10 Targeted jobs withholding tax credit. For employers that enter into a withholding

agreement with pilot project cities approved by the economic development authority and create or retain targeted jobs in a pilot project city, a credit equal to 3 percent of the gross wages paid to employees under the withholding agreement can be taken on the Iowa withholding tax return. The employer shall remit the amount of the credit to the pilot project city. The administrative rules for the targeted jobs withholding tax credit program administered by the economic development authority may be found in 261—Chapter 71. If the amount of withholding by the employer is less than 3 percent of the wages paid to the employees covered under the withholding agreement, the employer can take the remaining credit against Iowa tax withheld for other employees or may carry the credit forward for up to ten years or until depleted, whichever is the earlier. If an employer also has a new job credit from withholding provided in rule 701—307.8(260E) or the supplemental new jobs credit from withholding provided in subrule 307.9(1), these credits shall be collected and disbursed prior to the collection and disbursement of the targeted jobs withholding tax credit. The following nonexclusive examples illustrate how this rule applies: Example 1: Company A does not have a withholding credit under Iowa Code chapter 260E or a supplemental new jobs credit under Iowa Code chapter 15E. Company A enters into a withholding Revenue[701] IAC 2/5/25 Ch 307, p.17 agreement, and the withholding rate for employees covered under the agreement is 4 percent of the wages paid. Company A will be allowed a credit on the Iowa withholding return equal to 3 percent of the wages paid to each employee covered under the withholding agreement, since the targeted jobs withholding tax credit cannot exceed 3 percent. Example 2: Company B does not have a withholding credit under Iowa Code chapter 260E or a supplemental new jobs credit under Iowa Code chapter 15E. Company B enters into a withholding agreement, and the withholding rate for employees covered under the agreement is 2.5 percent of the wages paid. Company B will be allowed a credit on the Iowa withholding return equal to 3 percent of the wages paid to each employee covered under the withholding agreement. The extra withholding credit equal to 0.5 percent may be used to offset withholding tax for Company B’s employees not covered under the withholding agreement. Example 3: Company C has a withholding credit under Iowa Code chapter 260E of 1.5 percent of the wages paid to new employees and a supplemental new jobs credit under Iowa Code chapter 15E of 1.5 percent of the wages paid to new employees. Company C also enters into a withholding agreement for the same employees covered under the 260E agreement and supplemental new jobs credit agreement, and the withholding rate for employees covered under these agreements is 5 percent of the wages paid. Company C will be allowed a credit on the Iowa withholding return equal to 5 percent of the wages paid to each employee covered under these agreements. Since the community college receives disbursement of the credit before the pilot project city, the community college will receive 3 percent of the wages paid to each employee covered under the agreements, and the pilot project city will receive the remaining 2 percent of the wages paid to each employee covered under the agreements. Example 4: Company D has a withholding credit under Iowa Code chapter 260E of 1.5 percent of the wages paid to new employees and a