II 

109TH CONGRESS 

1ST SESSION S. 595 

To amend the Internal Revenue Code of 1986 to modify the work opportunity 

credit and the welfare-to-work credit. 

IN THE SENATE OF THE UNITED STATES 

MARCH 10, 2005 

Mr. SANTORUM (for himself, Mr. BAUCUS, Mr. SMITH, Mr. ROCKEFELLER, 

and Mr. JEFFORDS) 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 modify 

the work opportunity credit and the welfare-to-work credit. 

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 ‘‘Encouraging Work Act 

5 of 2005’’. 

6 SEC. 2. MODIFICATIONS TO WORK OPPORTUNITY CREDIT 

7 AND WELFARE-TO-WORK CREDIT. 

8 (a) CREDIT MADE PERMANENT.— 
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•S 595 IS

1 (1) Subsection (c) of section 51 of the Internal 

2 Revenue Code of 1986 is amended by striking para3 graph (4) (relating to termination). 

4 (2) Section 51A of such Code is amended by 

5 striking subsection (f). 

6 (b) ELIGIBILITY OF EX-FELONS DETERMINED

7 WITHOUT REGARD TO FAMILY INCOME.—Paragraph (4) 

8 of section 51(d) of the Internal Revenue Code of 1986 

9 is amended by adding ‘‘and’’ at the end of subparagraph 

10 (A), by striking ‘‘, and’’ at the end of subparagraph (B) 

11 and inserting a period, and by striking all that follows sub12 paragraph (B). 

13 (c) INCREASE IN MAXIMUM AGE FOR ELIGIBILITY OF

14 FOOD STAMP RECIPIENTS.—Clause (i) of section 

15 51(d)(8)(A) of the Internal Revenue Code of 1986 is 

16 amended by striking ‘‘25’’ and inserting ‘‘40’’. 

17 (d) INCREASE IN MAXIMUM AGE FOR DESIGNATED

18 COMMUNITY RESIDENTS.— 

19 (1) IN GENERAL.—Paragraph (5) of section 

20 51(d) of the Internal Revenue Code of 1986 is 

21 amended to read as follows: 

22 ‘‘(5) DESIGNATED COMMUNITY RESIDENTS.— 

23 ‘‘(A) IN GENERAL.—The term ‘designated 

24 community resident’ means any individual who 

25 is certified by the designated local agency— 
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1 ‘‘(i) as having attained age 18 but not 

2 age 40 on the hiring date, and 

3 ‘‘(ii) as having his principal place of 

4 abode within an empowerment zone, enter5 prise community, or renewal community. 

6 ‘‘(B) INDIVIDUAL MUST CONTINUE TO RE7 SIDE IN ZONE OR COMMUNITY.—In the case of 

8 a designated community resident, the term 

9 ‘qualified wages’ shall not include wages paid or 

10 incurred for services performed while the indi11 vidual’s principal place of abode is outside an 

12 empowerment zone, enterprise community, or 

13 renewal community.’’ 

14 (2) CONFORMING AMENDMENT.—Subparagraph 

15 (D) of section 51(d)(1) of such Code is amended to 

16 read as follows: 

17 ‘‘(D) a designated community resident,’’. 

18 (e) CLARIFICATION OF TREATMENT OF INDIVIDUALS

19 UNDER INDIVIDUAL WORK PLANS.—Subparagraph (B) 

20 of section 51(d)(6) of the Internal Revenue Code of 1986 

21 (relating to vocational rehabilitation referral) is amended 

22 by striking ‘‘or’’ at the end of clause (i), by striking the 

23 period at the end of clause (ii) and inserting ‘‘, or’’, and 

24 by adding at the end the following new clause: 
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1 ‘‘(iii) an individual work plan devel2 oped and implemented by an employment 

3 network pursuant to subsection (g) of sec4 tion 1148 of the Social Security Act with 

5 respect to which the requirements of such 

6 subsection are met.’’ 

7 (f) EFFECTIVE DATE.—The amendments made by 

8 this section shall apply to individuals who begin work for 

9 the employer after the date of the enactment of this Act, 

10 in taxable years ending after such date. 

