I 

114TH CONGRESS 

1ST SESSION H. R. 2608 

To amend the Internal Revenue Code of 1986 to allow manufacturing businesses to establish tax-free manufacturing reinvestment accounts to assist 

them in providing for new equipment and facilities and workforce training. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 2, 2015 

Ms. DELAURO (for herself, Mr. COLE, Mr. WELCH, Ms. DUCKWORTH, Ms. 

LEE, Mr. LIPINSKI, Mr. RYAN of Ohio, Ms. ESTY, and Ms. KUSTER) 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 manufacturing businesses to establish tax-free manufacturing 

reinvestment accounts to assist them in providing for 

new equipment and facilities and workforce training. 

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 ‘‘Manufacturing Rein5 vestment Account Act of 2015’’. 


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1 SEC. 2. MANUFACTURING REINVESTMENT ACCOUNTS. 

2 (a) IN GENERAL.—Part VI of subchapter B of chap3 ter 1 of the Internal Revenue Code of 1986 (relating to 

4 itemized deductions for individuals and corporations) is 

5 amended by inserting after section 199 the following new 

6 section: 

7 ‘‘SEC. 199A. MANUFACTURING REINVESTMENT ACCOUNTS. 

8 ‘‘(a) DEDUCTION ALLOWED.—In the case of a tax9 payer engaged in a manufacturing business, there shall 

10 be allowed as a deduction for the taxable year the amount 

11 paid in cash by the taxpayer during the taxable year to 

12 a manufacturing reinvestment account (hereinafter re13 ferred to as an ‘MRA’) for the taxpayer’s benefit. 

14 ‘‘(b) LIMITATION.— 

15 ‘‘(1) IN GENERAL.—The amount which a tax16 payer may pay into an MRA for the taxable year 

17 shall not exceed the lesser of— 

18 ‘‘(A) the domestic manufacturing gross re19 ceipts of the taxpayer for the taxable year, or 

20 ‘‘(B) $500,000. 

21 ‘‘(2) CONTROLLED GROUPS.— 

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

23 subsection, all persons treated as a single em24 ployer under subsection (a) or (b) of section 52 

25 or subsection (m) or (o) of section 414 shall be 

26 treated as a single manufacturer. 


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1 ‘‘(B) INCLUSION OF FOREIGN CORPORA2 TIONS.—For purposes of subparagraph (A), in 

3 applying subsections (a) and (b) of section 52 

4 to this section, section 1563 shall be applied 

5 without regard to subsection (b)(2)(C) thereof. 

6 ‘‘(c) MRA.—For purposes of this section, the term 

7 ‘MRA’ means a trust created or organized in the United 

8 States for the exclusive benefit of the taxpayer, but only 

9 if the written governing instrument creating the trust 

10 meets the following requirements: 

11 ‘‘(1) No contribution will be accepted for any 

12 taxable year unless it is in cash. 

13 ‘‘(2) Contributions will not be accepted for any 

14 taxable year in excess of the amount allowed as a 

15 deduction under subsection (a) for such year. 

16 ‘‘(3) The trustee is an eligible institution. 

17 ‘‘(4) No part of the trust assets will be invested 

18 in life insurance contracts. 

19 ‘‘(5) No part of the trust assets will be invested 

20 in any collectible (as defined in section 408(m)). 

21 ‘‘(6) The assets of the trust will not be commin22 gled with other property except in a common trust 

23 fund or common investment fund. 

24 ‘‘(d) TAX TREATMENT OF ACCOUNTS.— 


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1 ‘‘(1) IN GENERAL.—An MRA is exempt from 

2 taxation under this subtitle unless the account has 

3 ceased to be an MRA. Notwithstanding the pre4 ceding sentence, an MRA is subject to the taxes im5 posed by section 511 (relating to imposition of tax 

6 on unrelated business income of charitable, etc. or7 ganizations). 

8 ‘‘(2) ACCOUNT TERMINATIONS.—Rules similar 

9 to the rules of paragraphs (2) and (4) of section 

10 408(e) shall apply to MRAs, and any amount treat11 ed as distributed under such rules shall be treated 

12 as not used to pay qualified reinvestment expenses. 

