II 

112TH CONGRESS 

2D SESSION S. 3660 

To extend the payroll tax holiday and to amend the Internal Revenue Code 

of 1986 to provide a temporary payroll increase tax credit for certain 

employers. 

IN THE SENATE OF THE UNITED STATES 

DECEMBER 5, 2012 

Mr. CASEY introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To extend the payroll tax holiday and to amend the Internal 

Revenue Code of 1986 to provide a temporary payroll 

increase tax credit for certain employers. 

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 ‘‘Middle Class & Small 

5 Business Tax Cut Act of 2012’’. 

6 SEC. 2. EXTENSION OF PAYROLL TAX REDUCTION. 

7 (a) IN GENERAL.—Subsection (c) of section 601 of 

8 the Tax Relief, Unemployment Insurance Reauthorization, 


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1 and Job Creation Act of 2010 is amended by striking ‘‘and 

2 2012’’ and inserting ‘‘, 2012, and 2013’’. 

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

4 this section shall apply to remuneration received, and tax5 able years beginning, after December 31, 2012. 

6 SEC. 3. EMPLOYER PAYROLL INCREASE CREDIT. 

7 (a) IN GENERAL.—Subchapter B of chapter 65 of the 

8 Internal Revenue Code of 1986 is amended by adding at 

9 the end the following new section: 

10 ‘‘SEC. 6433. EMPLOYER PAYROLL INCREASE CREDITS. 

11 ‘‘(a) IN GENERAL.—Each qualified employer shall be 

12 treated as having made a payment against the tax imposed 

13 by section 3111(a) or section 3221(a), whichever is appli14 cable, for each qualified quarter in an amount equal to 

15 the credit amount. 

16 ‘‘(b) CREDIT AMOUNT.—For purposes of this section, 

17 the credit amount with respect to any qualified quarter 

18 is equal to the 10 percent of the qualified payroll increase 

19 of such employer for such qualified quarter. 

20 ‘‘(c) DOLLAR LIMITATION.—The total credit amount 

21 with respect to any employer shall not exceed $500,000 

22 for all qualified quarters. 

23 ‘‘(d) QUALIFIED EMPLOYER.—For purposes of this 

24 section, the term ‘qualified employer’ means any American 


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1 employer other than the United States, any State, or any 

2 instrumentality thereof. 

3 ‘‘(e) QUALIFIED PAYROLL INCREASE.—For purposes 

4 of this section— 

5 ‘‘(1) IN GENERAL.—The term ‘qualified payroll 

6 increase’ with respect to any qualified quarter means 

7 the amount, if any, by which a qualified employer’s 

8 qualified payroll for such quarter exceeds the quali9 fied payroll for such quarter of the calendar year 

10 preceding the year in which such qualified quarter 

11 falls. 

12 ‘‘(2) QUALIFIED PAYROLL.—The term ‘quali13 fied payroll’ means the amount of all wages (within 

14 the meaning of section 3121(a)) paid or incurred by 

15 a qualified employer to the employees of such em16 ployer, except that, with respect to each such em17 ployee for any quarter of the employer, such wages 

18 shall be taken into account only to the extent that 

19 such wages do not exceed the contribution and ben20 efit base as determined under section 230 of the So21 cial Security Act. 

22 ‘‘(3) RAILWAY LABOR.—In the case of remu23 neration subject to the tax imposed by section 

24 3221(a), paragraph (1) shall be applied by sub25 stituting ‘all compensation (within the meaning of 


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1 section 3231(e))’ for ‘all wages (within the meaning 

2 of section 3121(a))’. 

3 ‘‘(4) SPECIAL RULE FOR LARGE EMPLOYERS.— 

4 In the case of an employer that employs 100 or 

5 more employees during the qualified quarter, no 

6 qualified payroll increase shall be taken into account 

7 for such qualified quarter unless the qualified pay8 roll increase with respect to such qualified quarter 

9 exceeds 3 percent of the qualified payroll for such 

10 quarter of the calendar year preceding the year in 

11 which such qualified quarter falls. 

12 ‘‘(f) QUALIFIED QUARTER.—For purposes of this 

13 section, the term ‘qualified quarter’ means— 

14 ‘‘(1) the calendar quarter which includes the 

15 date of the enactment of the Middle Class & Small 

16 Business Tax Cut Act of 2012, and 

17 ‘‘(2) each of the 3 calendar quarters following 

18 such quarter. 

19 ‘‘(g) DEFINITIONS.—Except as provided in sub20 section (h)(1), any term used in this section which is also 

21 used in section 3111 has the same meaning as when used 

22 in such section. 

