I 

110TH CONGRESS 

1ST SESSION H. R. 1213 

To amend the Internal Revenue Code of 1986 to allow employers a credit 

against income tax equal to 50 percent of the compensation paid to 

employees while they are performing active duty service as members 

of the Ready Reserve or the National Guard and of the compensation 

paid to temporary replacement employees. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 27, 2007 

Mr. POE (for himself, Mr. EDWARDS, Mr. CARTER, Mr. GONZALEZ, Mr. 

SOUDER, Mrs. MUSGRAVE, Mr. GOODLATTE, Mr. PITTS, Mr. LAMBORN, 

Mr. SHADEGG, Mr. BARTLETT of Maryland, Mr. WILSON of South Carolina, Mr. FORTUN ̃O, Mr. BARRETT of South Carolina, Mr. PEARCE, Mr. 

GINGREY, Mr. MCCAUL of Texas, Mr. HARE, Mr. GENE GREEN of Texas, 

Mr. SCOTT of Georgia, Mrs. MYRICK, Mr. SENSENBRENNER, Ms. 

BORDALLO, Mr. PATRICK J. MURPHY of Pennsylvania, Mr. LINCOLN

DIAZ-BALART of Florida, Mr. MCCOTTER, and Mr. TERRY) 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 allow employers a credit against income tax equal to 50 percent 

of the compensation paid to employees while they are 

performing active duty service as members of the Ready 

Reserve or the National Guard and of the compensation 

paid to temporary replacement employees. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 


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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Ready Employers Will3 ing to Assist Reservists’ Deployment Act of 2007’’ or as 

4 the ‘‘REWARD Act of 2007’’. 

5 SEC. 2. EMPLOYER CREDIT FOR COMPENSATION PAID TO 

6 EMPLOYEES WHILE SERVING ON ACTIVE 

7 DUTY AS MEMBERS OF READY RESERVE OR 

8 THE NATIONAL GUARD. 

9 (a) IN GENERAL.—Subpart D of part IV of sub10 chapter A of chapter 1 of the Internal Revenue Code of 

11 1986 (relating to business-related credits) is amended by 

12 adding at the end the following new section: 

13 ‘‘SEC. 45O. EMPLOYER CREDIT FOR COMPENSATION PAID 

14 TO EMPLOYEES WHILE SERVING ON ACTIVE 

15 DUTY AS MEMBERS OF READY RESERVE OR 

16 THE NATIONAL GUARD AND FOR COMPENSA17 TION PAID TO TEMPORARY REPLACEMENT 

18 EMPLOYEES. 

19 ‘‘(a) GENERAL RULE.—For purposes of section 38, 

20 in the case of an employer, the employer Ready Reserve21 National Guard active duty credit determined under this 

22 section for the taxable year is an amount equal to— 

23 ‘‘(1) 50 percent of the compensation paid or in24 curred to each Ready Reserve-National Guard em25 ployee of the taxpayer while the employee is absent 


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1 from employment while performing qualified active 

2 duty, and 

3 ‘‘(2) 50 percent of the compensation paid or in4 curred to each qualified replacement employee of the 

5 taxpayer. 

6 ‘‘(b) LIMITATION APPLICABLE TO READY RESERVE7 NATIONAL GUARD EMPLOYEES.— 

8 ‘‘(1) IN GENERAL.—The amount of compensa9 tion taken into account under subsection (a) for any 

10 period of qualified active duty with respect to a 

11 Ready Reserve-National Guard employee shall not 

12 exceed the active duty wage differential of such em13 ployee for such period. 

14 ‘‘(2) ACTIVE DUTY WAGE DIFFERENTIAL.— 

15 ‘‘(A) IN GENERAL.—For purposes of this 

16 section, the active duty wage differential of a 

17 Ready Reserve-National Guard employee for 

18 any period of qualified active duty is the 

19 amount equal to the product of— 

20 ‘‘(i) the daily wage differential of such 

21 employee for such period, multiplied by 

22 ‘‘(ii) the number of days that such 

23 employee is on qualified active duty during 

24 such period. 


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1 ‘‘(B) DAILY WAGE DIFFERENTIAL.—For 

2 purposes of subparagraph (A), the daily wage 

3 differential of a Ready Reserve-National Guard 

4 employee for any period is an amount equal to 

5 the excess of— 

6 ‘‘(i) such employee’s average daily em7 ployer-provided compensation for such pe8 riod, over 

9 ‘‘(ii) such employee’s average daily 

10 military pay for such period. 

11 ‘‘(C) AVERAGE DAILY EMPLOYER-PRO12 VIDED COMPENSATION.— 

13 ‘‘(i) IN GENERAL.—For purposes of 

14 subparagraph (B), an employee’s average 

15 daily employer-provided compensation for 

16 any period is the average daily compensa17 tion paid by the employer to the employee 

18 for the 1-year period ending on the day be19 fore the date that the employee begins 

20 qualified active duty, adjusted for cost-of21 living and other increases generally appli22 cable to employees of the employer for 

23 such period. 

24 ‘‘(ii) EMPLOYER-PROVIDED COM25 PENSATION.—The term ‘compensation’ 


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1 means any remuneration for employment, 

2 whether in cash or in kind, which is allow3 able as a deduction under section 

4 162(a)(1). 

