I

103D CONGRESS

1ST SESSION H. R. 1207

To amend the Worker Adjustment and Retraining Notification Act to require

notice of certain plant closings to be provided to the Secretary of the

Treasury and to amend the Internal Revenue Code of 1986 to deny

the benefits of the Puerto Rico and possession tax credit in the case

of runaway plants.

IN THE HOUSE OF REPRESENTATIVES

MARCH 3, 1993

Mr. ROEMER (for himself and Mr. STARK) introduced the following bill; which

was referred jointly to the Committees on Ways and Means and

Education and Labor

A BILL

To amend the Worker Adjustment and Retraining Notification Act to require notice of certain plant closings to

be provided to the Secretary of the Treasury and to

amend the Internal Revenue Code of 1986 to deny the

benefits of the Puerto Rico and possession tax credit

in the case of runaway plants.

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 ‘‘Jobs Preservation Act

5 of 1993’’.
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1 SEC. 2. NOTIFICATION OF CERTAIN PLANT CLOSINGS TO

2 THE SECRETARY OF THE TREASURY; ADDI3 TIONAL INFORMATION REQUIRED ON CER4 TAIN NOTICES.

5 (a) GENERAL RULE.—Subsection (a) of section 3 of

6 the Worker Adjustment and Retraining Notification Act

7 (29 U.S.C. 2102) is amended—

8 (1) by striking ‘‘and’’ at the end of paragraph

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

10 (2) and inserting ‘‘; and’’, and by inserting after

11 paragraph (2) the following new paragraph:

12 ‘‘(3) to the Secretary of the Treasury if the em13 ployer or any person related to the employer (within

14 the meaning of section 936(h)(3)(D) of the Internal

15 Revenue Code of 1986) holds (directly or indirectly)

16 any stock in a corporation eligible for the credit

17 provided by section 936 of such Code.’’, and

18 (2) by adding at the end thereof the following

19 new sentence: ‘‘If any notice is required under para20 graph (3), each notice required under paragraph (1)

21 or (2) shall include a statement that the employer

22 directly or indirectly holds stock in a corporation eli23 gible for the credit provided by section 936 of the

24 Internal Revenue Code of 1986.’’.

25 (b) CLERICAL AMENDMENT.—The subsection head26 ing for subsection (a) of such section 3 is amended by
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1 striking ‘‘LOCAL GOVERNMENTS’’ and inserting ‘‘CER2 TAIN GOVERNMENTAL UNITS’’.

3 (c) EFFECTIVE DATE.—The amendments made by

4 this section shall take effect on the date of the enactment

5 of this Act.

6 SEC. 3. LIMITATION ON PUERTO RICO AND POSSESSION

7 TAX CREDIT.

8 (a) GENERAL RULE.—Section 936 of the Internal

9 Revenue Code of 1986 (relating to Puerto Rico and pos10 session tax credit) is amended by adding at the end there11 of the following new subsection:

12 ‘‘(i) DENIAL OF CREDIT FOR INCOME ATTRIB13 UTABLE TO RUNAWAY PLANTS.—

14 ‘‘(1) IN GENERAL.—

15 ‘‘(A) INCOME ATTRIBUTABLE TO SHARE16 HOLDERS.—The runaway plant income of a cor17 poration electing the application of this section

18 for any taxable year (hereinafter in this sub19 section referred to as the ‘electing corporation’)

20 shall be included on a pro rata basis in the

21 gross income of all shareholders of such electing

22 corporation at the close of the taxable year of

23 such electing corporation as income from

24 sources within the United States for the taxable

25 year of such shareholder in which or with which
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1 the taxable year of such electing corporation

2 ends.

3 ‘‘(B) EXCLUSION FROM THE INCOME OF

4 AN ELECTING CORPORATION.—The taxable in5 come of an electing corporation shall be reduced

6 by the amount which is included in the gross

7 income of a shareholder of such corporation by

8 reason of subparagraph (A).

9 ‘‘(2) FOREIGN SHAREHOLDERS; SHAREHOLD10 ERS NOT SUBJECT TO TAX.—

11 ‘‘(A) IN GENERAL.—Paragraph (1)(A)

12 shall not apply with respect to any share13 holder—

14 ‘‘(i) who is not a United States

15 person, or

16 ‘‘(ii) who is not subject to tax under

17 this title on runaway plant income which

18 would be allocated to such shareholder (but

19 for this subparagraph).

20 ‘‘(B) TREATMENT OF NONALLOCATED

21 RUNAWAY PLANT INCOME.—For purposes of

22 this subtitle, runaway plant income of an elect23 ing corporation which is not included in the

24 gross income of a shareholder of such corpora25 tion by reason of subparagraph (A) shall be
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1 treated as taxable income from sources within

2 the United States.

3 ‘‘(3) EXCLUSION OF INCOME FOR QUALIFICA4 TION TESTS.—Any gross income taken into account

5 in determining the amount of the runaway plant in6 come of any electing corporation shall not be taken

7 into account for purposes of subsection (a)(2).

8 ‘‘(4) RUNAWAY PLANT INCOME.—For purposes

9 of this subsection, the term ‘runaway plant income’

10 means the portion of the taxable income of the elect11 ing corporation which is attributable to a disquali12 fied facility.

