II 110th CONGRESS 1st Session S. 538 IN THE SENATE OF THE UNITED STATES February 8, 2007 Ms. Landrieu introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To reduce income tax withholding deposits to reflect a FICA payroll tax credit for certain employers located in specified portions of the GO Zone, and for other purposes.

1.

Short title; etc

(a)

Short Title

This Act may be cited as the Work, Hope, and Opportunity for the Disaster Area Today Act. (b)

Amendment of 1986 Code

Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.

2.

Reduction in income tax withholding deposits to reflect fica payroll tax credit for certain employers located in specified portions of the GO Zone during 2007

(a)

General Rule

In the case of any applicable calendar quarter— (1)the aggregate amount of required income tax deposits of an eligible employer for the calendar quarter following the applicable calendar quarter shall be reduced by the payroll tax credit equivalent amount for the applicable calendar quarter, and (2)the amount of any deduction allowable to the eligible employer under chapter 1 of the Internal Revenue Code of 1986 for taxes paid under section 3111 of such Code with respect to employment during the applicable calendar quarter shall be reduced by such payroll tax credit equivalent amount. For purposes of the Internal Revenue Code of 1986, an eligible employer shall be treated as having paid, and an eligible employee shall be treated as having received, any wages or compensation deducted and withheld but not deposited by reason of paragraph (1).(b)

Carryovers of Unused Amounts

If the payroll tax credit equivalent amount for any applicable calendar quarter exceeds the required income tax deposits for the following calendar quarter— (1)such excess shall be added to the payroll tax credit equivalent amount for the next applicable calendar quarter, and (2)in the case of the last applicable calendar quarter, such excess shall be used to reduce required income tax deposits for any succeeding calendar quarter until such excess is used. (c)

Payroll Tax Credit Equivalent Amount

For purposes of this section— (1)

In general

The term payroll tax credit equivalent amount means, with respect to any applicable calendar quarter, an amount equal to 7.65 percent of the aggregate amount of wages or compensation— (A)paid or incurred by the eligible employer with respect to employment of eligible employees during the applicable calendar quarter, and (B)subject to the tax imposed by section 3111 of the Internal Revenue Code of 1986. (2)

Trade or business requirement

A rule similar to the rule of section 51(f) of such Code shall apply for purposes of this section. (3)

Limitation on wages subject to credit

For purposes of this subsection, only wages and compensation of an eligible employee in an applicable calendar quarter, when added to such wages and compensation for any preceding applicable calendar quarter, not exceeding $15,000 shall be taken into account with respect to such employee. (d)

Eligible employer; eligible employee

For purposes of this section— (1)

Eligible employer

(A)

In general

The term eligible employer means any employer which conducts an active trade or business in one or more specified portions of the GO Zone and employs not more than 100 full-time employees on the date of the enactment of this Act. (B)

Specified portions of the go zone

The term specified portions of the GO Zone has the meaning given such term by section 1400N(d)(6)(C) of the Internal Revenue Code of 1986. (2)

Eligible employee

The term eligible employee means with respect to an eligible employer an employee whose principal place of employment with such eligible employer is in one or more specified portions of the GO Zone. Such term shall not include an employee described in section 401(c)(1)(A). (e)

Applicable calendar quarter

For purposes of this section, the term applicable calendar quarter means any of the 4 calendar quarters beginning in 2007. (f)

Special Rules

For purposes of this section— (1)

Required income tax deposits

The term required income tax deposits means deposits an eligible employer is required to make under section 6302 of the Internal Revenue Code of 1986 of taxes such employer is required to deduct and withhold under section 3402 of such Code. (2)

Aggregation rules

Rules similar to the rules of subsections (a) and (b) of section 52 of the Internal Revenue Code of 1986 shall apply. (3)

Employers not on quarterly system

The Secretary of the Treasury shall prescribe rules for the application of this section in the case of an eligible employer whose required income tax deposits are not made on a quarterly basis. (4)

Adjustments for certain acquisitions, etc

Under regulations prescribed by the Secretary— (A)

Acquisitions

If, after December 31, 2006, an employer acquires the major portion of a trade or business of another person (hereafter in this paragraph referred to as the predecessor) or the major portion of a separate unit of a trade or business of a predecessor, then, for purposes of applying this section for any calendar quarter ending after such acquisition, the amount of wages or compensation deemed paid by the employer during periods before such acquisition shall be increased by so much of such wages or compensation paid by the predecessor with respect to the acquired trade or business as is attributable to the portion of such trade or business acquired by the employer. (B)

Dispositions

If, after December 31, 2006— (i)an employer disposes of the major portion of any trade or business of the employer or the major portion of a separate unit of a trade or business of the employer in a transaction to which paragraph (1) applies, and (ii)the employer furnishes the acquiring person such information as is necessary for the application of subparagraph (A), then, for purposes of applying this section for any calendar quarter ending after such disposition, the amount of wages or compensation deemed paid by the employer during periods before such disposition shall be decreased by so much of such wages as is attributable to such trade or business or separate unit.(5)

Other rules

(A)

Government employers

This section shall not apply if the employer is the Government of the United States, the government of any State or political subdivision of the State, or any agency or instrumentality of any such government. (B)

Treatment of other entities

Rules similar to the rules of subsections (d) and (e) of section 52 of such Code shall apply for purposes of this section.

3.

