II 

Calendar No. 341 

112TH CONGRESS 

2D SESSION S. 2237 

To provide a temporary income tax credit for increased payroll and extend 

bonus depreciation for an additional year, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MARCH 26, 2012 

Mr. REID introduced the following bill; which was read the first time 

MARCH 27, 2012 

Read the second time and placed on the calendar 

A BILL 

To provide a temporary income tax credit for increased payroll and extend bonus depreciation for an additional year, 

and for other purposes. 

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 ‘‘Small Business Jobs 

5 and Tax Relief Act’’. 


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1 SEC. 2. TEMPORARY TAX CREDIT FOR INCREASED PAY2 ROLL. 

3 (a) IN GENERAL.—In the case of a qualified employer 

4 who elects the application of this section, there shall be 

5 allowed as a credit against the tax imposed by chapter 

6 1 of the Internal Revenue Code of 1986 for the taxable 

7 year which includes December 31, 2012, an amount equal 

8 to 10 percent of the excess (if any) of— 

9 (1) the sum of the wages and compensation 

10 paid by such qualified employer for qualified services 

11 during calendar year 2012, over 

12 (2) the sum of such wages and compensation 

13 paid during calendar year 2011. 

14 (b) LIMITATION.—The amount of the excess taken 

15 into account under subsection (a) with respect to any 

16 qualified employer shall not exceed $5,000,000. 

17 (c) WAGES AND COMPENSATION.—For purposes of 

18 this section— 

19 (1) WAGES.—The term ‘‘wages’’ has the mean20 ing given such term under section 3121 of the Inter21 nal Revenue Code of 1986 for purposes of the tax 

22 imposed by section 3111(a) of such Code. 

23 (2) COMPENSATION.—The term ‘‘compensa24 tion’’ has the meaning given such term under section 

25 3231 of such Code for purposes of the portion of the 

26 tax imposed by section 3221(a) of such Code that 


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1 corresponds to the tax imposed by section 3111(a) 

2 of such Code. 

3 (3) APPLICATION OF CONTRIBUTION AND BEN4 EFIT BASE TO CALENDAR YEAR 2011.—For purposes 

5 of determining wages and compensation under sub6 section (a)(2), the contribution and benefit base as 

7 determined under section 230 of the Social Security 

8 Act shall be such amount as in effect for calendar 

9 year 2012. 

10 (4) SPECIAL RULE WHEN NO WAGES OR COM11 PENSATION IN 2011.—In any case in which the sum 

12 of the wages and compensation paid by a qualified 

13 employer for qualified services during calendar year 

14 2011 is zero, then the amount taken into account 

15 under subsection (a)(2) shall be 80 percent of the 

16 amount taken into account under subsection (a)(1). 

17 (5) COORDINATION WITH OTHER EMPLOYMENT

18 CREDITS.—The amount of the excess taken into ac19 count under subsection (a) shall be reduced by the 

20 sum of all other Federal tax credits determined with 

21 respect to wages or compensation paid in calendar 

22 year 2012. 

23 (d) OTHER DEFINITIONS.— 

24 (1) QUALIFIED EMPLOYER.—For purposes of 

25 this section— 


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

2 employer’’ has the meaning given such term 

3 under section 3111(d)(2) of the Internal Rev4 enue Code of 1986, determined by substituting 

5 ‘‘section 101 of the Higher Education Act of 

6 1965’’ for ‘‘section 101(b) of the Higher Edu7 cation Act of 1965’’ in subparagraph (B) there8 of. 

9 (B) AGGREGATION RULES.—Rules similar 

10 to the rules of sections 414(b), 414(c), 414(m), 

11 and 414(o) of such Code shall apply to deter12 mine when multiple entities shall be treated as 

13 a single employer, and rules with respect to 

14 predecessor and successor employers may be 

15 applied, in such manner as may be prescribed 

16 by the Secretary of the Treasury or the Sec17 retary’s designee (in this section referred to as 

18 the ‘‘Secretary’’). 

