[Congressional Record Volume 149, Number 27 (Thursday, February 13, 2003)]
[Senate]
[Pages S2469-S2470]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ALLEN:
  S. 393. A bill to amend the Internal Revenue Code of 1986 to allow 
employers a credit against income tax with respect to employees who 
participate in the military reserve components and to allow a 
comparable credit for participating reserve component self-employed 
individuals, and for other purposes; to the Committee on Finance.
  Mr. ALLEN. Mr. President, I ask unanimous consent that the text of 
the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 393

       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 ``____ Act of 2003''.

     SEC. 2. CREDIT FOR EMPLOYMENT OF RESERVE COMPONENT PERSONNEL.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     business-related credits) is amended by adding at the end the 
     following new section:

     ``SEC. 45G. RESERVE COMPONENT EMPLOYMENT CREDIT.

       ``(a) General Rule.--For purposes of section 38, the 
     reserve component employment credit determined under this 
     section is an amount equal to the sum of--
       ``(1) the employment credit with respect to all qualified 
     employees of the taxpayer, plus
       ``(2) the self-employment credit of a qualified self-
     employed taxpayer.
       ``(b) Employment Credit.--For purposes of this section--
       ``(1) In general.--The employment credit with respect to a 
     qualified employee of the taxpayer for any taxable year is 
     equal to 100 percent of the excess, if any, of--
       ``(A) the qualified employee's average daily qualified 
     compensation for the taxable year, over
       ``(B) the average daily military pay and allowances 
     received by the qualified employee during the taxable year,

     while participating in qualified reserve component duty to 
     the exclusion of the qualified employee's normal employment 
     duties for the number of days the qualified employee 
     participates in qualified reserve component duty during the 
     taxable year, including time spent in a travel status. The 
     employment credit, with respect to all qualified employees, 
     is equal to the sum of the employment credits for each 
     qualified employee under this subsection.
       ``(2) Average daily qualified compensation and average 
     daily military pay and allowances.--As used with respect to a 
     qualified employee--
       ``(A) the term `average daily qualified compensation' means 
     the qualified compensation of the qualified employee for the 
     taxable year divided by the difference between--
       ``(i) 365, and
       ``(ii) the number of days the qualified employee 
     participates in qualified reserve component duty during the 
     taxable year, including time spent in a travel status, and
       ``(B) the term `average daily military pay and allowances' 
     means--
       ``(i) the amount paid to the qualified employee during the 
     taxable year as military pay and allowances on account of the 
     qualified employee's participation in qualified reserve 
     component duty, divided by
       ``(ii) the total number of days the qualified employee 
     participates in qualified reserve component duty, including 
     time spent in travel status.
       ``(3) Qualified compensation.--When used with respect to 
     the compensation paid or that would have been paid to a 
     qualified employee for any period during which the qualified 
     employee participates in qualified reserve component duty, 
     the term `qualified compensation' means--
       ``(A) compensation which is normally contingent on the 
     qualified employee's presence for work and which would be 
     deductible from the taxpayer's gross income under section 
     162(a)(1) if the qualified employee were present and 
     receiving such compensation,
       ``(B) compensation which is not characterized by the 
     taxpayer as vacation or holiday pay, or as sick leave or pay, 
     or as any other form of pay for a nonspecific leave of 
     absence, and with respect to which the number of days the 
     qualified employee participates in qualified reserve 
     component duty does not result in any reduction in the amount 
     of vacation time, sick leave, or other nonspecific leave 
     previously credited to or earned by the qualified employee, 
     and
       ``(C) group health plan costs (if any) with respect to the 
     qualified employee.
       ``(4) Qualified employee.--The term `qualified employee' 
     means a person who--
       ``(A) has been an employee of the taxpayer for the 21-day 
     period immediately preceding the period during which the 
     employee participates in qualified reserve component duty, 
     and
       ``(B) is a member of the Ready Reserve of a reserve 
     component of an Armed Force of the United States as defined 
     in sections 10142 and 10101 of title 10, United States Code.
       ``(c) Self-Employment Credit.--
       ``(1) In general.--The self-employment credit of a 
     qualified self-employed taxpayer for any taxable year is 
     equal to 100 percent of the excess, if any, of--
       ``(A) the self-employed taxpayer's average daily self-
     employment income for the taxable year over
       ``(B) the average daily military pay and allowances 
     received by the taxpayer during the taxable year, while 
     participating in qualified reserve component duty to the 
     exclusion of the taxpayer's normal self-employment duties for 
     the number of days the taxpayer participates in qualified 
     reserve component duty during the taxable year, including 
     time spent in a travel status.
       ``(2) Average daily self-employment income and average 
     daily military pay and allowances.--As used with respect to a 
     self-employed taxpayer--
       ``(A) the term `average daily self-employment income' means 
     the self-employment income (as defined in section 1402) of 
     the taxpayer for the taxable year plus the amount paid for 
     insurance which constitutes medical care for the taxpayer for 
     such year (within the meaning of section 162(l)) divided by 
     the difference between--
       ``(i) 365, and
       ``(ii) the number of days the taxpayer participates in 
     qualified reserve component duty during the taxable year, 
     including time spent in a travel status, and
       ``(B) the term `average daily military pay and allowances' 
     means--
       ``(i) the amount paid to the taxpayer during the taxable 
     year as military pay and allowances on account of the 
     taxpayer's participation in qualified reserve component duty, 
     divided by
       ``(ii) the total number of days the taxpayer participates 
     in qualified reserve component duty, including time spent in 
     travel status.
       ``(3) Qualified self-employed taxpayer.--The term 
     `qualified self-employed taxpayer' means a taxpayer who--
       ``(A) has net earnings from self-employment (as defined in 
     section 1402) for the taxable year, and
       ``(B) is a member of the Ready Reserve of a reserve 
     component of an Armed Force of the United States.

