II 

113TH CONGRESS 

1ST SESSION S. 1651 

To amend the Internal Revenue Code of 1986 to allow manufacturing businesses to establish tax-free manufacturing reinvestment accounts to assist 

them in providing for new equipment and facilities and workforce training. 

IN THE SENATE OF THE UNITED STATES 

NOVEMBER 5, 2013 

Mr. BLUMENTHAL (for himself and Mr. MURPHY) 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 allow manufacturing businesses to establish tax-free manufacturing 

reinvestment accounts to assist them in providing for 

new equipment and facilities and workforce 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 ‘‘Manufacturing Rein5 vestment Account Act of 2013’’. 

6 SEC. 2. MANUFACTURING REINVESTMENT ACCOUNTS. 

7 (a) IN GENERAL.—Part VI of subchapter B of chap8 ter 1 of the Internal Revenue Code of 1986 (relating to 

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1 itemized deductions for individuals and corporations) is 

2 amended by inserting after section 199 the following new 

3 section: 

4 ‘‘SEC. 199A. MANUFACTURING REINVESTMENT ACCOUNTS. 

5 ‘‘(a) DEDUCTION ALLOWED.—In the case of a tax6 payer engaged in a manufacturing business, there shall 

7 be allowed as a deduction for the taxable year the amount 

8 paid in cash by the taxpayer during the taxable year to 

9 a manufacturing reinvestment account (hereinafter re10 ferred to as an ‘MRA’) for the taxpayer’s benefit. 

11 ‘‘(b) LIMITATION.— 

12 ‘‘(1) IN GENERAL.—The amount which a tax13 payer may pay into an MRA for the taxable year 

14 shall not exceed the lesser of— 

15 ‘‘(A) the domestic manufacturing gross re16 ceipts of the taxpayer for the taxable year, or 

17 ‘‘(B) $500,000. 

18 ‘‘(2) CONTROLLED GROUPS.— 

19 ‘‘(A) IN GENERAL.—For purposes of this 

20 subsection, all persons treated as a single em21 ployer under subsection (a) or (b) of section 52 

22 or subsection (m) or (o) of section 414 shall be 

23 treated as a single manufacturer. 

24 ‘‘(B) INCLUSION OF FOREIGN CORPORA25 TIONS.—For purposes of subparagraph (A), in 

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1 applying subsections (a) and (b) of section 52 

2 to this section, section 1563 shall be applied 

3 without regard to subsection (b)(2)(C) thereof. 

4 ‘‘(c) MRA.—For purposes of this section, the term 

5 ‘MRA’ means a trust created or organized in the United 

6 States for the exclusive benefit of the taxpayer, but only 

7 if the written governing instrument creating the trust 

8 meets the following requirements: 

9 ‘‘(1) No contribution will be accepted for any 

10 taxable year unless it is in cash. 

11 ‘‘(2) Contributions will not be accepted for any 

12 taxable year in excess of the amount allowed as a 

13 deduction under subsection (a) for such year. 

14 ‘‘(3) The trustee is an eligible institution. 

15 ‘‘(4) No part of the trust assets will be invested 

16 in life insurance contracts. 

17 ‘‘(5) No part of the trust assets will be invested 

18 in any collectible (as defined in section 408(m)). 

19 ‘‘(6) The assets of the trust will not be commin20 gled with other property except in a common trust 

21 fund or common investment fund. 

22 ‘‘(d) TAX TREATMENT OF ACCOUNTS.— 

23 ‘‘(1) IN GENERAL.—An MRA is exempt from 

24 taxation under this subtitle unless the account has 

25 ceased to be an MRA. Notwithstanding the premstockstill on DSK4VPTVN1PROD with BILLS

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1 ceding sentence, an MRA is subject to the taxes im2 posed by section 511 (relating to imposition of tax 

3 on unrelated business income of charitable, etc. or4 ganizations). 

5 ‘‘(2) ACCOUNT TERMINATIONS.—Rules similar 

6 to the rules of paragraphs (2) and (4) of section 

7 408(e) shall apply to MRAs, and any amount treat8 ed as distributed under such rules shall be treated 

9 as not used to pay qualified reinvestment expenses. 