19 (2) QUALIFIED SERVICES.—The term ‘‘qualified 

20 services’’ means services performed by an individual 

21 who is not described in section 51(i)(1) of such Code 

22 (applied by substituting ‘‘qualified employer’’ for 

23 ‘‘taxpayer’’ each place it appears)— 

24 (A) in a trade or business of the qualified 

25 employer, or 


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1 (B) in the case of a qualified employer ex2 empt from tax under section 501(a) of such 

3 Code, in furtherance of the activities related to 

4 the purpose or function constituting the basis of 

5 the employer’s exemption under section 501 of 

6 such Code. 

7 (e) APPLICATION OF CERTAIN RULES.—Rules simi8 lar to the rules of sections 280C(a) and 6501(m) of the 

9 Internal Revenue Code of 1986 shall apply with respect 

10 to the credit determined under this section. 

11 (f) TREATMENT OF CREDIT.—For purposes of the 

12 Internal Revenue Code of 1986— 

13 (1) TAXABLE EMPLOYERS.— 

14 (A) IN GENERAL.—The credit allowed 

15 under subsection (a) with respect to qualified 

16 services described in subsection (d)(2)(A) for 

17 any taxable year shall be added to the current 

18 year business credit under section 38(b) of such 

19 Code for such taxable year and shall be treated 

20 as a credit allowed under subpart D of part IV 

21 of subchapter A of chapter 1 of such Code. 

22 (B) LIMITATION ON CARRYBACKS.—No 

23 portion of the unused business credit under sec24 tion 38 of such Code for any taxable year which 

25 is attributable to an increase in the current 


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1 year business credit by reason of subparagraph 

2 (A) may be carried to a taxable year beginning 

3 before the date of the enactment of this section. 

4 (2) TAX-EXEMPT EMPLOYERS.— 

5 (A) IN GENERAL.—The credit allowed 

6 under subsection (a) with respect to qualified 

7 services described in subsection (d)(2)(B) for 

8 any taxable year— 

9 (i) shall be treated as a credit allowed 

10 under subpart C of part IV of subchapter 

11 A of chapter 1 of such Code, and 

12 (ii) shall be added to the credits de13 scribed in subparagraph (A) of section 

14 6211(b)(4) of such Code. 

15 (B) CONFORMING AMENDMENT.—Section 

16 1324(b)(2) of title 31, United States Code, is 

17 amended by inserting ‘‘or due under section 2 

18 of the Small Business Jobs and Tax Relief Act’’ 

19 after ‘‘the Housing Assistance Tax Act of 

20 2008’’. 

21 (g) TREATMENT OF POSSESSIONS.— 

22 (1) PAYMENTS TO POSSESSIONS.— 

23 (A) MIRROR CODE POSSESSIONS.—The 

24 Secretary shall pay to each possession of the 

25 United States with a mirror code tax system 


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1 amounts equal to the loss to that possession by 

2 reason of the application of subsections (a) 

3 through (f). Such amounts shall be determined 

4 by the Secretary based on information provided 

5 by the government of the respective possession 

6 of the United States. 

7 (B) OTHER POSSESSIONS.—The Secretary 

8 shall pay to each possession of the United 

9 States which does not have a mirror code tax 

10 system the amount estimated by the Secretary 

11 as being equal to the loss to that possession 

12 that would have occurred by reason of the ap13 plication of subsections (a) through (f) if a mir14 ror code tax system had been in effect in such 

15 possession. The preceding sentence shall not 

16 apply with respect to any possession of the 

17 United States unless such possession establishes 

18 to the satisfaction of the Secretary that the pos19 session has implemented (or, at the discretion 

20 of the Secretary, will implement) an income tax 

21 benefit which is substantially equivalent to the 

22 income tax credit allowed under such sub23 sections. 