13 ‘‘(e) TREATMENT OF DISTRIBUTIONS.— 

14 ‘‘(1) IN GENERAL.—Except as provided in para15 graphs (3) and (4), there shall be includible in the 

16 gross income of the taxpayer for any taxable year— 

17 ‘‘(A) any amount distributed from an MRA 

18 of the taxpayer during such taxable year, and 

19 ‘‘(B) any deemed distribution under— 

20 ‘‘(i) subsection (g)(1) (relating to de21 posits not distributed within 7 years), 

22 ‘‘(ii) subsection (g)(2) (relating to ces23 sation in manufacturing business), and 


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1 ‘‘(iii) subparagraph (A) or (B) of sub2 section (g)(3) (relating to prohibited trans3 actions and pledging account as security). 

4 ‘‘(2) ADDITIONAL TAX.— 

5 ‘‘(A) IN GENERAL.—The tax imposed by 

6 this chapter on the taxpayer for any taxable 

7 year in which there is a distribution from an 

8 MRA shall be increased by 10 percent of the 

9 amount of such distribution which is includible 

10 in gross income. 

11 ‘‘(B) EXCEPTION.—Subparagraph (A) 

12 shall not apply to distributions during the tax13 able year to the extent necessary, under regula14 tions prescribed by the Secretary, to avoid 

15 bankruptcy. 

16 ‘‘(3) REDUCED INCLUSION FOR AMOUNTS REIN17 VESTED.—Only 43 percent of the aggregate amount 

18 distributed from an MRA during the taxable year 

19 shall be includible in income under paragraph (1)(A) 

20 to the extent that such aggregate amount does not 

21 exceed the aggregate amount of qualified reinvest22 ment expenses paid or incurred by the taxpayer dur23 ing such year. 

24 ‘‘(4) DISTRIBUTION OF EXCESS CONTRIBU25 TIONS.—Paragraph (1) shall not apply to the disVerDate Sep 11 2014 06:10 Jun 03, 2015 Jkt 049200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2608.IH H2608

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1 tribution of any contribution paid during a taxable 

2 year to an MRA to the extent that such contribution 

3 exceeds the limitation applicable under subsection 

4 (b) if requirements similar to the requirements of 

5 section 408(d)(4) are met. 

6 ‘‘(f) DEFINITIONS.—For purposes of this section— 

7 ‘‘(1) MANUFACTURING BUSINESS.—The term 

8 ‘manufacturing business’ means any trade or busi9 ness having domestic manufacturing gross receipts. 

10 ‘‘(2) DOMESTIC MANUFACTURING GROSS RE11 CEIPTS.—The term ‘domestic manufacturing gross 

12 receipts’ means gross receipts of the taxpayer which 

13 are derived from any lease, rental, license, sale, ex14 change, or other disposition of tangible personal 

15 property which was manufactured by the taxpayer in 

16 whole or in significant part within the United 

17 States. Rules similar to the rules of section 199 

18 shall apply in determining the gross receipts of the 

19 taxpayer for purposes of the preceding sentence. 

20 ‘‘(3) QUALIFIED REINVESTMENT EXPENSES.— 

21 The term ‘qualified reinvestment expenses’ means— 

22 ‘‘(A) expenses for property to be used by 

23 the taxpayer in a manufacturing business, and 


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1 ‘‘(B) expenses for job training and work2 force development for employees of the tax3 payer. 

4 ‘‘(4) ELIGIBLE INSTITUTION.— 

5 ‘‘(A) IN GENERAL.—The term ‘eligible in6 stitution’ means— 

7 ‘‘(i) any insured depository institu8 tion, which— 

9 ‘‘(I) is not controlled by a bank 

10 holding company or savings and loan 

11 holding company that is also an eligi12 ble institution, 

13 ‘‘(II) has total assets of equal to 

14 or less than $25,000,000,000, as re15 ported in the call report as of the end 

16 of the fourth quarter of calendar year 

17 2014, and 

18 ‘‘(III) is not directly or indirectly 

19 controlled by any company or other 

20 entity that has total consolidated as21 sets of more than $25,000,000,000, 

22 as so reported; 

23 ‘‘(ii) any bank holding company which 

24 has total consolidated assets of equal to or 

25 less than $25,000,000,000; 


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1 ‘‘(iii) any savings and loan holding 

2 company which has total consolidated as3 sets of equal to or less than 

4 $25,000,000,000; 

5 ‘‘(iv) any community development fi6 nancial institution loan fund which has 

7 total assets of equal to or less than 

8 $25,000,000,000; and 

9 ‘‘(v) any small business lending com10 pany that has total assets of equal to or 

11 less than $25,000,000,000. 

