MMEDS Act of 2020

I 116TH CONGRESS 2D SESSION H. R. 7527 To rescue domestic medical manufacturing activity by providing incentives in economically distressed areas of the United States and its possessions. IN THE HOUSE OF REPRESENTATIVES JULY 9, 2020 Miss GONZA´LEZ-COLO´N of Puerto Rico (for herself, Mr. SERRANO, Mr. BISHOP of Utah, Ms. SHALALA, Mr. KING of New York, and Mr. SOTO) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Energy and Com- merce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdic- tion of the committee concerned A BILL To rescue domestic medical manufacturing activity by pro- viding incentives 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 ‘‘Medical Manufac- 4 turing, Economic Development, and Sustainability Act of 5 2020’’ or the ‘‘MMEDS Act of 2020’’. 6 VerDate Sep 11 2014 19:02 Jul 28, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H7527.IH H7527 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 7527 IH SEC. 2. ECONOMICALLY DISTRESSED ZONES. 1 (a) IN GENERAL.—Chapter 1 of the Internal Rev- 2 enue Code of 1986 is amended by adding at the end the 3 following new subchapter: 4 ‘‘Subchapter AA—Medical Manufacturing in 5 Economically Distressed Zones 6 ‘‘SUBCHAPTER AA—MEDICAL MANUFACTURING IN ECONOMICALLY DISTRESSED ZONES ‘‘Sec. 1400AA–1. Medical manufacturing in economically distressed zone credit. ‘‘Sec. 1400AA–2. Credit for economically distressed zone products and services acquired by domestic medical manufacturers. ‘‘Sec. 1400AA–3. Special rules to secure the national supply chain and for the production of population health products. ‘‘Sec. 1400AA–4. Designation of economically distressed zones. ‘‘SEC. 1400AA–1. MEDICAL MANUFACTURING IN ECONOMI- 7 CALLY DISTRESSED ZONE CREDIT. 8 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al- 9 lowed as a credit against the tax imposed by subtitle A 10 for the taxable year an amount equal 40 percent of the 11 sum of— 12 ‘‘(1) the aggregate amount of the taxpayer’s 13 medical manufacturing economically distressed zone 14 wages for such taxable year, 15 ‘‘(2) the allocable employee fringe benefit ex- 16 penses of the taxpayer for such taxable year, and 17 ‘‘(3) the depreciation and amortization allow- 18 ances of the taxpayer for the taxable year with re- 19 spect to qualified medical manufacturing facility 20 property. 21 VerDate Sep 11 2014 19:02 Jul 28, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H7527.IH H7527 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 7527 IH ‘‘(b) DENIAL OF DOUBLE BENEFIT.—Any wages or 1 other expenses taken into account in determining the cred- 2 it under this section may not be taken into account in de- 3 termining the credit under sections 41, and any other pro- 4 vision determined by the Secretary to be substantially 5 similar. 6 ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur- 7 poses of this section— 8 ‘‘(1) ECONOMICALLY DISTRESSED ZONE 9 WAGES.— 10 ‘‘(A) IN GENERAL.—The term ‘economi- 11 cally distressed zone wages’ means amounts 12 paid or incurred for wages of an employee by 13 the taxpayer for the taxable year which are— 14 ‘‘(i) in connection with the active con- 15 duct of a trade or business of the taxpayer, 16 and 17 ‘‘(ii) the principal place of employ- 18 ment of whom is in a qualified medical 19 manufacturing facility of such taxpayer. 20 ‘‘(B) LIMITATION ON AMOUNT OF WAGES 21 TAKEN INTO ACCOUNT.— 22 ‘‘(i) IN GENERAL.