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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Investing in American 

5 Workers Act’’. 

6 SEC. 2. EMPLOYER-PROVIDED WORKER TRAINING CREDIT. 

7 (a) IN GENERAL.— 

8 (1) DETERMINATION OF CREDIT.—Subpart D 

9 of part IV of subchapter A of chapter 1 of the InterVerDate 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

1 nal Revenue Code of 1986 is amended by adding at 

2 the end the following new section: 

3 ‘‘SEC. 45T. EMPLOYER-PROVIDED WORKER TRAINING 

4 CREDIT. 

5 ‘‘(a) IN GENERAL.—For purposes of section 38, the 

6 employer-provided worker training credit under this sec7 tion for the taxable year is an amount equal to 20 percent 

8 of the excess (if any) of— 

9 ‘‘(1) the qualified training expenditures for the 

10 taxable year, over 

11 ‘‘(2) the average of the adjusted qualified train12 ing expenditures for the 3 taxable years preceding 

13 the taxable year for which the credit is being deter14 mined. 

15 ‘‘(b) QUALIFIED TRAINING EXPENDITURES.—For 

16 purposes of this section— 

17 ‘‘(1) IN GENERAL.—The term ‘qualified train18 ing expenditures’ means any expenditures for the 

19 qualified training of any non-highly compensated 

20 employee. Such term shall not include any amounts 

21 paid for meals, lodging, transportation, or other 

22 services incidental to such qualified training. 

23 ‘‘(2) QUALIFIED TRAINING.— 

24 ‘‘(A) IN GENERAL.—For purposes of para25 graph (1), the term ‘qualified training’ means 


kjohnson on DSK79L0C42 with BILLS
3 

•S 538 IS

1 training which results in the attainment of a 

2 recognized postsecondary credential and which 

3 is provided through— 

4 ‘‘(i) an apprenticeship program reg5 istered under the Act of August 16, 1937 

6 (commonly known as the ‘National Ap7 prenticeship Act’; 50 Stat. 664, chapter 

8 663; 29 U.S.C. 50 et seq.); 

9 ‘‘(ii)(I) a program of training services 

10 which is listed under section 122(d) of the 

11 Workforce Innovation and Opportunity Act 

12 (29 U.S.C. 3152(d)); or 

13 ‘‘(II) an apprenticeship program 

14 which is registered or approved by a recog15 nized State apprenticeship agency (which 

16 uses a State apprenticeship council) in ac17 cordance with section 1 of the Act referred 

18 to in clause (i); 

19 ‘‘(iii) a program which is conducted 

20 by an area career and technical education 

21 school, a community college, or a labor or22 ganization; or 

23 ‘‘(iv) a program which is sponsored 

24 and administered by an employer, industry 


kjohnson on DSK79L0C42 with BILLS
4 

•S 538 IS

1 trade association, industry or sector part2 nership, or labor organization. 

3 ‘‘(B) RELATED DEFINITIONS.—In sub4 paragraph (A): 

5 ‘‘(i) AREA CAREER AND TECHNICAL

6 EDUCATION SCHOOL.—The term ‘area ca7 reer and technical education school’ means 

8 such a school, as defined in section 3 of 

9 the Carl D. Perkins Career and Technical 

10 Education Act of 2006 (20 U.S.C. 2302), 

11 which participates in a program under that 

12 Act (20 U.S.C. 2301 et seq.). 

13 ‘‘(ii) COMMUNITY COLLEGE.—The 

14 term ‘community college’ means an institu15 tion which— 

16 ‘‘(I) is a junior or community col17 lege as defined in section 312(f) of the 

18 Higher Education Act of 1965 (20 

19 U.S.C. 1058(f)), except that the insti20 tution need not meet the requirements 

21 of paragraph (1) of that section; and 

22 ‘‘(II) participates in a program 

23 under title IV of that Act (20 U.S.C. 

24 1070 et seq.). 


kjohnson on DSK79L0C42 with BILLS
5 

•S 538 IS

1 ‘‘(iii) INDUSTRY OR SECTOR PARTNER2 SHIP.—The term ‘industry or sector part3 nership’ has the meaning given such term 

4 under section 3 of the Workforce Innova5 tion and Opportunity Act (29 U.S.C. 

6 3102). 

7 ‘‘(iv) INDUSTRY TRADE ASSOCIA8 TION.—The term ‘industry trade associa9 tion’ means an organization which— 

10 ‘‘(I) is described in paragraph (3) 

11 or (6) of section 501(c) of the Inter12 nal Revenue Code of 1986 and exempt 

13 from taxation under section 501(a) of 

14 such Code; and 

15 ‘‘(II) is representing an industry. 

