I 

117TH CONGRESS 

1ST SESSION H. R. 1388 

To require the Secretary of Labor to establish a program to provide grants 

for job guarantee programs. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 25, 2021 

Mrs. WATSON COLEMAN (for herself and Ms. OMAR) introduced the following 

bill; which was referred to the Committee on Ways and Means, and in 

addition to the Committee on Education and Labor, for a period to be 

subsequently determined by the Speaker, in each case for consideration 

of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To require the Secretary of Labor to establish a program 

to provide grants for job guarantee programs. 

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 ‘‘Workforce Promotion 

5 and Access Act’’ or the ‘‘WPA Act’’. 

6 SEC. 2. JOB GUARANTEE GRANT PROGRAM. 

7 (a) DEFINITIONS.—In this section: 


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1 (1) ELIGIBLE ENTITY.—The term ‘‘eligible enti2 ty’’ means an entity that is a political subdivision of 

3 a State, Tribal entity, outlying area, or a combina4 tion of contiguous political subdivisions or Tribal en5 tities that— 

6 (A) has an unemployment rate that is 

7 equal to the lower of 10 or 80 percent of the 

8 national unemployment rate, as determined by 

9 the Bureau of Labor Statistics (except in the 

10 case of Tribal entities which may submit their 

11 own employment data where no such Federal 

12 data is available for such entities) based on the 

13 most recent data available at the time the Sec14 retary solicits applications for grants under this 

15 section; and 

16 (B) submits an application in accordance 

17 with subsection (e). 

18 (2) JOB GUARANTEE PROGRAM.—The term 

19 ‘‘job guarantee program’’ means a program that 

20 meets the requirements of subsection (c). 

21 (3) RURAL AREA.—The term ‘‘rural area’’ 

22 means an area that is located outside of an urban 

23 area. 

24 (4) TRIBAL ENTITY.—The term ‘‘Tribal entity’’ 

25 means an Indian tribe or tribal organization as such 


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1 terms are defined in section 4 of the Indian Self-De2 termination Act (25 U.S.C. 5304). 

3 (5) URBAN AREA.—The term ‘‘urban area’’ 

4 means an urbanized area (a region of 50,000 or 

5 more residents) and an urbanized cluster (an area 

6 encompassing between 2,500 and 50,000 residents), 

7 according to the Census Bureau’s urban-rural classi8 fication in the 2010 census. 

9 (6) SECRETARY.—The term ‘‘Secretary’’ means 

10 the Secretary of Labor. 

11 (7) WIOA DEFINITIONS.—The terms ‘‘adult 

12 education and literacy activities’’, ‘‘career planning’’, 

13 ‘‘individual with a barrier to employment’’, ‘‘in-de14 mand industry sector or occupation’’, ‘‘local board’’, 

15 ‘‘outlying area’’, ‘‘recognized postsecondary creden16 tial’’, ‘‘State’’, ‘‘State board’’, ‘‘supportive services’’, 

17 and ‘‘workplace learning advisor’’ have the meanings 

18 given such terms in section 3 of the Workforce Inno19 vation and Opportunity Act (29 U.S.C. 3102). 

20 (b) ESTABLISHMENT.— 

21 (1) IN GENERAL.—The Secretary shall establish 

22 a program to provide competitive grants to eligible 

23 entities to establish programs to ensure that any in24 dividual within the area served by the entity who apVerDate Sep 11 2014 05:58 Apr 02, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1388.IH H1388

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1 plies for a job through the program will be provided 

2 with employment as provided for in this section. 

3 (2) TERMINATION.—Federal funding for a job 

4 guarantee program established under a grant under 

5 this section shall terminate on the earlier of— 

6 (A) the end of the 3-year period beginning 

7 on the date of the grant; or 

8 (B) the date of any revocation of the 

9 grantee as an eligible entity. 

10 (3) GRANT RENEWAL.—An eligible entity that 

11 receives a grant under this section may reapply 

12 under this section for an additional grant after the 

13 first 3-year grant period. 

