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[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[S. 2540 Introduced in Senate (IS)]

113th CONGRESS
  2d Session
                                S. 2540

 To amend the Internal Revenue Code of 1986 to provide a tax credit to 
               Patriot employers, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             June 26, 2014

Mr. Durbin (for himself, Mr. Brown, Mr. Reed, Ms. Warren, Ms. Baldwin, 
 and Mr. Sanders) 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 a tax credit to 
               Patriot employers, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Patriot Employer Tax Credit Act''.

SEC. 2. PATRIOT EMPLOYER TAX CREDIT.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new section:

``SEC. 45S. PATRIOT EMPLOYER TAX CREDIT.

    ``(a) Determination of Amount.--
            ``(1) In general.--For purposes of section 38, the Patriot 
        employer credit determined under this section with respect to 
        any taxpayer who is a Patriot employer for any taxable year 
        shall be equal to 10 percent of the qualified wages paid or 
        incurred by the Patriot employer.
            ``(2) Limitation.--The amount of qualified wages which may 
        be taken into account under paragraph (1) with respect to any 
        employee for any taxable year shall not exceed $15,000.
    ``(b) Patriot Employer.--
            ``(1) In general.--For purposes of subsection (a), the term 
        `Patriot employer' means, with respect to any taxable year, any 
        taxpayer--
                    ``(A) which--
                            ``(i) maintains its headquarters in the 
                        United States if the taxpayer (or any 
                        predecessor) has ever been headquartered in the 
                        United States, and
                            ``(ii) is not (and no predecessor of which 
                        is) an expatriated entity (as defined in 
                        section 7874(a)(2)) for the taxable year or any 
                        preceding taxable year ending after March 4, 
                        2003,
                    ``(B) with respect to which no assessable payment 
                has been imposed under section 4980H with respect to 
                any month occurring during the taxable year, and
                    ``(C) in the case of--
                            ``(i) a taxpayer which employs an average 
                        of more than 50 employees on business days 
                        during the taxable year, which--
                                    ``(I) provides compensation for at 
                                least 90 percent of its employees for 
                                services provided by such employees 
                                during the taxable year at an hourly 
                                rate (or equivalent thereof) not less 
                                than an amount equal to 150 percent of 
                                the Federal poverty level for a family 
                                of three for the calendar year in which 
                                the taxable year begins divided by 
                                2,080,
                                    ``(II) meets the retirement plan 
                                requirements of subsection (c) with 
                                respect to at least 90 percent of its 
                                employees providing services during the 
                                taxable year who are not highly 
                                compensated employees, and
                                    ``(III) meets the additional 
                                requirements of subparagraphs (A) and 
                                (B) of paragraph (2), or
                            ``(ii) any other taxpayer, which meets the 
                        requirements of either subclause (I) or (II) of 
                        clause (i) for the taxable year.
            ``(2) Additional requirements for large employers.--
                    ``(A) United states employment.--The requirements 
                of this subparagraph are met for any taxable year if--
                            ``(i) in any case in which the taxpayer 
                        increases the number of employees performing 
                        substantially all of their services for the 
                        taxable year outside the United States, the 
                        taxpayer either--
                                    ``(I) increases the number of 
                                employees performing substantially all 
                                of their services inside the United 
                                States by an amount not less than the 
                                increase in such number for employees 
                                outside the United States, or
                                    ``(II) has a percentage increase in 
                                such employees inside the United States 
                                which is not less than the percentage 
                                increase in such employees outside the 
                                United States,
                            ``(ii) in any case in which the taxpayer 
                        decreases the number of employees performing 
                        substantially all of their services for the 
                        taxable year inside the United States, the 
                        taxpayer either--
                                    ``(I) decreases the number of 
                                employees performing substantially all 
                                of their services outside the United 
                                States by an amount not less than the 
                                decrease in such number for employees 
                                inside the United States, or
                                    ``(II) has a percentage decrease in 
                                employees outside the United States 
                                which is not less than the percentage 
                                decrease in such employees inside the 
                                United States, and