16 ‘‘(v) LABOR ORGANIZATION.—The 

17 term ‘labor organization’ means a labor or18 ganization, within the meaning of the term 

19 in section 501(c)(5) of the Internal Rev20 enue Code of 1986. 

21 ‘‘(vi) RECOGNIZED POSTSECONDARY

22 CREDENTIAL.—The term ‘recognized post23 secondary credential’ means a credential 

24 consisting of an industry-recognized certifi25 cate or certification, a certificate of comVerDate 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

1 pletion of an apprenticeship, a license rec2 ognized by the State involved or Federal 

3 Government, or an associate or bacca4 laureate degree. 

5 ‘‘(3) NON-HIGHLY COMPENSATED EMPLOYEE.— 

6 For purposes of paragraph (1), the term ‘non-highly 

7 compensated employee’ means an employee of the 

8 taxpayer whose remuneration for the taxable year 

9 for services provided to the taxpayer does not exceed 

10 $82,000. 

11 ‘‘(c) ADJUSTED QUALIFIED TRAINING EXPENDI12 TURES.—For purposes of this section, the term ‘adjusted 

13 qualified training expenses’ means, with respect to any 

14 taxable year— 

15 ‘‘(1) the qualified training expenses for such 

16 taxable year, multiplied by 

17 ‘‘(2) the cost-of-living adjustment determined 

18 under section 1(f)(3) for the calendar year in which 

19 the taxable year for which the credit is being deter20 mined begins, except that section 1(f)(3)(A)(ii) shall 

21 be applied by using the CPI for the calendar year 

22 in which the taxable year in which qualified training 

23 expenses were paid or incurred begins in lieu of the 

24 CPI for calendar year 1982. 


kjohnson on DSK79L0C42 with BILLS
7 

•S 538 IS

1 ‘‘(d) SPECIAL RULES.—For purposes of this sec2 tion— 

3 ‘‘(1) SPECIAL RULE IN CASE OF NO QUALIFIED

4 TRAINING EXPENDITURES IN ANY OF 3 PRECEDING

5 TAXABLE YEARS.— 

6 ‘‘(A) TAXPAYERS TO WHICH PARAGRAPH

7 APPLIES.—The credit under this section shall 

8 be determined under this paragraph if the tax9 payer has no qualified training expenditures in 

10 any one of the 3 taxable years preceding the 

11 taxable year for which the credit is being deter12 mined. 

13 ‘‘(B) CREDIT RATE.—The credit deter14 mined under this paragraph shall be equal to 

15 10 percent of the adjusted qualified training ex16 penditures for the taxable year. 

17 ‘‘(2) AGGREGATION AND ALLOCATION OF EX18 PENDITURES, ETC.—Rules similar to the rules of 

19 paragraphs (1), (2), (3), (4), and (5) of section 

20 41(f) shall apply. 

21 ‘‘(e) ELECTION TO APPLY CREDIT AGAINST PAY22 ROLL TAXES.— 

23 ‘‘(1) IN GENERAL.—At the election of a quali24 fied small business or a qualified tax-exempt organi25 zation (as defined in section 3111(e)(5)(A)) for any 


kjohnson on DSK79L0C42 with BILLS
8 

•S 538 IS

1 taxable year, section 3111(g) shall apply to the pay2 roll tax credit portion of the credit otherwise deter3 mined under subsection (a) for the taxable year and 

4 such portion shall not be treated (other than for 

5 purposes of section 280C) as a credit determined 

6 under subsection (a). 

7 ‘‘(2) PAYROLL TAX CREDIT PORTION.—For 

8 purposes of this subsection, the payroll tax credit 

9 portion of the credit determined under subsection 

10 (a) with respect to any qualified small business or 

11 qualified tax-exempt organization for any taxable 

12 year is the least of— 

13 ‘‘(A) the amount specified in the election 

14 made under this subsection, 

15 ‘‘(B) the credit determined under sub16 section (a) for the taxable year (determined be17 fore the application of this subsection), or 

18 ‘‘(C) in the case of a qualified small busi19 ness other than a partnership or S corporation, 

20 the amount of the business credit carryforward 

21 under section 39 carried from the taxable year 

22 (determined before the application of this sub23 section to the taxable year). 

