HB36

ENROLLED, An Act,

To establish the Alabama Small Business and Agribusiness Jobs Act; to define certain terms; to provide for a tax credit to Alabama small business employers that create new jobs and hire new employees under certain conditions; to amend Section 40-18-321, Code of Alabama 1975, to make conforming changes; to provide rulemaking authority; and to require the Department of Revenue to implement a program promoting various tax credits for small businesses and independently owned business entities.

BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:

Section 1. This act shall be known and may be cited as the Alabama Small Business and Agribusiness Jobs Act.

Section 2. For the purpose of this act, the following words and phrases shall have the following meanings:

(1) ALABAMA SMALL BUSINESS EMPLOYER. A business organization duly formed, organized, or qualified to do business in the state, with its headquarters or principal place of business in the state, and having 75 or fewer employees during the tax year in which the tax credit is claimed pursuant to this act, other than new employees for which a credit is allowed by this act.

(2) DEPARTMENT. The Alabama Department of Revenue.

(3) NET EMPLOYEE GROWTH. An Alabama small business employer's net increase in the total number of full-time employees residing in Alabama based on the following:

a. The total number of full-time Alabama employees on the last date of each tax year in which the employer is claiming a credit pursuant to this act; minus,

b. The total number of full-time Alabama employees as of the last day of the tax year in which a credit under this act was first claimed and granted. on the day before the effective date of this act.

(4) QUALIFIED NEW EMPLOYEE. A new employee of an Alabama small business employer that, for a qualifying time period of 12 consecutive months, satisfies all of the following criteria:

a. Was employed on a full-time basis.

b. Was an Alabama resident.

c. Received wages from the Alabama small business employer that met or exceeded a total of forty thousand dollars ($40,000).

d. Was not a full-time employee of the Alabama small business employer during any time 12 months prior to the start of such qualifying time period.

(5) WAGES. Total wages paid to an employee, including gross wages, salaries, overtime, and bonuses.

Section 3. (a) An Alabama small business tax credit is hereby allowed for any Alabama small business employer that creates a new job and hires a new full-time employee to fill that job. The credit shall be a one-time credit equal to one thousand five hundred dollars ($1,500) for each qualified new employee, and shall only be applicable to a tax year in which the new employee has completed 12 months of consecutive full-time employment with the employer.

(b) To qualify for the credit, the employer must have a net employee growth as of the last date of each tax year during which the employer claims a credit pursuant to this act. The net employee growth must equal or exceed the number of qualified new employees for which a credit is sought in the current or applicable tax year, plus the total number of qualified new employees for whom credits were claimed pursuant to this act in a prior tax year.

(c)(1) The credit shall be allowed against the tax imposed by Chapter 16 or Chapter 16 or Chapter 18, of Title 40, Code of Alabama 1975. A financial institution shall be allowed to claim the credit against the liability determined in Chapter 16, Title 40, Code of Alabama 1975. A financial institution shall be allowed to claim the credit against the liability determined in Chapter 16, Title 40, Code of Alabama 1975. The credit shall be available, on a pro rata basis, to the owners or members of qualified Alabama small business employers that are entities taxed under subchapters S or K of the Internal Revenue Code.

(2) An Alabama small business employer may receive a credit under this section or under the Full Employment Act of 2011, Article 11, Chapter 18, Title 40, Code of Alabama 1975, but in no case shall the employer receive both a credit under this act and a credit provided under the Full Employment Act of 2011. Once a credit is claimed for an employee under this section or the Full Employment Act of 2011, the employer may not thereafter make a claim for a credit of that employee under the other act.

(d) This tax credit may not be allowed to decrease a taxpayer's tax liability to less than zero in any tax year, but any unused portion may be carried forward for a period of up to three years. The credit is not refundable or transferable.

(e) To the extent the credit is used to offset a financial institution excise tax liability, the Department of Finance shall promulgate regulations to ensure that the credit in no case would reduce the distribution for municipalities and counties.

(e) To the extent the credit is used to offset a financial institution excise tax liability, the Department of Finance shall promulgate regulations to ensure that the credit in no case would reduce the distribution for municipalities and counties.

(f) The income tax credit provided in this section may be claimed only for employees who are hired following the effective date of this act and shall only apply to tax years beginning on or after January 1, 2016.

(g) The tax credit provided in this section shall expire on January 1, 2019, unless otherwise extended by the Legislature.

Section 4. The department may adopt rules consistent with this act as necessary to implement and administer this act. Rules may be adopted to include, but not limited to, a requirement that, upon request, taxpayers shall receive credits for up to, but no more than, the number of qualified new employees hired after the effective date of this act. In no case shall an employer claim a credit under this act for the same qualified employee more than once. Nor shall the number of qualified new employees, for which a credit is claimed, exceed the number of employees at the end of the tax year less the number of employees at the beginning of the tax year. Section 5. Section 40-18-321, Code of Alabama 1975, is amended to read as follows:

§40-18-321.

"In addition to the existing tax credit allowed for in the Full Employment Act of 2011, codified as Section 40-18-290 through 40-18-293, or the Alabama Small Business Jobs Act, an additional $1,000 one thousand dollar ($1,000) tax credit for job creation is available if the existing requirements of Section 40-18-290 through 40-18-293 or Sections 2 and 3 of the act adding this amendatory language are met along with the following definition:

"RECENTLY DEPLOYED UNEMPLOYED VETERAN. An individual who is all of the following:

"(1) Was a resident of Alabama at the time of entry into military service or was mobilized to active, federal military service while a member of the Alabama National Guard or other reserve unit located in Alabama, regardless of the resident's home of record.

"(2) Received an honorable or general discharge from active, federal military service within the two-year period preceding the date of hire.

"(3) Has certification by the Department of Labor at the time of hire of either of the following:

"a. Collecting or being eligible to collect unemployment benefits.

"b. Having exhausted his or her unemployment benefits."

Section 6. By December 31, 2016, the Department of Revenue shall create and implement a program to actively promote to small business owners, tax professionals, and other appropriate parties the tax credits allowed under the Alabama Small Business Jobs Act created by this act, the Full Employment Act of 2011, Article 11 of Chapter 18 of Title 40, Code of Alabama 1975, the Heroes for Hire Tax Credit Act of 2012, Article 13 of Chapter 18 of Title 40, Code of Alabama 1975, and other tax credits available to small businesses and independently owned business entities.

Section 7. The provisions of this act are severable. If any part of this act is declared invalid or unconstitutional, that declaration shall not affect the part which remains.

Section 8. All laws or parts of laws which conflict with this act are repealed.

Section 9. This act shall become effective 90 days following its passage and approval by the Governor, or its otherwise becoming law.

Business and Commerce

Economic Development

Small Business

Taxation

Code Amended