I 

112TH CONGRESS 

1ST SESSION H. R. 2742 

To amend the Internal Revenue Code of 1986 to provide tax incentives 

to employers for providing training programs for jobs specific to the 

needs of the employers. 

IN THE HOUSE OF REPRESENTATIVES 

AUGUST 1, 2011 

Ms. FUDGE 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 provide 

tax incentives to employers for providing training programs for jobs specific to the needs of the employers. 

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 ‘‘Hire, Train, Retain 

5 Act of 2011’’. 

6 SEC. 2. FINDINGS. 

7 The Congress finds the following: 


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1 (1) As of June 2011 9.2 percent of all Ameri2 cans eligible to work were unemployed, or 14.1 mil3 lion people. 

4 (2) There are millions of workers who were dis5 placed during the recent ‘‘Great Recession’’ who 

6 need to be re-trained so that they can re-integrate 

7 into the workforce. According to the bi-annual Dis8 placed Workers Survey, the unemployment rate was 

9 4.5 percent in 2007 before spiking to nearly 10 per10 cent in 2010. 

11 (3) Often overlooked are the 982,000 discour12 aged workers, people who are not looking for work 

13 because they do not believe that they are qualified 

14 for any available jobs. 

15 (4) Paradoxically, there are enough jobs avail16 able to employ just over 20 percent of these per17 sons—there were 3.0 million job openings on the 

18 last business day of May 2011 according to the Bu19 reau of Labor Statistics. 

20 (5) The disconnect is that many people search21 ing for work lack the job-specific skills that they 

22 need to be competitive for many of these vacancies. 

23 Specifically, technology is outpacing the country’s 

24 current approach to job-related education and train25 ing. The difference between white collar and blue 


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1 collar jobs is fading because traditionally ‘‘blue col2 lar jobs’’ are more specialized than ever before. 

3 SEC. 3. PAYROLL TAX FORGIVENESS FOR HIRING AND 

4 TRAINING WORKERS. 

5 (a) IN GENERAL.—Section 3111 of the Internal Rev6 enue Code of 1986 is amended by adding at the end the 

7 following new subsection: 

8 ‘‘(e) SPECIAL EXEMPTION FOR CERTAIN INDIVID9 UALS HIRED IN BETWEEN 2011 AND 2015.— 

10 ‘‘(1) IN GENERAL.—During the period begin11 ning on the day after the date of the enactment of 

12 this subsection and ending on December 31, 2015, 

13 subsection (a) shall not apply to wages paid by a 

14 qualified employer with respect to employment of 

15 any qualified individual for services performed— 

16 ‘‘(A) in a trade or business of such quali17 fied employer, or 

18 ‘‘(B) in the case of a qualified employer ex19 empt from tax under section 501(a), in further20 ance of the activities related to the purpose or 

21 function constituting the basis of the employer’s 

22 exemption under section 501. 

23 ‘‘(2) QUALIFIED EMPLOYER.—For purposes of 

24 this subsection— 


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

2 employer’ means any employer other than the 

3 United States, any State, or any political sub4 division thereof, or any instrumentality of the 

5 foregoing that provides a qualified job training 

6 program for or on behalf its employees. 

7 ‘‘(B) TREATMENT OF EMPLOYEES OF

8 POST-SECONDARY EDUCATIONAL INSTITU9 TIONS.—Notwithstanding subparagraph (A), 

10 the term ‘qualified employer’ includes any em11 ployer which is a public institution of higher 

12 education (as defined in section 101(b) of the 

13 Higher Education Act of 1965). 

14 ‘‘(3) QUALIFIED INDIVIDUAL.—For purposes of 

15 this subsection, the term ‘qualified individual’ means 

16 any individual who— 

17 ‘‘(A) begins employment with a qualified 

18 employer after the date of the enactment of this 

19 subsection and before January 1, 2016, 

20 ‘‘(B) certifies by signed affidavit, under 

21 penalties of perjury, that such individual has 

22 not been employed for more than 40 hours dur23 ing the 60-day period ending on the date such 

24 individual begins such employment, 


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1 ‘‘(C) certifies by signed affidavit, under 

2 penalties of perjury, that such individual has 

3 satisfactorily completed a qualified job training 

4 program, 

5 ‘‘(D) is not employed by the qualified em6 ployer to replace another employee of such em7 ployer unless such other employee separated 

8 from employment voluntarily or for cause, and 

9 ‘‘(E) is not an individual described in sec10 tion 51(i)(1) (applied by substituting ‘qualified 

11 employer’ for ‘taxpayer’ each place it appears). 