24 ‘‘(3) QUALIFIED SMALL BUSINESS.—For pur25 poses of this subsection— 


kjohnson on DSK79L0C42 with BILLS
9 

•S 538 IS

1 ‘‘(A) IN GENERAL.—The term ‘qualified 

2 small business’ means, with respect to any tax3 able year— 

4 ‘‘(i) a corporation or partnership, if— 

5 ‘‘(I) the gross receipts (as deter6 mined under the rules of section 

7 448(c)(3), without regard to subpara8 graph (A) thereof) of such entity for 

9 the taxable year is less than 

10 $5,000,000, and 

11 ‘‘(II) such entity did not have 

12 gross receipts (as so determined) for 

13 any taxable year preceding the 5-tax14 able-year period ending with such tax15 able year, and 

16 ‘‘(ii) any person (other than a cor17 poration or partnership) who meets the re18 quirements of subclauses (I) and (II) of 

19 clause (i), determined— 

20 ‘‘(I) by substituting ‘person’ for 

21 ‘entity’ each place it appears, and 

22 ‘‘(II) by only taking into account 

23 the aggregate gross receipts received 

24 by such person in carrying on all 

25 trades or businesses of such person. 


kjohnson on DSK79L0C42 with BILLS
10 

•S 538 IS

1 ‘‘(B) LIMITATION.—Such term shall not 

2 include an organization which is exempt from 

3 taxation under section 501. 

4 ‘‘(4) ELECTION.— 

5 ‘‘(A) IN GENERAL.—Any election under 

6 this subsection for any taxable year— 

7 ‘‘(i) shall specify the amount of the 

8 credit to which such election applies, 

9 ‘‘(ii) shall be made on or before the 

10 due date (including extensions) of— 

11 ‘‘(I) in the case of a partnership, 

12 the return required to be filed under 

13 section 6031, 

14 ‘‘(II) in the case of an S corpora15 tion, the return required to be filed 

16 under section 6037, and 

17 ‘‘(III) in the case of any other 

18 qualified small business or qualified 

19 tax-exempt organization, the return of 

20 tax for the taxable year, and 

21 ‘‘(iii) may be revoked only with the 

22 consent of the Secretary. 

23 ‘‘(B) LIMITATIONS.— 


kjohnson on DSK79L0C42 with BILLS
11 

•S 538 IS

1 ‘‘(i) AMOUNT.—The amount specified 

2 in any election made under this subsection 

3 shall not exceed $250,000. 

4 ‘‘(ii) NUMBER OF TAXABLE YEARS.— 

5 A person may not make an election under 

6 this subsection if such person (or any other 

7 person treated as a single taxpayer with 

8 such person under paragraph (5)(A)) has 

9 made an election under this subsection for 

10 five or more preceding taxable years. 

11 ‘‘(C) SPECIAL RULE FOR PARTNERSHIPS

12 AND S CORPORATIONS.—In the case of a part13 nership or S corporation, the election made 

14 under this subsection shall be made at the enti15 ty level. 

16 ‘‘(5) AGGREGATION RULES.— 

17 ‘‘(A) IN GENERAL.—Except as provided in 

18 subparagraph (B)— 

19 ‘‘(i) all members of the same con20 trolled group of corporations shall be treat21 ed as a single taxpayer, and 

22 ‘‘(ii) all trades or businesses (whether 

23 or not incorporated) which are under com24 mon control shall be treated as a single 

25 taxpayer. 


kjohnson on DSK79L0C42 with BILLS
12 

•S 538 IS

1 ‘‘(B) SPECIAL RULES.—For purposes of 

2 this subsection and section 3111(g)— 

3 ‘‘(i) each of the persons treated as a 

4 single taxpayer under subparagraph (A) 

5 may separately make the election under 

6 paragraph (1) for any taxable year, and 

7 ‘‘(ii) the $250,000 amount under 

8 paragraph (3)(B)(i) shall be allocated 

9 among all persons treated as a single tax10 payer under subparagraph (A) in the man11 ner provided by the Secretary which is 

12 similar to the manner provided under sec13 tion 41(f)(1). 

14 ‘‘(6) REGULATIONS.—The Secretary shall pre15 scribe such regulations as may be necessary to carry 

16 out the purposes of this subsection, including— 

17 ‘‘(A) regulations to prevent the avoidance 

18 of the purposes of the limitations and aggrega19 tion rules under this subsection, 

20 ‘‘(B) regulations to minimize compliance 

21 and recordkeeping burdens under this sub22 section, and 

23 ‘‘(C) regulations for recapturing the ben24 efit of credits determined under section 3111(g) 

25 in cases where there is a recapture or a subseVerDate 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

1 quent adjustment to the payroll tax credit por2 tion of the credit determined under subsection 

3 (a), including requiring amended income tax re4 turns in the cases where there is such an ad5 justment.’’. 

6 (2) CREDIT PART OF GENERAL BUSINESS

7 CREDIT.—Section 38(b) of the Internal Revenue 

8 Code of 1986 is amended by striking ‘‘plus’’ at the 

9 end of paragraph (31), by striking the period at the 

10 end of paragraph (32) and inserting ‘‘, plus’’, and 

11 by adding at the end the following new paragraph: 

12 ‘‘(33) the employer-provided worker training 

13 credit determined under section 45T(a).’’. 

