[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2994 Introduced in House (IH)]

  2d Session
                                H. R. 2994

To amend the Internal Revenue Code of 1986 to provide for the extension 
                    of certain expiring provisions.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           February 29, 1996

Mrs. Johnson of Connecticut (for herself and Mr. Matsui) introduced the 
 following bill; which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to provide for the extension 
                    of certain expiring provisions.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. WORK OPPORTUNITY TAX CREDIT.

    (a) Amount of Credit.--Subsection (a) of section 51 of the Internal 
Revenue Code of 1986 (relating to amount of credit) is amended by 
striking ``40 percent'' and inserting ``35 percent''.
    (b) Members of Targeted Groups.--Subsection (d) of section 51 of 
the Internal Revenue Code of 1986 is amended to read as follows:
    ``(d) Members of Targeted Groups.--For purposes of this subpart--
            ``(1) In general.--An individual is a member of a targeted 
        group if such individual is--
                    ``(A) a qualified IV-A recipient,
                    ``(B) a qualified veteran,
                    ``(C) a qualified ex-felon,
                    ``(D) a high-risk youth,
                    ``(E) a vocational rehabilitation referral,
                    ``(F) a qualified summer youth employee, or
                    ``(G) a qualified food stamp recipient.
            ``(2) Qualified iv-a recipient.--
                    ``(A) In general.--The term `qualified IV-A 
                recipient' means any individual who is certified by the 
                designated local agency as being a member of a family 
                receiving assistance under a IV-A program for at least 
                a 9-month period ending during the 9-month period 
                ending on the hiring date.
                    ``(B) IV-A program.--For purposes of this 
                paragraph, the term `IV-A program' means any program 
                providing assistance under a State plan approved under 
                part A of title IV of the Social Security Act (relating 
                to assistance for needy families with minor children) 
                and any successor of such program.
            ``(3) Qualified veteran.--
                    ``(A) In general.--The term `qualified veteran' 
                means any veteran who is certified by the designated 
                local agency as being--
                            ``(i) a member of a family receiving 
                        assistance under a IV-A program (as defined in 
                        paragraph (2)(B)) for at least a 9-month period 
                        ending during the 12-month period ending on the 
                        hiring date, or
                            ``(ii) a member of a family receiving 
                        assistance under a food stamp program under the 
                        Food Stamp Act of 1977 for at least a 3-month 
                        period ending during the 12-month period ending 
                        on the hiring date.
                    ``(B) Veteran.--For purposes of subparagraph (A), 
                the term `veteran' means any individual who is 
                certified by the designated local agency as--
                            ``(i)(I) having served on active duty 
                        (other than active duty for training) in the 
                        Armed Forces of the United States for a period 
                        of more than 180 days, or
                            ``(II) having been discharged or released 
                        from active duty in the Armed Forces of the 
                        United States for a service-connected 
                        disability, and
                            ``(ii) not having any day during the 60-day 
                        period ending on the hiring date which was a 
                        day of extended active duty in the Armed Forces 
                        of the United States.
                For purposes of clause (ii), the term `extended active 
                duty' means a period of more than 90 days during which 
                the individual was on active duty (other than active 
                duty for training).
            ``(4) Qualified ex-felon.--The term `qualified ex-felon' 
        means any individual who is certified by the designated local 
        agency--
                    ``(A) as having been convicted of a felony under 
                any statute of the United States or any State,
                    ``(B) as having a hiring date which is not more 
                than 1 year after the last date on which such 
                individual was so convicted or was released from 
                prison, and
                    ``(C) as being a member of a family which had an 
                income during the 6 months immediately preceding the 
                earlier of the month in which such income determination 
                occurs or the month in which the hiring date occurs, 
                which, on an annual basis, would be 70 percent or less 
                of the Bureau of Labor Statistics lower living 
                standard.
        Any determination under subparagraph (C) shall be valid for the 
