II 112th CONGRESS 2d Session S. 3466 IN THE SENATE OF THE UNITED STATES August 1, 2012 Mr. Menendez 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 provide a credit for employer-provided job training, and for other purposes.

1.

Short title

This Act may be cited as the Better Education and Skills Training for America’s Workforce Act.

2.

Job training tax credit

(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.

Job training credit

(a)

In general

For the purposes of section 38, the job training credit determined under this section for the taxable year is an amount equal to 100 percent of the qualified training expenses paid by the qualifying taxpayer during the taxable year. (b)

Limitation

The credit allowed under subsection (a) with respect to any eligible trainee of the qualifying taxpayer shall not exceed the excess (if any) of $4,000 over the aggregate credit allowed to such taxpayer under this section with respect to such eligible trainee for all prior taxable years. (c)

Definitions

For purposes of this section— (1)

Qualified training expenses

(A)

In general

The term qualified training expenses means, with respect to any eligible trainee of the qualifying taxpayer, expenses paid or incurred by such taxpayer for qualified tuition costs of such eligible trainee. (B)

Qualified tuition costs

The term qualified tuition costs means costs for books and enrollment in a training program at a qualified educational organization, the outcome of which, if completed, will provide the eligible trainee a certificate or credential recognized by a State accrediting body, Federal Apprenticeship Agency, or any other national accrediting body recognized by the Department of Education as an independent, third-party accrediting body. Such training program— (i)may include a single course, multiple courses, or a combination of work training and study, and (ii)must be reasonably necessary for employment with the qualifying taxpayer. (C)

Qualified educational organization

The term qualified educational organization means any educational organization described in section 101 of the Higher Education Act of 1965. (2)

Qualifying taxpayer

The term qualifying taxpayer means any taxpayer who— (A)with respect to any eligible trainee, is training and hiring individuals for positions based in the United States, and (B)provides, with respect to any eligible trainee, such documentation as required by the Secretary regarding qualified training expenses and proof of unemployment status as described in paragraph (3)(A). (3)

Eligible trainee

The term eligible trainee means any individual who— (A)has been unemployed for at least 90 days before the date of enrollment in a training program described in paragraph (1)(B), and (B)had not been employed by the qualifying taxpayer at any time prior to the date on which such trainee was hired. (d)

Special rules

(1)

Denial of double benefit

No credit shall be allowed under subsection (a) for any qualified training expense for which a deduction or other credit is allowed to the taxpayer under any other provision of this chapter. (2)

Aggregation

For purposes of this section, all persons treated as a single employer under subsection (a) or (b) or section 52, or subsection (m) or (o) of section 414, shall be treated as one person. (e)

Election To have credit not apply

A taxpayer may elect (at such time and in such manner as the Secretary may by regulations prescribe) to have this section not apply for any taxable year. (f)

Termination

This section shall not apply to expenses paid after December 31, 2015.

. (b)

Credit To be part of general business credit

Subsection (b) of section 38 of the Internal Revenue Code of 1986 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 job training credit determined under section 45S(a). . (c)

Credit allowed against alternative minimum tax

Section 38(c)(4)(B) of the Internal Revenue Code of 1986 is amended by redesignating clauses (vii), (viii), and (ix) as clauses (viii), (ix), and (x), respectively, and by inserting after clause (vi) the following new clause: (vii)the credit determined under section 45S, . (d)

Technical amendment

Section 6501(m) of the Internal Revenue Code of 1986 is amended by inserting ‘45S(e),’ after ‘45H(g),’. (e)

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. Job training credit. . (f)

Effective dates

(1)

In general

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. (2)

Minimum tax

The amendments made by subsection (c) shall apply to credits determined under section 45S of the Internal Revenue Code of 1986 in taxable years ending after the date of the enactment of this Act, and to carrybacks of such credits.

3.

Qualified Job Training Partnerships credit

(a)

In general

Subpart E of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 48D the following new section:

48E.

Qualified Job Training Partnerships credit

(a)

In general

For purposes of section 46, the Qualified Job Training Partnership credit for any taxable year is an amount equal to the percentage determined by the Secretary (not to exceed 100 percent) of the qualified investment for such taxable year with respect to any Qualified Job Training Partnership. (b)

Qualified investment

(1)

In general

For purposes of subsection (a), the qualified investment for any taxable year is the aggregate amount of the costs paid or incurred in such taxable year for expenses necessary for and directly related to the conduct of a Qualified Job Training Partnership in the form of contributions of cash, cash equivalent, equipment, or any combination of the three where 100 percent of the investment is used for the planning, implementation, or operation of a Qualified Job Training Partnership and the training financed through the investment must result in a type of certificate or credential recognized by a State accrediting body, Federal Apprenticeship Agency, or any other national accrediting body recognized by the Department of Education as an independent, third-party accrediting body. (2)