24 (2) COORDINATION WITH CREDIT ALLOWED

25 AGAINST UNITED STATES INCOME TAXES.—No inVerDate Mar 15 2010 23:36 Mar 27, 2012 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S2237.PCS S2237

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1 crease in the credit determined under section 38(b) 

2 of the Internal Revenue Code of 1986 against 

3 United States income taxes for any taxable year de4 termined by reason of subsection (f)(1)(A) shall be 

5 taken into account with respect to any person— 

6 (A) to whom a credit is allowed against 

7 taxes imposed by the possession by reason of 

8 this section for such taxable year, or 

9 (B) who is eligible for a payment under a 

10 plan described in paragraph (1)(B) with respect 

11 to such taxable year. 

12 (3) DEFINITIONS AND SPECIAL RULES.— 

13 (A) POSSESSION OF THE UNITED

14 STATES.—For purposes of this subsection, the 

15 term ‘‘possession of the United States’’ includes 

16 American Samoa, Guam, the Commonwealth of 

17 the Northern Mariana Islands, the Common18 wealth of Puerto Rico, and the United States 

19 Virgin Islands. 

20 (B) MIRROR CODE TAX SYSTEM.—For pur21 poses of this subsection, the term ‘‘mirror code 

22 tax system’’ means, with respect to any posses23 sion of the United States, the income tax sys24 tem of such possession if the income tax liabil25 ity of the residents of such possession under 


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1 such system is determined by reference to the 

2 income tax laws of the United States as if such 

3 possession were the United States. 

4 (C) TREATMENT OF PAYMENTS.—For pur5 poses of section 1324(b)(2) of title 31, United 

6 States Code, the payments under this sub7 section shall be treated in the same manner as 

8 a refund due from credit provisions described in 

9 such section. 

10 (h) REGULATIONS.—The Secretary shall prescribe 

11 such regulations or guidance as are necessary to carry out 

12 the provisions of this section. 

13 SEC. 3. EXTENSION OF ALLOWANCE FOR BONUS DEPRECIA14 TION FOR CERTAIN BUSINESS ASSETS. 

15 (a) EXTENSION OF 100 PERCENT BONUS DEPRECIA16 TION.— 

17 (1) IN GENERAL.—Paragraph (5) of section 

18 168(k) of the Internal Revenue Code of 1986 is 

19 amended— 

20 (A) by striking ‘‘January 1, 2012’’ each 

21 place it appears and inserting ‘‘January 1, 

22 2013’’, and 

23 (B) by striking ‘‘January 1, 2013’’ and in24 serting ‘‘January 1, 2014’’. 

25 (2) CONFORMING AMENDMENTS.— 


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1 (A) The heading for paragraph (5) of sec2 tion 168(k) of such Code is amended by strik3 ing ‘‘PRE-2012 PERIODS’’ and inserting ‘‘PRE4 2013 PERIODS’’. 

5 (B) Clause (ii) of section 460(c)(6)(B) of 

6 such Code is amended by striking ‘‘January 1, 

7 2011 (January 1, 2012’’ and inserting ‘‘Janu8 ary 1, 2013 (January 1, 2014’’. 

9 (3) EFFECTIVE DATES.— 

10 (A) IN GENERAL.—Except as provided in 

11 subparagraph (B), the amendments made by 

12 this section shall apply to property placed in 

13 service after December 31, 2011. 

14 (B) CONFORMING AMENDMENT.—The 

15 amendment made by paragraph (2)(B) shall 

16 apply to property placed in service after Decem17 ber 31, 2010. 

18 (b) EXPANSION OF ELECTION TO ACCELERATE AMT 

19 CREDITS IN LIEU OF BONUS DEPRECIATION.— 

20 (1) IN GENERAL.—Paragraph (4) of section 

21 168(k) of the Internal Revenue Code of 1986 is 

22 amended to read as follows: 

23 ‘‘(4) ELECTION TO ACCELERATE AMT CREDITS

24 IN LIEU OF BONUS DEPRECIATION.— 


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1 ‘‘(A) IN GENERAL.—If a corporation elects 

2 to have this paragraph apply for any taxable 

3 year— 

4 ‘‘(i) paragraph (1) shall not apply to 

5 any eligible qualified property placed in 

6 service by the taxpayer in such taxable 

7 year, 

8 ‘‘(ii) the applicable depreciation meth9 od used under this section with respect to 

10 such property shall be the straight line 

11 method, and 

12 ‘‘(iii) the limitation imposed by section 

13 53(c) for such taxable year shall be in14 creased by the bonus depreciation amount 

15 which is determined for such taxable year 

16 under subparagraph (B). 