10 ‘‘(e) TREATMENT OF DISTRIBUTIONS.— 

11 ‘‘(1) IN GENERAL.—Except as provided in para12 graphs (3) and (4), there shall be includible in the 

13 gross income of the taxpayer for any taxable year— 

14 ‘‘(A) any amount distributed from an MRA 

15 of the taxpayer during such taxable year, and 

16 ‘‘(B) any deemed distribution under— 

17 ‘‘(i) subsection (g)(1) (relating to de18 posits not distributed within 7 years), 

19 ‘‘(ii) subsection (g)(2) (relating to ces20 sation in manufacturing business), and 

21 ‘‘(iii) subparagraph (A) or (B) of sub22 section (g)(3) (relating to prohibited trans23 actions and pledging account as security). 

24 ‘‘(2) ADDITIONAL TAX.— 

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1 ‘‘(A) IN GENERAL.—The tax imposed by 

2 this chapter on the taxpayer for any taxable 

3 year in which there is a distribution from an 

4 MRA shall be increased by 10 percent of the 

5 amount of such distribution which is includible 

6 in gross income. 

7 ‘‘(B) EXCEPTION.—Subparagraph (A) 

8 shall not apply to distributions during the tax9 able year to the extent necessary, under regula10 tions prescribed by the Secretary, to avoid 

11 bankruptcy. 

12 ‘‘(3) REDUCED INCLUSION FOR AMOUNTS REIN13 VESTED.—Only 43 percent of the aggregate amount 

14 distributed from an MRA during the taxable year 

15 shall be includible in income under paragraph (1)(A) 

16 to the extent that such aggregate amount does not 

17 exceed the aggregate amount of qualified reinvest18 ment expenses paid or incurred by the taxpayer dur19 ing such year. 

20 ‘‘(4) DISTRIBUTION OF EXCESS CONTRIBU21 TIONS.—Paragraph (1) shall not apply to the dis22 tribution of any contribution paid during a taxable 

23 year to an MRA to the extent that such contribution 

24 exceeds the limitation applicable under subsection 

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1 (b) if requirements similar to the requirements of 

2 section 408(d)(4) are met. 

3 ‘‘(f) DEFINITIONS.—For purposes of this section— 

4 ‘‘(1) MANUFACTURING BUSINESS.—The term 

5 ‘manufacturing business’ means any trade or busi6 ness having domestic manufacturing gross receipts. 

7 ‘‘(2) DOMESTIC MANUFACTURING GROSS RE8 CEIPTS.—The term ‘domestic manufacturing gross 

9 receipts’ means gross receipts of the taxpayer which 

10 are derived from any lease, rental, license, sale, ex11 change, or other disposition of tangible personal 

12 property which was manufactured by the taxpayer in 

13 whole or in significant part within the United 

14 States. Rules similar to the rules of section 199 

15 shall apply in determining the gross receipts of the 

16 taxpayer for purposes of the preceding sentence. 

17 ‘‘(3) QUALIFIED REINVESTMENT EXPENSES.— 

18 The term ‘qualified reinvestment expenses’ means— 

19 ‘‘(A) expenses for property to be used by 

20 the taxpayer in a manufacturing business, and 

21 ‘‘(B) expenses for job training and work22 force development for employees of the tax23 payer. 

24 ‘‘(4) ELIGIBLE INSTITUTION.— 

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1 ‘‘(A) IN GENERAL.—The term ‘eligible in2 stitution’ means— 

3 ‘‘(i) any insured depository institu4 tion, which— 

5 ‘‘(I) is not controlled by a bank 

6 holding company or savings and loan 

7 holding company that is also an eligi8 ble institution, 

9 ‘‘(II) has total assets of equal to 

10 or less than $25,000,000,000, as re11 ported in the call report as of the end 

12 of the fourth quarter of calendar year 

13 2012, and 

14 ‘‘(III) is not directly or indirectly 

15 controlled by any company or other 

16 entity that has total consolidated as17 sets of more than $25,000,000,000, 

18 as so reported; 

19 ‘‘(ii) any bank holding company which 

20 has total consolidated assets of equal to or 

21 less than $25,000,000,000; 

22 ‘‘(iii) any savings and loan holding 

23 company which has total consolidated as24 sets of equal to or less than 

25 $25,000,000,000; 

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1 ‘‘(iv) any community development fi2 nancial institution loan fund which has 

3 total assets of equal to or less than 

4 $25,000,000,000; and 

5 ‘‘(v) any small business lending com6 pany that has total assets of equal to or 

7 less than $25,000,000,000. 

