(1) As used in this section, unless the context otherwise requires:
(a) "Labor services" means the physical performance of services in this state.
(b) "Unauthorized alien" shall have the same meaning as set forth in 8 U.S.C. sec. 1324a (h)(3), as amended.
(2) On or after January 1, 2008, no wages or remuneration for labor services paid to an unauthorized alien of six hundred dollars or more in a year shall be claimed as a deductible business expense for state income tax purposes by a taxpayer who, at the time the taxpayer hired the unauthorized alien, knew of the unauthorized status of the alien. The provisions of this subsection (2) shall apply regardless of whether an internal revenue service form 1099-MISC is issued in conjunction with the wages or remuneration.
(3) This section shall not apply to:
(a) Any business domiciled in the state that is exempt from compliance with federal employment verification procedures under federal law that makes the employment of unauthorized aliens unlawful;
(b) Any individual hired by the taxpayer before December 31, 2006;
(c) Any taxpayer where the individual being paid is not directly compensated or employed by the taxpayer; or
(d) Wages or remuneration paid for labor services to any individual who holds and presents to the taxpayer a valid license or identification card issued by the department of revenue.
(4) The executive director is authorized to prescribe forms and promulgate rules that are necessary to administer this section.
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