13 ‘‘(5) DISQUALIFIED FACILITY.—For purposes

14 of this subsection—

15 ‘‘(A) IN GENERAL.—The term ‘disqualified

16 facility’ means any facility at which operations

17 are commenced with respect to the electing cor18 poration after llllllllll unless—

19 ‘‘(i) the Secretary determines that op20 erations at such facility—

21 ‘‘(I) will not result in a substan22 tial adverse effect on the level of em23 ployment at any facility in the United

24 States operated by the electing cor-
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1 poration or a person related to the

2 electing corporation, and

3 ‘‘(II) will not result in such an

4 effect with respect to any other facil5 ity in the United States on account of

6 changes in a supplier relationship to

7 the electing corporation or a person

8 related to the electing corporation,

9 and

10 ‘‘(ii) the electing corporation files a

11 request with the Secretary for a determina12 tion under clause (i) on or before the

13 earlier of—

14 ‘‘(I) the day 90 days after the

15 date on which an application is sub16 mitted to the possession for tax incen17 tives for such facility, or

18 ‘‘(II) the day 1 year before the

19 date on which operations at such

20 facility commence.

21 The Secretary may treat a request not filed be22 fore the time required under clause (ii) as time23 ly filed if the Secretary determines that there

24 was reasonable cause for not filing the request

25 before the time required.
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1 ‘‘(B) CERTAIN REVOCATIONS REQUIRED.—

2 ‘‘(i) IN GENERAL.—The Secretary

3 shall revoke a determination under sub4 paragraph (A)(i) at any time before the

5 close of the 3-year period beginning on the

6 date on which operations at the facility

7 commenced if the Secretary determines

8 that, on the basis of the facts and cir9 cumstances then known, the requirements

10 of subparagraph (A)(i) are not satisfied.

11 ‘‘(ii) MISREPRESENTATIONS, ETC.—

12 The Secretary shall, at any time, revoke a

13 determination under subparagraph (A)(i)

14 if, in connection with the request for such

15 determination, there was a misrepresenta16 tion with respect to (or a failure to dis17 close) any material information by the

18 electing corporation or a related person.

19 ‘‘(iii) REVOCATIONS RETROACTIVE.—

20 If any determination is revoked under this

21 subparagraph, this subsection (other than

22 paragraph (8) thereof) shall be applied as

23 if such determination had never been

24 made.
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1 ‘‘(C) OPPORTUNITY FOR PUBLIC COM2 MENT.—No determination may be made under

3 subparagraph (A)(i) unless the Secretary allows

4 an opportunity for public comment on the

5 request for such determination.

6 ‘‘(6) EXPANSIONS TREATED AS SEPARATE FA7 CILITIES.—

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

9 subsection, any substantial increase in employ10 ment at a facility shall be treated as a separate

11 facility at which operations are commenced with

12 respect to the electing corporation as of the

13 date of such increase.

14 ‘‘(B) SUBSTANTIAL INCREASE IN EMPLOY15 MENT.—For purposes of subparagraph (A),

16 there shall be deemed to be a substantial in17 crease in employment as of any day at any

18 facility if—

19 ‘‘(i) such day is the last day of a pay20 roll period and the average number of em21 ployees performing services at such facility

22 during such period exceeds 110 percent of

23 the average number of employees perform24 ing services at such facility during the cor-
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1 responding payroll period in the preceding

2 calendar year, or

3 ‘‘(ii) there is an expansion in such fa4 cility or the operations at such facility with

5 respect to which a separate or supple6 mental application or other request relat7 ing to tax incentives for such expansion is

8 made to governmental authorities of the

9 possession.

10 Appropriate adjustments in the application of

11 clause (i) shall be made in the case of employ12 ees not performing services on a full-time basis.

13 ‘‘(7) SPECIAL RULES.—

14 ‘‘(A) DISTRIBUTIONS TO MEET QUALIFICA15 TION STANDARDS.—Rules similar to the rules

16 of subsection (h)(4) shall apply for purposes of

17 this subsection.

18 ‘‘(B) RELATED PERSON.—For purposes of

19 this subsection, the rules of subparagraphs (D)

20 and (E) of subsection (h)(3) shall apply in de21 termining whether any person is related to the

22 electing corporation.

23 ‘‘(8) PUBLIC DISCLOSURE.—
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1 ‘‘(A) PUBLICATION IN FEDERAL REG2 ISTER.—The Secretary shall publish in the Fed3 eral Register—

4 ‘‘(i) a notification of each request for

5 a determination under paragraph (5)(A)(i),

6 and

7 ‘‘(ii) a notification of the Secretary’s

8 determination in the case of each such

9 request.

10 ‘‘(B) PUBLIC INSPECTION OF DETERMINA11 TION.—

12 ‘‘(i) IN GENERAL.—Notwithstanding

13 section 6103, the text of any determination

14 made by the Secretary under paragraph

15 (5)(A)(i) and any background file docu16 ment relating to such determination shall

17 be open to public inspection at such place

18 as the Secretary may prescribe.

19 ‘‘(ii) EXEMPTIONS FROM DISCLO20 SURE.—Rules similar to the rules of sec21 tion 6110(c) (other than paragraph (1)

22 thereof) shall apply for purposes of clause

23 (i).

24 ‘‘(iii) BACKGROUND FILE DOCU25 MENT.—For purposes of this subpara-
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1 graph, the term ‘background file docu2 ment’ has the meaning given such term by

3 section 6110(b)(2) determined by treating

4 the determination under paragraph (2) as

5 a written determination.’’

6 (b) EFFECTIVE DATE.—

7 (1) IN GENERAL.—The amendment made by

8 subsection (a) shall apply to taxable years ending

9 after lllllllllllll.

10 (2) TIME FOR FILING REQUEST.—The time for

11 filing a request under section 936(i)(5)(A)(ii) of the

12 Internal Revenue Code of 1986 (as added by this

13 section) shall in no event expire before the date 90

14 days after the date of the enactment of this Act.

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