I 

118TH CONGRESS 

1ST SESSION H. R. 1656 

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

tax for charitable donations to nonprofit organizations providing workforce training. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 17, 2023 

Mr. SMUCKER 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 a 

credit against tax for charitable donations to nonprofit 

organizations providing workforce training. 

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 ‘‘USA Workforce Tax 

5 Credit Act’’. 

6 SEC. 2. TAX CREDIT FOR CONTRIBUTIONS TO WORKFORCE 

7 DEVELOPMENT AND APPRENTICESHIP 

8 TRAINING ORGANIZATIONS. 

9 (a) CREDIT FOR INDIVIDUALS.— 


kjohnson on DSK79L0C42PROD with BILLS
2 

•HR 1656 IH

1 (1) IN GENERAL.—Subpart A of part IV of sub2 chapter A of chapter 1 of the Internal Revenue Code 

3 of 1986 is amended by inserting after section 25E 

4 the following new section: 

5 ‘‘SEC. 25F. QUALIFIED WORKFORCE DEVELOPMENT AND 

6 APPRENTICESHIP TRAINING PROGRAMS. 

7 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in8 dividual, there shall be allowed as a credit against the tax 

9 imposed by this chapter for the taxable year an amount 

10 equal to the amount of qualified contributions made by 

11 the taxpayer during the year. 

12 ‘‘(b) DOLLAR LIMITATIONS.— 

13 ‘‘(1) INCOME LIMITATION.—The amount al14 lowed as a credit under subsection (a) with respect 

15 to any taxpayer shall not exceed 25 percent of the 

16 tax liability of the taxpayer with a maximum value 

17 of $250,000. 

18 ‘‘(2) REDUCTION BASED ON STATE CREDIT.— 

19 The amount allowed as a credit under subsection (a) 

20 for a taxable year shall be reduced by the amount 

21 allowed as a credit on any State tax return of the 

22 individual for qualified contributions made by the 

23 taxpayer during the taxable year. 

24 ‘‘(c) QUALIFIED CONTRIBUTIONS; OTHER DEFINI25 TIONS.—For purposes of this section— 


kjohnson on DSK79L0C42PROD with BILLS
3 

•HR 1656 IH

1 ‘‘(1) QUALIFIED CONTRIBUTION.—The term 

2 ‘qualified contribution’ means a charitable contribu3 tion (as defined by section 170(c)) to a workforce 

4 development or apprenticeship training organization. 

5 ‘‘(2) WORKFORCE DEVELOPMENT OR APPREN6 TICESHIP TRAINING ORGANIZATION.—The term 

7 ‘workforce development or apprenticeship training 

8 organization’ means any organization— 

9 ‘‘(A) which— 

10 ‘‘(i) is described in section 501(c)(3) 

11 and exempt from tax under section 501(a), 

12 and 

13 ‘‘(ii) is not a private foundation, 

14 ‘‘(B) the exclusive purpose if which is— 

15 ‘‘(i) to provide workforce development 

16 and apprenticeship training to eligible par17 ticipants, including— 

18 ‘‘(I) community colleges, 

19 ‘‘(II) workforce training pro20 grams, as defined by State workforce 

21 agencies, 

22 ‘‘(III) organizations that provide 

23 career and technical education, 

24 ‘‘(IV) organizations that provide 

25 training or apprenticeships operated 


kjohnson on DSK79L0C42PROD with BILLS
4 

•HR 1656 IH

1 by a collective bargaining organiza2 tion, 

3 ‘‘(V) community organizations 

4 that provide full certified training, 

5 and 

6 ‘‘(VI) private schools that confer 

7 diplomas, degrees, or certify comple8 tion of certain grades, or 

9 ‘‘(ii) to provide scholarships for use in 

10 obtaining workforce development and ap11 prenticeship training described in clause (i) 

12 at an organization which is exempt from 

13 tax under section 501(a) (other than a pri14 vate foundation), and 

15 ‘‘(C) that is in compliance with all applica16 ble State laws, including laws relating to unlaw17 ful discrimination, health and safety require18 ments, and criminal background checks of em19 ployees. 

