HF 25 (LSB 1113YH (2) 85)

HOUSE FILE 25

BY  MURPHY

A BILL FOR

An Act establishing a veteran employment tax credit pilot project for individual and corporate income taxpayers and franchise taxpayers who hire and employ qualified veterans and including effective date and retroactive and other applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  422.11E  Veteran employment tax credit.
   1.  As used in this section, unless the context otherwise requires:
   a.  “Full-time basis” means an average of forty hours of work per week, including all paid holidays, vacations, sick leave, and other paid leave.
   b.  “Qualified veteran” means an individual who meets all the following requirements:
   (1)  The individual is a veteran, as defined in section 35.1, subsection 2.
   (2)  The individual is totally unemployed, as defined in section 96.19, subsection 38, paragraph “a”, prior to being hired for employment which qualifies for the tax credit under this section.
   2.
  a.  The taxes imposed under this division, less the credits allowed under section 422.12, shall be reduced by a veteran employment tax credit for a taxpayer who hires and employs a qualified veteran on a full-time basis in this state on or after the effective date of this Act. The credit shall be available in two parts, equal to the following amounts:
   (1)  Five hundred eighty dollars if the qualified veteran is employed by the taxpayer for one hundred eighty consecutive days.
   (2)  Five hundred eighty dollars if the qualified veteran is employed by the taxpayer for eighteen consecutive months.
   b.  The aggregate total amount of tax credit certificates that may be issued by the department under paragraph “a”, subparagraph (1), shall not exceed five hundred eighty thousand dollars. The aggregate total amount of tax credit certificates that may be issued by the department under paragraph “a”, subparagraph (2), shall not exceed five hundred eighty thousand dollars.
   3.  The credit shall not be allowed for a qualified veteran who was hired to replace an individual whose employment was terminated within the twelve-month period preceding the date the veteran is hired. However, if the individual being replaced left employment voluntarily without good cause attributable to the employer or if the individual was discharged for misconduct in connection with the individual’s employment as determined by the department of workforce development, the credit shall be allowed.
   4.  To receive the veteran employment tax credit, a taxpayer must submit an application to the department, made in the manner and form prescribed by the department. If the taxpayer meets the criteria for eligibility, the department shall issue to the taxpayer a tax certificate for the veteran employment tax credit. The certificate shall contain the taxpayer’s name, address, tax identification number, the amount of the credit, the tax year for which the certificate applies, and an expiration date for the certificate. The taxpayer must file the tax credit certificate with the taxpayer’s income tax return in order to claim the tax credit.
   5.  Tax credit certificates shall be issued on an earliest filed basis. A taxpayer who fails to apply for and receive a tax credit certificate under subsection 2, paragraph “a”, subparagraph (1), for a qualified veteran shall be ineligible to receive a tax credit for that qualified veteran under subsection 2, paragraph “a”, subparagraph (2).
   6.  Any credit in excess of the tax liability shall be refunded. In lieu of claiming a refund, a taxpayer may elect to have the overpayment shown on the taxpayer’s final, completed return credited to the tax liability for the following tax year.
   7.  An individual may claim the tax credit allowed a partnership, limited liability company, S corporation, estate, or trust electing to have the income taxed directly to the individual. The amount claimed by the individual shall be based upon the pro rata share of the individual’s earnings of the partnership, limited liability company, S corporation, estate, or trust.
   8.  This section is repealed June 30, 2017, or thirty days following the date on which one million one hundred sixty thousand dollars in total credits have been allowed, whichever is earlier.
    Sec. 2.  Section 422.33, Code 2013, is amended by adding the following new subsection:
   NEW SUBSECTION.  15.
  a.  The taxes imposed under this division shall be reduced by a veteran employment tax credit allowed under section 422.11E.
   b.  This subsection is subject to repeal pursuant to section 422.11E, subsection 8.
    Sec. 3.  Section 422.60, Code 2013, is amended by adding the following new subsection:
   NEW SUBSECTION.  12.
  a.  The taxes imposed under this division shall be reduced by a veteran employment tax credit allowed under section 422.11E.
   b.  This subsection is subject to repeal pursuant to section 422.11E, subsection 8.
    Sec. 4.  PILOT PROJECT —— EVALUATION.  The tax credit provided in this Act for taxpayers who hire and employ qualified veterans is viewed as a pilot project to gauge the feasibility of using such an approach to increase the employment of veterans in this state.
   The department of workforce development and the department of revenue shall review and evaluate the pilot project established in this Act and determine the benefits to the state. A report from each department shall be filed with the general assembly no later than January 15, 2015, and shall contain its evaluation and recommendations, especially with regard to the creation of a permanent qualified veteran employment tax credit as part of the state’s effort to increase the employment of veterans in this state. However, the departments may file a joint report if this would prove more beneficial to the general assembly and the evaluation of the pilot project.
    Sec. 5.  EFFECTIVE UPON ENACTMENT.  This Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 6.  RETROACTIVE APPLICABILITY.  This Act applies retroactively to January 1, 2013, for tax years beginning on or after that date.
    Sec. 7.  APPLICABILITY.  This Act applies to qualified veterans hired on or after the effective date of this Act.
EXPLANATION
   This bill provides a refundable individual and corporate income tax credit and franchise tax credit for the hiring and employment of qualified veterans in this state. “Qualified veteran” is defined as an individual who is a veteran and is totally unemployed.
   The credit is available to a taxpayer who hires and employs a qualified veteran for employment on a full-time basis in this state on or after the effective date of the bill. “Full-time” basis is defined as an average of 40 hours of work per week. The credit is available in two parts. The first part of the credit is equal to $580 if the qualified veteran is employed by the taxpayer for 180 consecutive days. The second part is equal to $580 if the qualified veteran is employed by the taxpayer for 18 consecutive months. The second part of the credit is unavailable to a taxpayer for the employment of a qualified veteran if the taxpayer did not receive the first part of the credit for that particular qualified veteran.
   The credit is not allowed if the qualified veteran was hired to replace an individual whose employment was terminated within the 12-month period preceding the date the qualified veteran was hired, unless the individual left employment voluntarily without good cause attributable to the employer or was discharged for misconduct as determined by the department of workforce development.
   To receive the tax credit, a taxpayer must submit an application to the department of revenue and receive a tax credit certificate, then attach the certificate to the taxpayer’s tax return.
   The total amount of tax credits that may be issued by the department of revenue shall not exceed $580,000 for each part of the credit, for a total of $1,160,000. Tax credit certificates shall be issued on an earliest filed basis.
   An individual may claim the tax credit allowed a partnership, limited liability company, S corporation, estate, or trust electing to have the income taxed directly to the individual. The amount claimed by the individual shall be based upon the pro rata share of the individual’s earnings of the partnership, limited liability company, S corporation, estate, or trust.
   The credit is repealed on June 30, 2017, or 30 days following the date on which $1,160,000 in total credits have been provided, whichever is earlier.
   The bill provides that the veteran employment tax credit is a pilot project to gauge the feasibility of using such an approach to increase the employment of veterans in this state. The department of workforce development and the department of revenue are required to evaluate the pilot project and submit a joint or separate report to the general assembly no later than January 15, 2015. The report shall contain evaluations and recommendations with regard to the creation of a permanent qualified veteran employment tax credit as part of the state’s effort to increase employment of veterans in this state.
   The bill takes effect upon enactment and applies to qualified veterans hired on or after that date, and retroactively to tax years beginning on or after January 1, 2013.