I 

112TH CONGRESS 

1ST SESSION H. R. 1948 

To amend the Internal Revenue Code of 1986 to allow employers a credit 

against income tax equal to 50 percent of the compensation paid to 

employees while they are performing active duty service as members 

of the Ready Reserve or the National Guard and of the compensation 

paid to temporary replacement employees. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 23, 2011 

Mr. POE of Texas (for himself, Mr. CONNOLLY of Virginia, Mr. COURTNEY, 

Mrs. MILLER of Michigan, and Mr. SENSENBRENNER) introduced the following bill; which was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to allow employers a credit against income tax equal to 50 percent 

of the compensation paid to employees while they are 

performing active duty service as members of the Ready 

Reserve or the National Guard and of the compensation 

paid to temporary replacement employees. 

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


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1 SECTION 1. SHORT TITLE, ETC. 

2 (a) SHORT TITLE.—This Act may be cited as the 

3 ‘‘Ready Employers Willing to Assist Reservists’ Deploy4 ment Act of 2011’’ or as the ‘‘REWARD Act of 2011’’. 

5 (b) FINDINGS.—The Congress finds the following: 

6 (1) The Secretary of Defense presents Freedom 

7 Awards to employers who demonstrate exceptional 

8 understanding and support for employees who are 

9 deployed as members of the Ready Reserve and Na10 tional Guard. 

11 (2) Since the Freedom Awards program was es12 tablished in 1996, more than 100 employers have re13 ceived the prestigious Freedom Award. 

14 SEC. 2. EMPLOYER CREDIT FOR COMPENSATION PAID TO 

15 EMPLOYEES WHILE SERVING ON ACTIVE 

16 DUTY AS MEMBERS OF READY RESERVE OR 

17 THE NATIONAL GUARD. 

18 (a) IN GENERAL.—Subpart D of part IV of sub19 chapter A of chapter 1 of the Internal Revenue Code of 

20 1986 (relating to business-related credits) is amended by 

21 adding at the end the following new section: 


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1 ‘‘SEC. 45S. EMPLOYER CREDIT FOR COMPENSATION PAID 

2 TO EMPLOYEES WHILE SERVING ON ACTIVE 

3 DUTY AS MEMBERS OF READY RESERVE OR 

4 THE NATIONAL GUARD AND FOR COMPENSA5 TION PAID TO TEMPORARY REPLACEMENT 

6 EMPLOYEES. 

7 ‘‘(a) GENERAL RULE.—For purposes of section 38, 

8 in the case of an employer, the employer Ready Reserve9 National Guard active duty credit determined under this 

10 section for the taxable year is an amount equal to— 

11 ‘‘(1) 50 percent of the compensation paid or in12 curred to each Ready Reserve-National Guard em13 ployee of the taxpayer while the employee is absent 

14 from employment while performing qualified active 

15 duty, and 

16 ‘‘(2) 50 percent of the compensation paid or in17 curred to each qualified replacement employee of the 

18 taxpayer. 

19 ‘‘(b) LIMITATION APPLICABLE TO READY RESERVE20 NATIONAL GUARD EMPLOYEES.— 

21 ‘‘(1) IN GENERAL.—The amount of compensa22 tion taken into account under subsection (a) for any 

23 period of qualified active duty with respect to a 

24 Ready Reserve-National Guard employee shall not 

25 exceed the active duty wage differential of such em26 ployee for such period. 


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1 ‘‘(2) ACTIVE DUTY WAGE DIFFERENTIAL.— 

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

3 section, the active duty wage differential of a 

4 Ready Reserve-National Guard employee for 

5 any period of qualified active duty is the 

6 amount equal to the product of— 

7 ‘‘(i) the daily wage differential of such 

8 employee for such period, multiplied by 

9 ‘‘(ii) the number of days that such 

10 employee is on qualified active duty during 

11 such period. 

12 ‘‘(B) DAILY WAGE DIFFERENTIAL.—For 

13 purposes of subparagraph (A), the daily wage 

14 differential of a Ready Reserve-National Guard 

15 employee for any period is an amount equal to 

16 the excess of— 

17 ‘‘(i) such employee’s average daily em18 ployer-provided compensation for such pe19 riod, over 

20 ‘‘(ii) such employee’s average daily 

21 military pay for such period. 

22 ‘‘(C) AVERAGE DAILY EMPLOYER-PRO23 VIDED COMPENSATION.— 

24 ‘‘(i) IN GENERAL.—For purposes of 

25 subparagraph (B), an employee’s average 


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1 daily employer-provided compensation for 

2 any period is the average daily compensa3 tion paid by the employer to the employee 

4 for the 1-year period ending on the day be5 fore the date that the employee begins 

6 qualified active duty, adjusted for cost-of7 living and other increases generally appli8 cable to employees of the employer for 

9 such period. 

10 ‘‘(ii) EMPLOYER-PROVIDED COM11 PENSATION.—The term ‘compensation’ 

12 means any remuneration for employment, 

13 whether in cash or in kind, which is allow14 able as a deduction under section 

15 162(a)(1). 

16 ‘‘(D) AVERAGE DAILY MILITARY PAY.— 

17 ‘‘(i) IN GENERAL.—For purposes of 

18 subparagraph (B), a Ready Reserve-Na19 tional Guard employee’s average daily mili20 tary pay is the average daily military pay 

21 and allowances received by the employee on 

22 account of the employee’s performance of 

23 qualified active duty during the period. 

