Alabama 2024 Regular Session

Alabama Senate Bill SB280 Compare Versions

Only one version of the bill is available at this time.

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1	1	SB280INTRODUCED
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3	3	SB280
4	4	PMK4GER-1
5	5	By Senators Gudger, Bell, Shelnutt, Roberts, Waggoner,
6	6	Chesteen, Weaver, Stutts, Givhan, Melson, Figures,
7	7	Coleman-Madison, Stewart, Smitherman, Elliott, Hovey,
8	8	Kitchens, Price, Livingston, Reed, Butler, Allen, Carnley,
9	9	Williams, Coleman, Singleton, Sessions, Hatcher, Kelley
10	10	RFD: Finance and Taxation Education
11	11	First Read: 04-Apr-24
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20	20	9 PMK4GER-1 04/03/2024 TEW (F)TEW 2024-1394
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22	22	First Read: 04-Apr-24
23	23	SYNOPSIS:
24	24	This bill creates the employer tax credit,
25	25	childcare facility tax credit, and nonprofit childcare
26	26	provider grant program to incentivize employers to fund
27	27	childcare for their employees and to enable childcare
28	28	providers to offer more readily available, affordable,
29	29	high-quality childcare.
30	30	A BILL
31	31	TO BE ENTITLED
32	32	AN ACT
33	33	Relating to childcare and workforce development; to
34	34	establish the employer tax credit, childcare provider tax
35	35	credit, and nonprofit childcare provider grant; and to make
36	36	legislative findings.
37	37	BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
38	38	Section 1. The Legislature hereby makes the following
39	39	findings of fact and declares its intent to be as follows:
40	40	Alabama is currently attracting and creating jobs and business
41	41	investments at a record-setting pace. Despite historically low
42	42	unemployment rates, Alabama's workforce participation rate
43	43	ranked among the lowest in the country. One possible barrier
44	44	to entering the workforce for some Alabamians is a lack of
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74	74	to entering the workforce for some Alabamians is a lack of
75	75	available, affordable, high-quality childcare. Furthermore,
76	76	the grant, and any appropriations by the Legislature in
77	77	furtherance thereof, serves a public purpose by conferring a
78	78	direct public benefit of a reasonably general character
79	79	through the promotion of public health, safety, morals,
80	80	security, prosperity, contentment, and the general welfare of
81	81	the community. The grant achieves this public purpose by
82	82	increasing the quality of childcare to the general public,
83	83	which has the effect of encouraging high-quality care and
84	84	education for children and facilitating greater workforce
85	85	participation throughout the state. It is the intent of the
86	86	Legislature, by the passage of this legislation, to encourage
87	87	more Alabamians to enter the workforce and gain employment by
88	88	improving the quality and availability of childcare options
89	89	for working parents. Accordingly, future efforts to extend or
90	90	reauthorize this act should be preceded by consideration of
91	91	the effectiveness of this legislation in achieving these
92	92	policy goals. To this end, once this legislation has had a
93	93	sufficient opportunity to be implemented and its effects
94	94	measured, but before extending or reauthorizing this act, the
95	95	Legislature should request and examine reports from: (1) the
96	96	Alabama Department of Revenue, to determine the usage of the
97	97	tax credits; and (2) from the Alabama Department of Labor and
98	98	the Alabama Department of Commerce, to determine the impact of
99	99	the tax credits on workforce participation.
100	100	Section 2. For the purposes of this article, the
101	101	following terms have the following meanings:
102	102	(1) APPLICABLE TAXES. An employer's, taxpayer's, or
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132	132	(1) APPLICABLE TAXES. An employer's, taxpayer's, or
133	133	childcare provider's, or in the case of a pass-through entity
134	134	that is an employer, taxpayer, or childcare provider, such
135	135	employer's, taxpayer's, or childcare provider's owners' taxes
136	136	as follows:
137	137	a. Taxes levied in Chapter 18 of Title 40, Code of
138	138	Alabama 1975.
139	139	b. The state portion of taxes levied in Chapter 16 of
140	140	Title 40, Code of Alabama 1975.
141	141	c. Taxes levied in Section 27-4A-3(a), Code of Alabama
142	142	1975.
