Employer-provided worker training credit

(a)

In general

(1)

Determination of credit

Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:

45T.

Employer-provided worker training credit

(a)

In general

For purposes of section 38, except as provided in subsection (d), the employer-provided worker training credit under this section for the taxable year is an amount equal to 20 percent of the excess (if any) of— (1)the qualified training expenditures for such taxable year, over (2)the average of the qualified training expenditures (if any) for the 3 taxable years preceding such taxable year. (b)

Qualified training expenditures

For purposes of this section— (1)

Qualified training expenditures defined

(A)

In general

The term qualified training expenditures means any expenditures by an employer for qualified training for any non-highly compensated employee. (B)

Exclusions

The term qualified training expenditures shall not include any amounts paid for meals, lodging, transportation, or other services incidental to expenditures described in subparagraph (A). (2)

Qualified training

(A)

In general

The term qualified training means training which results in the attainment of a recognized postsecondary credential and which is provided pursuant to one of the following: (i)An apprenticeship program which is registered under the Act of August 16, 1937 (commonly known as the National Apprenticeship Act; 50 Stat. 664, chapter 663), and is in an emerging industry. (ii)An apprenticeship program which is registered or approved by a recognized State apprenticeship agency in accordance with section 1 of such Act and which is in an emerging industry. (iii)A program of training services listed pursuant to section 122(d) of the Workforce Innovation and Opportunity Act. (iv)A program which is conducted by an area career and technical education school, a community college, or a labor organization. (v)A program which is sponsored and administered by an employer, industry trade association, industry or sector partnership, or labor organization. (B)

Emerging industry

The term emerging industry means, for a taxable year, an industry that comprises less than 30 percent of all civilian apprentices registered with the Department of Labor for the fiscal year ending in such taxable year. (C)

Community college

The term community college means an institution which is a junior or community college as defined in section 312(f) of the Higher Education Act of 1965. (D)

Labor organization

The term labor organization means a labor organization, within the meaning of the term in section 501(c)(5) of the Internal Revenue Code of 1986. (E)

Industry trade association

The term industry trade association means an organization which— (i)is described in paragraph (3) or (6) of section 501(c) of the Internal Revenue Code of 1986 and exempt from taxation under section 501(a) of such Code, and (ii)is representing an industry. (F)

Other terms

The terms area career and technical education school, recognized postsecondary credential, and industry or sector partnership have the meanings given such terms, respectively, by section 3 of the Workforce Innovation and Opportunity Act. (3)

Non-highly compensated employee

The term non-highly compensated employee means, with respect to an employer, an employee whose— (A)compensation (as such term is defined in section 415(c)(3)) from such employer for services provided for the taxable year does not exceed $82,000, and (B)rate of compensation, if applied to a full-time employee for a year, would not exceed $82,000. (c)

Special rules

(1)

Special rule in case of no qualified training expenditures in any of 3 preceding taxable years

(A)

Taxpayers to which paragraph applies

The credit under this section shall be determined under this paragraph if the taxpayer has no qualified training expenditures in any one of the 3 taxable years preceding the taxable year for which the credit is being determined. (B)

Credit rate

The credit determined under this paragraph shall be equal to 10 percent of the adjusted qualified training expenditures for the taxable year. (2)

Aggregation and allocation of expenditures, etc

In determining the amount of the credit under this section, rules similar to the rules of paragraphs (1), (2), (3), (4), and (5) of section 41(f) shall apply. (d)

Election To apply credit against payroll taxes

(1)

In general

At the election of a qualified small business (as defined in section 41(h)) or a qualified tax-exempt organization (as defined in section 3111(e)(5)(A)) for any taxable year, section 3111(g) shall apply to the payroll tax credit portion of the credit otherwise determined under subsection (a) for the taxable year and such portion shall not be treated (other than for purposes of section 280C) as a credit determined under subsection (a). (2)

Payroll tax credit portion

For purposes of this subsection, the payroll tax credit portion of the credit determined under subsection (a) with respect to any taxpayer for any taxable year is the least of— (A)the amount specified in the election made under this subsection, (B)the credit determined under subsection (a) for the taxable year (determined before the application of this subsection), or (C)in the case of a qualified small business other than a partnership or S corporation, the amount of the business credit carryforward under section 39 carried from the taxable year (determined before the application of this subsection to the taxable year). (3)

Election

(A)

In general

Any election under this subsection for any taxable year— (i)shall specify the amount of the credit to which such election applies, (ii)shall be made on or before the due date (including extensions) of— (I)in the case of a partnership, the return required to be filed under section 6031, (II)in the case of an S corporation, the return required to be filed under section 6037, and (III)in the case of any other taxpayer, the return of tax for the taxable year, and (iii)may be revoked only with the consent of the Secretary. (B)