14 (c) JOB GUARANTEE PROGRAMS.—A job guarantee 

15 program meets the requirements of this subsection if the 

16 jobs provided under such program— 

17 (1) are available to any unemployed individual 

18 who— 

19 (A) is 18 years of age or older; and 

20 (B) resides in the eligible entity as of the 

21 date that the grant is awarded under this sub22 section to such eligible entity, 

23 except that participants may be released, and/or sus24 pended if they fail to perform the stipulated duties 

25 or they are generally disruptive to the workplace inVerDate Sep 11 2014 05:58 Apr 02, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1388.IH H1388

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1 volved under procedures established by the Secretary 

2 that provide for an opportunity for a review of such 

3 determinations; 

4 (2) are, with respect to individual participants, 

5 included as part of an established bargaining unit 

6 and covered by any applicable collective bargaining 

7 agreement in effect if similarly situated employees 

8 are part of such unit and represented by an exclu9 sive bargaining representative; 

10 (3) are available for the duration of the pro11 gram; 

12 (4) provide a wage of not less than the greater 

13 of— 

14 (A) $15 per hour, or the hourly wage oth15 erwise required to be paid to employees in the 

16 area to be served under the program, whichever 

17 is greater; 

18 (B) the prevailing wage in the area in19 volved for a similar job as required by chapter 

20 67 of title 41, United States Code, and other 

21 related laws; or 

22 (C) the applicable wage under an applica23 ble collective bargaining agreement as provided 

24 for under paragraph (2); 


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1 (5) provide for coverage of the worker under a 

2 health insurance program that is comparable to that 

3 offered to Federal employees under the Federal Em4 ployee Health Benefits Program; and 

5 (6) provide at a minimum— 

6 (A) family and medical leave consistent 

7 with the provisions of the Family and Medical 

8 Leave Act of 1993 and applicable State law, ex9 cept that such leave shall be paid leave; and 

10 (B) the Emergency Paid Sick Leave Act 

11 under division E of the Families First 

12 Coronavirus Response Act (29 U.S.C. 2601 

13 note). 

14 (d) OTHER USES.—Funds may be used to provide 

15 workers in a job guarantee program with— 

16 (1) supportive services, which can include trans17 portation, child care, dependent care, housing, and 

18 needs-related payments, that are necessary to enable 

19 an individual to participate in activities authorized 

20 under this Act; 

21 (2) access to a workplace learning advisor to 

22 support the education, skill development, job train23 ing, career planning, and credentials required to 

24 progress toward career goals of such employees in 

25 order to meet employer requirements related to job 


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1 openings and career advancements that support eco2 nomic self-sufficiency; 

3 (3) adult education and literacy activities, in4 cluding those provided by public libraries; 

5 (4) activities that assist justice-involved individ6 uals, formerly incarcerated individuals, and individ7 uals with criminal records in reentering the work8 force; and 

9 (5) financial literacy activities including those 

10 described in section 129(b)(2)(D) of the Workforce 

11 Innovation and Opportunity Act. 

12 (e) APPLICATIONS.—An eligible entity seeking a 

13 grant under this section shall submit an application to the 

14 Secretary at such time, in such manner, and containing 

15 such information as the Secretary may require. Such ap16 plication shall include— 

17 (1) a description of the geographic area and 

18 population that the entity intends to serve under the 

19 job guarantee program established under the grant, 

20 including the area unemployment rate, underemploy21 ment rate, unemployment rate for individuals with 

22 disabilities, poverty rate, housing vacancy rate, crime 

23 rate, household income, home-ownership rate, labor 

24 force participation rate, and educational attainment; 


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1 (2) to the extent practicable, a description of 

2 the jobs that will be offered under the job guarantee 

3 program, including— 

4 (A) a description of supports provided to 

5 individuals with disabilities and accommoda6 tions required under the Americans with Dis7 abilities Act of 1990 (42 U.S.C. 12101 et seq.); 

8 and 

9 (B) a description of supports and proce10 dures to ensure job access and opportunities for 

11 individuals with criminal records, including in12 formation on physical and programmatic acces13 sibility, in accordance with section 188 of the 

14 Workforce Innovation and Opportunity Act, if 

15 applicable, and the Americans with Disabilities 

16 Act of 1990, for individuals with disabilities; 

17 (3) the need in the area for jobs to be per18 formed, including for jobs designated as a high-skill, 

19 high-wage or in-demand industry sector or occupa20 tion by the Secretary, State board, or local board; 

21 (4) a description of State, local, or philan22 thropic funding, including through coordination and 

23 in-kind or nonfinancial support, if any, that will be 

24 provided to assist in carrying out the job guarantee 

25 program; 


