II 116TH CONGRESS 1ST SESSION S. 223 To amend the Internal Revenue Code of 1986 to provide a tax credit to Patriot employers, and for other purposes. IN THE SENATE OF THE UNITED STATES JANUARY 24, 2019 Mr. DURBIN (for himself and Mr. BROWN) 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 provide a tax credit to Patriot employers, and for other purposes. 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 ‘‘Patriot Employer Tax 4 Credit Act’’. 5 SEC. 2. PATRIOT EMPLOYER TAX CREDIT. 6 (a) IN GENERAL.—Subpart D of part IV of sub- 7 chapter A of chapter 1 of the Internal Revenue Code of 8 1986 is amended by adding at the end the following new 9 section: 10 VerDate Sep 11 2014 01:04 Feb 01, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S223.IS S223 pamtmann on DSKBFK8HB2PROD with BILLS 2 •S 223 IS ‘‘SEC. 45T. PATRIOT EMPLOYER TAX CREDIT. 1 ‘‘(a) DETERMINATION OF AMOUNT.— 2 ‘‘(1) IN GENERAL.—For purposes of section 38, 3 the Patriot employer credit determined under this 4 section with respect to any taxpayer who is a Patriot 5 employer for any taxable year shall be equal to 10 6 percent of the qualified wages paid or incurred by 7 the Patriot employer. 8 ‘‘(2) LIMITATION.—The amount of qualified 9 wages which may be taken into account under para- 10 graph (1) with respect to any employee for any tax- 11 able year shall not exceed $15,000. 12 ‘‘(b) PATRIOT EMPLOYER.— 13 ‘‘(1) IN GENERAL.—For purposes of subsection 14 (a), the term ‘Patriot employer’ means, with respect 15 to any taxable year, any taxpayer— 16 ‘‘(A) which— 17 ‘‘(i) maintains its headquarters in the 18 United States if the taxpayer (or any pred- 19 ecessor) has ever been headquartered in 20 the United States, and 21 ‘‘(ii) is not (and no predecessor of 22 which is) an expatriated entity (as defined 23 in section 7874(a)(2)) for the taxable year 24 or any preceding taxable year ending after 25 March 4, 2003, 26 VerDate Sep 11 2014 01:04 Feb 01, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S223.IS S223 pamtmann on DSKBFK8HB2PROD with BILLS 3 •S 223 IS ‘‘(B) with respect to which no assessable 1 payment has been imposed under section 2 4980H with respect to any month occurring 3 during the taxable year, 4 ‘‘(C) provides employees with— 5 ‘‘(i) paid sick leave, or 6 ‘‘(ii) paid family and medical leave, 7 and 8 ‘‘(D) in the case of— 9 ‘‘(i) a taxpayer which employs an av- 10 erage of more than 50 employees on busi- 11 ness days during the taxable year, which— 12 ‘‘(I) provides compensation for at 13 least 90 percent of its employees for 14 services provided by such employees 15 during the taxable year at an hourly 16 rate (or equivalent thereof) not less 17 than an amount equal to 218 percent 18 of the Federal poverty level for an in- 19 dividual for the calendar year in which 20 the taxable year begins divided by 21 1,750, 22 ‘‘(II) meets the retirement plan 23 requirements of subsection (c) with 24 respect to at least 90 percent of its 25 VerDate Sep 11 2014 01:04 Feb 01, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S223.IS S223 pamtmann on DSKBFK8HB2PROD with BILLS 4 •S 223 IS employees providing services during 1 the taxable year who are not highly 2 compensated employees, and 3 ‘‘(III) meets the additional re- 4 quirements of subparagraphs (A) and 5 (B) of paragraph (2), or 6 ‘‘(ii) any other taxpayer, which meets 7 the requirements of either subclause (I) or 8 (II) of clause (i) for the taxable year. 9 ‘‘(2) ADDITIONAL REQUIREMENTS FOR LARGE 10 EMPLOYERS.— 11 ‘‘(A) UNITED STATES EMPLOYMENT.