I 

117TH CONGRESS 

2D SESSION H. R. 6428 

To amend the Internal Revenue Code of 1986 to establish a State and 

local general sales tax credit for small businesses. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 19, 2022 

Mr. KHANNA 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 establish 

a State and local general sales tax credit for small businesses. 

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 ‘‘Brick and Mortar 

5 Small Business Tax Credit Act of 2022’’. 

6 SEC. 2. STATE AND LOCAL GENERAL SALES TAX CREDIT 

7 FOR SMALL BUSINESSES. 

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. 45U. STATE AND LOCAL GENERAL SALES TAX CREDIT 

4 FOR SMALL BUSINESSES. 

5 ‘‘(a) ALLOWANCE OF CREDIT.—For purposes of sec6 tion 38, in the case of an eligible small business, the State 

7 and local general sales tax credit determined under this 

8 section for the taxable year is an amount equal to 5 per9 cent of so much of the business gross receipts of the tax10 payer for the taxable year as do not exceed $1,000,000 

11 (regardless of whether such receipts are subject to a State 

12 or local general sales tax). 

13 ‘‘(b) PHASEOUT OF CREDIT.—If the business gross 

14 receipts of the taxpayer for the taxable year exceed 

15 $1,000,000, the credit otherwise determined under sub16 section (a) shall be reduced by an amount which bears 

17 the same ratio to the amount of such credit (determined 

18 without regard to this subsection) as— 

19 ‘‘(1) such excess, bears to 

20 ‘‘(2) $1,000,000. 

21 ‘‘(c) DEFINITIONS AND SPECIAL RULES.— 

22 ‘‘(1) DEFINITIONS.—For purposes of this sec23 tion— 

24 ‘‘(A) ELIGIBLE SMALL BUSINESS.— 


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1 ‘‘(i) IN GENERAL.—The term ‘eligible 

2 small business’ means any taxpayer for 

3 any taxable year if— 

4 ‘‘(I) the business gross receipts 

5 of such taxpayer for such taxable year 

6 do not exceed $2,000,000, and 

7 ‘‘(II) more than 50 percent of 

8 such business gross receipts of such 

9 taxpayer for such taxable year were 

10 generated by in-person sales. 

11 ‘‘(ii) SPECIAL RULE FOR 2020 AND

12 2021.—In the case of any taxable year be13 ginning in or with calendar year 2020 or 

14 2021, clause (i)(II) shall be applied by 

15 substituting ‘any percentage of’ for ‘more 

16 than 50 percent’. 

17 ‘‘(B) BUSINESS GROSS RECEIPTS.—The 

18 term ‘business gross receipts’ means gross re19 ceipts received in the course of any trade or 

20 business (other than the trade or business of 

21 being an employee). 

22 ‘‘(C) IN-PERSON SALES.—The term ‘in23 person sales’ means a sales transaction in which 

24 a customer pays for a good or service at a phys25 ical location of an eligible small business. 


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1 ‘‘(D) STATE.—The term ‘State’ means 

2 each of the several States, the District of Co3 lumbia, American Samoa, Guam, the Common4 wealth of the Northern Mariana Islands, Puerto 

5 Rico, the Virgin Islands of the United States, 

6 and any other territory of the United States. 

7 ‘‘(2) AGGREGATION RULES.—All persons treat8 ed as a single employer under subsection (a) or (b) 

9 of section 52, or subsection (n) or (o) of section 414, 

10 shall be treated as one person. 

11 ‘‘(d) TERMINATION.—Subsection (a) shall not apply 

12 with respect to any taxable year beginning after December 

13 31, 2026.’’. 

14 (b) CREDIT MADE PART OF GENERAL BUSINESS

15 CREDIT.—Subsection (b) of section 38 of such Code is 

16 amended by striking ‘‘plus’’ at the end of paragraph (32), 

17 by striking the period at the end of paragraph (33) and 

18 inserting ‘‘, plus’’, and by adding at the end the following 

19 new paragraph: 

20 ‘‘(34) in the case of an eligible small business 

21 (as defined in section 45U), the State and local gen22 eral sales tax credit determined under section 45U.’’. 

23 (c) 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 such Code is amended by adding at the end the fol2 lowing new item: 

‘‘Sec. 45U. State and local general sales tax credit for small businesses.’’. 

3 (d) PUBLIC AWARENESS CAMPAIGN.— 

4 (1) REQUIREMENT.—The Administrator of the 

5 Small Business Administration, in consultation with 

6 the Internal Revenue Service, shall conduct a public 

7 awareness campaign to inform relevant small busi8 ness concerns of the tax credit under section 45U of 

9 the Internal Revenue Code of 1986, as added by 

10 subsection (a). 

11 (2) PLAN.—Not later than 180 days after the 

12 date of the enactment of this Act, the Administrator 

13 shall submit to Congress a plan to implement the 

14 public awareness campaign under paragraph (1), in15 cluding— 

16 (A) a description of the objectives and 

17 goals for the campaign; and 

18 (B) a description of how the Administrator 

19 will work with other departments and agencies 

20 of the Federal Government and with nongovern21 mental entities to inform relevant small busi22 ness concerns of the tax credit described in 

23 paragraph (1). 

24 (3) AUTHORIZATION OF APPROPRIATIONS.— 

25 There is authorized to be appropriated to the AdVerDate Sep 11 2014 15:58 Jan 21, 2022 Jkt 029200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H6428.IH H6428

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1 ministrator $500,000 for fiscal year 2022 to carry 

2 out the public awareness campaign under paragraph 

3 (1). 

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

5 this section shall apply to taxable years beginning after 

6 December 31, 2019. 

Æ 


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