117th CONGRESS 1st Session |
To amend the Internal Revenue Code of 1986 to allow for a credit against tax for employers of reservists.
April 15, 2021
Ms. Duckworth (for herself, Mr. Moran, Mr. Durbin, Ms. Baldwin, Mr. Blumenthal, Mrs. Feinstein, and Ms. Rosen) introduced the following bill; which was read twice and referred to the Committee on Finance
To amend the Internal Revenue Code of 1986 to allow for a credit against tax for employers of reservists.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
This Act may be cited as the “Reserve Employers Comprehensive Relief and Uniform Incentives on Taxes Act of 2021” or as the “RECRUIT Act of 2021”.
SEC. 2. Reservist employment credit.
(a) Allowance of credit.—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. 45U. Reservist employment credit.
“(a) Establishment of credit.—For purposes of section 38, in the case of an eligible employer, the reservist employment credit for any taxable year is an amount equal to 40 percent of the wages paid or incurred to qualified reservists by such employer during such taxable year.
“(1) IN GENERAL.—The reservist employment credit determined under subsection (a), with respect to any qualified reservist for any taxable year, shall not exceed the reservist credit amount.
“(2) RESERVIST CREDIT AMOUNT.—For purposes of this section, the term ‘reservist credit amount’ means, with respect to a qualified reservist for a taxable year, an amount equal to the sum of—
“(A) $1,000, plus
“(B) in the case of a qualified reservist—
“(i) with 30 or more days, and fewer than 90 days, of service in the uniformed services during such year, $3,000,
“(ii) with 90 or more days, and fewer than 180 days, of service in the uniformed services during such year, $5,000, and
“(iii) with 180 or more days of service in the uniformed services during such year, $10,000.
“(3) DAYS OF SERVICE.—For purposes of paragraph (2), any day of service—
“(A) shall not be taken into account if such day constitutes regularly scheduled unit training or annual training, and
“(B) shall only be taken into account with respect to a qualified reservist employed by an eligible employer to the extent such days are during a period of employment of such reservist by such employer.
“(4) QUALIFIED RESERVIST.—The term ‘qualified reservist’ means, with respect to a taxable year, an individual who is, at any time during such taxable year, a member of the National Guard or a reserve component of the Armed Forces, as named in section 10101 of title 10, United States Code (except for a member of the Individual Ready Reserve).
“(5) OTHER DEFINITIONS.—The term ‘reserve component’ has the meanings given such term in section 101 of title 10, United States Code. The term ‘National Guard’ has the meaning given such term in section 101(3) of title 32, United States Code. The term ‘service in the uniformed services’ has the meaning given such term in section 4303 of title 38, United States Code.
“(c) Eligible employer.—For purposes of this section, the term ‘eligible employer’ means any employer which has an average of less than 500 employees employed on business days during the taxable year.
“(d) Aggregation rule.—All persons treated as a single employer under subsection (b), (c), (m), or (o) of section 414 shall be treated as 1 employer for purposes of this section.
“(e) Election To have credit not apply.—
“(1) IN GENERAL.—A taxpayer may elect to have this section not apply for any taxable year.
“(2) OTHER RULES.—Rules similar to the rules of paragraphs (2) and (3) of section 51(j) shall apply for purposes of this subsection.
“(f) Election To treat credit as payroll tax credit.—
“(1) IN GENERAL.—At the election of an eligible employer for any taxable year, section 3111(g) 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 280C) as a credit determined under subsection (a).
“(2) PAYROLL TAX CREDIT PORTION.—For purposes of this subsection, the term ‘payroll tax credit portion’ means the lesser of—
“(A) the amount specified in the election made under this subsection, or
“(B) the amount of the credit otherwise determined under subsection (a) for the taxable year.
“(3) ELECTION.—Any election under this subsection for any taxable year—
“(A) shall specify the amount of the credit to which such election applies,
“(B) 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
“(C) may be revoked only with the consent of the Secretary.”.
(b) Credit part of general business credit.—Section 38(b) of the Internal Revenue Code of 1986 is amended by striking “plus” at the end of paragraph (32), by striking the period at the end of paragraph (33) and inserting “, plus”, and by adding at the end the following new paragraph:
“(34) in the case of an eligible employer (as defined in section 45U(c)), the reservist employment credit determined under section 45U(a).”.
(c) Credit allowed against AMT.—Subparagraph (B) of section 38(c)(4) of the Internal Revenue Code of 1986 is amended by redesignating clauses (x) through (xii) as clauses (xi) through (xiii), respectively, and by inserting after clause (ix) the following new clause:
“(x) the credit determined under section 45U,”.
(d) Payroll tax credit.—Section 3111 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:
“(g) Reservist employment credit.—
“(1) IN GENERAL.—In the case of a taxpayer which has made an election under section 45U(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 45U(f)(3)(B) an amount equal to the payroll tax credit portion determined under section 45U(f)(2).
“(A) IN GENERAL.—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. The limitation imposed by the preceding sentence shall be applied to appropriately take into account any other credits allowed against such tax in such manner as the Secretary may provide.
“(B) TEMPORARY REFUNDABILITY.—In the case of any credit allowed by paragraph (1) with respect to a payroll tax credit portion determined for a taxable year beginning in 2021 or 2022, if the amount of such credit exceeds the limitation of subparagraph (A) for the calendar quarter, such excess shall be treated as an overpayment that shall be refunded under sections 6402(a) and 6413(b) of such Code. For purposes of section 1324 of title 31, United States Code, any amounts due to an employer under this subparagraph shall be treated in the same manner as a refund due from a credit provision referred to in subsection (b)(2) of such section.
“(C) CARRYOVER.—In the case of any credit allowed by paragraph (1) with respect to a payroll tax credit portion determined for a taxable year beginning after 2022, if the amount of such credit exceeds the limitation of subparagraph (A) 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.
“(3) 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).”.
(1) DENIAL OF DOUBLE BENEFIT.—Section 280C(a) of the Internal Revenue Code of 1986 is amended by inserting “45U(a),” after “45S(a),”.
(2) ELECTION TO HAVE CREDIT NOT APPLY.—Section 6501(m) of the Internal Revenue Code of 1986 is amended by inserting “45U(d),” after “45H(g),”.
(3) 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 adding at the end the following new item:
“Sec. 45U. Reservist employment credit.”.
(f) Effective date.—The amendments made by this section shall apply to wages paid in taxable years beginning after December 31, 2020.