17 ‘‘(B) BONUS DEPRECIATION AMOUNT.— 

18 For purposes of this paragraph— 

19 ‘‘(i) IN GENERAL.—The bonus depre20 ciation amount for any taxable year is an 

21 amount equal to 20 percent of the excess 

22 (if any) of— 

23 ‘‘(I) the aggregate amount of de24 preciation which would be allowed 

25 under this section for eligible qualified 


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1 property placed in service by the tax2 payer during such taxable year if 

3 paragraph (1) applied to all such 

4 property, over 

5 ‘‘(II) the aggregate amount of 

6 depreciation which would be allowed 

7 under this section for eligible qualified 

8 property placed in service by the tax9 payer during such taxable year if 

10 paragraph (1) did not apply to any 

11 such property. 

12 The aggregate amounts determined under 

13 subclauses (I) and (II) shall be determined 

14 without regard to any election made under 

15 subsection (b)(2)(D), (b)(3)(D), or (g)(7) 

16 and without regard to subparagraph 

17 (A)(ii). 

18 ‘‘(ii) LIMITATION.—The bonus depre19 ciation amount for any taxable year shall 

20 not exceed the lesser of— 

21 ‘‘(I) 50 percent of the minimum 

22 tax credit under section 53(b) for the 

23 first taxable year ending after Decem24 ber 31, 2011, reduced (but not below 

25 zero) by the sum of the bonus depreVerDate Mar 15 2010 23:36 Mar 27, 2012 Jkt 019200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S2237.PCS S2237

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1 ciation amounts for all taxable years 

2 ending after such date for which an 

3 election under this paragraph was 

4 made which precede the taxable year 

5 for which the determination is made 

6 (other than amounts determined with 

7 respect to property placed in service 

8 by the taxpayer on or before such 

9 date), or 

10 ‘‘(II) the minimum tax credit 

11 under section 53(b) for such taxable 

12 year determined by taking into ac13 count only the adjusted minimum tax 

14 for taxable years ending before Janu15 ary 1, 2012 (determined by treating 

16 credits as allowed on a first-in, first17 out basis). 

18 ‘‘(iii) AGGREGATION RULE.—All cor19 porations which are treated as a single em20 ployer under section 52(a) shall be treat21 ed— 

22 ‘‘(I) as 1 taxpayer for purposes 

23 of this paragraph, and 


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1 ‘‘(II) as having elected the appli2 cation of this paragraph if any such 

3 corporation so elects. 

4 ‘‘(C) ELIGIBLE QUALIFIED PROPERTY.— 

5 For purposes of this paragraph, the term ‘eligi6 ble qualified property’ means qualified property 

7 under paragraph (2), except that in applying 

8 paragraph (2) for purposes of this paragraph— 

9 ‘‘(i) ‘March 31, 2008’ shall be sub10 stituted for ‘December 31, 2007’ each 

11 place it appears in subparagraph (A) and 

12 clauses (i) and (ii) of subparagraph (E) 

13 thereof, 

14 ‘‘(ii) ‘April 1, 2008’ shall be sub15 stituted for ‘January 1, 2008’ in subpara16 graph (A)(iii)(I) thereof, and 

17 ‘‘(iii) only adjusted basis attributable 

18 to manufacture, construction, or produc19 tion— 

20 ‘‘(I) after March 31, 2008, and 

21 before January 1, 2010, and 

22 ‘‘(II) after December 31, 2010, 

23 and before January 1, 2013, shall be 

24 taken into account under subpara25 graph (B)(ii) thereof. 


