Investing in American Workers Act

II 116TH CONGRESS 1ST SESSION S. 538 To amend the Internal Revenue Code of 1986 to provide a credit for employer-provided worker training. IN THE SENATE OF THE UNITED STATES FEBRUARY 25, 2019 Mr. WARNER (for himself, Ms. STABENOW, and Mr. CASEY) 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 credit for employer-provided worker training. 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 ‘‘Investing in American 4 Workers Act’’. 5 SEC. 2. EMPLOYER-PROVIDED WORKER TRAINING CREDIT. 6 (a) IN GENERAL.— 7 (1) DETERMINATION OF CREDIT.—Subpart D 8 of part IV of subchapter A of chapter 1 of the Inter- 9 VerDate Sep 11 2014 05:37 Mar 01, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S538.IS S538 kjohnson on DSK79L0C42 with BILLS 2 •S 538 IS nal Revenue Code of 1986 is amended by adding at 1 the end the following new section: 2 ‘‘SEC. 45T. EMPLOYER-PROVIDED WORKER TRAINING 3 CREDIT. 4 ‘‘(a) IN GENERAL.—For purposes of section 38, the 5 employer-provided worker training credit under this sec- 6 tion for the taxable year is an amount equal to 20 percent 7 of the excess (if any) of— 8 ‘‘(1) the qualified training expenditures for the 9 taxable year, over 10 ‘‘(2) the average of the adjusted qualified train- 11 ing expenditures for the 3 taxable years preceding 12 the taxable year for which the credit is being deter- 13 mined. 14 ‘‘(b) QUALIFIED TRAINING EXPENDITURES.—For 15 purposes of this section— 16 ‘‘(1) IN GENERAL.—The term ‘qualified train- 17 ing expenditures’ means any expenditures for the 18 qualified training of any non-highly compensated 19 employee. Such term shall not include any amounts 20 paid for meals, lodging, transportation, or other 21 services incidental to such qualified training. 22 ‘‘(2) QUALIFIED TRAINING.— 23 ‘‘(A) IN GENERAL.—For purposes of para- 24 graph (1), the term ‘qualified training’ means 25 VerDate Sep 11 2014 05:37 Mar 01, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S538.IS S538 kjohnson on DSK79L0C42 with BILLS 3 •S 538 IS training which results in the attainment of a 1 recognized postsecondary credential and which 2 is provided through— 3 ‘‘(i) an apprenticeship program reg- 4 istered under the Act of August 16, 1937 5 (commonly known as the ‘National Ap- 6 prenticeship Act’; 50 Stat. 664, chapter 7 663; 29 U.S.C. 50 et seq.); 8 ‘‘(ii)(I) a program of training services 9 which is listed under section 122(d) of the 10 Workforce Innovation and Opportunity Act 11 (29 U.S.C. 3152(d)); or 12 ‘‘(II) an apprenticeship program 13 which is registered or approved by a recog- 14 nized State apprenticeship agency (which 15 uses a State apprenticeship council) in ac- 16 cordance with section 1 of the Act referred 17 to in clause (i); 18 ‘‘(iii) a program which is conducted 19 by an area career and technical education 20 school, a community college, or a labor or- 21 ganization; or 22 ‘‘(iv) a program which is sponsored 23 and administered by an employer, industry 24 VerDate Sep 11 2014 05:37 Mar 01, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S538.IS S538 kjohnson on DSK79L0C42 with BILLS 4 •S 538 IS trade association, industry or sector part- 1 nership, or labor organization. 2 ‘‘(B) RELATED DEFINITIONS.—In sub- 3 paragraph (A): 4 ‘‘(i) AREA CAREER AND TECHNICAL 5 EDUCATION SCHOOL.—The term ‘area ca- 6 reer and technical education school’ means 7 such a school, as defined in section 3 of 8 the Carl D. Perkins Career and Technical 9 Education Act of 2006 (20 U.S.C. 2302), 10 which participates in a program under that 11 Act (20 U.S.C. 2301 et seq.). 12 ‘‘(ii) COMMUNITY COLLEGE.