[Congressional Record Volume 160, Number 101 (Thursday, June 26, 2014)]
[Senate]
[Pages S4156-S4158]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
By Mr. DURBIN (for himself, Mr. Brown, Mr. Reed, Ms. Warren, Ms.
Baldwin, and Mr. Sanders):
S. 2540. A bill to amend the Internal Revenue Code of 1986 to provide
a tax credit to Patriot employers, and for other purposes; to the
Committee on Finance.
Mr. DURBIN. Mr. President, I ask unanimous consent that the text of
the bill be printed in the Record.
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:
S. 2540
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 ``Patriot Employer Tax Credit
Act''.
SEC. 2. PATRIOT EMPLOYER 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:
``SEC. 45S. PATRIOT EMPLOYER TAX CREDIT.
``(a) Determination of Amount.--
``(1) In general.--For purposes of section 38, the Patriot
employer credit determined under this section with respect to
any taxpayer who is a Patriot employer for any taxable year
shall be equal to 10 percent of the qualified wages paid or
incurred by the Patriot employer.
``(2) Limitation.--The amount of qualified wages which may
be taken into account under paragraph (1) with respect to any
employee for any taxable year shall not exceed $15,000.
``(b) Patriot Employer.--
``(1) In general.--For purposes of subsection (a), the term
`Patriot employer' means, with respect to any taxable year,
any taxpayer--
``(A) which--
``(i) maintains its headquarters in the United States if
the taxpayer (or any predecessor) has ever been headquartered
in the United States, and
``(ii) is not (and no predecessor of which is) an
expatriated entity (as defined in section 7874(a)(2)) for the
taxable year or any preceding taxable year ending after March
4, 2003,
``(B) with respect to which no assessable payment has been
imposed under section 4980H with respect to any month
occurring during the taxable year, and
``(C) in the case of--
``(i) a taxpayer which employs an average of more than 50
employees on business days during the taxable year, which--
``(I) provides compensation for at least 90 percent of its
employees for services provided by such employees during the
taxable year at an hourly rate (or equivalent thereof) not
less than an amount equal to 150 percent of the Federal
poverty level for a family of three for the calendar year in
which the taxable year begins divided by 2,080,
``(II) meets the retirement plan requirements of subsection
(c) with respect to at least 90 percent of its employees
providing services during the taxable year who are not highly
compensated employees, and
``(III) meets the additional requirements of subparagraphs
(A) and (B) of paragraph (2), or
``(ii) any other taxpayer, which meets the requirements of
either subclause (I) or (II) of clause (i) for the taxable
year.
``(2) Additional requirements for large employers.--
``(A) United states employment.--The requirements of this
subparagraph are met for any taxable year if--
``(i) in any case in which the taxpayer increases the
number of employees performing substantially all of their
services for the taxable year outside the United States, the
taxpayer either--
``(I) increases the number of employees performing
substantially all of their services inside the United States
by an amount not less than the increase in such number for
employees outside the United States, or
``(II) has a percentage increase in such employees inside
the United States which is not less than the percentage
increase in such employees outside the United States,
``(ii) in any case in which the taxpayer decreases the
number of employees performing substantially all of their
services for the taxable year inside the United States, the
taxpayer either--
``(I) decreases the number of employees performing
substantially all of their services outside the United States
by an amount not less than the decrease in such number for
employees inside the United States, or
``(II) has a percentage decrease in employees outside the
United States which is not less than the percentage decrease
in such employees inside the United States, and
``(iii) there is not a decrease in the number of employees
performing substantially all of their services for the
taxable year inside the United States by reason of the
taxpayer contracting out such services to persons who are not
employees of the taxpayer.
``(B) Treatment of individuals in the uniformed services
and the disabled.--The requirements of this subparagraph are
met for any taxable year if--
``(i) the taxpayer provides differential wage payments (as
defined in section 3401(h)(2)) to each employee described in
section
[[Page S4157]]
3401(h)(2)(A) for any period during the taxable year in an
amount not less than the difference between the wages which
would have been received from the employer during such period
and the amount of pay and allowances which the employee
receives for service in the uniformed services during such
period, and
``(ii) the taxpayer has in place at all times during the
taxable year a written policy for the recruitment of
employees who have served in the uniformed services or who
are disabled.
