II 

113TH CONGRESS 

2D SESSION S. 2597 

To amend the Internal Revenue Code of 1986 to provide for the establishment 

of Promise Zones. 

IN THE SENATE OF THE UNITED STATES 

JULY 14, 2014 

Mr. CASEY 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 the establishment of Promise Zones. 

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 ‘‘Promise Zone Job Cre5 ation Act of 2014’’. 

6 SEC. 2. PROMISE ZONES. 

7 (a) IN GENERAL.—Subchapter Y of chapter 1 of the 

8 Internal Revenue Code of 1986 is amended by adding at 

9 the end the following new part: 

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1 ‘‘PART IV—PROMISE ZONES 

‘‘Sec. 1400V–1. Designation of Promise Zones. 

‘‘Sec. 1400V–2. Promise Zone employment credit. 

‘‘Sec. 1400V–3. Expensing of Promise Zone property. 

2 ‘‘SEC. 1400V–1. DESIGNATION OF PROMISE ZONES. 

3 ‘‘(a) IN GENERAL.—For purposes of this part, the 

4 term ‘Promise Zone’ means any area— 

5 ‘‘(1) which is nominated by 1 or more local gov6 ernments or Indian Tribes (as defined in section 

7 4(13) of the Native American Housing Assistance 

8 and Self-Determination Act of 1996 (25 U.S.C. 

9 4103(13)) for designation as a Promise Zone (here10 after in this section referred to as a ‘nominated 

11 area’), 

12 ‘‘(2) which has a continuous boundary, 

13 ‘‘(3) the population of which does not exceed 

14 200,000, and 

15 ‘‘(4) which the Secretary of Housing and Urban 

16 Development and the Secretary of Agriculture, act17 ing jointly, designate as a Promise Zone, after con18 sultation with the Secretary of Commerce, the Sec19 retary of Education, the Attorney General, the Sec20 retary of Health and Human Services, the Secretary 

21 of Labor, the Secretary of the Treasury, the Sec22 retary of Transportation, and other agencies as ap23 propriate. 

24 ‘‘(b) NUMBER OF DESIGNATIONS.— 

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1 ‘‘(1) IN GENERAL.—Not more than 20 nomi2 nated areas may be designated as Promise Zones. 

3 ‘‘(2) NUMBER OF DESIGNATIONS IN RURAL

4 AREAS.—Of the areas designated under paragraph 

5 (1), 6 of such areas shall be areas— 

6 ‘‘(A) which are outside of a metropolitan 

7 statistical area (within the meaning of section 

8 143(k)(2)(B)), or 

9 ‘‘(B) which are determined by the Sec10 retary of Agriculture to be rural areas. 

11 ‘‘(c) PERIOD OF DESIGNATIONS.— 

12 ‘‘(1) IN GENERAL.—The Secretary of Housing 

13 and Urban Development and the Secretary of the 

14 Agriculture shall, acting jointly, designate 20 areas 

15 as Promise Zones before January 1, 2017. 

16 ‘‘(2) EFFECTIVE DATES OF DESIGNATIONS.— 

17 The designation of any Promise Zone shall take ef18 fect— 

19 ‘‘(A) for purposes of priority consideration 

20 in Federal grant programs and initiatives 

21 (other than this part), upon execution of the 

22 Promise Zone agreement, and 

23 ‘‘(B) for purposes of this part, on January 

24 1 of the first calendar year beginning after the 

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1 date of the execution of the Promise Zone 

2 agreement. 

3 ‘‘(3) TERMINATION OF DESIGNATIONS.—The 

4 designation of any Promise Zone shall end on the 

5 earlier of— 

6 ‘‘(A) the end of the 10-year period begin7 ning on the date that such designation takes ef8 fect, or 

9 ‘‘(B) the date of the revocation of such 

10 designation. 

11 ‘‘(4) APPLICATION TO CERTAIN ZONES AL12 READY DESIGNATED.—In the case of any area des13 ignated as a Promise Zone by the Secretary of 

14 Housing and Urban Development and the Secretary 

15 of Agriculture before the date of the enactment of 

16 this Act, such area shall be taken into account as a 

17 Promise Zone designated under this section and 

18 shall reduce the number of Promise Zones remaining 

19 to be designated under paragraph (1). 

20 ‘‘(d) LIMITATIONS ON DESIGNATIONS.—No area may 

21 be designated under this section unless— 

22 ‘‘(1) the entities nominating the area have the 

23 authority to nominate the area of designation under 

24 this section, 

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1 ‘‘(2) such entities provide written assurances 

2 satisfactory to the Secretary of Housing and Urban 

3 Development and the Secretary of Agriculture that 

4 the competitiveness plan described in the application 

5 under subsection (e) for such area will be imple6 mented and that such entities will provide the Sec7 retary of Housing and Urban Development and the 

8 Secretary of Agriculture with such data regarding 

9 the economic conditions of the area (before, during, 

10 and after the area’s period of designation as a 

11 Promise Zone) as such Secretary may require, and 

12 ‘‘(3) the Secretary of Housing and Urban De13 velopment and the Secretary of Agriculture deter14 mine that any information furnished is reasonably 

15 accurate. 

