House File 617 - Introduced HOUSE FILE 617 BY PRICHARD , McCONKEY , HANSEN , COHOON , KURTH , JAMES , B. MEYER , KONFRST , SUNDE , HALL , BOHANNAN , HUNTER , JUDGE , GJERDE , ANDERSON , WILBURN , WESSEL-KROESCHELL , OLSON , KRESSIG , MASCHER , JACOBY , EHLERT , CAHILL , WINCKLER , STAED , OLDSON , BROWN-POWERS , THEDE , DONAHUE , FORBES , BENNETT , WOLFE , and STECKMAN A BILL FOR An Act providing small businesses with income, franchise, 1 moneys and credits, and gross premiums tax credits for 2 providing child care benefits to employees of the small 3 business, making appropriations, and including retroactive 4 applicability date provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 2289YH (4) 89 jm/jh

H.F. 617 DIVISION I 1 SMALL BUSINESS CHILD CARE TAX CREDIT 2 Section 1. NEW SECTION . 237A.31 Small business child care 3 tax credit. 4 1. As used in this section “small business” means any 5 enterprise which is located in this state, which is operated 6 for profit and under a single management, and which has either 7 fewer than twenty employees or an annual gross income of less 8 than four million dollars computed as the average of the three 9 preceding fiscal years. This definition does not apply to any 10 program or activity for which a definition for small business 11 is provided for the program or activity by federal law or 12 regulation or other state law. 13 2. The taxes imposed against the income tax imposed under 14 chapter 422, subchapter II or III, the franchise tax imposed 15 under chapter 422, subchapter V, the gross premiums tax imposed 16 under chapter 432, or the moneys and credits tax imposed in 17 section 533.329 shall be reduced by a small business child 18 care tax credit for a small business that provides child care 19 employee benefits to employees of the business as provided in 20 this section. The amount of the credit equals the costs to 21 provide the benefit up to three thousand dollars per employee 22 per year. 23 3. The aggregate amount of tax credits authorized pursuant 24 to this section shall not exceed a total of two million 25 dollars per fiscal year, and shall be awarded on a first-come, 26 first-served basis. 27 4. To be eligible for a small business child care tax 28 credit, the small business must provide child care employee 29 benefits to employees of the business through any of the 30 following: 31 a. Building a new structure or rehabilitating an existing 32 structure to be used as a child care center at or near the small 33 business where the children of the employees of the business 34 are provided child care. A small business may construct or 35 -1- LSB 2289YH (4) 89 jm/jh 1/ 4

H.F. 617 rehabilitate the structure in conjunction with another business 1 but only the actual cost of the business shall be considered in 2 determining the credit. 3 b. Operating or leasing a child care center at or near 4 the small business where the children of the employees of the 5 business are provided child care. 6 5. Any credit in excess of the tax liability is not 7 refundable but the excess for the tax year may be credited 8 to the tax liability for the following five years or until 9 depleted, whichever is earlier. 10 6. The director of revenue shall adopt rules to implement 11 this section. 12 Sec. 2. NEW SECTION . 422.12O Small business child care tax 13 credit. 14 1. The taxes imposed under this subchapter, less the credits 15 allowed under section 422.12, shall be reduced by a small 16 business child care tax credit allowed pursuant to section 17 237A.31. 18 2. An individual may claim the tax credit allowed a 19 partnership, S corporation, limited liability company, estate, 20 or trust electing to have the income taxed directly to the 21 individual. The amount claimed by the individual shall be 22 based upon the pro rata share of the individual’s earnings of a 23 partnership, S corporation, limited liability company, estate, 24 or trust. 25 Sec. 3. Section 422.33, Code 2021, is amended by adding the 26 following new subsection: 27 NEW SUBSECTION . 31. The taxes imposed under this subchapter 28 shall be reduced by a small business child care tax credit 29 allowed pursuant to section 237A.31. 30 Sec. 4. Section 422.60, Code 2021, is amended by adding the 31 following new subsection: 32 NEW SUBSECTION . 14. The taxes imposed under this subchapter 33 shall be reduced by a small business child care tax credit 34 allowed pursuant to section 237A.31. 35 -2- LSB 2289YH (4) 89 jm/jh 2/ 4

H.F. 617 Sec. 5. NEW SECTION . 432.12N Small business child care tax 1 credit. 2 The taxes imposed under this chapter shall be reduced by 3 a small business child care tax credit allowed pursuant to 4 section 237A.31. 5 Sec. 6. Section 533.329, subsection 2, Code 2021, is amended 6 by adding the following new paragraph: 7 NEW PARAGRAPH . l. The moneys and credits tax imposed under 8 this section shall be reduced by a small business child care 9 tax credit allowed pursuant to section 237A.31. 10 Sec. 7. RETROACTIVE APPLICABILITY. This Act applies 11 retroactively to January 1, 2021, for tax years beginning on 12 or after that date. 13 DIVISION II 14 APPROPRIATION 15 Sec. 8. TAXPAYER RELIEF FUND —— APPROPRIATION. There is 16 appropriated from the taxpayer relief fund created in section 17 8.57E to the general fund of the state for the fiscal year 18 beginning July 1, 2021, and ending June 30, 2022, the following 19 amounts, or so much thereof as is necessary, to be used for the 20 purposes designated: 21 For the small business child care tax credit pursuant to 22 section 237A.31: 23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,000,000 24 EXPLANATION 25 The inclusion of this explanation does not constitute agreement with 26 the explanation’s substance by the members of the general assembly. 27 This bill provides small businesses with income, franchise, 28 moneys and credits, and gross premiums tax credits for 29 providing child care benefits to employees of the small 30 business. 31 DIVISION I —— SMALL BUSINESS CHILD CARE TAX CREDIT. The 32 bill defines “small business” to mean any enterprise which is 33 located in this state, which is operated for profit and under a 34 single management, and which has either fewer than 20 employees 35 -3- LSB 2289YH (4) 89 jm/jh 3/ 4

H.F. 617 or an annual gross income of less than $4 million computed as 1 the average of the three preceding fiscal years. 2 The child care employee benefits include the following: 3 building or rehabilitating an existing structure at or near 4 the small business as a child care center for employee use, 5 or operating or leasing a child care center for children of 6 employees to attend at or near the small business. 7 The amount of the credit equals the costs to provide the 8 benefit up to $3,000 per employee per year. The aggregate 9 amount of tax credits authorized pursuant to the bill shall 10 not exceed a total of $2 million per fiscal year, and shall be 11 awarded on a first-come, first-served basis. The credit is 12 nonrefundable but any excess may be carried forward for up to 13 five tax years. 14 The division applies retroactively to tax years beginning on 15 or after January 1, 2021. 16 DIVISION II —— APPROPRIATIONS. The bill makes an 17 appropriation from the taxpayer relief fund to the general fund 18 of the state for fiscal year 2022 in the same amount as the 19 amount of small business child care tax credits allowed in the 20 bill for that fiscal year. 21 -4- LSB 2289YH (4) 89 jm/jh 4/ 4