[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 1885 Introduced in Senate (IS)]







108th CONGRESS
  1st Session
                                S. 1885

 To amend the Internal Revenue Code of 1986 to provide tax incentives 
           for manufacturing businesses in the United States.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           November 18, 2003

 Mr. Daschle (for Mr. Kerry) introduced the following bill; which was 
          read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to provide tax incentives 
           for manufacturing businesses in the United States.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Manufacturing Job Production Act of 
2003''.

SEC. 2. TEMPORARY MANUFACTURING JOB CREATION TAX CREDIT.

    (a) In General.--Subpart F of part IV of subchapter A of chapter 1 
(relating to rules for computing work opportunity credit) is amended by 
inserting after section 51A the following new section:

``SEC. 51B. REFUND OF PAYROLL TAXES ATTRIBUTABLE TO NEW MANUFACTURING 
              EMPLOYEES DURING 2004 AND 2005.

    ``(a) General Rule.--In the case of an employee's first taxable 
year beginning in any applicable calendar year, the amount of the work 
opportunity credit determined under section 51 (without regard to this 
section) for the taxable year shall be increased by the increased 
manufacturing wages payroll tax rebate amount.
    ``(b) Applicable Calendar Year.--For purposes of this section, the 
term `applicable calendar year' means 2004 and 2005.
    ``(c) Increased Manufacturing Wages Payroll Tax Rebate Amount.--
            ``(1) In general.--For purposes of this section, the term 
        `increased manufacturing wages payroll tax rebate amount' means 
        an amount equal to the applicable percentage of the excess (if 
        any) of--
                    ``(A) the qualified manufacturing wages paid or 
                incurred by the employer with respect to employment 
                during the applicable calendar year, over
                    ``(B) the sum of--
                            ``(i) the qualified manufacturing wages 
                        paid or incurred by the employer with respect 
                        to employment during the previous calendar 
                        year, plus
                            ``(ii) an amount equal to the amount 
                        determined under clause (i) multiplied by a 
                        percentage equal to the percentage change in 
                        the contribution and benefit base under section 
                        230 of the Social Security Act from the 
                        applicable calendar year to the previous 
                        calendar year.
            ``(2) Applicable percentage.--For purposes of this 
        subsection, the term `applicable percentage' means--
                    ``(A) for 2004, 50 percent, and
                    ``(B) for 2005, 25 percent.
    ``(d) Other Definitions and Rules.--For purposes of this section--
            ``(1) Qualified manufacturing wages.--
                    ``(A) In general.--The term `qualified 
                manufacturing wages' means wages which are paid by the 
                taxpayer and included under section 263A in the cost of 
                property produced by the taxpayer.
                    ``(B) Wages.--The term `wages' has the meaning 
                given such term by section 3121(a), except that in the 
                case of any employer subject to tax under chapter 22 
                with respect to any employee, the such term includes 
                compensation within the meaning of section 3231(e).
                    ``(C) United states.--For purposes of this 
                paragraph, the term `United States' includes the 
                territories and possessions of the United States.
            ``(2) Predecessors.--Any reference in this section to an 
        employer shall include a reference to a predecessor.
            ``(3) Other rules.--Rules similar to the rules of sections 
        51(k) and 52 shall apply.
    ``(e) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary to carry out this section, including regulations 
for the application of this section in the case of acquisitions and 
dispositions.''.
    (b) Conforming Amendment.--The table of sections for subpart F of 
part IV of subchapter A of chapter 1 is amended by inserting after the 
item relating to section 51A the following new item:

        ``Sec. 51B. Refund of payroll taxes attributable to new 
                            manufacturing employees during 2004 and 
                            2005.''.

SEC. 3. MODIFICATIONS OF EXCLUSIONS AND ROLLOVERS OF GAIN ON QUALIFIED 
              SMALL BUSINESS STOCK.

