[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 3816 Placed on Calendar Senate (PCS)]

                                                       Calendar No. 578
111th CONGRESS
  2d Session
                                S. 3816

To amend the Internal Revenue Code of 1986 to create American jobs and 
            to prevent the offshoring of such jobs overseas.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 21, 2010

Mr. Durbin (for himself, Mr. Reid, Mr. Schumer, Mr. Dorgan, Mrs. Boxer, 
Mr. Brown of Ohio, and Mr. Leahy) introduced the following bill; which 
                        was read the first time

                           September 22, 2010

            Read the second time and placed on the calendar

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to create American jobs and 
            to prevent the offshoring of such jobs overseas.

    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 ``Creating American Jobs and Ending 
Offshoring Act''.

              TITLE I--INCENTIVES TO CREATE AMERICAN JOBS

SEC. 101. PAYROLL TAX HOLIDAY FOR EMPLOYERS MOVING JOBS TO THE UNITED 
              STATES FROM OVERSEAS.

    (a) In General.--Section 3111 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsection:
    ``(e) Special Exemption for Certain Individuals Hired to Replace 
Employees Whose Jobs Were Overseas.--
            ``(1) In general.--Subsection (a) shall not apply to wages 
        paid by a qualified employer with respect to employment during 
        the applicable 24-month period with respect to any qualified 
        replacement individual for services performed--
                    ``(A) in a trade or business of such qualified 
                employer, or
                    ``(B) in the case of a qualified employer exempt 
                from tax under section 501(a), in furtherance of the 
                activities related to the purpose or function 
                constituting the basis of the employer's exemption 
                under section 501.
            ``(2) Qualified employer.--For purposes of this subsection, 
        the term `qualified employer' has the meaning given such term 
        by subsection (d)(2).
            ``(3) Qualified replacement individual.--For purposes of 
        this subsection--
                    ``(A) In general.--The term `qualified replacement 
                individual' means any individual--
                            ``(i) who begins employment with a 
                        qualified employer after September 21, 2010, 
                        and before September 22, 2013,
                            ``(ii) with respect to whom the qualified 
                        employer certifies that such individual has 
                        been employed by the qualified employer to 
                        replace another employee--
                                    ``(I) who was not a citizen or 
                                lawfully present resident of the United 
                                States, and
                                    ``(II) substantially all of whose 
                                services for the employer were 
                                performed outside of the United States,
                            ``(iii) with respect to whom the qualified 
                        employer certifies that substantially all of 
                        the services the individual will perform for 
                        the employer will be performed within the 
                        United States, and
                            ``(iv) who is not an individual described 
                        in section 51(i)(1) (applied by substituting 
                        qualified employer for taxpayer each place it 
                        appears).
                For purposes of this paragraph, only 1 individual may 
                be treated as a qualified replacement individual with 
                respect to any employee described in clause (ii) being 
                replaced by the qualified employer. Any certification 
                under clause (ii) or (iii) shall be made by signed 
                affidavit, under penalties of perjury.
                    ``(B) Employer.--All employers treated as a single 
                employer under subsection (a) or (b) of section 52 
                shall be treated as a single employer for purposes of 
                subparagraph (A)(ii), except that section 1563(b)(2)(C) 
                shall be disregarded in applying section 1563 for 
                purposes of such section.
            ``(4) Applicable 24-month period.--For purposes of this 
        subsection, the term `applicable 24-month period' means, with 
        respect to any qualified replacement individual of a qualified 
        employer, the 24-month period beginning on the hiring date of 
        such individual by the employer.
            ``(5) Election.--A qualified employer may elect to have 
        this subsection not apply. Such election shall be made in such 
        manner as the Secretary may require.
            ``(6) Special rule for third calendar quarter of 2010.--
                    ``(A) Nonapplication of exemption during third 
                quarter.--Paragraph (1) shall not apply with respect to 
                wages paid during the third calendar quarter of 2010.
                    ``(B) Crediting of first quarter exemption during 
                fourth quarter.--The amount by which the tax imposed 
                under subsection (a) would (but for subparagraph (A)) 
                have been reduced with respect to wages paid by a 
                qualified employer during the third calendar quarter of 
                2010 shall be treated as a payment against the tax 
                imposed under subsection (a) with respect to the 
                qualified employer for the fourth calendar quarter of 
                2010 which is made on the date that such tax is due.
            ``(7) Regulations.--The Secretary shall prescribe such 
        regulations as may be necessary to carry out the purposes of 
        this subsection, including regulations necessary to prevent the 
        avoidance of such purposes through the transfer and retransfer 
        of employees within and without the United States or 
        otherwise.''.
    (b) Coordination With Work Opportunity Credit.--Section 51(c) of 
the Internal Revenue Code of 1986 is amended by adding at the end the 
following new paragraph:
            ``(6) Coordination with payroll tax forgiveness of 
        qualified replacement individuals.--The term `wages' shall not 
        include any amount paid or incurred to a qualified replacement 
        individual (as defined in section 3111(e)(3)) during the 2-year 
        period beginning on the hiring date of such individual by an 
        employer unless such employer makes an election not to have 
        section 3111(e) apply.''.
    (c) Transfers to Federal Old-Age and Survivors Insurance Trust 
Fund.--There are hereby appropriated to the Federal Old-Age and 
Survivors Trust Fund and the Federal Disability Insurance Trust Fund 
established under section 201 of the Social Security Act (42 U.S.C. 
401) amounts equal to the reduction in revenues to the Treasury by 
reason of the amendments made by subsection (a). Amounts appropriated 
by the preceding sentence shall be transferred from the general fund at 
such times and in such manner as to replicate to the extent possible 
the transfers which would have occurred to such Trust Fund had such 
amendments not been enacted.
    (d) Effective Date.--The amendments made by this section shall 
apply to wages paid after September 21, 2010.