11 SEC. 3. CONSOLIDATION OF WORK OPPORTUNITY CREDIT 

12 WITH WELFARE-TO-WORK CREDIT. 

13 (a) IN GENERAL.—Paragraph (1) of section 51(d) of 

14 the Internal Revenue Code of 1986 is amended by striking 

15 ‘‘or’’ at the end of subparagraph (G), by striking the pe16 riod at the end of subparagraph (H) and inserting ‘‘, or’’, 

17 and by adding at the end the following new subparagraph: 

18 ‘‘(I) a long-term family assistance recipi19 ent.’’ 

20 (b) LONG-TERM FAMILY ASSISTANCE RECIPIENT.— 

21 Subsection (d) of section 51 of the Internal Revenue Code 

22 of 1986 is amended by redesignating paragraphs (10) 

23 through (12) as paragraphs (11) through (13), respec24 tively, and by inserting after paragraph (9) the following 

25 new paragraph: 
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1 ‘‘(10) LONG-TERM FAMILY ASSISTANCE RECIPI2 ENT.—The term ‘long-term family assistance recipi3 ent’ means any individual who is certified by the 

4 designated local agency— 

5 ‘‘(A) as being a member of a family receiv6 ing assistance under a IV–A program (as de7 fined in paragraph (2)(B)) for at least the 18- 

8 month period ending on the hiring date, 

9 ‘‘(B)(i) as being a member of a family re10 ceiving such assistance for 18 months beginning 

11 after August 5, 1997, and 

12 ‘‘(ii) as having a hiring date which is not 

13 more than 2 years after the end of the earliest 

14 such 18-month period, or 

15 ‘‘(C)(i) as being a member of a family 

16 which ceased to be eligible for such assistance 

17 by reason of any limitation imposed by Federal 

18 or State law on the maximum period such as19 sistance is payable to a family, and 

20 ‘‘(ii) as having a hiring date which is not 

21 more than 2 years after the date of such ces22 sation.’’ 

23 (c) INCREASED CREDIT FOR EMPLOYMENT OF LONG24 TERM FAMILY ASSISTANCE RECIPIENTS.—Section 51 of 
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1 the Internal Revenue Code of 1986 is amended by insert2 ing after subsection (d) the following new subsection: 

3 ‘‘(e) CREDIT FOR SECOND-YEAR WAGES FOR EM4 PLOYMENT OF LONG-TERM FAMILY ASSISTANCE RECIPI5 ENTS.— 

6 ‘‘(1) IN GENERAL.—With respect to the em7 ployment of a long-term family assistance recipi8 ent— 

9 ‘‘(A) the amount of the work opportunity 

10 credit determined under this section for the tax11 able year shall include 50 percent of the quali12 fied second-year wages for such year, and 

13 ‘‘(B) in lieu of applying subsection (b)(3), 

14 the amount of the qualified first-year wages, 

15 and the amount of qualified second-year wages, 

16 which may be taken into account with respect 

17 to such a recipient shall not exceed $10,000 per 

18 year. 

19 ‘‘(2) QUALIFIED SECOND-YEAR WAGES.—For 

20 purposes of this subsection, the term ‘qualified sec21 ond-year wages’ means qualified wages— 

22 ‘‘(A) which are paid to a long-term family 

23 assistance recipient, and 

24 ‘‘(B) which are attributable to service ren25 dered during the 1-year period beginning on the 
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1 day after the last day of the 1-year period with 

2 respect to such recipient determined under sub3 section (b)(2). 

4 ‘‘(3) SPECIAL RULES FOR AGRICULTURAL AND

5 RAILWAY LABOR.—If such recipient is an employee 

6 to whom subparagraph (A) or (B) of subsection 

7 (h)(1) applies, rules similar to the rules of such sub8 paragraphs shall apply except that— 

9 ‘‘(A) such subparagraph (A) shall be ap10 plied by substituting ‘$10,000’ for ‘$6,000’, and 

11 ‘‘(B) such subparagraph (B) shall be ap12 plied by substituting ‘$833.33’ for ‘$500’.’’ 

13 (d) REPEAL OF SEPARATE WELFARE-TO-WORK

14 CREDIT.— 

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

16 Revenue Code of 1986 is hereby repealed. 

17 (2) CLERICAL AMENDMENT.—The table of sec18 tions for subpart F of part IV of subchapter A of 

19 chapter 1 of such Code is amended by striking the 

20 item relating to section 51A. 

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

22 this section shall apply to individuals who begin work for 

23 the employer after the date of the enactment of this Act, 

24 in taxable years ending after such date. 

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