12 ‘‘(4) QUALIFIED JOB TRAINING PROGRAM.—For 

13 purposes of this subsection, the term ‘qualified job 

14 training program’ means— 

15 ‘‘(A) a program provided by a qualified 

16 employer that is in-house and is specific train17 ing for available jobs at such employer, or 

18 ‘‘(B) a program under which a qualified 

19 employer partners with a public institution of 

20 higher education (as defined in section 101(b) 

21 of the Higher Education Act of 1965) to pro22 vide specific training for available jobs at such 

23 employer. 

24 ‘‘(5) ELECTION.—A qualified employer may 

25 elect to have this subsection not apply. Such election 


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1 shall be made in such manner as the Secretary may 

2 require.’’. 

3 (b) COORDINATION WITH WORK OPPORTUNITY

4 CREDIT.—Section 51(c) of such Code is amended by add5 ing at the end the following new paragraph: 

6 ‘‘(6) COORDINATION WITH PAYROLL TAX FOR7 GIVENESS FOR HIRING AND TRAINING WORKERS.— 

8 The term ‘wages’ shall not include any amount paid 

9 or incurred to a qualified individual (as defined in 

10 section 3111(e)(3)) during the 1-year period begin11 ning on the hiring date of such individual by a quali12 fied employer (as defined in section 3111(e)) unless 

13 such qualified employer makes an election not to 

14 have section 3111(e) apply.’’. 

15 (c) TRANSFERS TO FEDERAL OLD-AGE AND SUR16 VIVORS INSURANCE TRUST FUND.—There are hereby ap17 propriated to the Federal Old-Age and Survivors Trust 

18 Fund and the Federal Disability Insurance Trust Fund 

19 established under section 201 of the Social Security Act 

20 (42 U.S.C. 401) amounts equal to the reduction in reve21 nues to the Treasury by reason of the amendments made 

22 by subsection (a). Amounts appropriated by the preceding 

23 sentence shall be transferred from the general fund at 

24 such times and in such manner as to replicate to the exVerDate Mar 15 2010 23:10 Aug 02, 2011 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2742.IH H2742

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1 tent possible the transfers that would have occurred to 

2 such Trust Fund had such amendments not been enacted. 

3 (d) APPLICATION TO RAILROAD RETIREMENT

4 TAXES.— 

5 (1) IN GENERAL.—Section 3221 of the Internal 

6 Revenue Code of 1986 is amended by redesignating 

7 subsection (d) as subsection (e) and by inserting 

8 after subsection (c) the following new subsection: 

9 ‘‘(d) SPECIAL RATE FOR CERTAIN INDIVIDUALS

10 HIRED IN BETWEEN 2011 AND 2015.— 

11 ‘‘(1) IN GENERAL.—In the case of compensa12 tion paid by a qualified employer during the period 

13 beginning on the day after the date of the enactment 

14 of this subsection and ending on December 31, 

15 2015, with respect to having a qualified individual in 

16 the employer’s employ for services rendered to such 

17 qualified employer, the applicable percentage under 

18 subsection (a) shall be equal to the rate of tax in ef19 fect under section 3111(b) for the calendar year. 

20 ‘‘(2) QUALIFIED EMPLOYER.—For purposes of 

21 this subsection, the term ‘qualified employer’ means 

22 any employer other than the United States, any 

23 State, or any political subdivision thereof, or any in24 strumentality of the foregoing that provides a qualiVerDate Mar 15 2010 23:10 Aug 02, 2011 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H2742.IH H2742

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1 fied job training program for or on behalf its em2 ployees. 