5 ‘‘(D) AVERAGE DAILY MILITARY PAY.— 

6 ‘‘(i) IN GENERAL.—For purposes of 

7 subparagraph (B), a Ready Reserve-Na8 tional Guard employee’s average daily mili9 tary pay is the average daily military pay 

10 and allowances received by the employee on 

11 account of the employee’s performance of 

12 qualified active duty during the period. 

13 ‘‘(ii) MILITARY PAY AND ALLOW14 ANCES.—For purposes of clause (i)— 

15 ‘‘(I) MILITARY PAY.—The term 

16 ‘military pay’ means pay (as defined 

17 in section 101(21) of title 37, United 

18 States Code). 

19 ‘‘(II) ALLOWANCES.—The term 

20 ‘allowances’ means the allowances 

21 payable to a member of the Armed 

22 Forces of the United States under 

23 chapter 7 of such title. 

24 ‘‘(c) LIMITATION APPLICABLE TO QUALIFIED RE25 PLACEMENT EMPLOYEES.— 


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1 ‘‘(1) IN GENERAL.—The amount of compensa2 tion taken into account under subsection (a) with re3 spect to any qualified replacement employee for any 

4 period shall not exceed the amount equal to the 

5 product of— 

6 ‘‘(A) the average daily employer-provided 

7 compensation for such period of the Ready Re8 serve-National Guard employee being replaced 

9 by such replacement employee for such period, 

10 and 

11 ‘‘(B) the number of days that the Ready 

12 Reserve-National Guard employee is on quali13 fied active duty during such period. 

14 ‘‘(d) DEFINITIONS.—For purposes of this section— 

15 ‘‘(1) READY RESERVE-NATIONAL GUARD EM16 PLOYEE.— 

17 ‘‘(A) IN GENERAL.—The term ‘Ready Re18 serve-National Guard employee’ means any em19 ployee— 

20 ‘‘(i) who is a member of the Ready 

21 Reserve or of the National Guard, and 

22 ‘‘(ii) who was an employee of the tax23 payer during the 1-year period ending on 

24 the day before the date that the employee 

25 begins qualified active duty. 


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1 ‘‘(B) NATIONAL GUARD.—The term ‘Na2 tional Guard’ has the meaning given such term 

3 by section 101(c)(1) of title 10, United States 

4 Code. 

5 ‘‘(C) READY RESERVE.—The term ‘Ready 

6 Reserve’ has the meaning given such term by 

7 section 10142 of title 10, United States Code. 

8 ‘‘(2) QUALIFIED ACTIVE DUTY.—The term 

9 ‘qualified active duty’ means— 

10 ‘‘(A) active duty under an order or call for 

11 a period in excess of 90 days or for an indefi12 nite period, other than the training duty speci13 fied in— 

14 ‘‘(i) section 10147 of title 10, United 

15 States Code (relating to training require16 ments for the Ready Reserve), or 

17 ‘‘(ii) section 502(a) of title 32, United 

18 States Code (relating to required drills and 

19 field exercises for the National Guard), in 

20 connection with which an employee is enti21 tled to reemployment rights and other ben22 efits or to a leave of absence from employ23 ment under chapter 43 of title 38, United 

24 States Code, and 


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1 ‘‘(B) hospitalization incident to such active 

2 duty. 

3 ‘‘(3) QUALIFIED REPLACEMENT EMPLOYEE.— 

4 The term ‘qualified replacement employee’ means 

5 any employee who is hired by the taxpayer to replace 

6 a Ready Reserve-National Guard employee during a 

7 period of qualified active duty, but only with respect 

8 to periods for which the taxpayer has paid such 

9 Ready Reserve-National Guard employee an amount 

10 not less than the active duty wage differential (if 

11 any) for such period.’’. 

12 (b) DENIAL OF DOUBLE BENEFIT.—Subsection (a) 

13 of section 280C of such Code (relating to certain expenses 

14 for which credits are allowable) is amended by inserting 

15 ‘‘45O(a),’’ after ‘‘45A(a),’’ 

16 (c) CREDIT TO BE PART OF GENERAL BUSINESS

17 CREDIT.—Subsection (b) of section 38 of such Code (re18 lating to general business credit) is amended by striking 

19 ‘‘plus’’ at the end of paragraph (30), by striking the period 

20 at the end of paragraph (30) and inserting ‘‘, plus’’, and 

21 by inserting after paragraph (31) the following new para22 graph: 

23 ‘‘(32) in the case of an employer, the employer 

24 Ready Reserve-National Guard employee credit de25 termined under section 45O(a).’’. 


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1 (d) CONFORMING AMENDMENT.—The table of sec2 tions for subpart D of part IV of subchapter A of chapter 

3 1 of such Code is amended by inserting after the item 

4 relating to section 45N the following new item: 

‘‘Sec. 45O. Employer credit for compensation paid to employees while serving 

on active duty as members of Ready Reserve or the National 

Guard and for compensation paid to temporary replacement 

employees.’’. 

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

6 this section shall apply to periods of qualified active duty 

7 (as defined in section 45O(d) of the Internal Revenue 

8 Code of 1986, as added by this section) in taxable years 

9 beginning after December 31, 2006. 

10 (f) INFORMATION ON MILITARY PAY AND ALLOW11 ANCES.—The Secretary concerned (as defined in section 

12 101 of title 10, United States Code) shall provide to em13 ployers and the Secretary of the Treasury such informa14 tion as is necessary to determine the proper amount of 

15 credit allowable to employers under such section 45O. 

Æ 


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