``(3) Special rules for applying the minimum wage and
retirement plan requirements.--
``(A) Minimum wage.--In determining whether the minimum
wage requirements of paragraph (1)(C)(i)(I) are met with
respect to 90 percent of a taxpayer's employees for any
taxable year--
``(i) a taxpayer may elect to exclude from such
determination apprentices or learners that an employer may
exclude under the regulations under section 14(a) of the Fair
Labor Standards Act of 1938, and
``(ii) if a taxpayer meets the requirements of paragraph
(2)(B)(i) with respect to providing differential wage
payments to any employee for any period (without regard to
whether such requirements apply to the taxpayer), the hourly
rate (or equivalent thereof) for such payments shall be
determined on the basis of the wages which would have been
paid by the employer during such period if the employee had
not been providing service in the uniformed services.
``(B) Retirement plan.--In determining whether the
retirement plan requirements of paragraph (1)(C)(i)(II) are
met with respect to 90 percent of a taxpayer's employees for
any taxable year, a taxpayer may elect to exclude from such
determination--
``(i) employees not meeting the age or service requirements
under section 410(a)(1) (or such lower age or service
requirements as the employer provides), and
``(ii) employees described in section 410(b)(3).
``(c) Retirement Plan Requirements.--
``(1) In general.--The requirements of this subsection are
met for any taxable year with respect to an employee of the
taxpayer who is not a highly compensated employee if the
employee is eligible to participate in 1 or more applicable
eligible retirement plans maintained by the employer for a
plan year ending with or within the taxable year.
``(2) Applicable eligible retirement plan.--For purposes of
this subsection, the term `applicable eligible retirement
plan' means an eligible retirement plan which, with respect
to the plan year described in paragraph (1), is either--
``(A) a defined contribution plan which--
``(i) requires the employer to make nonelective
contributions of at least 5 percent of the compensation of
the employee, or
``(ii) both--
``(I) includes an eligible automatic contribution
arrangement (as defined in section 414(w)(3)) under which the
uniform percentage described in section 414(w)(3)(B) is at
least 5 percent, and
``(II) requires the employer to make matching contributions
of 100 percent of the elective deferrals (as defined in
section 414(u)(2)(C)) of the employee to the extent such
deferrals do not exceed the percentage specified by the plan
(not less than 5 percent) of the employee's compensation, or
``(B) a defined benefit plan--
``(i) with respect to which the accrued benefit of the
employee derived from employer contributions, when expressed
as an annual retirement benefit, is not less than the product
of--
``(I) the lesser of 2 percent multiplied by the employee's
years of service (determined under the rules of paragraphs
(4), (5), and (6) of section 411(a)) with the employer or 20
percent, multiplied by
``(II) the employee's final average pay, or
``(ii) which is an applicable defined benefit plan (as
defined in section 411(a)(13)(B))--
``(I) which meets the interest credit requirements of
section 411(b)(5)(B)(i) with respect to the plan year, and
``(II) under which the employee receives a pay credit for
the plan year which is not less than 5 percent of
compensation.
``(3) Definitions and special rules.--For purposes of this
subsection--
``(A) Eligible retirement plan.--The term `eligible
retirement plan' has the meaning given such term by section
402(c)(8)(B), except that in the case of an account or
annuity described in clause (i) or (ii) thereof, such term
shall only include an account or annuity which is a
simplified employee pension (as defined in section 408(k)).
``(B) Final average pay.--For purposes of paragraph
(2)(B)(i)(II), final average pay shall be determined using
the period of consecutive years (not exceeding 5) during
which the employee had the greatest compensation from the
taxpayer.
``(C) Alternative plan designs.--The Secretary may
prescribe regulations for a taxpayer to meet the requirements
of this subsection through a combination of defined
contribution plans or defined benefit plans described in
paragraph (1) or through a combination of both such types of
plans.
