[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 1142 Introduced in Senate (IS)]







109th CONGRESS
  1st Session
                                S. 1142

 To provide pay protection for members of the Reserve and the National 
                     Guard, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 26, 2005

 Ms. Landrieu (for herself, Mr. Graham, Mr. Allen, Mr. Durbin, and Mr. 
  Lautenberg) introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To provide pay protection for members of the Reserve and the National 
                     Guard, and for other purposes.

    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 ``Helping Our Patriotic Employers at 
Helping Our Military Employees Act of 2005'' or the ``HOPE at HOME Act 
of 2005''.

SEC. 2. NONREDUCTION IN PAY WHILE FEDERAL EMPLOYEE IS PERFORMING ACTIVE 
              SERVICE IN THE UNIFORMED SERVICES.

    (a) In General.--Subchapter IV of chapter 55 of title 5, United 
States Code, is amended by adding at the end the following:
``Sec. 5538. Nonreduction in pay while serving in the uniformed 
              services
    ``(a) An employee who is absent from a position of employment with 
the Federal Government in order to perform service in the uniformed 
services for a period of more than 90 days shall be entitled to 
receive, for each pay period described in subsection (b), an amount 
equal to the amount by which--
            ``(1) the amount of basic pay which would otherwise have 
        been payable to such employee for such pay period if such 
        employee's civilian employment with the Government had not been 
        interrupted by that service, exceeds (if at all)
            ``(2) the amount of pay and allowances which (as determined 
        under subsection (d))--
                    ``(A) is payable to such employee for that service; 
                and
                    ``(B) is allocable to such pay period.
    ``(b)(1) Amounts under this section shall be payable with respect 
to each pay period (which would otherwise apply if the employee's 
civilian employment had not been interrupted)--
            ``(A) during which such employee is entitled to 
        reemployment rights under chapter 43 of title 38 with respect 
        to the position from which such employee is absent (as referred 
        to in subsection (a)); and
            ``(B) for which such employee does not otherwise receive 
        basic pay (including by taking any annual, military, or other 
        paid leave) to which such employee is entitled by virtue of 
        such employee's civilian employment with the Government.
    ``(2) For purposes of this section, the period during which an 
employee is entitled to reemployment rights under chapter 43 of title 
38--
            ``(A) shall be determined disregarding the provisions of 
        section 4312(d) of title 38; and
            ``(B) shall include any period of time specified in section 
        4312(e) of title 38 within which an employee may report or 
        apply for employment or reemployment following completion of 
        service in the uniformed services.
    ``(c) Any amount payable under this section to an employee shall be 
paid--
            ``(1) by such employee's employing agency;
            ``(2) from the appropriation or fund which would be used to 
        pay the employee if such employee were in a pay status; and
            ``(3) to the extent practicable, at the same time and in 
        the same manner as would basic pay if such employee's civilian 
        employment had not been interrupted.
    ``(d) The Office of Personnel Management shall, in consultation 
with Secretary of Defense, prescribe any regulations necessary to carry 
out the preceding provisions of this section.
    ``(e)(1) The head of each agency referred to in section 
2302(a)(2)(C)(ii) shall, in consultation with the Office, prescribe 
procedures to ensure that the rights under this section apply to the 
employees of such agency.
    ``(2) The Administrator of the Federal Aviation Administration 
shall, in consultation with the Office, prescribe procedures to ensure 
that the rights under this section apply to the employees of that 
agency.
    ``(f) For purposes of this section--
            ``(1) the terms `employee', `Federal Government', and 
        `uniformed services' have the same respective meanings as given 
        in section 4303 of title 38;
            ``(2) the term `service in the uniformed services' has the 
        meaning given that term in section 4303 of title 38 and 
        includes duty performed by a member of the National Guard under 
        section 502(f) of title 32 at the direction of the Secretary of 
        the Army or Secretary of the Air Force;
            ``(3) the term `employing agency', as used with respect to 
        an employee entitled to any payments under this section, means 
        the agency or other entity of the Government (including an 
        agency referred to in section 2302(a)(2)(C)(ii)) with respect 
        to which such employee has reemployment rights under chapter 43 
        of title 38; and
            ``(4) the term `basic pay' includes any amount payable 
        under section 5304.''.
    (b) Clerical Amendment.--The table of sections for chapter 55 of 
title 5, United States Code, is amended by inserting after the item 
relating to section 5537 the following:

``5538. Nonreduction in pay while serving in the uniformed services or 
                            National Guard.''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to pay periods (as described in section 5538(b) of 
title 5, United States Code, as added by this section) beginning on or 
after September 11, 2001.

SEC. 3. READY RESERVE-NATIONAL GUARD EMPLOYEE CREDIT ADDED TO GENERAL 
              BUSINESS CREDIT.