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1 (5) an assurance that the eligible entity will es2 tablish— 

3 (A) a public internet website, in conjunc4 tion with the Secretary, to post all available 

5 jobs under the job guarantee program; and 

6 (B) a process for individuals to apply for 

7 such jobs; 

8 (6) a comprehensive plan to describe how the 

9 funding under the program will leverage existing or 

10 anticipated local, State, and Federal funding; 

11 (7) an assurance that necessary administrative 

12 data systems and information technology infrastruc13 ture are available, or will be available, to provide for 

14 full participation in the evaluation under subsection 

15 (k); 

16 (8) a description of how the eligible entity will 

17 comply with the requirements described in sub18 section (c)(6); 

19 (9) an assurance that the entity will enter into 

20 an allocation agreement with the Secretary under 

21 subsection (j)(2)(A); and 

22 (10) an assurance that energy and infrastruc23 ture jobs provided under the program will not exac24 erbate the impacts of climate change. 


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1 (f) SELECTION.—In awarding such grant under this 

2 section, the Secretary shall consider diversity in geo3 graphic location, urban-rural composition, and political en4 tity, including the representation of Tribal entities. 

5 (g) AMOUNT OF GRANT.— 

6 (1) ESTABLISHMENT OF FUND.—There is es7 tablished in the Treasury of the United States a sep8 arate account to be known as the ‘‘Job Guarantee 

9 Program Trust Fund’’ (referred to in this section as 

10 the ‘‘Fund’’). 

11 (2) TRANSFERS TO FUND.—There is hereby ap12 propriated to the Fund amounts equivalent to— 

13 (A) taxes received in the Treasury under 

14 subchapter C of chapter 36 of the Internal Rev15 enue Code of 1986; and 

16 (B) interest earned on investment of 

17 amounts in the Fund under rules similar to the 

18 rules of section 9602(b) of such Code. 

19 (3) USE OF AMOUNTS.—The Secretary shall use 

20 amounts in the Fund to make payments to grantees 

21 under grants under this section in accordance with 

22 paragraph (4). 

23 (4) PAYMENTS.— 

24 (A) IN GENERAL.—The Secretary shall de25 termine the annual amount of a grant under 


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1 this section based on a formula to be developed 

2 by the Secretary. 

3 (B) PAYMENTS.—The Secretary shall 

4 make payments to grantees under this section 

5 in a manner determined appropriate by the Sec6 retary. The Secretary shall not make subse7 quent payments to a grantee after the initial 

8 payment until the grantee certifies to the Sec9 retary that the grantee has expended, trans10 ferred, or obligated not less than 80 percent of 

11 the most recent payment made under this sub12 section. 

13 (h) LIMITATIONS.—An eligible entity may not use 

14 amounts received under a grant under this section to— 

15 (1) employ individuals who will replace, or lead 

16 to the displacement of, existing employees, positions, 

17 or individuals who would otherwise perform similar 

18 employment, or disrupt existing contracts and collec19 tive bargaining agreements, as defined in section 

20 181(b) of the Workforce Innovation and Opportunity 

21 Act (Public Law 113–128); 

22 (2) perform functions otherwise prohibited by 

23 Federal, State, or local laws; and 

24 (3) carry out other prohibited activities, as de25 termined by the Secretary. 


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1 (i) FEDERAL PROVISION OF JOBS IN PROGRAM

2 SITES.— 

3 (1) GUIDANCE.—Not later than 30 days after 

4 the date on which the Secretary awards the first 

5 grant under this section, the Secretary shall— 

6 (A) provide guidance to the heads of ap7 propriate Federal agencies to notify such agen8 cies of job guarantee programs established 

9 under the grants awarded under this section; 

10 (B) request that such agencies notify the 

11 Secretary, within 30 days of the date on which 

12 the guidance is received under paragraph (1), 

13 of the number and types of jobs that each such 

14 agency would make available through each of 

15 the programs; and 

16 (C) ensure that each such agency makes 

17 best efforts to provide jobs through the pro18 grams established under such grants. 

19 (2) APPLICATION OF PROVISIONS.—The re20 quirements of subsection (c) relating to wages and 

21 benefits provided to participants in jobs provided 

22 under job guarantee programs, and the limitations 

23 in subsection (h), shall apply to Federal agencies 

24 and jobs provided under this subsection, except that 


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1 a Federal agency shall employ each individual under 

2 this subsection for up to 3 years. 

