RECRUIT Act of 2021

I 117TH CONGRESS 1ST SESSION H. R. 1854 To amend the Internal Revenue Code of 1986 to allow for a credit against tax for employers of reservists. IN THE HOUSE OF REPRESENTATIVES MARCH 11, 2021 Mr. RYAN (for himself, Mr. PALAZZO, Ms. SPANBERGER, Mr. KELLY of Mis- sissippi, Mr. KILMER, Mrs. BUSTOS, Mrs. RADEWAGEN, Mr. MOORE of Utah, Mr. STAUBER, Mr. CROW, and Ms. STEFANIK) introduced the fol- lowing bill; which was referred to the Committee on Ways and Means A BILL 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 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 ‘‘Reserve Employers 4 Comprehensive Relief and Uniform Incentives on Taxes 5 Act of 2021’’ or as the ‘‘RECRUIT Act of 2021’’. 6 SEC. 2. RESERVIST EMPLOYMENT CREDIT. 7 (a) ALLOWANCE OF CREDIT.—Subpart D of part IV 8 of subchapter A of chapter 1 of the Internal Revenue Code 9 VerDate Sep 11 2014 20:58 May 03, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H1854.IH H1854 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 1854 IH of 1986 is amended by adding at the end the following 1 new section: 2 ‘‘SEC. 45U. RESERVIST EMPLOYMENT CREDIT. 3 ‘‘(a) ESTABLISHMENT OF CREDIT.—For purposes of 4 section 38, in the case of an eligible employer, the reservist 5 employment credit for any taxable year is an amount equal 6 to 40 percent of the wages paid or incurred to qualified 7 reservists by such employer during such taxable year. 8 ‘‘(b) LIMITATION.— 9 ‘‘(1) IN GENERAL.—The reservist employment 10 credit determined under subsection (a), with respect 11 to any qualified reservist for any taxable year, shall 12 not exceed the reservist credit amount. 13 ‘‘(2) RESERVIST CREDIT AMOUNT.—For pur- 14 poses of this section, the term ‘reservist credit 15 amount’ means, with respect to a qualified reservist 16 for a taxable year, an amount equal to the sum of— 17 ‘‘(A) $1,000, plus 18 ‘‘(B) in the case of a qualified reservist— 19 ‘‘(i) with 30 or more days, and fewer 20 than 90 days, of service in the uniformed 21 services during such year, $3,000, 22 ‘‘(ii) with 90 or more days, and fewer 23 than 180 days, of service in the uniformed 24 services during such year, $5,000, and 25 VerDate Sep 11 2014 20:58 May 03, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1854.IH H1854 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 1854 IH ‘‘(iii) with 180 or more days of service 1 in the uniformed services during such year, 2 $10,000. 3 ‘‘(3) DAYS OF SERVICE.—For purposes of para- 4 graph (2), any day of service— 5 ‘‘(A) shall not be taken into account if 6 such day constitutes regularly scheduled unit 7 training or annual training, and 8 ‘‘(B) shall only be taken into account with 9 respect to a qualified reservist employed by an 10 eligible employer to the extent such days are 11 during a period of employment of such reservist 12 by such employer. 13 ‘‘(4) QUALIFIED RESERVIST.—The term ‘quali- 14 fied reservist’ means, with respect to a taxable year, 15 an individual who is, at any time during such tax- 16 able year, a member of the National Guard or a re- 17 serve component of the Armed Forces, as named in 18 section 10101 of title 10, United States Code (ex- 19 cept for a member of the Individual Ready Reserve). 20 ‘‘(5) OTHER DEFINITIONS.—The term ‘reserve 21 component’ has the meanings given such term in 22 section 101 of title 10, United States Code. The 23 term ‘National Guard’ has the meaning given such 24 term in section 101(3) of title 32, United States 25 VerDate Sep 11 2014 20:58 May 03, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1854.IH H1854 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 1854 IH Code. The term ‘service in the uniformed services’ 1 has the meaning given such term in section 4303 of 2 title 38, United States Code. 3 ‘‘(c) ELIGIBLE EMPLOYER.