—The amount of 23 wages which may be taken into account 24 under subparagraph (A) with respect to 25 VerDate Sep 11 2014 19:02 Jul 28, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H7527.IH H7527 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 7527 IH any employee for any taxable year shall 1 not exceed the contribution and benefit 2 base determined under section 230 of the 3 Social Security Act for the calendar year 4 in which such taxable year begins. 5 ‘‘(ii) TREATMENT OF PART-TIME EM- 6 PLOYEES, ETC.—If— 7 ‘‘(I) any employee is not em- 8 ployed by the taxpayer on a substan- 9 tially full-time basis at all times dur- 10 ing the taxable year, or 11 ‘‘(II) the principal place of em- 12 ployment of any employee is not with- 13 in an economically distressed zone at 14 all times during the taxable year, 15 the limitation applicable under clause (i) 16 with respect to such employee shall be the 17 appropriate portion (as determined by the 18 Secretary) of the limitation which would 19 otherwise be in effect under clause (i). 20 ‘‘(C) TREATMENT OF CERTAIN EMPLOY- 21 EES.—The term ‘economically distressed zone 22 wages’ shall not include any wages paid to em- 23 ployees who are assigned by the employer to 24 perform services for another person, unless the 25 VerDate Sep 11 2014 19:02 Jul 28, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H7527.IH H7527 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 7527 IH principal trade or business of the employer is to 1 make employees available for temporary periods 2 to other persons in return for compensation. 3 ‘‘(2) ALLOCABLE EMPLOYEE FRINGE BENEFIT 4 EXPENSES.— 5 ‘‘(A) IN GENERAL.—The term ‘allocable 6 employee fringe benefit expenses’ means the ag- 7 gregate amount allowable as a deduction under 8 this chapter to the taxpayer for the taxable year 9 for the following amounts which are allocable to 10 employment in a qualified medical manufac- 11 turing facility: 12 ‘‘(i) Employer contributions under a 13 stock bonus, pension, profit-sharing, or an- 14 nuity plan. 15 ‘‘(ii) Employer-provided coverage 16 under any accident or health plan for em- 17 ployees. 18 ‘‘(iii) The cost of life or disability in- 19 surance provided to employees. 20 ‘‘(B) ALLOCATION.—For purposes of sub- 21 paragraph (A), an amount shall be treated as 22 allocable to a qualified medical manufacturing 23 facility only if such amount is with respect to 24 employment of an individual for services pro- 25 VerDate Sep 11 2014 19:02 Jul 28, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H7527.IH H7527 pamtmann on DSKBC07HB2PROD with BILLS 6 •HR 7527 IH vided, and the principal place of employment of 1 whom is, in such facility. 2 ‘‘(3) QUALIFIED MEDICAL MANUFACTURING FA- 3 CILITY.—The term ‘qualified medical manufacturing 4 facility’ means any facility that— 5 ‘‘(A) researches and develops or produces 6 medical products, and 7 ‘‘(B) is located within an economically dis- 8 tressed zone. 9 ‘‘(4) QUALIFIED MEDICAL MANUFACTURING FA- 10 CILITY PROPERTY.—The term ‘qualified medical 11 manufacturing facility property’ means any property 12 used in (or consisting of) a qualified medical manu- 13 facturing facility if such property is directly con- 14 nected to the research, development, or production 15 of a medical product. 16 ‘‘(5) MEDICAL PRODUCT.—The term ‘medical 17 product’ means— 18 ‘‘(A) any prescription pharmaceutical 19 which— 20 ‘‘(i) is subject to regulation under— 21 ‘‘(I) section 505 of the Federal 22 Food, Drug, and Cosmetic Act (21 23 U.S.C. 355), 24 VerDate Sep 11 2014 19:02 Jul 28, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H7527.IH H7527 pamtmann on DSKBC07HB2PROD with BILLS 7 •HR 7527 IH ‘‘(II) section 802 of such Act (21 1 U.S.C. 382), or 2 ‘‘(III) section 351 of the Public 3 Health Service Act (42 U.S.C. 262), 4 or 5 ‘‘(ii) is described in section 201(jj) of 6 the Federal Food, Drug, and Cosmetic Act 7 (21 U.S.C. 321(jj)), or 8 ‘‘(B) any device (as that term is defined by 9 section 201(h) of the Federal Food, Drug, and 10 Cosmetic Act (21 U.S.C. 321(h))) or part 11 thereof. 