Apprenticeship credit

(a)

In general

Subchapter D of chapter 21 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:

3135.

Apprenticeship credit

(a)

In general

In the case of an eligible employer, there shall be allowed as a credit against applicable employment taxes for each calendar quarter an amount equal to 50 percent of the sum of—(1)the qualified wages with respect to each qualified apprentice of such employer for such calendar quarter, and(2)the registered apprenticeship program expenses paid or incurred by the employer during the calendar quarter.(b)

Limitations and refundability

(1)

Wages taken into account

The amount of qualified wages with respect to any qualified apprentice which may be taken into account under subsection (a) by the eligible employer for any calendar quarter shall not exceed $5,000.(2)

Registered apprenticeship program expenses taken into account

The amount of registered apprenticeship program expenses taken into account by the eligible employer with respect to any calendar quarter shall not exceed the greater of—(A)$5,000, or(B)the lesser of—(i)$2,500 for each qualified apprentice which is an employee of the eligible employer during such calendar quarter, or(ii)$50,000.(3)

Credit limited to employment taxes

The credit allowed by subsection (a) with respect to any calendar quarter shall not exceed the applicable employment taxes (reduced by any credits allowed under section 3111) on the wages paid with respect to the employment of all the employees of the eligible employer for such calendar quarter.(4)

Refundability of excess credit

If the amount of the credit under subsection (a) exceeds the limitation of paragraph (3) for any calendar quarter, such excess shall be treated as an overpayment that shall be refunded under sections 6402(a) and 6413(b).(c)

Definitions

For purposes of this section—(1)

Applicable employment taxes

The term applicable employment taxes means the following:(A)The taxes imposed under section 3111(b).(B)So much of the taxes imposed under section 3221(a) as are attributable to the rate in effect under section 3111(b).(2)

Eligible employer

The term eligible employer means any employer which, during the calendar quarter—(A)either—(i)maintains a registered apprenticeship program, or(ii)has entered into a written agreement (including a collective bargaining agreement) under which the employer agrees to adhere to the apprenticeship standards formulated and registered by a registered apprenticeship program sponsor with respect to qualified apprentices participating in the registered apprenticeship program of such sponsor, and(B)employs a qualified apprentice.(3)

Qualified wages

(A)

In general

The term qualified wages means, with respect to any qualified apprentice, wages paid for service rendered while such qualified apprentice is participating in a registered apprenticeship program.(B)

Limitations

Such term shall not include any wages paid for service rendered after the date that is 2 years after the date the qualified apprentice begins participation in a registered apprenticeship program.(4)

Wages

(A)

In general

The term wages means wages (as defined in section 3121(a)) and compensation (as defined in section 3231(e)).(B)

Allowance for certain health plan expenses

(i)

In general

Such term shall include amounts paid by the eligible employer to provide and maintain a group health plan (as defined in section 5000(b)(1)), but only to the extent that such amounts are excluded from the gross income of employees by reason of section 106(a).(ii)

Allocation rules

For purposes of this section, amounts treated as wages under clause (i) shall be treated as paid with respect to any employee (and with respect to any period) to the extent that such amounts are properly allocable to such employee (and to such period) in such manner as the Secretary may prescribe. Except as otherwise provided by the Secretary, such allocation shall be treated as properly made if made on the basis of being pro rata among periods of coverage.(5)

Qualified apprentice

(A)

In general

The term qualified apprentice means an individual who—(i)is an employee of an eligible employer, and(ii)participates in a registered apprenticeship program pursuant to a written apprenticeship agreement with the registered apprenticeship program sponsor entered into after the date of the enactment of this section.(B)

Exception

Such term shall not include—(i)any individual described in subparagraph (A), (B), or (C) of section 51(i)(1), or(ii)any 5-percent owner (as defined in section 416(i)(1)(B)).(C)