                            ``(iii) there is not a decrease in the 
                        number of employees performing substantially 
                        all of their services for the taxable year 
                        inside the United States by reason of the 
                        taxpayer contracting out such services to 
                        persons who are not employees of the taxpayer.
                    ``(B) Treatment of individuals in the uniformed 
                services and the disabled.--The requirements of this 
                subparagraph are met for any taxable year if--
                            ``(i) the taxpayer provides differential 
                        wage payments (as defined in section 
                        3401(h)(2)) to each employee described in 
                        section 3401(h)(2)(A) for any period during the 
                        taxable year in an amount not less than the 
                        difference between the wages which would have 
                        been received from the employer during such 
                        period and the amount of pay and allowances 
                        which the employee receives for service in the 
                        uniformed services during such period, and
                            ``(ii) the taxpayer has in place at all 
                        times during the taxable year a written policy 
                        for the recruitment of employees who have 
                        served in the uniformed services or who are 
                        disabled.
            ``(3) Special rules for applying the minimum wage and 
        retirement plan requirements.--
                    ``(A) Minimum wage.--In determining whether the 
                minimum wage requirements of paragraph (1)(C)(i)(I) are 
                met with respect to 90 percent of a taxpayer's 
                employees for any taxable year--
                            ``(i) a taxpayer may elect to exclude from 
                        such determination apprentices or learners that 
                        an employer may exclude under the regulations 
                        under section 14(a) of the Fair Labor Standards 
                        Act of 1938, and
                            ``(ii) if a taxpayer meets the requirements 
                        of paragraph (2)(B)(i) with respect to 
                        providing differential wage payments to any 
                        employee for any period (without regard to 
                        whether such requirements apply to the 
                        taxpayer), the hourly rate (or equivalent 
                        thereof) for such payments shall be determined 
                        on the basis of the wages which would have been 
                        paid by the employer during such period if the 
                        employee had not been providing service in the 
                        uniformed services.
                    ``(B) Retirement plan.--In determining whether the 
                retirement plan requirements of paragraph (1)(C)(i)(II) 
                are met with respect to 90 percent of a taxpayer's 
                employees for any taxable year, a taxpayer may elect to 
                exclude from such determination--
                            ``(i) employees not meeting the age or 
                        service requirements under section 410(a)(1) 
                        (or such lower age or service requirements as 
                        the employer provides), and
                            ``(ii) employees described in section 
                        410(b)(3).
    ``(c) Retirement Plan Requirements.--
            ``(1) In general.--The requirements of this subsection are 
        met for any taxable year with respect to an employee of the 
        taxpayer who is not a highly compensated employee if the 
        employee is eligible to participate in 1 or more applicable 
        eligible retirement plans maintained by the employer for a plan 
        year ending with or within the taxable year.
            ``(2) Applicable eligible retirement plan.--For purposes of 
        this subsection, the term `applicable eligible retirement plan' 
        means an eligible retirement plan which, with respect to the 
        plan year described in paragraph (1), is either--
                    ``(A) a defined contribution plan which--
                            ``(i) requires the employer to make 
                        nonelective contributions of at least 5 percent 
                        of the compensation of the employee, or
                            ``(ii) both--
                                    ``(I) includes an eligible 
                                automatic contribution arrangement (as 
                                defined in section 414(w)(3)) under 
                                which the uniform percentage described 
                                in section 414(w)(3)(B) is at least 5 
                                percent, and
                                    ``(II) requires the employer to 
                                make matching contributions of 100 
                                percent of the elective deferrals (as 
                                defined in section 414(u)(2)(C)) of the 
                                employee to the extent such deferrals 
                                do not exceed the percentage specified 
                                by the plan (not less than 5 percent) 
                                of the employee's compensation, or
                    ``(B) a defined benefit plan--
                            ``(i) with respect to which the accrued 
                        benefit of the employee derived from employer 
                        contributions, when expressed as an annual 
                        retirement benefit, is not less than the 
                        product of--
                                    ``(I) the lesser of 2 percent 
                                multiplied by the employee's years of 
                                service (determined under the rules of 
                                paragraphs (4), (5), and (6) of section 
                                411(a)) with the employer or 20 
