HSB 167 (LSB 2306YC (2) 85)

HOUSE FILE _____

BY  (PROPOSED COMMITTEE ON COMMERCE BILL BY CHAIRPERSON COWNIE)

A BILL FOR

An Act providing for a tax credit for the repayment of certain student loan debt and including applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  261.114  Technology workers tax credit program.
   1.  For purposes of this section, unless the context otherwise requires:
   a.  “Commission” means the college student aid commission.
   b.  “Eligible lender” means the same as defined in section 261.35.
   c.  “Program” means the technology workers tax credit program established in this section.
   d.  “Program agreement” means an agreement entered into between the commission and a technology worker pursuant to this section.
   e.  “Qualified student debt” means the maximum amount of an eligible technology worker’s student loan principal as determined pursuant to this section.
   f.  “Technology worker” means a worker employed as a computer and information scientist, systems analyst, computer programmer or developer, or computer professional, or any skilled worker who performs any function related to information technology, including the study, design, development, implementation, support, or management of computer-based information systems.
   2.  The commission shall establish and administer a technology workers tax credit program pursuant to this section. The purpose of the program is to reimburse eligible technology workers, or employers of such workers, for the amount of qualified student debt borrowed and repaid in order to attend a postsecondary institution.
   3.  The commission shall coordinate with postsecondary institutions, technology workers, eligible lenders, and the department of revenue in the administration of this program.
   4.  The commission shall enter into a program agreement with an eligible technology worker residing and working in Iowa who wishes to participate in the program. As part of the program agreement, the technology worker shall covenant and agree to the following:

   a.  That the person is or will become an Iowa resident and will remain an Iowa resident for the entirety of each tax year for which the person wishes to claim a tax credit under the program. A person not meeting the residency requirements of this paragraph is not eligible to claim a tax credit.
   b.  That the person was enrolled in a program of study at a postsecondary institution and has qualified student debt.
   c.  To keep all necessary financial and educational records relating to the degree pursued and the qualified student debt incurred for a period of not less than three years after the last tax year in which a tax credit under the program is claimed.
   d.  That only repayment of qualified student debt is eligible to be claimed as a tax credit under the program.
   e.  That any acceleration in the repayment schedule of the qualified student debt will result in a forfeiture of the tax credit in that tax year and all subsequent tax years.
   f.  To refinance the loans comprising qualified student debt only if the loans remain separate from all other debt and if both annual repayments and the total remaining indebtedness under the loan’s amortization schedule will be reduced by such refinancing.
   5.  A technology worker shall not enter into more than one program agreement or claim the tax credit available under the program more than once.
   6.
  a.  After entering into a program agreement with an eligible technology worker, and before a tax credit certificate is issued, the commission shall request the postsecondary institution in which the technology worker was enrolled to verify the technology worker’s enrollment at the institution and to certify to the commission the technology worker’s amount of qualified student debt.
   b.  The program agreement shall terminate if the commission is unable to verify the technology worker’s enrollment at a postsecondary institution or unable to certify the amount of the technology worker’s qualified student debt.
   7.
  a.  An eligible technology worker’s qualified student debt shall be the total amount of principal borrowed from an eligible lender for purposes of paying the amount of tuition and mandatory fees required in order to obtain a degree from a postsecondary institution.
   b.  Only loans included as part of a financial aid package awarded to the eligible technology worker by a postsecondary institution shall be included in the amount of qualified student debt determined pursuant to this subsection.
   8.  After verifying whether the technology worker qualifies for the program and after certifying the amount of qualified student debt, the commission shall issue to the technology worker a tax credit certificate which shall contain the technology worker’s name, address, tax identification number, the amount of the tax credit, and any other information required by the department of revenue.
   9.
  a.  (1)  A technology workers tax credit shall be allowed against the taxes imposed in chapter 422, divisions II, III, and V, and in chapter 432, and against the moneys and credits tax imposed in section 533.329, for the repayment of qualified student debt.
   (2)  An individual may claim the tax credit under this section of a partnership, limited liability company, S corporation, estate, or trust electing to have 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 from the partnership, limited liability company, S corporation, estate, or trust.
   b.
  (1)  An employer may claim a tax credit under this section for payments made directly to an eligible lender on behalf of a technology worker who has been issued a tax credit certificate pursuant to this subsection.
   (2)  The employer may claim the tax credit in an amount equal to the payments made by the employer of qualified student debt that came due during the technology worker’s period of employment with the employer.
   (3)  The employer may require a person to provide a copy of the program agreement and a copy of the tax credit certificate issued pursuant to this section in order to verify that a person is an eligible technology worker with qualified student debt.
   (4)  The employer claiming a tax credit under the program shall retain all relevant records for at least three tax years following the last tax year in which the tax credit is claimed.
   c.  A technology worker and the technology worker’s employer may both claim tax credits for payments of qualified student debt made in the same year, but the same payment of qualified student debt shall not be claimed by more than one taxpayer.
   d.  A technology worker and the technology worker’s employer shall receive a credit for the amount of qualified student debt repaid by the employer or technology worker up to a combined amount of one thousand dollars each year for a maximum of five years.
   e.  Any tax credit in excess of the taxpayer’s liability for the tax year is not refundable but may be credited to the tax liability for the following five years or until depleted, whichever is earlier. A tax credit shall not be carried back to a tax year prior to the tax year in which the taxpayer first receives the tax credit.
   f.  A technology worker or employer may claim the tax credit only if the technology worker is in compliance with the program agreement, and the technology worker is not in arrears on the repayment schedule for the qualified student debt.
   10.
  a.  (1)  To claim the technology workers tax credit, a technology worker shall attach the tax credit certificate issued by the commission to the taxpayer’s tax return.
   (2)  To claim the technology workers tax credit for payments made on behalf of a technology worker, a taxpayer shall attach a copy of the tax credit certificate issued to the technology worker along with any information required by the department of revenue pertaining to the payments made to an eligible lender.
   b.  The tax credit certificate attached to the taxpayer’s tax return shall expire on or after the last day of the taxable year for which the taxpayer is claiming the tax credit and show a tax credit amount equal to or greater than the tax credit claimed on the taxpayer’s tax return.
   c.  The tax credit certificate, unless rescinded by the commission, shall be accepted by the department of revenue as payment for taxes imposed pursuant to chapter 422, divisions II, III, and V, and in chapter 432, and for the moneys and credits tax imposed in 533.329, subject to any conditions or restrictions placed by the commission upon the face of the tax credit certificate and subject to the limitations of this section.
   11.  Except as otherwise provided in this section, a tax credit certificate is not transferable to any person or entity.
   12.  An eligible technology worker who exercises the forbearance or deferment provisions of a student loan agreement that comprises a portion of the technology worker’s qualified student debt does not forfeit the right to claim the tax credit available under this section. The department of revenue shall toll the carryforward provisions of subsection 9, paragraph “e”, for any worker exercising forbearance or deferment provisions.
   13.
  a.  The commission, in consultation with the department of revenue, shall adopt rules pursuant to chapter 17A for the implementation and administration of the program.
   b.  The department of revenue, in consultation with the commission, may adopt rules pursuant to chapter 17A for the implementation and administration of subsections 9 through 12.
    Sec. 2.  NEW SECTION.  422.11R  Technology workers tax credit.
   The taxes imposed under this division, less the credits allowed under section 422.12, shall be reduced by a technology workers tax credit authorized pursuant to section 261.114.
    Sec. 3.  Section 422.33, Code 2013, is amended by adding the following new subsection:
   NEW SUBSECTION.  30.  The taxes imposed under this division shall be reduced by a technology workers tax credit authorized pursuant to section 261.114.
    Sec. 4.  Section 422.60, Code 2013, is amended by adding the following new subsection:
   NEW SUBSECTION.  12.  The taxes imposed under this division shall be reduced by a technology workers tax credit authorized pursuant to section 261.114.
    Sec. 5.  NEW SECTION.  432.12N  Technology workers tax credit.
   The taxes imposed under this chapter shall be reduced by a technology workers tax credit authorized pursuant to section 261.114.
    Sec. 6.  Section 533.329, subsection 2, Code 2013, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  k.  The moneys and credits tax imposed under this section shall be reduced by a technology workers tax credit authorized pursuant to section 261.114.
    Sec. 7.  APPLICABILITY.  This Act applies to tax years beginning on or after January 1, 2014.
EXPLANATION
   This bill provides for the establishment of a technology workers tax credit program to be administered by the college student aid commission and the department of revenue.
   The purpose of the program is to provide a tax credit to eligible technology workers or to provide a tax credit to an eligible technology worker’s employer for payments made toward the qualified student debt. For purposes of the bill, “qualified student debt” is the total amount of principal borrowed by the eligible technology worker to attend a postsecondary institution. Only those loans included as part of an eligible technology worker’s financial aid package from a postsecondary institution may be included in the amount of qualified student debt.
   To be eligible for the program, a technology worker must be or become an Iowa resident and remain an Iowa resident for the entirety of any tax year in which the technology worker seeks to claim the tax credit available under the program. The bill defines a “technology worker” for purposes of the bill as a worker who is employed as a computer and information scientist, systems analyst, computer programmer or developer, or computer professional, or any skilled worker who performs any function related to information technology, including the study, design, development, implementation, support, or management of computer-based information systems. The eligible technology worker must enter into an agreement with the college student aid commission.
   The commission is required to coordinate with postsecondary institutions, technology workers, eligible lenders, and the department of revenue in the administration of the program. Upon entering into a program agreement, the commission must request information from the postsecondary institution in which the technology worker was enrolled in order to verify that the technology worker was enrolled at the institution and to certify the amount of qualified student debt. Upon receiving this information, the commission must issue a tax credit certificate to an eligible technology worker. If the commission is unable to verify or certify the information, the agreement is terminated.
   The technology worker may claim the repayment of qualified student debt as a credit against state income taxes and may carry the credit forward for up to five years. A technology worker and the technology worker’s employer may receive a combined maximum tax credit amount of $1,000 a year for up to five years.
   An employer may claim the portion of the credit for payments made directly to eligible lenders on the technology worker’s behalf to the extent that such payments are due under the terms of the loan during the eligible technology worker’s period of employment with that employer. The credit is not refundable or transferable and may not be carried back to prior tax years but may be carried forward for the earlier of five years or until depleted. The credit is only available if the technology worker is in compliance with the agreement entered into with the college student aid commission, and is not in arrears on the repayment schedule for the qualified student debt.
   The bill provides for rulemaking by both the college student aid commission and the department of revenue for the administration of the program.
   The bill applies to tax years beginning on or after January 1, 2014.