12 ‘‘(6) AGGREGATION RULES.— 13 ‘‘(A) IN GENERAL.—For purposes of this 14 section, members of an affiliated group shall be 15 treated as a single taxpayer. 16 ‘‘(B) AFFILIATED GROUP.—The term ‘af- 17 filiated group’ means an affiliated group (as de- 18 fined in section 1504(a), determined without re- 19 gard to section 1504(b)(3)) one or more mem- 20 bers of which are engaged in the active conduct 21 of a trade or business within an economically 22 distressed zone. 23 VerDate Sep 11 2014 20:40 Jul 31, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H7527.IH H7527 pamtmann on DSKBC07HB2PROD with BILLS 8 •HR 7527 IH ‘‘SEC. 1400AA–2. CREDIT FOR ECONOMICALLY DISTRESSED 1 ZONE PRODUCTS AND SERVICES ACQUIRED 2 BY DOMESTIC MEDICAL MANUFACTURERS. 3 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eli- 4 gible medical manufacturer, there shall be allowed as a 5 credit against the tax imposed by subtitle A for the taxable 6 year an amount equal to the applicable percentage of the 7 aggregate amounts paid or incurred by the taxpayer dur- 8 ing such taxable year for qualified economically distressed 9 zone products or services. 10 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 11 this section, the term applicable percentage means— 12 ‘‘(1) 30 percent in the case of amounts paid or 13 incurred to persons not described in paragraph (2) 14 or (3), 15 ‘‘(2) 40 percent in the case of amounts paid or 16 incurred to an unrelated minority business, and 17 ‘‘(3) 5 percent in the case of amounts paid or 18 incurred to a related person. 19 ‘‘(c) ELIGIBLE MEDICAL MANUFACTURER.—For 20 purposes of this section, the term ‘eligible medical manu- 21 facturer’ means any person in the trade or business of pro- 22 ducing medical products in the United States. 23 ‘‘(d) QUALIFIED PRODUCT OR SERVICE.—For pur- 24 poses of this section, the term ‘qualified product or service’ 25 means— 26 VerDate Sep 11 2014 19:02 Jul 28, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H7527.IH H7527 pamtmann on DSKBC07HB2PROD with BILLS 9 •HR 7527 IH ‘‘(1) any product which is produced in an eco- 1 nomically distressed zone and which is integrated 2 into a medical product produced by the taxpayer, 3 and 4 ‘‘(2) any service which is provided in an eco- 5 nomically distressed zone and which is necessary to 6 the production of a medical product by the taxpayer 7 (including packaging). 8 ‘‘(e) MINORITY BUSINESS.—For purposes of this sec- 9 tion— 10 ‘‘(1) IN GENERAL.—The term ‘minority busi- 11 ness’ means— 12 ‘‘(A) a sole proprietorship carried on by a 13 qualified individual, or 14 ‘‘(B) a corporation or partnership— 15 ‘‘(i) at least 50 percent of the owner- 16 ship interests in which are held by one or 17 more qualified individuals, and 18 ‘‘(ii) of which a qualified individual is 19 the president or chief executive officer (or 20 a substantially equivalent position). 21 ‘‘(2) QUALIFIED INDIVIDUAL.—The term ‘quali- 22 fied individual’ means any individual who— 23 VerDate Sep 11 2014 19:02 Jul 28, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H7527.IH H7527 pamtmann on DSKBC07HB2PROD with BILLS 10 •HR 7527 IH ‘‘(A) is of Asian-Indian, Asian-Pacific, 1 Black, Hispanic, or Native American origin or 2 descent, and 3 ‘‘(B) is a United States citizen or legal 4 resident of the United States or any of its terri- 5 tories or possessions. 