—The 12 requirements of this subparagraph are met for 13 any taxable year if— 14 ‘‘(i) in any case in which the taxpayer 15 increases the number of employees per- 16 forming substantially all of their services 17 for the taxable year outside the United 18 States, the taxpayer either— 19 ‘‘(I) increases the number of em- 20 ployees performing substantially all of 21 their services inside the United States 22 by an amount not less than the in- 23 crease in such number for employees 24 outside the United States, or 25 VerDate Sep 11 2014 01:04 Feb 01, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S223.IS S223 pamtmann on DSKBFK8HB2PROD with BILLS 5 •S 223 IS ‘‘(II) has a percentage increase 1 in such employees inside the United 2 States which is not less than the per- 3 centage increase in such employees 4 outside the United States, 5 ‘‘(ii) in any case in which the taxpayer 6 decreases the number of employees per- 7 forming substantially all of their services 8 for the taxable year inside the United 9 States, the taxpayer either— 10 ‘‘(I) decreases the number of em- 11 ployees performing substantially all of 12 their services outside the United 13 States by an amount not less than the 14 decrease in such number for employ- 15 ees inside the United States, or 16 ‘‘(II) has a percentage decrease 17 in employees outside the United 18 States which is not less than the per- 19 centage decrease in such employees 20 inside the United States, and 21 ‘‘(iii) there is not a decrease in the 22 number of employees performing substan- 23 tially all of their services for the taxable 24 year inside the United States by reason of 25 VerDate Sep 11 2014 01:04 Feb 01, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S223.IS S223 pamtmann on DSKBFK8HB2PROD with BILLS 6 •S 223 IS the taxpayer contracting out such services 1 to persons who are not employees of the 2 taxpayer. 3 ‘‘(B) TREATMENT OF INDIVIDUALS IN THE 4 UNIFORMED SERVICES AND THE DISABLED.— 5 The requirements of this subparagraph are met 6 for any taxable year if— 7 ‘‘(i) the taxpayer provides differential 8 wage payments (as defined in section 9 3401(h)(2)) to each employee described in 10 section 3401(h)(2)(A) for any period dur- 11 ing the taxable year in an amount not less 12 than the difference between the wages 13 which would have been received from the 14 employer during such period and the 15 amount of pay and allowances which the 16 employee receives for service in the uni- 17 formed services during such period, and 18 ‘‘(ii) the taxpayer has in place at all 19 times during the taxable year a written 20 policy for the recruitment of employees 21 who have served in the uniformed services 22 or who are disabled. 23 VerDate Sep 11 2014 01:04 Feb 01, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S223.IS S223 pamtmann on DSKBFK8HB2PROD with BILLS 7 •S 223 IS ‘‘(3) SPECIAL RULES FOR APPLYING THE MIN- 1 IMUM WAGE AND RETIREMENT PLAN REQUIRE- 2 MENTS.— 3 ‘‘(A) MINIMUM WAGE.—In determining 4 whether the minimum wage requirements of 5 paragraph (1)(D)(i)(I) are met with respect to 6 90 percent of a taxpayer’s employees for any 7 taxable year— 8 ‘‘(i) a taxpayer may elect to exclude 9 from such determination apprentices or 10 learners that an employer may exclude 11 under the regulations under section 14(a) 12 of the Fair Labor Standards Act of 1938, 13 and 14 ‘‘(ii) if a taxpayer meets the require- 15 ments of paragraph (2)(B)(i) with respect 16 to providing differential wage payments to 17 any employee for any period (without re- 18 gard to whether such requirements apply 19 to the taxpayer), the hourly rate (or equiv- 20 alent thereof) for such payments shall be 21 determined on the basis of the wages which 22 would have been paid by the employer dur- 23 ing such period if the employee had not 24 VerDate Sep 11 2014 01:04 Feb 01, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S223.IS S223 pamtmann on DSKBFK8HB2PROD with BILLS 8 •S 223 IS been providing service in the uniformed 1 services. 