Corporate Freeloader Fee Act

II 116TH CONGRESS 1ST SESSION S. 219 To amend the Internal Revenue Code of 1986 to impose an excise tax on employers with low-wage employees. IN THE SENATE OF THE UNITED STATES JANUARY 24, 2019 Mr. BROWN (for himself and Mr. DURBIN) 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 impose an excise tax on employers with low-wage employees. 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 ‘‘Corporate Freeloader 4 Fee Act’’. 5 SEC. 2. IMPOSITION OF EXCISE TAX ON CORPORATIONS 6 WITH LOW-WAGE EMPLOYEES. 7 (a) IN GENERAL.—Subtitle D of the Internal Rev- 8 enue Code of 1986 is amended by adding after chapter 9 36 the following new chapter: 10 VerDate Sep 11 2014 01:03 Feb 01, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S219.IS S219 pamtmann on DSKBFK8HB2PROD with BILLS 2 •S 219 IS ‘‘CHAPTER 37—CORPORATE 1 RESPONSIBILITY TAX 2 ‘‘Sec. 4511. Imposition of tax. ‘‘SEC. 4511. IMPOSITION OF TAX. 3 ‘‘(a) IN GENERAL.—In the case of an applicable em- 4 ployer who employs a low-wage employee during the cal- 5 endar year, there is imposed a tax equal to the applicable 6 percentage of the aggregate amount of wages paid by the 7 applicable employer with respect to employment of all em- 8 ployees of the employer during the calendar year. 9 ‘‘(b) APPLICABLE EMPLOYER; LOW-WAGE EM- 10 PLOYEE.—For purposes of this section— 11 ‘‘(1) APPLICABLE EMPLOYER.— 12 ‘‘(A) IN GENERAL.—The term ‘applicable 13 employer’ means, with respect to any calendar 14 year, any employer who was required to make 15 deposits of taxes under chapters 21 and 24 (or 16 who would have been required to make such de- 17 posits if the rules of subparagraph (C) applied 18 for such purposes) by the close of the next day 19 for periods aggregating more than 180 days 20 during the preceding calendar year. 21 ‘‘(B) EXCEPTION.—Such term shall not in- 22 clude a Federal or other governmental entity or 23 VerDate Sep 11 2014 01:03 Feb 01, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S219.IS S219 pamtmann on DSKBFK8HB2PROD with BILLS 3 •S 219 IS a church or qualified church organization (as 1 such terms are defined in section 3121(w)(3)). 2 ‘‘(C) AGGREGATION RULES.—The rules of 3 subsections (b), (c), (m), and (o) of section 414 4 shall apply for purposes of this section, except 5 that in applying subsections (b) and (c) of such 6 section, the phrase ‘more than 50 percent’ shall 7 be substituted for the phrase ‘more than 80 8 percent’ each place it appears. 9 ‘‘(2) LOW-WAGE EMPLOYEE.— 10 ‘‘(A) IN GENERAL.—The term ‘low-wage 11 employee’ means any employee who receives 12 wages from an applicable employer during the 13 calendar year in an amount less than 218 per- 14 cent of the Federal poverty line (within the 15 meaning of section 2110(c)(5) of the Social Se- 16 curity Act) for an individual. Rules similar to 17 the rules of section 36B(d)(3)(B) shall apply 18 for purposes of this subparagraph. 19 ‘‘(B) EMPLOYEES EMPLOYED FOR LESS 20 THAN ENTIRE YEAR.—In the case of any em- 21 ployee employed by an applicable taxpayer for 22 less than the entire calendar year, the amount 23 described in subparagraph (A) shall be reduced 24 VerDate Sep 11 2014 01:03 Feb 01, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S219.IS S219 pamtmann on DSKBFK8HB2PROD with BILLS 4 •S 219 IS by an amount which bears the same ratio to 1 such amount as— 2 ‘‘(i) the number of weeks during the 3 calendar year in which such individual was 4 not an employee of such applicable em- 5 ployer, bears to 6 ‘‘(ii) 52. 7 ‘‘(c) APPLICABLE PERCENTAGE.—For purposes of 8 subsection (a)— 9 ‘‘(1) IN GENERAL.— 10 ‘‘(A) DETERMINATION.—The applicable 11 percentage shall be determined as follows: 12 ‘‘In the case of an applicable employer with a low-wage employee ratio of: The applicable percentage is: 25 percent or less ....................................................................... 