Securing the National Supply Chain Act of 2020

I 116TH CONGRESS 2D SESSION H. R. 6443 To secure the national supply chain by providing tax incentives in economically distressed areas of the United States and its possessions. IN THE HOUSE OF REPRESENTATIVES APRIL 3, 2020 Miss GONZA´LEZ-COLO´N of Puerto Rico (for herself, Mr. GALLEGO, Mr. KING of New York, Ms. SHALALA, and Mr. SOTO) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To secure the national supply chain by providing tax incen- tives in economically distressed areas of the United States and its possessions. 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 ‘‘Securing the National 4 Supply Chain Act of 2020’’. 5 SEC. 2. ECONOMICALLY DISTRESSED ZONES. 6 (a) IN GENERAL.—Chapter 1 of the Internal Rev- 7 enue Code of 1986 is amended by adding at the end the 8 following new subchapter: 9 VerDate Sep 11 2014 03:01 Apr 14, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H6443.IH H6443 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 6443 IH ‘‘Subchapter AA—Economically Distressed 1 Zones 2 ‘‘Sec. 1400AA–1. Economically distressed zone credit. ‘‘Sec. 1400AA–2. Designation of economically distressed zones. ‘‘SEC. 1400AA–1. ECONOMICALLY DISTRESSED ZONE CRED- 3 IT. 4 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al- 5 lowed as a credit against the tax imposed by subtitle A 6 for the taxable year an amount equal to the sum of— 7 ‘‘(1) an amount equal to 40 percent of the sum 8 of— 9 ‘‘(A) the aggregate amount of the tax- 10 payer’s economically distressed zone wages for 11 such taxable year, plus 12 ‘‘(B) the allocable employee fringe benefit 13 expenses of the taxpayer for such taxable year, 14 ‘‘(2) an amount equal to 40 percent of the de- 15 preciation and amortization allowances for the tax- 16 able year with respect to property of the taxpayer 17 which are located and used in the active conduct of 18 a trade or business within an economically distressed 19 zone, and 20 ‘‘(3) an amount equal to 30 percent of the pay- 21 ments made by the taxpayer in course of a trade or 22 business for purchases of services or tangible prop- 23 erty from an unrelated person (40 percent in the 24 VerDate Sep 11 2014 03:01 Apr 14, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H6443.IH H6443 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 6443 IH case of such a purchase from an unrelated minority 1 business) located within an economically distressed 2 zone. 3 ‘‘(b) DENIAL OF DOUBLE BENEFIT.—Any wages or 4 other expenses taken into account in determining the cred- 5 it under this section may not be taken into account in de- 6 termining the credit under sections 41, and any other pro- 7 vision determined by the Secretary to be substantially 8 similar. 9 ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur- 10 poses of this section— 11 ‘‘(1) QUALIFIED ECONOMICALLY DISTRESSED 12 ZONE WAGES.— 13 ‘‘(A) IN GENERAL.—The term ‘qualified 14 economically distressed zone wages’ means 15 amounts paid or incurred by the taxpayer for 16 the taxable year which are— 17 ‘‘(i) in connection with the active con- 18 duct of a trade or business of the taxpayer 19 within an economically distressed zone, and 20 ‘‘(ii) for wages of an employee for 21 services provided, and the principal place 22 of employment of whom is, in such eco- 23 nomically distressed zone. 24 VerDate Sep 11 2014 03:01 Apr 14, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H6443.IH H6443 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 6443 IH ‘‘(B) LIMITATION ON AMOUNT OF WAGES 1 TAKEN INTO ACCOUNT.— 2 ‘‘(i) IN GENERAL.—The amount of 3 wages which may be taken into account 4 under subparagraph (A) with respect to 5 any employee for any taxable year shall 6 not exceed the contribution and benefit 7 base determined under section 230 of the 8 Social Security Act for the calendar year 9 in which such taxable year begins. 10 ‘‘(ii) TREATMENT OF PART-TIME EM- 11 PLOYEES, ETC.—If— 12 ‘‘(I) any employee is not em- 13 ployed by the taxpayer on a substan- 14 tially full-time basis at all times dur- 15 ing the taxable year, or 16 ‘‘(II) the principal place of em- 17 ployment of any employee is not with- 18 in an economically distressed zone at 19 all times during the taxable year, 20 the limitation applicable under clause (i) 21 with respect to such employee shall be the 22 appropriate portion (as determined by the 23 Secretary) of the limitation which would 24 otherwise be in effect under clause (i). 25 VerDate Sep 11 2014 03:01 Apr 14, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H6443.IH H6443 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 6443 IH ‘‘(C) TREATMENT OF CERTAIN EMPLOY- 1 EES.—The term ‘qualified economically dis- 2 tressed zone wages’ shall not include any wages 3 paid to employees who are assigned by the em- 4 ployer to perform services for another person, 5 unless the principal trade or business of the 6 employer is to make employees available for 7 temporary periods to other persons in return 8 for compensation. 