[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[S. 1651 Introduced in Senate (IS)]

113th CONGRESS
  1st Session
                                S. 1651

   To amend the Internal Revenue Code of 1986 to allow manufacturing 
businesses to establish tax-free manufacturing reinvestment accounts to 
assist them in providing for new equipment and facilities and workforce 
                               training.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            November 5, 2013

 Mr. Blumenthal (for himself and Mr. Murphy) 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 allow manufacturing 
businesses to establish tax-free manufacturing reinvestment accounts to 
assist them in providing for new equipment and facilities and workforce 
                               training.

    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 ``Manufacturing Reinvestment Account 
Act of 2013''.

SEC. 2. MANUFACTURING REINVESTMENT ACCOUNTS.

    (a) In General.--Part VI of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to itemized deductions for 
individuals and corporations) is amended by inserting after section 199 
the following new section:

``SEC. 199A. MANUFACTURING REINVESTMENT ACCOUNTS.

    ``(a) Deduction Allowed.--In the case of a taxpayer engaged in a 
manufacturing business, there shall be allowed as a deduction for the 
taxable year the amount paid in cash by the taxpayer during the taxable 
year to a manufacturing reinvestment account (hereinafter referred to 
as an `MRA') for the taxpayer's benefit.
    ``(b) Limitation.--
            ``(1) In general.--The amount which a taxpayer may pay into 
        an MRA for the taxable year shall not exceed the lesser of--
                    ``(A) the domestic manufacturing gross receipts of 
                the taxpayer for the taxable year, or
                    ``(B) $500,000.
            ``(2) Controlled groups.--
                    ``(A) In general.--For purposes of this subsection, 
                all persons treated as a single employer under 
                subsection (a) or (b) of section 52 or subsection (m) 
                or (o) of section 414 shall be treated as a single 
                manufacturer.
                    ``(B) Inclusion of foreign corporations.--For 
                purposes of subparagraph (A), in applying subsections 
                (a) and (b) of section 52 to this section, section 1563 
                shall be applied without regard to subsection (b)(2)(C) 
                thereof.
    ``(c) MRA.--For purposes of this section, the term `MRA' means a 
trust created or organized in the United States for the exclusive 
benefit of the taxpayer, but only if the written governing instrument 
creating the trust meets the following requirements:
            ``(1) No contribution will be accepted for any taxable year 
        unless it is in cash.
            ``(2) Contributions will not be accepted for any taxable 
        year in excess of the amount allowed as a deduction under 
        subsection (a) for such year.
            ``(3) The trustee is an eligible institution.
            ``(4) No part of the trust assets will be invested in life 
        insurance contracts.
            ``(5) No part of the trust assets will be invested in any 
        collectible (as defined in section 408(m)).
            ``(6) The assets of the trust will not be commingled with 
        other property except in a common trust fund or common 
        investment fund.
    ``(d) Tax Treatment of Accounts.--
            ``(1) In general.--An MRA is exempt from taxation under 
        this subtitle unless the account has ceased to be an MRA. 
        Notwithstanding the preceding sentence, an MRA is subject to 
        the taxes imposed by section 511 (relating to imposition of tax 
        on unrelated business income of charitable, etc. 
        organizations).
            ``(2) Account terminations.--Rules similar to the rules of 
        paragraphs (2) and (4) of section 408(e) shall apply to MRAs, 
        and any amount treated as distributed under such rules shall be 
        treated as not used to pay qualified reinvestment expenses.
    ``(e) Treatment of Distributions.--
            ``(1) In general.--Except as provided in paragraphs (3) and 
        (4), there shall be includible in the gross income of the 
        taxpayer for any taxable year--
                    ``(A) any amount distributed from an MRA of the 
                taxpayer during such taxable year, and
                    ``(B) any deemed distribution under--
                            ``(i) subsection (g)(1) (relating to 
                        deposits not distributed within 7 years),
                            ``(ii) subsection (g)(2) (relating to 
                        cessation in manufacturing business), and
                            ``(iii) subparagraph (A) or (B) of 
                        subsection (g)(3) (relating to prohibited 
                        transactions and pledging account as security).
            ``(2) Additional tax.--
                    ``(A) In general.--The tax imposed by this chapter 
                on the taxpayer for any taxable year in which there is 
                a distribution from an MRA shall be increased by 10 
                percent of the amount of such distribution which is 
                includible in gross income.
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                to distributions during the taxable year to the extent 
                necessary, under regulations prescribed by the 
                Secretary, to avoid bankruptcy.
            ``(3) Reduced inclusion for amounts reinvested.--Only 43 
        percent of the aggregate amount distributed from an MRA during 
        the taxable year shall be includible in income under paragraph 
        (1)(A) to the extent that such aggregate amount does not exceed 
        the aggregate amount of qualified reinvestment expenses paid or 
        incurred by the taxpayer during such year.
            ``(4) Distribution of excess contributions.--Paragraph (1) 
