II 

110TH CONGRESS 

2D SESSION S. 3488 

To amend the Internal Revenue Code of 1986 to provide for a tax credit 

for qualified donations of employee services. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 15, 2008 

Mr. HATCH (for himself and Mr. KENNEDY) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

for a tax credit for qualified donations of employee services. 

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 ‘‘Incentive to Serve Tax 

5 Act’’. 

6 SEC. 2. TAX CREDIT FOR QUALIFIED DONATIONS OF EM7 PLOYEE SERVICES. 

8 (a) IN GENERAL.—Subpart D of part IV of sub9 chapter A of chapter 1 of the Internal Revenue Code of 


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1 1986 is amended by adding at the end the following new 

2 section: 

3 ‘‘SEC. 45Q. QUALIFIED EMPLOYEE SERVICE DONATIONS. 

4 ‘‘(a) IN GENERAL.—For purposes of section 38, the 

5 qualified employee service donation credit under this sec6 tion is an amount equal to 25 percent of the qualified 

7 wages paid or incurred by the taxpayer. 

8 ‘‘(b) QUALIFIED WAGES.—For purposes of this sec9 tion— 

10 ‘‘(1) IN GENERAL.—The term ‘qualified wages’ 

11 means the wages paid or incurred by an employer 

12 during the taxable year to an eligible employee dur13 ing periods in which the eligible employee is per14 forming qualified services. 

15 ‘‘(2) WAGES.—The term ‘wages’ has the mean16 ing given to such term by subsection (b) of section 

17 3306 (determined without regard to the dollar limi18 tation contained in such section). 

19 ‘‘(3) LIMITATION ON WAGES TAKEN INTO AC20 COUNT.—The amount of qualified wages which may 

21 be taken into account with respect to any individual 

22 shall not exceed $100,000 per year. 

23 ‘‘(4) COORDINATION WITH OTHER CREDITS.— 

24 ‘‘(A) WORK OPPORTUNITY CREDIT.—The 

25 term ‘qualified wages’ shall not include wages 


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1 attributable to service rendered during the 1- 

2 year period beginning with the day the indi3 vidual begins work for the employer if any por4 tion of such wages is taken into account in de5 termining the credit under section 51. 

6 ‘‘(B) INDIAN EMPLOYMENT CREDIT.—The 

7 term ‘qualified wages’ shall not include wages 

8 with respect to any employee if a credit is al9 lowed for wages paid to such employee under 

10 section 45A. 

11 ‘‘(c) ELIGIBLE EMPLOYEE.—For purposes of this 

12 section, the term ‘eligible employee’ means any employee 

13 of the employer who performs qualified services at the di14 rection of the employer and with the employee’s consent 

15 for a period of not less than 160 hours for which such 

16 employee was fully compensated during the taxable year 

17 of the employer. 

18 ‘‘(d) QUALIFIED SERVICES.—For purposes of this 

19 section— 

20 ‘‘(1) IN GENERAL.—The term ‘qualified serv21 ices’ means— 

22 ‘‘(A) eligible direct services to recipients or 

23 beneficiaries of charitable organizations and 

24 community agencies, 


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1 ‘‘(B) the recruitment and coordination of 

2 activities of volunteers providing such eligible 

3 direct services, or 

4 ‘‘(C) the building of the capacity of such 

5 organizations and agencies to provide such eligi6 ble direct services. 

7 ‘‘(2) ELIGIBLE DIRECT SERVICES.—The term 

8 ‘eligible direct services’ means direct services which 

9 advance 1 or more of the following: 

10 ‘‘(A) Improving the quality of education in 

11 public schools for economically disadvantaged 

12 students. 

13 ‘‘(B) Expanding and improving access to 

14 health care. 

15 ‘‘(C) Improving and conserving energy and 

16 natural resources. 

17 ‘‘(D) Improving economic opportunities for 

18 economically disadvantaged individuals. 

19 ‘‘(E) Improving disaster preparedness and 

20 response. 

21 ‘‘(e) VERIFICATION.—No amount shall be allowed as 

22 a credit under subsection (a) for qualified wages for quali23 fied services with respect to which the taxpayer has not 

24 submitted such information or certification as the SecVerDate Aug 31 2005 17:19 Oct 16, 2008 Jkt 079200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S3488.IS S3488

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1 retary determines necessary to ensure the performance of 

2 such qualified services. 

3 ‘‘(f) SPECIAL RULES.—For purposes of this section, 

4 rules similar to the rules of section 52 shall apply.’’. 

5 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec6 tion 38(b) of the Internal Revenue Code of 1986 (relating 

7 to current year business credit) is amended by striking 

8 ‘‘and’’ at the end of paragraph (32), by striking the period 

9 at the end of paragraph (33) and inserting ‘‘, plus’’, and 

10 by adding at the end the following new paragraph: 

11 ‘‘(34) the credit determined under section 

12 45Q(a).’’. 

13 (c) CONFORMING AMENDMENTS.— 

14 (1) Section 196(c) of the Internal Revenue 

15 Code of 1986 is amended by striking ‘‘and’’ at the 

16 end of paragraph (12), by striking the period at the 

17 end of paragraph (13) and inserting ‘‘, and’’, and by 

18 adding at the end the following new paragraph: 

19 ‘‘(14) the qualified employee service credit 

20 under section 45Q(a).’’. 

21 (2) Section 280C(a) of such Code is amended 

22 by inserting ‘‘45Q(a),’’ after ‘‘45A(a)’’. 

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

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


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1 of the Internal Revenue Code of 1986 is amended by add2 ing at the end the following new item: 

‘‘Sec. 45Q. Qualified employee service donations.’’. 

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

4 this section shall apply to wages paid or incurred after 

5 the date of the enactment of this Act. 

6 SEC. 3. EXCLUSION. 

7 Section 148 of the National and Community Service 

8 Act of 1990 (42 U.S.C. 12604) is amended— 

9 (1) by redesignating subsection (g) as sub10 section (h); and 

11 (2) by inserting after subsection (f) the fol12 lowing: 

13 ‘‘(g) EXCLUSION FROM INCOME.—The amount of an 

14 educational award provided to an individual under this 

15 section shall not be included in the gross income of the 

16 individual for purposes of the Internal Revenue Code of 

17 1986.’’. 

Æ 


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