9 ‘‘(2) ALLOCABLE EMPLOYEE FRINGE BENEFIT 10 EXPENSES.— 11 ‘‘(A) IN GENERAL.—The term ‘allocable 12 employee fringe benefit expenses’ means the ag- 13 gregate amount allowable as a deduction under 14 this chapter to the taxpayer for the taxable year 15 for the following amounts which are allocable to 16 employment in an economically distressed zone: 17 ‘‘(i) Employer contributions under a 18 stock bonus, pension, profit-sharing, or an- 19 nuity plan. 20 ‘‘(ii) Employer-provided coverage 21 under any accident or health plan for em- 22 ployees. 23 ‘‘(iii) The cost of life or disability in- 24 surance provided to employees. 25 VerDate Sep 11 2014 03:01 Apr 14, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H6443.IH H6443 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 6443 IH ‘‘(B) ALLOCATION.—For purposes of sub- 1 paragraph (A), an amount shall be treated as 2 allocable to an economically distressed zone only 3 if such amount is with respect to employment 4 of an individual for services provided, and the 5 principal place of employment of whom is, in 6 such zone. 7 ‘‘(3) MINORITY BUSINESS.— 8 ‘‘(A) IN GENERAL.—The term ‘minority 9 business’ means— 10 ‘‘(i) a sole proprietorship carried on 11 by a qualified individual, or 12 ‘‘(ii) a corporation or partnership— 13 ‘‘(I) at least 50 percent of the 14 ownership interests in which are held 15 by one or more qualified individuals, 16 and 17 ‘‘(II) of which a qualified indi- 18 vidual is the president or chief execu- 19 tive officer (or a substantially equiva- 20 lent position). 21 ‘‘(B) QUALIFIED INDIVIDUAL.—The term 22 ‘qualified individual’ means any individual 23 who— 24 VerDate Sep 11 2014 03:01 Apr 14, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H6443.IH H6443 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 6443 IH ‘‘(i) is of Asian-Indian, Asian-Pacific, 1 Black, Hispanic or Native American origin 2 or descent, and 3 ‘‘(ii) is a United States citizen or legal 4 resident of the United States or any of its 5 territories or possessions. 6 ‘‘(4) AGGREGATION RULES.— 7 ‘‘(A) IN GENERAL.—Members of an affili- 8 ated group shall be treated as a single taxpayer. 9 ‘‘(B) AFFILIATED GROUP.—The term 10 ‘qualified group’ means an affiliated group (as 11 defined in section 1504(a), determined without 12 regard to section 1504(b)(3)) one or more 13 members of which are engaged in the active 14 conduct of a trade or business within an eco- 15 nomically distressed zone. 16 ‘‘(C) RELATED PERSONS.—Persons shall 17 be treated as related to each other if such per- 18 sons would be treated as a single employer 19 under the regulations prescribed under section 20 52(b). 21 ‘‘(d) SPECIAL RULES TO SECURE THE NATIONAL 22 SUPPLY CHAIN.— 23 VerDate Sep 11 2014 03:01 Apr 14, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H6443.IH H6443 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 6443 IH ‘‘(1) IN GENERAL.—In the case of a qualified 1 manufacturing facility, subsection (a) shall be ap- 2 plied— 3 ‘‘(A) by substituting ‘50 percent’ for ‘40 4 percent’ each place it appears therein, and 5 ‘‘(B) by substituting ‘50 percent’ for ‘30 6 percent’ in paragraph (3) therein. 7 ‘‘(2) QUALIFIED MANUFACTURING FACILITY.— 8 For purposes of this subsection, the term ‘qualified 9 manufacturing facility’ means any manufacturing fa- 10 cility if— 11 ‘‘(A) such manufacturing facility produces 12 property required to be maintained in the stra- 13 tegic national stockpile under section 319F–2 of 14 the Public Health Service Act, and 15 ‘‘(B) the production of such manufacturing 16 facility is moved to the United States (including 17 any possession of the United States) from a 18 foreign country that the United States Trade 19 Representative has determined could pose a risk 20 to the national supply chain because of political 21 or social factors. 22 VerDate Sep 11 2014 03:01 Apr 14, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H6443.IH H6443 kjohnson on DSK79L0C42PROD with BILLS 9 •HR 6443 IH ‘‘SEC. 1400AA–2. DESIGNATION OF ECONOMICALLY DIS- 1 TRESSED ZONES. 2 ‘‘(a) IN GENERAL.—For purposes of this subchapter, 3 the term ‘economically distressed zone’ means any popu- 4 lation census tract which— 5 ‘‘(1) has a poverty rate of not less than 35 per- 6 cent for each of the 5 most recent calendar years for 7 which information is available, or 8 ‘‘(2) satisfies each of the following require- 9 ments: 10 ‘‘(A) has pervasive poverty, unemployment, 11 low labor force participation, and general dis- 12 tress measured as a prolonged period of eco- 13 nomic decline measured by real gross national 14 product, 15 ‘‘(B) has a poverty rate of not less than 30 16 percent, and 17 ‘‘(C) has been designated as such by the 18 Secretary and the Secretary of Commerce pur- 19 suant to an application under subsection (b). 