        shall not apply to the distribution of any contribution paid 
        during a taxable year to an MRA to the extent that such 
        contribution exceeds the limitation applicable under subsection 
        (b) if requirements similar to the requirements of section 
        408(d)(4) are met.
    ``(f) Definitions.--For purposes of this section--
            ``(1) Manufacturing business.--The term `manufacturing 
        business' means any trade or business having domestic 
        manufacturing gross receipts.
            ``(2) Domestic manufacturing gross receipts.--The term 
        `domestic manufacturing gross receipts' means gross receipts of 
        the taxpayer which are derived from any lease, rental, license, 
        sale, exchange, or other disposition of tangible personal 
        property which was manufactured by the taxpayer in whole or in 
        significant part within the United States. Rules similar to the 
        rules of section 199 shall apply in determining the gross 
        receipts of the taxpayer for purposes of the preceding 
        sentence.
            ``(3) Qualified reinvestment expenses.--The term `qualified 
        reinvestment expenses' means--
                    ``(A) expenses for property to be used by the 
                taxpayer in a manufacturing business, and
                    ``(B) expenses for job training and workforce 
                development for employees of the taxpayer.
            ``(4) Eligible institution.--
                    ``(A) In general.--The term `eligible institution' 
                means--
                            ``(i) any insured depository institution, 
                        which--
                                    ``(I) is not controlled by a bank 
                                holding company or savings and loan 
                                holding company that is also an 
                                eligible institution,
                                    ``(II) has total assets of equal to 
                                or less than $25,000,000,000, as 
                                reported in the call report as of the 
                                end of the fourth quarter of calendar 
                                year 2012, and
                                    ``(III) is not directly or 
                                indirectly controlled by any company or 
                                other entity that has total 
                                consolidated assets of more than 
                                $25,000,000,000, as so reported;
                            ``(ii) any bank holding company which has 
                        total consolidated assets of equal to or less 
                        than $25,000,000,000;
                            ``(iii) any savings and loan holding 
                        company which has total consolidated assets of 
                        equal to or less than $25,000,000,000;
                            ``(iv) any community development financial 
                        institution loan fund which has total assets of 
                        equal to or less than $25,000,000,000; and
                            ``(v) any small business lending company 
                        that has total assets of equal to or less than 
                        $25,000,000,000.
                    ``(B) Insured depository institution.--The term 
                `insured depository institution' has the meaning given 
                such term under section 3(c)(2) of the Federal Deposit 
                Insurance Act (12 U.S.C. 1813(c)(2)).
                    ``(C) Bank holding company.--The term `bank holding 
                company' has the meaning given such term under section 
                2(a)(1) of the Bank Holding Company Act of 1956 (12 
                U.S.C. 1841(2)(a)(1)).
                    ``(D) Call report.--The term `call report' means--
                            ``(i) reports of Condition and Income 
                        submitted to the Office of the Comptroller of 
                        the Currency, the Board of Governors of the 
                        Federal Reserve System, and the Federal Deposit 
                        Insurance Corporation;
                            ``(ii) the Office of Thrift Supervision 
                        Thrift Financial Report;
                            ``(iii) any report that is designated by 
                        the Office of the Comptroller of the Currency, 
                        the Board of Governors of the Federal Reserve 
                        System, the Federal Deposit Insurance 
                        Corporation, or the Office of Thrift 
                        Supervision, as applicable, as a successor to 
                        any report referred to in clause (i) or (ii);
                            ``(iv) standard reports of Condition and 
                        Income submitted by Community Development 
                        Financial Institution loan funds to the 
                        Community Development Financial Institutions 
                        Fund; and
                            ``(v) with respect to an eligible 
                        institution for which no report exists that is 
                        described under clause (i), (ii), or (iii), 
                        such other report or set of information as the 
                        Secretary, in consultation with the 
                        Administrator of the Small Business 
                        Administration, may prescribe.
    ``(g) Special Rules.--
            ``(1) Tax on deposits in account which are not distributed 
        within 7 years.--
                    ``(A) In general.--If, at the close of any taxable 
                year, there is a nonqualified balance in any MRA--
                            ``(i) there shall be deemed distributed 
                        from the MRA during such taxable year an amount 
                        equal to such balance, and
                            ``(ii) the taxpayer's tax imposed by this 
