For tax years beginning on or after January 1, 1984, a
taxpayer which is considered to be a small business corporation, as defined by
subrule 502.11(2), is allowed a deduction for 50 percent of the first 12 months
of wages paid or accrued during the tax years for work done in Iowa for
employees first hired on or after January 1, 1984.
A handicapped individual domiciled in this state at the time
of hiring.
An individual domiciled in this state at the time of hiring
who meets any of the following conditions:
4. Is in a work release program pursuant to
Iowa Code chapter 904.
An individual, whether or not domiciled in this state at the
time of the hiring, who is on parole or probation and to whom the interstate
probation and parole compact under Iowa Code chapter 913 applies.
For tax years beginning on or after January 1, 1989, a
taxpayer which is considered to be a small business corporation, as defined by
subrule 502.11(2) is allowed a deduction for 65 percent not to exceed $20,000
of the first 12 months of wages paid or accrued during the tax year for work
done in Iowa for employees first hired after January 1, 1989, who meet the
above criteria.
(1) The additional
deduction shall not be allowed for wages paid to an individual who was hired to
replace an individual whose employment was terminated within the 12-month
period preceding the date of first employment. However, if the individual being
replaced left employment voluntarily without good cause attributable to the
employer or if the individual was discharged for misconduct in connection with
the individual's employment as determined by the Iowa division of job service
of the department of employment services, the additional deduction shall be
allowed.
The determination of whether an individual left employment
voluntarily without good cause attributable to the employer or if the
individual was discharged for misconduct is a factual determination which must
be made on a case-by-case basis.
(2) The term "small business corporation"
includes the operation of a farm but does not include the practice of a
profession. The following conditions apply for the purpose of determining what
constitutes a small business corporation.
a. A
small business corporation shall not have had more than 20 full-time equivalent
positions during each of the 26 consecutive weeks within the 52-week period
immediately preceding the date on which the individual for whom an additional
deduction for wages is taken was hired. Full-time equivalent position means any
of the following:
1. An employment position
requiring an average work week of 40 or more hours;
2. An employment position for which
compensation is paid on a salaried full-time basis without regard to hours
worked; or
3. An aggregation of any
number of part-time positions which equal one full-time position. For purposes
of this subrule each part-time position shall be categorized with regard to the
average number of hours worked each week as a one-quarter, half, three-quarter,
or full-time position, as set forth in the following table:
|
Average Number of Weekly
Hours
|
Category
|
|
More than 0 but less than 15
|
1/4
|
|
15 or more but less than 25
|
1/2
|
|
25 or more but less than 35
|
3/4
|
|
35 or more
|
1 (full-time)
|
b. A small business corporation shall not
have more than $1 million in annual gross revenues or after July 1, 1984, $3
million in annual gross revenues or as the average of the three preceding tax
years. "Annual gross revenues" means total sales, before deducting returns and
allowances but after deducting corrections and trade discounts, sales taxes and
excise taxes based on sales, as determined in accordance with generally
accepted accounting principles.
c. A
small business corporation shall not be an affiliate or subsidiary of a
business which is dominant in its field of operation. "Dominant in its field of
operation" means having more than 20 full-time equivalent employees and more
than $1 million of annual gross revenues or after July 1, 1984, $3 million of
annual gross revenues or as the average of the three preceding tax years.
"Affiliate or subsidiary of a business dominant in its field of operations"
means a business which is at least 20 percent owned by a business dominant in
its field of operation, or by partners, officers, directors, majority
stockholders, or their equivalent, of a business dominant in that field of
operation.
d. "Operation of a farm"
means the cultivation of land for the production of agricultural crops, the
raising of poultry, the production of eggs, the production of milk, the
production of fruit or other horticultural crops, grazing or the production of
livestock. Operation of a farm shall not include the production of timber,
forest products, nursery products, or sod and operation of a farm shall not
include a contract where a processor or distributor of farm products or
supplies provides spraying, harvesting or other farm services.
e. "The practice of a profession" means a
vocation requiring specialized knowledge and preparation including but not
limited to the following: medicine and surgery, podiatry, osteopathy,
osteopathic medicine and surgery, psychology, psychiatry, chiropractic,
nursing, dentistry, dental hygiene, optometry, speech pathology, audiology,
pharmacy, physical therapy, occupational therapy, mortuary science, law,
architecture, engineering and surveying, and accounting.
(3) Definitions.
a. The term
"handicapped
person" means any person who has a physical or mental impairment which
substantially limits one or more major life activities, has a record of such
impairment, or is regarded as having such an impairment.
The term handicapped does not include any person who is an
alcoholic or drug abuser whose current use of alcohol or drugs prevents the
person from performing the duties of employment or whose employment, by reason
of current use of alcohol or drugs, would constitute a direct threat to the
property or the safety of others.
b. The term "physical or mental
impairment" means any physiological disorder or condition, cosmetic
disfigurement, or anatomical loss affecting one or more of the following body
systems: neurological; musculoskeletal; special sense organs; respiratory,
including speech organs; cardiovascular; reproductive; digestive;
genitourinary; hemic and lymphatic; skin and endocrine; or any mental or
psychological disorder, such as intellectual disability, organic brain
syndrome, emotional or mental illness, and specific learning
disabilities.
c. The term
"major life activities" means functions such as caring for
one's self, performing manual tasks, walking, seeing, hearing, speaking,
breathing, learning, and working.
d. The term "has a record of such
impairment" means has a history of, or has been misclassified as
having, a mental or physical impairment that substantially limits one or more
major life activities.
e. The term
"is regarded as having such an impairment" means:
1. Has a physical or mental impairment that
does not substantially limit major life activities but that is perceived as
constituting such a limitation;
2.