Limitation

The amount which is treated as qualified investment for all taxable years with respect to any Qualified Job Training Partnership shall not exceed the amount certified by the Secretary as eligible for the credit under this section. (3)

Exclusions

The qualified investment for any taxable year with respect to any Qualified Job Training Partnership shall not take into account any cost for student tuition or for any other expense as determined by the Secretary as appropriate to carry out the purposes of this section. (4)

Certain progress expenditure rules made applicable

In the case of costs described in paragraph (1) that are paid for property of a character subject to an allowance for depreciation, rules similar to the rules of subsections (c)(4) and (d) of section 46 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of this section. (c)

Qualified Job Training Partnership

(1)

In general

The term Qualified Job Training Partnership means a formal or informal partnership between at least 1 eligible private business employer and— (A)1 qualified educational institution, or (B)1 labor organization (as defined in section 2(5) of the National Labor Relations Act), where the stated goal of the partnership is to train students in job-ready skills.(2)

Eligible private business employer

The term eligible private business employer means— (A)a business entity at least 50 percent of the gross income of which is derived from qualified production activities (within the meaning of section 199(c)), or (B)any type of domestic business entity the average number of employees of which for any taxable year is not more than 500 employees. (3)

Qualified educational organization

The term qualified educational organization means any educational organization described in section 101 of the Higher Education Act of 1965 which provides a 2-year program that culminates in an associate degree. (d)

Qualified Job Training Partnership program

(1)

Establishment

(A)

In general

Not later than 60 days after the date of the enactment of this section, the Secretary, in consultation with the Secretary of Labor, shall establish a Qualified Job Training Partnership program to consider and award certifications for qualified investments eligible for credits under this section to Qualified Job Training Partnerships. (B)

Limitation

The total amount of credits that may be allocated under the program shall not exceed $1,000,000,000. (2)

Certification

(A)

Application period

Each applicant for certification under this paragraph shall submit an application containing such information as the Secretary may require during the period beginning on the date the Secretary establishes the program under paragraph (1). (B)

Time for review of applications

The Secretary shall take action to approve or deny any application under subparagraph (A) within 30 days of the submission of such application. (C)

Multi-year applications

An application for certification under subparagraph (A) may include a request for an allocation of credits for more than 1 year. (3)

Selection criteria

In determining the Qualified Job Training Partnerships with respect to which qualified investments may be certified under this section, the Secretary— (A)shall give priority to those applications which demonstrate— (i)the greatest probability that those who complete the program will secure employment; (ii)the greatest potential for providing workers who complete the program with skills that can provide long-term job and income security; (iii)the strongest market demand for the type of training offered; (iv)the greatest probability that the program would create a net increase in job training opportunities; (v)a strong need in the community for skills training; (vi)the ability to allow nontraditional learners to complete the training; and (vii)the ability and capacity to implement the program in a reasonable period of time; and (B)shall take into additional consideration which applications show— (i)the ability to leverage additional sources of capital; and (ii)the greatest ability to offer training programs that result in a certificate or credential (within the meaning of subsection (b)(1)) that is stackable or portable or both. (4)

Review and additional allocation

(A)

Review

Not later than 1 year after the date of enactment of this section, the Secretary shall review the credits allocated under this section as of such date. (B)

Additional allocation

If the Secretary determines at the time of the review that credits under this section are available for allocation pursuant to the requirements set forth in paragraph (2), the Secretary is authorized to allocate such available credits through the conduct of an additional program or programs for applications for certification. (5)

Disclosure of allocations

The Secretary shall, upon making a certification under this subsection, publicly disclose the identity of the applicant and the amount of the credit with respect to such applicant. (e)

Special rules

(1)

Basis adjustment

For purposes of this subtitle, if a credit is allowed under this section for an expenditure related to property of a character subject to an allowance for depreciation, the basis of such property shall be reduced by the amount of such credit. (2)

Denial of double benefit

(A)

Bonus depreciation

A credit shall not be allowed under this section for any investment for which bonus depreciation is allowed under section 168(k), 1400L(b)(1), or 1400N(d)(1). (B)

Deductions

No deduction under this subtitle shall be allowed for the portion of the expenses otherwise allowable as a deduction taken into account in determining the credit under this section for the taxable year which is equal to the amount of the credit determined for such taxable year under subsection (a) attributable to such portion. This subparagraph shall not apply to expenses related to property of a character subject to an allowance for depreciation the basis of which is reduced under paragraph (1), or which are described in section 280C(g).