8 ‘‘(B) INSURED DEPOSITORY INSTITU9 TION.—The term ‘insured depository institu10 tion’ has the meaning given such term under 

11 section 3(c)(2) of the Federal Deposit Insur12 ance Act (12 U.S.C. 1813(c)(2)). 

13 ‘‘(C) BANK HOLDING COMPANY.—The 

14 term ‘bank holding company’ has the meaning 

15 given such term under section 2(a)(1) of the 

16 Bank Holding Company Act of 1956 (12 

17 U.S.C. 1841(2)(a)(1)). 

18 ‘‘(D) CALL REPORT.—The term ‘call re19 port’ means— 

20 ‘‘(i) reports of Condition and Income 

21 submitted to the Office of the Comptroller 

22 of the Currency, the Board of Governors of 

23 the Federal Reserve System, and the Fed24 eral Deposit Insurance Corporation; 

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1 ‘‘(ii) the Office of Thrift Supervision 

2 Thrift Financial Report; 

3 ‘‘(iii) any report that is designated by 

4 the Office of the Comptroller of the Cur5 rency, the Board of Governors of the Fed6 eral Reserve System, the Federal Deposit 

7 Insurance Corporation, or the Office of 

8 Thrift Supervision, as applicable, as a suc9 cessor to any report referred to in clause 

10 (i) or (ii); 

11 ‘‘(iv) standard reports of Condition 

12 and Income submitted by Community De13 velopment Financial Institution loan funds 

14 to the Community Development Financial 

15 Institutions Fund; and 

16 ‘‘(v) with respect to an eligible institu17 tion for which no report exists that is de18 scribed under clause (i), (ii), or (iii), such 

19 other report or set of information as the 

20 Secretary, in consultation with the Admin21 istrator of the Small Business Administra22 tion, may prescribe. 

23 ‘‘(g) SPECIAL RULES.— 

24 ‘‘(1) TAX ON DEPOSITS IN ACCOUNT WHICH

25 ARE NOT DISTRIBUTED WITHIN 7 YEARS.— 

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1 ‘‘(A) IN GENERAL.—If, at the close of any 

2 taxable year, there is a nonqualified balance in 

3 any MRA— 

4 ‘‘(i) there shall be deemed distributed 

5 from the MRA during such taxable year an 

6 amount equal to such balance, and 

7 ‘‘(ii) the taxpayer’s tax imposed by 

8 this chapter for such taxable year shall be 

9 increased by 10 percent of such deemed 

10 distribution. 

11 ‘‘(B) NONQUALIFIED BALANCE.—For pur12 poses of subparagraph (A), the term ‘non13 qualified balance’ means any balance in the 

14 MRA on the last day of the taxable year which 

15 is attributable to amounts deposited in such ac16 count before the 6th preceding taxable year. 

17 ‘‘(C) ORDERING RULE.—For purposes of 

18 this paragraph, distributions from an MRA 

19 shall be treated as made from deposits (and in20 come thereon) in the order in which such depos21 its were made, beginning with the earliest de22 posits. 

23 ‘‘(2) CESSATION OF MANUFACTURING BUSI24 NESS.—If the taxpayer ceases to be engaged in a 

25 manufacturing business, there shall be deemed dismstockstill on DSK4VPTVN1PROD with BILLS

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1 tributed from the MRA of the taxpayer at the close 

2 of the first taxable year beginning after such ces3 sation an amount equal to the balance in the MRA 

4 (if any) at such close. 

5 ‘‘(3) CERTAIN RULES TO APPLY.—Rules similar 

6 to the following rules shall apply for purposes of this 

7 section: 

8 ‘‘(A) Section 408(e)(2) (relating to loss of 

9 exemption of account where taxpayer engages 

10 in prohibited transaction). 

11 ‘‘(B) Section 408(e)(4) (relating to effect 

12 of pledging account as security). 

13 ‘‘(C) Section 408(h) (relating to custodial 

14 accounts). 

15 ‘‘(4) TIME WHEN PAYMENTS DEEMED MADE.— 

16 For purposes of this section, a taxpayer shall be 

17 deemed to have made a payment to an MRA on the 

18 last day of a taxable year if such payment is made 

19 on account of such taxable year and is made on or 

20 before the due date (without regard to extensions) 

21 for filing the return of tax for such taxable year. 