143	143	d. Taxes levied in Article 2 of Chapter 21 of Title 40,
144	144	Code of Alabama 1975, not to include the freight line and
145	145	equipment tax levied in Section 40-21-52, Code of Alabama
146	146	1975.
147	147	(2) CHILD or CHILDREN. Individuals who are five years
148	148	of age or less.
149	149	(3) CHILDCARE FACILITY. A facility meeting the
150	150	definition found in Section 38-7-2(7), Code of Alabama 1975,
151	151	that is licensed by the Department of Human Resources and is
152	152	participating in the quality rating and improvement system.
153	153	(4) CHILDCARE PROVIDER. An Alabama taxpayer that owns a
154	154	childcare facility or a nonprofit entity that owns and
155	155	operates a childcare facility in Alabama.
156	156	(5) ELIGIBLE CHILD or ELIGIBLE CHILDREN. Children who
157	157	participate in the Child Care Subsidy Program administered by
158	158	the Department of Human Resources and who attend a childcare
159	159	facility operated by a childcare provider.
160	160	(6) ELIGIBLE EXPENSES. Expenses incurred by an employer
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190	190	(6) ELIGIBLE EXPENSES. Expenses incurred by an employer
191	191	for:
192	192	a. The construction, renovation, expansion, or repair
193	193	of a childcare facility, or for the purchase of equipment for
194	194	such facility, or for the maintenance and operation thereof.
195	195	b. Payments made to childcare facilities or employees
196	196	for the provision of childcare at childcare facilities for
197	197	children of employees.
198	198	c. Payments made to childcare facilities to reserve
199	199	services for children of employees.
200	200	For purposes of this definition, "childcare facility"
201	201	or "childcare facilities" shall also include a facility
202	202	meeting the definition found in Section 38-7-2(7), Code of
203	203	Alabama 1975, that is operated, directly or indirectly, by an
204	204	organization defined in Section 16-5-1(1), Code of Alabama
205	205	1975.
206	206	(7) EMPLOYEE. A resident of this state who works on a
207	207	full-time or part-time basis for an employer. An employee
208	208	shall include independent contractors engaged by an employer
209	209	and the owners of an employer that also work for such employer
210	210	on a full-time or part-time basis.
211	211	(8) EMPLOYER. A for profit business lawfully operating
212	212	in this state.
213	213	(9) EMPLOYER TAX CREDIT. A tax credit to be applied
214	214	against applicable taxes for the year in which the eligible
215	215	expenses are incurred by an employer, equal to the total
216	216	eligible expenses incurred by the employer, up to one million
217	217	dollars ($1,000,000) per year for each employer.
218	218	(10) FACILITY TAX CREDIT. A tax credit to be applied
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248	248	(10) FACILITY TAX CREDIT. A tax credit to be applied
249	249	against applicable taxes, calculated in accordance with
250	250	Section 4(a), but not exceeding twenty-five thousand dollars
251	251	($25,000) per year for each childcare facility.
252	252	(11) GRANT. A grant awarded by the Department of Human
253	253	Resources to nonprofit childcare providers for the purpose of
254	254	funding expenses related to the construction, expansion,
255	255	improvement, repair, or operation of a childcare facility or
256	256	childcare facilities, so long as such expenses are made in
257	257	furtherance of the childcare services offered at such
258	258	childcare facility and result in increased quality of care or
259	259	increased capacity for children at each applicable childcare
260	260	facility.
261	261	(12) OWNER. A shareholder, partner, or member of a
262	262	pass-through entity.
263	263	(13) PASS-THROUGH ENTITY. An Alabama S corporation or a
264	264	subchapter K entity.
265	265	(14) QUALITY RATING. The rating applicable to a
266	266	childcare facility under the quality rating and improvement
267	267	system.
268	268	(15) QUALITY RATING AND IMPROVEMENT SYSTEM. A system of
269	269	the Department of Human Resources known as the Alabama Quality
270	270	STARS program that measures the quality of childcare
271	271	facilities on a scale of one to five stars, with five stars
272	272	denoting the highest level of quality.
273	273	(16) RURAL AREA. Any Alabama county that meets the
274	274	definition of "targeted county" found in Section
275	275	40-18-376.1(a)(2), Code of Alabama 1975.
276	276	(17) SMALL BUSINESS. An employer that has fewer than 25
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306	306	(17) SMALL BUSINESS. An employer that has fewer than 25
307	307	employees.