                                percent, multiplied by
                                    ``(II) the employee's final average 
                                pay, or
                            ``(ii) which is an applicable defined 
                        benefit plan (as defined in section 
                        411(a)(13)(B))--
                                    ``(I) which meets the interest 
                                credit requirements of section 
                                411(b)(5)(B)(i) with respect to the 
                                plan year, and
                                    ``(II) under which the employee 
                                receives a pay credit for the plan year 
                                which is not less than 5 percent of 
                                compensation.
            ``(3) Definitions and special rules.--For purposes of this 
        subsection--
                    ``(A) Eligible retirement plan.--The term `eligible 
                retirement plan' has the meaning given such term by 
                section 402(c)(8)(B), except that in the case of an 
                account or annuity described in clause (i) or (ii) 
                thereof, such term shall only include an account or 
                annuity which is a simplified employee pension (as 
                defined in section 408(k)).
                    ``(B) Final average pay.--For purposes of paragraph 
                (2)(B)(i)(II), final average pay shall be determined 
                using the period of consecutive years (not exceeding 5) 
                during which the employee had the greatest compensation 
                from the taxpayer.
                    ``(C) Alternative plan designs.--The Secretary may 
                prescribe regulations for a taxpayer to meet the 
                requirements of this subsection through a combination 
                of defined contribution plans or defined benefit plans 
                described in paragraph (1) or through a combination of 
                both such types of plans.
                    ``(D) Plans must meet requirements without taking 
                into account social security and similar contributions 
                and benefits.--A rule similar to the rule of section 
                416(e) shall apply.
    ``(d) Qualified Wages and Compensation.--For purposes of this 
section--
            ``(1) In general.--The term `qualified wages' means wages 
        (as defined in section 51(c), determined without regard to 
        paragraph (4) thereof) paid or incurred by the Patriot employer 
        during the taxable year to employees--
                    ``(A) who perform substantially all of their 
                services for such Patriot employer inside the United 
                States, and
                    ``(B) with respect to whom--
                            ``(i) in the case of a Patriot employer 
                        which employs an average of more than 50 
                        employees on business days during the taxable 
                        year, the requirements of subclauses (I) and 
                        (II) of subsection (b)(1)(C)(i) are met, and
                            ``(ii) in the case of any other Patriot 
                        employer, the requirements of either subclause 
                        (I) or (II) of subsection (b)(1)(C)(i) are met.
            ``(2) Special rules for agricultural labor and railway 
        labor.--Rules similar to the rules of section 51(h) shall 
        apply.
            ``(3) Compensation.--For purposes of subsections 
        (b)(1)(C)(i)(I) and (c), the term `compensation' has the same 
        meaning as qualified wages, except that section 51(c)(2) shall 
        be disregarded in determining the amount of such wages.
    ``(e) Aggregation Rules.--For purposes of this section--
            ``(1) In general.--All persons treated as a single employer 
        under subsection (a) or (b) of section 52 shall be treated as a 
        single taxpayer.
            ``(2) Special rules for certain requirements.--For purposes 
        of applying paragraphs (1)(A) and (2)(A) of subsection (b)--
                    ``(A) the determination under subsections (a) and 
                (b) of section 52 for purposes of paragraph (1) shall 
                be made without regard to section 1563(b)(2)(C) 
                (relating to exclusion of foreign corporations), and
                    ``(B) if any person treated as a single taxpayer 
                under this subsection (after application of 
                subparagraph (A)), or any predecessor of such person, 
                was an expatriated entity (as defined in section 
                7874(a)(2)) for any taxable year ending after March 4, 
                2003, then all persons treated as a single taxpayer 
                with such person shall be treated as expatriated 
                entities.
    ``(f) Election To Have Credit Not Apply.--
            ``(1) In general.--A taxpayer may elect to have this 
        section not apply for any taxable year.
            ``(2) Time for making election.--An election under 
        paragraph (1) for any taxable year may be made (or revoked) at 
        any time before the expiration of the 3-year period beginning 
        on the last date prescribed by law for filing the return for 
        such taxable year (determined without regard to extensions).
            ``(3) Manner of making election.--An election under 
        paragraph (1) (or revocation thereof) shall be made in such 
        manner as the Secretary may by regulations prescribe.''.
    (b) Allowance as General Business Credit.--Section 38(b) of the 
Internal Revenue Code of 1986 is amended by striking ``plus'' at the 
end of paragraph (35), by striking the period at the end of paragraph 
(36) and inserting ``, plus'', and by adding at the end the following:
            ``(37) in the case of a Patriot employer (as defined in 
        section 45S(b)) for any taxable year, the Patriot employer 
        credit determined under section 45S(a).''.
    (c) Denial of Double Benefit.--Subsection (a) of section 280C of 
the Internal Revenue Code of 1986 is amended by inserting ``45S(a),'' 
after ``45P(a)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2014.

