I

107TH CONGRESS

1ST SESSION H. R. 1414

To amend the Internal Revenue Code of 1986 to expand the work opportunity

tax credit for small business jobs creation.

IN THE HOUSE OF REPRESENTATIVES

APRIL 4, 2001

Mr. RANGEL (for himself, Mr. MCNULTY, Mr. TOWNS, Mr. LAFALCE, Ms.

SLAUGHTER, Mr. HINCHEY, Mr. CROWLEY, Mrs. MALONEY of New York,

Mr. SERRANO, and Mr. GILMAN) 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 expand

the work opportunity tax credit for small business jobs

creation.

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 ‘‘Small Business Jobs

5 Credit Act of 2001’’.

6 SEC. 2. FINDINGS.

7 Congress finds the following:

8 (1) In many parts of the United States, smaller

9 cities and rural areas are experiencing population
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1 loss and low-job growth that hurts the surrounding

2 communities.

3 (2) In areas hurt by low-job growth, people are

4 forced to leave the communities they have lived in

5 their whole life to secure a job.

6 (3) A small business tax credit to promote jobs

7 in areas suffering from low-job growth and popu8 lation loss would spur the economy and allow busi9 nesses to take advantage of an often underutilized

10 well-educated workforce.

11 SEC. 3. EXPANSION OF WORK OPPORTUNITY TAX CREDIT.

12 (a) IN GENERAL.—Section 51(d)(1) of the Internal

13 Revenue Code of 1986 (relating to members of targeted

14 groups) is amended by striking ‘‘or’’ at the end of sub15 paragraph (G), by striking the period at the end of sub16 paragraph (H) and inserting ‘‘, or’’, and by adding at the

17 end the following:

18 ‘‘(I) a qualified small business employee.’’.

19 (b) QUALIFIED SMALL BUSINESS EMPLOYEE.—Sec20 tion 51(d) of the Internal Revenue Code of 1986 is amend21 ed by redesignating paragraphs (10) through (12) as para22 graphs (11) through (13), respectively, and by inserting

23 after paragraph (9) the following:

24 ‘‘(10) QUALIFIED SMALL BUSINESS EM25 PLOYEE.—
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1 ‘‘(A) IN GENERAL.—The term ‘qualified

2 small business employee’ means any

3 individual—

4 ‘‘(i) hired by a qualified small busi5 ness located in a development zone, or

6 ‘‘(ii) hired by a qualified small busi7 ness and who is certified by the designated

8 local agency as residing in such a develop9 ment zone.

10 ‘‘(B) QUALIFIED SMALL BUSINESS.—The

11 term ‘qualified small business’ has the meaning

12 given the term ‘small employer’ by section

13 4980D(d)(2).

14 ‘‘(C) DEVELOPMENT ZONE.—For purposes

15 of this section—

16 ‘‘(i) IN GENERAL.—The term ‘devel17 opment zone’ means any area—

18 ‘‘(I) which is nominated under

19 the procedures defined in sections

20 1400E(a)(1)(A) and 1400E(a)(4) for

21 renewal communities;

22 ‘‘(II) which the Secretary of

23 Housing and Urban Development des24 ignates as a development zone, after
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1 consultation with the Secretary of

2 Commerce;

3 ‘‘(III) which has a population of

4 not less than 5,000 and not more

5 than 150,000;

6 ‘‘(IV) which has a poverty rate

7 not less than 20 percent (within the

8 meaning of section 1400E(c)(3)(C));

9 ‘‘(V) which has an average rate

10 of job growth of less than 1 percent

11 during the preceding 5-year period;

12 and

13 ‘‘(VI) which, during the period

14 beginning January 1, 1990 and end15 ing with the date of the enactment of

16 this Act, has a net out-migration of

17 inhabitants, or other population loss,

18 from the area of at least 3 percent of

19 the population of the area during such

20 period.

21 ‘‘(ii) NUMBER OF DESIGNATIONS.—

22 The Secretary of Housing and Urban De23 velopment may not designate more than

24 100 development zones.
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1 ‘‘(D) SPECIAL RULES FOR DETERMINING

2 AMOUNT OF CREDIT.—For purposes of applying

3 this subpart to wages paid or incurred to any

4 qualified small business employee—

5 ‘‘(i) subsection (a) shall be applied by

6 substituting ‘‘20 percent of the qualified

7 first, second, third, fourth, or fifth year

8 wages’’ for ‘‘40 percent of the qualified

9 first year wages’’, and

10 ‘‘(ii) in lieu of paragraphs (2) and (3)

11 of subsection (b), the following definitions

12 and special rule shall apply:

13 ‘‘(I) QUALIFIED FIRST-YEAR

14 WAGES.—The term ‘qualified first15 year wages’ means, with respect to

16 any individual, qualified wages attrib17 utable to service rendered during the

18 1-year period beginning with the day

19 the individual begins work for the em20 ployer.

21 ‘‘(II) QUALIFIED SECOND-YEAR

22 WAGES.—The term ‘qualified second23 year wages’ means, with respect to

24 any individual, qualified wages attrib25 utable to service rendered during the
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1 1-year period beginning on the day

2 after the last day of the 1-year period

3 with respect to such individual deter4 mined under subclause (I).

5 ‘‘(III) QUALIFIED THIRD-YEAR

6 WAGES.—The term ‘qualified third7 year wages’ means, with respect to

8 any individual, qualified wages attrib9 utable to service rendered during the

10 1-year period beginning on the day

11 after the last day of the 1-year period

12 with respect to such individual deter13 mined under subclause (II).

14 ‘‘(IV) QUALIFIED FOURTH-YEAR

15 WAGES.—The term ‘qualified fourth16 year wages’ means, with respect to

17 any individual, qualified wages attrib18 utable to service rendered during the

19 1-year period beginning on the day

20 after the last day of the 1-year period

21 with respect to such individual deter22 mined under subclause (III).

23 ‘‘(V) QUALIFIED FIFTH-YEAR

24 WAGES.—The term ‘qualified fifth25 year wages’ means, with respect to
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1 any individual, qualified wages attrib2 utable to service rendered during the

3 1-year period beginning on the day

4 after the last day of the 1-year period

5 with respect to such individual deter6 mined under subclause (IV).

7 ‘‘(VI) ONLY FIRST $15,000 OF

8 WAGES PER YEAR TAKEN INTO AC9 COUNT.—The amount of the qualified

10 first, second, third, fourth, and fifth

11 year wages which may be taken into

12 account with respect to any individual

13 shall not exceed $15,000 per year.’’.

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

15 this section shall apply to individuals who begin work for

16 the employer after the date of the enactment of this Act.

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