Bonus business travel deduction in specified portions of the GO Zone

(a)

In general

Section 274(n)(2) (relating to exceptions) is amended by striking or at the end of subparagraph (D), by striking the period at the end of subparagraph (E)(iv) and inserting , or, and by inserting after subparagraph (E)(iv) the following new subparagraph: (F)such expense is for goods, services, or facilities made available before January 1, 2010, in one or more specified portions of the GO Zone (as defined in section 1400N(d)(6)(C). . (b)

Effective date

The amendments made by this section shall apply to expenses paid or incurred after the date of the enactment of this Act, in taxable years ending after such date.

4.

Extension of increased expensing for qualified section 179 Gulf Opportunity Zone property located in specified portions of the GO Zone

Paragraph (2) of section 1400N(e) (relating to qualified section 179 Gulf Opportunity Zone property) is amended— (1)by striking this subsection, the term and inserting this subsection—(A)

In general

The term , and (2)by adding at the end the following new subparagraph: (B)

Extension for certain property

In the case of property substantially all of the use of which is in one or more specified portions of the GO Zone (as defined in subsection (d)(6)(C)), such term shall include section 179 property (as so defined) which is described in subsection (d)(2), determined— (i)without regard to subsection (d)(6), and (ii)by substituting, in subparagraph (A)(v) thereof— (I)2009 for 2007, and (II)2009 for 2008. .

5.

Extension of work opportunity tax credit for Hurricane Katrina employees hired by small businesses located in specified portions of the GO Zone

(a)

In general

Section 201(b)(1) of the Katrina Emergency Tax Relief Act of 2005 (Public Law 109–73) is amended by striking who is hired during the 2-year period and all that follows and inserting who—(A)is hired during the 2-year period beginning on such date for a position the principal place of employment which is located in the core disaster area, or (B)is hired— (i)during the period beginning on the date of the enactment of the Work, Hope, Opportunity, and Disaster Area Tax Act of 2007 and ending before January 1, 2010, for a position the principal place of employment which is located in one or more specified portions of the GO Zone (as defined in subsection 1400N(d)(6)(C) of the Internal Revenue Code of 1986), and (ii)by an employer who has no more than 100 employees on the date such individual is hired, and . (b)

Effective date

The amendment made by this section take effect as if included in section 201 of the Katrina Emergency Tax Relief Act of 2005.

6.

Extension and modification of 15-year straight-line cost recovery for qualified leasehold improvements and qualified restaurant improvements located in specified portions of the GO Zone; 15-year straight-line cost recovery for certain improvements to retail space located in specified portions of the GO Zone

(a)

Extension of leasehold and restaurant improvements

(1)

In general

Clauses (iv) and (v) of section 168(e)(3)(E) (relating to 15-year property) are each amended by striking January 1, 2008 and inserting January 1, 2008 (January 1, 2009, in the case of property placed in service in one or more specified portions of the GO Zone (as defined in subsection 1400Nd)(6)(C)). (2)

Effective date

The amendment made by this subsection shall apply to property placed in service after December 31, 2007. (b)

Modification of treatment of qualified restaurant property as 15-year property for purposes of depreciation deduction

(1)

Treatment to include new construction

Paragraph (7) of section 168(e) (relating to classification of property) is amended to read as follows: (7)

Qualified restaurant property

(A)

In general

Except as provided in subparagraph (B), the term qualified restaurant property means any section 1250 property which is an improvement to a building if— (i)such improvement is placed in service more than 3 years after the date such building was first placed in service, and (ii)more than 50 percent of the building's square footage is devoted to preparation of, and seating for on-premises consumption of, prepared meals. (B)

Property located in certain areas of GO Zone

In the case of property placed in service in one or more specified portions of the GO Zone (as defined in subsection 1400Nd)(6)(C)), such term means any section 1250 property which is a building (or its structural components) or an improvement to such building if more than 50 percent of such building's square footage is devoted to preparation of, and seating for on-premises consumption of, prepared meals. . (2)

Effective Date

The amendment made by this subsection shall apply to any property placed in service after the date of the enactment of this Act. (c)

Recovery period for depreciation of certain improvements to retail space

(1)

15-year recovery period

Section 168(e)(3)(E) (relating to 15-year property) is amended by striking and at the end of clause (vii), by striking the period at the end of clause (viii) and inserting , and, and by adding at the end the following new clause: (ix)any qualified retail improvement property placed in service before January 1, 2009, in one or more specified portions of the GO Zone (as defined in subsection 1400Nd)(6)(C). . (2)

Qualified retail improvement property

Section 168(e) is amended by adding at the end the following new paragraph: (8)

Qualified retail improvement property

(A)

In general

The term qualified retail improvement property means any improvement to an interior portion of a building which is nonresidential real property if— (i)such portion is open to the general public and is used in the retail trade or business of selling tangible personal property to the general public, and (ii)such improvement is placed in service more than 3 years after the date the building was first placed in service. (B)

Improvements made by owner

In the case of an improvement made by the owner of such improvement, such improvement shall be qualified retail improvement property (if at all) only so long as such improvement is held by such owner. Rules similar to the rules under paragraph (6)(B) shall apply for purposes of the preceding sentence. (C)

Certain improvements not included

Such term shall not include any improvement for which the expenditure is attributable to— (i)the enlargement of the building, (ii)any elevator or escalator, (iii)any structural component benefitting a common area, or (iv)the internal structural framework of the building. . (3)

Requirement to use straight line method

Section 168(b)(3) is amended by adding at the end the following new subparagraph: (I)Qualified retail improvement property described in subsection (e)(8). . (4)

Alternative system

The table contained in section 168(g)(3)(B) is amended by inserting after the item relating to subparagraph (E)(viii) the following new item: (E)(ix)39 . (5)

Effective date

The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act.