    (a) Ready Reserve-National Guard Credit.--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 adding at the end 
the following:

``SEC. 45J. READY RESERVE-NATIONAL GUARD EMPLOYEE CREDIT.

    ``(a) General Rule.--For purposes of section 38, the Ready Reserve-
National Guard employee credit determined under this section for any 
taxable year is an amount equal to 50 percent of the actual 
compensation amount for such taxable year.
    ``(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 employer with respect to a Ready 
Reserve-National Guard employee on any day during a taxable year when 
the employee was absent from employment for the purpose of performing 
qualified active duty.
    ``(c) Limitation.--No credit shall be allowed with respect to a 
Ready Reserve-National Guard employee who performs qualified active 
duty on any day on which the employee was not scheduled to work (for 
reason other than to participate in qualified active duty).
    ``(d) Definitions.--For purposes of this section--
            ``(1) Qualified active duty.--The term `qualified active 
        duty' means--
                    ``(A) active duty, 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.
            ``(2) 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).
            ``(3) 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.
            ``(4) Certain rules to apply.--Rules similar to the rules 
        of section 52 shall apply.
    ``(e) Portion of Credit Made Refundable.--
            ``(1) In general.--In the case of an eligible employer of a 
        Ready Reserve-National Guard employee, the aggregate credits 
        allowed to a taxpayer under subpart C shall be increased by the 
        lesser of--
                    ``(A) the credit which would be allowed under this 
                section without regard to this subsection and the 
                limitation under section 38(c), or
                    ``(B) the amount by which the aggregate amount of 
                credits allowed by this subpart (determined without 
                regard to this subsection) would increase if the 
                limitation imposed by section 38(c) for any taxable 
                year were increased by the amount of employer payroll 
                taxes imposed on the taxpayer during the calendar year 
                in which the taxable year begins.
        The amount of the credit allowed under this subsection shall 
        not be treated as a credit allowed under this subpart and shall 
        reduce the amount of the credit otherwise allowable under 
        subsection (a) without regard to section 38(c).
            ``(2) Eligible employer.--For purposes of this subsection, 
        the term `eligible employer' means an employer which is a State 
        or local government or subdivision thereof.
            ``(3) Employer payroll taxes.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `employer payroll 
                taxes' means the taxes imposed by--
                            ``(i) section 3111(b), and
                            ``(ii) sections 3211(a) and 3221(a) 
                        (determined at a rate equal to the rate under 
                        section 3111(b)).
                    ``(B) Special rule.--A rule similar to the rule of 
                section 24(d)(2)(C) shall apply for purposes of 
                subparagraph (A).''.
    (b) Credit to Be Part of General Business Credit.--Subsection (b) 
of section 38 of such Code (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).''.
    (c) Denial of Double Benefit.--Section 280C(a) (relating to rule 
for employment credits) is amended by inserting ``45J(a),'' after 
``45A(a),''.
    (d) 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.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 4. READY RESERVE-NATIONAL GUARD REPLACEMENT EMPLOYEE CREDIT.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to foreign tax credit, 
etc.) is amended by adding after section 30A the following new section:

``SEC. 30B. READY RESERVE-NATIONAL GUARD REPLACEMENT EMPLOYEE CREDIT.

