Recovery Startup Assistance Act

II 117TH CONGRESS 1ST SESSION S. 551 To amend the Internal Revenue Code of 1986 to expand the Employee Retention Tax Credit to include certain startup businesses. IN THE SENATE OF THE UNITED STATES MARCH 2 (legislative day, MARCH 1), 2021 Ms. HASSAN (for herself and Mr. BRAUN) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to expand the Employee Retention Tax Credit to include certain startup businesses. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Recovery Startup As- 4 sistance Act’’. 5 SEC. 2. EXPANSION OF EMPLOYEE RETENTION TAX CREDIT 6 TO INCLUDE CERTAIN STARTUP BUSINESSES. 7 (a) IN GENERAL.—Section 2301 of the CARES Act, 8 as amended by sections 206 and 207 of the Taxpayer Cer- 9 VerDate Sep 11 2014 04:00 Apr 01, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S551.IS S551 pbinns on DSKJLVW7X2PROD with BILLS 2 •S 551 IS tainty and Disaster Tax Relief Act of 2020 (Public Law 1 116–260), is amended— 2 (1) in subsection (c)— 3 (A) in paragraph (2)(A)(ii)— 4 (i) in subclause (I), by striking ‘‘or’’ 5 at the end, 6 (ii) in subclause (II), by striking the 7 period at the end and inserting ‘‘, or’’, and 8 (iii) by inserting after subclause (II) 9 the following: 10 ‘‘(III) the employer is a recovery 11 startup business (as defined in para- 12 graph (6)).’’, 13 (B) by redesignating paragraph (6) as 14 paragraph (7), and 15 (C) by inserting after paragraph (5) the 16 following: 17 ‘‘(6) RECOVERY STARTUP BUSINESS.— 18 ‘‘(A) IN GENERAL.—The term ‘recovery 19 startup business’ means any employer which— 20 ‘‘(i) began carrying on a trade or 21 business after February 15, 2020, 22 ‘‘(ii) had less than 50 full-time em- 23 ployees (as defined in section 4980H(c)(4) 24 of the Internal Revenue Code of 1986, ex- 25 VerDate Sep 11 2014 04:00 Apr 01, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S551.IS S551 pbinns on DSKJLVW7X2PROD with BILLS 3 •S 551 IS cept that subparagraph (A) of such section 1 shall be applied by substituting ‘quarter’ 2 for ‘month’) during the calendar quarter 3 for which the credit is determined under 4 subsection (a), 5 ‘‘(iii) did not have gross receipts (as 6 determined under the rules of section 7 448(c)(3) of such Code, without regard to 8 subparagraph (A) thereof) in excess of 9 $25,000 for any taxable year preceding the 10 5-taxable-year period ending with the tax- 11 able year preceding such quarter, and 12 ‘‘(iv) elected to have this paragraph 13 apply for such quarter. 14 ‘‘(B) PHASEOUT OF CREDIT.—In the case 15 of any recovery startup business, the amount of 16 the credit allowed under subsection (a) for any 17 calendar quarter (as determined without regard 18 to this subparagraph) shall be reduced (but not 19 below zero) by an amount equal to 1 percent of 20 the amount of such credit for each $40,000 (or 21 fraction thereof) by which the gross receipts (as 22 determined under the rules of section 448(c)(3) 23 of the Internal Revenue Code of 1986, without 24 regard to subparagraph (A) thereof) of such 25 VerDate Sep 11 2014 04:00 Apr 01, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S551.IS S551 pbinns on DSKJLVW7X2PROD with BILLS 4 •S 551 IS business for the last taxable year ending before 1 such quarter exceeds $1,000,000. 2 ‘‘(C) EXTENSIONS AND MODIFICATIONS.— 3 ‘‘(i) LIMITATION ON NUMBER OF EM- 4 PLOYEES.—In the case of a recovery start- 5 up business, the amount of qualified wages 6 which may be taken into account under 7 subsection (a) by such employer for any 8 calendar quarter shall not exceed $50,000. 9 ‘‘(ii) LIMITATION ON NUMBER OF 10 QUARTERS.— 11 ‘‘(I) IN GENERAL.—Subject to 12 subclause (II), in the case of a recov- 13 ery startup business, the credit al- 14 lowed under subsection (a) shall only 15 apply to wages paid during any period 16 of 2 consecutive calendar quarters (as 17 elected by such business), as reduced 18 by the total number of calendar quar- 19 ters in which the recovery startup 20 business— 21 ‘‘(aa) claimed the credit 22 under this section, and 23 VerDate Sep 11 2014 04:00 Apr 01, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S551.IS S551 pbinns on DSKJLVW7X2PROD with BILLS 5 •S 551 IS ‘‘(bb) did not make an elec- 1 tion described in subparagraph 2 (A)(iv). 3 ‘‘(II) EXCLUSION.—The period 4 described in subclause (I) shall not in- 5 clude any calendar quarter which ends 6 before the later of— 7 ‘‘(aa) the date of enactment 8 of the Recovery Startup Assist- 9 ance Act, or 10 ‘‘(bb) the date on which 11 such business began operations. 12 ‘‘(iii) EXTENSION.—In the case of a 13 recovery startup business, subsection (m) 14 shall be applied by substituting ‘January 15 1, 2022’ for ‘July 1, 2021’.’’, 16 (2) in subsection (j)(2), by adding at the end 17 the following: 18 ‘‘(D) RECOVERY STARTUP BUSINESS.— 19 Without regard to subparagraphs (A) through 20 (C), under rules provided by the Secretary, a 21 recovery startup business may elect for any cal- 22 endar quarter to receive an advance payment of 23 the credit under subsection (a) (after applica- 24 VerDate Sep 11 2014 04:00 Apr 01, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S551.IS S551 pbinns on DSKJLVW7X2PROD with BILLS 6 •S 551 IS tion of subsection (c)(6)) for such quarter.’’, 1 and 2 (3) in subsection (l)— 3 (A) in paragraph (2), by striking ‘‘and’’ at 4 the end, 5 (B) in paragraph (3), by striking the pe- 6 riod at the end and inserting ‘‘, and’’, and 7 (C) by inserting after paragraph (3) the 8 following: 9 ‘‘(4) to prevent fraudulent and abusive claims 10 of the credit allowed under subsection (a) by recov- 11 ery startup businesses.’’. 12 (b) EFFECTIVE DATE.—The amendments made by 13 this section shall apply to calendar quarters beginning 14 after December 31, 2020. 15 Æ VerDate Sep 11 2014 04:00 Apr 01, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6301 E:\BILLS\S551.IS S551 pbinns on DSKJLVW7X2PROD with BILLS