Credit for employers hiring veterans

(a)

In general

Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:

45S.

Credit for employers hiring veterans

(a)

General Rule

For purposes of section 38, the military service personnel employment credit for the taxable year shall be equal to— (1)in the case of a qualified veteran, 40 percent of the qualified first-year wages with respect to such veteran for such year, and (2)in the case of a qualified disabled veteran, the applicable percentage of the qualified first-year wages with respect to such veteran for such year. (b)

Veteran taken into account only once

No credit shall be determined under subsection (a) with respect to any veteran unless such veteran has elected (in such form and manner as the Secretary may require) to have his qualified first-year wages taken into account with respect to the employer paying such wages. A veteran may make only one election under this subsection. The Secretary shall require such reporting as the Secretary determines is necessary to carry out the purposes of this subsection. (c)

Qualified wages

For purposes of this section— (1)

In general

The term qualified wages means, with respect to any individual, the wages paid or incurred by the employer during the taxable year to such individual. (2)

Qualified first-year wages

The term qualified first-year wages means, with respect to any individual, qualified wages attributable to service rendered during the 1-year period beginning with the day the individual begins work for the employer. (3)

Wages

The term wages has the meaning given such term by section 51(c), without regard to paragraph (4) thereof. (d)

Qualified veteran; hiring date

For purposes of this section— (1)

Qualified veteran

The term qualified veteran means any individual who is certified by the designated local agency (as defined in section 51(d)(11)) as being a veteran (as defined in section 51(d)(3)(B)). (2)

Hiring date

The term hiring date has the meaning given such term by section 51(d). (e)

Qualified disabled veteran; applicable percentage

(1)

In general

The term qualified disabled veteran means any qualified veteran who is certified by the designated local agency (as defined in section 51(d)(11)) as having a disability that has been determined under the laws administered by the Secretary of Veterans Affairs to be service-connected and that is rated by such Secretary (as of the date of the certification) as 10 percent or more disabling. (2)

Applicable percentage

The term applicable percentage means the percentage determined in accordance with the following table: Applicable Percentage of disability:percentage: At least 10 but not over 2041 At least 20 but not over 3042 At least 30 but not over 4043 At least 40 but not over 5044 At least 50 but not over 6045 At least 60 but not over 7046 At least 70 but not over 80 47 At least 80 but not over 9048 At least 90 but not over 10049 100 percent50.

(f)

Certain rules To apply

Rules similar to the rules of section 52, and subsections (d)(11), (f), (g), (i) (as in effect on the day before the date of the enactment of the Taxpayer Relief Act of 1997), (j), and (k) of section 51, shall apply for purposes of this section. (g)

Coordination with work opportunity credit

The credit allowed under this section with respect to any qualified first-year wages shall be in addition to any credit allowed under section 51 with respect to such wages.

(b)

Credit To be part of general business credit

Subsection (b) of section 38 of such Code 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 military service personnel employment credit determined under section 45S(a).

(c)

Technical amendments

(1)Clause (iii) of section 41(b)(2)(D) of such Code is amended to read as follows:

(iii)

Exclusion for wages to which employment credits apply

The term wages shall not include any amount taken into account in determining the credit under section 45S(a) or 51(a).

(2)Subparagraph (B) of section 45A(b)(1) of such Code is amended to read as follows:

(B)

Coordination with other employment credits

The term qualified wages shall not include wages attributable to service rendered during the 1-year period beginning with the day the individual begins work for the employer if any portion of such wages is taken into account in determining the credit under section 45S or 51.

(3)Subsection (a) of section 280C of such Code is amended by inserting 45S(a), after 45A(a),. (4)Paragraph (3) of section 1396(c) of such Code is amended to read as follows:

(3)

Coordination with other employment credits

(A)

In general

The term qualified wages shall not include wages taken into account in determining the credit under section 45S or 51. (B)

Coordination with paragraph (2)

The $15,000 amount in paragraph (2) shall be reduced for any calendar year by the amount of wages paid or incurred during such year which are taken into account in determining the credit under section 45S or 51.

(d)

Clerical amendment

The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following new item:

Sec. 45S. Credit for employers hiring veterans.

(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.