2 ‘‘(B) RETIREMENT PLAN.—In determining 3 whether the retirement plan requirements of 4 paragraph (1)(D)(i)(II) are met with respect to 5 90 percent of a taxpayer’s employees for any 6 taxable year, a taxpayer may elect to exclude 7 from such determination— 8 ‘‘(i) employees not meeting the age or 9 service requirements under section 10 410(a)(1) (or such lower age or service re- 11 quirements as the employer provides), and 12 ‘‘(ii) employees described in section 13 410(b)(3). 14 ‘‘(c) RETIREMENT PLAN REQUIREMENTS.— 15 ‘‘(1) IN GENERAL.—The requirements of this 16 subsection are met for any taxable year with respect 17 to an employee of the taxpayer who is not a highly 18 compensated employee if the employee is eligible to 19 participate in 1 or more applicable eligible retire- 20 ment plans maintained by the employer for a plan 21 year ending with or within the taxable year. 22 ‘‘(2) APPLICABLE ELIGIBLE RETIREMENT 23 PLAN.—For purposes of this subsection, the term 24 ‘applicable eligible retirement plan’ means an eligible 25 VerDate Sep 11 2014 01:04 Feb 01, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S223.IS S223 pamtmann on DSKBFK8HB2PROD with BILLS 9 •S 223 IS retirement plan which, with respect to the plan year 1 described in paragraph (1), is either— 2 ‘‘(A) a defined contribution plan which— 3 ‘‘(i) requires the employer to make 4 nonelective contributions of at least 5 per- 5 cent of the compensation of the employee, 6 or 7 ‘‘(ii) both— 8 ‘‘(I) includes an eligible auto- 9 matic contribution arrangement (as 10 defined in section 414(w)(3)) under 11 which the uniform percentage de- 12 scribed in section 414(w)(3)(B) is at 13 least 5 percent, and 14 ‘‘(II) requires the employer to 15 make matching contributions of 100 16 percent of the elective deferrals (as 17 defined in section 414(u)(2)(C)) of 18 the employee to the extent such defer- 19 rals do not exceed the percentage 20 specified by the plan (not less than 5 21 percent) of the employee’s compensa- 22 tion, or 23 ‘‘(B) a defined benefit plan— 24 VerDate Sep 11 2014 01:04 Feb 01, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S223.IS S223 pamtmann on DSKBFK8HB2PROD with BILLS 10 •S 223 IS ‘‘(i) with respect to which the accrued 1 benefit of the employee derived from em- 2 ployer contributions, when expressed as an 3 annual retirement benefit, is not less than 4 the product of— 5 ‘‘(I) the lesser of 2 percent multi- 6 plied by the employee’s years of serv- 7 ice (determined under the rules of 8 paragraphs (4), (5), and (6) of section 9 411(a)) with the employer or 20 per- 10 cent, multiplied by 11 ‘‘(II) the employee’s final average 12 pay, or 13 ‘‘(ii) which is an applicable defined 14 benefit plan (as defined in section 15 411(a)(13)(C))— 16 ‘‘(I) which meets the interest 17 credit requirements of section 18 411(b)(5)(B)(i) with respect to the 19 plan year, and 20 ‘‘(II) under which the employee 21 receives a pay credit for the plan year 22 which is not less than 5 percent of 23 compensation. 24 VerDate Sep 11 2014 01:04 Feb 01, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S223.IS S223 pamtmann on DSKBFK8HB2PROD with BILLS 11 •S 223 IS ‘‘(3) DEFINITIONS AND SPECIAL RULES.—For 1 purposes of this subsection— 2 ‘‘(A) ELIGIBLE RETIREMENT PLAN.