20 ‘‘(3) ELIGIBLE PARTICIPANTS.—The term ‘eli21 gible participant’ means an individual who is en22 rolled in a workforce development and apprentice23 ship training organization, as described in paragraph 

24 (2)(B). 


kjohnson on DSK79L0C42PROD with BILLS
5 

•HR 1656 IH

1 ‘‘(d) DENIAL OF DOUBLE BENEFIT.—No deduction 

2 shall be allowed under any provision of this chapter for 

3 any expense for which a credit is allowed under this sec4 tion. 

5 ‘‘(e) ELECTION.—This section shall apply to a tax6 payer for a taxable year only if such taxpayer elects to 

7 have this section apply for such taxable year. 

8 ‘‘(f) APPLICATION OF VOLUME CAP.—A contribution 

9 shall be taken into account under this section only if such 

10 contribution is recognized by the Secretary as applying 

11 against the volume cap established under section 4 of the 

12 USA Workforce Tax Credit Act.’’. 

13 (2) CLERICAL AMENDMENT.—The table of sec14 tions for subpart A of part IV of subchapter A of 

15 chapter 1 of such Code is amended by inserting 

16 after the item relating to section 25E the following 

17 new item: 

‘‘Sec. 25F. Qualified Workforce Development and Apprenticeship Training Programs.’’. 

18 (b) BUSINESS CREDIT.— 

19 (1) IN GENERAL.—Subpart D of part IV of 

20 subchapter A of chapter 1 of such Code is amended 

21 by adding at the end the following new section: 


kjohnson on DSK79L0C42PROD with BILLS
6 

•HR 1656 IH

1 ‘‘SEC. 45BB. CONTRIBUTIONS TO WORKFORCE DEVELOP2 MENT OR APPRENTICESHIP TRAINING ORGA3 NIZATIONS. 

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

5 in the case of a corporation, the workforce development 

6 and apprenticeship training credit determined under this 

7 section for the taxable year is the aggregate amount of 

8 qualified contributions for the taxable year. 

9 ‘‘(b) LIMITATION.— 

10 ‘‘(1) INCOME LIMITATION.—The amount of the 

11 credit determined under this section for any taxable 

12 year shall not exceed the lesser of— 

13 ‘‘(A) 25 percent of the tax liability of the 

14 taxpayer for the taxable year, and 

15 ‘‘(B) $250,000. 

16 ‘‘(2) REDUCTION BASED ON STATE CREDIT.— 

17 The amount allowed as a credit under subsection (a) 

18 for a taxable year shall be reduced by the amount 

19 allowed as a credit on any State tax return of the 

20 individual for qualified contributions made by the 

21 taxpayer during the taxable year. 

22 ‘‘(3) QUALIFIED CONTRIBUTIONS.—For pur23 poses of this section, the term ‘qualified contribu24 tion’ has the meaning given such term under section 

25 25F. 


kjohnson on DSK79L0C42PROD with BILLS
7 

•HR 1656 IH

1 ‘‘(c) DENIAL OF DOUBLE BENEFIT.—No deduction 

2 shall be allowed under any provision of this chapter for 

3 any expense for which a credit is allowed under this sec4 tion. 

5 ‘‘(d) ELECTION.—This section shall apply to a tax6 payer for a taxable year only if such taxpayer elects to 

7 have this section apply for such taxable year. 