Participation in a registered apprenticeship program

For purposes of subparagraph (A)(ii), an individual participates in a registered apprenticeship program if—(i)the individual has entered into an apprenticeship agreement that has been registered with the Office of Apprenticeship of the Department of Labor or a recognized State apprenticeship agency during the first 90 days of probationary employment with an eligible employer under a registered apprenticeship program, and (ii) the individual has been certified by such Office of Apprenticeship or a recognized State apprenticeship agency as eligible for probationary employment as an apprentice (as defined in section 29.2 of title 29, Code of Federal Regulations (as in effect on the date of the enactment of this subparagraph)). (6)

Registered apprenticeship program

The term registered apprenticeship program means an apprenticeship registered under the Act of August 16, 1937 (commonly known as the National Apprenticeship Act; 50 Stat. 664, chapter 663; 29 U.S.C. 50 et seq.) that meets the standards of parts 29 and 30 of title 29, Code of Federal Regulations (as in effect on the date of the enactment of this paragraph). (7)

Registered apprenticeship program expenses

(A)

In general

The term registered apprenticeship program expenses means expenses (other than qualified wages) paid or incurred in connection with a registered apprenticeship program, including—(i)related instruction expenses,(ii)on-the-job learning expenses,(iii)mentor wages,(iv)expenses directly associated with the development, registration, or maintenance of a registered apprenticeship program, and(v)amounts paid or incurred by an eligible employer to a registered apprenticeship program sponsor pursuant to a collective bargaining agreement (or similar binding agreement) for the purpose of supporting or funding such program.(B)

Related instruction expenses

The term related instruction expenses means the costs of organized instruction—(i)in technical subjects related to the occupation, and(ii)that may be provided in a classroom, through distance learning, or other means of instruction, consistent with the requirements for such instruction under section 29.5(b)(4) of title 29, Code of Federal Regulations (as in effect on the date of the enactment of this paragraph).(C)

On-the-job learning expenses

The term on-the-job learning expenses—(i)means the costs of training that—(I)is provided to a qualified apprentice while engaged in productive work in a job, and(II)provides knowledge or skills essential to the full and adequate performance of the job,(ii)includes reimbursement or support for the costs of such training and of supervision provided during such training, and(iii)does not include the costs of any wages provided to the qualified apprentice during the training.(D)

Mentor wages

(i)

In general

The term mentor wages means wages which—(I)are paid by an eligible employer to an employee who is a journeyworker (within the meaning of section 29.2 of title 29, Code of Federal Regulations (as in effect on the date of the enactment of this subparagraph)), and(II)are in excess of the base rate of pay of such employee for pay periods in which such employee is providing mentorship or supervisory services to a qualified apprentice of such eligible employer.(ii)

Base rate of pay

(I)

In general

The term base rate of pay means, with respect to any pay period for any employee providing mentorship or supervisory services, the average wages paid for pay periods occurring over the 12-month period ending with the pay period before the date on which such individual began providing such mentorship or supervisory services.(II)

Special rules

If the employee was not employed for the entire 12-month period referred to in subclause (I), such subclause shall be applied on the basis of the period during which such employee was so employed. The Secretary may provide rules for the application of this clause in cases where the employee was not employed for any period before providing mentorship or supervisory services.(iii)

Limitation on mentor wages

The amount of mentor wages which may be taken into account during a calendar quarter with respect to any employee providing mentorship or supervisory services shall not exceed $10,000.(8)

Registered apprenticeship program sponsor

The term registered apprenticeship program sponsor means any person, association, committee, or organization operating a registered apprenticeship program and in whose name such program is registered or approved.(d)

Other rules

For purposes of this section—(1)

Aggregation rules

All persons which are treated as a single employer under subsections (a) and (b) of section 52 or subsection (m) or (o) of section 414 shall be treated as a single taxpayer.(2)

Certain governmental employers

(A)

In general

This credit shall not apply to the Government of the United States, the government of any State or political subdivision thereof, or any agency or instrumentality of any of the foregoing.(B)