        45-day period beginning on the date such determination is made.
            ``(5) High-risk youth.--
                    ``(A) In general.--The term `high-risk youth' means 
                any individual who is certified by the designated local 
                agency--
                            ``(i) as having attained age 18 but not age 
                        25 on the hiring date, and
                            ``(ii) as having his principal place of 
                        abode within an empowerment zone or enterprise 
                        community.
                    ``(B) Youth must continue to reside in zone.--In 
                the case of a high-risk youth, the term `qualified 
                wages' shall not include wages paid or incurred for 
                services performed while such youth's principal place 
                of abode is outside an empowerment zone or enterprise 
                community.
            ``(6) Vocational rehabilitation referral.--The term 
        `vocational rehabilitation referral' means any individual who 
        is certified by the designated local agency as--
                    ``(A) having a physical or mental disability which, 
                for such individual, constitutes or results in a 
                substantial handicap to employment, and
                    ``(B) having been referred to the employer upon 
                completion of (or while receiving) rehabilitative 
                services pursuant to--
                            ``(i) an individualized written 
                        rehabilitation plan under a State plan for 
                        vocational rehabilitation services approved 
                        under the Rehabilitation Act of 1973, or
                            ``(ii) a program of vocational 
                        rehabilitation carried out under chapter 31 of 
                        title 38, United States Code.
            ``(7) Qualified summer youth employee.--
                    ``(A) In general.--The term `qualified summer youth 
                employee' means any individual--
                            ``(i) who performs services for the 
                        employer between May 1 and September 15,
                            ``(ii) who is certified by the designated 
                        local agency as having attained age 16 but not 
                        18 on the hiring date (or if later, on May 1 of 
                        the calendar year involved),
                            ``(iii) who has not been an employee of the 
                        employer during any period prior to the 90-day 
                        period described in subparagraph (B)(i), and
                            ``(iv) who is certified by the designated 
                        local agency as--
                                    ``(I) having his principal place of 
                                abode within an empowerment zone or 
                                enterprise community, or
                                    ``(II) being a member of a family 
                                receiving assistance under a food stamp 
                                program under the Food Stamp Act of 
                                1977 for at least a 3-month period 
                                ending during the 12-month period 
                                ending on the hiring date.
                    ``(B) Special rules for determining amount of 
                credit.--For purposes of applying this subpart to wages 
                paid or incurred to any qualified summer youth 
                employee--
                            ``(i) subsection (b)(2) shall be applied by 
                        substituting `any 90-day period between May 1 
                        and September 15' for `the 1-year period 
                        beginning with the day the individual begins 
                        work for the employer', and
                            ``(ii) subsection (b)(3) shall be applied 
                        by substituting `$3,000' for `$6,000'.
                The preceding sentence shall not apply to an individual 
                who, with respect to the same employer, is certified as 
                a member of another targeted group after such 
                individual has been a qualified summer youth employee.
                    ``(C) Youth must continue to reside in zone.--
                Paragraph (5)(B) shall apply for purposes of 
                subparagraph (A)(iv)(I).
            ``(8) Qualified food stamp recipient.--
                    ``(A) In general.--The term `qualified food stamp 
                recipient' means any individual who is certified by the 
                designated local agency--
                            ``(i) as having attained age 18 but not age 
                        25 on the hiring date, and
                            ``(ii) as being a member of a family 
                        receiving assistance under a food stamp program 
                        under the Food Stamp Act of 1977 for at least a 
                        3-month period ending during the 12-month 
                        period ending on the hiring date.
            ``(9) Hiring date.--The term `hiring date' means the day 
        the individual is hired by the employer.
            ``(10) Designated local agency.--The term `designated local 