8 ‘‘(e) APPLICATION OF VOLUME CAP.—A contribution 

9 shall be taken into account under this section only if such 

10 contribution is recognized by the Secretary as applying 

11 against the volume cap established under section 4 of the 

12 USA Workforce Tax Credit Act.’’. 

13 (2) CONFORMING AMENDMENTS.—Section 

14 38(b) of such Code is amended by striking ‘‘plus’’ at 

15 the end of paragraph (40), by striking the period 

16 and inserting ‘‘, plus’’ at the end of paragraph (41), 

17 and by adding at the end the following new para18 graph: 

19 ‘‘(42) the workforce development or apprentice20 ship training credit determined under section 

21 45BB(a).’’. 

22 (3) CLERICAL AMENDMENT.—The table of sec23 tions for subpart D of part IV of subchapter A of 

24 chapter 1 of such Code is amended by adding at the 

25 end the following new item: 


kjohnson on DSK79L0C42PROD with BILLS
8 

•HR 1656 IH

‘‘Sec. 45BB. Contributions to workforce development or apprenticeship training 

organizations.’’. 

1 (c) EXCISE TAX ON FAILURE OF SCHOLARSHIP

2 GRANTING ORGANIZATIONS TO MAKE DISTRIBUTIONS.— 

3 (1) IN GENERAL.—Chapter 42 of such Code is 

4 amended by adding at the end the following new 

5 subchapter: 

6 ‘‘Subchapter I—Organizations Providing 

7 Workforce Development or Apprentice8 ship Training 

‘‘Sec. 4969. Tax on failure to distribute receipts. 

9 ‘‘SEC. 4969. TAX ON FAILURE TO DISTRIBUTE RECEIPTS. 

10 ‘‘(a) TAX IMPOSED.—There is hereby imposed a tax 

11 on the failure of a workforce development or apprentice12 ship training organization (as defined in section 25F(c)) 

13 to make distributions in any taxable year in an amount 

14 equal to or in excess of the required distribution amount 

15 before the distribution deadline relating to a taxable year. 

16 ‘‘(b) AMOUNT OF TAX.—The tax imposed by sub17 section (a) with respect to a taxable year shall be equal 

18 to 15 percent of the excess (if any) of— 

19 ‘‘(1) the required distribution amount with re20 spect to the taxable year, over 

21 ‘‘(2) the amount of receipts of the workforce de22 velopment or apprenticeship training organization 

23 for each taxable year which are distributed before 


kjohnson on DSK79L0C42PROD with BILLS
9 

•HR 1656 IH

1 the distribution deadline with respect to such re2 ceipts. 

3 ‘‘(c) DEFINITIONS.—For purposes of this section— 

4 ‘‘(1) REQUIRED DISTRIBUTION AMOUNT.— 

5 ‘‘(A) IN GENERAL.—The required distribu6 tion amount with respect to a taxable year is 

7 the amount equal to 100 percent of the total re8 ceipts of the workforce development or appren9 ticeship training organization for such taxable 

10 year— 

11 ‘‘(i) reduced by the sum of such re12 ceipts that are retained for administrative 

13 expenses for the taxable year or are carried 

14 to the succeeding taxable year under sub15 paragraph (C), and 

16 ‘‘(ii) increased by the amount of the 

17 carryover under subparagraph (C) from 

18 the preceding taxable year. 

19 ‘‘(B) ADMINISTRATIVE EXPENSES.—For 

20 purposes of this paragraph, not more than 10 

21 percent of total receipts of a qualified workforce 

22 development or apprenticeship training organi23 zation for a taxable year may be used for ad24 ministrative purposes. 


kjohnson on DSK79L0C42PROD with BILLS
10 

•HR 1656 IH

1 ‘‘(C) CARRYOVER.—Receipts of a qualified 

2 workforce development or apprenticeship train3 ing organization that are not disbursed for the 

4 taxable year or retained for administrative pur5 poses for the taxable year shall be carried to 

6 the succeeding taxable year. The amount car7 ried to the taxable year under the preceding 

8 sentence shall not exceed 15 percent of total re9 ceipts of the qualified workforce development or 

10 apprenticeship training organization for the 

11 taxable year. 