12 ‘‘(B) INSURED DEPOSITORY INSTITU13 TION.—The term ‘insured depository institu14 tion’ has the meaning given such term under 

15 section 3(c)(2) of the Federal Deposit Insur16 ance Act (12 U.S.C. 1813(c)(2)). 

17 ‘‘(C) BANK HOLDING COMPANY.—The 

18 term ‘bank holding company’ has the meaning 

19 given such term under section 2(a)(1) of the 

20 Bank Holding Company Act of 1956 (12 

21 U.S.C. 1841(2)(a)(1)). 

22 ‘‘(D) CALL REPORT.—The term ‘call re23 port’ means— 

24 ‘‘(i) reports of Condition and Income 

25 submitted to the Office of the Comptroller 


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1 of the Currency, the Board of Governors of 

2 the Federal Reserve System, and the Fed3 eral Deposit Insurance Corporation; 

4 ‘‘(ii) the Office of Thrift Supervision 

5 Thrift Financial Report; 

6 ‘‘(iii) any report that is designated by 

7 the Office of the Comptroller of the Cur8 rency, the Board of Governors of the Fed9 eral Reserve System, the Federal Deposit 

10 Insurance Corporation, or the Office of 

11 Thrift Supervision, as applicable, as a suc12 cessor to any report referred to in clause 

13 (i) or (ii); 

14 ‘‘(iv) standard reports of Condition 

15 and Income submitted by Community De16 velopment Financial Institution loan funds 

17 to the Community Development Financial 

18 Institutions Fund; and 

19 ‘‘(v) with respect to an eligible institu20 tion for which no report exists that is de21 scribed under clause (i), (ii), or (iii), such 

22 other report or set of information as the 

23 Secretary, in consultation with the Admin24 istrator of the Small Business Administra25 tion, may prescribe. 


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1 ‘‘(g) SPECIAL RULES.— 

2 ‘‘(1) TAX ON DEPOSITS IN ACCOUNT WHICH

3 ARE NOT DISTRIBUTED WITHIN 7 YEARS.— 

4 ‘‘(A) IN GENERAL.—If, at the close of any 

5 taxable year, there is a nonqualified balance in 

6 any MRA— 

7 ‘‘(i) there shall be deemed distributed 

8 from the MRA during such taxable year an 

9 amount equal to such balance, and 

10 ‘‘(ii) the taxpayer’s tax imposed by 

11 this chapter for such taxable year shall be 

12 increased by 10 percent of such deemed 

13 distribution. 

14 ‘‘(B) NONQUALIFIED BALANCE.—For pur15 poses of subparagraph (A), the term ‘non16 qualified balance’ means any balance in the 

17 MRA on the last day of the taxable year which 

18 is attributable to amounts deposited in such ac19 count before the 6th preceding taxable year. 

20 ‘‘(C) ORDERING RULE.—For purposes of 

21 this paragraph, distributions from an MRA 

22 shall be treated as made from deposits (and in23 come thereon) in the order in which such depos24 its were made, beginning with the earliest de25 posits. 


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1 ‘‘(2) CESSATION OF MANUFACTURING BUSI2 NESS.—If the taxpayer ceases to be engaged in a 

3 manufacturing business, there shall be deemed dis4 tributed from the MRA of the taxpayer at the close 

5 of the first taxable year beginning after such ces6 sation an amount equal to the balance in the MRA 

7 (if any) at such close. 

8 ‘‘(3) CERTAIN RULES TO APPLY.—Rules similar 

9 to the following rules shall apply for purposes of this 

10 section: 

11 ‘‘(A) Section 408(e)(2) (relating to loss of 

12 exemption of account where taxpayer engages 

13 in prohibited transaction). 

14 ‘‘(B) Section 408(e)(4) (relating to effect 

15 of pledging account as security). 

16 ‘‘(C) Section 408(h) (relating to custodial 

17 accounts). 

18 ‘‘(4) TIME WHEN PAYMENTS DEEMED MADE.— 

19 For purposes of this section, a taxpayer shall be 

20 deemed to have made a payment to an MRA on the 

21 last day of a taxable year if such payment is made 

22 on account of such taxable year and is made on or 

23 before the due date (without regard to extensions) 

24 for filing the return of tax for such taxable year. 