supplemental new jobs credit under Iowa Code chapter 15E of 1.5 percent of the wages paid to new employees. Company D also enters into a withholding agreement for the same employees covered under the 260E agreement and supplemental new jobs credit agreement, and the withholding rate for employees covered under the agreement is 2.5 percent of the wages paid. Company D will be allowed a credit on the Iowa withholding tax return equal to 6 percent of the wages paid to each employee covered under these agreements. The extra withholding credit equal to 3.5 percent may be used to offset withholding tax for Company D’s employees not covered under these agreements. 307.10(1) Notification by the employer. Once a withholding agreement is entered into with a pilot project city, the employer shall notify the department of revenue that an agreement has been executed. With this notification, the employer must also provide its address, tax identification number and the number of new jobs created under the agreement. In addition, for each year that the withholding agreement is in place, the employer must notify the department of revenue by January 31 of the number of new jobs created as of December 31 of the preceding year. 307.10(2) Notification by the pilot project city. The pilot project city must notify the department of revenue on a quarterly basis of the amount of the targeted jobs withholding credit that each employer covered by a withholding agreement remitted to the city. This notification must occur within 45 days after the end of each calendar quarter. In addition, the pilot project city must notify the department of revenue immediately when a withholding agreement with an employer is terminated. This rule is intended to implement Iowa Code section 403.19A as amended by 2013 Iowa Acts, Senate File 433. [ARC 1138C, IAB 10/30/13, effective 12/4/13; Editorial change: IAC Supplement 11/2/22] [Filed 12/12/74] [Filed 12/10/76, Notice 9/22/76—published 12/29/76, effective 2/2/77] [Filed emergency 4/28/78—published 5/17/78, effective 4/28/78] [Filed emergency 3/2/79—published 3/21/79, effective 3/2/79] [Filed emergency 7/17/80—published 8/6/80, effective 7/17/80] [Filed 11/20/81, Notice 10/14/81—published 12/9/81, effective 1/13/82] [Filed emergency 3/5/82—published 3/31/82, effective 4/1/82] [Filed 7/16/82, Notice 6/9/82—published 8/4/82, effective 9/8/82] [Filed 12/16/83, Notice 11/9/83—published 1/4/84, effective 2/8/84] Revenue[701] Ch 307, p.18 IAC 2/5/25 [Filed 7/27/84, Notice 6/20/84—published 8/15/84, effective 9/19/84] [Filed 10/19/84, Notice 9/12/84—published 11/7/84, effective 12/12/84] [Filed 5/31/85, Notice 4/24/85—published 6/19/85, effective 7/24/85] [Filed 9/6/85, Notice 7/31/85—published 9/25/85, effective 10/30/85] [Filed 3/7/86, Notice 1/29/86—published 3/26/86, effective 4/30/86] [Filed 8/22/86, Notice 7/16/86—published 9/10/86, effective 10/15/86] [Filed 9/5/86, Notice 7/30/86—published 9/24/86, effective 10/29/86] [Filed emergency 11/14/86—published 12/17/86, effective 11/14/86] [Filed emergency 7/2/87—published 7/29/87, effective 7/2/87] [Filed 11/12/87, Notice 7/29/87—published 12/2/87, effective 1/6/88] [Filed 3/3/88, Notice 1/27/88—published 3/23/88, effective 4/27/88] [Filed 8/19/88, Notice 7/13/88—published 9/7/88, effective 10/12/88] [Filed 1/4/89, Notice 11/30/88—published 1/25/89, effective 3/1/89] [Filed 9/29/89, Notice 8/23/89—published 10/18/89, effective 11/22/89] [Filed 11/22/89, Notice 10/18/89—published 12/13/89, effective 1/17/90] [Filed 8/30/90, Notice 7/25/90—published 9/19/90, effective 10/24/90] [Filed 11/9/90, Notice 