    ``(a) Allowance of Credit.--
            ``(1) In general.--In the case of an eligible taxpayer, 
        there shall be allowed as a credit against the tax imposed by 
        this chapter for the taxable year the sum of the employment 
        credits for each qualified replacement employee under this 
        section.
            ``(2) Employment credit.--The employment credit with 
        respect to a qualified replacement employee of the taxpayer for 
        any taxable year is equal to 50 percent of the lesser of--
                    ``(A) the individual's qualified compensation 
                attributable to service rendered as a qualified 
                replacement employee, or
                    ``(B) $12,000.
    ``(b) Qualified Compensation.--The term `qualified compensation' 
means--
            ``(1) compensation which is normally contingent on the 
        qualified replacement employee's presence for work and which is 
        deductible from the taxpayer's gross income under section 
        162(a)(1),
            ``(2) compensation which is not characterized by the 
        taxpayer as vacation or holiday pay, or as sick leave or pay, 
        or as any other form of pay for a nonspecific leave of absence, 
        and
            ``(3) group health plan costs (if any) with respect to the 
        qualified replacement employee.
    ``(c) Qualified Replacement Employee.--For purposes of this 
section--
            ``(1) In general.--The term `qualified replacement 
        employee' means an individual who is hired to replace a Ready 
        Reserve-National Guard employee or a Ready Reserve-National 
        Guard self-employed taxpayer, but only with respect to the 
        period during which--
                    ``(A) such Ready Reserve-National Guard employee is 
                receiving an actual compensation amount (as defined in 
                section 45J(b)) from the employee's employer and is 
                participating in qualified active duty, including time 
                spent in travel status, or
                    ``(B) such Ready Reserve-National Guard self-
                employed taxpayer is participating in such qualified 
                active duty.
            ``(2) Ready reserve-national guard employee.--The term 
        `Ready Reserve-National Guard employee' has the meaning given 
        such term by section 45J(d)(3).
            ``(3) Ready reserve-national guard self-employed 
        taxpayer.--The term `Ready Reserve-National Guard self-employed 
        taxpayer' means a taxpayer who--
                    ``(A) has net earnings from self-employment (as 
                defined in section 1402(a)) for the taxable year, and
                    ``(B) is a member of the Ready Reserve of a reserve 
                component of an Armed Force of the United States as 
                described in section 10142 and 10101 of title 10, 
                United States Code.
    ``(d) Coordination With Other Credits.--The amount of credit 
otherwise allowable under sections 51(a) and 1396(a) with respect to 
any employee shall be reduced by the credit allowed by this section 
with respect to such employee.
    ``(e) Limitations.--
            ``(1) Application with other credits.--The credit allowed 
        under subsection (a) for any taxable year shall not exceed the 
        excess (if any) of--
                    ``(A) the regular tax for the taxable year reduced 
                by the sum of the credits allowable under subpart A and 
                sections 27, 29, and 30, over
                    ``(B) the tentative minimum tax for the taxable 
                year.
            ``(2) 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) to a taxpayer for--
                    ``(A) 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
                    ``(B) the 2 succeeding taxable years.
    ``(f) General Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Eligible taxpayer.--The term `eligible taxpayer' 
        means a small business employer or a Ready Reserve-National 
        Guard self-employed taxpayer.
            ``(2) Small business employer.--
                    ``(A) 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.
                    ``(B) Controlled groups.--For purposes of 
                subparagraph (A), all persons treated as a single 
                employer under subsection (b), (c), (m), or (o) of 
                section 414 shall be treated as a single employer.
            ``(3) Qualified active duty.--The term `qualified active 
        duty' has the meaning given such term by section 45J(d)(1).
            ``(4) Special rules for certain manufacturers.--
                    ``(A) In general.--In the case of any qualified 
                manufacturer--
                            ``(i) subsection (a)(2)(B) shall be applied 
                        by substituting `$20,000' for `$12,000', and
                            ``(ii) paragraph (2)(A) of this subsection 
                        shall be applied by substituting `100' for 
                        `50'.
                    ``(B) Qualified manufacturer.--For purposes of this 
                paragraph, the term `qualified manufacturer' means any 
                person if--
                            ``(i) the primary business of such person 
                        is classified in sector 31, 32, or 33 of the 
                        North American Industrial Classification 
                        System, and
                            ``(ii) all of such person's facilities 
                        which are used for production in such business 
                        are located in the United States.
            ``(5) Carryback and carryforward allowed.--
                    ``(A) In general.--If the credit allowable under 
                subsection (a) for a taxable year exceeds the amount of 
                the limitation under subsection (e)(1) for such taxable 
                year (in this paragraph referred to as the `unused 
                credit year'), such excess shall be a credit carryback 
                to each of the 3 taxable years preceding the unused 
                credit year and a credit carryforward to each of the 20 
                taxable years following the unused credit year.
                    ``(B) Rules.--Rules similar to the rules of section 
                39 shall apply with respect to the credit carryback and 
                credit carryforward under subparagraph (A).
            ``(6) Certain rules to apply.--Rules similar to the rules 
        of subsections (c), (d), and (e) of section 52 shall apply.''.
    (b) No Deduction for Compensation Taken Into Account for Credit.--
Section 280C(a) of the Internal Revenue Code of 1986 (relating to rule 
for employment credits), as amended by this Act, is amended--
            (1) by inserting ``or compensation'' after ``salaries'', 
        and
            (2) by inserting ``30B,'' before ``45A(a),''.
    (c) Conforming Amendment.--Section 55(c)(2) of the Internal Revenue 
Code of 1986 is amended by inserting ``30B(e)(1),'' after 
``30(b)(3),''.
    (d) Clerical Amendment.--The table of sections for subpart B of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by adding after the item relating to section 30A the 
following new item:

``Sec. 30B. Credit for replacement of activated military reservists.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 5. INCOME TAX WITHHOLDING ON DIFFERENTIAL WAGE PAYMENTS.

