II 

109TH CONGRESS 

2D SESSION S. 3894 

To amend the Internal Revenue Code of 1986 to alleviate poverty by encouraging the employment of residents by empowerment zone businesses 

through the employment of residents in designated areas of pervasive 

poverty, unemployment, and general distress. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 14, 2006 

Mr. BOND (for himself, Mr. TALENT, Mr. DURBIN, and Mr. OBAMA) 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 alleviate 

poverty by encouraging the employment of residents by 

empowerment zone businesses through the employment 

of residents in designated areas of pervasive poverty, 

unemployment, and general distress. 

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

3 SECTION 1. SPECIAL RULE FOR EMPLOYMENT OF RESI4 DENTS IN AN EMPOWERMENT ZONE. 

5 (a) IN GENERAL.—Section 1397C of the Internal 

6 Revenue Code of 1986 (defining enterprise zone business) 


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1 is amended by adding at the end the following new sub2 section: 

3 ‘‘(g) SPECIAL RULES RELATING TO RESIDENT EM4 PLOYMENT REQUIREMENTS.— 

5 ‘‘(1) IN GENERAL.—If a business entity or pro6 prietorship uses all reasonable efforts during the 

7 first 6-month period of any taxable year to meet the 

8 35 percent employee requirement under subsection 

9 (b)(6) or (c)(5) or under any other provision of this 

10 subchapter, but is unable to do so because insuffi11 cient applications of qualified candidates willing to 

12 accept and continue employment were received by 

13 such business entity or proprietorship during such 

14 period, then the business entity or proprietorship 

15 may file with the Secretary of Housing and Urban 

16 Development necessary information, including avail17 able statistics concerning the labor pool and applica18 tions received, documenting such reasonable efforts 

19 during such period and request that the Secretary of 

20 Housing and Urban Development determine whether 

21 such business entity or proprietorship used all rea22 sonable efforts during such period to meet such re23 quirement. If the Secretary of Housing and Urban 

24 Development determines that the business entity or 

25 proprietorship used such reasonable efforts, the SecVerDate Aug 31 2005 00:38 Sep 16, 2006 Jkt 049200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S3894.IS S3894

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1 retary of Housing and Urban Development shall 

2 issue a finding stating such determination and such 

3 requirement shall be deemed to be met for all pur4 poses of this subchapter for such taxable year if dur5 ing the final 3 months of such taxable year at least 

6 35 percent of the employees of such business entity 

7 or proprietorship are residents of— 

8 ‘‘(A) the empowerment zone, or 

9 ‘‘(B) any area within a 15 mile radius of 

10 the qualified business of such business entity or 

11 proprietorship which has been designated by 

12 any Federal, State, city, or municipal govern13 mental unit as an area of pervasive poverty, un14 employment, and general distress. 

15 Any employee taken into account for purposes of 

16 such requirement by reason of this paragraph for 

17 any taxable year may continue to be taken into ac18 count for such requirement for any subsequent tax19 able year during which such employee remains a 

20 resident of the area described in subparagraph (A) 

21 or (B). 

22 ‘‘(2) DETERMINATION BY HUD.—The Secretary 

23 of Housing and Urban Development shall make any 

24 and all necessary inquiries (including requesting ad25 ditional information of the business entity or propriVerDate Aug 31 2005 00:38 Sep 16, 2006 Jkt 049200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S3894.IS S3894

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1 etorship) in order to respond to the request made 

2 under paragraph (1) (by making such finding or 

3 providing notice of a failure to make such finding) 

4 within 30 days of the date of such request. Any find5 ing under paragraph (1) shall also contain a state6 ment by the Secretary of Housing and Urban Devel7 opment verifying that the areas described in para8 graph (1)(B) are areas of pervasive poverty, unem9 ployment and general distress. 

10 ‘‘(3) EMPLOYMENT BY MANAGEMENT COM11 PANY.—For purposes of this subchapter, a business 

12 entity or proprietorship owner of a enterprise zone 

13 business shall be deemed the employer of any em14 ployees that a management company hires to oper15 ate such enterprise zone business.’’. 

16 (b) REPORTS TO CONGRESS.— 

17 (1) IN GENERAL.—The Secretary of Housing 

18 and Urban Development shall submit to Congress, 

19 every 3 years, a report summarizing the information 

20 submitted to the Secretary by a business entity or 

21 proprietorship under section 1397C(g) of the Inter22 nal Revenue Code of 1986 (as added by subsection 

23 (a)) and the actions taken by the Secretary in re24 sponse. 


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1 (2) FINAL REPORT.—The Comptroller General 

2 of the United States shall use the reports submitted 

3 by the Secretary of Housing and Urban Develop4 ment under paragraph (1), and such other informa5 tion the Comptroller General deems relevant, to 

6 make an assessment of the impact of such section 

7 1397C(g), in the form of an update to the reports 

8 required by section 101(c) of the Community Re9 newal Tax Relief Act of 2000. 

10 (c) EFFECTIVE DATE.—The amendment made by 

11 this section shall apply to taxable years beginning on and 

12 after January 1, 2006, and shall apply to any bonds out13 standing on that date. 

Æ 


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