H.F. 2098 Section 1. NEW SECTION . 15C.1 Title. 1 This chapter shall be known and may cited as the “Iowa job 2 training tax credit program” . 3 Sec. 2. NEW SECTION . 15C.2 Definitions. 4 For purposes of this chapter, unless the context otherwise 5 requires: 6 1. “Apprentice” means the same as defined in section 15B.2. 7 2. “Authority” means the economic development authority 8 created in section 15.105. 9 3. “Employ” or “employed” means to be hired or retained for 10 paid work as an apprentice or intern and to perform the duties 11 of an apprentice or intern. 12 4. “Intern” means an Iowa student engaged in an internship. 13 5. “Internship” means temporary employment of an Iowa 14 student that focuses on providing the student with work 15 experience in the student’s field of study. 16 6. “Iowa student” means the same as defined in section 17 15.411, subsection 3, paragraph “a” . 18 7. “Minimum training standards” means the minimum training 19 standards adopted by the authority by rule pursuant to section 20 15C.3, subsection 3. 21 8. “Program” means the job training tax credit program 22 credit in this chapter. 23 9. “Qualified trainee” means a person who meets the 24 requirements of section 15C.3, subsection 2, with respect to 25 a tax year. 26 10. “Tax year” means the calendar year, or the fiscal year 27 ending during such calendar year, upon the basis of which a tax 28 is calculated. 29 Sec. 3. NEW SECTION . 15C.3 Job training tax credit program 30 —— application —— eligibility requirements. 31 1. Program administration. The authority, in consultation 32 with the department of revenue, shall administer a job training 33 tax credit program to provide tax credits to businesses that 34 employ qualified trainees in Iowa during the tax year. 35 -1- LSB 5074YH (4) 87 mm/jh 1/ 7

H.F. 2098 2. Qualified trainee. For purposes of the program, a person 1 is a qualified trainee of a business if the person meets all of 2 the following requirements for the tax year: 3 a. The person is an apprentice or an intern. 4 b. The person is employed by the business in Iowa. 5 c. The person satisfies the relevant minimum training 6 standard. 7 3. Minimum training standards. 8 a. The authority shall establish by rule minimum training 9 standards under the program for apprenticeships and internships 10 that will reflect the minimum amount of training necessary to 11 provide a meaningful work experience in the relevant field 12 of study of an intern or to learn the relevant trade or job 13 position of an apprentice. The minimum training standards 14 shall be a value expressed as a number of job training hours, 15 or a ratio of job training hours to work hours, or some 16 combination of both. 17 b. In determining the minimum training standards, the 18 authority shall consider the relevant field of study involved, 19 the trade or job position involved, the stated goals and length 20 of the internship or apprenticeship, and any other factors the 21 authority deems relevant. The authority may establish more 22 than one minimum training standard. 23 c. In establishing minimum training standards, the authority 24 may consult with any person the authority deems relevant, 25 including but not limited to the department of education, 26 institutions of higher learning, or business and labor 27 organizations. 28 4. Application. 29 a. A business employing one or more qualified trainees in 30 Iowa may apply to the authority for the job training tax credit 31 provided in section 15C.4. 32 b. The application shall be made in the manner and form 33 prescribed by the authority. 34 c. The authority may accept applications on a continuous 35 -2- LSB 5074YH (4) 87 mm/jh 2/ 7

H.F. 2098 basis or may establish, by rule, an annual application 1 deadline. 2 d. The application shall include all of the following 3 information: 4 (1) A description of the business and the apprenticeship 5 program or internship program conducted by the business, 6 including the number of qualified trainees employed by the 7 business during the relevant tax year. 8 (2) With respect to each qualified trainee of the business: 9 (a) The identity of the qualified trainee, the period 10 of time the qualified trainee was employed by the business 11 during the tax year, and if relevant, the institution of higher 12 learning at which the qualified trainee is a student. 13 (b) A description of the qualified trainee’s job duties and 14 the number of hours those job duties were performed. 15 (c) A description and total number of hours of job training 16 and instruction provided by the business to the qualified 17 trainee. 18 (d) A statement from the business certifying that the 19 apprentice or intern meets the relevant minimum training 20 standard for the relevant tax year. 21 (3) Any other information reasonably required by the 22 authority in order to establish and verify eligibility under 23 the program. 24 e. Upon receiving a complete and accurate application and 25 establishing that all requirements of the program have been 26 satisfied, the authority shall issue a tax credit and related 27 tax credit certificate to the business stating the amount of 28 job training tax credit under section 15C.4 the business may 29 claim. 30 Sec. 4. NEW SECTION . 15C.4 Job training tax credit. 31 1. a. A business that satisfies the requirements of the 32 job training tax credit program in section 15C.3 may claim a 33 tax credit in an amount equal to one thousand dollars for each 34 qualified trainee employed in Iowa by the taxpayer for the 35 -3- LSB 5074YH (4) 87 mm/jh 3/ 7

