[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 1540 Introduced in Senate (IS)]

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115th CONGRESS
  1st Session
                                S. 1540

 To amend the Internal Revenue Code of 1986 to allow a credit against 
        tax for investments in qualified production facilities.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 12, 2017

 Ms. Stabenow (for herself, Mr. Brown, and Mr. Peters) 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 a credit against 
        tax for investments in qualified production facilities.

    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 ``Growing Small Businesses Act''.

SEC. 2. CREDIT FOR QUALIFYING PRODUCTION FACILITIES.

    (a) Income Tax Credit.--
            (1) In general.--Section 46 of the Internal Revenue Code of 
        1986 is amended--
                    (A) by striking ``and'' at the end of paragraph 
                (5);
                    (B) by striking the period at the end of paragraph 
                (6) and inserting ``, and''; and
                    (C) by adding at the end the following new 
                paragraph:
            ``(7) the qualifying production facility credit.''.
            (2) Amount of credit.--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:

``SEC. 48E. CREDIT FOR QUALIFYING PRODUCTION FACILITIES.

    ``(a) In General.--For purposes of section 46, in the case of an 
eligible employer, the qualifying production facility credit for any 
taxable year is an amount equal to 25 percent of the basis of eligible 
property placed in service during the taxable year.
    ``(b) Eligible Employer.--For purposes of this section--
            ``(1) In general.--The term `eligible employer' means any 
        employer--
                    ``(A) which has no more than 50 full-time 
                equivalent employees (within the meaning of section 
                45R(d)(2)) for the taxable year, and
                    ``(B) which has not (prior to placing in service 
                the production facility designated for purposes of this 
                section) placed in service a dedicated facility for the 
                production of goods for sale.
            ``(2) Safe harbor.--
                    ``(A) In general.--An employer shall not be treated 
                as having previously placed in service a facility 
                described in paragraph (1)(B) if--
                            ``(i) a credit under this section has not 
                        previously been allowed to the employer, and
                            ``(ii) the cost of applicable property 
                        placed into service by the employer for each 
                        taxable year during the 5-taxable-year period 
                        ending immediately before the taxable year did 
                        not exceed $7,500.
                    ``(B) Applicable property.--For purposes of 
                subparagraph (A), the term `applicable property' means 
                personal property which would have qualified as 
                eligible property under subsection (c)(1)(B) if such 
                property were placed in service by an eligible employer 
                at a qualified production facility after enactment of 
                this Act for the production of a qualifying product.
            ``(3) Self-employed individual treated as employee.--For 
        purposes of paragraph (1)(A), the term employee includes an 
        individual described in section 401(c)(1).
    ``(c) Eligible Property.--For purposes of this section--
            ``(1) In general.--The term `eligible property' means--
                    ``(A) any qualifying production facility--
                            ``(i)(I) the construction, reconstruction, 
                        or erection of which is completed by the 
                        taxpayer, or
                            ``(II) which is acquired by the taxpayer by 
                        purchase (as defined in section 179(d)(2)), and
                            ``(ii) for which a deduction is allowable 
                        under section 167, and
                    ``(B) any personal property--
                            ``(i) which is placed in service within 12 
                        months of the date on which a qualifying 
                        production facility for which a credit is 
                        allowed under subsection (a) is placed in 
                        service,
                            ``(ii) which is used exclusively at such 
                        qualifying production facility primarily for 
                        the production of a qualifying product, and
                            ``(iii) for which a deduction is allowable 
                        under section 167.
            ``(2) Special rule for leased facilities.--In the case of 
        any of a qualifying production facility which is leased by the 
        taxpayer, paragraph (1)(B) shall be applied by substituting 
        `the date on which the qualifying production facility was first 
        leased by the taxpayer' for `the date on which a qualifying 
        production facility for which a credit is allowed under 
        subsection (a) is placed in service' in clause (i).