14 (3) COORDINATION WITH DEDUCTIONS.—Sec15 tion 280C of the Internal Revenue Code of 1986 is 

16 amended by adding at the end the following new 

17 subsection: 

18 ‘‘(i) EMPLOYER-PROVIDED WORKER TRAINING

19 CREDIT.—No deduction shall be allowed for that portion 

20 of the expenses otherwise allowable as a deduction taken 

21 into account in determining the credit under section 45T 

22 for the taxable year which is equal to the amount of the 

23 credit determined for such taxable year under section 

24 45T(a).’’. 


kjohnson on DSK79L0C42 with BILLS
14 

•S 538 IS

1 (4) CLERICAL AMENDMENT.—The table of sec2 tions for subpart D of part IV of subchapter A of 

3 chapter 1 of the Internal Revenue Code of 1986 is 

4 amended by adding at the end the following new 

5 item: 

‘‘Sec. 45T. Employer-provided worker training credit.’’. 

6 (b) CREDIT ALLOWED AGAINST ALTERNATIVE MIN7 IMUM TAX.—Subparagraph (B) of section 38(c)(4) of the 

8 Internal Revenue Code of 1986 is amended— 

9 (1) by redesignating clauses (x), (xi), and (xii) 

10 as clauses (xi), (xii), and (xiii), respectively, and 

11 (2) by inserting after clause (ix) the following 

12 new clause: 

13 ‘‘(x) the credit determined under sec14 tion 45T with respect to an eligible small 

15 business (as defined in paragraph (5)(C), 

16 after application of rules similar to the 

17 rules of paragraph (5)(D)),’’. 

18 (c) PAYROLL TAX CREDIT.—Section 3111 of the In19 ternal Revenue Code of 1986 is amended by adding at the 

20 end the following new subsection: 

21 ‘‘(g) CREDIT FOR WORKER TRAINING EXPENSES.— 

22 ‘‘(1) IN GENERAL.—In the case of a taxpayer 

23 who has made an election under section 45T(e) for 

24 a taxable year, there shall be allowed as a credit 

25 against the tax imposed by subsection (a) for the 


kjohnson on DSK79L0C42 with BILLS
15 

•S 538 IS

1 first calendar quarter which begins after the date on 

2 which the taxpayer files the return specified in sec3 tion 45T(e)(4)(A)(ii) an amount equal to the payroll 

4 tax credit portion determined under section 

5 45T(e)(2). 

6 ‘‘(2) LIMITATION.—The credit allowed by para7 graph (1) shall not exceed the tax imposed by sub8 section (a) for any calendar quarter on the wages 

9 paid with respect to the employment of all individ10 uals in the employ of the employer. 

11 ‘‘(3) CARRYOVER OF UNUSED CREDIT.—If the 

12 amount of the credit under paragraph (1) exceeds 

13 the limitation of paragraph (2) for any calendar 

14 quarter, such excess shall be carried to the suc15 ceeding calendar quarter and allowed as a credit 

16 under paragraph (1) for such quarter. 

17 ‘‘(4) DEDUCTION ALLOWED FOR CREDITED

18 AMOUNTS.—The credit allowed under paragraph (1) 

19 shall not be taken into account for purposes of de20 termining the amount of any deduction allowed 

21 under chapter 1 for taxes imposed under subsection 

22 (a).’’. 

23 (d) SIMPLIFIED FILING FOR CERTAIN SMALL BUSI24 NESSES.—The Secretary of the Treasury shall provide for 

25 a method of filing returns of tax and information returns 


kjohnson on DSK79L0C42 with BILLS
16 

•S 538 IS

1 required under the Internal Revenue Code of 1986 in a 

2 simplified format, to the extent possible, for employers 

3 with less than $5,000,000 in annual gross receipts (as de4 termined under guidance provided by the Secretary). 

5 (e) REGULATIONS RELATING TO POSTSECONDARY

6 CREDENTIALS.—Not later than 1 year after the date of 

7 the enactment of this Act, the Secretary of Labor, in con8 sultation with the Secretary of the Treasury, shall issue 

9 regulations or other guidance applying the definition of 

10 the term ‘‘recognized postsecondary credential’’ as pro11 vided in section 3 of the Workforce Innovation and Oppor12 tunity Act (29 U.S.C. 3102). 

13 (f) EFFECTIVE DATE.—The amendments made by 

14 this section shall apply to taxable years beginning after 

15 the date of the enactment of this Act. 

Æ 


kjohnson on DSK79L0C42 with BILLS