3 (3) LISTING OF JOBS ON WEBSITE.—The Sec4 retary shall establish procedures to ensure that jobs 

5 identified under paragraph (1)(B) are listed on the 

6 appropriate public internet website as provided for 

7 under subsection (e)(5)(A). 

8 (4) REIMBURSEMENT.—At the end of each fis9 cal year, the Secretary shall transfer from the Fund 

10 to each Federal agency that employs individuals 

11 under a job guarantee program under this section, 

12 an amount necessary to reimburse such agency for 

13 the full cost of employing each such individual dur14 ing such fiscal year. 

15 (j) TRAINING.— 

16 (1) IN GENERAL.—The Secretary shall develop 

17 procedures to support up to 8 weeks of paid training 

18 (through privately or publicly funded training pro19 grams, such as those provided by the public work20 force system) to participants in order to perform du21 ties required by job guarantee programs under this 

22 section, including a new period of training, not to 

23 exceed 8 weeks, prior to commencing any new job 

24 under the program. 


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1 (2) SPECIFIC POPULATIONS.—With respect to 

2 certain populations with barriers to employment (as 

3 defined in section 3(24) of the Workforce Innovation 

4 and Opportunity Act (Public Law 113–128)), the 8- 

5 week training period may include specific job-related 

6 training and counseling and other general skills 

7 training to prepare such individuals to reenter the 

8 workforce. 

9 (k) PRIORITIES AND AUDITS.— 

10 (1) PRIORITIES.—Prior to awarding the initial 

11 grants under this section, the Secretary shall issue 

12 a list of national job priorities relating to jobs that 

13 may be carried out under job guarantee programs, 

14 that shall include but not be limited to child care, 

15 care for seniors and individuals with disabilities, 

16 clean energy jobs, community investment projects, 

17 and sustainable infrastructure activities. The Sec18 retary shall take State board and local board sugges19 tions into consideration when issuing such list. 

20 (2) AUDITS.— 

21 (A) IN GENERAL.—The Secretary, acting 

22 through the Inspector General of the Depart23 ment of Labor, shall carry out annual audits of 

24 the use of grant funds provided to eligible enti25 ties under this section. 


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1 (B) ALLOCATION AGREEMENTS AND MIS2 USE OF FUNDS.— 

3 (i) ALLOCATION AGREEMENTS.—An 

4 eligible entity shall enter into an allocation 

5 agreement with the Secretary that shall 

6 provide that the Secretary shall recoup any 

7 amounts paid to the entity under a grant 

8 under this section if the results of an audit 

9 under subparagraph (A) include a finding 

10 that there was an intentional or reckless 

11 misuse of such funds by such entity. 

12 (ii) LOSS OF ELIGIBILITY.—An eligi13 ble entity that is determined to have fal14 sified or otherwise misstated data in any 

15 report submitted to the Secretary with the 

16 intent to deceive or mislead the Secretary 

17 shall be ineligible to receive additional 

18 funds under this section. 

19 (l) REPORTS.—Not later than 90 days after the end 

20 of each calendar year for which an eligible entity obligates 

21 or expends any amounts made available under a grant 

22 under this section, the eligible entity shall submit to the 

23 Secretary a report that— 

24 (1) specifies the amount of grant funds obli25 gated or expended for the preceding fiscal year; 


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1 (2) specifies any purposes for which the funds 

2 were obligated or expended; and 

3 (3) includes any other information that the Sec4 retary may require to more effectively administer the 

5 grant program under this section, including the indi6 cators of performance under section 116(b)(2)(A)(i) 

7 of the Workforce Innovation and Opportunity Act 

8 (29 U.S.C. 3141(b)(2)(A)(i)), with the performance 

9 data disaggregated by race, ethnicity, sex, age, and 

10 membership in a population specified in section 

11 3(24) of such Act (29 U.S.C. 3102(24)). 