    ``(d) Other Definitions.--For purposes of this section--
            ``(1) Qualifying production facility.--The term `qualifying 
        production facility' means any facility which--
                    ``(A) is used to produce qualifying products, and
                    ``(B) is designated by the taxpayer as a qualifying 
                production facility for purposes of this section at 
                such time and in such manner as the Secretary shall 
                prescribe.
            ``(2) Qualifying product.--The term `qualifying product' 
        means any of the following:
                    ``(A) Tangible personal property.
                    ``(B) Computer software (as defined in section 
                167(f)(1)(B)).
                    ``(C) Property described in section 168(f)(3).
                    ``(D) Property described in section 168(f)(4).
                    ``(E) Food and beverages which are prepared by the 
                taxpayer but not primarily for consumption at property 
                owned by the taxpayer.
    ``(e) Special Rules.--For purposes of this section--
            ``(1) Controlled group.--All members of the same controlled 
        group of corporations (within the meaning of section 52(a)) and 
        all persons under common control (within the meaning of section 
        52(b)) shall be treated as 1 person for purposes of this 
        section.
            ``(2) Predecessor.--Any reference in this section to an 
        employer shall include a reference to any predecessor of such 
        employer.
            ``(3) Certain qualified progress expenditures rules made 
        applicable.--Rules similar to the rules of subsections (c)(4) 
        and (d) of section 46 (as in effect on the day before the 
        enactment of the Revenue Reconciliation Act of 1990) shall 
        apply for purposes of this section.
    ``(f) Election To Apply Credit Against Payroll Taxes.--
            ``(1) In general.--At the election of the eligible 
        employer, section 3111(f) shall apply to the payroll tax credit 
        portion of the credit otherwise determined under subsection (a) 
        for the taxable year and such portion shall not be treated 
        (other than for purposes of section 50(c)) as a credit 
        determined under subsection (a).
            ``(2) Payroll tax credit portion.--For purposes of this 
        subsection, the payroll tax credit portion of the credit 
        determined under subsection (a) with respect to any qualified 
        small business for any taxable year is the least of--
                    ``(A) the amount specified in the election made 
                under this subsection,
                    ``(B) the credit determined under subsection (a) 
                for the taxable year (determined before the application 
                of this subsection), or
                    ``(C) in the case of an eligible employer other 
                than a partnership or S corporation, the amount of the 
                business credit carryforward under section 39 carried 
                from the taxable year (determined before the 
                application of this subsection to the taxable year).
            ``(3) Election.--
                    ``(A) In general.--Any election under this 
                subsection for any taxable year--
                            ``(i) shall specify the amount of the 
                        credit to which such election applies,
                            ``(ii) shall be made on or before the due 
                        date (including extensions) of--
                                    ``(I) in the case of an eligible 
                                employer which is a partnership, the 
                                return required to be filed under 
                                section 6031,
                                    ``(II) in the case of an eligible 
                                employer which is an S corporation, the 
                                return required to be filed under 
                                section 6037, and
                                    ``(III) in the case of any other 
                                eligible employer, the return of tax 
                                for the taxable year, and
                            ``(iii) may be revoked only with the 
                        consent of the Secretary.
                    ``(B) Limitations.--The amount specified in any 
                election made under this subsection shall not exceed 
                $250,000.
                    ``(C) Special rule for partnerships and s 
                corporations.--In the case of an eligible employer 
                which is a partnership or S corporation, the election 
                made under this subsection shall be made at the entity 
                level.
            ``(4) Aggregation rules.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), all persons or entities treated as a 
                single taxpayer under subsection (e)(1) shall be 
                treated as a single taxpayer for purposes of this 
                subsection.
                    ``(B) Special rules.--For purposes of this 
                subsection and section 3111(g)--
