To amend the Internal Revenue Code of 1986 to provide tax incentives and job training grants for communities affected by the migration of businesses and jobs to Canada or Mexico as a result of the North American Free Trade Agreement.

Summary: NAFTA-Impacted Communities Relief Act - Amends the Internal Revenue Code to: (1) provide for the designation of communities as impacted by the North American Free Trade Agreement (NAFTA) based upon job loss and unemployment resulting from NAFTA; (2) allow employers in such NAFTA-impacted communities a business tax credit for up to 8.5 percent of wages paid to employees; (3) increase depreciation expensing levels for business assets located in NAFTA-impacted communities; and (4) direct the Secretary of Labor to provide grants to States containing NAFTA-impacted communities for education and job training assistance.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``NAFTA-Impacted Communities Relief 
Act''.

SEC. 2. DESIGNATION OF AND TAX INCENTIVES FOR NAFTA-IMPACTED 
              COMMUNITIES.

    (a) In General.--Chapter 1 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new subchapter:

               ``Subchapter Z--NAFTA-Impacted Communities

``Sec. 1400M. Designation of NAFTA-impacted communities.
``Sec. 1400N. NAFTA-impacted community employment credit.
``Sec. 1400O. Increase in expensing under Section 179.
``Sec. 1400P. NAFTA-impacted community business defined.

``SEC. 1400M. DESIGNATION OF NAFTA-IMPACTED COMMUNITIES.

    ``(a) Designation.--
            ``(1) NAFTA-impacted community.--For purposes of this 
        title, the term `NAFTA-impacted community' means any area--
                    ``(A) which is nominated by one or more local 
                governments and the State or States in which it is 
                located for designation as a community impacted by the 
                North American Free Trade Agreement (hereinafter in 
                this section referred to as a `nominated area'), and
                    ``(B) which the Secretary of Commerce designates as 
                a NAFTA-impacted community, after consultation with--
                            ``(i) in the case of an area in a rural 
                        area, the Secretary of Agriculture;
                            ``(ii) in the case of an area in an urban 
                        area, the Secretary of Housing and Urban 
                        Development; and
                            ``(iii) in the case of an area on an Indian 
                        reservation, the Secretary of the Interior.
            ``(2) Number of designations.--The Secretary of Commerce 
        may designate not more than 35 nominated areas as NAFTA-
        impacted communities.
            ``(3) Areas designated based on degree of loss of jobs 
        resulting from nafta, etc.--Except as otherwise provided in 
        this section, the nominated areas designated as NAFTA-impacted 
        communities under this subsection shall be those nominated 
        areas with the highest average ranking with respect to the 
        criteria described in subsection (c)(3). For purposes of the 
        preceding sentence, an area shall be ranked within each such 
        criterion on the basis of the amount by which the area exceeds 
        such criterion, with the area which exceeds such criterion by 
        the greatest amount given the highest ranking.
            ``(4) Limitation on designations.--
                    ``(A) Publication of regulations.--The Secretary of 
                Commerce shall prescribe by regulation no later than 4 
                months after the date of the enactment of this section, 
                after consultation with the officials described in 
                paragraph (1)(B)--
                            ``(i) the procedures for nominating an area 
                        under paragraph (1)(A),
                            ``(ii) the parameters relating to the size 
                        and population characteristics of a NAFTA-
                        impacted community, and
                            ``(iii) the manner in which nominated areas 
                        will be evaluated based on the criteria 
                        specified in subsection (c).
                    ``(B) Procedural rules.--The Secretary of Commerce 
                shall not make any designation of a nominated area as a 
                NAFTA-impacted community under paragraph (2) unless--
                            ``(i) a nomination regarding such area is 
                        submitted in such a manner and in such form, 
                        and contains such information, as the Secretary 
                        of Commerce shall by regulation prescribe, and
                            ``(ii) the Secretary of Commerce determines 
                        that any information furnished is reasonably 
                        accurate.
            ``(5) Nomination process for indian reservations.--For 
        purposes of this subchapter, in the case of a nominated area on 
        an Indian reservation, the reservation governing body (as 
        determined by the Secretary of the Interior) shall be treated 
        as being both the State and local governments with respect to 
        such area.
    ``(b) Period for Which Designation Is in Effect.--
            ``(1) In general.--Any designation of an area as a NAFTA-
        impacted community shall remain in effect during the period 
        beginning on the date of the designation and ending on the 
        earliest of--
                    ``(A) December 31, 2012,
                    ``(B) the termination date designated by the State 
                and local governments in their nomination, or
                    ``(C) the date the Secretary of Commerce revokes 
                such designation.
            ``(2) Revocation of designation.--The Secretary of Commerce 
        may revoke the designation under this section of an area if the 
        Secretary determines that the loss of jobs and other effects of 
        NAFTA on the area have been substantially alleviated. Such 
        determination shall include, at a minimum, a finding that the 
        unemployment rate in the area is equal to or lower than the 
        national unemployment rate, and a finding that new businesses 
        are being attracted to the area.
    ``(c) Area and Eligibility Requirements.--
            ``(1) In general.--The Secretary of Commerce may designate 
        a nominated area as a NAFTA-impacted community under subsection 
        (a) only if the area meets the requirements of paragraphs (2) 
        and (3) of this subsection.
            ``(2) Area requirements.--For purposes of paragraph (1), a 
        nominated area meets the requirements of this paragraph if--
                    ``(A) the area is within the jurisdiction of one or 
                more local governments,
                    ``(B) the boundary of the area is continuous,
                    ``(C) the area does not include an empowerment zone 
                (as defined in section 1393(b)), and
                    ``(D) the area does not include a renewal community 
                designated under section 1400E.
            ``(3) Eligibility requirements.--
                    ``(A) In general.--For purposes of paragraph (1), a 
                nominated area meets the requirements of this paragraph 
                if the State and the local governments in which it is 
                located certify (and the Secretary of Commerce, after 
                such review of Department of Labor data and other 
                appropriate supporting data as he deems appropriate, 
                accepts such certification) that--
                            ``(i) the unemployment rate in the area, as 
                        determined by the most recent available data, 
                        was at least 1 percentage point above the 
                        national unemployment rate for the period to 
                        which such data relate, and
                            ``(ii) in the case of--
                                    ``(I) a rural area, at least 300 
                                workers who live or work in the area 
                                have been certified as eligible to 
                                apply for NAFTA transitional adjustment 
                                assistance under subchapter D of 
                                chapter 2 of title II of the Trade Act 
                                of 1974 (19 U.S.C. 2341 et seq.), and
                                    ``(II) an urban area, at least 500 
                                workers have been so certified.
                    ``(B) Rural area defined.--For purposes of this 
                section, the term `rural area' means an area--
                            ``(i) which is within a local government 
                        jurisdiction or jurisdictions with a population 
                        of less than 10,000,
                            ``(ii) which is outside of a metropolitan 
                        statistical area (within the meaning of section 
                        143(k)(2)(B)), or
                            ``(iii) which is determined by the 
                        Secretary of Commerce, after consultation with 
                        the Secretary of Agriculture, to be a rural 
                        area.
                    ``(C) Urban area defined.--For purposes of this 
                section, the term `urban area' means any area that is 
                not a rural area.
    ``(d) Coordination With Treatment of Enterprise Communities.--For 
purposes of this title, if there are in effect with respect to the same 
area both--
            ``(1) a designation as a NAFTA-impacted community, and
            ``(2) a designation as an enterprise community,
both of such designations shall be given full effect with respect to 
such area.
    ``(e) Definitions and Special Rules.--For purposes of this 
subchapter, rules similar to the rules of paragraphs (5) and (7) of 
section 1393 shall apply.