        TITLE II--DISINCENTIVES TO MOVING AMERICAN JOBS OVERSEAS

SEC. 201. DISALLOWANCE OF DEDUCTION, LOSS, OR CREDIT FOR CERTAIN ITEMS 
              INCURRED IN MOVING AMERICAN JOBS OFFSHORE.

    (a) In General.--Part IX of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new section:

``SEC. 280I. EXPENDITURES INCURRED IN MOVING AMERICAN JOBS OFFSHORE.

    ``(a) Disallowance.--No deduction, loss, or credit shall be allowed 
under this title for any taxable year for any disallowed amount.
    ``(b) Disallowed Amount.--For purposes of this section--
            ``(1) In general.--The term `disallowed amount' means any 
        amount which is paid or incurred during the taxable year which 
        is properly allocable to an American jobs offshoring 
        transaction.
            ``(2) Losses.--Such term shall include any loss from any 
        sale, exchange, abandonment, or other disposition of property 
        in connection with an American jobs offshoring transaction.
            ``(3) Exception for costs related to displaced workers.--
        Such term shall not include any amount paid or incurred for 
        assistance to employees within the United States whose jobs are 
        being lost as part of an American jobs offshoring transaction, 
        including any severance pay, outplacement services, or employee 
        retraining.
    ``(c) American Jobs Offshoring Transaction.--For purposes of this 
section--
            ``(1) In general.--The term `American jobs offshoring 
        transaction' means any transaction (or series of transactions) 
        in which the taxpayer reduces or eliminates the operation of a 
        trade or business (or line of business) within the United 
        States in connection with the start up or expansion of such 
        trade or business (or such line of business) by the taxpayer 
        outside of the United States.
            ``(2) Exception.--A transaction (or series of transactions) 
        shall not be treated as an American jobs offshoring transaction 
        if the taxpayer establishes to the satisfaction of the 
        Secretary that such transaction (or series of transactions) 
        will not result in the loss of employment for employees of the 
        taxpayer within the United States.
    ``(d) Aggregation Rule.--All employers treated as a single employer 
under subsection (a) or (b) of section 52 shall be treated as a single 
taxpayer for purposes of this section, except that section 
1563(b)(2)(C) shall be disregarded in applying section 1563 for 
purposes of section 52.
    ``(e) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary to carry out the purposes of this section, 
including regulations necessary to prevent the avoidance of such 
purposes and the application of this section in the case of mergers, 
acquisitions, and dispositions and in the case of contract 
employees.''.
    (b) Conforming Amendment.--The table of sections for part IX of 
subchapter B of chapter 1 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new item:

``Sec. 280I. Expenditures incurred in moving American jobs offshore.''.
    (c) Effective Dates.--
            (1) In general.--The amendments made by this section shall 
        apply to transactions occurring after the date of the enactment 
        of this Act.
            (2) Exception for existing transactions.--The amendments 
        made by this section shall not apply to transactions occurring 
        after the date of the enactment of this Act if the taxpayer 
        establishes to the satisfaction of the Secretary of the 
        Treasury or the Secretary's delegate that on or before such 
        date the taxpayer publicly identified the transaction in 
        sufficient detail that the nature and scope of the transaction 
        could be identified.

SEC. 202. TAXATION OF INCOME OF CONTROLLED FOREIGN CORPORATIONS 
              ATTRIBUTABLE TO IMPORTED PROPERTY PRODUCED BY EMPLOYEES 
              IN AMERICAN JOBS MOVED OFFSHORE.

    (a) General Rule.--Subsection (a) of section 954 of the Internal 
Revenue Code of 1986 (defining foreign base company income) is amended 
by striking the period at the end of paragraph (5) and inserting ``, 
and'', by redesignating paragraph (5) as paragraph (4), and by adding 
at the end the following new paragraph:
            ``(5) imported property offshored income for the taxable 
        year (determined under subsection (j) and reduced as provided 
        in subsection (b)(5)).''.
    (b) Definition of Imported Property Offshored Income.--Section 954 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new subsection:
    ``(j) Imported Property Offshored Income.--
            ``(1) In general.--For purposes of subsection (a)(5), the 
        term `imported property offshored income' means offshored 
        income (whether in the form of profits, commissions, fees, or 
        otherwise) received from a controlled foreign corporation and 
        derived in connection with--
                    ``(A) manufacturing, producing, growing, or 
                extracting imported property;
                    ``(B) the sale, exchange, or other disposition of 
                imported property; or
                    ``(C) the lease, rental, or licensing of imported 
                property.
        Such term shall not include any foreign oil and gas extraction 
        income (within the meaning of section 907(c)) or any foreign 
        oil related income (within the meaning of section 907(c)).
            ``(2) Imported property.--For purposes of this subsection--
                    ``(A) In general.--Except as otherwise provided in 
                this paragraph, the term `imported property' means 
                property which is imported into the United States by 
                the offshored controlled foreign corporation or a 
                related person.
                    ``(B) Imported property includes certain property 
                imported by unrelated persons.--The term `imported 
                property' includes any property imported into the 
                United States by an unrelated person if, when such 
                property was sold to the unrelated person by the 
                controlled foreign corporation (or a related person), 
                it was reasonable to expect that--
                            ``(i) such property would be imported into 
                        the United States; or
                            ``(ii) such property would be used as a 
                        component in other property which would be 
                        imported into the United States.
                    ``(C) Exception for property subsequently 
                exported.--The term `imported property' does not 
                include any property which is imported into the United 
                States and which--
                            ``(i) before substantial use in the United 
                        States, is sold, leased, or rented by the 
                        controlled foreign corporation or a related 
                        person for direct use, consumption, or 
                        disposition outside the United States; or
                            ``(ii) is used by the offshored controlled 
                        foreign corporation or a related person as a 
                        component in other property which is so sold, 
                        leased, or rented.
                    ``(D) Exception for certain agricultural 
                commodities.--The term `imported property' does not 
                include any agricultural commodity which is not grown 
                in the United States in commercially marketable 
                quantities.
            ``(3) Offshored income.--For purposes of this section, the 
        term `offshored income' means income described in paragraph (1) 
        that is directly or indirectly derived from the operation of a 