    (a) Exclusion of Gain on Qualified Small Business Stock.--
            (1) Increase in exclusion percentage.--
                    (A) In general.--Section 1202(a)(1) (relating to 
                exclusion for gain from certain small business stock) 
                is amended by striking ``50 percent'' and inserting 
                ``75 percent''.
                    (B) 100-percent exclusion for critical technology, 
                small manufacturing, and specialized small business 
                investment businesses.--Section 1202(a) is amended by 
                adding at the end the following new paragraph:
            ``(3) Critical technology, small manufacturing, and 
        specialized small business investment businesses.--
                    ``(A) In general.--In the case of qualified small 
                business stock acquired after the date of the enactment 
                of this paragraph which is stock in--
                            ``(i) a critical technology corporation,
                            ``(ii) a manufacturing corporation, or
                            ``(iii) a corporation which is a 
                        specialized small business investment company 
                        (as defined in subsection (c)(2)(B)(ii)),
                paragraph (1) shall be applied by substituting `100 
                percent' for `75 percent'.
                    ``(B) Critical technology corporation.--The term 
                `critical technology corporation' means a corporation 
                substantially all of the active business activities of 
                which during substantially all of a taxpayer's holding 
                period of stock in the corporation are in connection 
                with--
                            ``(i) transportation or homeland security 
                        technologies,
                            ``(ii) antiterrorism technologies,
                            ``(iii) technologies enhancing security by 
                        improving methods of personal identification 
                        (including biometrics),
                            ``(iv) environmental technologies for 
                        pollution minimization, remediation, or waste 
                        management,
                            ``(v) national defense technologies, or
                            ``(vi) energy efficiency or the development 
                        of non-fossil based fuel source technologies.
                    ``(C) Manufacturing corporation.--The term 
                `manufacturing corporation' means a corporation 
                substantially all of the active business activities of 
                which during substantially all of a taxpayer's holding 
                period of stock in the corporation are in connection 
                with manufacturing (as determined under the North 
                American Industrial Classification System).''.
                    (C) Empowerment zone conforming amendment.--Section 
                1202(a)(2)(A) is amended--
                            (i) by striking ``60 percent'' and 
                        inserting ``100 percent'', and
                            (ii) by striking ``50 percent'' and 
                        inserting ``75 percent''.
            (2) Decrease in holding period.--
                    (A) In general.--Section 1202(a)(1) is amended by 
                striking ``5 years'' and inserting ``4 years''.
                    (B) Conforming amendment.--Section 1202(j)(1)(A) is 
                amended by striking ``5 years'' and inserting ``4 
                years''.
            (3) Exclusion available to corporations.--
                    (A) In general.--Subsection (a) of section 1202 
                (relating to partial exclusion for gains from certain 
                small business stock) is amended by striking ``other 
                than a corporation''.
                    (B) Technical amendment.--Subsection (c) of section 
                1202 is amended by adding at the end the following new 
                paragraph:
            ``(4) Stock held among members of controlled group not 
        eligible.--Stock of a member of a parent-subsidiary controlled 
        group (as defined in subsection (d)(3)) shall not be treated as 
        qualified small business stock while held by another member of 
        such group.''.
            (4) Stock of larger businesses eligible for exclusion.--
                    (A) In general.--Paragraph (1) of section 1202(d) 
                (defining qualified small business) is amended by 
                striking ``$50,000,000'' each place it appears and 
                inserting ``$100,000,000''.
                    (B) Inflation adjustment.--Section 1202(d) 
                (defining qualified small business) is amended by 
                adding at the end the following:
            ``(5) Inflation adjustment of asset limitation.--In the 
        case of stock issued in any calendar year after 2004, the 
        $100,000,000 amount contained in paragraph (1) shall be 
        increased by an amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year, determined 
                by substituting `calendar year 2003' for `calendar year 
                1992' in subparagraph (B) thereof.
        If any amount as adjusted under the preceding sentence is not a 
        multiple of $10,000, such amount shall be rounded to the 
        nearest multiple of $10,000.''.
    (b) Increase in Period To Purchase Replacement Stock and Qualify 
for Rollover.--
            (1) In general.--Section 1045(a)(2) (relating to 
        nonrecognition of gain) is amended by striking ``60-day'' and 
        inserting ``180-day''.
            (2) Conforming amendment.--Section 1045(b)(2) is amended by 
        striking ``60-day'' and inserting ``180-day''.
    (c) Effective Dates.--
            (1) Exclusion.--The amendments made by subsection (a) shall 
        apply to stock issued after the date of the enactment of this 
        Act.
            (2) Rollover.--The amendment made by subsection (b) shall 
        apply to sales after the date of the enactment of this Act.