12 (m) EVALUATION.—The Chief Evaluation Officer at 

13 the Department of Labor shall provide for the conduct of 

14 an evaluation of the program, using a rigorous design and 

15 evaluation methods to assess the implementation of the 

16 programs and their impact on— 

17 (1) overall employment, public-sector employ18 ment, and private-sector employment; 

19 (2) private-sector employment, wages, and bene20 fits; 

21 (3) poverty rate; 

22 (4) public assistance spending and other Fed23 eral spending in the area served by the program; 

24 (5) child health and educational outcomes; 


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1 (6) health and well-being of those with mental, 

2 emotional, and behavioral health needs; 

3 (7) incarceration rates; 

4 (8) the environment, including air quality and 

5 water quality; 

6 (9) the indicators of performance as described 

7 in subsection (l)(3); and 

8 (10) other economic development and individual 

9 outcome indicators, as determined by the Secretary. 

10 (n) EXPANSION OF WORK OPPORTUNITY CREDIT TO

11 INCLUDE PARTICIPANTS IN JOB GUARANTEE PRO12 GRAMS.— 

13 (1) IN GENERAL.—Subsection (d) of section 51 

14 of the Internal Revenue Code of 1986 is amended— 

15 (A) in paragraph (1)— 

16 (i) in subparagraph (I), by striking 

17 ‘‘or’’ at the end, 

18 (ii) in subparagraph (J), by striking 

19 the period at the end and inserting ‘‘, or’’, 

20 and 

21 (iii) by adding at the end the fol22 lowing new subparagraph: 

23 ‘‘(K) a qualified participant in a job guar24 antee program.’’, and 


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1 (B) by adding at the end the following new 

2 paragraph: 

3 ‘‘(16) QUALIFIED PARTICIPANT IN A JOB GUAR4 ANTEE PROGRAM.—The term ‘qualified participant 

5 in a job guarantee program’ means any individual 

6 who is certified by the designated local agency as 

7 having participated in a job guarantee program 

8 under section 2 of the Federal Jobs Guarantee Pro9 gram Act of 2020 for not less than 3 months during 

10 the 6-month period ending on the hiring date.’’. 

11 (2) EFFECTIVE DATE.—The amendments made 

12 by this subsection shall apply to individuals who 

13 begin work for the employer after December 31, 

14 2021. 

15 (o) APPROPRIATIONS.—From funds in the Treasury 

16 not otherwise appropriated, there are appropriated to the 

17 Secretary such sums as may be necessary to carry out this 

18 section. 

19 SEC. 3. TRANSACTION TAX. 

20 (a) IN GENERAL.—Chapter 36 of the Internal Rev21 enue Code of 1986 is amended by inserting after sub22 chapter B the following new subchapter: 

23 ‘‘Subchapter C—Tax on Trading Transactions 

‘‘Sec. 4475. Tax on trading transactions. 

‘‘Sec. 4476. Derivative defined. 


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1 ‘‘SEC. 4475. TAX ON TRADING TRANSACTIONS. 

2 ‘‘(a) IMPOSITION OF TAX.—There is hereby imposed 

3 a tax on each covered transaction with respect to any secu4 rity. 

5 ‘‘(b) RATE OF TAX.—The tax imposed under sub6 section (a) with respect to any covered transaction shall 

7 be 0.1 percent of the specified base amount with respect 

8 to such covered transaction. 

9 ‘‘(c) SPECIFIED BASE AMOUNT.—For purposes of 

10 this section, the term ‘specified base amount’ means— 

11 ‘‘(1) except as provided in paragraph (2), the 

12 fair market value of a security (determined as of the 

13 time of the covered transaction), and 

14 ‘‘(2) in the case of any payment with respect to 

15 a derivative, the amount of such payment. 

16 ‘‘(d) COVERED TRANSACTION.—For purposes of this 

17 section— 

18 ‘‘(1) IN GENERAL.—The term ‘covered trans19 action’ means— 

20 ‘‘(A) except as provided in subparagraph 

21 (B), any purchase if— 

22 ‘‘(i) such purchase occurs on, or is 

23 subject to the rules of, a qualified board or 

24 exchange located in the United States, or 

25 ‘‘(ii) the purchaser or seller is a 

26 United States person, and 


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1 ‘‘(B) any transaction with respect to a de2 rivative if— 

3 ‘‘(i) such derivative is traded on, or is 

4 subject to the rules of, a qualified board or 

5 exchange located in the United States, or 

6 ‘‘(ii) any party with rights under such 

7 derivative is a United States person. 