. (b)

Inclusion as part of investment credit

Section 46 of the Internal Revenue Code of 1986 is amended— (1)by adding a comma at the end of paragraph (4), (2)by striking and at the end of paragraph (5), (3)by striking the period at the end of paragraph (6) and inserting , and, and (4)by adding at the end the following new paragraph: (7)the Qualified Job Training Partnerships credit. . (c)

Conforming amendments

(1)Section 49(a)(1)(C) of the Internal Revenue Code of 1986 is amended— (A)by striking and at the end of clause (v), (B)by striking the period at the end of clause (vi) and inserting , and, and (C)by adding at the end the following new clause: (vii)the basis of any property to which paragraph (1) of section 48E(e) applies which is part of a Qualified Job Training Partnership under such section 48E. . (2)Section 280C of such Code is amended by adding at the end the following new subsection: (j)

Qualified Job Training Partnership credit

(1)

In general

No deduction shall be allowed for that portion of the qualified investment (as defined in section 48E(b)) otherwise allowable as a deduction for the taxable year which is equal to the amount of the credit determined for such taxable year under section 48E(a), reduced by— (A)the amount disallowed as a deduction by reason of section 48E(e)(2)(B), and (B)the amount of any basis reduction under section 48E(e)(1). (2)

Similar rule where taxpayer capitalizes rather than deducts expenses

In the case of expenses described in paragraph (1)(A) taken into account in determining the credit under section 48E for the taxable year, if— (A)the amount of the portion of the credit determined under such section with respect to such expenses, exceeds (B)the amount allowable as a deduction for such taxable year for such expenses (determined without regard to paragraph (1)), the amount chargeable to capital account for the taxable year for such expenses shall be reduced by the amount of such excess.(3)

Controlled groups

Paragraph (3) of subsection (b) shall apply for purposes of this subsection. . (d)

Clerical amendment

The table of sections for subpart E 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 48D the following new item: Sec. 48E. Qualified Job Training Partnership credit. . (e)

Grants for qualified investments in Qualified Job Training Partnerships in lieu of tax credits

(1)

In general

Upon application, the Secretary of the Treasury shall, subject to the requirements of this subsection, provide a grant to each person who makes a qualified investment in a Qualified Job Training Partnership in an amount not to exceed 100 percent of such investment. (2)

Application

(A)

In general

At the stated election of the applicant, an application for certification under section 48E(d)(2) of the Internal Revenue Code of 1986 for a credit under such section for any taxable year shall be considered to be an application for a grant under paragraph (1) for such taxable year. (B)

Submission date

An application for a grant under paragraph (1) for any taxable year shall be submitted— (i)not earlier than the day after the last day of such taxable year, and (ii)not later than the due date (including extensions) for filing the return of tax for such taxable year. (C)

Information to be submitted

An application for a grant under paragraph (1) shall include such information and be in such form as the Secretary of the Treasury may require to state the amount of the credit allowable (but for the receipt of a grant under this subsection) under section 48E for the taxable year for the qualified investment with respect to which such application is made. (3)

Time for payment of grant

(A)

In general

The Secretary of the Treasury shall make payment of the amount of any grant under paragraph (1) during the 30-day period beginning on the later of— (i)the date of the application for such grant, or (ii)the date the qualified investment for which the grant is being made is made. (B)

Regulations

In the case of investments of an ongoing nature, the Secretary of the Treasury shall issue regulations to determine the date on which a qualified investment shall be deemed to have been made for purposes of this paragraph. (4)

Qualified investment

For purposes of this subsection, the term qualified investment means a qualified investment that is certified under section 48E(d) of the Internal Revenue Code of 1986 for purposes of the credit under such section 48E. (5)

Application of certain rules

(A)

In general

In making grants under this subsection, the Secretary of the Treasury shall apply rules similar to the rules of section 50 of the Internal Revenue Code of 1986. In applying such rules, any increase in tax under chapter 1 of such Code by reason of an investment ceasing to be a qualified investment shall be imposed on the person to whom the grant was made. (B)

Special rules

(i)

Recapture of excessive grant amounts

If the amount of a grant made under this subsection exceeds the amount allowable as a grant under this subsection, such excess shall be recaptured under subparagraph (A) as if the investment to which such excess portion of the grant relates had ceased to be a qualified investment immediately after such grant was made. (ii)

Grant information not treated as return information

In no event shall the amount of a grant made under paragraph (1), the identity of the person to whom such grant was made, or a description of the investment with respect to which such grant was made be treated as return information for purposes of section 6103 of the Internal Revenue Code of 1986. (6)

Secretary

Any reference in this subsection to the Secretary of the Treasury shall be treated as including the Secretary's delegate. (7)

Other terms

Any term used in this subsection which is also used in section 48E of the Internal Revenue Code of 1986 shall have the same meaning for purposes of this subsection as when used in such section. (8)

Denial of double benefit

No credit shall be allowed under section 46(7) of the Internal Revenue Code of 1986 by reason of section 48E of such Code for any investment for which a grant is awarded under this subsection. (9)

Appropriations

There is hereby appropriated to the Secretary of the Treasury such sums as may be necessary to carry out this subsection. (f)

Effective date

The amendments made by subsections (a) through (d) of this section shall apply to amounts paid or incurred after the date of the enactment of this Act, in taxable years beginning after such date.