SEC. 4. DEFERRED PAYMENT OF TAX BY CERTAIN SMALL BUSINESSES.

    (a) In General.--Subchapter B of chapter 62 of the Internal Revenue 
Code of 1986 (relating to extensions of time for payment of tax) is 
amended by adding at the end the following new section:

``SEC. 6168. EXTENSION OF TIME FOR PAYMENT OF TAX FOR CERTAIN SMALL 
              BUSINESSES.

    ``(a) In General.--An eligible small business may elect to pay the 
tax imposed by chapter 1 in 4 equal installments (6 equal installments 
in the case of a qualified manufacturer).
    ``(b) Limitation.--The maximum amount of tax which may be paid in 
installments under this section for any taxable year shall not exceed 
whichever of the following is the least:
            ``(1) The tax imposed by chapter 1 for the taxable year.
            ``(2) The amount contributed by the taxpayer into a BRIDGE 
        Account during such year.
            ``(3) The excess of--
                    ``(A) $250,000 ($400,000 in the case of a qualified 
                manufacturer), over
                    ``(B) the aggregate amount of tax for which an 
                election under this section was made by the taxpayer 
                (or any predecessor) for all prior taxable years.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Eligible small business.--
                    ``(A) In general.--The term `eligible small 
                business' means, with respect to any taxable year, any 
                person if--
                            ``(i) such person meets the active business 
                        requirements of section 1202(e) throughout such 
                        taxable year,
                            ``(ii) the taxpayer has gross receipts of 
                        $10,000,000 or less for the taxable year,
                            ``(iii) the gross receipts of the taxpayer 
                        for such taxable year are at least 10 percent 
                        greater than the average annual gross receipts 
                        of the taxpayer (or any predecessor) for the 2 
                        prior taxable years, and
                            ``(iv) the taxpayer uses an accrual method 
                        of accounting.
                    ``(B) Certain rules to apply.--Rules similar to the 
                rules of paragraphs (2) and (3) of section 448(c) shall 
                apply for purposes of this subsection.
            ``(2) Qualified manufacturer.--The term `qualified 
        manufacturer' means an eligible small business substantially 
        all of the business activities of which are in connection with 
        manufacturing (as determined under the North American 
        Industrial Classification System).
    ``(d) Date for Payment of Installments; Time for Payment of 
Interest.--
            ``(1) Date for payment of installments.--
                    ``(A) In general.--If an election is made under 
                this section for any taxable year, the first 
                installment shall be paid on or before the due date for 
                such installment and each succeeding installment shall 
                be paid on or before the date which is 1 year after the 
                date prescribed by this paragraph for payment of the 
                preceding installment.
                    ``(B) Due date for first installment.--The due date 
                for the first installment for a taxable year shall be 
                whichever of the following is the earliest:
                            ``(i) The date selected by the taxpayer.
                            ``(ii) The date which is 2 years after the 
                        date prescribed by section 6151(a) for payment 
                        of the tax for such taxable year.
            ``(2) Time for payment of interest.--If the time for 
        payment of any amount of tax has been extended under this 
        section--
                    ``(A) Interest for period before due date of first 
                installment.--Interest payable under section 6601 on 
                any unpaid portion of such amount attributable to the 
                period before the due date for the first installment 
                shall be paid annually.
                    ``(B) Interest during installment period.--Interest 
                payable under section 6601 on any unpaid portion of 
                such amount attributable to any period after such 
                period shall be paid at the same time as, and as a part 
                of, each installment payment of the tax.
                    ``(C) Interest in the case of certain 
                deficiencies.--In the case of a deficiency to which 
                subsection (e)(3) applies for a taxable year which is 
                assessed after the due date for the first installment 
                for such year, interest attributable to the period 
                before such due date, and interest assigned under 
                subparagraph (B) to any installment the date for 
                payment of which has arrived on or before the date of 
                the assessment of the deficiency, shall be paid upon 
                notice and demand from the Secretary.
    ``(e) Special Rules.--
            ``(1) Application of limitation to partners and s 
        corporation shareholders.--
                    ``(A) In general.--In applying this section to a 
                partnership which is an eligible small business--
                            ``(i) the election under subsection (a) 
                        shall be made by the partnership,