        agency' means a State employment security agency established in 
        accordance with the Act of June 6, 1933, as amended (29 U.S.C. 
        49-49n).
            ``(11) Special rules for certifications.--
                    ``(A) In general.--An individual shall not be 
                treated as a member of a targeted group unless--
                            ``(i) on or before the day on which such 
                        individual begins work for the employer, the 
                        employer has received a certification from a 
                        designated local agency that such individual is 
                        a member of a targeted group, or
                            ``(ii)(I) on or before the day the 
                        individual is offered employment with the 
                        employer, a pre-screening notice is completed 
                        by the employer with respect to such 
                        individual, and
                            ``(II) not later than the 30th day after 
                        the individual begins work for the employer, 
                        the employer submits such notice, signed by the 
                        employer under penalties of perjury, to the 
                        designated local agency as part of a written 
                        request for such a certification from such 
                        agency.
                For purposes of this paragraph, the term `pre-screening 
                notice' means a document (in such form as the Secretary 
                shall prescribe) which contains information provided by 
                the individual on the basis of which the employer 
                believes that the individual is a member of a targeted 
                group.
                    ``(B) Incorrect certifications.--If--
                            ``(i) an individual has been certified by a 
                        designated local agency as a member of a 
                        targeted group, and
                            ``(ii) such certification is incorrect 
                        because it was based on false information 
                        provided by such individual,
                the certification shall be revoked and wages paid by 
                the employer after the date on which notice of 
                revocation is received by the employer shall not be 
                treated as qualified wages.
                    ``(C) Explanation of denial of request.--If a 
                designated local agency denies a request for 
                certification of membership in a targeted group, such 
                agency shall provide to the person making such request 
                a written explanation of the reasons for such 
                denial.''.
    (c) Minimum Employment Period.--Paragraph (3) of section 51(i) of 
the Internal Revenue Code of 1986 (relating to certain individuals 
ineligible) is amended to read as follows:
            ``(3) Individuals not meeting minimum employment period.--
        No wages shall be taken into account under subsection (a) with 
        respect to any individual unless such individual either--
                    ``(A) is employed by the employer at least 180 days 
                (20 days in the case of a qualified summer youth 
                employee), or
                    ``(B) has completed at least 500 hours (120 hours 
                in the case of a qualified summer youth employee) of 
                services performed for the employer.''.
    (d) Termination.--Paragraph (4) of section 51(c) of the Internal 
Revenue Code of 1986 (relating to wages defined) is amended to read as 
follows:
            ``(4) Termination.--The term `wages' shall not include any 
        amount paid or incurred to an individual who begins work for 
        the employer--
                    ``(A) after December 31, 1994, and before the 60th 
                day after the date of the enactment of this 
                subparagraph, or
                    ``(B) after December 31, 1997.''.
    (e) Redesignation of Credit.--
            (1) Sections 38(b)(2) and 51(a) of the Internal Revenue 
        Code of 1986 are each amended by striking ``targeted jobs 
        credit'' and inserting ``work opportunity credit''.
            (2) The subpart heading for subpart F of part IV of 
        subchapter A of chapter 1 of such Code is amended by striking 
        ``Targeted Jobs Credit'' and inserting ``Work Opportunity 
        Credit''.
            (3) The table of subparts for such part IV is amended by 
        striking ``targeted jobs credit'' and inserting ``work 
        opportunity credit''.
            (4) The heading for paragraph (3) of section 1396(c) of 
        such Code is amended by striking ``targeted jobs credit'' and 
        inserting ``work opportunity credit''.
    (f) Technical Amendments.--
            (1) Paragraph (1) of section 51(c) of the Internal Revenue 
        Code of 1986 is amended by striking ``, subsection 
        (d)(8)(D),''.
            (2) Paragraph (3) of section 51(i) of such Code is amended 
        by striking ``(d)(12)'' each place it appears and inserting 
        ``(d)(6)''.
    (g) Effective Date.--The amendments made by this section shall 
apply to individuals who begin work for the employer on or after the 
60th day after the date of the enactment of this Act.