308	308	(18) STATE. The State of Alabama.
309	309	Section 3. (a) Effective for tax years beginning on or
310	310	after January 1, 2025, and ending December 31, 2029, unless
311	311	extended by an act of the Legislature, an employer may apply
312	312	to the Department of Revenue for an employer tax credit to be
313	313	applied against applicable taxes.
314	314	(b) For the calendar year ending December 31, 2025, the
315	315	employer tax credit is limited to an aggregate amount for all
316	316	employers of fifteen million dollars ($15,000,000), which
317	317	amount shall increase to twenty million dollars ($20,000,000)
318	318	for the calendar year ending December 31, 2026; twenty-five
319	319	million dollars ($25,000,000) for the calendar year ending
320	320	December 31, 2027; thirty million dollars ($30,000,000) for
321	321	the calendar year ending December 31, 2028; and thirty-five
322	322	million dollars ($35,000,000) for the calendar year ending
323	323	December 31, 2029.
324	324	(c) The Department of Revenue shall:
325	325	(1) Provide a standardized format for, and require
326	326	completion of, a certificate to be signed by the employer
327	327	applying for the employer tax credit, certifying that the
328	328	expenses incurred by the employer were eligible expenses
329	329	incurred to support the provision of childcare at childcare
330	330	facilities for the children of employees.
331	331	(2) Require the employer to provide documentation to
332	332	substantiate to the satisfaction of the Department of Revenue
333	333	the amount of the employer tax credit applied for pursuant to
334	334	this section and that the expenses incurred by the employer
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364	364	this section and that the expenses incurred by the employer
365	365	were eligible expenses incurred to support the provision of
366	366	childcare at childcare facilities for the children of
367	367	employees.
368	368	(3) If the employer is a pass-through entity, require
369	369	that the employer identify the identity and pro rata
370	370	percentage ownership of its owners.
371	371	(d) The Department of Revenue shall award the tax
372	372	credit to the employer after the employer provides the
373	373	documentation required in subdivision (c). Failure to provide
374	374	the documentation required in subdivision (c) shall result in
375	375	the automatic denial of the employer tax credit.
376	376	Section 4. (a) Effective for tax years beginning on or
377	377	after January 1, 2025, and ending December 31, 2029, unless
378	378	extended by an act of the Legislature, a childcare provider
379	379	may apply to the Department of Revenue for a facility tax
380	380	credit to be applied against applicable taxes, in an amount
381	381	equal to the average monthly number of eligible children,
382	382	multiplied by a dollar amount which shall be based upon the
383	383	quality rating of the childcare facility as follows:
384	384	(1) Five star quality rating - two thousand dollars
385	385	($2,000) per eligible child.
386	386	(2) Four star quality rating - one thousand seven
387	387	hundred fifty dollars ($1,750) per eligible child.
388	388	(3) Three star quality rating - one thousand five
389	389	hundred dollars ($1,500) per eligible child.
390	390	(4) Two star quality rating - one thousand two hundred
391	391	fifty dollars ($1,250) per eligible child.
392	392	(5) One star quality rating - one thousand dollars
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422	422	(5) One star quality rating - one thousand dollars
423	423	($1,000) per eligible child.
424	424	(b) The facility tax credit is limited to an aggregate
425	425	amount for all childcare providers of five million dollars
426	426	($5,000,000) in a calendar year.
427	427	(c) The Department of Revenue shall:
428	428	(1) Provide a standardized format for, and require
429	429	completion of, a certificate to be completed and signed by the
430	430	childcare provider applying for the facility tax credit,
431	431	certifying each childcare provider's ownership of applicable
432	432	childcare facilities, the quality rating of each facility, and
433	433	the average number of eligible children attending each
434	434	facility monthly.
435	435	(2) Require the childcare provider to provide
436	436	documentation to substantiate to the satisfaction of the
437	437	Department of Revenue the amount of the facility tax credit
438	438	applied for pursuant to this section, the quality rating of
439	439	each applicable childcare facility, and the average number of
440	440	eligible children attending each facility monthly.
441	441	(3) If the childcare provider is a pass-through entity,
442	442	require that the childcare provider identify the identity and
443	443	pro rata percentage ownership of its owners.