Has a physical or mental impairment that substantially limits major life
activities only as a result of the attitudes of others toward such impairment;
or
3. Has none of the impairments
defined as physical or mental impairments, but is perceived as having such an
impairment.
f. The term
"successfully completing a probationary period" includes those
instances where the employee quits without good cause attributable to the
employer during the probationary period or was discharged for misconduct during
the probationary period.
g. The term
"probationary period" means the period of probation for newly
hired employees, if the employer has a written probationary policy. If the
employer has no written probationary policy for newly hired employees, the
probationary period shall be considered to be six months from the date of hire.
(4) If a newly hired
employee has been certified as either a vocational rehabilitation referral or
an economically disadvantaged ex-convict for purposes of qualification for the
work opportunity tax credit under Section
51 of the Internal Revenue Code, that
employee shall be considered to have met the qualifications for the additional
wage deduction.
A vocational rehabilitation referral is any individual
certified by a state employment agency as having a physical or mental
disability which, for the individual, constitutes or results in a substantial
handicap to employment. In addition, the individual must have been referred to
the employer after completion or while receiving rehabilitation services
pursuant to either a state or federal approved vocational rehabilitation
program.
For all other newly hired employees, the employer has the
burden of proof to show that the employees meet the qualifications for the
additional wage deduction.
(5) The taxpayer shall include a schedule
with the filing of its tax return showing the name, address, social security
number, date of hiring and wages paid of each employee for which the taxpayer
claims the additional deduction for wages.
(6) If the employee for which an additional
deduction for wages was allowed fails to successfully complete a probationary
period and the taxpayer has already filed an Iowa corporation income tax return
taking the additional deduction for wages, the taxpayer shall file an amended
return adding back the additional deduction for wages. The amended return shall
state the name and social security number of the employee who failed to
successfully complete a probationary period.
(7) For tax years ending after July 1, 1990,
a taxpayer who did not qualify for the additional deduction for wages paid or
accrued for work done in Iowa by certain individuals set forth above is allowed
an additional deduction of 65 percent not to exceed $20,000 of the first 12
months of wages paid or accrued for work done in Iowa for employees first hired
on or after July 1, 1990, if the new employee is:
a. An individual domiciled in this state at
the time of the hiring who meets any of the following conditions:
(1) Has been convicted of a felony in this or
any other state or the District of Columbia.
(2) Is on parole pursuant to Iowa Code
chapter 906.
(3) Is on probation
pursuant to Iowa Code chapter 907, for an offense other than a simple
misdemeanor.
(4) Is in a work
release program pursuant to Iowa Code chapter 904, division IX.
b. An individual, whether or not
domiciled in this state at the time of the hiring, who is on parole or
probation and to whom the interstate probation and parole compact under Iowa
Code section 907A.1 applies.
The additional deduction is not allowed for wages paid to an
individual who was hired to replace an individual whose employment was
terminated within the 12-month period preceding the date of first employment.
However, if the individual being replaced left employment voluntarily without
good cause attributable to the employer or if the individual was discharged for
misconduct in connection with the individual's employment as determined by the
Iowa division of job service of the department of employment services, the
additional deduction is allowed.
The determination of whether an individual left employment
voluntarily without good cause attributable to the employer or if the
individual was discharged for misconduct is a factual determination which must
be made on a case-by-case basis.
The taxpayer must include a schedule with the filing of its
tax return showing the name, address, social security number, date of hiring,
and wages paid of each employee for whom the taxpayer claims the additional
deduction for wages.
If the employee for whom an additional deduction for wages
was allowed fails to successfully complete a probationary period and the
taxpayer has already filed an Iowa corporation income tax return taking the
additional deduction for wages, the taxpayer must file an amended return adding
back the additional deduction for wages. The amended return must state the name
and social security number of the employee who failed to successfully complete
a probationary period.
(8) The additional deduction applies to any
individual hired on or after July 1, 2001, whether or not domiciled in Iowa at
the time of hiring, who is on parole or probation and to whom either the
interstate probation and parole compact under Iowa Code section 907A.1 or the
compact for adult offenders under Iowa Code chapter 907B applies. The amount of
additional deduction for hiring this individual is equal to 65 percent of the
wages paid, but the additional deduction is not to exceed $20,000 for the first
12 months of wages paid for work done in Iowa. The conditions set out in the
unnumbered paragraphs under paragraph 502.11(7)
"b" also apply
to the deduction for the hiring of certain individuals in this subrule.
This rule is intended to implement 2011 Iowa Code Supplement
section 422.35 as amended by 2012 Iowa
Acts, Senate File 2247.