20 ‘‘(b) APPLICATION FOR DESIGNATION.— 21 ‘‘(1) IN GENERAL.—An application for designa- 22 tion as an economically distressed zone may be filed 23 by a State or local government in which the popu- 24 lation census tract to which the application applies 25 is located. 26 VerDate Sep 11 2014 03:01 Apr 14, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H6443.IH H6443 kjohnson on DSK79L0C42PROD with BILLS 10 •HR 6443 IH ‘‘(2) REQUIREMENTS.—Such application shall 1 include a strategic plan for accomplishing the pur- 2 poses of this subchapter, which— 3 ‘‘(A) describes the coordinated economic, 4 human, community, and physical development 5 plan and related activities proposed for the 6 nominated area, 7 ‘‘(B) describes the process by which the af- 8 fected community is a full partner in the proc- 9 ess of developing and implementing the plan 10 and the extent to which local institutions and 11 organizations have contributed to the planning 12 process, 13 ‘‘(C) identifies the amount of State, local, 14 and private resources that will be available in 15 the nominated area and the private/public part- 16 nerships to be used, which may include partici- 17 pation by, and cooperation with, universities, 18 medical centers, and other private and public 19 entities, 20 ‘‘(D) identifies the funding requested 21 under any Federal program in support of the 22 proposed economic, human, community, and 23 physical development and related activities, 24 VerDate Sep 11 2014 03:01 Apr 14, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H6443.IH H6443 kjohnson on DSK79L0C42PROD with BILLS 11 •HR 6443 IH ‘‘(E) identifies baselines, methods, and 1 benchmarks for measuring the success of car- 2 rying out the strategic plan, including the ex- 3 tent to which poor persons and families will be 4 empowered to become economically self-suffi- 5 cient, and 6 ‘‘(F) does not include any action to assist 7 any establishment in relocating from one area 8 outside the nominated area to the nominated 9 area, except that assistance for the expansion of 10 an existing business entity through the estab- 11 lishment of a new branch, affiliate, or sub- 12 sidiary is permitted if— 13 ‘‘(i) the establishment of the new 14 branch, affiliate, or subsidiary will not re- 15 sult in a decrease in employment in the 16 area of original location or in any other 17 area where the existing business entity 18 conducts business operations, 19 ‘‘(ii) there is no reason to believe that 20 the new branch, affiliate, or subsidiary is 21 being established with the intention of clos- 22 ing down the operations of the existing 23 business entity in the area of its original 24 location or in any other area where the ex- 25 VerDate Sep 11 2014 03:01 Apr 14, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H6443.IH H6443 kjohnson on DSK79L0C42PROD with BILLS 12 •HR 6443 IH isting business entity conducts business op- 1 eration, and 2 ‘‘(iii) includes such other information 3 as may be required by the Secretary and 4 the Secretary of Commerce. 5 ‘‘(c) PERIOD FOR WHICH DESIGNATIONS ARE IN EF- 6 FECT.—Designation as an economically distressed zone 7 may be made at any time during the 10-year period begin- 8 ning on the date of the enactment of this section, and shall 9 remain in effect with respect to such zone during the 15- 10 year period beginning on the date of such designation. 11 Economically distressed zones described in subsection 12 (a)(1) shall take effect on the date of the enactment of 13 this Act and shall remain in effect during the 15-year pe- 14 riod beginning on such date. 15 ‘‘(d) TERRITORIES AND POSSESSIONS.—The term 16 ‘State’ includes territories and possessions of the United 17 States. 18 ‘‘(e) REGULATIONS.—The Secretary shall issue such 19 regulations or other guidance as may be necessary or ap- 20 propriate to carry out the purposes of this section, includ- 21 ing— 22 ‘‘(1) not later than 30 days after the date of 23 the enactment of this section, a list of the population 24 census tracts described in subsection (a)(1), and 25 VerDate Sep 11 2014 03:01 Apr 14, 2020 Jkt 099200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H6443.IH H6443 kjohnson on DSK79L0C42PROD with BILLS 13 •HR 6443 IH ‘‘(2) not later than 60 days after the date of 1 the enactment of this section, regulations or other 2 guidance regarding the designation of population 3 census tracts described in subsection (a)(2).’’. 4 (b) EFFECTIVE DATE.—The amendments made by 5 this section shall apply to taxable years beginning after 6 December 31, 2019. 7 Æ VerDate Sep 11 2014 03:01 Apr 14, 2020 Jkt 099200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6301 E:\BILLS\H6443.IH H6443 kjohnson on DSK79L0C42PROD with [Text truncated for display. 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