``(D) Plans must meet requirements without taking into
account social security and similar contributions and
benefits.--A rule similar to the rule of section 416(e) shall
apply.
``(d) Qualified Wages and Compensation.--For purposes of
this section--
``(1) In general.--The term `qualified wages' means wages
(as defined in section 51(c), determined without regard to
paragraph (4) thereof) paid or incurred by the Patriot
employer during the taxable year to employees--
``(A) who perform substantially all of their services for
such Patriot employer inside the United States, and
``(B) with respect to whom--
``(i) in the case of a Patriot employer which employs an
average of more than 50 employees on business days during the
taxable year, the requirements of subclauses (I) and (II) of
subsection (b)(1)(C)(i) are met, and
``(ii) in the case of any other Patriot employer, the
requirements of either subclause (I) or (II) of subsection
(b)(1)(C)(i) are met .
``(2) Special rules for agricultural labor and railway
labor.--Rules similar to the rules of section 51(h) shall
apply.
``(3) Compensation.--For purposes of subsections
(b)(1)(C)(i)(I) and (c), the term `compensation' has the same
meaning as qualified wages, except that section 51(c)(2)
shall be disregarded in determining the amount of such wages.
``(e) Aggregation Rules.--For purposes of this section--
``(1) In general.--All persons treated as a single employer
under subsection (a) or (b) of section 52 shall be treated as
a single taxpayer.
``(2) Special rules for certain requirements.--For purposes
of applying paragraphs (1)(A) and (2)(A) of subsection (b)--
``(A) the determination under subsections (a) and (b) of
section 52 for purposes of paragraph (1) shall be made
without regard to section 1563(b)(2)(C) (relating to
exclusion of foreign corporations), and
``(B) if any person treated as a single taxpayer under this
subsection (after application of subparagraph (A)), or any
predecessor of such person, was an expatriated entity (as
defined in section 7874(a)(2)) for any taxable year ending
after March 4, 2003, then all persons treated as a single
taxpayer with such person shall be treated as expatriated
entities.
``(f) Election to Have Credit Not Apply.--
``(1) In general.--A taxpayer may elect to have this
section not apply for any taxable year.
``(2) Time for making election.--An election under
paragraph (1) for any taxable year may be made (or revoked)
at any time before the expiration of the 3-year period
beginning on the last date prescribed by law for filing the
return for such taxable year (determined without regard to
extensions).
``(3) Manner of making election.--An election under
paragraph (1) (or revocation thereof) shall be made in such
manner as the Secretary may by regulations prescribe.''.
(b) Allowance as General Business Credit.--Section 38(b) 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:
``(37) in the case of a Patriot employer (as defined in
section 45S(b)) for any taxable year, the Patriot employer
credit determined under section 45S(a).''.
(c) Denial of Double Benefit.--Subsection (a) of section
280C of the Internal Revenue Code of 1986 is amended by
inserting ``45S(a),'' after ``45P(a)''.
(d) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2014.
SEC. 3. DEFER DEDUCTION OF INTEREST EXPENSE RELATED TO
DEFERRED INCOME.
(a) In General.--Section 163 of the Internal Revenue Code
of 1986 (relating to deductions for interest expense) is
amended by redesignating subsection (n) as subsection (o) and
by inserting after subsection (m) the following new
subsection:
``(n) Deferral of Deduction for Interest Expense Related to
Deferred Income.--
``(1) General rule.--The amount of foreign-related interest
expense of any taxpayer allowed as a deduction under this
chapter for any taxable year shall not exceed an amount equal
to the applicable percentage of the sum of--
``(A) the taxpayer's foreign-related interest expense for
the taxable year, plus
``(B) the taxpayer's deferred foreign-related interest
expense.
For purposes of the paragraph, the applicable percentage is
the percentage equal to the current inclusion ratio.