25 percent Greater than 25 percent, but not greater than 50 percent ........ 50 percent Greater than 50 percent, but not greater than 75 percent ........ 75 percent Greater than 75 percent ............................................................. 100 percent. ‘‘(B) LOW-WAGE EMPLOYEE RATIO.—For 13 purposes of subparagraph (A), the low-wage 14 employee ratio with respect to any applicable 15 employer is the ratio (expressed as a percent- 16 age) of— 17 ‘‘(i) the number of low-wage employ- 18 ees employed by the applicable employer 19 during the calendar year, to 20 VerDate Sep 11 2014 01:03 Feb 01, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S219.IS S219 pamtmann on DSKBFK8HB2PROD with BILLS 5 •S 219 IS ‘‘(ii) the total number of individuals 1 employed by the applicable employer dur- 2 ing such calendar year. 3 ‘‘(2) HEALTH AND RETIREMENT OFFSET.— 4 ‘‘(A) IN GENERAL.—In the case of an ap- 5 plicable employer who meets the requirements 6 of subparagraph (B), the applicable percentage 7 shall be reduced (but not below zero) by 25 per- 8 centage points. 9 ‘‘(B) REQUIREMENTS.—An applicable em- 10 ployer meets the requirements of this subpara- 11 graph if such applicable employer— 12 ‘‘(i) offers to all full-time low-wage 13 employees (and their spouse and depend- 14 ents) the opportunity to enroll for all 15 months during the calendar year in min- 16 imum essential coverage under an eligible 17 employer sponsored health plan (as defined 18 in section 5000A(f)(2)) for which— 19 ‘‘(I) the plan’s share of the al- 20 lowed costs of benefits provided under 21 the plan is not less than 60 percent of 22 such costs, and 23 ‘‘(II) the required contribution 24 (within the meaning of section 25 VerDate Sep 11 2014 01:03 Feb 01, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S219.IS S219 pamtmann on DSKBFK8HB2PROD with BILLS 6 •S 219 IS 5000A(e)(1)(B)) of the employee does 1 not exceed the applicable percentage 2 of the annual wages paid to the em- 3 ployee by the applicable employer, and 4 ‘‘(ii) meets the retirement plan re- 5 quirements of subsection (d) for all em- 6 ployees who are low-wage employees. 7 For purposes of clause (i)(II), the applicable 8 percentage is the percentage in effect under 9 section 36B(b)(2)(B)(ii) for the plan year. 10 ‘‘(d) RETIREMENT PLAN REQUIREMENTS.— 11 ‘‘(1) IN GENERAL.—The requirements of this 12 subsection are met for any calendar year with re- 13 spect to an employee of the applicable employer who 14 is a low-wage employee if the employee is eligible to 15 participate in one or more applicable eligible retire- 16 ment plans maintained by the applicable employer 17 (or any member of the group of employers treated 18 as an applicable employer under subsection 19 (b)(1)(C)) for a plan year ending with or within the 20 calendar year. 21 ‘‘(2) APPLICABLE ELIGIBLE RETIREMENT 22 PLAN.—For purposes of this subsection, the term 23 ‘applicable eligible retirement plan’ means an eligible 24 VerDate Sep 11 2014 01:03 Feb 01, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S219.IS S219 pamtmann on DSKBFK8HB2PROD with BILLS 7 •S 219 IS retirement plan which, with respect to the plan year 1 described in paragraph (1), is either— 2 ‘‘(A) a defined contribution plan which re- 3 quires the employer to make nonelective con- 4 tributions of at least 5 percent of the com- 5 pensation of the employee, or 6 ‘‘(B) a defined benefit plan— 7 ‘‘(i) with respect to which the accrued 8 benefit of the employee derived from em- 9 ployer contributions, when expressed as an 10 annual retirement benefit, is not less than 11 the product of— 12 ‘‘(I) the lesser of 2 percent multi- 13 plied by the employee’s years of serv- 14 ice (determined under the rules of 15 paragraphs (4), (5), and (6) of section 16 411(a)) with the employer or 20 per- 17 cent, multiplied by 18 ‘‘(II) the employee’s final average 19 pay, or 20 ‘‘(ii) which is an applicable defined 21 benefit plan (as defined in section 22 411(a)(13)(B))— 23 ‘‘(I) which meets the interest 24 credit requirements of section 25 VerDate Sep 11 2014 01:03 Feb 01, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S219.IS S219 pamtmann on DSKBFK8HB2PROD with BILLS 8 •S 219 IS 411(b)(5)(B)(i) with respect to the 1 plan year, and 2 ‘‘(II) under which the employee 3 receives a pay credit for the plan year 4 which is not less than 5 percent of 5 compensation. 