—The 13 term ‘community college’ means an institu- 14 tion which— 15 ‘‘(I) is a junior or community col- 16 lege as defined in section 312(f) of the 17 Higher Education Act of 1965 (20 18 U.S.C. 1058(f)), except that the insti- 19 tution need not meet the requirements 20 of paragraph (1) of that section; and 21 ‘‘(II) participates in a program 22 under title IV of that Act (20 U.S.C. 23 1070 et seq.). 24 VerDate Sep 11 2014 05:37 Mar 01, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S538.IS S538 kjohnson on DSK79L0C42 with BILLS 5 •S 538 IS ‘‘(iii) INDUSTRY OR SECTOR PARTNER- 1 SHIP.—The term ‘industry or sector part- 2 nership’ has the meaning given such term 3 under section 3 of the Workforce Innova- 4 tion and Opportunity Act (29 U.S.C. 5 3102). 6 ‘‘(iv) INDUSTRY TRADE ASSOCIA- 7 TION.—The term ‘industry trade associa- 8 tion’ means an organization which— 9 ‘‘(I) is described in paragraph (3) 10 or (6) of section 501(c) of the Inter- 11 nal Revenue Code of 1986 and exempt 12 from taxation under section 501(a) of 13 such Code; and 14 ‘‘(II) is representing an industry. 15 ‘‘(v) LABOR ORGANIZATION.—The 16 term ‘labor organization’ means a labor or- 17 ganization, within the meaning of the term 18 in section 501(c)(5) of the Internal Rev- 19 enue Code of 1986. 20 ‘‘(vi) RECOGNIZED POSTSECONDARY 21 CREDENTIAL.—The term ‘recognized post- 22 secondary credential’ means a credential 23 consisting of an industry-recognized certifi- 24 cate or certification, a certificate of com- 25 VerDate Sep 11 2014 05:37 Mar 01, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S538.IS S538 kjohnson on DSK79L0C42 with BILLS 6 •S 538 IS pletion of an apprenticeship, a license rec- 1 ognized by the State involved or Federal 2 Government, or an associate or bacca- 3 laureate degree. 4 ‘‘(3) NON-HIGHLY COMPENSATED EMPLOYEE.— 5 For purposes of paragraph (1), the term ‘non-highly 6 compensated employee’ means an employee of the 7 taxpayer whose remuneration for the taxable year 8 for services provided to the taxpayer does not exceed 9 $82,000. 10 ‘‘(c) ADJUSTED QUALIFIED TRAINING EXPENDI- 11 TURES.—For purposes of this section, the term ‘adjusted 12 qualified training expenses’ means, with respect to any 13 taxable year— 14 ‘‘(1) the qualified training expenses for such 15 taxable year, multiplied by 16 ‘‘(2) the cost-of-living adjustment determined 17 under section 1(f)(3) for the calendar year in which 18 the taxable year for which the credit is being deter- 19 mined begins, except that section 1(f)(3)(A)(ii) shall 20 be applied by using the CPI for the calendar year 21 in which the taxable year in which qualified training 22 expenses were paid or incurred begins in lieu of the 23 CPI for calendar year 1982. 24 VerDate Sep 11 2014 05:37 Mar 01, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S538.IS S538 kjohnson on DSK79L0C42 with BILLS 7 •S 538 IS ‘‘(d) SPECIAL RULES.—For purposes of this sec- 1 tion— 2 ‘‘(1) SPECIAL RULE IN CASE OF NO QUALIFIED 3 TRAINING EXPENDITURES IN ANY OF 3 PRECEDING 4 TAXABLE YEARS.— 5 ‘‘(A) TAXPAYERS TO WHICH PARAGRAPH 6 APPLIES.—The credit under this section shall 7 be determined under this paragraph if the tax- 8 payer has no qualified training expenditures in 9 any one of the 3 taxable years preceding the 10 taxable year for which the credit is being deter- 11 mined. 12 ‘‘(B) CREDIT RATE.—The credit deter- 13 mined under this paragraph shall be equal to 14 10 percent of the adjusted qualified training ex- 15 penditures for the taxable year. 16 ‘‘(2) AGGREGATION AND ALLOCATION OF EX- 17 PENDITURES, ETC.