H.F. 2098 entire tax year. 1 b. If the qualified trainee is not employed for the entire 2 tax year, the maximum amount of the credit shall be prorated 3 and the amount of the credit with regard to that qualified 4 trainee shall equal the maximum amount of credit for the tax 5 year, divided by twelve, multiplied by the number of months 6 in the tax year the qualified trainee was employed by the 7 taxpayer. The credit shall be rounded to the nearest dollar. 8 If the qualified trainee was employed during any part of the 9 month, the qualified trainee shall be considered a qualified 10 trainee for the entire month. 11 2. An individual may claim the tax credit allowed a 12 partnership, limited liability company, S corporation, 13 estate, or trust electing to have income taxed directly to 14 the individual. The amount claimed by the individual shall 15 be based upon the pro rata share of the individual’s earnings 16 from the partnership, limited liability company, S corporation, 17 estate, or trust. 18 3. Any tax credit in excess of the taxpayer’s liability 19 for the tax year is not refundable but may be credited to the 20 tax liability for the following seven years or until depleted, 21 whichever is earlier. 22 4. Tax credits issued under this section are not 23 transferable to any person. 24 5. a. To claim a tax credit under this section, a taxpayer 25 shall include one or more tax credit certificates with the 26 taxpayer’s tax return. 27 b. The tax credit certificate shall contain the taxpayer’s 28 name, address, tax identification number, the amount of the 29 credit, and any other information required by the department 30 of revenue. 31 c. The tax credit certificate, unless rescinded by the 32 authority, shall be accepted by the department of revenue as 33 payment for taxes imposed in chapter 422, divisions II, III, 34 and V, and in chapter 432, and against the moneys and credits 35 -4- LSB 5074YH (4) 87 mm/jh 4/ 7

H.F. 2098 tax imposed in section 533.329, subject to any conditions or 1 restrictions placed by the authority or the department of 2 revenue upon the face of the tax credit certificate and subject 3 to the limitations of this program. 4 Sec. 5. NEW SECTION . 15C.5 Reports to general assembly. 5 The authority, in cooperation with the department of 6 revenue, shall publish an annual report of activities of the 7 program and shall submit the report to the governor and the 8 general assembly. 9 Sec. 6. NEW SECTION . 15C.6 Rules. 10 The authority and the department of revenue shall each adopt 11 rules as necessary for the implementation and administration of 12 this chapter. 13 Sec. 7. NEW SECTION . 422.10C Job training tax credit. 14 The taxes imposed under this division, less the credits 15 allowed under section 422.12, shall be reduced by a job 16 training tax credit allowed under chapter 15C. 17 Sec. 8. Section 422.33, Code 2018, is amended by adding the 18 following new subsection: 19 NEW SUBSECTION . 17. The taxes imposed under this division 20 shall be reduced by a job training tax credit allowed under 21 chapter 15C. 22 Sec. 9. Section 422.60, Code 2018, is amended by adding the 23 following new subsection: 24 NEW SUBSECTION . 14. The taxes imposed under this division 25 shall be reduced by a job training tax credit allowed under 26 chapter 15C. 27 Sec. 10. NEW SECTION . 432.12N Job training tax credit. 28 The taxes imposed under this chapter shall be reduced by a 29 job training tax credit allowed under chapter 15C. 30 Sec. 11. Section 533.329, subsection 2, Code 2018, is 31 amended by adding the following new paragraph: 32 NEW PARAGRAPH . m. The moneys and credits tax imposed under 33 this section shall be reduced by a job training tax credit 34 allowed under chapter 15C. 35 -5- LSB 5074YH (4) 87 mm/jh 5/ 7

H.F. 2098 Sec. 12. APPLICABILITY. This Act applies to tax years 1 beginning on or after January 1, 2019. 2 Sec. 13. APPLICABILITY. This Act applies to qualified 3 trainees employed in Iowa on or after January 1, 2019. 4 EXPLANATION 5 The inclusion of this explanation does not constitute agreement with 6 the explanation’s substance by the members of the general assembly. 7 This bill creates a job training tax credit program 8 (program) administered by the economic development authority 9 (EDA) in consultation with the department of revenue (DOR) 10 to provide tax credits to businesses that employ for pay 11 qualified trainees in Iowa during the tax year. To qualify 12 as a “qualified trainee” under the program, a person must be 13 an apprentice or an intern, must be employed by a business in 14 Iowa, and must satisfy the relevant minimum training standard. 15 “Apprentice” is defined in the bill to mean an Iowa resident 16 employed in an apprenticeable occupation and registered as such 17 with the U.S. office of apprenticeship. “Intern” is defined 18 in the bill to mean an Iowa college student, or a student who 19 graduated from high school in Iowa but who now attends college 20 outside of Iowa, who is engaged in temporary employment that 21 focuses on providing the student with work experience in the 22 student’s field of study. 23 EDA is required to establish by rule minimum training 24 standards that will reflect the minimum training necessary to 25 provide a meaningful work experience for an intern or to learn 26 a trade or job position for an apprentice. The bill describes 27 how the minimum training standards should be quantified, as 28 well as the factors EDA shall consider and the persons with 29 whom EDA may consult in determining the standards. The bill 30 provides that EDA may establish more than one minimum training 31 standard. 32 In order to receive a tax credit, a business must apply 33 to the authority in the manner and form prescribed by the 34 authority, and the bill describes the required information 35 -6- LSB 5074YH (4) 87 mm/jh 6/ 7

H.F. 2098 that must be contained in an application. EDA is required to 1 review applications and, upon determining that the requirements 2 of the program have been satisfied, issue a tax credit to the 3 business. 4 The tax credit equals $1,000 for each qualified trainee 5 employed in Iowa by a business for the entire tax year. If 6 a qualified trainee was not employed by the business for the 7 entire tax year, the amount of the credit is prorated based 8 upon the number of months of employment. The tax credit 9 may be claimed against the individual and corporate income 10 taxes, the franchise tax, the insurance companies tax, and the 11 moneys and credits tax. The tax credit is nonrefundable and 12 nontransferable, but any excess may be carried forward for 13 seven years. 14 The bill requires EDA and DOR to adopt rules as necessary 15 for the implementation of the bill, and requires EDA and DOR to 16 publish and submit annual reports to the governor and general 17 assembly containing information as described in the bill. 18 The bill applies to tax years beginning on or after January 19 1, 2019, and to qualified trainees employed in Iowa on or after 20 that date. 21 -7- LSB 5074YH (4) 87 mm/jh 7/ 7