House File 2246      


                                          HOUSE FILE       
                                          BY  SCHICKEL


       Passed House,  Date               Passed Senate, Date             
       Vote:  Ayes        Nays           Vote:  Ayes        Nays         
                    Approved                            

                                         A BILL FOR

     1 An Act providing a tax credit to a small business for
     2    unemployment benefits paid to national guard and military
     3    reserve replacement workers and including a retroactive
     4    applicability date provision.
     5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
     6 TLSB 5289YH 81
     7 mg/je/5

PAG LIN



  1  1    Section 1.  NEW SECTION.  422.11M  UNEMPLOYMENT BENEFITS
  1  2 TAX CREDIT == SMALL BUSINESSES.
  1  3    1.  The taxes imposed under this division, less the credits
  1  4 allowed under sections 422.12 and 422.12B, shall be reduced by
  1  5 an unemployment benefits tax credit.  This credit shall only
  1  6 be available to small businesses that employed not more than
  1  7 fifty permanent full=time employees during the previous tax
  1  8 year.  The amount of the unemployment benefits tax credit
  1  9 equals one hundred percent of the state unemployment benefits
  1 10 received by each temporary employee hired by the eligible
  1 11 small business to temporarily replace a permanent full=time
  1 12 employee who was a member of the Iowa national guard or
  1 13 reserve forces of the United States and who was activated for
  1 14 federal duty, other than training, for a minimum aggregate of
  1 15 ninety days.
  1 16    Notwithstanding any confidentiality provision, upon
  1 17 application to the department of workforce development by the
  1 18 taxpayer, the department shall provide the taxpayer with the
  1 19 amount of state unemployment benefits paid to the temporary
  1 20 employees for whom the state tax credit is claimed.
  1 21    2.  If the unemployment benefits tax credit exceeds the tax
  1 22 liability of the taxpayer, the excess is nonrefundable but may
  1 23 be credited to the tax liability for the following seven years
  1 24 or until depleted, whichever is the earlier.
  1 25    3.  An individual may claim an unemployment benefits tax
  1 26 credit allowed a partnership, limited liability company, S
  1 27 corporation, estate, or trust electing to have the income
  1 28 taxed directly to the individual.  The amount claimed by the
  1 29 individual shall be based upon the pro rata share of the
  1 30 individual's earnings of the partnership, limited liability
  1 31 company, S corporation, estate, or trust.
  1 32    Sec. 2.  Section 422.33, Code Supplement 2005, is amended
  1 33 by adding the following new subsection:
  1 34    NEW SUBSECTION.  20.  The taxes imposed under this division
  1 35 shall be reduced by an unemployment benefits tax credit
  2  1 allowed small businesses in the manner and under the
  2  2 requirements specified in section 422.11M.
  2  3    Sec. 3.  Section 422.60, Code Supplement 2005, is amended
  2  4 by adding the following new subsection:
  2  5    NEW SUBSECTION.  11.  The taxes imposed under this division
  2  6 shall be reduced by an unemployment benefits tax credit
  2  7 allowed small businesses in the manner and under the
  2  8 requirements specified in section 422.11M.
  2  9    Sec. 4.  NEW SECTION.  432.12H  UNEMPLOYMENT BENEFITS TAX
  2 10 CREDIT.
  2 11    The taxes imposed under this chapter shall be reduced by an
  2 12 unemployment benefits tax credit allowed small businesses in
  2 13 the manner and under the requirements specified in section
  2 14 422.11M.
  2 15    Sec. 5.  Section 533.24, Code Supplement 2005, is amended
  2 16 by adding the following new subsection:
  2 17    NEW SUBSECTION.  8.  The moneys and credits tax imposed
  2 18 under this section shall be reduced by an unemployment
  2 19 benefits tax credit allowed small businesses in the manner and
  2 20 under the requirements specified in section 422.11M.
  2 21    Sec. 6.  RETROACTIVE APPLICABILITY DATE.  This Act applies
  2 22 retroactively to January 1, 2006, for tax years beginning on
  2 23 or after that date.
  2 24                           EXPLANATION
  2 25    This bill allows a tax credit under the individual and
  2 26 corporate income taxes, franchise tax, premiums tax, and
  2 27 moneys and credits tax for small businesses in the amount of
  2 28 the unemployment benefits paid to each employee who
  2 29 temporarily replaces a permanent full=time employee who was a
  2 30 member of the Iowa national guard or reserve forces and who
  2 31 was activated for federal duty, other than training, for a
  2 32 minimum aggregate of 90 days.  The credit is nonrefundable but
  2 33 may be carried forward for up to seven tax years.
  2 34    The bill applies retroactively to January 1, 2006, for tax
  2 35 years beginning on or after that date.
  3  1 LSB 5289YH 81
  3  2 mg:rj/je/5