[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 595 Introduced in Senate (IS)]







109th CONGRESS
  1st Session
                                 S. 595

     To amend the Internal Revenue Code of 1986 to modify the work 
           opportunity credit and the welfare-to-work credit.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 10, 2005

Mr. Santorum (for himself, Mr. Baucus, Mr. Smith, Mr. Rockefeller, and 
 Mr. Jeffords) 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 modify the work 
           opportunity credit and the welfare-to-work credit.

    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 ``Encouraging Work Act of 2005''.

SEC. 2. MODIFICATIONS TO WORK OPPORTUNITY CREDIT AND WELFARE-TO-WORK 
              CREDIT.

    (a) Credit Made Permanent.--
            (1) Subsection (c) of section 51 of the Internal Revenue 
        Code of 1986 is amended by striking paragraph (4) (relating to 
        termination).
            (2) Section 51A of such Code is amended by striking 
        subsection (f).
    (b) Eligibility of Ex-Felons Determined Without Regard to Family 
Income.--Paragraph (4) of section 51(d) of the Internal Revenue Code of 
1986 is amended by adding ``and'' at the end of subparagraph (A), by 
striking ``, and'' at the end of subparagraph (B) and inserting a 
period, and by striking all that follows subparagraph (B).
    (c) Increase in Maximum Age for Eligibility of Food Stamp 
Recipients.--Clause (i) of section 51(d)(8)(A) of the Internal Revenue 
Code of 1986 is amended by striking ``25'' and inserting ``40''.
    (d) Increase in Maximum Age for Designated Community Residents.--
            (1) In general.--Paragraph (5) of section 51(d) of the 
        Internal Revenue Code of 1986 is amended to read as follows:
            ``(5) Designated community residents.--
                    ``(A) In general.--The term `designated community 
                resident' means any individual who is certified by the 
                designated local agency--
                            ``(i) as having attained age 18 but not age 
                        40 on the hiring date, and
                            ``(ii) as having his principal place of 
                        abode within an empowerment zone, enterprise 
                        community, or renewal community.
                    ``(B) Individual must continue to reside in zone or 
                community.--In the case of a designated community 
                resident, the term `qualified wages' shall not include 
                wages paid or incurred for services performed while the 
                individual's principal place of abode is outside an 
                empowerment zone, enterprise community, or renewal 
                community.''
            (2) Conforming amendment.--Subparagraph (D) of section 
        51(d)(1) of such Code is amended to read as follows:
                    ``(D) a designated community resident,''.
    (e) Clarification of Treatment of Individuals Under Individual Work 
Plans.--Subparagraph (B) of section 51(d)(6) of the Internal Revenue 
Code of 1986 (relating to vocational rehabilitation referral) is 
amended by striking ``or'' at the end of clause (i), by striking the 
period at the end of clause (ii) and inserting ``, or'', and by adding 
at the end the following new clause:
                            ``(iii) an individual work plan developed 
                        and implemented by an employment network 
                        pursuant to subsection (g) of section 1148 of 
                        the Social Security Act with respect to which 
                        the requirements of such subsection are met.''
    (f) Effective Date.--The amendments made by this section shall 
apply to individuals who begin work for the employer after the date of 
the enactment of this Act, in taxable years ending after such date.

SEC. 3. CONSOLIDATION OF WORK OPPORTUNITY CREDIT WITH WELFARE-TO-WORK 
              CREDIT.

    (a) In General.--Paragraph (1) of section 51(d) of the Internal 
Revenue Code of 1986 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 long-term family assistance recipient.''
    (b) Long-Term Family Assistance Recipient.--Subsection (d) of 
section 51 of the Internal Revenue Code of 1986 is amended by 
redesignating paragraphs (10) through (12) as paragraphs (11) through 
(13), respectively, and by inserting after paragraph (9) the following 
new paragraph:
            ``(10) Long-term family assistance recipient.--The term 
        `long-term family assistance recipient' means any individual 
        who is certified by the designated local agency--
                    ``(A) as being a member of a family receiving 
                assistance under a IV-A program (as defined in 
                paragraph (2)(B)) for at least the 18-month period 
                ending on the hiring date,
                    ``(B)(i) as being a member of a family receiving 
                such assistance for 18 months beginning after August 5, 
                1997, and
                    ``(ii) as having a hiring date which is not more 
                than 2 years after the end of the earliest such 18-
                month period, or
                    ``(C)(i) as being a member of a family which ceased 
                to be eligible for such assistance by reason of any 
                limitation imposed by Federal or State law on the 
                maximum period such assistance is payable to a family, 
                and
                    ``(ii) as having a hiring date which is not more 
                than 2 years after the date of such cessation.''
    (c) Increased Credit for Employment of Long-Term Family Assistance 
Recipients.--Section 51 of the Internal Revenue Code of 1986 is amended 
by inserting after subsection (d) the following new subsection:
    ``(e) Credit for Second-Year Wages for Employment of Long-Term 
Family Assistance Recipients.--
            ``(1) In general.--With respect to the employment of a 
        long-term family assistance recipient--
                    ``(A) the amount of the work opportunity credit 
                determined under this section for the taxable year 
                shall include 50 percent of the qualified second-year 
                wages for such year, and
                    ``(B) in lieu of applying subsection (b)(3), the 
                amount of the qualified first-year wages, and the 
                amount of qualified second-year wages, which may be 
                taken into account with respect to such a recipient 
                shall not exceed $10,000 per year.
            ``(2) Qualified second-year wages.--For purposes of this 
        subsection, the term `qualified second-year wages' means 
        qualified wages--
                    ``(A) which are paid to a long-term family 
                assistance recipient, and
                    ``(B) which are attributable to service rendered 
                during the 1-year period beginning on the day after the 
                last day of the 1-year period with respect to such 
                recipient determined under subsection (b)(2).
            ``(3) Special rules for agricultural and railway labor.--If 
        such recipient is an employee to whom subparagraph (A) or (B) 
        of subsection (h)(1) applies, rules similar to the rules of 
        such subparagraphs shall apply except that--
                    ``(A) such subparagraph (A) shall be applied by 
                substituting `$10,000' for `$6,000', and
                    ``(B) such subparagraph (B) shall be applied by 
                substituting `$833.33' for `$500'.''
    (d) Repeal of Separate Welfare-to-Work Credit.--
            (1) In general.--Section 51A of the Internal Revenue Code 
        of 1986 is hereby repealed.
            (2) Clerical amendment.--The table of sections for subpart 
        F of part IV of subchapter A of chapter 1 of such Code is 
        amended by striking the item relating to section 51A.
    (e) Effective Date.--The amendments made by this section shall 
apply to individuals who begin work for the employer after the date of 
the enactment of this Act, in taxable years ending after such date.
                                 <all>