                            ``(i) each of the persons treated as a 
                        single taxpayer under subparagraph (A) may 
                        separately make the election under paragraph 
                        (1) for any taxable year, and
                            ``(ii) the $250,000 amount under paragraph 
                        (3)(B)(i) shall be allocated among all persons 
                        treated as a single taxpayer under subparagraph 
                        (A) in the manner provided by the Secretary 
                        which is similar to the manner provided under 
                        section 41(f)(1).
            ``(5) Regulations.--The Secretary shall prescribe such 
        regulations as may be necessary to carry out the purposes of 
        this subsection, including--
                    ``(A) regulations to prevent the avoidance of the 
                purposes of the limitations and aggregation rules under 
                this subsection,
                    ``(B) regulations to minimize compliance and 
                recordkeeping burdens under this subsection, and
                    ``(C) regulations for recapturing the benefit of 
                credits determined under section 3111(g) in cases where 
                there is a recapture or a subsequent adjustment to the 
                payroll tax credit portion of the credit determined 
                under subsection (a), including requiring amended 
                income tax returns in the cases where there is such an 
                adjustment.''.
            (3) Special rules relating to recapture.--
                    (A) Certain related party transaction.--Paragraph 
                (4) of section 50(a) of the Internal Revenue Code of 
                1986 is amended by adding at the end the following new 
                sentence: ``Subparagraph (B) shall not apply to 
                investment credit property described in section 48E in 
                any case in which the transaction is a transaction 
                between related persons.''.
                    (B) Loss of eligible employer status.--Paragraph 
                (5) of section 50(a) of such Code is amended by adding 
                at the end the following new paragraph:
                    ``(D) Treatment of eligible employer status for 
                qualifying production facility credit.--Paragraphs (1) 
                and (2) shall not apply with respect to any credit 
                allowed under section 48E solely because the taxpayer 
                has ceased to be an eligible employer (as defined in 
                section 48E(b)) in any taxable year after the year in 
                which the credit is allowed.''.
            (4) Conforming amendments.--
                    (A) Section 49(a)(1)(C) of the Internal Revenue 
                Code of 1986 is amended--
                            (i) by striking ``and'' at the end of 
                        clause (v);
                            (ii) by striking the period at the end of 
                        clause (vi) and inserting ``, and''; and
                            (iii) by adding after clause (vi) the 
                        following new clause:
                            ``(vii) the basis of any eligible property 
                        under section 48E.''.
                    (B) 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. Credit for qualifying production facilities.''.
    (b) Payroll Tax Credit.--Section 3111 of the Internal Revenue Code 
of 1986 is amended by adding at the end the following new subsection:
    ``(g) Credit for Qualifying Production Facilities.--
            ``(1) In general.--In the case of a taxpayer who has made 
        an election under section 48E(f) for a taxable year, there 
        shall be allowed as a credit against the tax imposed by 
        subsection (a) for the first calendar quarter which begins 
        after the date on which the taxpayer files the return specified 
        in section 48E(f)(3)(A)(ii) an amount equal to the payroll tax 
        credit portion determined under section 48E(f)(2).
            ``(2) Limitation.--The credit allowed by paragraph (1) 
        shall not exceed the tax imposed by subsection (a) for any 
        calendar quarter on the wages paid with respect to the 
        employment of all individuals in the employ of the employer.
            ``(3) Carryover of unused credit.--If the amount of the 
        credit under paragraph (1) exceeds the limitation of paragraph 
        (2) for any calendar quarter, such excess shall be carried to 
        the succeeding calendar quarter and allowed as a credit under 
        paragraph (1) for such quarter.
            ``(4) Deduction allowed for credited amounts.--The credit 
        allowed under paragraph (1) shall not be taken into account for 
        purposes of determining the amount of any deduction allowed 
        under chapter 1 for taxes imposed under subsection (a).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to periods after the date of the enactment of this Act, under 
rules similar to the rules of section 48(m) of the Internal Revenue 
Code of 1986 (as in effect on the day before the date of the enactment 
of the Revenue Reconciliation Act of 1990).
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