        trade or business (or line of business) which was started or 
        expanded outside the United States as part of an American jobs 
        offshoring transaction (as defined in section 280I(c)) to which 
        the provisions of section 280I apply.
            ``(4) Definitions and special rules.--
                    ``(A) Import.--For purposes of this subsection, the 
                term `import' means entering, or withdrawal from 
                warehouse, for consumption or use. Such term includes 
                any grant of the right to use intangible property (as 
                defined in section 936(h)(3)(B)) in the United States.
                    ``(B) United states.--For purposes of this 
                subsection, the term `United States' includes the 
                Commonwealth of Puerto Rico, the Virgin Islands of the 
                United States, Guam, American Samoa, and the 
                Commonwealth of the Northern Mariana Islands.
                    ``(C) Unrelated person.--For purposes of this 
                subsection, the term `unrelated person' means any 
                person who is not a related person with respect to the 
                controlled foreign corporation.
                    ``(D) Coordination with foreign base company sales 
                income.--For purposes of this section, the term 
                `foreign base company sales income' shall not include 
                any imported property income.''.
    (c) Separate Application of Limitations on Foreign Tax Credit for 
Imported Property Offshored Income.--
            (1) In general.--Paragraph (1) of section 904(d) of the 
        Internal Revenue Code of 1986 (relating to separate application 
        of section with respect to certain categories of income) is 
        amended by striking ``and'' at the end of subparagraph (A), by 
        redesignating subparagraph (B) as subparagraph (C), and by 
        inserting after subparagraph (A) the following new 
        subparagraph:
                    ``(B) imported property offshored income, and''.
            (2) Imported property offshored income defined.--Paragraph 
        (2) of section 904(d) of such Code is amended by redesignating 
        subparagraphs (I), (J), and (K) as subparagraphs (J), (K), and 
        (L), respectively, and by inserting after subparagraph (H) the 
        following new subparagraph:
                    ``(I) Imported property offshored income.--The term 
                `imported property offshored income' means any income 
                received or accrued by any person which is of a kind 
                which would be imported property offshored income (as 
                defined in section 954(j)).''.
            (3) Conforming amendment.--Clause (ii) of section 
        904(d)(2)(A) of such Code is amended by inserting ``or imported 
        property offshored income'' after ``passive category income''.
    (d) Technical Amendments.--
            (1) Clause (iii) of section 952(c)(1)(B) of the Internal 
        Revenue Code of 1986 (relating to certain prior year deficits 
        may be taken into account) is amended--
                    (A) by redesignating subclauses (II), (III), (IV), 
                and (V) as subclauses (III), (IV), (V), and (VI), and
                    (B) by inserting after subclause (I) the following 
                new subclause:
                                    ``(II) imported property offshored 
                                income,''.
            (2) The last sentence of paragraph (4) of section 954(b) of 
        such Code (relating to exception for certain income subject to 
        high foreign taxes) is amended by striking ``subsection 
        (a)(5)'' and inserting ``subsection (a)(4)''.
            (3) Paragraph (5) of section 954(b) of such Code (relating 
        to deductions to be taken into account) is amended by striking 
        ``and the foreign base company oil related income'' and 
        inserting ``the foreign base company oil related income, and 
        the imported property offshored income''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years of foreign corporations beginning after the date 
of the enactment of this Act, and to taxable years of United States 
shareholders within which or with which such taxable years of such 
foreign corporations end.
                                                       Calendar No. 578

111th CONGRESS

  2d Session

                                S. 3816

_______________________________________________________________________

                                 A BILL

To amend the Internal Revenue Code of 1986 to create American jobs and 
            to prevent the offshoring of such jobs overseas.

_______________________________________________________________________

                           September 22, 2010

            Read the second time and placed on the calendar