—For purposes of this 4 section, the term ‘eligible employer’ means any employer 5 which has an average of less than 500 employees employed 6 on business days during the taxable year. 7 ‘‘(d) AGGREGATION RULE.—All persons treated as a 8 single employer under subsection (b), (c), (m), or (o) of 9 section 414 shall be treated as 1 employer for purposes 10 of this section. 11 ‘‘(e) ELECTION TO HAVE CREDIT NOT APPLY.— 12 ‘‘(1) IN GENERAL.—A taxpayer may elect to 13 have this section not apply for any taxable year. 14 ‘‘(2) OTHER RULES.—Rules similar to the rules 15 of paragraphs (2) and (3) of section 51(j) shall 16 apply for purposes of this subsection. 17 ‘‘(f) ELECTION TO TREAT CREDIT AS PAYROLL TAX 18 CREDIT.— 19 ‘‘(1) IN GENERAL.—At the election of an eligi- 20 ble employer for any taxable year, section 3111(g) 21 shall apply to the payroll tax credit portion of the 22 credit otherwise determined under subsection (a) for 23 the taxable year and such portion shall not be treat- 24 VerDate Sep 11 2014 20:58 May 03, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1854.IH H1854 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 1854 IH ed (other than for purposes of section 280C) as a 1 credit determined under subsection (a). 2 ‘‘(2) PAYROLL TAX CREDIT PORTION.—For 3 purposes of this subsection, the term ‘payroll tax 4 credit portion’ means the lesser of— 5 ‘‘(A) the amount specified in the election 6 made under this subsection, or 7 ‘‘(B) the amount of the credit otherwise 8 determined under subsection (a) for the taxable 9 year. 10 ‘‘(3) ELECTION.—Any election under this sub- 11 section for any taxable year— 12 ‘‘(A) shall specify the amount of the credit 13 to which such election applies, 14 ‘‘(B) shall be made on or before the due 15 date (including extensions) of— 16 ‘‘(i) in the case of an eligible employer 17 which is a partnership, the return required 18 to be filed under section 6031, 19 ‘‘(ii) in the case of an eligible em- 20 ployer which is an S corporation, the re- 21 turn required to be filed under section 22 6037, and 23 VerDate Sep 11 2014 20:58 May 03, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H1854.IH H1854 pamtmann on DSKBC07HB2PROD with BILLS 6 •HR 1854 IH ‘‘(iii) in the case of any other eligible 1 employer, the return of tax for the taxable 2 year, and 3 ‘‘(C) may be revoked only with the consent 4 of the Secretary.’’. 5 (b) CREDIT PART OF GENERAL BUSINESS CREDIT.— 6 Section 38(b) of the Internal Revenue Code of 1986 is 7 amended by striking ‘‘plus’’ at the end of paragraph (32), 8 by striking the period at the end of paragraph (33) and 9 inserting ‘‘, plus’’, and by adding at the end the following 10 new paragraph: 11 ‘‘(34) in the case of an eligible employer (as de- 12 fined in section 45U(c)), the reservist employment 13 credit determined under section 45U(a).’’. 14 (c) CREDIT ALLOWED AGAINST AMT.—Subpara- 15 graph (B) of section 38(c)(4) of the Internal Revenue 16 Code of 1986 is amended by redesignating clauses (x) 17 through (xii) as clauses (xi) through (xiii), respectively, 18 and by inserting after clause (ix) the following new clause: 19 ‘‘(x) the credit determined under sec- 20 tion 45U,’’. 21 (d) PAYROLL TAX CREDIT.—Section 3111 of the In- 22 ternal Revenue Code of 1986 is amended by adding at the 23 end the following new subsection: 24 ‘‘(g) RESERVIST EMPLOYMENT CREDIT.