12 ‘‘(2) DISTRIBUTIONS.—The term ‘distribution’ 

13 includes amounts which are formally committed but 

14 not distributed. A formal commitment described in 

15 the preceding sentence may include contributions set 

16 aside for eligible students or participants for more 

17 than one year. 

18 ‘‘(3) DISTRIBUTION DEADLINE.—The distribu19 tion deadline with respect to receipts for a taxable 

20 year is the first day of the second taxable year fol21 lowing the taxable year in which such receipts are 

22 received by the scholarship granting organization. 

23 ‘‘(d) REASONABLE CAUSE EXCEPTION.—The tax im24 posed by subsection (a) shall not apply with respect to any 

25 failure to make required distributions before the distribuVerDate Sep 11 2014 02:09 Mar 30, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H1656.IH H1656

kjohnson on DSK79L0C42PROD with BILLS
11 

•HR 1656 IH

1 tion deadline which is not willful and is due to reasonable 

2 cause.’’. 

3 (2) ABATEMENT OF TAX.— 

4 (A) GENERAL RULE.—Subsection (b) of 

5 section 4962 of such Code is amended by strik6 ing ‘‘or G’’ and inserting ‘‘G, or I’’. 

7 (B) FIRST TIER TAX.—Subsection (a) of 

8 section 4963 of such Code is amended by in9 serting ‘‘4969,’’ after ‘‘4967,’’. 

10 (C) TAXABLE EVENT.—Subsection (c) of 

11 section 4963 of such Code is amended by in12 serting ‘‘4969,’’ after ‘‘4967,’’. 

13 (3) CORRECTION PERIOD.—Subparagraph (A) 

14 of section 4963(e)(2) of such Code is amended by in15 serting ‘‘or 4969’’ after ‘‘4942’’. 

16 (4) CLERICAL AMENDMENT.—The table of sub17 chapters for chapter 42 of such Code is amended by 

18 adding at the end the following new item: 

‘‘SUBCHAPTER I. ORGANIZATIONS PROVIDING WORKFORCE DEVELOPMENT, 

APPRENTICESHIP TRAINING, OR SCHOLARSHIPS’’. 

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

20 this Act shall apply to taxable years beginning after De21 cember 31, 2023. 

22 SEC. 3. ORGANIZATIONAL AUTONOMY. 

23 A participating eligible organization or entity under 

24 the programs established pursuant to this Act are autonoVerDate Sep 11 2014 02:09 Mar 30, 2023 Jkt 039200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H1656.IH H1656

kjohnson on DSK79L0C42PROD with BILLS
12 

•HR 1656 IH

1 mous and not agents of the State or Federal Government 

2 and therefore— 

3 (1) a Federal or State agency may not in any 

4 way regulate the program of a participating entity 

5 that accepts a contribution under this Act; 

6 (2) the provision of tax credits under this Act 

7 does not expand the regulatory authority of the Fed8 eral Government, the State, its officers, or any 

9 school district to impose any additional regulation of 

10 an entity beyond those necessary to enforce the re11 quirements of this Act; and 

12 (3) participating eligible entities shall be given 

13 the maximum freedom to provide for the needs of 

14 their participants without government control. 

15 SEC. 4. VOLUME CAP. 

16 (a) AMOUNT.—The volume cap amount available for 

17 tax credits allowed under sections 25F and 45BB of the 

18 Internal Revenue Code of 1986, as added by this Act, shall 

19 be $2,000,000,000 annually, beginning for taxable years 

20 beginning in 2024 and for each succeeding calendar year 

21 thereafter. 

22 (b) APPLICATION FOR CREDITS.—The Secretary 

23 shall develop a system to track and make available infor24 mation in real time, regarding availability of such tax 


kjohnson on DSK79L0C42PROD with BILLS
13 

•HR 1656 IH

1 credits to donors which will be available on a first-come, 

2 first-serve basis. 

Æ 


kjohnson on DSK79L0C42PROD with BILLS