SB195 By Senator Livingston RFD Fiscal Responsibility and Economic Development Rd 1 18-FEB-20

SYNOPSIS: Under existing law, a physician who qualifies as a rural physician in a small or rural community with a small or rural hospital is entitled to a tax credit of $5,000 each year for five years.

This bill would terminate the existing rural physician income tax credit effective December 31, 2020, and would authorize a physician claiming the credit for the tax year ending on December 31, 2020, to claim the credit under the revised act for the remainder of the five year credit period available under the prior law.

This bill would further provide a new rural dentist and rural physician income tax credit effective for tax year beginning after January 1, 2021. The bill would define practices, rural dentist and physician, and rural community. A rural community would be defined as a rural area under federal law. The requirements that a rural community have a rural hospital would be deleted. The bill would require a rural dentist or physician to practice at least 20 hours per week in a rural community.

The bill would require the State Board of Medical Examiners and the State Board of Dental Examiners to issue certificates to physicians and dentists, respectively, who qualify for the tax credit.

A BILL TO BE ENTITLED AN ACT

Relating to state income tax credits for rural physicians; to designate Sections 40-18-130, 40-18-131, and 40-18-132, Code of Alabama 1975, as Division 1 of Article 4A of Chapter 18 of Title 40, Code of Alabama 1975; to terminate the income tax credit authorized for a rural physician under the existing Article 4A of Chapter 18, Title 40, Code of Alabama 1975, as it existed prior to January 1, 2021, and to provide that any physician who claimed the credit or claims the exemption under the existing Article 4A for the tax year ending on December 31, 2020, would be authorized to continue to claim the exemption under this act until the credit period authorized under the prior law for that physician expires; to add Division 2 to Article 4A of Chapter 18, Title 40, Code of Alabama 1975, to further provide for a rural dentist and rural physician income tax credit; to provide definitions; to modify the requirement for residence and practice in a rural community; to remove the requirement for hospital privileges in a rural hospital; and to require the State Board of Medical Examiners and the State Board of Dental Examiners to certify physicians and dentists, respectively, who qualify for the income tax credit.

BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:

Section 1. Sections 40-18-130, 40-18-131, and 40-18-132, Code of Alabama 1975, shall be designated as Division 1 of Article 4A of Chapter 18 of Title 40, Code of Alabama 1975.

Section 2. (a) Any income tax credit authorized pursuant to Division 1 of Article 4A of Chapter 18, Title 40, Code of Alabama 1975, composed of Sections 40-18-130, 40-18-131, and 40-18-132, Code of Alabama 1975, is terminated effective for tax years ending after December 31, 2020.

(b) Notwithstanding subsection (a), any physician who claimed the exemption under Article 4A for any tax year prior to December 31, 2020, may claim the exemption under Division 1 of Article 4A for tax year 2020.

Section 3. Division 2 of Article 4A is added to Chapter 18 of Title 40, Code of Alabama 1975, commencing with Section 40-18-133, to read as follows:

§40-18-133. Division 2.

It is the intent of the Legislature to institute programs that will make rural Alabama communities more competitive in the recruitment and retention of physicians and dentists and reduce inequities that rural communities have in the funding and recruitment of physicians and dentists.

§40-18-133.1.

For the purposes of this division, the following words have the following meanings, respectively, unless the context clearly indicates otherwise:

(1) PRACTICING. Assessing, diagnosing, performing surgical procedures, treating, reporting, or giving advice in a medical capacity in a medical facility, not including a personal residence, located in a rural community. Practicing includes prescribing medicines and signing any medical certificate required for statutory purposes, such as death and cremation certificates.

(2) RURAL COMMUNITY. A rural area in this state that meets the criteria for designation as a rural area pursuant to 42 C.F.R. 491.5(c).

(3) RURAL DENTIST. A dentist licensed to practice dentistry in Alabama who practices and resides in a rural community and practices an annual average of at least 20 hours per week.

(4) RURAL PHYSICIAN. A physician licensed to practice medicine in Alabama who practices and resides in a rural community and practices medicine an annual average of at least 20 hours per week.

§40-18-133.2.

(a)(1) Beginning with the 2021 tax year, a person newly qualifying as a rural dentist or a rural physician shall be allowed a credit against the tax imposed by Section 40-18-2, in the sum of five thousand dollars ($5,000). The tax credit may be claimed for not more than five consecutive tax years if the person continues to qualify as a rural physician or a rural dentist.

(2) Notwithstanding subdivision (1), a physician who claimed a tax credit under Division 1 of Article 4A of Chapter 18 of this title, prior to its termination by this act for the 2020 tax year who qualifies as a rural physician under this subsection shall be entitled to a tax credit of five thousand dollars ($5,000) per tax year for the period of five consecutive years less the number of years a tax credit under Division 1 of Article 4A of Chapter 18 of this title was received. Except as provided in this subdivision, no credit may be claimed under this division by a physician who previously claimed a rural physician tax credit under Division 1 of Article 4A prior to its termination, or otherwise.

(3) Except as provided in subdivision (2), no tax credit shall be allowed under this subsection to a physician or dentist who has practiced in a rural community prior to January 1, 2021, unless, after January 1, 2021, the physician or dentist returns to practice in a rural community after having practiced in a large or urban community or outside of Alabama for at least three years.

(4) Any person who claims a tax credit as a rural dentist or rural physician pursuant to subdivision (1) for five consecutive tax years as provided in subdivision (2), shall not thereafter be eligible to claim any additional tax credit under this act. In addition, if a rural dentist or rural physician claims a tax credit under this act for any tax year and for any reason does not claim a tax credit for the next consecutive tax year, the person shall not be eligible to claim any additional tax credit under this act thereafter.

(b) Prior to claiming a credit under this act, a rural physician shall submit to the State Board of Medical Examiners, or its designee, and a rural dentist shall submit to the State Board of Dental Examiners, or its designee, adequate information to substantiate that he or she qualifies for the income tax credit. The appropriate board or its designee, upon review of the foregoing documentation from the rural physician or dentist, shall make the determination on whether he or she qualifies for the credit and shall issue a certificate to the qualifying physician or dentist. No credit shall be granted to a rural physician or rural dentist who does not obtain a certificate required by this subsection prior to claiming the credit on his or her income tax return, and fails to attach the certification to his or her income tax return at the time the credit is being claimed.

(c) Effective for tax years beginning after December 31, 2020, the State Board of Medical Examiners, or its designee, for physicians, and the State Board of Dental Examiners, or its designee, for dentists, shall file an annual informational report in accordance with Section 40-1-50 and rules adopted under that section, for physicians and dentists, respectively, who receive the credit under this division.

(d) The Department of Revenue shall adopt any rules necessary to implement and administer this division.

Section 4. This act shall become effective immediately following its passage and approval by the Governor, or its otherwise becoming law.

Taxation

Income Tax

Physicians

Dentists

Public Health Department

Rural Areas

Code Amended