[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2296 Introduced in House (IH)]
109th CONGRESS
1st Session
H. R. 2296
To amend the Internal Revenue Code of 1986 to protect the financial
stability of activated members of the Ready-Reserve and National Guard
while serving abroad.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 11, 2005
Mrs. Lowey 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 protect the financial
stability of activated members of the Ready-Reserve and National Guard
while serving abroad.
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 ``Guard and Reserve Financial
Stability Act of 2005''.
SEC. 2. READY RESERVE-NATIONAL GUARD EMPLOYEE CREDIT AND READY RESERVE-
NATIONAL GUARD REPLACEMENT EMPLOYEE CREDIT.
(a) Ready Reserve-National Guard Credit.--
(1) In general.--Subpart D of part IV of subchapter A of
chapter 1 of the Internal Revenue Code of 1986 (relating to
business-related credits) is amended by inserting after section
45I the following new section:
``SEC. 45J. READY RESERVE-NATIONAL GUARD EMPLOYEE CREDIT.
``(a) General Rule.--For purposes of section 38, in the case of an
eligible taxpayer, the Ready Reserve-National Guard employee credit
determined under this section for any taxable year with respect to each
Ready Reserve-National Guard employee of such taxpayer is an amount
equal to 50 percent of the lesser of--
``(1) the actual compensation amount with respect to such
employee for such taxable year, or
``(2) $30,000.
``(b) Definition of Actual Compensation Amount.--For purposes of
this section, the term `actual compensation amount' means the amount of
compensation paid or incurred by an eligible taxpayer with respect to a
Ready Reserve-National Guard employee on any day when the employee was
absent from employment for the purpose of performing qualified active
duty.
``(c) Limitations.--No credit shall be allowed with respect to any
day that a Ready Reserve-National Guard employee who performs qualified
active duty was not scheduled to work (for reason other than to
participate in qualified active duty).
``(d) Definitions and Special Rules.--For purposes of this
section--
``(1) Eligible taxpayer.--
``(A) In general.--The term `eligible taxpayer'
means a small business employer.
``(B) Small business employer.--
``(i) In general.--The term `small business
employer' means, with respect to any taxable
year, any employer who employed an average of
50 or fewer employees on business days during
such taxable year.
``(ii) Controlled groups.--For purposes of
clause (i), all persons treated as a single
employer under subsection (b), (c), (m), or (o)
of section 414 shall be treated as a single
employer.
``(2) Qualified active duty.--The term `qualified active
duty' means--
``(A) active duty under an order or call for a
period in excess of 179 days or for an indefinite
period, other than the training duty specified in
section 10147 of title 10, United States Code (relating
to training requirements for the Ready Reserve), or
section 502(a) of title 32, United States Code
(relating to required drills and field exercises for
the National Guard), in connection with which an
employee is entitled to reemployment rights and other
benefits or to a leave of absence from employment under
chapter 43 of title 38, United States Code, and
``(B) hospitalization incident to such duty.
``(3) Compensation.--The term `compensation' means any
remuneration for employment, whether in cash or in kind, which
is paid or incurred by a taxpayer and which is deductible from
the taxpayer's gross income under section 162(a)(1).
``(4) Ready reserve-national guard employee.--The term
`Ready Reserve-National Guard employee' means an employee who
is a member of the Ready Reserve of a reserve component of an
Armed Force of the United States as described in sections 10142
and 10101 of title 10, United States Code.
``(5) Certain rules to apply.--Rules similar to the rules
of section 52 shall apply.
``(e) Termination.--This section shall not apply to any amount paid
or incurred after December 31, 2006.''.
(2) Credit to be part of general business credit.--
Subsection (b) of section 38 of the Internal Revenue Code of
1986 (relating to general business credit) is amended by
striking ``plus'' at the end of paragraph (18), by striking the
period at the end of paragraph (19) and inserting ``, plus'',
and by adding at the end the following:
``(20) the Ready Reserve-National Guard employee credit
determined under section 45J(a).''.
