HB142INTRODUCED
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HB142
UK2NDXG-1
By Representative Rafferty
RFD: Financial Services
First Read: 04-Feb-25
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5 UK2NDXG-1 02/04/2025 CD (F)CD 2025-529
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First Read: 04-Feb-25
SYNOPSIS:
This bill would provide for the establishment of
portable benefit accounts for independent contractors.
A BILL
TO BE ENTITLED
AN ACT
Relating to employee benefits; to add Article 7 of
Chapter 1 of Title 25, commencing with Section 25-1-70 to the
Code of Alabama 1975, to provide for the establishment of
portable benefit accounts for independent contractors; and to
provide for deductions of contributions to portable benefit
accounts for Alabama income tax purposes.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. This act shall be known and may be cited as
the "Portable Benefits Act."
Section 2. Article 7, Chapter 1 of Title 25, starting
with Section 25-1-70, is added to the Code of Alabama 1975, to
read as follows:
§25-1-70 For purposes of this act, the following words
have the following meanings:
(1) BANK. A banking corporation or trust company
entitled to operate within the State of Alabama under Title 5
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entitled to operate within the State of Alabama under Title 5
of the Code of Alabama 1975.
(2) HIRING PARTY. A person or entity who hires or
enters into a contract for the performance of work with an
independent contractor.
(3) PORTABLE BENEFIT ACCOUNT. An account opened by an
independent contractor that is:
a. Administered by a portable benefit account provider;
and
b. Owned by an independent contractor for the purpose
of funding the purchase of one of more benefit plans,
including, but not limited to, plans that provide health
benefits, income replacement insurance, life insurance, or
retirement benefits.
(4) PORTABLE BENEFIT ACCOUNT PROVIDER. The
administrator of a portable benefit account and includes:
a. A bank;
b. An investment management firm; and
c. A technology provider or program manager that offers
services through a bank or investment management firm.
§25-1-71
(a) Any person or entity, including an Internet or
application based entity, may contribute funds to one or more
portable benefit accounts.
(b) Where a hiring party contributes to a portable
benefit account as a form of compensation, the contribution
shall not be used as a criterion for determining a worker's
employment classification.
(c) A contribution to a portable benefit account may be
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(c) A contribution to a portable benefit account may be
made using the funds of the hiring party or a percentage of
funds withheld from compensation owed to an independent
contractor if:
(1) The withholding of compensation is expressly agreed
to in writing by both parties;
(2) The written agreement is clear, unambiguous, and
prominently displayed either in a services agreement or other
contract between the independent contractor and the hiring
party or a separate notice;
(3) The withholding of compensation is voluntary and
requires an independent contractor to opt in; and
(4) The independent contractor may choose to opt out of
the agreement at any time.
§25-2-72
(a) A hiring party that contributes its own funds to a
portable benefit account as a form of compensation may deduct
as a business expense on the Alabama income tax return to
compute Alabama taxable income an amount equal to 100 percent
of the amount contributed from its own funds during the tax
year.
(b) A qualifying independent contractor may deduct, as
an adjustment to income on the employee's Alabama individual
income tax return, an amount equal to 100 percent of the
amount contributed by a hiring party as a form of compensation
to a portable benefit account during the applicable tax year
as well as any contributions that the independent contractor
made to a portable benefit account during the applicable tax
year.
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year.
Section 3. This act shall become effective on October
1, 2025.
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