3 ‘‘(3) QUALIFIED INDIVIDUAL.—For purposes of 

4 this subsection, the term ‘qualified individual’ means 

5 any individual who— 

6 ‘‘(A) begins employment with a qualified 

7 employer after the date of the enactment of this 

8 subsection and before January 1, 2016, 

9 ‘‘(B) certifies by signed affidavit, under 

10 penalties of perjury, that such individual has 

11 not been employed for more than 40 hours dur12 ing the 60-day period ending on the date such 

13 individual begins such employment, 

14 ‘‘(C) certifies by signed affidavit, under 

15 penalties of perjury, that such individual has 

16 satisfactorily completed a qualified job training 

17 program, 

18 ‘‘(D) is not employed by the qualified em19 ployer to replace another employee of such em20 ployer unless such other employee separated 

21 from employment voluntarily or for cause, and 

22 ‘‘(E) is not an individual described in sec23 tion 51(i)(1) (applied by substituting ‘qualified 

24 employer’ for ‘taxpayer’ each place it appears). 


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1 ‘‘(4) QUALIFIED JOB TRAINING PROGRAM.—For 

2 purposes of this subsection, the term ‘qualified job 

3 training program’ means— 

4 ‘‘(A) a program provided by a qualified 

5 employer that is in-house and is specific train6 ing for available jobs at such employer, or 

7 ‘‘(B) a program under which a qualified 

8 employer partners with a public institution of 

9 higher education (as defined in section 101(b) 

10 of the Higher Education Act of 1965) to pro11 vide specific training for available jobs at such 

12 employer. 

13 ‘‘(5) ELECTION.—A qualified employer may 

14 elect to have this subsection not apply. Such election 

15 shall be made in such manner as the Secretary may 

16 require.’’. 

17 (2) TRANSFERS TO SOCIAL SECURITY EQUIVA18 LENT BENEFIT ACCOUNT.—There are hereby appro19 priated to the Social Security Equivalent Benefit Ac20 count established under section 15A(a) of the Rail21 road Retirement Act of 1974 (45 U.S.C. 231n–1(a)) 

22 amounts equal to the reduction in revenues to the 

23 Treasury by reason of the amendments made by 

24 paragraph (1). Amounts appropriated by the pre25 ceding sentence shall be transferred from the general 


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1 fund at such times and in such manner as to rep2 licate to the extent possible the transfers which 

3 would have occurred to such Account had such 

4 amendments not been enacted. 

5 (e) EFFECTIVE DATES.— 

6 (1) IN GENERAL.—Except as provided in para7 graph (2), the amendments made by this subsection 

8 shall apply to wages paid after the date of the enact9 ment of this Act. 

10 (2) RAILROAD RETIREMENT TAXES.—The 

11 amendments made by subsection (d) shall apply to 

12 compensation paid after the date of the enactment 

13 of this Act. 

14 SEC. 4. BUSINESS CREDIT FOR RETENTION OF CERTAIN 

15 NEWLY HIRED INDIVIDUALS IN 2011. 

16 (a) IN GENERAL.—In the case of any taxable year 

17 ending after the date of the enactment of this Act, the 

18 current year business credit determined under section 

19 38(b) of the Internal Revenue Code of 1986 for such tax20 able year shall be increased, with respect to each retained 

21 worker with respect to which subsection (b)(2) is first sat22 isfied during such taxable year, by the lesser of— 

23 (1) $1,000, or 

24 (2) 6.2 percent of the wages (as defined in sec25 tion 3401(a) of such Code) paid by the taxpayer to 


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1 such retained worker during the 52 consecutive week 

2 period referred to in subsection (b)(2). 