``(2) Treatment of deferred deductions.--If, for any
taxable year, the amount of the limitation determined under
paragraph (1) exceeds the taxpayer's foreign-related interest
expense for the taxable year, there shall be allowed as a
deduction for the taxable year an amount equal to the lesser
of--
``(A) such excess, or
``(B) the taxpayer's deferred foreign-related interest
expense.
``(3) Definitions and special rule.--For purposes of this
subsection--
``(A) Foreign-related interest expense.--The term `foreign-
related interest expense' means, with respect to any taxpayer
for any taxable year, the amount which bears the same ratio
to the amount of interest expense for such taxable year
allocated and apportioned under sections 861, 864(e), and
864(f) to income from sources outside the United States as--
[[Page S4158]]
``(i) the value of all stock held by the taxpayer in all
section 902 corporations with respect to which the taxpayer
meets the ownership requirements of subsection (a) or (b) of
section 902, bears to
``(ii) the value of all assets of the taxpayer which
generate gross income from sources outside the United States.
``(B) Deferred foreign-related interest expense.--The term
`deferred foreign-related interest expense' means the excess,
if any, of the aggregate foreign-related interest expense for
all prior taxable years beginning after December 31, 2014,
over the aggregate amount allowed as a deduction under
paragraphs (1) and (2) for all such prior taxable years.
``(C) Value of assets.--Except as otherwise provided by the
Secretary, for purposes of subparagraph (A)(ii), the value of
any asset shall be the amount with respect to such asset
determined for purposes of allocating and apportioning
interest expense under sections 861, 864(e), and 864(f).
``(D) Current inclusion ratio.--The term `current inclusion
ratio' means, with respect to any domestic corporation which
meets the ownership requirements of subsection (a) or (b) of
section 902 with respect to one or more section 902
corporations for any taxable year, the ratio (expressed as a
percentage) of--
``(i) the sum of all dividends received by the domestic
corporation from all such section 902 corporations during the
taxable year plus amounts includible in gross income under
section 951(a) from all such section 902 corporations, in
each case computed without regard to section 78, divided by
``(ii) the aggregate amount of post-1986 undistributed
earnings.
``(E) Aggregate amount of post-1986 undistributed
earnings.--The term `aggregate amount of post-1986
undistributed earnings' means, with respect to any domestic
corporation which meets the ownership requirements of
subsection (a) or (b) of section 902 with respect to one or
more section 902 corporations, the domestic corporation's pro
rata share of the post-1986 undistributed earnings (as
defined in section 902(c)(1)) of all such section 902
corporations.
``(F) Foreign currency conversion.--For purposes of
determining the current inclusion ratio, and except as
otherwise provided by the Secretary, the aggregate amount of
post-1986 undistributed earnings for the taxable year shall
be determined by translating each section 902 corporation's
post-1986 undistributed earnings into dollars using the
average exchange rate for such year.
``(G) Section 902 corporation.--The term `section 902
corporation' has the meaning given to such term by section
909(d)(5).
``(4) Treatment of affiliated groups.--The current
inclusion ratio of each member of an affiliated group (as
defined in section 864(e)(5)(A)) shall be determined as if
all members of such group were a single corporation.
``(5) Application to separate categories of income.--This
subsection shall be applied separately with respect to the
categories of income specified in section 904(d)(1).
``(6) Regulations.--The Secretary may prescribe such
regulations or other guidance as is necessary or appropriate
to carry out the purposes of this subsection, including
regulations or other guidance providing--
``(A) for the proper application of this subsection with
respect to changes in ownership of a section 902 corporation,
``(B) that certain corporations that otherwise would not be
members of the affiliated group will be treated as members of
the affiliated group for purposes of this subsection,
``(C) for the proper application of this subsection with
respect to the taxpayer's share of a deficit in earnings and
profits of a section 902 corporation,
``(D) for appropriate adjustments to the determination of
the value of stock in any section 902 corporation for
purposes of this subsection or to the foreign-related
interest expense to account for income that is subject to tax
under section 882(a)(1), and
``(E) for the proper application of this subsection with
respect to interest expense that is directly allocable to
income with respect to certain assets.''.
(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2014.
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