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1 ‘‘(D) CREDIT REFUNDABLE.—For pur2 poses of section 6401(b), the aggregate increase 

3 in the credits allowable under part IV of sub4 chapter A for any taxable year resulting from 

5 the application of this paragraph shall be treat6 ed as allowed under subpart C of such part 

7 (and not any other subpart). 

8 ‘‘(E) OTHER RULES.— 

9 ‘‘(i) ELECTION.—Any election under 

10 this paragraph may be revoked only with 

11 the consent of the Secretary. 

12 ‘‘(ii) PARTNERSHIPS WITH ELECTING

13 PARTNERS.—In the case of a corporation 

14 making an election under subparagraph 

15 (A) and which is a partner in a partner16 ship, for purposes of determining such cor17 poration’s distributive share of partnership 

18 items under section 702— 

19 ‘‘(I) paragraph (1) shall not 

20 apply to any eligible qualified prop21 erty, and 

22 ‘‘(II) the applicable depreciation 

23 method used under this section with 

24 respect to such property shall be the 

25 straight line method. 


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1 ‘‘(iii) CERTAIN PARTNERSHIPS.—In 

2 the case of a partnership in which more 

3 than 50 percent of the capital and profits 

4 interests are owned (directly or indirectly) 

5 at all times during the taxable year by one 

6 corporation (or by corporations treated as 

7 1 taxpayer under subparagraph (B)(iii)), 

8 for purposes of subparagraph (B), each 

9 partner shall take into account its distribu10 tive share of the amounts determined by 

11 the partnership under subclauses (I) and 

12 (II) of clause (i) of such subparagraph for 

13 the taxable year of the partnership ending 

14 with or within the taxable year of the part15 ner. The preceding sentence shall apply 

16 only to amounts determined with respect to 

17 property placed in service after December 

18 31, 2011. 

19 ‘‘(iv) SPECIAL RULE FOR PASSENGER

20 AIRCRAFT.—In the case of any passenger 

21 aircraft, the written binding contract limi22 tation under paragraph (2)(A)(iii)(I) shall 

23 not apply for purposes of subparagraphs 

24 (B)(i)(I) and (C).’’. 


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1 (2) EFFECTIVE DATE.—The amendment made 

2 by this subsection shall apply to taxable years end3 ing after December 31, 2011. 

4 (3) TRANSITIONAL RULE.—In the case of a tax5 able year beginning before January 1, 2012, and 

6 ending after December 31, 2011, the bonus depre7 ciation amount determined under paragraph (4) of 

8 section 168(k) of the Internal Revenue Code of 1986 

9 for such year shall be the sum of— 

10 (A) such amount determined under such 

11 paragraph as in effect on the date before the 

12 date of enactment of this Act— 

13 (i) taking into account only property 

14 placed in service before January 1, 2012, 

15 and 

16 (ii) multiplying the limitation under 

17 subparagraph (C)(ii) of such paragraph (as 

18 so in effect) by a fraction the numerator of 

19 which is the number of days in the taxable 

20 year before January 1, 2012, and the de21 nominator of which is the number of days 

22 in the taxable year, and 

23 (B) such amount determined under such 

24 paragraph as amended by this Act— 


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1 (i) taking into account only property 

2 placed in service after December 31, 2011, 

3 and 

4 (ii) multiplying the limitation under 

5 subparagraph (B)(ii) of such paragraph 

6 (as so in effect) by a fraction the numer7 ator of which is the number of days in the 

8 taxable year after December 31, 2011, and 

9 the denominator of which is the number of 

10 days in the taxable year. 


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Calendar No. 341 

112TH CONGRESS 

2D SESSION S. 2237 

A BILL 

To provide a temporary income tax credit for inan additional year, and for other purposes. creased payroll and extend bonus depreciation for 

MARCH 27, 2012 

Read the second time and placed on the calendar 


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