24 ‘‘(ii) MILITARY PAY AND ALLOW25 ANCES.—For purposes of clause (i)— 


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1 ‘‘(I) MILITARY PAY.—The term 

2 ‘military pay’ means pay (as defined 

3 in section 101(21) of title 37, United 

4 States Code). 

5 ‘‘(II) ALLOWANCES.—The term 

6 ‘allowances’ means the allowances 

7 payable to a member of the Armed 

8 Forces of the United States under 

9 chapter 7 of such title. 

10 ‘‘(c) LIMITATION APPLICABLE TO QUALIFIED RE11 PLACEMENT EMPLOYEES.— 

12 ‘‘(1) IN GENERAL.—The amount of compensa13 tion taken into account under subsection (a) with re14 spect to any qualified replacement employee for any 

15 period shall not exceed the amount equal to the 

16 product of— 

17 ‘‘(A) the average daily employer-provided 

18 compensation for such period of the Ready Re19 serve-National Guard employee being replaced 

20 by such replacement employee for such period, 

21 and 

22 ‘‘(B) the number of days that the Ready 

23 Reserve-National Guard employee is on quali24 fied active duty during such period. 

25 ‘‘(d) DEFINITIONS.—For purposes of this section— 


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1 ‘‘(1) READY RESERVE-NATIONAL GUARD EM2 PLOYEE.— 

3 ‘‘(A) IN GENERAL.—The term ‘Ready Re4 serve-National Guard employee’ means any em5 ployee— 

6 ‘‘(i) who is a member of the Ready 

7 Reserve or of the National Guard, and 

8 ‘‘(ii) who was an employee of the tax9 payer during the 1-year period ending on 

10 the day before the date that the employee 

11 begins qualified active duty. 

12 ‘‘(B) NATIONAL GUARD.—The term ‘Na13 tional Guard’ has the meaning given such term 

14 by section 101(c)(1) of title 10, United States 

15 Code. 

16 ‘‘(C) READY RESERVE.—The term ‘Ready 

17 Reserve’ has the meaning given such term by 

18 section 10142 of title 10, United States Code. 

19 ‘‘(2) QUALIFIED ACTIVE DUTY.—The term 

20 ‘qualified active duty’ means— 

21 ‘‘(A) active duty under an order or call for 

22 a period in excess of 90 days or for an indefi23 nite period, other than the training duty speci24 fied in— 


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1 ‘‘(i) section 10147 of title 10, United 

2 States Code (relating to training require3 ments for the Ready Reserve), or 

4 ‘‘(ii) section 502(a) of title 32, United 

5 States Code (relating to required drills and 

6 field exercises for the National Guard), in 

7 connection with which an employee is enti8 tled to reemployment rights and other ben9 efits or to a leave of absence from employ10 ment under chapter 43 of title 38, United 

11 States Code, and 

12 ‘‘(B) hospitalization incident to such active 

13 duty. 

14 ‘‘(3) QUALIFIED REPLACEMENT EMPLOYEE.— 

15 The term ‘qualified replacement employee’ means 

16 any employee who is hired by the taxpayer to replace 

17 a Ready Reserve-National Guard employee during a 

18 period of qualified active duty, but only with respect 

19 to periods for which the taxpayer has paid such 

20 Ready Reserve-National Guard employee an amount 

21 not less than the active duty wage differential (if 

22 any) for such period.’’. 

23 (b) DENIAL OF DOUBLE BENEFIT.—Subsection (a) 

24 of section 280C of such Code (relating to certain expenses 


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1 for which credits are allowable) is amended by inserting 

2 ‘‘45S(a),’’ after ‘‘45P(a),’’. 

3 (c) CREDIT TO BE PART OF GENERAL BUSINESS

4 CREDIT.—Subsection (b) of section 38 of such Code (re5 lating to general business credit) is amended by striking 

6 ‘‘plus’’ at the end of paragraph (35), by striking the period 

7 at the end of paragraph (36) and inserting ‘‘, plus’’, and 

8 by inserting after paragraph (36) the following new para9 graph: 

10 ‘‘(37) in the case of an employer, the employer 

11 Ready Reserve-National Guard employee credit de12 termined under section 45S(a).’’. 

13 (d) CONFORMING AMENDMENT.—The table of sec14 tions for subpart D of part IV of subchapter A of chapter 

15 1 of such Code is amended by adding at the end the fol16 lowing new item: 

‘‘Sec. 45S. Employer credit for compensation paid to employees while serving 

on active duty as members of Ready Reserve or the National 

Guard and for compensation paid to temporary replacement 

employees.’’. 

17 (e) EFFECTIVE DATE.—The amendments made by 

18 this section shall apply to periods of qualified active duty 

19 (as defined in section 45S(d) of the Internal Revenue Code 

20 of 1986, as added by this section) in taxable years begin21 ning after December 31, 2010. 

22 (f) INFORMATION ON MILITARY PAY AND ALLOW23 ANCES.—The Secretary concerned (as defined in section 


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1 101 of title 10, United States Code) shall provide to em2 ployers and the Secretary of the Treasury such informa3 tion as is necessary to determine the proper amount of 

4 credit allowable to employers under section 45S of the In5 ternal Revenue Code of 1986, as added by this section. 

Æ 


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