Limitations

(i)

Amount

The amount specified in any election made under this subsection shall not exceed $250,000. (ii)

Number of taxable years

A person may not make an election under this subsection if such person (or any other person treated as a single taxpayer with such person under paragraph (5)(A)) has made an election under this subsection for five or more preceding taxable years. (C)

Special rule for partnerships and S corporations

In the case of a partnership or S corporation, the election made under this subsection shall be made at the entity level. (4)

Aggregation rules

(A)

In general

Except as provided in subparagraph (B)— (i)all members of the same controlled group of corporations shall be treated as a single taxpayer, and (ii)all trades or businesses (whether or not incorporated) which are under common control shall be treated as a single taxpayer. (B)

Special rules

For purposes of this subsection and section 3111(g)— (i)each of the persons treated as a single taxpayer under subparagraph (A) may separately make the election under paragraph (1) for any taxable year, and (ii)the $250,000 amount under paragraph (4)(B)(i) shall be allocated among all persons treated as a single taxpayer under subparagraph (A) in the same manner as under section 41(f)(1). (5)

Regulations

The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this subsection, including— (A)regulations to prevent the avoidance of the purposes of the limitations and aggregation rules under this subsection, (B)regulations to minimize compliance and recordkeeping burdens under this subsection, and (C)regulations for recapturing the benefit of credits determined under section 3111(g) in cases where there is a recapture or a subsequent adjustment to the payroll tax credit portion of the credit determined under subsection (a), including requiring amended income tax returns in the cases where there is such an adjustment.

(2)

Credit part of general business credit

Section 38(b) of the Internal Revenue Code of 1986 is amended by striking plus at the end of paragraph (36), by striking the period at the end of paragraph (37) and inserting , plus, and by adding at the end the following new paragraph:

(38)the employer-provided worker training credit determined under section 45T(a).

(3)

Coordination with deductions

Section 280C of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

(j)

Employer-Provided worker training credit

No deduction shall be allowed for that portion of the expenses otherwise allowable as a deduction taken into account in determining the credit under section 45T for the taxable year which is equal to the amount of the credit determined for such taxable year under section 45T(a).

(4)

Clerical amendment

The table of sections for subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:

Sec. 45T. Employer-provided worker training credit.

(b)

Credit allowed against alternative minimum tax

Subparagraph (B) of section 38(c)(4) of the Internal Revenue Code of 1986 is amended— (1)by redesignating clauses (x), (xi), and (xii) as clauses (xi), (xii), and (xiii), respectively; and (2)by inserting after clause (ix) the following new clause:

(x)the credit determined under section 45T with respect to an eligible small business (as defined in paragraph (5)(C), after application of rules similar to the rules of paragraph (5)(D)),

(c)

Payroll tax credit

Section 3111 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

(g)

Credit for worker training expenses

(1)

In general

In the case of a taxpayer who has made an election under section 45S(e) for a taxable year, there shall be allowed as a credit against the tax imposed by subsection (a) for the first calendar quarter which begins after the date on which the taxpayer files the return specified in section 45S(e)(4)(A)(ii) an amount equal to the payroll tax credit portion determined under section 45S(e)(2). (2)

Limitation

The credit allowed by paragraph (1) shall not exceed the tax imposed by subsection (a) for any calendar quarter on the wages paid with respect to the employment of all individuals in the employ of the employer. (3)

Carryover of unused credit

If the amount of the credit under paragraph (1) exceeds the limitation of paragraph (2) for any calendar quarter, such excess shall be carried to the succeeding calendar quarter and allowed as a credit under paragraph (1) for such quarter. (4)

Deduction allowed for credited amounts

The credit allowed under paragraph (1) shall not be taken into account for purposes of determining the amount of any deduction allowed under chapter 1 for taxes imposed under subsection (a).

(d)

Simplified filing for certain small businesses

The Secretary of the Treasury shall provide for a method of filing returns of tax and information returns required under the Internal Revenue Code of 1986 in a simplified format, to the extent possible, for employers with less than $5,000,000 in annual gross receipts. (e)

Regulations relating to postsecondary credentials

Not later than 1 year after the date of the enactment of this Act, the Secretary of Labor, in consultation with the Secretary of the Treasury, shall issue regulations or other guidance applying the definition of the term recognized postsecondary credential as provided in section 3 of the Workforce Innovation and Opportunity Act (29 U.S.C. 3102). (f)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.