    (a) In General.--Section 3401 of the Internal Revenue Code of 1986 
(relating to definitions) is amended by adding at the end the following 
new subsection:
    ``(i) Differential Wage Payments to Active Duty Members of the 
Uniformed Services.--
            ``(1) In general.--For purposes of subsection (a), any 
        differential wage payment shall be treated as a payment of 
        wages by the employer to the employee.
            ``(2) Differential wage payment.--For purposes of paragraph 
        (1), the term `differential wage payment' means any payment 
        which--
                    ``(A) is made by an employer to an individual with 
                respect to any period during which the individual is 
                performing service in the uniformed services while on 
                active duty for a period of more than 30 days, and
                    ``(B) represents all or a portion of the wages the 
                individual would have received from the employer if the 
                individual were performing service for the employer.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to remuneration paid after December 31, 2004.

SEC. 6. TREATMENT OF DIFFERENTIAL WAGE PAYMENTS FOR RETIREMENT PLAN 
              PURPOSES.

    (a) Pension Plans.--
            (1) In general.--Section 414(u) of the Internal Revenue 
        Code of 1986 (relating to special rules relating to veterans' 
        reemployment rights under USERRA) is amended by adding at the 
        end the following new paragraph:
            ``(11) Treatment of differential wage payments.--
                    ``(A) In general.--Except as provided in this 
                paragraph, for purposes of applying this title to a 
                retirement plan to which this subsection applies--
                            ``(i) an individual receiving a 
                        differential wage payment shall be treated as 
                        an employee of the employer making the payment,
                            ``(ii) the differential wage payment shall 
                        be treated as compensation, and
                            ``(iii) the plan shall not be treated as 
                        failing to meet the requirements of any 
                        provision described in paragraph (1)(C) by 
                        reason of any contribution which is based on 
                        the differential wage payment.
                    ``(B) Special rule for distributions.--
                            ``(i) In general.--Notwithstanding 
                        subparagraph (A)(i), for purposes of section 
                        401(k)(2)(B)(i)(I), 403(b)(7)(A)(ii), 
                        403(b)(11)(A), or 457(d)(1)(A)(ii), an 
                        individual shall be treated as having been 
                        severed from employment during any period the 
                        individual is performing service in the 
                        uniformed services described in section 
                        3401(i)(2)(A).
                            ``(ii) Limitation.--If an individual elects 
                        to receive a distribution by reason of clause 
                        (i), the plan shall provide that the individual 
                        may not make an elective deferral or employee 
                        contribution during the 6-month period 
                        beginning on the date of the distribution.
                    ``(C) Nondiscrimination requirement.--Subparagraph 
                (A)(iii) shall apply only if all employees of an 
                employer performing service in the uniformed services 
                described in section 3401(i)(2)(A) are entitled to 
                receive differential wage payments on reasonably 
                equivalent terms and, if eligible to participate in a 
                retirement plan maintained by the employer, to make 
                contributions based on the payments. For purposes of 
                applying this subparagraph, the provisions of 
                paragraphs (3), (4), and (5), of section 410(b) shall 
                apply.
                    ``(D) Differential wage payment.--For purposes of 
                this paragraph, the term `differential wage payment' 
                has the meaning given such term by section 
                3401(i)(2).''.
            (2) Conforming amendment.--The heading for section 414(u) 
        of such Code is amended by inserting ``and to Differential Wage 
        Payments to Members on Active Duty'' after ``USERRA''.
    (b) Differential Wage Payments Treated as Compensation for 
Individual Retirement Plans.--Section 219(f)(1) of the Internal Revenue 
Code of 1986 (defining compensation) is amended by adding at the end 
the following new sentence: ``The term `compensation' includes any 
differential wage payment (as defined in section 3401(i)(2)).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2004.
    (d) Provisions Relating to Plan Amendments.--
            (1) In general.--If this subsection applies to any plan or 
        annuity contract amendment--
                    (A) such plan or contract shall be treated as being 
                operated in accordance with the terms of the plan or 
                contract during the period described in paragraph 
                (2)(B)(i), and
                    (B) except as provided by the Secretary of the 
                Treasury, such plan shall not fail to meet the 
                requirements of the Internal Revenue Code of 1986 or 
                the Employee Retirement Income Security Act of 1974 by 
                reason of such amendment.
            (2) Amendments to which section applies.--
                    (A) In general.--This subsection shall apply to any 
                amendment to any plan or annuity contract which is 
                made--
                            (i) pursuant to any amendment made by this 
                        section, and
                            (ii) on or before the last day of the first 
                        plan year beginning on or after January 1, 
                        2007.
                    (B) Conditions.--This subsection shall not apply to 
                any plan or annuity contract amendment unless--
                            (i) during the period beginning on the date 
                        the amendment described in subparagraph (A)(i) 
                        takes effect and ending on the date described 
                        in subparagraph (A)(ii) (or, if earlier, the 
                        date the plan or contract amendment is 
                        adopted), the plan or contract is operated as 
                        if such plan or contract amendment were in 
                        effect, and
                            (ii) such plan or contract amendment 
                        applies retroactively for such period.
                                 <all>