—Rules similar to the rules of 18 paragraphs (1), (2), (3), (4), and (5) of section 19 41(f) shall apply. 20 ‘‘(e) ELECTION TO APPLY CREDIT AGAINST PAY- 21 ROLL TAXES.— 22 ‘‘(1) IN GENERAL.—At the election of a quali- 23 fied small business or a qualified tax-exempt organi- 24 zation (as defined in section 3111(e)(5)(A)) for any 25 VerDate Sep 11 2014 05:37 Mar 01, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S538.IS S538 kjohnson on DSK79L0C42 with BILLS 8 •S 538 IS taxable year, section 3111(g) shall apply to the pay- 1 roll tax credit portion of the credit otherwise deter- 2 mined under subsection (a) for the taxable year and 3 such portion shall not be treated (other than for 4 purposes of section 280C) as a credit determined 5 under subsection (a). 6 ‘‘(2) PAYROLL TAX CREDIT PORTION.—For 7 purposes of this subsection, the payroll tax credit 8 portion of the credit determined under subsection 9 (a) with respect to any qualified small business or 10 qualified tax-exempt organization for any taxable 11 year is the least of— 12 ‘‘(A) the amount specified in the election 13 made under this subsection, 14 ‘‘(B) the credit determined under sub- 15 section (a) for the taxable year (determined be- 16 fore the application of this subsection), or 17 ‘‘(C) in the case of a qualified small busi- 18 ness other than a partnership or S corporation, 19 the amount of the business credit carryforward 20 under section 39 carried from the taxable year 21 (determined before the application of this sub- 22 section to the taxable year). 23 ‘‘(3) QUALIFIED SMALL BUSINESS.—For pur- 24 poses of this subsection— 25 VerDate Sep 11 2014 05:37 Mar 01, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S538.IS S538 kjohnson on DSK79L0C42 with BILLS 9 •S 538 IS ‘‘(A) IN GENERAL.—The term ‘qualified 1 small business’ means, with respect to any tax- 2 able year— 3 ‘‘(i) a corporation or partnership, if— 4 ‘‘(I) the gross receipts (as deter- 5 mined under the rules of section 6 448(c)(3), without regard to subpara- 7 graph (A) thereof) of such entity for 8 the taxable year is less than 9 $5,000,000, and 10 ‘‘(II) such entity did not have 11 gross receipts (as so determined) for 12 any taxable year preceding the 5-tax- 13 able-year period ending with such tax- 14 able year, and 15 ‘‘(ii) any person (other than a cor- 16 poration or partnership) who meets the re- 17 quirements of subclauses (I) and (II) of 18 clause (i), determined— 19 ‘‘(I) by substituting ‘person’ for 20 ‘entity’ each place it appears, and 21 ‘‘(II) by only taking into account 22 the aggregate gross receipts received 23 by such person in carrying on all 24 trades or businesses of such person. 25 VerDate Sep 11 2014 05:37 Mar 01, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S538.IS S538 kjohnson on DSK79L0C42 with BILLS 10 •S 538 IS ‘‘(B) LIMITATION.—Such term shall not 1 include an organization which is exempt from 2 taxation under section 501. 3 ‘‘(4) ELECTION.— 4 ‘‘(A) IN GENERAL.—Any election under 5 this subsection for any taxable year— 6 ‘‘(i) shall specify the amount of the 7 credit to which such election applies, 8 ‘‘(ii) shall be made on or before the 9 due date (including extensions) of— 10 ‘‘(I) in the case of a partnership, 11 the return required to be filed under 12 section 6031, 13 ‘‘(II) in the case of an S corpora- 14 tion, the return required to be filed 15 under section 6037, and 16 ‘‘(III) in the case of any other 17 qualified small business or qualified 18 tax-exempt organization, the return of 19 tax for the taxable year, and 20 ‘‘(iii) may be revoked only with the 21 consent of the Secretary. 22 ‘‘(B) LIMITATIONS.