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103D CONGRESS

1ST SESSION H. R. 1108

To amend the Internal Revenue Code of 1986 to provide small businesses

a credit for the cost of complying with Federal regulations.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 24, 1993

Mr. LIGHTFOOT (for himself, Mr. BAKER of Louisiana, Mr. BURTON of Indiana, Mr. CLINGER, Mr. DELAY, Mr. DORNAN, Mr. DREIER, Mr. EMERSON, Mr. FIELDS of Texas, Mr. GALLEGLY, Mr. GALLO, Mr. GILMAN,

Mr. GINGRICH, Mr. GOODLING, Mr. HERGER, Mr. HOKE, Mr. HUNTER,

Mr. INHOFE, Mr. KOLBE, Mr. LEWIS of Florida, Mrs. LLOYD, Mr.

MCHUGH, Mr. MACHTLEY, Ms. NORTON, Mr. OXLEY, Mr. PARKER, Mr.

ROBERTS, Mr. SAXTON, Mr. SENSENBRENNER, Mr. SKEEN, Mr. SOLOMON, Mr. SUNDQUIST, Mr. THOMAS of Wyoming, Mr. UPTON, and Mr.

WYNN) 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 provide

small businesses a credit for the cost of complying with

Federal regulations.

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 Regu5 latory Cost Relief Act of 1993’’.
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1 SEC. 2. TAX CREDIT FOR CERTAIN REGULATORY COSTS.

2 (a) GENERAL RULE.—Section 44 of the Internal

3 Revenue Code of 1986 is amended to read as follows:

4 ‘‘SEC. 44. SMALL BUSINESS REGULATORY COSTS.

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

6 in the case of a qualified small business, the regulatory

7 cost credit determined under this section for any taxable

8 year is 50 percent of so much of the qualified regulatory

9 costs for the taxable year as exceed $250.

10 ‘‘(b) QUALIFIED SMALL BUSINESS.—For purposes of

11 this section, the term ‘qualified small business’ means any

12 person if—

13 ‘‘(1)(A) such person is a small business concern

14 as defined in section 3(a) of the Small Business Act

15 and the regulations thereunder, or

16 ‘‘(B) a certification that such person is a small

17 business concern under section 8(b)(6) of the Small

18 Business Act (15 U.S.C. 637(b)(6)) is in effect as

19 of the close of the taxable year, and

20 ‘‘(2) such person elects the application of this

21 section for the taxable year.

22 ‘‘(c) QUALIFIED REGULATORY COSTS.—For pur23 poses of this section—

24 ‘‘(1) IN GENERAL.—The term ‘qualified regu25 latory costs’ means the sum of the following

26 amounts paid or incurred during the taxable year:
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1 ‘‘(A) The federally required nonproductive

2 expenditures.

3 ‘‘(B) The product approval costs.

4 ‘‘(2) FEDERALLY REQUIRED NONPRODUCTIVE

5 EXPENDITURES.—

6 ‘‘(A) IN GENERAL.—The term ‘federally

7 required nonproductive expenditure’ means any

8 amount which is paid or incurred by the tax9 payer in connection with any plant or other

10 property operated by the taxpayer and which—

11 ‘‘(i) is certified by the Federal certify12 ing authority to the Secretary as being

13 necessary or appropriate for the operation

14 of such plant or property to be in compli15 ance with—

16 ‘‘(I) the requirements of any reg17 ulation issued pursuant to any Fed18 eral law, or

19 ‘‘(II) the requirements of any

20 regulation issued pursuant to a State

21 law which was adopted to meet a re22 quirement of such Federal law;

23 ‘‘(ii) does not significantly—

24 ‘‘(I) increase the output or capac25 ity, extend the useful life, or reduce
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1 the total operating costs of any prop2 erty, or

3 ‘‘(II) alter the nature of any

4 manufacturing or production process,

5 and

6 ‘‘(iii) cannot reasonably be expected to

7 be recovered over its useful life by reason

8 of profits derived through the recovery of

9 wastes or otherwise.

10 ‘‘(B) EXPENSES WITH RESPECT TO NEW

11 PROPERTY NOT ELIGIBLE.—The term ‘federally

12 required nonproductive expenditure’ does not

13 include any amount paid or incurred in connec14 tion with any property first placed in service

15 after the later of—

16 ‘‘(i) the date on which the regulation

17 became final, or

18 ‘‘(ii) the date of the enactment of the

19 Small Business Regulatory Cost Relief Act

20 of 1993.

21 ‘‘(C) FEDERAL CERTIFYING AUTHORITY.—

22 The term ‘Federal certifying authority’ means

23 the head of the Federal agency which has the

24 primary jurisdiction over the Federal law re25 ferred to in subparagraph (A)(i)(I).
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1 ‘‘(3) PRODUCT APPROVAL COSTS.—The term

2 ‘product approval costs’ means amounts paid or in3 curred by the taxpayer in connection with determin4 ing the safety or effectiveness of any product or

5 service in order to comply with the requirements of

6 any Federal law.

7 ‘‘(d) SPECIAL RULES.—

8 ‘‘(1) TREATMENT OF EXPENDITURES TO PRO9 VIDE ACCESS TO DISABLED INDIVIDUALS.—For pur10 poses of this section, the term ‘qualified regulatory

11 costs’ includes any eligible access expenditures as de12 fined in this section as in effect on the day before

13 the date of the enactment of the Small Business

14 Regulatory Cost Relief Act of 1993.

15 ‘‘(2) DENIAL OF DOUBLE BENEFIT.—If a credit

16 is determined under this section with respect to any

17 qualified regulatory cost—

18 ‘‘(A) no deduction or credit shall be al19 lowed under any other provision of this chapter

20 for the credit portion of such cost, and

21 ‘‘(B) no increase in the adjusted basis of

22 any property shall result from the credit portion

23 of such cost.

24 For purposes of the preceding sentence, the term

25 ‘credit portion’ means, with respect to any qualified
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1 regulatory cost for any taxable year, the amount

2 which bears the same ratio to the credit determined

3 under this section for such taxable year as the

4 amount of such cost bears to the entire amount of

5 qualified regulatory costs for such taxable year.’’

6 (b) CREDIT PART OF GENERAL BUSINESS CREDIT.—

7 Paragraph (7) of section 38(b) of such Code is amended

8 to read as follows:

9 ‘‘(7) in the case of a qualified small business

10 (as defined in section 44(b)), the regulatory cost

11 credit determined under section 44(a), plus.’’

12 (c) CONFORMING AMENDMENT.—The paragraph of

13 section 39(d) of such Code which relates to the credit

14 under section 44 is amended by adding at the end thereof

15 the following new sentence: ‘‘No portion of the unused

16 business credit for any taxable year which is attributable

17 to the additional credit determined under section 44 by

18 reason of the Small Business Regulatory Cost Relief Act

19 of 1993 may be carried back to taxable year ending before

20 the date of the enactment of such Act.’’

21 (d) CLERICAL AMENDMENT.—The table of sections

22 for subpart D of part IV of subchapter A of chapter 1

23 of such Code is amended by striking the item relating to

24 section 44 and inserting the following:

‘‘Sec. 44. Small business regulatory costs.’’
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1 (e) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to amounts paid or incurred after

3 the date of the enactment of this Act in taxable years end4 ing after such date of enactment.

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