6 ‘‘(3) DEFINITIONS AND SPECIAL RULES.—For 7 purposes of this subsection— 8 ‘‘(A) ELIGIBLE RETIREMENT PLAN.—The 9 term ‘eligible retirement plan’ has the meaning 10 given such term by section 402(c)(8)(B), except 11 that in the case of an account or annuity de- 12 scribed in clause (i) or (ii) thereof, such term 13 shall only include an account or annuity which 14 is a simplified employee pension (as defined in 15 section 408(k)). 16 ‘‘(B) FINAL AVERAGE PAY.—For purposes 17 of paragraph (2)(B)(i)(II), final average pay 18 shall be determined using the period of consecu- 19 tive years (not exceeding 5) during which the 20 employee had the greatest compensation from 21 the applicable employer. 22 ‘‘(C) ALTERNATIVE PLAN DESIGNS.—The 23 Secretary may prescribe regulations for an ap- 24 plicable employer to meet the requirements of 25 VerDate Sep 11 2014 01:03 Feb 01, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S219.IS S219 pamtmann on DSKBFK8HB2PROD with BILLS 9 •S 219 IS this subsection through a combination of de- 1 fined contribution plans or defined benefit plans 2 described in paragraph (1) or through a com- 3 bination of both such types of plans. 4 ‘‘(D) PLANS MUST MEET REQUIREMENTS 5 WITHOUT TAKING INTO ACCOUNT SOCIAL SECU- 6 RITY AND SIMILAR CONTRIBUTIONS AND BENE- 7 FITS.—A rule similar to the rule of section 8 416(e) shall apply. 9 ‘‘(E) CERTAIN EMPLOYEES MAY BE EX- 10 CLUDED.—For purposes of paragraph 11 (2)(B)(ii), an employer shall not be treated as 12 failing to meet the requirements of this sub- 13 section with respect to employees— 14 ‘‘(i) who have not attained the age of 15 21 before the close of a plan year, 16 ‘‘(ii) who have less than 1 year of 17 service with the employer as of any day 18 during the plan year, 19 ‘‘(iii) who are covered under an agree- 20 ment which the Secretary of Labor finds to 21 be a collective bargaining agreement if 22 there is evidence that the benefits covered 23 under the plan were the subject of good 24 VerDate Sep 11 2014 01:03 Feb 01, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S219.IS S219 pamtmann on DSKBFK8HB2PROD with BILLS 10 •S 219 IS faith bargaining between employee rep- 1 resentatives and the employer, or 2 ‘‘(iv) who are described in section 3 410(b)(3)(C) (relating to nonresident 4 aliens working outside the United States). 5 ‘‘(e) DEFINITIONS AND SPECIAL RULES.—For pur- 6 poses of this section— 7 ‘‘(1) WAGES.—The term ‘wages’ has the mean- 8 ing given such term by section 3121(a) (determined 9 without regard to any dollar limitation contained in 10 such section). 11 ‘‘(2) ALLOCATION OF TAX.—The Secretary 12 shall prescribe such rules as necessary for the alloca- 13 tion of the tax imposed by subsection (a) among dif- 14 ferent entities treated as a single employer under 15 subsection (b)(1)(C).’’. 16 (b) CONFORMING AMENDMENT.—The table of chap- 17 ters of the Internal Revenue Code of 1986 is amended by 18 inserting after the item relating to chapter 36 the fol- 19 lowing new item: 20 ‘‘CHAPTER 37—CORPORATE RESPONSIBILITY TAX’’. (c) EFFECTIVE DATE.—The amendments made by 21 this section shall apply to calendar years beginning after 22 the date of the enactment of this Act. 23 Æ VerDate Sep 11 2014 01:03 Feb 01, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6301 E:\BILLS\S219.IS S219 pamtmann on DSKBFK8HB2PROD with BILLS