 based upon the pro rata share of the individual’s earnings of 34 the partnership, limited liability company, S corporation, 35 -2- LSB 1113YH (2) 85 mm/sc 2/ 5

H.F. 25 estate, or trust. 1 8. This section is repealed June 30, 2017, or thirty days 2 following the date on which one million one hundred sixty 3 thousand dollars in total credits have been allowed, whichever 4 is earlier. 5 Sec. 2. Section 422.33, Code 2013, is amended by adding the 6 following new subsection: 7 NEW SUBSECTION . 15. a. The taxes imposed under this 8 division shall be reduced by a veteran employment tax credit 9 allowed under section 422.11E. 10 b. This subsection is subject to repeal pursuant to section 11 422.11E, subsection 8. 12 Sec. 3. Section 422.60, Code 2013, is amended by adding the 13 following new subsection: 14 NEW SUBSECTION . 12. a. The taxes imposed under this 15 division shall be reduced by a veteran employment tax credit 16 allowed under section 422.11E. 17 b. This subsection is subject to repeal pursuant to section 18 422.11E, subsection 8. 19 Sec. 4. PILOT PROJECT —— EVALUATION. The tax credit 20 provided in this Act for taxpayers who hire and employ 21 qualified veterans is viewed as a pilot project to gauge 22 the feasibility of using such an approach to increase the 23 employment of veterans in this state. 24 The department of workforce development and the department 25 of revenue shall review and evaluate the pilot project 26 established in this Act and determine the benefits to the 27 state. A report from each department shall be filed with 28 the general assembly no later than January 15, 2015, and 29 shall contain its evaluation and recommendations, especially 30 with regard to the creation of a permanent qualified veteran 31 employment tax credit as part of the state’s effort to increase 32 the employment of veterans in this state. However, the 33 departments may file a joint report if this would prove more 34 beneficial to the general assembly and the evaluation of the 35 -3- LSB 1113YH (2) 85 mm/sc 3/ 5

H.F. 25 pilot project. 1 Sec. 5. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 2 immediate importance, takes effect upon enactment. 3 Sec. 6. RETROACTIVE APPLICABILITY. This Act applies 4 retroactively to January 1, 2013, for tax years beginning on 5 or after that date. 6 Sec. 7. APPLICABILITY. This Act applies to qualified 7 veterans hired on or after the effective date of this Act. 8 EXPLANATION 9 This bill provides a refundable individual and corporate 10 income tax credit and franchise tax credit for the hiring and 11 employment of qualified veterans in this state. “Qualified 12 veteran” is defined as an individual who is a veteran and is 13 totally unemployed. 14 The credit is available to a taxpayer who hires and employs 15 a qualified veteran for employment on a full-time basis in this 16 state on or after the effective date of the bill. “Full-time” 17 basis is defined as an average of 40 hours of work per week. 18 The credit is available in two parts. The first part of the 19 credit is equal to $580 if the qualified veteran is employed 20 by the taxpayer for 180 consecutive days. The second part 21 is equal to $580 if the qualified veteran is employed by the 22 taxpayer for 18 consecutive months. The second part of the 23 credit is unavailable to a taxpayer for the employment of a 24 qualified veteran if the taxpayer did not receive the first 25 part of the credit for that particular qualified veteran. 26 The credit is not allowed if the qualified veteran was 27 hired to replace an individual whose employment was terminated 28 within the 12-month period preceding the date the qualified 29 veteran was hired, unless the individual left employment 30 voluntarily without good cause attributable to the employer or 31 was discharged for misconduct as determined by the department 32 of workforce development. 33 To receive the tax credit, a taxpayer must submit an 34 application to the department of revenue and receive a tax 35 -4- LSB 1113YH (2) 85 mm/sc 4/ 5

H.F. 25 credit certificate, then attach the certificate to the 1 taxpayer’s tax return. 2 The total amount of tax credits that may be issued by the 3 department of revenue shall not exceed $580,000 for each 4 part of the credit, for a total of $1,160,000. Tax credit 5 certificates shall be issued on an earliest filed basis. 6 An individual may claim the tax credit allowed a 7 partnership, limited liability company, S corporation, estate, 8 or trust electing to have the income taxed directly to the 9 individual. The amount claimed by the individual shall be 10 based upon the pro rata share of the individual’s earnings of 11 the partnership, limited liability company, S corporation, 12 estate, or trust. 13 The credit is repealed on June 30, 2017, or 30 days following 14 the date on which $1,160,000 in total credits have been 15 provided, whichever is earlier. 16 The bill provides that the veteran employment tax credit 17 is a pilot project to gauge the feasibility of using such an 18 approach to increase the employment of veterans in this state. 19 The department of workforce development and the department of 20 revenue are required to evaluate the pilot project and submit 21 a joint or separate report to the general assembly no later 22 than January 15, 2015. The report shall contain evaluations 23 and recommendations with regard to the creation of a permanent 24 qualified veteran employment tax credit as part of the state’s 25 effort to increase employment of veterans in this state. 26 The bill takes effect upon enactment and applies 27 to qualified veterans hired on or after that date, and 28 retroactively to tax years beginning on or after January 1, 29 2013. 30 -5- LSB 1113YH (2) 85 mm/sc 5/ 5