16 ‘‘(e) APPLICATION.—No area may be designated 

17 under this section unless the application for such designa18 tion— 

19 ‘‘(1) demonstrates that the nominated area sat20 isfies the eligibility criteria described in subsection 

21 (a), 

22 ‘‘(2) includes a competitiveness plan which— 

23 ‘‘(A) addresses the need of the nominated 

24 area to attract investment and jobs and im25 prove educational opportunities, 

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1 ‘‘(B) leverages the nominated area’s eco2 nomic strengths and outlines targeted invest3 ments to develop competitive advantages, 

4 ‘‘(C) demonstrates collaboration across a 

5 wide range of stakeholders, 

6 ‘‘(D) outlines a strategy which connects 

7 the nominated area to drivers of regional eco8 nomic growth, and 

9 ‘‘(E) proposes a strategy for focusing on 

10 increased access to high quality affordable 

11 housing and improved public safety. 

12 ‘‘(f) SELECTION CRITERIA.—From among the nomi13 nated areas eligible for designation under this section, the 

14 Secretary of Housing and Urban Development and the 

15 Secretary of Agriculture shall designate Promise Zones on 

16 the basis of— 

17 ‘‘(1) the effectiveness of the competitiveness 

18 plan submitted under subsection (e) and the assur19 ances made under subsection (d), and 

20 ‘‘(2) unemployment rates, poverty rates, va21 cancy rates, crime rates, and such other factors as 

22 the Secretary of Housing and Urban Development 

23 and the Secretary of Agriculture may identify, in24 cluding household income, home-ownership, labor 

25 force participation, and educational attainment, and 

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1 ‘‘(3) other criteria as determined by the Sec2 retary of Housing and Urban Development and the 

3 Secretary of Agriculture. 

4 The Secretary of Housing and Urban Development and 

5 the Secretary of Agriculture may set minimal standards 

6 for the levels of unemployment and poverty that must be 

7 satisfied for designation as a Promise Zone. 

8 ‘‘SEC. 1400V–2. PROMISE ZONE EMPLOYMENT CREDIT. 

9 ‘‘(a) AMOUNT OF CREDIT.—For purposes of section 

10 38, the amount of the Promise Zone employment credit 

11 determined under this section with respect to any em12 ployer for any taxable year is the applicable percentage 

13 of the qualified wages paid or incurred during the calendar 

14 year which ends with or within such taxable year. 

15 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 

16 this section, the term ‘applicable percentage’ means— 

17 ‘‘(1) in the case of qualified wages described in 

18 subsection (c)(1)(A), 20 percent, and 

19 ‘‘(2) in the case of qualified wages described in 

20 subsection (c)(1)(B), 10 percent. 

21 ‘‘(c) QUALIFIED WAGES.—For purposes of this sec22 tion— 

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

24 means any wages paid or incurred by an employer 

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1 for services performed by an employee while such 

2 employee is— 

3 ‘‘(A) a qualified zone employee, or 

4 ‘‘(B) a qualified resident employee. 

5 ‘‘(2) ONLY FIRST $15,000 OF WAGES PER YEAR

6 TAKEN INTO ACCOUNT.—With respect to each quali7 fied employee, the amount of qualified wages taken 

8 into account for a calendar year shall not exceed 

9 $15,000. 

10 ‘‘(3) COORDINATION WITH WORK OPPORTUNITY

11 CREDIT.— 

12 ‘‘(A) IN GENERAL.—The term ‘qualified 

13 wages’ shall not include wages taken into ac14 count in determining the credit under section 

15 51. 

16 ‘‘(B) COORDINATION WITH DOLLAR LIMI17 TATION.—The $15,000 amount in paragraph 

18 (2) shall be reduced for any calendar year by 

19 the amount of wages paid or incurred during 

20 such year which are taken into account in de21 termining the credit under section 51. 

22 ‘‘(4) WAGES.—The term ‘wages’ has the mean23 ing given such term by section 1397(a). 

24 ‘‘(d) QUALIFIED EMPLOYEE.—For purposes of this 

25 section— 

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1 ‘‘(1) QUALIFIED EMPLOYEE.—The term ‘quali2 fied employee’ means any employee who is a quali3 fied zone employee or a qualified resident employee. 