[[Page S2470]]

       ``(d) Credit in Addition to Deduction.--The employment 
     credit provided in this section is in addition to any 
     deduction otherwise allowable with respect to compensation 
     actually paid to a qualified employee during any period the 
     qualified employee participates in qualified reserve 
     component duty to the exclusion of normal employment duties.
       ``(e) Limitations.--
       ``(1) Disallowance for failure to comply with employment or 
     reemployment rights of members of the reserve components of 
     the armed forces of the united states.--No credit shall be 
     allowed under subsection (a) to a taxpayer for--
       ``(A) any taxable year in which the taxpayer is under a 
     final order, judgment, or other process issued or required by 
     a district court of the United States under section 4323 of 
     title 38 of the United States Code with respect to a 
     violation of chapter 43 of such title, and
       ``(B) the 2 succeeding taxable years.
       ``(2) Disallowance with respect to persons ordered to 
     active duty for training.--No credit shall be allowed under 
     subsection (a) to a taxpayer with respect to any period for 
     which the person on whose behalf the credit would otherwise 
     be allowable is called or ordered to active duty for any of 
     the following types of duty:
       ``(A) active duty for training under any provision of title 
     10, United States Code,
       ``(B) training at encampments, maneuvers, outdoor target 
     practice, or other exercises under chapter 5 of title 32, 
     United States Code, or
       ``(C) full-time National Guard duty, as defined in section 
     101(d)(5) of title 10, United States Code.
       ``(f) General Definitions and Special Rules.--
       ``(1) Military pay and allowances.--The term `military pay' 
     means pay as that term is defined in section 101(21) of title 
     37, United States Code, and the term `allowances' means the 
     allowances payable to a member of the Armed Forces of the 
     United States under chapter 7 of that title.
       ``(2) Qualified reserve component duty.--The term 
     `qualified reserve component duty' includes only active duty 
     performed, as designated in the reservist's military orders, 
     in support of a contingency operation as defined in section 
     101(a)(13) of title 10, United States Code.
       ``(3) Normal employment and self-employment duties.--A 
     person shall be deemed to be participating in qualified 
     reserve component duty to the exclusion of normal employment 
     or self-employment duties if the person does not engage in or 
     undertake any substantial activity related to the person's 
     normal employment or self-employment duties while 
     participating in qualified reserve component duty unless in 
     an authorized leave status or other authorized absence from 
     military duties. If a person engages in or undertakes any 
     substantial activity related to the person's normal 
     employment or self-employment duties at any time while 
     participating in a period of qualified reserve component 
     duty, unless during a period of authorized leave or other 
     authorized absence from military duties, the person shall be 
     deemed to have engaged in or undertaken such activity for the 
     entire period of qualified reserve component duty.
       ``(4) Certain rules to apply.--Rules similar to the rules 
     of subsections (c), (d), and (e) of section 52 shall apply 
     for purposes of this section.''.
       (b) Conforming Amendment.--Section 38(b) of the Internal 
     Revenue Code of 1986 (relating to general business credit) is 
     amended--
       (1) by striking ``plus'' at the end of paragraph (14),
       (2) by striking the period at the end of paragraph (15) and 
     inserting ``, plus'', and
       (3) by adding at the end the following new paragraph:
       ``(16) the reserve component employment credit determined 
     under section 45G(a).''.
       (c) Clerical Amendment.--The table of sections for subpart 
     D 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 45F the following new item:

``Sec. 45G. Reserve component employment credit.''.

       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2002.
                                 ______