Business credit for retention of certain individuals newly hired before 2013

(a)

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 adding at the end the following new section:

45S.

Retention of certain individuals newly hired before 2013

(a)

In general

For purposes of section 38, in the case of any taxable year ending after the date of the enactment of this section and beginning before January 1, 2013, the retained worker credit determined under this section for the taxable year is the aggregate of the lesser of— (1)$4,000 ($6,000 in the case of a long-term unemployed individual), or (2)6.2 percent of the wages (as defined in section 3401(a)) paid by the taxpayer to such retained worker during the 52 consecutive week period referred to in subsection (c)(2). (b)

Limitations

(1)

Increase in employment

The number of retained workers taken into account under subsection (a) shall not exceed the excess of (if any)— (A)the number of employees of the taxpayer at the end of the taxable year, over (B)the number of employees of the taxpayer at the beginning of the taxable year. (2)

Dollar limitation

The amount allowed as a credit under subsection (a) for a taxable year with respect to any business location of the employer shall not exceed $400,000. (3)

Special rules

(A)

Business-location specific

All determinations under this section regarding the number of employees shall be determined on a location basis. (B)

Employees rotated among business not eligible

An employee who is moved from one location of the taxpayer to another location shall not be taken into account for purposes of paragraph (1). (c)

Definitions

For purposes of this section— (1)

Retained worker

The term retained worker means any qualified individual— (A)who was employed by the taxpayer on any date during the taxable year, (B)who was so employed by the taxpayer for a period of not less than 52 consecutive weeks, and (C)whose wages (as defined in section 3401(a)) for such employment during the last 26 weeks of such period equaled at least 80 percent of such wages for the first 26 weeks of such period. (2)

Qualified individual

The term qualified individual means any individual who— (A)begins employment with a qualified employer after December 31, 2010, and before January 1, 2014, (B)certifies by signed affidavit, under penalties of perjury, that such individual has not been employed for 40 hours or more per week during the 60-day period ending on the date such individual begins such employment, (C)is not employed by the qualified employer to replace another employee of such employer unless such other employee separated from employment voluntarily or for cause, and (D)is not an individual described in section 51(i)(1) (applied by substituting qualified employer for taxpayer each place it appears). (3)

Qualified employer

(A)

In general

The term qualified employer means any employer other than the United States, any State, or any political subdivision thereof, or any instrumentality of the foregoing which employed an average of less than 100 employees on business days during such taxable year. (B)

Treatment of employees of post-secondary educational institutions

Notwithstanding subparagraph (A), the term qualified employer includes any employer which is a public institution of higher education (as defined in section 101(b) of the Higher Education Act of 1965). (4)

Long-term unemployed individual

The term long-term unemployed individual means an individual who was in receipt of unemployment compensation under State or Federal law for not less than 26 weeks during the 1-year period ending on the day the individual is hired by the employer.

(b)

Credit allowed as business credit

Section 38(b) of the Internal Revenue Code of 1986 (relating to current year business credit) is amended by striking plus at the end of paragraph (35), by striking the period at the end of paragraph (36) and inserting , plus, and by adding at the end the following new paragraph:

(37)the retained worker credit determined under section 45S.

(c)

Limitation on carryforward

Section 39(a) of such Code is amended by adding at the end the following:

(5)

3-year carryforward for retained worker credit

In the case of the retained worker credit, paragraph (2) shall be applied— (A)by substituting 3 taxable years for 21 taxable years in subparagraph (A) thereof, and (B)by substituting 2 taxable years for 20 taxable years in subparagraph (B) thereof.

(d)

Clerical 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 45R the following new item:

Sec. 45S. Retention of certain individuals newly hired before 2013.

(e)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.