4 ‘‘(2) QUALIFIED ZONE EMPLOYEE.—Except as 

5 otherwise provided in this subsection, the term 

6 ‘qualified zone employee’ means, with respect to any 

7 period, any employee of an employer if— 

8 ‘‘(A) substantially all of the services per9 formed during such period by such employee for 

10 such employer are performed within a Promise 

11 Zone in a trade or business of the employer, 

12 and 

13 ‘‘(B) the principal place of abode of such 

14 employee while performing such services is 

15 within a Promise Zone. 

16 ‘‘(3) QUALIFIED RESIDENT EMPLOYEE.—Ex17 cept as otherwise provided in this subsection, the 

18 term ‘qualified resident employee’ means, with re19 spect to any period, an employee of an employer if 

20 the principal place of abode of such employee during 

21 such period is within a Promise Zone, but substan22 tially all of the services performed during such pe23 riod by such employee for such employer are not 

24 performed within a Promise Zone in a trade or busi25 ness of the employer. 

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1 ‘‘(4) CERTAIN INDIVIDUALS NOT ELIGIBLE.— 

2 The terms ‘qualified zone employee’ and ‘qualified 

3 resident employee’ shall not include any individual 

4 described in paragraph (2) of section 1396(d)(2) 

5 (determined after application of paragraph (3) 

6 thereof). 

7 ‘‘(e) SPECIAL RULES.—Rules similar to the rules of 

8 section 1397 shall apply for purposes of this section. 

9 ‘‘(f) TAXPAYER REPORTING.—No credit shall be de10 termined under this section with respect to any taxpayer 

11 for any taxable year unless such taxpayer provides the 

12 Secretary with such information as the Secretary may re13 quire to allow the Secretary to evaluate the effectiveness 

14 of the program established under this part. 

15 ‘‘SEC. 1400V–3. EXPENSING OF PROMISE ZONE PROPERTY. 

16 ‘‘(a) IN GENERAL.—A taxpayer may elect to treat the 

17 cost of any Promise Zone property as an expense which 

18 is not chargeable to capital account. Any cost so treated 

19 shall be allowed as a deduction for the taxable year in 

20 which the Promise Zone property is placed in service. 

21 ‘‘(b) PROMISE ZONE PROPERTY.—For purposes of 

22 this section— 

23 ‘‘(1) IN GENERAL.—Except as otherwise pro24 vided in this subsection, the term ‘Promise Zone 

25 property’ means property— 

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1 ‘‘(A) which is— 

2 ‘‘(i) tangible property (to which sec3 tion 168 applies) with an applicable recov4 ery period (within the meaning of section 

5 168) of 20 years or less, 

6 ‘‘(ii) water utility property described 

7 in section 168(e)(5), 

8 ‘‘(iii) computer software described in 

9 section 179(d)(1)(A)(ii), or 

10 ‘‘(iv) qualified leasehold improvement 

11 property (as defined in section 168(e)), 

12 ‘‘(B) which is acquired by purchase (as de13 fined in section 179(d)(2)) for use in the active 

14 conduct of a trade or business, and 

15 ‘‘(C) which is originally placed in service 

16 by the taxpayer in a Promise Zone. 

17 ‘‘(2) EXCEPTION FOR CERTAIN PROPERTY.— 

18 Such term shall not include any property to which 

19 section 168(g) applies. 

20 ‘‘(c) ELECTION.—An election under this section shall 

21 be made under rules similar to the rules of section 179(c). 

22 ‘‘(d) COORDINATION WITH SECTION 179.—For pur23 poses of section 179, Promise Zone property shall not be 

24 treated as section 179 property. 

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1 ‘‘(e) APPLICATION OF OTHER RULES.—Rules similar 

2 to the rules of paragraphs (3), (4), (5), (7), (9) and (10) 

3 of section 179(d) shall apply for purposes of this section. 

4 ‘‘(f) TAXPAYER REPORTING.—This section shall not 

5 apply with respect to any taxpayer for any taxable year 

6 unless such taxpayer provides the Secretary with such in7 formation as the Secretary may require to allow the Sec8 retary to evaluate the effectiveness of the program estab9 lished under this part.’’. 

10 (b) CONFORMING AMENDMENTS.— 

11 (1) Section 38(b) of such Code is amended by 

12 striking ‘‘plus’’ at the end of paragraph (35), by 

13 striking the period at the end of paragraph (36) and 

14 inserting ‘‘, plus’’, and by adding at the end the fol15 lowing new paragraph: 

16 ‘‘(37) the Promise Zone employment credit de17 termined under section 1400V–2.’’. 

18 (2) The table of parts for subchapter Y of chap19 ter 1 of such Code is amended by adding at the end 

20 the following new item: 

‘‘PART IV—PROMISE ZONES’’. 

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

22 this section shall apply to taxable years ending after De23 cember 31, 2014. 

Æ 

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