SEC. 2. EMPLOYER-PROVIDED EDUCATIONAL ASSISTANCE PROGRAMS.

    (a) Extension.--Subsection (d) of section 127 of the Internal 
Revenue Code of 1986 (relating to educational assistance programs) is 
amended by striking ``December 31, 1994'' and inserting ``December 31, 
1997''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 1994.

SEC. 3. RESEARCH CREDIT.

    (a) In General.--Subsection (h) of section 41 of the Internal 
Revenue Code of 1986 (relating to credit for research activities) is 
amended--
            (1) by striking ``June 30, 1995'' each place it appears and 
        inserting ``December 31, 1997'', and
            (2) by striking ``July 1, 1995'' each place it appears and 
        inserting ``January 1, 1998''.
    (b) Base Amount for Start-Up Companies.--Clause (i) of section 
41(c)(3)(B) of the Internal Revenue Code of 1986 (relating to start-up 
companies) is amended to read as follows:
                            ``(i)  Taxpayers to which subparagraph 
                        applies.--The fixed-base percentage shall be 
                        determined under this subparagraph if--
                                    ``(I) the first taxable year in 
                                which a taxpayer had both gross 
                                receipts and qualified research 
                                expenses begins after December 31, 
                                1983, or
                                    ``(II) there are fewer than 3 
                                taxable years beginning after December 
                                31, 1983, and before January 1, 1989, 
                                in which the taxpayer had both gross 
                                receipts and qualified research 
                                expenses.''.
    (c) Election of Alternative Incremental Credit.--Subsection (c) of 
section 41 of the Internal Revenue Code of 1986 is amended by 
redesignating paragraphs (4) and (5) as paragraphs (5) and (6), 
respectively, and by inserting after paragraph (3) the following new 
paragraph:
            ``(4) Election of alternative incremental credit.--
                    ``(A) In general.--At the election of the taxpayer, 
                the credit determined under subsection (a)(1) shall be 
                equal to the sum of--
                            ``(i) 1.65 percent of so much of the 
                        qualified research expenses for the taxable 
                        year as exceeds 1 percent of the average 
                        described in subsection (c)(1)(B) but does not 
                        exceed 1.5 percent of such average,
                            ``(ii) 2.2 percent of so much of such 
                        expenses as exceeds 1.5 percent of such average 
                        but does not exceed 2 percent of such average, 
                        and
                            ``(iii) 2.75 percent of so much of such 
                        expenses as exceeds 2 percent of such average.
                    ``(B) Election.--An election under this paragraph 
                may be made only for the first taxable year of the 
                taxpayer beginning after June 30, 1995. Such an 
                election shall apply to the taxable year for which made 
                and all succeeding taxable years unless revoked with 
the consent of the Secretary.''.
    (d) Increased Credit for Contract Research Expenses With Respect to 
Certain Research Consortia.--Paragraph (3) of section 41(b) of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new subparagraph:
                    ``(C) Amounts paid to certain research consortia.--
                            ``(i) In general.--Subparagraph (A) shall 
                        be applied by substituting `75 percent' for `65 
                        percent' with respect to amounts paid or 
                        incurred by the taxpayer to a qualified 
                        research consortium for qualified research.
                            ``(ii) Qualified research consortium.--The 
                        term `qualified research consortium' means any 
                        organization described in subsection (e)(6)(B) 
                        if--
                                    ``(I) at least 15 unrelated 
                                taxpayers paid (during the calendar 
                                year in which the taxable year of the 
                                taxpayer begins) amounts to such 
                                organization for qualified research,
                                    ``(II) no 3 persons paid during 
                                such calendar year more than 50 percent 
                                of the total amounts paid during such 
                                calendar year for qualified research, 
                                and
                                    ``(III) no person contributed more 
                                than 20 percent of such total amounts.
                        For purposes of subclause (I), all persons 
                        treated as a single employer under subsection 
                        (a) or (b) of section 52 shall be treated as 
                        related taxpayers.''.
    (e)  Conforming Amendment.--Subparagraph (D) of section 28(b)(1) of 
the Internal Revenue Code of 1986 is amended by striking ``June 30, 
1995'' and inserting ``December 31, 1997''.
    (f) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        ending after June 30, 1995.
            (2) Subsections (c) and (d).--The amendments made by 
        subsections (c) and (d) shall apply to taxable years beginning 
        after June 30, 1995.

SEC. 4. ORPHAN DRUG TAX CREDIT.

    (a) Recategorized as a Business Credit.--
            (1) In general.--Section 28 of the Internal Revenue Code of 
        1986 (relating to clinical testing expenses for certain drugs 
        for rare diseases or conditions) is transferred to subpart D of 
        part IV of subchapter A of chapter 1 of such Code, inserted 
        after section 45B, and redesignated as section 45C.
            (2) Conforming amendment.--Subsection (b) of section 38 of 
        such Code (relating to general business credit) is amended by 
        striking ``plus'' at the end of paragraph (10), by striking the 
        period at the end of paragraph (11) and inserting ``, plus'', 
        and by adding at the end the following new paragraph:
            ``(12) the orphan drug credit determined under section 
        45C(a).''.
            (3) Clerical amendments.--
                    (A) The table of sections for subpart B of such 
                part IV is amended by striking the item relating to 
                section 28.
                    (B) The table of sections for subpart D of such 
                part IV is amended by adding at the end the following 
                new item:

        ``Sec. 45C. Clinical testing expenses for certain drugs for 
                            rare diseases or conditions.''.
    (b) Credit Termination.--Subsection (e) of section 45C of the 
Internal Revenue Code of 1986, as redesignated by subsection (a)(1), is 
amended by striking ``December 31, 1994'' and inserting ``December 31, 
1997''.
    (c) No Pre-1995 Carrybacks.--Subsection (d) of section 39 of the 
Internal Revenue Code of 1986 (relating to carryback and carryforward 
of unused credits) is amended by adding at the end the following new 
paragraph:
            ``(7) No carryback of section 45c credit before 1995.--No 
        portion of the unused business credit for any taxable year 
        which is attributable to the orphan drug credit determined 
        under section 45C may be carried back to a taxable year 
        beginning before January 1, 1995.''.
    (d) Additional Conforming Amendments.--
            (1) Section 45C(a) of the Internal Revenue Code of 1986, as 
        redesignated by subsection (a)(1), is amended by striking 
        ``There shall be allowed as a credit against the tax imposed by 
        this chapter for the taxable year'' and inserting ``For 
        purposes of section 38, the credit determined under this 
        section for the taxable year is''.
            (2) Section 45C(d) of such Code, as so redesignated, is 
        amended by striking paragraph (2) and by redesignating 
        paragraphs (3), (4), and (5) as paragraphs (2), (3), and (4).
            (3) Section 29(b)(6)(A) of such Code is amended by striking 
        ``sections 27 and 28'' and inserting ``section 27''.
            (4) Section 30(b)(3)(A) of such Code is amended by striking 
        ``sections 27, 28, and 29'' and inserting ``sections 27 and 
        29''.
            (5) Section 53(d)(1)(B) of such Code is amended--
                    (A) by striking ``or not allowed under section 28 
                solely by reason of the application of section 
                28(d)(2)(B),'' in clause (iii), and
                    (B) by striking ``or not allowed under section 28 
                solely by reason of the application of section 
                28(d)(2)(B)'' in clause (iv)(II).
            (6) Section 55(c)(2) of such Code is amended by striking 
        ``28(d)(2),''.
            (7) Section 280C(b) of such Code is amended--
                    (A) by striking ``section 28(b)'' in paragraph (1) 
                and inserting ``section 45C(b)'',
                    (B) by striking ``section 28'' in paragraphs (1) 
                and (2)(A) and inserting ``section 45C(b)'', and
                    (C) by striking ``subsection (d)(2) thereof'' in 
                paragraphs (1) and (2)(A) and inserting ``section 
                38(c)''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after December 31, 1994.

SEC. 5. CONTRIBUTIONS OF STOCK TO PRIVATE FOUNDATIONS.

    (a) In General.--Subparagraph (D) of section 170(e)(5) of the 
Internal Revenue Code of 1986 (relating to special rule for 
contributions of stock for which market quotations are readily 
available) is amended by striking ``December 31, 1994'' and inserting 
``December 31, 1997''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions made after December 31, 1994.

SEC. 6. EXTENSION OF BINDING CONTRACT DATE FOR BIOMASS AND COAL 
              FACILITIES.

    (a) In General.--Subparagraph (A) of section 29(g)(1) of the 
Internal Revenue Code of 1986 (relating to extension of certain 
facilities) is amended by striking ``January 1, 1997'' and inserting 
``January 1, 1999'' and by striking ``January 1, 1996'' and inserting 
``July 1, 1997''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 7. EXTENSION OF GROUP LEGAL SERVICES.

    (a) Extension.--Subsection (e) of section 120 of the Internal 
Revenue Code of 1986 (relating to amounts received under qualified 
group legal services plans) is amended by striking ``June 30, 1992'' 
and inserting ``December 31, 1997''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after June 30, 1992.

SEC. 8. FUTA EXEMPTION FOR ALIEN AGRICULTURAL WORKERS.

    (a) In General.--Subparagraph (B) of section 3306(c)(1) (defining 
employment) is amended by striking ``before January 1, 1995,''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to services performed after December 31, 1994.
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