[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3915 Introduced in House (IH)]
106th CONGRESS
2d Session
H. R. 3915
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 reserves, to allow a comparable credit for participating self-
employed individuals, and to restore the pre-1986 status of deductions
incurred in connection with services performed as a member of a Reserve
component of the Armed Forces.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 14, 2000
Mr. Nethercutt (for himself, Mr. Callahan, Mr. Foley, Mrs. Thurman,
Mrs. Myrick, and Mr. Frost) introduced the following bill; which was
referred to the Committee on Ways and Means
_______________________________________________________________________
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 reserves, to allow a comparable credit for participating self-
employed individuals, and to restore the pre-1986 status of deductions
incurred in connection with services performed as a member of a Reserve
component of the Armed Forces.
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 ``Reserve Employer Tax Credit Act of
2000''.
SEC. 2. TAX CREDIT FOR RESERVE FORCES PARTICIPATION.
(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. 45D. RESERVE FORCE PARTICIPATION CREDIT.
``(a) General Rule.--For purposes of section 38, the reserve force
participation 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 50 percent of the amount of qualified compensation
that would have been paid to the employee with respect to all
periods during which the employee participates in qualified
reserve duty to the exclusion of normal employment duties,
including time spent in a travel status had the employee not
been participating in qualified reserve duty. 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) 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 employee
participates in qualified reserve duty, the term `qualified
compensation' means compensation--
``(A) which is normally contingent on the
employee's presence for work and which would be
deductible from the taxpayer's gross income under
section 162(a)(1) if the employee were present and
receiving such compensation, and
``(B) 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 employee participates in qualified reserve 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 employee.
``(3) 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
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 50 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 duty to the
exclusion of the taxpayer's normal self-employment
duties for the number of days the taxpayer participates
in qualified reserve 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
divided by the difference between--
``(i) 365, and
``(ii) the number of days the taxpayer
participates in qualified reserve 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 duty,
divided by
``(ii) the total number of days the
taxpayer participates in qualified reserve
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.
``(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 employee participates in qualified
reserve duty to the exclusion of normal employment duties.
``(e) Limitations.--
``(1) Maximum credit.--
``(A) In general.--The credit allowed by subsection
(a) for the taxable year--
``(i) shall not exceed $7,500 in the
aggregate, and
``(ii) shall not exceed $2,000 with respect
to each qualified employee.
``(B) Controlled groups.--For purposes of applying
the limitations in subparagraph (A)--
``(i) all members of a controlled group
shall be treated as one taxpayer, and
``(ii) such limitations shall be allocated
among the members of such group in such manner
as the Secretary may prescribe.
For purposes of this subparagraph, all persons treated
as a single employer under subsection (a) or (b) of
section 52 or subsection (m) or (o) of section 414
shall be treated as members of a controlled group.
``(2) 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 two succeeding taxable years.
``(3) 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 duty.--The term `qualified reserve
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
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 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 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 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 (11),
(2) by striking the period at the end of paragraph (12) and
inserting ``, plus'', and
(3) by adding at the end the following new paragraph:
``(13) the reserve force participation credit determined
under section 45D(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 45C the
following new item:
``Sec. 45D. Reserve force participation
credit.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the calendar year which includes
the date of the enactment of this Act.
SEC. 3. DEDUCTION OF CERTAIN EXPENSES PAID OR INCURRED BY MEMBERS OF
THE RESERVE COMPONENTS OF THE ARMED FORCES.
(a) In General.--Paragraph (2) of section 62(a) of the Internal
Revenue Code of 1986 (defining adjusted gross income) is amended by
adding at the end the following new subparagraph:
``(D) Certain expenses of members of reserve
components of the armed forces of the united states.--
The deductions allowed by part VI (section 161 and
following) which consist of--
``(i) expenses of travel, meals, and
lodging while away from home, and
``(ii) expenses of transportation,
paid or incurred by the taxpayer in connection with the
performance of services by such taxpayer as a member of
a Reserve component of the Armed Forces (as defined in
section 10101 of title 10, United States Code).''.
(b) Two Percent Floor on Itemized Deductions Not To Apply.--
Subsection (b) of section 67 of such Code is amended by striking
``and'' at the end of paragraph (11), by striking the period at the end
of paragraph (12) and inserting ``, and'', and by adding at the end the
following new paragraph:
``(13) the deductions under part VI (section 161 and
following) for expenses paid or incurred by the taxpayer in
connection with the performance of services by such taxpayer as
a member of a Reserve component of the Armed Forces (as defined
in section 10101 of title 10, United States Code).''.
(c) 50-Percent Ceiling on Deduction for Meal and Entertainment,
Etc., Expenses Not To Apply.--Paragraph (2) of section 274(n) of such
Code is amended by striking ``or'' at the end of subparagraph (D), by
striking the period at the end of subparagraph (E) and inserting ``,
or'', and by inserting after subparagraph (E) the following new
subparagraph:
``(F) any expense in connection with the
performance of services by the taxpayer as a member of
a Reserve component of the Armed Forces (as defined in
section 10101 of title 10, United States Code).''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the calendar year which includes
the date of the enactment of this Act.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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