                            ``(ii) the amount referred to in subsection 
                        (b)(1) shall be the sum of each partner's tax 
                        which is attributable to items of the 
                        partnership and assuming the highest marginal 
                        rate under section 1, and
                            ``(iii) the partnership shall be treated as 
                        the taxpayer referred to in paragraphs (2) and 
                        (3) of subsection (b).
                    ``(B) Overall limitation also applied at partner 
                level.--In the case of a partner in a partnership, the 
                limitation under subsection (b)(3) shall be applied at 
                the partnership and partner levels.
                    ``(C) Similar rules for s corporations.--Rules 
                similar to the rules of subparagraphs (A) and (B) shall 
                apply to shareholders in an S corporation.
            ``(2) Acceleration of payment in certain cases.--
                    ``(A) In general.--If--
                            ``(i) the taxpayer ceases to meet the 
                        requirement of subsection (c)(1)(A)(i), or
                            ``(ii) there is an ownership change with 
                        respect to the taxpayer,
                then the extension of time for payment of tax provided 
                in subsection (a) shall cease to apply, and the unpaid 
                portion of the tax payable in installments shall be 
                paid on or before the due date for filing the return of 
                tax imposed by chapter 1 for the first taxable year 
                following such cessation.
                    ``(B) Ownership change.--For purposes of 
                subparagraph (A), in the case of a corporation, the 
                term `ownership change' has the meaning given to such 
                term by section 382. Rules similar to the rules 
                applicable under the preceding sentence shall apply to 
                a partnership.
            ``(3) Proration of deficiency to installments.--Rules 
        similar to the rules of section 6166(e) shall apply for 
        purposes of this section.
    ``(f) BRIDGE Account.--For purposes of this section--
            ``(1) In general.--The term `BRIDGE Account' means a trust 
        created or organized in the United States for the exclusive 
        benefit of an eligible small business, but only if the written 
        governing instrument creating the trust meets the following 
        requirements:
                    ``(A) No contribution will be accepted for any 
                taxable year in excess of the amount allowed as a 
                deferral under subsection (b) for such year.
                    ``(B) The trustee is a bank (as defined in section 
                408(n)) or another person who demonstrates to the 
                satisfaction of the Secretary that the manner in which 
                such person will administer the trust will be 
                consistent with the requirements of this section.
                    ``(C) The assets of the trust consist entirely of 
                cash or of obligations which have adequate stated 
                interest (as defined in section 1274(c)(2)) and which 
                pay such interest not less often than annually.
                    ``(D) The assets of the trust will not be 
                commingled with other property except in a common trust 
                fund or common investment fund.
                    ``(E) Amounts in the trust may be used only--
                            ``(i) as security for a loan to the 
                        business or for repayment of such loan, or
                            ``(ii) to pay the installments under this 
                        section.
            ``(2) Account taxed as grantor trust.--The grantor of a 
        BRIDGE Account shall be treated for purposes of this title as 
        the owner of such Account and shall be subject to tax thereon 
        in accordance with subpart E of part I of subchapter J of this 
        chapter (relating to grantors and others treated as substantial 
        owners).
            ``(3) Time when payments deemed made.--For purposes of this 
        section, a taxpayer shall be deemed to have made a payment to a 
        BRIDGE Account on the last day of a taxable year if such 
        payment is made on account of such taxable year and is made 
        within 3\1/2\ months after the close of such taxable year.
    ``(g) Reports.--The Secretary may require such reporting as the 
Secretary determines to be appropriate to carry out this section.
    ``(h) Application of Section.--This section shall apply to taxes 
imposed for taxable years beginning after December 31, 2003, and before 
January 1, 2008.''.
    (b) Priority of Lender.--Subsection (b) of section 6323 of the 
Internal Revenue Code of 1986 (relating to protection for certain 
interests even though notice filed) is amended by adding at the end the 
following new paragraph:
            ``(11) Loans secured by bridge accounts.--With respect to a 
        BRIDGE account (as defined in section 6168(f)) with any bank 
        (as defined in section 408(n)), to the extent of any loan made 
        by such bank without actual notice or knowledge of the 
        existence of such lien, as against such bank, if such loan is 
        secured by such account.''.
    (c) Clerical Amendment.--The table of sections for subchapter B of 
chapter 62 of the Internal Revenue Code of 1986 is amended by adding at 
the end the following new item:

                              ``Sec.  6168. Extension of time for 
                                        payment of tax for certain 
                                        small businesses.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2003.
    (e) Study by General Accounting Office.--
            (1) Study.--In consultation with the Secretary of the 
        Treasury, the Comptroller General of the United States shall 
        undertake a study to evaluate the applicability (including 
        administrative aspects) and impact of the amendments made by 
        section 4 of the Manufacturing Job Production Act of 2003, 
        including how it affects the capital funding needs of 
        businesses under the Act and number of businesses benefiting.
            (2) Report.--Not later than March 31, 2007, the Comptroller 
        General shall transmit to the Committee on Ways and Means of 
        the House of Representatives and the Committee on Finance of 
        the Senate a written report presenting the results of the study 
        conducted pursuant to this subsection, together with such 
        recommendations for legislative or administrative changes as 
        the Comptroller General determines are appropriate.

SEC. 5. PERMANENT EXTENSION OF INCREASED EXPENSING FOR SMALL 
              BUSINESSES.

    (a) In General.--Paragraph (1) of section 179(b) of the Internal 
Revenue Code of 1986 (relating to dollar limitation) is amended by 
striking ``$25,000 ($100,000 in the case of taxable years beginning 
after 2002 and before 2006)'' and inserting ``$100,000''.
    (b) Increase in Qualifying Investment at Which Phaseout Begins.--
Paragraph (2) of section 179(b) of the Internal Revenue Code of 1986 
(relating to reduction in limitation) is amended by striking ``$200,000 
($400,000 in the case of taxable years beginning after 2002 and before 
2006)'' and inserting ``$400,000''.
    (c) Off-the-Shelf Computer Software.--Paragraph (1) of section 
179(d) of the Internal Revenue Code of 1986 (defining section 179 
property) is amended by striking ``, and which is placed in service in 
a taxable year beginning after 2002 and before 2006''.
    (d) Inflation Adjustment.--Subparagraph (A) of section 179(b)(5) of 
the Internal Revenue Code of 1986 (relating to inflation adjustments) 
is amended by striking ``and before 2006''.
    (e) Revocation of Election.--Paragraph (2) of section 179(c) of the 
Internal Revenue Code of 1986 is amended by striking the last sentence.
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2003.
                                 <all>