``SEC. 1400N. NAFTA-IMPACTED COMMUNITY EMPLOYMENT CREDIT.

    ``(a) Amount of Credit.--For purposes of section 38, the amount of 
the NAFTA-impacted community employment credit determined under this 
section with respect to any employer for any taxable year is 8.5 
percent of the qualified NAFTA-impacted community wages paid or 
incurred during the calendar year which ends with or within such 
taxable year.
    ``(b) Qualified NAFTA-Impacted Community Wages.--
            ``(1) In general.--For purposes of this section, the term 
        `qualified NAFTA-impacted community wages' means any wages paid 
        or incurred by an employer for services performed by an 
        employee while such employee is a qualified NAFTA-impacted 
        community employee.
            ``(2) Only first $15,000 of wages per year taken into 
        account.--With respect to each qualified NAFTA-impacted 
        community employee, the amount of qualified NAFTA-impacted 
        community wages which may be taken into account for a calendar 
        year shall not exceed $15,000.
            ``(3) Coordination with work opportunity credit.--
                    ``(A) In general.--The term `qualified NAFTA-
                impacted community wages' shall not include wages taken 
                into account in determining the credit under section 
                51.
                    ``(B) Coordination with paragraph (2).--The $15,000 
                amount in paragraph (2) shall be reduced for any 
                calendar year by the amount of wages paid or incurred 
                during such year which are taken into account in 
                determining the credit under section 51.
    ``(c) Qualified NAFTA-Impacted Community Employee.--For purposes of 
this section--
            ``(1) In general.--Except as otherwise provided in this 
        subsection, the term `qualified NAFTA-impacted community 
        employee' means, with respect to any period, any employee of an 
        employer if--
                    ``(A) substantially all of the services performed 
                during such period by such employee for such employer 
                are performed within a NAFTA-impacted community in a 
                trade or business of the employer, and
                    ``(B) the principal place of abode of such employee 
                while performing such services is within such NAFTA-
                impacted community.
            ``(2) Other rules.--Rules similar to the rules of 
        paragraphs (2) and (3) of section 1396(d) shall apply.
    ``(d) Other Definitions and Special Rules.--For purposes of this 
section, the rules of section 1397 shall apply.