3 (b) RETAINED WORKER.—For purposes of this sec4 tion, the term ‘‘retained worker’’ means any qualified indi5 vidual (as defined in section 3111(e)(3) or section 

6 3221(d)(3) of the Internal Revenue Code of 1986)— 

7 (1) who was employed by the taxpayer on any 

8 date during the taxable year, 

9 (2) who was so employed by the taxpayer for a 

10 period of not less than 52 consecutive weeks, and 

11 (3) whose wages (as defined in section 3401(a)) 

12 for such employment during the last 26 weeks of 

13 such period equaled at least 80 percent of such 

14 wages for the first 26 weeks of such period. 

15 (c) EMPLOYER STAFFING AND PAYROLL MUST IN16 CREASE.—No amount shall be allowed as a credit under 

17 this section to an employer for a taxable year unless the 

18 employer has a net increase for the taxable year in those 

19 who work at least 20 hours per week for the employer 

20 during the taxable year and the amount of its payroll dur21 ing the taxable year. 

22 (d) LIMITATION ON CARRYBACKS.—No portion of the 

23 unused business credit under section 38 of the Internal 

24 Revenue Code of 1986 for any taxable year which is attrib25 utable to the increase in the current year business credit 


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1 under this section may be carried to a taxable year begin2 ning before the date of the enactment of this section. 

3 (e) TREATMENT OF POSSESSIONS.— 

4 (1) PAYMENTS TO POSSESSIONS.— 

5 (A) MIRROR CODE POSSESSIONS.—The 

6 Secretary of the Treasury shall pay to each pos7 session of the United States with a mirror code 

8 tax system amounts equal to the loss to that 

9 possession by reason of the application of this 

10 section (other than this subsection). Such 

11 amounts shall be determined by the Secretary 

12 of the Treasury based on information provided 

13 by the government of the respective possession. 

14 (B) OTHER POSSESSIONS.—The Secretary 

15 of the Treasury shall pay to each possession of 

16 the United States which does not have a mirror 

17 code tax system amounts estimated by the Sec18 retary of the Treasury as being equal to the ag19 gregate benefits that would have been provided 

20 to residents of such possession by reason of the 

21 application of this section (other than this sub22 section) if a mirror code tax system had been 

23 in effect in such possession. The preceding sen24 tence shall not apply with respect to any posses25 sion of the United States unless such possession 


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1 has a plan, which has been approved by the 

2 Secretary of the Treasury, under which such 

3 possession will promptly distribute such pay4 ments to the residents of such possession. 

5 (2) COORDINATION WITH CREDIT ALLOWED

6 AGAINST UNITED STATES INCOME TAXES.—No in7 crease in the credit determined under section 38(b) 

8 of the Internal Revenue Code of 1986 against 

9 United States income taxes for any taxable year de10 termined under subsection (a) shall be taken into ac11 count with respect to any person— 

12 (A) to whom a credit is allowed against 

13 taxes imposed by the possession by reason of 

14 this section for such taxable year, or 

15 (B) who is eligible for a payment under a 

16 plan described in paragraph (1)(B) with respect 

17 to such taxable year. 

18 (3) DEFINITIONS AND SPECIAL RULES.— 

19 (A) POSSESSION OF THE UNITED

20 STATES.—For purposes of this subsection, the 

21 term ‘‘possession of the United States’’ includes 

22 the Commonwealth of Puerto Rico and the 

23 Commonwealth of the Northern Mariana Is24 lands. 


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1 (B) MIRROR CODE TAX SYSTEM.—For pur2 poses of this subsection, the term ‘‘mirror code 

3 tax system’’ means, with respect to any posses4 sion of the United States, the income tax sys5 tem of such possession if the income tax liabil6 ity of the residents of such possession under 

7 such system is determined by reference to the 

8 income tax laws of the United States as if such 

9 possession were the United States. 

10 (C) TREATMENT OF PAYMENTS.—For pur11 poses of section 1324(b)(2) of title 31, United 

12 States Code, rules similar to the rules of section 

13 1001(b)(3)(C) of the American Recovery and 

14 Reinvestment Tax Act of 2009 shall apply. 

Æ 


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