22 ‘‘(5) DEDUCTION NOT ALLOWED FOR SELF-EM23 PLOYMENT TAX.—The deduction allowable by reason 

24 of subsection (a) shall not be taken into account in 

25 determining an individual’s net earnings from selfmstockstill on DSK4VPTVN1PROD with BILLS

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1 employment (within the meaning of section 1402(a)) 

2 for purposes of chapter 2. 

3 ‘‘(h) REPORTS.—The trustee of an MRA shall make 

4 such reports regarding such account to the Secretary and 

5 to the person for whose benefit the account is maintained 

6 with respect to contributions, distributions, and such other 

7 matters as the Secretary may require under regulations. 

8 The reports required by this subsection shall be filed at 

9 such time and in such manner and furnished to such per10 sons at such time and in such manner as may be required 

11 by such regulations. 

12 ‘‘(i) TERMINATION.—No deduction shall be allowed 

13 under this section for any taxable year beginning more 

14 than 10 years after the date of the enactment of this sec15 tion.’’. 

16 (b) TAX ON EXCESS CONTRIBUTIONS.— 

17 (1) IN GENERAL.—Subsection (a) of section 

18 4973 of such Code (relating to tax on excess con19 tributions to certain tax-favored accounts and annu20 ities) is amended by striking ‘‘or’’ at the end of 

21 paragraph (4), by adding ‘‘or’’ at the end of para22 graph (5), and by inserting after paragraph (5) the 

23 following new paragraph: 

24 ‘‘(6) an MRA (within the meaning of section 

25 199A(c)),’’. 

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1 (2) EXCESS CONTRIBUTION DEFINED.—Section 

2 4973 of such Code is amended by adding at the end 

3 the following new subsection: 

4 ‘‘(h) EXCESS CONTRIBUTIONS TO MRAS.—For pur5 poses of this section, in the case of MRAs (within the 

6 meaning of section 199A(c)), the term ‘excess contribu7 tions’ means the amount by which the amount contributed 

8 for the taxable year to the MRAs of the taxpayer exceeds 

9 the amount which may be contributed to such MRAs 

10 under section 199A(b) for such taxable year. For purposes 

11 of this subsection, any contribution which is distributed 

12 out of an MRA in a distribution to which section 

13 199A(e)(3) applies shall be treated as an amount not con14 tributed.’’. 

15 (c) TAX ON PROHIBITED TRANSACTIONS.— 

16 (1) IN GENERAL.—Paragraph (1) of section 

17 4975(e) of such Code is amended by striking ‘‘or’’ 

18 at the end of subparagraph (F), by redesignating 

19 subparagraph (G) as subparagraph (H), and by in20 serting after subparagraph (F) the following: 

21 ‘‘(G) an MRA described in section 

22 199A(c), or’’. 

23 (2) SPECIAL RULE.—Subsection (c) of section 

24 4975 of such Code (relating to tax on prohibited 

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1 transactions) is amended by adding at the end the 

2 following: 

3 ‘‘(7) SPECIAL RULE FOR MANUFACTURING RE4 INVESTMENT ACCOUNTS.—A person for whose ben5 efit an MRA (within the meaning of section 

6 199A(c)) is established shall be exempt from the tax 

7 imposed by this section with respect to any trans8 action concerning such account (which would other9 wise be taxable under this section) if, with respect 

10 to such transaction, the account ceases to be an 

11 MRA by reason of the application of section 

12 199A(g)(3)(A) to such account.’’. 

13 (d) FAILURE TO PROVIDE REPORTS ON MRAS.— 

14 Paragraph (2) of section 6693(a) of such Code (relating 

15 to failure to provide reports on certain tax-favored ac16 counts or annuities) is amended by redesignating subpara17 graphs (A) through (E) as subparagraphs (B) and (F), 

18 respectively, and by inserting before subparagraph (B), as 

19 so redesignated, the following new subparagraph: 

20 ‘‘(A) section 199A(h) (relating to manufac21 turing reinvestment accounts),’’. 

22 (e) CLERICAL AMENDMENT.—The table of sections 

23 for part VI of subchapter B of chapter 1 of such Code 

24 is amended by inserting after the item relating to section 

25 199 the following new item: 

‘‘Sec. 199A. Manufacturing reinvestment accounts.’’. 

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

2 this section shall apply to taxable years beginning after 

3 the date of the enactment of this Act. 

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