6 ‘‘(f) RELATED PERSONS.—For purposes of this sec- 7 tion, persons shall be treated as related to each other if 8 such persons would be treated as a single employer under 9 the regulations prescribed under section 52(b). 10 ‘‘(g) OTHER TERMS.—Terms used in this section 11 which are also used in section 1400AA–1 shall have the 12 same meaning as when used in such section. 13 ‘‘SEC. 1400AA–3. SPECIAL RULES TO SECURE THE NATIONAL 14 SUPPLY CHAIN AND FOR THE PRODUCTION 15 OF POPULATION HEALTH PRODUCTS. 16 ‘‘(a) IN GENERAL.—In the case of a qualified repatri- 17 ated medical manufacturing facility or a qualified popu- 18 lation health product manufacturing facility— 19 ‘‘(1) section 1400AA–1(a) shall be applied by 20 substituting ‘60 percent’ for ‘40 percent’, and 21 ‘‘(2) section 1400AA–2(a) shall be applied— 22 ‘‘(A) by substituting ‘50 percent’ for ‘30 23 percent’, and 24 VerDate Sep 11 2014 19:02 Jul 28, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H7527.IH H7527 pamtmann on DSKBC07HB2PROD with BILLS 11 •HR 7527 IH ‘‘(B) by substituting ‘60 percent’ for ‘40 1 percent’. 2 ‘‘(b) ELECTION TO EXPENSE IN LIEU OF TAX CRED- 3 IT FOR DEPRECIATION.—In the case of a taxpayer which 4 elects (at such time and in such manner as the Secretary 5 may provide) the application of this subsection with re- 6 spect to any qualified repatriated medical manufacturing 7 facility or qualified population health product manufac- 8 turing facility— 9 ‘‘(1) section 1400AA–1(a)(3) shall not apply 10 with respect to any qualified medical manufacturing 11 facility property with respect to such facility, and 12 ‘‘(2) for purposes of section 168(k)— 13 ‘‘(A) such property shall be treated as 14 qualified property, and 15 ‘‘(B) the applicable percentage with respect 16 to such property shall be 100 percent. 17 ‘‘(c) QUALIFIED REPATRIATED MEDICAL MANUFAC- 18 TURING FACILITY.—For purposes of this section, the term 19 ‘qualified repatriated medical manufacturing facility’ 20 means any qualified medical manufacturing facility (as de- 21 fined in section 1400AA–1) the production of which was 22 moved to an economically distressed zone from a foreign 23 country that the United States Trade Representative has 24 VerDate Sep 11 2014 19:02 Jul 28, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H7527.IH H7527 pamtmann on DSKBC07HB2PROD with BILLS 12 •HR 7527 IH determined could pose a risk to the national supply chain 1 because of political or social factors. 2 ‘‘(d) QUALIFIED POPULATION HEALTH PRODUCT 3 MANUFACTURING FACILITY.—For purposes of this sec- 4 tion, the term ‘qualified population health product manu- 5 facturing facility’ means any qualified medical manufac- 6 turing facility (as defined in section 1400AA–1) that pro- 7 duces a population health product (as defined in section 8 319L(a)(11) of the Public Health Service Act) which the 9 Secretary of Health and Human Services has identified 10 for support through a strategic initiative under section 11 319L(c)(4)(F)(ii) of the Public Health Service Act. 12 ‘‘SEC. 1400AA–4. DESIGNATION OF ECONOMICALLY DIS- 13 TRESSED ZONES. 14 ‘‘(a) IN GENERAL.—For purposes of this subchapter, 15 the term ‘economically distressed zone’ means any popu- 16 lation census tract within the United States which— 17 ‘‘(1) has a poverty rate of not less than 35 per- 18 cent for each of the 5 most recent calendar years for 19 which information is available, or 20 ‘‘(2) satisfies each of the following require- 21 ment [Text truncated for display. Full text available on Congress.gov.]