10/3/90—published 11/28/90, effective 1/2/91] [Filed 1/4/91, Notice 11/28/90—published 1/23/91, effective 2/27/91] [Filed 11/20/91, Notice 10/16/91—published 12/11/91, effective 1/15/92] [Filed emergency 2/14/92—published 3/4/92, effective 2/14/92] [Filed 4/10/92, Notice 3/4/92—published 4/29/92, effective 6/3/92] [Filed 10/9/92, Notice 9/2/92—published 10/28/92, effective 12/2/92] [Filed 11/20/92, Notice 10/14/92—published 12/9/92, effective 1/13/93] [Filed 7/1/93, Notice 5/26/93—published 7/21/93, effective 8/25/93] [Filed 9/10/93, Notice 8/4/93—published 9/29/93, effective 11/3/93] [Filed 5/20/94, Notice 4/13/94—published 6/8/94, effective 7/13/94] [Filed 9/23/94, Notice 8/17/94—published 10/12/94, effective 11/16/94] [Filed 2/24/95, Notice 1/4/95—published 3/15/95, effective 4/19/95] [Filed 7/14/95, Notice 6/7/95—published 8/2/95, effective 9/6/95] [Filed 1/12/96, Notice 12/6/95—published 1/31/96, effective 3/6/96] [Filed 8/23/96, Notice 7/17/96—published 9/11/96, effective 10/16/96] [Filed 5/15/98, Notice 4/8/98—published 6/3/98, effective 7/8/98] [Filed 10/2/98, Notice 8/26/98—published 10/21/98, effective 11/25/98] [Filed 12/23/99, Notice 11/17/99—published 1/12/00, effective 2/16/00] [Filed 3/30/00, Notice 2/23/00—published 4/19/00, effective 5/24/00] [Filed 1/5/01, Notice 11/29/00—published 1/24/01, effective 2/28/01] [Filed 5/24/01, Notice 4/18/01—published 6/13/01, effective 7/18/01] [Filed 3/15/02, Notice 1/23/02—published 4/3/02, effective 5/8/02] [Filed 11/8/02, Notice 10/2/02—published 11/27/02, effective 1/1/03] [Filed 1/30/04, Notice 12/24/03—published 2/18/04, effective 3/24/04] [Filed 11/4/04, Notice 9/29/04—published 11/24/04, effective 12/29/04] [Filed 2/11/05, Notice 1/5/05—published 3/2/05, effective 4/6/05] [Filed 1/27/06, Notice 12/21/05—published 2/15/06, effective 3/22/06] [Filed 7/28/06, Notice 6/21/06—published 8/16/06, effective 9/20/06] [Filed 12/13/06, Notice 11/8/06—published 1/3/07, effective 2/7/07] [Filed 10/19/07, Notice 9/12/07—published 11/7/07, effective 12/12/07] [Filed 3/7/08, Notice 1/30/08—published 3/26/08, effective 4/30/08] [Filed ARC 7761B (Notice ARC 7632B, IAB 3/11/09), IAB 5/6/09, effective 6/10/09] [Filed ARC 8589B (Notice ARC 8430B, IAB 12/30/09), IAB 3/10/10, effective 4/14/10] [Filed ARC 8605B (Notice ARC 8481B, IAB 1/13/10), IAB 3/10/10, effective 4/14/10] Revenue[701] IAC 2/5/25 Ch 307, p.19 [Filed ARC 0337C (Notice ARC 0232C, IAB 7/25/12), IAB 9/19/12, effective 10/24/12] [Filed ARC 1138C (Notice ARC 0998C, IAB 9/4/13), IAB 10/30/13, effective 12/4/13] [Filed ARC 1303C (Notice ARC 1231C, IAB 12/11/13), IAB 2/5/14, effective 3/12/14] [Filed ARC 1665C (Notice ARC 1590C, IAB 8/20/14), IAB 10/15/14, effective 11/19/14] [Filed ARC 1744C (Notice ARC 1654C, IAB 10/1/14), IAB 11/26/14, effective 12/31/14] [Filed ARC 2512C (Notice ARC 2434C, IAB 3/2/16), IAB 4/27/16, effective 6/1/16] [Filed ARC 2739C (Notice ARC 2616C, IAB 7/6/16), IAB 9/28/16, effective 11/2/16] [Filed ARC 3085C (Notice ARC 2942C, IAB 2/15/17), IAB 5/24/17, effective 6/28/17] [Filed ARC 3429C (Notice ARC 3284C, IAB 8/30/17), IAB 10/25/17, effective 11/29/17] [Filed ARC 4678C (Notice ARC 4561C, IAB 7/31/19), IAB 9/25/19, effective 10/30/19] [Filed ARC 5518C (Notice ARC 5183C, IAB 9/23/20), IAB 3/10/21, effective 4/14/21] [Editorial change: IAC Supplement 11/2/22] [Filed ARC 6900C (Notice ARC 6746C, IAB 12/14/22), IAB 2/22/23, effective 3/29/23] [Filed ARC 6904C (Notice ARC 6538C, IAB 9/21/22), IAB 2/22/23, effective 3/29/23] [Filed ARC 7502C (Notice ARC 7109C, IAB 11/1/23), IAB 1/10/24, effective 2/14/24] Revenue[701] Ch 307, p.20 IAC 2/5/25