                        chapter for such taxable year shall be 
                        increased by 10 percent of such deemed 
                        distribution.
                    ``(B) Nonqualified balance.--For purposes of 
                subparagraph (A), the term `nonqualified balance' means 
                any balance in the MRA on the last day of the taxable 
                year which is attributable to amounts deposited in such 
                account before the 6th preceding taxable year.
                    ``(C) Ordering rule.--For purposes of this 
                paragraph, distributions from an MRA shall be treated 
                as made from deposits (and income thereon) in the order 
                in which such deposits were made, beginning with the 
                earliest deposits.
            ``(2) Cessation of manufacturing business.--If the taxpayer 
        ceases to be engaged in a manufacturing business, there shall 
        be deemed distributed from the MRA of the taxpayer at the close 
        of the first taxable year beginning after such cessation an 
        amount equal to the balance in the MRA (if any) at such close.
            ``(3) Certain rules to apply.--Rules similar to the 
        following rules shall apply for purposes of this section:
                    ``(A) Section 408(e)(2) (relating to loss of 
                exemption of account where taxpayer engages in 
                prohibited transaction).
                    ``(B) Section 408(e)(4) (relating to effect of 
                pledging account as security).
                    ``(C) Section 408(h) (relating to custodial 
                accounts).
            ``(4) Time when payments deemed made.--For purposes of this 
        section, a taxpayer shall be deemed to have made a payment to 
        an MRA on the last day of a taxable year if such payment is 
        made on account of such taxable year and is made on or before 
        the due date (without regard to extensions) for filing the 
        return of tax for such taxable year.
            ``(5) Deduction not allowed for self-employment tax.--The 
        deduction allowable by reason of subsection (a) shall not be 
        taken into account in determining an individual's net earnings 
        from self-employment (within the meaning of section 1402(a)) 
        for purposes of chapter 2.
    ``(h) Reports.--The trustee of an MRA shall make such reports 
regarding such account to the Secretary and to the person for whose 
benefit the account is maintained with respect to contributions, 
distributions, and such other matters as the Secretary may require 
under regulations. The reports required by this subsection shall be 
filed at such time and in such manner and furnished to such persons at 
such time and in such manner as may be required by such regulations.
    ``(i) Termination.--No deduction shall be allowed under this 
section for any taxable year beginning more than 10 years after the 
date of the enactment of this section.''.
    (b) Tax on Excess Contributions.--
            (1) In general.--Subsection (a) of section 4973 of such 
        Code (relating to tax on excess contributions to certain tax-
        favored accounts and annuities) is amended by striking ``or'' 
        at the end of paragraph (4), by adding ``or'' at the end of 
        paragraph (5), and by inserting after paragraph (5) the 
        following new paragraph:
            ``(6) an MRA (within the meaning of section 199A(c)),''.
            (2) Excess contribution defined.--Section 4973 of such Code 
        is amended by adding at the end the following new subsection:
    ``(h) Excess Contributions to MRAs.--For purposes of this section, 
in the case of MRAs (within the meaning of section 199A(c)), the term 
`excess contributions' means the amount by which the amount contributed 
for the taxable year to the MRAs of the taxpayer exceeds the amount 
which may be contributed to such MRAs under section 199A(b) for such 
taxable year. For purposes of this subsection, any contribution which 
is distributed out of an MRA in a distribution to which section 
199A(e)(3) applies shall be treated as an amount not contributed.''.
    (c) Tax on Prohibited Transactions.--
            (1) In general.--Paragraph (1) of section 4975(e) of such 
        Code is amended by striking ``or'' at the end of subparagraph 
        (F), by redesignating subparagraph (G) as subparagraph (H), and 
        by inserting after subparagraph (F) the following:
                    ``(G) an MRA described in section 199A(c), or''.
            (2) Special rule.--Subsection (c) of section 4975 of such 
        Code (relating to tax on prohibited transactions) is amended by 
        adding at the end the following:
            ``(7) Special rule for manufacturing reinvestment 
        accounts.--A person for whose benefit an MRA (within the 
        meaning of section 199A(c)) is established shall be exempt from 
        the tax imposed by this section with respect to any transaction 
        concerning such account (which would otherwise be taxable under 
        this section) if, with respect to such transaction, the account 
        ceases to be an MRA by reason of the application of section 
        199A(g)(3)(A) to such account.''.
    (d) Failure To Provide Reports on MRAs.--Paragraph (2) of section 
6693(a) of such Code (relating to failure to provide reports on certain 
tax-favored accounts or annuities) is amended by redesignating 
subparagraphs (A) through (E) as subparagraphs (B) and (F), 
respectively, and by inserting before subparagraph (B), as so 
redesignated, the following new subparagraph:
                    ``(A) section 199A(h) (relating to manufacturing 
                reinvestment accounts),''.
    (e) Clerical Amendment.--The table of sections for part VI of 
subchapter B of chapter 1 of such Code is amended by inserting after 
the item relating to section 199 the following new item:

``Sec. 199A. Manufacturing reinvestment accounts.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.
                                 <all>