HF 230 (LSB 2096YH (3) 88)

HOUSE FILE 230

BY  JACOBY

A BILL FOR

An Act creating the Iowa job training tax credit program and including applicability provisions. 
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  15K.1  Title.
   This chapter shall be known and may cited as the “Iowa job training tax credit program”.
    Sec. 2.  NEW SECTION.  15K.2  Definitions.
   For purposes of this chapter, unless the context otherwise requires:
   1.  “Apprentice” means the same as defined in section 15B.2.
   2.  “Authority” means the economic development authority created in section 15.105.
   3.  “Employ” or “employed” means to be hired or retained for paid work as an apprentice or intern and to perform the duties of an apprentice or intern.
   4.  “Intern” means an Iowa student engaged in an internship.
   5.  “Internship” means temporary employment of an Iowa student that focuses on providing the student with work experience in the student’s field of study.
   6.  “Iowa student” means the same as defined in section 15.411, subsection 3, paragraph “a”.
   7.  “Minimum training standards” means the minimum training standards adopted by the authority by rule pursuant to section 15K.3, subsection 3.
   8.  “Program” means the job training tax credit program credit in this chapter.
   9.  “Qualified trainee” means a person who meets the requirements of section 15K.3, subsection 2, with respect to a tax year.
   10.  “Tax year” means the calendar year, or the fiscal year ending during such calendar year, upon the basis of which a tax is calculated.
    Sec. 3.  NEW SECTION.  15K.3  Job training tax credit program —— application —— eligibility requirements.
   1.  Program administration.  The authority, in consultation with the department of revenue, shall administer a job training tax credit program to provide tax credits to businesses that employ qualified trainees in Iowa during the tax year.
   2.  Qualified trainee.  For purposes of the program, a person is a qualified trainee of a business if the person meets all of the following requirements for the tax year:
   a.  The person is an apprentice or an intern.
   b.  The person is employed by the business in Iowa.
   c.  The person satisfies the relevant minimum training standard.
   3.  Minimum training standards.
   a.  The authority shall establish by rule minimum training standards under the program for apprenticeships and internships that will reflect the minimum amount of training necessary to provide a meaningful work experience in the relevant field of study of an intern or to learn the relevant trade or job position of an apprentice. The minimum training standards shall be a value expressed as a number of job training hours, or a ratio of job training hours to work hours, or some combination of both. 
   b.  In determining the minimum training standards, the authority shall consider the relevant field of study involved, the trade or job position involved, the stated goals and length of the internship or apprenticeship, and any other factors the authority deems relevant. The authority may establish more than one minimum training standard.
   c.  In establishing minimum training standards, the authority may consult with any person the authority deems relevant, including but not limited to the department of education, institutions of higher learning, or business and labor organizations.
   4.  Application.
   a.  A business employing one or more qualified trainees in Iowa may apply to the authority for the job training tax credit provided in section 15K.4.
   b.  The application shall be made in the manner and form prescribed by the authority.
   c.  The authority may accept applications on a continuous basis or may establish, by rule, an annual application deadline.
   d.  The application shall include all of the following information:
   (1)  A description of the business and the apprenticeship program or internship program conducted by the business, including the number of qualified trainees employed by the business during the relevant tax year.
   (2)  With respect to each qualified trainee of the business:
   (a)  The identity of the qualified trainee, the period of time the qualified trainee was employed by the business during the tax year, and if relevant, the institution of higher learning at which the qualified trainee is a student.
   (b)  A description of the qualified trainee’s job duties and the number of hours those job duties were performed.
   (c)  A description and total number of hours of job training and instruction provided by the business to the qualified trainee.
   (d)  A statement from the business certifying that the apprentice or intern meets the relevant minimum training standard for the relevant tax year.
   (3)  Any other information reasonably required by the authority in order to establish and verify eligibility under the program. 
   e.  Upon receiving a complete and accurate application and establishing that all requirements of the program have been satisfied, the authority shall issue a tax credit and related tax credit certificate to the business stating the amount of job training tax credit under section 15K.4 the business may claim.
    Sec. 4.  NEW SECTION.  15K.4  Job training tax credit.
   1.  a.  A business that satisfies the requirements of the job training tax credit program in section 15K.3 may claim a tax credit in an amount equal to one thousand dollars for each qualified trainee employed in Iowa by the taxpayer for the entire tax year.
   b.  If the qualified trainee is not employed for the entire tax year, the maximum amount of the credit shall be prorated and the amount of the credit with regard to that qualified trainee shall equal the maximum amount of credit for the tax year, divided by twelve, multiplied by the number of months in the tax year the qualified trainee was employed by the taxpayer. The credit shall be rounded to the nearest dollar. If the qualified trainee was employed during any part of the month, the qualified trainee shall be considered a qualified trainee for the entire month.