— 23 VerDate Sep 11 2014 05:37 Mar 01, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S538.IS S538 kjohnson on DSK79L0C42 with BILLS 11 •S 538 IS ‘‘(i) AMOUNT.—The amount specified 1 in any election made under this subsection 2 shall not exceed $250,000. 3 ‘‘(ii) NUMBER OF TAXABLE YEARS.— 4 A person may not make an election under 5 this subsection if such person (or any other 6 person treated as a single taxpayer with 7 such person under paragraph (5)(A)) has 8 made an election under this subsection for 9 five or more preceding taxable years. 10 ‘‘(C) SPECIAL RULE FOR PARTNERSHIPS 11 AND S CORPORATIONS.—In the case of a part- 12 nership or S corporation, the election made 13 under this subsection shall be made at the enti- 14 ty level. 15 ‘‘(5) AGGREGATION RULES.— 16 ‘‘(A) IN GENERAL.—Except as provided in 17 subparagraph (B)— 18 ‘‘(i) all members of the same con- 19 trolled group of corporations shall be treat- 20 ed as a single taxpayer, and 21 ‘‘(ii) all trades or businesses (whether 22 or not incorporated) which are under com- 23 mon control shall be treated as a single 24 taxpayer. 25 VerDate Sep 11 2014 05:37 Mar 01, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S538.IS S538 kjohnson on DSK79L0C42 with BILLS 12 •S 538 IS ‘‘(B) SPECIAL RULES.—For purposes of 1 this subsection and section 3111(g)— 2 ‘‘(i) each of the persons treated as a 3 single taxpayer under subparagraph (A) 4 may separately make the election under 5 paragraph (1) for any taxable year, and 6 ‘‘(ii) the $250,000 amount under 7 paragraph (3)(B)(i) shall be allocated 8 among all persons treated as a single tax- 9 payer under subparagraph (A) in the man- 10 ner provided by the Secretary which is 11 similar to the manner provided under sec- 12 tion 41(f)(1). 13 ‘‘(6) REGULATIONS.—The Secretary shall pre- 14 scribe such regulations as may be necessary to carry 15 out the purposes of this subsection, including— 16 ‘‘(A) regulations to prevent the avoidance 17 of the purposes of the limitations and aggrega- 18 tion rules under this subsection, 19 ‘‘(B) regulations to minimize compliance 20 and recordkeeping burdens under this sub- 21 section, and 22 ‘‘(C) regulations for recapturing the ben- 23 efit of credits determined under section 3111(g) 24 in cases where there is a recapture or a subse- 25 VerDate Sep 11 2014 05:37 Mar 01, 2019 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S538.IS S538 kjohnson on DSK79L0C42 with BILLS 13 •S 538 IS quent adjustment to the payroll tax credit por- 1 tion of the credit determined under subsection 2 (a), including requiring amended income tax re- 3 turns in the cases where there is such an ad- 4 justment.’’. 5 (2) CREDIT PART OF GENERAL BUSINESS 6 CREDIT.—Section 38(b) of the Internal Revenue 7 Code of 1986 is amended by striking ‘‘plus’’ at the 8 end of paragraph (31), by striking the period at the 9 end of paragraph (32) and inserting ‘‘, plus’’, and 10 by adding at the end the following new paragraph: 11 ‘‘(33) the employer-provided worker training 12 credit determined under section 45T(a).’’. 13 (3) COORDINATION WITH DEDUCTIONS.—Sec- 14 tion 280C of the Internal Revenue Code of 1986 is 15 amended by adding at the end the following new 16 subsection: 17 ‘‘(i) EMPLOYER-PROVIDED WORKER TRAINING 18 CREDIT.—No deduction shall be allowed for that portion 19 of the expenses otherwise allowable as a deduction taken 20 into account in determining the credit under section 45T 21 for the taxable year which is equal to the amount of the 22 credit determined for such taxable [Text truncated for display. 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