—The 3 term ‘eligible retirement plan’ has the meaning 4 given such term by section 402(c)(8)(B), except 5 that in the case of an account or annuity de- 6 scribed in clause (i) or (ii) thereof, such term 7 shall only include an account or annuity which 8 is a simplified employee pension (as defined in 9 section 408(k)). 10 ‘‘(B) FINAL AVERAGE PAY.—For purposes 11 of paragraph (2)(B)(i)(II), final average pay 12 shall be determined using the period of consecu- 13 tive years (not exceeding 5) during which the 14 employee had the greatest compensation from 15 the taxpayer. 16 ‘‘(C) ALTERNATIVE PLAN DESIGNS.—The 17 Secretary may prescribe regulations for a tax- 18 payer to meet the requirements of this sub- 19 section through a combination of defined con- 20 tribution plans or defined benefit plans de- 21 scribed in paragraph (1) or through a combina- 22 tion of both such types of plans. 23 ‘‘(D) PLANS MUST MEET REQUIREMENTS 24 WITHOUT TAKING INTO ACCOUNT SOCIAL SECU- 25 VerDate Sep 11 2014 01:04 Feb 01, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S223.IS S223 pamtmann on DSKBFK8HB2PROD with BILLS 12 •S 223 IS RITY AND SIMILAR CONTRIBUTIONS AND BENE- 1 FITS.—A rule similar to the rule of section 2 416(e) shall apply. 3 ‘‘(d) QUALIFIED WAGES AND COMPENSATION.—For 4 purposes of this section— 5 ‘‘(1) IN GENERAL.—The term ‘qualified wages’ 6 means wages (as defined in section 51(c), deter- 7 mined without regard to paragraph (4) thereof) paid 8 or incurred by the Patriot employer during the tax- 9 able year to employees— 10 ‘‘(A) who perform substantially all of their 11 services for such Patriot employer inside the 12 United States, and 13 ‘‘(B) with respect to whom— 14 ‘‘(i) in the case of a Patriot employer 15 which employs an average of more than 50 16 employees on business days during the tax- 17 able year, the requirements of subclauses 18 (I) and (II) of subsection (b)(1)(D)(i) are 19 met, and 20 ‘‘(ii) in the case of any other Patriot 21 employer, the requirements of either sub- 22 clause (I) or (II) of subsection (b)(1)(D)(i) 23 are met. 24 VerDate Sep 11 2014 01:04 Feb 01, 2019 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S223.IS S223 pamtmann on DSKBFK8HB2PROD with BILLS 13 •S 223 IS ‘‘(2) SPECIAL RULES FOR AGRICULTURAL 1 LABOR AND RAILWAY LABOR.—Rules similar to the 2 rules of section 51(h) shall apply. 3 ‘‘(3) COMPENSATION.—For purposes of sub- 4 sections (b)(1)(D)(i)(I) and (c), the term ‘compensa- 5 tion’ has the same meaning as qualified wages, ex- 6 cept that section 51(c)(2) shall be disregarded in de- 7 termining the amount of such wages. 8 ‘‘(e) AGGREGATION RULES.—For purposes of this 9 section— 10 ‘‘(1) IN GENERAL.—All persons treated as a 11 single employer under subsection (a) or (b) of sec- 12 tion 52 shall be treated as a single taxpayer. 13 ‘‘(2) SPECIAL RULES FOR CERTAIN REQUIRE- 14 MENTS.—For purposes of applying paragraphs 15 (1)(A) and (2)(A) of subsection (b)— 16 ‘‘(A) the determination under subsections 17 (a) and (b) of section 52 for purposes of para- 18 graph (1) shall be made without regard to sec- 19 tion 1563(b)(2)(C) (relating to exclusion of for- 20 eign corporations), and 21 ‘‘(B) if any person treated as a single tax- 22 payer under this subsection (after application of 23 subparagraph (A)), or any predecessor of such 24 person, was an expatriated entity (as defined in 25 VerDate Sep 11 2014 01:04 Feb 01, 2019 Jkt 089200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6201 E:\BILLS\S223.IS S223 pamtmann on DSKBFK8HB2PROD [Text truncated for display. 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