444	444	(d) The Department of Revenue shall award the facility
445	445	tax credit to a childcare provider after the childcare
446	446	provider provides the documentation required in subdivision
447	447	(c). Failure to provide the documentation required in
448	448	subdivision (c) shall result in the automatic denial of the
449	449	childcare facility tax credit.
450	450	(e) The Department of Human Resources and the
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480	480	(e) The Department of Human Resources and the
481	481	Department of Revenue shall enter into a Memorandum of
482	482	Understanding as to the information necessary to permit the
483	483	Department of Revenue to effectively administer this section.
484	484	Section 5. (a) The Department of Human Resources may
485	485	make grants to nonprofit childcare providers as provided in
486	486	this section.
487	487	(b) The Department of Human Resources may establish
488	488	priorities, guidelines, standards, and processes by which
489	489	grants may be awarded.
490	490	(c) The Department of Human Resources shall require
491	491	interested nonprofit childcare providers to complete
492	492	applications on forms issued by the Department of Human
493	493	Resources which shall include at least the following:
494	494	(1) Childcare Provider ID.
495	495	(2) Licensee's name.
496	496	(3) License number.
497	497	(4) Verification of nonprofit status.
498	498	(5) A certification from the applicant nonprofit
499	499	childcare provider that will comply with any rules adopted by
500	500	the Department of Human Resources related to the grant.
501	501	(d) Failure to provide the information required by the
502	502	Department of Human Resources may result in the automatic
503	503	denial of the grant.
504	504	(e) No nonprofit childcare provider shall be eligible
505	505	to receive more than fifty thousand dollars ($50,000) under
506	506	this section during a single calendar year.
507	507	(f) The aggregate amount of funding approved pursuant
508	508	to this section shall not exceed five million dollars
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538	538	to this section shall not exceed five million dollars
539	539	($5,000,000) in a calendar year.
540	540	(g) The amount and all terms and conditions of each
541	541	grant shall be memorialized in a grant agreement between the
542	542	Department of Human Resources and the nonprofit childcare
543	543	provider, which agreement shall include at least the following
544	544	terms and conditions:
545	545	(1) The amount of the grant.
546	546	(2) The nonprofit childcare provider will use the grant
547	547	solely in accordance with this act.
548	548	(3) The nonprofit childcare provider will comply with
549	549	any rules adopted by the Department of Human Resources related
550	550	to the grant.
551	551	(4) The requirement that the default of the nonprofit
552	552	childcare provider, under any provision of the grant
553	553	agreement, shall result in the repayment of any grant monies
554	554	paid to the nonprofit childcare provider by the Department of
555	555	Human Resources.
556	556	Section 6. (a) The Department of Human Resources and
557	557	the Department of Revenue shall adopt rules as necessary, on
558	558	or before January 1, 2025, for the implementation and
559	559	administration of this article. Such rules shall ensure: (i)
560	560	that at least 25 percent of the amounts specified in Section
561	561	3(b) are reserved for awards to small businesses or employers
562	562	that are headquartered in rural areas and at least 25 percent
563	563	of the amounts specified in Section 4(b) are reserved for
564	564	awards to childcare providers operating childcare facilities
565	565	exclusively in rural areas; and that at least 25 percent of
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596	596	the amounts specified in Section 5(f) are reserved for awards
597	597	to nonprofit childcare providers operating the applicable
598	598	childcare facility in a rural area; (ii) that in the event the
599	599	Department of Revenue or the Department of Human Resources
600	600	does not receive applications for and thereby does not
601	601	allocate the reserved tax credits and grants by the close of
602	602	the second quarter of the calendar year, the funds may revert
603	603	for allocations to other applications; (iii) that employer tax
604	604	credits and facility tax credits shall be awarded based on the
605	605	order in which they are requested by employers and childcare
606	606	providers, respectively; and (iv) that the employer tax
607	607	credits shall not be awarded to employers who cannot
608	608	demonstrate that they prioritize the payment of eligible
609	609	expenses for the benefit of employees that are eligible for
610	610	earned income tax credit under the Internal Revenue Code of
611	611	1986 as amended, if any.
