II 

108TH CONGRESS 

2D SESSION S. 2585

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

oppportunity tax credit for small business jobs creation. 

IN THE SENATE OF THE UNITED STATES 

JUNE 24, 2004

Mrs. CLINTON 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 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 Tax Credit Act of 2004’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 

8 (1) In many parts of the United States, seg9 ments of large cities, smaller cities, and rural areas 
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1 are experiencing population loss and low job growth 

2 that hurt the surrounding 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 economic growth and would 

9 provide incentives for businesses to take advantage 

10 of an often underutilized, well-educated workforce. 

11 (4) By promoting economic growth, such a tax 

12 credit would revitalize these areas that are less likely 

13 to receive other Federal investments. 

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

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

16 Revenue Code of 1986 (relating to members of targeted 

17 groups) is amended by striking ‘‘or’’ at the end of sub18 paragraph (G), by striking the period at the end of sub19 paragraph (H) and inserting ‘‘, or’’, and by adding at the 

20 end the following: 

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

22 (b) QUALIFIED SMALL BUSINESS EMPLOYEE.—Sec23 tion 51(d) of the Internal Revenue Code of 1986 is amend24 ed by redesignating paragraphs (10) through (12) as para-
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1 graphs (11) through (13), respectively, and by inserting 

2 after paragraph (9) the following: 

3 ‘‘(10) QUALIFIED SMALL BUSINESS EM4 PLOYEE.—

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

6 small business employee’ means any indi7 vidual—

8 ‘‘(i) hired by a qualified small busi9 ness located in a development zone, or 

10 ‘‘(ii) hired by a qualified small busi11 ness and who is certified by the designated 

12 local agency as residing in such a develop13 ment zone. 

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

15 term ‘qualified small business’ has the meaning 

16 given the term ‘small employer’ by section 

17 4980D(d)(2). 

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

19 of this section—

20 ‘‘(i) IN GENERAL.—The term ‘devel21 opment zone’ means any area—

22 ‘‘(I) which is nominated under 

23 the procedures defined in sections 

24 1400E(a)(1)(A) and 1400E(a)(4) for 

25 renewal communities; 
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1 ‘‘(II) which the Secretary of 

2 Housing and Urban Development des3 ignates as a development zone, after 

4 consultation with the Secretary of 

5 Commerce; 

6 ‘‘(III) which has a population of 

7 not less than 5,000 and not more 

8 than 150,000; 

9 ‘‘(IV) which has a poverty rate 

10 not less than 20 percent (within the 

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

12 ‘‘(V) which has an average an13 nual rate of job growth of less than 2 

14 percent during any 3 years of the pre15 ceding 5-year period; and 

16 ‘‘(VI) which, during the period 

17 beginning January 1, 1990 and end18 ing with the date of the enactment of 

19 this Act, has a net out-migration of 

20 inhabitants, or other population loss, 

21 from the area of at least 2 percent of 

22 the population of the area during such 

23 period. 

24 ‘‘(ii) NUMBER OF DESIGNATIONS.—

25 The Secretary of Housing and Urban De-
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1 velopment may not designate more than 

2 100 development zones. 

3 ‘‘(D) SPECIAL RULES FOR DETERMINING

4 AMOUNT OF CREDIT.—For purposes of applying 

5 this subpart to wages paid or incurred to any 

6 qualified small business employee—

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

8 substituting ‘‘20 percent of the qualified 

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

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

11 first year wages’’, and 

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

13 of subsection (b), the following definitions 

14 and special rule shall apply: 

15 ‘‘(I) QUALIFIED FIRST-YEAR

16 WAGES.—The term ‘qualified first17 year wages’ means, with respect to 

18 any individual, qualified wages attrib19 utable to service rendered during the 

20 1-year period beginning with the day 

21 the individual begins work for the em22 ployer. 

23 ‘‘(II) QUALIFIED SECOND-YEAR

24 WAGES.—The term ‘qualified second25 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 (I). 

7 ‘‘(III) QUALIFIED THIRD-YEAR

8 WAGES.—The term ‘qualified third9 year wages’ means, with respect to 

10 any individual, qualified wages attrib11 utable to service rendered during the 

12 1-year period beginning on the day 

13 after the last day of the 1-year period 

14 with respect to such individual deter15 mined under subclause (II). 

16 ‘‘(IV) QUALIFIED FOURTH-YEAR

17 WAGES.—The term ‘qualified fourth18 year wages’ means, with respect to 

19 any individual, qualified wages attrib20 utable to service rendered during the 

21 1-year period beginning on the day 

22 after the last day of the 1-year period 

23 with respect to such individual deter24 mined under subclause (III). 
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1 ‘‘(V) QUALIFIED FIFTH-YEAR

2 WAGES.—The term ‘qualified fifth3 year wages’ means, with respect to 

4 any individual, qualified wages attrib5 utable to service rendered during the 

6 1-year period beginning on the day 

7 after the last day of the 1-year period 

8 with respect to such individual deter9 mined under subclause (IV). 

10 ‘‘(VI) ONLY FIRST $15,000 OF

11 WAGES PER YEAR TAKEN INTO AC12 COUNT.—The amount of the qualified 

13 first, second, third, fourth, and fifth 

14 year wages which may be taken into 

15 account with respect to any individual 

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

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

18 this section shall apply to individuals who begin work for 

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

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