8 ‘‘(2) EXCEPTION FOR INITIAL ISSUES.—No tax 

9 shall be imposed under subsection (a) on any cov10 ered transaction with respect to the initial issuance 

11 of any security described in subparagraph (A), (B), 

12 or (C) of subsection (e)(1). 

13 ‘‘(e) DEFINITIONS AND SPECIAL RULES.—For pur14 poses of this section— 

15 ‘‘(1) SECURITY.—For purposes of this section, 

16 the term ‘security’ means— 

17 ‘‘(A) any share of stock in a corporation, 

18 ‘‘(B) any partnership or beneficial owner19 ship interest in a partnership or trust, 

20 ‘‘(C) except as provided in paragraph (2), 

21 any note, bond, debenture, or other evidence of 

22 indebtedness, and 

23 ‘‘(D) any derivative (as defined in section 

24 4476). 


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1 ‘‘(2) EXCEPTION FOR CERTAIN TRADED SHORT2 TERM INDEBTEDNESS.—A note, bond, debenture, or 

3 other evidence of indebtedness which— 

4 ‘‘(A) is traded on, or is subject to the rules 

5 of, a qualified board or exchange located in the 

6 United States, and 

7 ‘‘(B) has a fixed maturity of not more 

8 than 100 days, 

9 shall not be treated as described in paragraph 

10 (1)(C). 

11 ‘‘(3) QUALIFIED BOARD OR EXCHANGE.—The 

12 term ‘qualified board or exchange’ has the meaning 

13 given such term by section 1256(g)(7). 

14 ‘‘(f) BY WHOM PAID.— 

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

16 section shall be paid by— 

17 ‘‘(A) in the case of a transaction which oc18 curs on, or is subject to the rules of, a qualified 

19 board or exchange located in the United States, 

20 such qualified board or exchange, and 

21 ‘‘(B) in the case of a purchase not de22 scribed in subparagraph (A) which is executed 

23 by a broker (as defined in section 6045(c)(1)) 

24 which is a United States person, such broker. 


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1 ‘‘(2) SPECIAL RULES FOR DIRECT, ETC., 

2 TRANSACTIONS.—In the case of any transaction to 

3 which paragraph (1) does not apply, the tax imposed 

4 by this section shall be paid by— 

5 ‘‘(A) in the case of a transaction described 

6 in subsection (d)(1)(A)— 

7 ‘‘(i) the purchaser if the purchaser is 

8 a United States person, and 

9 ‘‘(ii) the seller if the purchaser is not 

10 a United States person, and 

11 ‘‘(B) in the case of a transaction described 

12 in subsection (d)(1)(B)— 

13 ‘‘(i) the payor if the payor is a United 

14 States person, and 

15 ‘‘(ii) the payee if the payor is not a 

16 United States person. 

17 ‘‘(g) TREATMENT OF EXCHANGES AND PAYMENTS

18 WITH RESPECT TO DERIVATIVES.—For purposes of this 

19 section— 

20 ‘‘(1) TREATMENT OF EXCHANGES.— 

21 ‘‘(A) IN GENERAL.—An exchange shall be 

22 treated as the sale of the property transferred 

23 and a purchase of the property received by each 

24 party to the exchange. 


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1 ‘‘(B) CERTAIN DEEMED EXCHANGES.—In 

2 the case of a distribution treated as an ex3 change for stock under section 302 or 331, the 

4 corporation making such distribution shall be 

5 treated as having purchased such stock for pur6 poses of this section. 

7 ‘‘(2) PAYMENTS WITH RESPECT TO DERIVA8 TIVES TREATED AS SEPARATE TRANSACTIONS.—Ex9 cept as otherwise provided by the Secretary, any 

10 payment with respect to any derivative shall be 

11 treated as a separate transaction for purposes of 

12 this section. 

13 ‘‘(h) APPLICATION TO TRANSACTIONS BY CON14 TROLLED FOREIGN CORPORATIONS.— 

15 ‘‘(1) IN GENERAL.—For purposes of this sec16 tion, a controlled foreign corporation shall be treated 

17 as a United States person. 

18 ‘‘(2) SPECIAL RULES FOR PAYMENT OF TAX ON

19 DIRECT, ETC., TRANSACTIONS.—In the case of any 

20 transaction which is a covered transaction solely by 

21 reason of paragraph (1) and which is not described 

22 in subsection (f)(1)— 

23 ‘‘(A) PAYMENT BY UNITED STATES SHARE24 HOLDERS.—Any tax which would (but for this 

25 paragraph) be payable under subsection (f)(2) 


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1 by the controlled foreign corporation shall, in 

2 lieu thereof, be paid by the United States 

3 shareholders of such controlled foreign corpora4 tion as provided in subparagraph (B). 