``SEC. 1400O. INCREASE IN EXPENSING UNDER SECTION 179.

    ``(a) General Rule.--In the case of a NAFTA-impacted community 
business (as defined in section 1400P), for purposes of section 179--
            ``(1) the limitation under section 179(b)(1) shall be 
        increased by the lesser of--
                    ``(A) $10,000, or
                    ``(B) the cost of section 179 property which is 
                qualified NAFTA-impacted property placed in service 
                during the taxable year, and
            ``(2) the amount taken into account under section 179(b)(2) 
        with respect to any section 179 property which is qualified 
        NAFTA-impacted property shall be 50 percent of the cost 
        thereof.
    ``(b) Recapture.--Rules similar to the rules under section 
179(d)(10) shall apply with respect to any qualified NAFTA-impacted 
property which ceases to be used in a NAFTA-impacted community by a 
NAFTA-impacted community business.
    ``(c) Qualified NAFTA-Impacted Property.--For purposes of this 
section--
            ``(1) In general.--The term `qualified NAFTA-impacted 
        property' means section 179 property (as defined in section 
        179(d)) if--
                    ``(A) such property was acquired by the taxpayer 
                after December 31, 2001, and before January 1, 2011, 
                and
                    ``(B) such property would be qualified zone 
                property (as defined in section 1397C) if references to 
                NAFTA-impacted communities were substituted for 
                references to empowerment zones in section 1397C.
            ``(2) Certain rules to apply.--The rules of subsections 
        (a)(2) and (b) of section 1397C shall apply for purposes of 
        this section.

``SEC. 1400P. NAFTA-IMPACTED COMMUNITY BUSINESS DEFINED.

    ``For purposes of this part, the term `NAFTA-impacted community 
business' means any entity or proprietorship which would be a qualified 
business entity or qualified proprietorship under section 1397C if 
references to NAFTA-impacted communities were substituted for 
references to empowerment zones in such section.''.
    (b) Technical and Conforming Amendments.--
            (1) NAFTA-impacted community employment credit part of 
        general business credit.--Subsection (b) of section 38 of such 
        Code (relating to current year business credit) is amended by 
        striking ``plus'' at the end of paragraph (18), by striking the 
        period at the end of paragraph (19) and inserting ``, plus'', 
        and by adding at the end the following new paragraph:
            ``(20) the NAFTA-impacted community employment credit 
        determined under section 1400N(a).''.
            (2) Denial of deduction for portion of wages equal to 
        nafta-impacted community employment credit.--
                    (A) Subsection (a) of section 280C of such Code 
                (relating to rule for employment credits) is amended by 
                striking ``and 1396(a)'' and inserting ``1396(a), and 
                1400N(a)''.
                    (B) Subsection (c) of section 196 of such Code 
                (relating to deduction for certain unused business 
                credits) is amended by striking ``and'' at the end of 
                paragraph (11), by striking the period at the end of 
                paragraph (12) and inserting ``, and'', and by adding 
                at the end the following new paragraph:
            ``(13) the NAFTA-impacted community employment credit 
        determined under section 1400N(a).''.
            (3) Carryovers.--Subsection (c) of section 381 of such Code 
        (relating to carryovers in certain corporate acquisitions) is 
        amended by adding at the end the following new paragraph:
            ``(27) NAFTA-impacted community provisions.--The acquiring 
        corporation shall take into account (to the extent proper to 
        carry out the purposes of this section and subchapter XI, and 
        under such regulations as may be prescribed by the Secretary) 
        the items required to be taken into account for purposes of 
        subchapter XI in respect of the distributor or transferor 
        corporation.''.
    (c) Clerical Amendments.--The table of subchapters for chapter 1 of 
such Code is amended by adding at the end the following new item:
             ``subchapter z. nafta-impacted communities''.

SEC. 3. GRANTS FOR JOB TRAINING ASSISTANCE FOR NAFTA-IMPACTED 
              COMMUNITIES.

    (a) In General.--The Secretary of Labor shall provide grants to 
States that contain NAFTA-impacted communities, as designated under 
section 1400M of the Internal Revenue Code of 1986 (as added by section 
2(a) of this Act), for the purpose of providing sub-grants to nonprofit 
organizations and community or junior colleges in order to provide 
short-term job training courses, courses in entrepreneurism and self-
employment, and other related job training assistance that will promote 
the economic self-sufficiency of individuals located in NAFTA-impacted 
communities.
    (b) Maximum Amount of Grant.--The total amount provided under a 
grant to a State under subsection (a) for a fiscal year may not exceed 
the product of--
            (1) $1,000,000; and
            (2) the number of NAFTA-impacted communities located in the 
        State.
    (c) Authorization of Appropriations.--
            (1) In general.--There are authorized to be appropriated to 
        carry out this section $35,000,000 for each of the fiscal years 
        2006 through 2012.
            (2) Availability.--Amounts appropriated pursuant to the 
        authorization of appropriations under paragraph (1) are 
        authorized to remain available until expended.