   2.  An individual may claim the tax credit allowed 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.
   3.  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 seven years or until depleted, whichever is earlier.
   4.  Tax credits issued under this section are not transferable to any person.
   5.  a.  To claim a tax credit under this section, a taxpayer shall include one or more tax credit certificates with the taxpayer’s tax return.
   b.  The tax credit certificate shall contain the taxpayer’s name, address, tax identification number, the amount of the credit, and any other information required by the department of revenue.
   c.  The tax credit certificate, unless rescinded by the authority, shall be accepted by the department of revenue as payment for 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, subject to any conditions or restrictions placed by the authority or the department of revenue upon the face of the tax credit certificate and subject to the limitations of this program.
    Sec. 5.  NEW SECTION.  15K.5  Reports to general assembly.
   The authority, in cooperation with the department of revenue, shall publish an annual report of activities of the program and shall submit the report to the governor and the general assembly.
    Sec. 6.  NEW SECTION.  15K.6  Rules.
   The authority and the department of revenue shall each adopt rules as necessary for the implementation and administration of this chapter.
    Sec. 7.  NEW SECTION.  422.10C  Job training tax credit.
   The taxes imposed under this division, less the credits allowed under section 422.12, shall be reduced by a job training tax credit allowed under chapter 15K.
    Sec. 8.  Section 422.33, Code 2019, is amended by adding the following new subsection:
   NEW SUBSECTION.  17.  The taxes imposed under this division shall be reduced by a job training tax credit allowed under chapter 15K.
    Sec. 9.  Section 422.60, Code 2019, is amended by adding the following new subsection:
   NEW SUBSECTION.  14.  The taxes imposed under this division shall be reduced by a job training tax credit allowed under chapter 15K.
    Sec. 10.  NEW SECTION.  432.12N  Job training tax credit.
   The taxes imposed under this chapter shall be reduced by a job training tax credit allowed under chapter 15K.
    Sec. 11.  Section 533.329, subsection 2, Code 2019, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  l.  The moneys and credits tax imposed under this section shall be reduced by a job training tax credit allowed under chapter 15K.
    Sec. 12.  APPLICABILITY.  This Act applies to tax years beginning on or after January 1, 2020.
    Sec. 13.  APPLICABILITY.  This Act applies to qualified trainees employed in Iowa on or after January 1, 2020.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill creates a job training tax credit program (program) administered by the economic development authority (EDA) in consultation with the department of revenue (DOR) to provide tax credits to businesses that employ for pay qualified trainees in Iowa during the tax year. To qualify as a “qualified trainee” under the program, a person must be an apprentice or an intern, must be employed by a business in Iowa, and must satisfy the relevant minimum training standard. 
   “Apprentice” is defined in the bill to mean an Iowa resident employed in an apprenticeable occupation and registered as such with the U.S. office of apprenticeship. “Intern” is defined in the bill to mean an Iowa college student, or a student who graduated from high school in Iowa but who now attends college outside of Iowa, who is engaged in temporary employment that focuses on providing the student with work experience in the student’s field of study.
   EDA is required to establish by rule minimum training standards that will reflect the minimum training necessary to provide a meaningful work experience for an intern or to learn a trade or job position for an apprentice. The bill describes how the minimum training standards should be quantified, as well as the factors EDA shall consider and the persons with whom EDA may consult in determining the standards. The bill provides that EDA may establish more than one minimum training standard.
   In order to receive a tax credit, a business must apply to the authority in the manner and form prescribed by the authority, and the bill describes the required information that must be contained in an application. EDA is required to review applications and, upon determining that the requirements of the program have been satisfied, issue a tax credit to the business.
   The tax credit equals $1,000 for each qualified trainee employed in Iowa by a business for the entire tax year. If a qualified trainee was not employed by the business for the entire tax year, the amount of the credit is prorated based upon the number of months of employment. The tax credit may be claimed against the individual and corporate income taxes, the franchise tax, the insurance companies tax, and the moneys and credits tax. The tax credit is nonrefundable and nontransferable, but any excess may be carried forward for seven years. 
   The bill requires EDA and DOR to adopt rules as necessary for the implementation of the bill, and requires EDA and DOR to publish and submit annual reports to the governor and general assembly containing information as described in the bill.
   The bill applies to tax years beginning on or after January 1, 2020, and to qualified trainees employed in Iowa on or after that date.