5 ‘‘(B) PRO RATA SHARES.—Each such 

6 United States shareholder shall pay the same 

7 proportion of such tax as— 

8 ‘‘(i) the stock which such United 

9 States shareholder owns (within the mean10 ing of section 958(a)) in such controlled 

11 foreign corporation, bears to 

12 ‘‘(ii) the stock so owned by all United 

13 States shareholders in such controlled for14 eign corporation. 

15 ‘‘(C) DEFINITIONS.—For purposes of this 

16 subsection, the terms ‘United States share17 holder’ and ‘controlled foreign corporation’ have 

18 the meanings given such terms in sections 

19 951(b) and 957(a), respectively. 

20 ‘‘(i) ADMINISTRATION.—The Secretary shall carry 

21 out this section in consultation with the Securities and Ex22 change Commission and the Commodity Futures Trading 

23 Commission. 

24 ‘‘(j) GUIDANCE; REGULATIONS.—The Secretary 

25 shall— 


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1 ‘‘(1) provide guidance regarding such informa2 tion reporting concerning covered transactions as the 

3 Secretary deems appropriate, and 

4 ‘‘(2) prescribe such regulations as are necessary 

5 or appropriate to prevent avoidance of the purposes 

6 of this section, including the use of non-United 

7 States persons in such transactions. 

8 ‘‘SEC. 4476. DERIVATIVE DEFINED. 

9 ‘‘(a) IN GENERAL.—For purposes of this subchapter, 

10 except as otherwise provided in this section, the term ‘de11 rivative’ means any contract (including any option, for12 ward contract, futures contract, short position, swap, or 

13 similar contract) the value of which, or any payment or 

14 other transfer with respect to which, is (directly or indi15 rectly) determined by reference to one or more of the fol16 lowing: 

17 ‘‘(1) Any share of stock in a corporation. 

18 ‘‘(2) Any partnership or beneficial ownership 

19 interest in a partnership or trust. 

20 ‘‘(3) Any evidence of indebtedness. 

21 ‘‘(4) Except as provided in subsection (b)(1), 

22 any real property. 

23 ‘‘(5) Any commodity which is actively traded 

24 (within the meaning of section 1092(d)(1)). 

25 ‘‘(6) Any currency. 


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1 ‘‘(7) Any rate, price, amount, index, formula, or 

2 algorithm. 

3 ‘‘(8) Any other item as the Secretary may pre4 scribe. 

5 Except as provided in regulations prescribed by the Sec6 retary to prevent the avoidance of the purposes of this 

7 subchapter, such term shall not include any item described 

8 in paragraphs (1) through (8). 

9 ‘‘(b) EXCEPTIONS.— 

10 ‘‘(1) CERTAIN REAL PROPERTY.— 

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

12 subchapter, the term ‘derivative’ shall not in13 clude any contract with respect to interests in 

14 real property (as defined in section 

15 856(c)(5)(C)) if such contract requires physical 

16 delivery of such real property. 

17 ‘‘(B) OPTIONS TO SETTLE IN CASH.— 

18 ‘‘(i) IN GENERAL.—For purposes of 

19 subparagraph (A), a contract which pro20 vides for an option of cash settlement shall 

21 not be treated as requiring physical deliv22 ery of real property unless the option is— 

23 ‘‘(I) not exercisable uncondition24 ally, and 


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1 ‘‘(II) exercisable only in unusual 

2 and exceptional circumstances. 

3 ‘‘(ii) OPTION OF CASH SETTLE4 MENT.—For purposes of clause (i), a con5 tract provides an option of cash settlement 

6 if the contract settles in (or could be set7 tled in) cash or property other than the 

8 underlying real property. 

9 ‘‘(2) SECURITIES LENDING, SALE-REPURCHASE, 

10 AND SIMILAR FINANCING TRANSACTIONS.—To the 

11 extent provided by the Secretary, for purposes of 

12 this subchapter, the term ‘derivative’ shall not in13 clude the right to the return of the same or substan14 tially identical securities transferred in a securities 

15 lending transaction, sale-repurchase transaction, or 

16 similar financing transaction. 