Exception

Paragraph (1) shall not apply to—(i)any organization described in section 501(c)(1) and exempt from tax under section 501(a), or(ii)any entity described in paragraph (1) if—(I)such entity is a college or university, or(II)the principal purpose or function of such entity is providing medical or hospital care.(3)

Denial of double benefit

(A)

Credits

Any wages or expenses taken into account in determining the credit allowed under this section shall not be taken into account for purposes of determining any credit allowed against the tax imposed by chapter 1.(B)

Deductions

(i)

Wages

For purposes of this section, rules similar to the rules of section 280C(a) shall apply.(ii)

Other expenses

No deduction shall be allowed under chapter 1 with respect to that portion of the registered apprenticeship program expenses (other than wages) taken into account under this section. (4)

Coordination with other Federal payments

This section shall not apply to any qualified wages or registered apprenticeship program expenses paid or incurred by an eligible employer if such eligible employer received payments for such qualified wages or registered apprenticeship program expenses under the Workforce Innovation and Opportunity Act or any other federally funded program. (5)

Election to have apprenticeship credit not apply

This section shall not apply to so much of the qualified wages and registered apprenticeship program expenses paid or incurred by an eligible employer as such employer elects (at such time and in such manner as the Secretary may prescribe) to not take into account for purposes of this section.(6)

Third party payors

Any credit allowed under this section shall be treated as a credit described in section 3511(d)(2).(7)

Extension of limitation on assessment

(A)

In general

Notwithstanding section 6501, the limitation on the time period for the assessment of any amount attributable to a credit claimed under this section shall not expire before the date that is 6 years after the latest of—(i)the date on which the original return which includes the calendar quarter with respect to which such credit is determined is filed,(ii)the date on which such return is treated as filed under section 6501(b)(2), or(iii)the date on which the claim for credit or refund with respect to such credit is made.(B)

Deduction for wages and expenses taken into account in determining improperly claimed credit

(i)

In general

Notwithstanding section 6511, in the case of an assessment attributable to a credit claimed under this section, the limitation on the time period for credit or refund of any amount attributable to a deduction for improperly claimed apprenticeship wages and expenses shall not expire before the time period for such assessment expires under paragraph (1).(ii)

Improperly claimed apprenticeship wages and expenses

For purposes of this paragraph, the term improperly claimed apprenticeship wages and expenses means, with respect to an assessment attributable to a credit claimed under this section, the wages and expenses with respect to which a deduction would not have been allowed if the portion of the credit to which such assessment relates had been properly claimed.(e)

Treatment of deposits

The Secretary shall waive any penalty under section 6656 for any failure to make a deposit of any applicable employment taxes if the Secretary determines that such failure was due to the reasonable anticipation of the credit allowed under this section.(f)

Regulations and guidance

The Secretary, in consultation with the Secretary of Labor, shall issue such forms, instructions, regulations, and guidance— (1) with respect to the application of the credit under subsection (a) to third party payors (including professional employer organizations, certified professional employer organizations, or agents under section 3504), including regulations or guidance allowing such payors to submit documentation necessary to substantiate the registered apprenticeship program expenses of employers that use such payors, and (2)to prevent the avoidance of the purposes of the limitations under this section.

Any forms, instructions, regulations, or other guidance described in paragraph (1) shall require the customer to be responsible for the accounting of the credit and for any liability for improperly claimed credits and shall require the certified professional employer organization or other third party payor to accurately report such tax credits based on the information provided by the customer.

(b)

Notice of availability of credit

The Secretary of Labor, in consultation with the Secretary of the Treasury (or the Secretary's delegate), shall take such steps as may be necessary or appropriate to keep employers apprised of the availability of the credit allowed under section 3135 of the Internal Revenue Code of 1986, as added by this section. (c)

Clerical amendment

The table of sections for subchapter D of chapter 21 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:

Sec. 3135. Apprenticeship credit.

(d)

Effective date

The amendments made by this section shall apply to wages paid, and expenses paid or incurred, for calendar quarters beginning after the date of enactment of this Act.