Federal matching payments for State new jobs training tax credits

(a)

Authority To make payments

Subject to subsection (h), the Secretary of the Treasury shall, on a quarterly basis, make a payment to each eligible community college in an amount equal to the aggregate new job tax withholding matches for all eligible trainees with respect to such eligible community college for such quarter.(b)

New job tax withholding match

In the case of any quarter, the new job tax withholding match with respect to any eligible trainee is an amount equal to the amounts remitted as described in subsection (d)(1)(A) during such quarter with respect to such trainee by a participating employer.(c)

Eligible community college

For purposes of this section, the term eligible community college means a public institution of higher education, as defined in section 101 of the Higher Education Act of 1965 (20 U.S.C. 1001)—(1)at which the majority of degrees awarded, for any academic year, are 2-year associate's degrees that are acceptable for full credit toward a baccalaureate degree,(2)that is located in a State that has a State new jobs training tax credit program in effect, and(3)that participates in such program by having in effect a contract that meets the requirements of subsection (d)(2).(d)

State new jobs training tax credit program

(1)

Programs described

For purposes of this section, the term State new jobs training tax credit program means a program established by a State government that provides that, if an eligible community college and an employer sign a contract that meets the requirements of paragraph (2) with respect to an eligible trainee—(A)the State income taxes withheld by the employer on behalf of the eligible trainee, once employed by the employer, to the extent they do not exceed the cost of qualified training specified in such contract, will not be remitted to the State in payment of income taxes, but will be remitted to the eligible community college,(B)the amounts so remitted will be treated in the hands of the eligible community college as payment for education provided by such community college, and(C)for purposes of determining the State income tax liability of the eligible trainee, the amounts so remitted will be treated as if they had been remitted to the State in payment of income taxes owed by the eligible trainee.(2)

Qualified contract

A contract meets the requirements of this paragraph if—(A)the contract is between an eligible community college located in the State that has the program described in paragraph (1) and an employer with at least 1 job site located in such State,(B)the contract meets all applicable requirements under such State program,(C)the contract provides that—(i)the eligible community college will directly provide qualified training to individuals designated by the employer or will contract with a provider of qualified training to provide such training to such individuals,(ii)the eligible community college will not charge tuition or fees to such individuals,(iii)the employer will hire such individuals for full-time employment at a job site located within the State,(iv)such individuals will be paid by the employer a wage that is not less than the greater of—(I)175 percent of the Federal minimum wage, or(II)the amount specified under the State program, and(v)as provided under the State program, the employer will remit the State income taxes withheld by the employer on behalf of the individual to the community college in payment for the training, to the extent such taxes do not exceed the cost described in subparagraph (D),(D)the contract specifies the entire cost of the qualified training (including all costs for equipment or instructional materials) that will be provided to each individual, and(E)the cost and terms specified under subparagraph (D) are reasonable by market standards.(3)

Qualified training

For purposes of this section, the term qualified training means education or training which, if completed, will provide the individual with—(A)education or skills necessary to perform the job for which such individual will be employed,(B)education or skills necessary to obtain a license required under Federal, State, or local governmental regulation for the employment of the individual in the job for which such individual will be employed,(C)a certificate or credential which is required under Federal, State, or local governmental regulation for the employment of the individual in the job for which such individual will be employed, or(D)a certificate or credential aligned with national or regionally recognized industry standards determined appropriate by the State.(4)

Job must be new job

(A)

In general

A State program will not be treated as a State new jobs training tax credit program for purposes of this subsection unless the program provides that, in order to be eligible to participate, the employer must show with respect to each eligible trainee that such eligible trainee is hired for a job that—(i)is a new job (which, for purposes of this paragraph, may include a new position within an existing job category), and not a job of a recalled worker, a replacement job, or any other job that existed in the employer's business within the 1-year period preceding the date of hire,(ii)is not a job that existed in a business operation or substantially similar business operation of the employer formerly located in another location which was closed or substantially reduced by the employer, and(iii)results in a net increase in employment for the employer.(B)

Only U.S. employees taken into account

For purposes of subparagraph (A), only employees at job sites located in the United States (including the possessions of the United States) shall be taken into account.(5)

Aggregation rules

All persons treated as a single employer under subsection (a) or (b) of section 52, or subsection (m) or (o) of section 414 of the Internal Revenue Code of 1986, shall be treated as a single employer for purposes of this section.(6)

Cooperation with local workforce investment boards

An employer or eligible community college participating in a State new jobs training tax credit program may work with local workforce investment boards established under section 117 of the Workforce Investment Act of 1998 (29 U.S.C. 2832) in searching for individuals to hire and train through such program.(e)

Eligible trainee

For purposes of this section, the term eligible trainee means an individual—(1)who received qualified training through an eligible community college pursuant to a contract that meets the requirements of subsection (d)(2), under a State new jobs training tax credit program, and(2)who is employed on a full-time basis, during the quarter for which payment is made under subsection (a), by the employer who was a party to such contract—(A)at a job site located in the same State as the eligible community college,(B)at a wage that meets the requirements of subsection (d)(2)(iii),(C)in a job that meets the new job requirement of subsection (d)(4), and(D)in a job for which such qualified training is required, either by law or regulation or by the inherent requirements of the job.(f)

Appropriation

Out of any sums in the Treasury not otherwise appropriated, there are appropriated on an ongoing basis such sums as are necessary to carry out this section.(g)

Remission of State income tax withholdings not treated as payments for training or education

In the case of an employer, the amount of withheld State income tax which is remitted by the employer to an eligible community college as described in subsection (d)(1)(A) shall not be treated as an amount paid or incurred by the employer for purposes of any credit or deduction available under the Internal Revenue Code of 1986 to such employer, but shall be treated as if such amount had been remitted to the State in payment of income taxes owed by the employee.(h)

Tax treatment of payments with respect to eligible trainee

In the case of an eligible trainee, neither—(1)the amount of any withheld State income tax which is remitted by an employer to an eligible community college as described in subsection (d)(1)(A), nor(2)the amount of any payment made under subsection (a),

shall be treated for purposes of the Internal Revenue Code of 1986 as income of the eligible trainee. For purposes of determining the deduction under section 164(a)(3) of such Code, amounts described in paragraph (1) shall be treated as amounts paid for State income taxes by the eligible trainee.