SEC. 3. DEFER DEDUCTION OF INTEREST EXPENSE RELATED TO DEFERRED INCOME.

    (a) In General.--Section 163 of the Internal Revenue Code of 1986 
(relating to deductions for interest expense) is amended by 
redesignating subsection (n) as subsection (o) and by inserting after 
subsection (m) the following new subsection:
    ``(n) Deferral of Deduction for Interest Expense Related to 
Deferred Income.--
            ``(1) General rule.--The amount of foreign-related interest 
        expense of any taxpayer allowed as a deduction under this 
        chapter for any taxable year shall not exceed an amount equal 
        to the applicable percentage of the sum of--
                    ``(A) the taxpayer's foreign-related interest 
                expense for the taxable year, plus
                    ``(B) the taxpayer's deferred foreign-related 
                interest expense.
        For purposes of the paragraph, the applicable percentage is the 
        percentage equal to the current inclusion ratio.
            ``(2) Treatment of deferred deductions.--If, for any 
        taxable year, the amount of the limitation determined under 
        paragraph (1) exceeds the taxpayer's foreign-related interest 
        expense for the taxable year, there shall be allowed as a 
        deduction for the taxable year an amount equal to the lesser 
        of--
                    ``(A) such excess, or
                    ``(B) the taxpayer's deferred foreign-related 
                interest expense.
            ``(3) Definitions and special rule.--For purposes of this 
        subsection--
                    ``(A) Foreign-related interest expense.--The term 
                `foreign-related interest expense' means, with respect 
                to any taxpayer for any taxable year, the amount which 
                bears the same ratio to the amount of interest expense 
                for such taxable year allocated and apportioned under 
                sections 861, 864(e), and 864(f) to income from sources 
                outside the United States as--
                            ``(i) the value of all stock held by the 
                        taxpayer in all section 902 corporations with 
                        respect to which the taxpayer meets the 
                        ownership requirements of subsection (a) or (b) 
                        of section 902, bears to
                            ``(ii) the value of all assets of the 
                        taxpayer which generate gross income from 
                        sources outside the United States.
                    ``(B) Deferred foreign-related interest expense.--
                The term `deferred foreign-related interest expense' 
                means the excess, if any, of the aggregate foreign-
                related interest expense for all prior taxable years 
                beginning after December 31, 2014, over the aggregate 
                amount allowed as a deduction under paragraphs (1) and 
                (2) for all such prior taxable years.
                    ``(C) Value of assets.--Except as otherwise 
                provided by the Secretary, for purposes of subparagraph 
                (A)(ii), the value of any asset shall be the amount 
                with respect to such asset determined for purposes of 
                allocating and apportioning interest expense under 
                sections 861, 864(e), and 864(f).
                    ``(D) Current inclusion ratio.--The term `current 
                inclusion ratio' means, with respect to any domestic 
                corporation which meets the ownership requirements of 
                subsection (a) or (b) of section 902 with respect to 
                one or more section 902 corporations for any taxable 
                year, the ratio (expressed as a percentage) of--
                            ``(i) the sum of all dividends received by 
                        the domestic corporation from all such section 
                        902 corporations during the taxable year plus 
                        amounts includible in gross income under 
                        section 951(a) from all such section 902 
                        corporations, in each case computed without 
                        regard to section 78, divided by
                            ``(ii) the aggregate amount of post-1986 
                        undistributed earnings.
                    ``(E) Aggregate amount of post-1986 undistributed 
                earnings.--The term `aggregate amount of post-1986 
                undistributed earnings' means, with respect to any 
                domestic corporation which meets the ownership 
                requirements of subsection (a) or (b) of section 902 
                with respect to one or more section 902 corporations, 
                the domestic corporation's pro rata share of the post-
                1986 undistributed earnings (as defined in section 
                902(c)(1)) of all such section 902 corporations.
                    ``(F) Foreign currency conversion.--For purposes of 
                determining the current inclusion ratio, and except as 
                otherwise provided by the Secretary, the aggregate 
                amount of post-1986 undistributed earnings for the 
                taxable year shall be determined by translating each 
                section 902 corporation's post-1986 undistributed 
                earnings into dollars using the average exchange rate 
                for such year.
                    ``(G) Section 902 corporation.--The term `section 
                902 corporation' has the meaning given to such term by 
                section 909(d)(5).
            ``(4) Treatment of affiliated groups.--The current 
        inclusion ratio of each member of an affiliated group (as 
        defined in section 864(e)(5)(A)) shall be determined as if all 
        members of such group were a single corporation.
            ``(5) Application to separate categories of income.--This 
        subsection shall be applied separately with respect to the 
        categories of income specified in section 904(d)(1).
            ``(6) Regulations.--The Secretary may prescribe such 
        regulations or other guidance as is necessary or appropriate to 
        carry out the purposes of this subsection, including 
        regulations or other guidance providing--
                    ``(A) for the proper application of this subsection 
                with respect to changes in ownership of a section 902 
                corporation,
                    ``(B) that certain corporations that otherwise 
                would not be members of the affiliated group will be 
                treated as members of the affiliated group for purposes 
                of this subsection,
                    ``(C) for the proper application of this subsection 
                with respect to the taxpayer's share of a deficit in 
                earnings and profits of a section 902 corporation,
                    ``(D) for appropriate adjustments to the 
                determination of the value of stock in any section 902 
                corporation for purposes of this subsection or to the 
                foreign-related interest expense to account for income 
                that is subject to tax under section 882(a)(1), and
                    ``(E) for the proper application of this subsection 
                with respect to interest expense that is directly 
                allocable to income with respect to certain assets.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2014.
                                 <all>
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