612	612	(b) Employer tax credits and facility tax credits may
613	613	only be claimed by an employer or childcare provider, or a
614	614	taxpayer who is an owner of a pass-through entity that is an
615	615	employer or childcare provider, but may not be otherwise
616	616	assigned or transferred to any other taxpayer. A taxpayer who
617	617	is an owner of a pass-through entity that is an employer or
618	618	childcare provider may only claim the pro rata share of the
619	619	employer tax credit or facility tax credit, respectively,
620	620	equal to their percentage ownership of the employer or
621	621	childcare provider.
622	622	(c) Where the applicable taxes owed by the employer or
623	623	childcare provider are less than the employer tax credit or
624	624	facility tax credit received by such entities, the employer or
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654	654	facility tax credit received by such entities, the employer or
655	655	childcare provider shall be entitled to claim a refund for the
656	656	difference but may not carry the employer tax credit or
657	657	facility tax credit forward for additional tax years. In the
658	658	case of owners of pass-through entities where the taxes owed
659	659	by such persons are less than their pro rata share of the
660	660	employer tax credit or facility tax credit received, such
661	661	persons shall be entitled to claim a refund for only the pro
662	662	rata share of the employer tax credit or facility tax credit
663	663	such persons receive in the tax year for which the employer
664	664	tax credits or facility tax credits are awarded.
665	665	(d) The Department of Revenue shall also prescribe the
666	666	various methods by which employer tax credits or facility tax
667	667	credits are to be issued to employers and childcare providers.
668	668	Refunds under subsection(c) of employer tax credits and
669	669	facility tax credits that are awarded against the taxes
670	670	referenced in Section 2(1) of this article shall be paid out
671	671	of sales tax collections made to the Education Trust Fund and
672	672	set aside by the Comptroller in the Childcare Tax Credit
673	673	Account created in subsection (e), in the same manner as
674	674	refunds of such taxes otherwise provided by law, and there is
675	675	hereby appropriated therefrom, for such purpose, so much as
676	676	may be necessary to annually pay for such tax credits as
677	677	provided by this article.
678	678	(e) There is created within the Education Trust Fund a
679	679	separate account named the Childcare Tax Credit Account for
680	680	the payment of any refunds under subsection(c) of employer tax
681	681	credits or facility tax credits awarded against the taxes
682	682	referenced in Section 2(1) of this article. The Commissioner
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712	712	referenced in Section 2(1) of this article. The Commissioner
713	713	of Revenue shall certify to the Comptroller the amount of such
714	714	tax credit refunds due to employers and childcare providers
715	715	under this section and the Comptroller shall transfer into the
716	716	Childcare Tax Credit Account only the amount from sales tax
717	717	revenues within the Education Trust Fund that is sufficient
718	718	for the Department of Revenue to use to cover the refunds for
719	719	the applicable tax year. The Commissioner of Revenue shall
720	720	distribute the funds in the Childcare Tax Credit Account to
721	721	employers and childcare providers pursuant to this article.
722	722	(f) The Alabama Department of Finance shall adopt rules
723	723	to ensure that the employer tax credit and the facility tax
724	724	credit, in any case, would not reduce the distribution for the
725	725	Alabama Special Mental Health Trust Fund by using any
726	726	unencumbered funds to ensure that the employer tax credit and
727	727	the facility tax credit shall not be limited, prevented, or
728	728	reduced.
729	729	Section 7. a) All filings and applications made with
730	730	the Department of Revenue in relation to the employer tax
731	731	credit or the facility tax credit shall be made using forms
732	732	adopted by the Department of Revenue. Such applications and
733	733	filings shall be treated as tax returns, subject to penalties
734	734	imposed by the Department of Revenue.
735	735	(b) All filings and applications made with the
736	736	Department of Human Resources in relation to the nonprofit
737	737	provider grant program shall be made using forms adopted by
738	738	the Department of Human Resources.
739	739	(c) Nothing in this article shall be construed to
740	740	constitute a guarantee or assumption by the state of any debt
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770	770	constitute a guarantee or assumption by the state of any debt
771	771	of any company nor to authorize the credit of the state to be
772	772	given, pledged, or loaned to any company.
773	773	(d) Nothing in this article shall be construed to make
774	774	available to any taxpayer any right to the benefits conferred
775	775	by this article absent strict compliance with this article.
776	776	Section 8. This act shall become effective on January
777	777	1, 2025.
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