— 25 VerDate Sep 11 2014 20:58 May 03, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H1854.IH H1854 pamtmann on DSKBC07HB2PROD with BILLS 7 •HR 1854 IH ‘‘(1) IN GENERAL.—In the case of a taxpayer 1 which has made an election under section 45U(f) for 2 a taxable year, there shall be allowed as a credit 3 against the tax imposed by subsection (a) for the 4 first calendar quarter which begins after the date on 5 which the taxpayer files the return specified in sec- 6 tion 45U(f)(3)(B) an amount equal to the payroll 7 tax credit portion determined under section 8 45U(f)(2). 9 ‘‘(2) LIMITATION.— 10 ‘‘(A) IN GENERAL.—The credit allowed by 11 paragraph (1) shall not exceed the tax imposed 12 by subsection (a) for any calendar quarter on 13 the wages paid with respect to the employment 14 of all individuals in the employ of the employer. 15 The limitation imposed by the preceding sen- 16 tence shall be applied to appropriately take into 17 account any other credits allowed against such 18 tax in such manner as the Secretary may pro- 19 vide. 20 ‘‘(B) TEMPORARY REFUNDABILITY.—In 21 the case of any credit allowed by paragraph (1) 22 with respect to a payroll tax credit portion de- 23 termined for a taxable year beginning in 2021 24 or 2022, if the amount of such credit exceeds 25 VerDate Sep 11 2014 20:58 May 03, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H1854.IH H1854 pamtmann on DSKBC07HB2PROD with BILLS 8 •HR 1854 IH the limitation of subparagraph (A) for the cal- 1 endar quarter, such excess shall be treated as 2 an overpayment that shall be refunded under 3 sections 6402(a) and 6413(b) of such Code. 4 For purposes of section 1324 of title 31, United 5 States Code, any amounts due to an employer 6 under this subparagraph shall be treated in the 7 same manner as a refund due from a credit 8 provision referred to in subsection (b)(2) of 9 such section. 10 ‘‘(C) CARRYOVER.—In the case of any 11 credit allowed by paragraph (1) with respect to 12 a payroll tax credit portion determined for a 13 taxable year beginning after 2022, if the 14 amount of such credit exceeds the limitation of 15 subparagraph (A) for any calendar quarter, 16 such excess shall be carried to the succeeding 17 calendar quarter and allowed as a credit under 18 paragraph (1) for such quarter. 19 ‘‘(3) DEDUCTION ALLOWED FOR CREDITED 20 AMOUNTS.—The credit allowed under paragraph (1) 21 shall not be taken into account for purposes of de- 22 termining the amount of any deduction allowed 23 under chapter 1 for taxes imposed under subsection 24 (a).’’. 25 VerDate Sep 11 2014 20:58 May 03, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H1854.IH H1854 pamtmann on DSKBC07HB2PROD with BILLS 9 •HR 1854 IH (e) CONFORMING AMENDMENTS.— 1 (1) DENIAL OF DOUBLE BENEFIT.—Section 2 280C(a) of the Internal Revenue Code of 1986 is 3 amended by inserting ‘‘45U(a),’’ after ‘‘45S(a),’’. 4 (2) ELECTION TO HAVE CREDIT NOT APPLY.— 5 Section 6501(m) of the Internal Revenue Code of 6 1986 is amended by inserting ‘‘45U(d),’’ after 7 ‘‘45H(g),’’. 8 (3) CLERICAL AMENDMENT.—The table of sec- 9 tions for subpart D of part IV of subchapter A of 10 chapter 1 of the Internal Revenue Code of 1986 is 11 amended by adding at the end the following new 12 item: 13 ‘‘Sec. 45U. Reservist employment credit.’’. (f) EFFECTIVE DATE.—The amendments made by 14 this section shall apply to wages paid in taxable years be- 15 ginning after December 31, 2020. 16 Æ VerDate Sep 11 2014 20:58 May 03, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6301 E:\BILLS\H1854.IH H1854 pamtmann on DSKBC07HB2PROD with BILLS