(3) Denial of double benefit.--Section 280C(a) of the
Internal Revenue Code of 1986 (relating to rule for employment
credits) is amended by inserting ``45J(a),'' after ``45A(a),''.
(4) Conforming 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 inserting after the
item relating to section 45I the following:
``Sec. 45J. Ready Reserve-National Guard employee credit.''.
(5) Effective date.--The amendments made by this subsection
shall apply to amounts paid or incurred after September 30,
2004, in taxable years ending after such date.
(b) Ready Reserve-National Guard Replacement Employee Credit.--
(1) In general.--Paragraph (1) of section 51(d) of the
Internal Revenue Code of 1986 (relating to members of targeted
groups) is amended by striking ``or'' at the end of
subparagraph (G), by striking the period at the end of
subparagraph (H) and inserting ``, or'' and by adding at the
end the following new subparagraph:
``(I) a qualified replacement employee.''.
(2) Qualified replacement employee.--Section 51(d) of the
Internal Revenue Code of 1986 is amended by redesignating
paragraphs (10), (11), and (12) as paragraphs (11), (12), and
(13), respectively, and by inserting after paragraph (9) the
following new paragraph:
``(10) Qualified replacement employee.--
``(A) In general.--The term `qualified replacement
employee' means an individual who is certified by the
designated local agency as being hired by an eligible
taxpayer to replace a Ready Reserve-National Guard
employee of such taxpayer, but only with respect to the
period during which such Ready Reserve-National Guard
employee participates in qualified active duty,
including time spent in travel status.
``(B) General definitions and special rules.--For
purposes of this paragraph--
``(i) Eligible taxpayer.--The term
`eligible taxpayer' means a small business
employer.
``(ii) Small business employer.--
``(I) In general.--The term `small
business employer' means, with respect
to any taxable year, any employer who
employed an average of 50 or fewer
employees on business days during such
taxable year.
``(II) Controlled groups.--For
purposes of subclause (I), all persons
treated as a single employer under
subsection (b), (c), (m), or (o) of
section 414 shall be treated as a
single employer.
``(iii) Ready reserve-national guard
employee.--The term `Ready Reserve-National
Guard employee' has the meaning given such term
by section 45J(d)(3).
``(iv) Qualified active duty.--The term
`qualified active duty' has the meaning given
such term by section 45J(d)(1).
``(C) Disallowance for failure to comply with
employment or reemployment rights of members of the
reserve components of the armed forces of the united
states.--No credit shall be allowed under subsection
(a) by reason of paragraph (1)(I) to a taxpayer for--
``(i) any taxable year, beginning after the
date of the enactment of this section, in which
the taxpayer is under a final order, judgment,
or other process issued or required by a
district court of the United States under
section 4323 of title 38 of the United States
Code with respect to a violation of chapter 43
of such title, and
``(ii) the 2 succeeding taxable years.''.
(3) Extension of credit with respect to qualified
replacement employees.--Subparagraph (B) of section 51(c)(4) of
such Code (relating to termination) is amended by inserting
``(December 31, 2006, in the case of amounts paid or incurred
to an individual who is a qualified replacement employee)''
after ``2005''.
(4) Effective date.--The amendments made by this subsection
shall apply to amounts paid or incurred to an individual who
begins work for the employer after September 30, 2004.
(c) Study by GAO.--
(1) In general.--The Comptroller General of the United
States shall study the following:
(A) What, if any, problems exist in recruiting
individuals for a reserve component of an Armed Force
of the United States.
(B) Whether the credit allowed under section 45J of
the Internal Revenue Code of 1986 (as added by this
section) is an effective incentive for the hiring and
retention of employees who are individuals described in
subparagraph (A) and whether there exists any
compliance problems in the administration of such
credit.
(2) Report.--The Comptroller General of the United States
shall report on the results of the study required under
paragraph (1) to the Committee on Finance of the Senate and the
Committee on Ways and Means of the House of Representatives
before December 1, 2005.
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