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1 ‘‘(5) DEDUCTION NOT ALLOWED FOR SELF-EM2 PLOYMENT TAX.—The deduction allowable by reason 

3 of subsection (a) shall not be taken into account in 

4 determining an individual’s net earnings from self5 employment (within the meaning of section 1402(a)) 

6 for purposes of chapter 2. 

7 ‘‘(h) REPORTS.—The trustee of an MRA shall make 

8 such reports regarding such account to the Secretary and 

9 to the person for whose benefit the account is maintained 

10 with respect to contributions, distributions, and such other 

11 matters as the Secretary may require under regulations. 

12 The reports required by this subsection shall be filed at 

13 such time and in such manner and furnished to such per14 sons at such time and in such manner as may be required 

15 by such regulations. 

16 ‘‘(i) TERMINATION.—No deduction shall be allowed 

17 under this section for any taxable year beginning more 

18 than 10 years after the date of the enactment of this sec19 tion.’’. 

20 (b) TAX ON EXCESS CONTRIBUTIONS.— 

21 (1) IN GENERAL.—Subsection (a) of section 

22 4973 of such Code (relating to tax on excess con23 tributions to certain tax-favored accounts and annu24 ities) is amended by striking ‘‘or’’ at the end of 

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1 graph (6), and by inserting after paragraph (6) the 

2 following new paragraph: 

3 ‘‘(7) an MRA (within the meaning of section 

4 199A(c)),’’. 

5 (2) EXCESS CONTRIBUTION DEFINED.—Section 

6 4973 of such Code is amended by adding at the end 

7 the following new subsection: 

8 ‘‘(i) EXCESS CONTRIBUTIONS TO MRAS.—For pur9 poses of this section, in the case of MRAs (within the 

10 meaning of section 199A(c)), the term ‘excess contribu11 tions’ means the amount by which the amount contributed 

12 for the taxable year to the MRAs of the taxpayer exceeds 

13 the amount which may be contributed to such MRAs 

14 under section 199A(b) for such taxable year. For purposes 

15 of this subsection, any contribution which is distributed 

16 out of an MRA in a distribution to which section 

17 199A(e)(3) applies shall be treated as an amount not con18 tributed.’’. 

19 (c) TAX ON PROHIBITED TRANSACTIONS.— 

20 (1) IN GENERAL.—Paragraph (1) of section 

21 4975(e) of such Code is amended by striking ‘‘or’’ 

22 at the end of subparagraph (F), by redesignating 

23 subparagraph (G) as subparagraph (H), and by in24 serting after subparagraph (F) the following: 


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1 ‘‘(G) an MRA described in section 

2 199A(c), or’’. 

3 (2) SPECIAL RULE.—Subsection (c) of section 

4 4975 of such Code (relating to tax on prohibited 

5 transactions) is amended by adding at the end the 

6 following: 

7 ‘‘(7) SPECIAL RULE FOR MANUFACTURING RE8 INVESTMENT ACCOUNTS.—A person for whose ben9 efit an MRA (within the meaning of section 

10 199A(c)) is established shall be exempt from the tax 

11 imposed by this section with respect to any trans12 action concerning such account (which would other13 wise be taxable under this section) if, with respect 

14 to such transaction, the account ceases to be an 

15 MRA by reason of the application of section 

16 199A(g)(3)(A) to such account.’’. 

17 (d) FAILURE TO PROVIDE REPORTS ON MRAS.— 

18 Paragraph (2) of section 6693(a) of such Code (relating 

19 to failure to provide reports on certain tax-favored ac20 counts or annuities) is amended by redesignating subpara21 graphs (A) through (F) as subparagraphs (B) through 

22 (G), respectively, and by inserting before subparagraph 

23 (B), as so redesignated, the following new subparagraph: 

24 ‘‘(A) section 199A(h) (relating to manufac25 turing reinvestment accounts),’’. 


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1 (e) CLERICAL AMENDMENT.—The table of sections 

2 for part VI of subchapter B of chapter 1 of such Code 

3 is amended by inserting after the item relating to section 

4 199 the following new item: 

‘‘Sec. 199A. Manufacturing reinvestment accounts.’’. 

5 (f) EFFECTIVE DATE.—The amendments made by 

6 this section shall apply to taxable years beginning after 

7 the date of the enactment of this Act. 

Æ 


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