17 ‘‘(3) OPTIONS RECEIVED IN CONNECTION WITH

18 THE PERFORMANCE OF SERVICES.—For purposes of 

19 this subchapter, the term ‘derivative’ shall not in20 clude any option described in section 83(e)(3) re21 ceived in connection with the performance of serv22 ices. 

23 ‘‘(4) INSURANCE CONTRACTS, ANNUITIES, AND

24 ENDOWMENTS.—For purposes of this subchapter, 

25 the term ‘derivative’ shall not include any insurance, 


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1 annuity, or endowment contract issued by an insur2 ance company to which subchapter L applies (or 

3 issued by any foreign corporation to which such sub4 chapter would apply if such foreign corporation were 

5 a domestic corporation). 

6 ‘‘(5) DERIVATIVES WITH RESPECT TO STOCK

7 OF MEMBERS OF SAME WORLDWIDE AFFILIATED

8 GROUP.—For purposes of this subchapter, the term 

9 ‘derivative’ shall not include any derivative (deter10 mined without regard to this paragraph) with re11 spect to stock issued by any member of the same 

12 worldwide affiliated group (as defined in section 

13 864(f)) in which the taxpayer is a member. 

14 ‘‘(6) COMMODITIES USED IN NORMAL COURSE

15 OF TRADE OR BUSINESS.—For purposes of this sub16 chapter, the term ‘derivative’ shall not include any 

17 contract with respect to any commodity if— 

18 ‘‘(A) such contract requires physical deliv19 ery with the option of cash settlement only in 

20 unusual and exceptional circumstances, and 

21 ‘‘(B) such commodity is used (and is used 

22 in quantities with respect to which such deriva23 tive relates) in the normal course of the tax24 payer’s trade or business (or, in the case of an 

25 individual, for personal consumption). 


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1 ‘‘(c) CONTRACTS WITH EMBEDDED DERIVATIVE

2 COMPONENTS.— 

3 ‘‘(1) IN GENERAL.—If a contract has derivative 

4 and nonderivative components, then each derivative 

5 component shall be treated as a derivative for pur6 poses of this subchapter. If the derivative component 

7 cannot be separately valued, then the entire contract 

8 shall be treated as a derivative for purposes of this 

9 subchapter. 

10 ‘‘(2) EXCEPTION FOR CERTAIN EMBEDDED DE11 RIVATIVE COMPONENTS OF DEBT INSTRUMENTS.—A 

12 debt instrument shall not be treated as having a de13 rivative component merely because— 

14 ‘‘(A) such debt instrument is denominated 

15 in a nonfunctional currency (as defined in sec16 tion 988(c)(1)(C)(ii)), or 

17 ‘‘(B) payments with respect to such debt 

18 instrument are determined by reference to the 

19 value of a nonfunctional currency (as so de20 fined). 

21 ‘‘(d) TREATMENT OF AMERICAN DEPOSITORY RE22 CEIPTS AND SIMILAR INSTRUMENTS.—Except as other23 wise provided by the Secretary, for purposes of this sub24 chapter, American depository receipts (and similar instru25 ments) with respect to shares of stock in foreign corporaVerDate Sep 11 2014 05:58 Apr 02, 2021 Jkt 019200 PO 00000 Frm 00029 Fmt 6652 Sfmt 6201 E:\BILLS\H1388.IH H1388

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1 tions shall be treated as shares of stock in such foreign 

2 corporations.’’. 

3 (b) INFORMATION REPORTING WITH RESPECT TO

4 CONTROLLED FOREIGN CORPORATIONS.—Section 

5 6038(a)(1)(B) of such Code is amended by inserting ‘‘and 

6 transactions which are covered transactions for purposes 

7 of section 4475 by reason of the application of section 

8 4475(h)(1) to such corporation’’ before the semicolon at 

9 the end. 

10 (c) CONFORMING AMENDMENT.—The table of sub11 chapters for chapter 36 of such Code is amended by in12 serting after the item relating to subchapter B the fol13 lowing new item: 

‘‘SUBCHAPTER C. TAX ON TRADING TRANSACTIONS’’. 

14 (d) EFFECTIVE DATE.—The amendments made by 

15 this section shall apply to transactions after December 31, 

16 2021. 

Æ 


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