(a) An Alabama income tax credit is hereby established for eligible employers that employ an apprentice for at least seven full months of the prior taxable year. The credit shall equal up to one thousand dollars ($1,000) for each apprentice employed, not to exceed five apprentices employed. The Department of Revenue, in consultation with the Workforce Development Division of the Department of Commerce, shall establish a scale reflecting ranges of amounts of money an employer has invested in an eligible apprentice and a corresponding tax credit amount and shall award the tax credit in accordance with this scale following confirmation from the Workforce Development Division that the apprentice for whom the credit is claimed is in compliance with all federal and state requirements for the apprenticeship program. The credit shall not be available for an individual apprentice for more than four taxable years.

(b) The credit shall be allowed against the tax imposed by Chapter 16 or Chapter 18 of this title. This tax credit shall not be allowed to decrease a taxpayer's tax liability to less than zero. The credit is not refundable or transferable. The credit shall be available, on a pro rata basis, to the owners of qualified employers that are entities taxed under subchapters S or K of the Internal Revenue Code or limited liability companies or professional corporations authorized to do business in this state. An employer applying for a tax credit must apply each year to receive the credit for the preceding calendar year.

(c) The cumulative amount of tax credits issued pursuant to this article shall not exceed three million dollars ($3,000,000) annually. The Department of Revenue shall ensure that this cap is not exceeded, shall prescribe the various methods by which these credits are to be issued, and shall develop procedures to notify taxpayers at such points in time when the tax credit caps in this subsection have been reached for the applicable tax credit year.

(d) If an employer employs an apprentice for less than the full preceding calendar year, the employer may apply for the credit on a pro rata monthly basis beginning on the first day of the first full month of apprenticeship.

(e) The Department of Revenue shall prescribe a form to claim this credit that provides information to the department sufficient for the proper administration of the credit.

(f) The participation of an employee with an apprenticeship program under this article and registration with the Office of Apprenticeship of the Employment and Training Administration of the United States Department of Labor shall not constitute union affiliation, unless the employee expressly elects to affiliate with a union.