23 ‘‘(h) SPECIAL RULES.—For purposes of this sec24 tion— 


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1 ‘‘(1) EMPLOYEE.—The term ‘employee’ includes 

2 only individuals who are citizens or lawful residents 

3 of the United States who receive wages, remunera4 tion, compensation, or tips from an employer for 

5 work performed within a State or a possession of the 

6 United States. 

7 ‘‘(2) MAINTENANCE OF BASE EMPLOYMENT RE8 QUIREMENT.—This section shall not apply to any 

9 qualified employer for any qualified quarter if the 

10 total number of employees of such employer during 

11 such quarter is less than the total number of such 

12 employees during the quarter preceding such quar13 ter, determined by not taking into account any em14 ployee who is a seasonal employee during such pre15 ceding quarter. 

16 ‘‘(3) CONTROLLED GROUPS.—All employers 

17 treated as a single employer under section (a) or (b) 

18 of section 52 shall be treated as a single employer 

19 for purposes of the dollar limitation under sub20 section (c), except that any employer which is not an 

21 American employer shall not be taken into account. 

22 ‘‘(4) NEW EMPLOYERS.— 

23 ‘‘(A) IN GENERAL.—In the case of a quali24 fied employer which comes into existence after 

25 the date of the enactment of the Middle Class 


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1 & Small Business Tax Cut Act of 2012 and be2 fore January 1, 2014— 

3 ‘‘(i) the term ‘qualified quarter’ 

4 means— 

5 ‘‘(I) the first calendar quarter for 

6 which such qualified employer is in 

7 existence, and 

8 ‘‘(II) each of the 3 quarters fol9 lowing such quarter, 

10 ‘‘(ii) the qualified payroll increase of 

11 such employer for the quarter described in 

12 clause (i)(I) shall be equal to the amount 

13 of the employer’s qualified payroll for such 

14 quarter, and 

15 ‘‘(iii) the qualified payroll increase of 

16 such employer for any quarter described in 

17 clause (i)(II) shall be the amount, if any, 

18 by which the employer’s qualified payroll 

19 for such quarter exceeds the qualified pay20 roll of the quarter preceding such quarter. 

21 ‘‘(B) TRANSITION RULE.— 

22 ‘‘(i) IN GENERAL.—In the case of a 

23 qualified employer which comes into exist24 ence— 


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1 ‘‘(I) after the last day of the cal2 endar quarter which is 5 calendar 

3 quarters before the date of the enact4 ment of the Middle Class & Small 

5 Business Tax Cut Act of 2012, and 

6 ‘‘(II) before such date of enact7 ment, 

8 the qualified payroll increase of such em9 ployer for any transition quarter shall be 

10 the amount, if any, by which the employ11 er’s qualified payroll for such quarter ex12 ceeds the qualified payroll of the quarter 

13 preceding such quarter. 

14 ‘‘(ii) TRANSITION QUARTER.—For 

15 purposes of clause (i), the term ‘transition 

16 quarter’ means a qualified quarter with re17 spect to which the qualified payroll in18 crease cannot be determined under sub19 section (e)(1) solely because the employer 

20 was not in existence during such quarter of 

21 the calendar year preceding the year in 

22 which such qualified quarter falls.’’. 

23 (b) CLERICAL AMENDMENT.—The table of sections 

24 for subchapter B of chapter 65 of the Internal Revenue 


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1 Code of 1986 is amended by adding at the end the fol2 lowing new item: 

‘‘Sec. 6433. Employer payroll increase credits.’’. 

3 (c) NOTIFICATION.—Not later than 30 days after the 

4 date of the enactment of this Act, the Commissioner of 

5 Internal Revenue shall notify all employers required to 

6 withhold employment taxes under chapter 21 or 22 of the 

7 Internal Revenue Code of 1986 of the enactment and ap8 plicability of section 6433 of the Internal Revenue Code 

9 of 1986, as added by this Act. 

10 (d) INVESTIGATION AND REPORT ON ENFORCEMENT

11 ACTIONS.—Not later than 6 months after the date of the 

12 enactment of this Act, and quarterly thereafter, the Com13 missioner of Internal Revenue shall submit a report to the 

14 Committee on Finance of the Senate and the Committee 

15 on Ways and Means of the House of Representatives on 

16 the enforcement measures taken to prevent and penalize 

17 fraud related to section 6433 of the Internal Revenue 

18 Code of 1986, including such information as— 

19 (1) general statistics related to the application 

20 of such section, 

21 (2) cases of fraud, and 

22 (3) the status of investigatory and prosecutorial 

23 actions related to such cases. 

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

25 subsections (a) and (b) shall apply to calendar quarters 


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1 beginning with the calendar quarter which includes the 

2 date of the enactment of this Act. 

Æ 


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