A BILL TO BE ENTITLED
AN ACT to provide for a tax credit for small businesses to offset employment costs associated with active duty deployment of members of the reserves or national guard.
The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 105‑129.16E(c)(3) is recodified as G.S. 105‑129.15(9).
SECTION 2.  Article 3B of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105‑129.16G.  Tax credits for Ready Reserve‑National Guard employees.
(a)	Definitions. – The following definitions apply in this section:
(1)	Qualified active duty. – Active duty other than training duty specified in 10 U.S.C. § 10147 or 32 U.S.C. § 502(a) with respect to which an employee is entitled to reemployment rights and other benefits or to a leave of absence from employment under chapter 43 of title 38 of the United States Code or hospitalization incident to active duty described in this subdivision.
(2)	Ready Reserve‑National Guard employee. – An employee who is a member of the Ready Reserve of a reserve component of an Armed Force of the United States.
(b)	Replacement Credit. – A small business that temporarily replaces a Ready Reserve‑National Guard employee who is on qualified active duty is allowed a credit under this Article. The amount of the credit is equal to one hundred percent (100%) of the compensation paid to the replacement employee for a period of time not to exceed three months. A small business may not take the credit allowed by this section for more than one replacement employee for each Ready Reserve‑National Guard employee per period of qualified active duty. The amount of the credit may not exceed the Ready Reserve‑National Guard employee's regular compensation for a three‑month period.
(c)	Returning Ready Reserve‑National Guard Employee Credit. – A small business that employs a Ready Reserve‑National Guard employee that returns to employment from qualified active duty is allowed a credit under this Article. The amount of the credit is equal to one hundred percent (100%) of the compensation paid to the returning Ready Reserve‑National Guard employee for the first month after the employee returns from qualified active duty. The amount of the credit may not exceed the employee's regular compensation for one month.
(d)	Sunset. – This section expires for taxable years beginning on or after January 1, 2012."
SECTION 3.  This act is effective for taxable years beginning on or after January 1, 2007.