I 

112TH CONGRESS 

1ST SESSION H. R. 2826 

To amend the Internal Revenue Code of 1986 to provide an exemption 

from employer social security taxes with respect to service members 

and veterans, and to provide a business credit for the retention of 

such individuals for at least 1 year. 

IN THE HOUSE OF REPRESENTATIVES 

AUGUST 26, 2011 

Mr. BRALEY of Iowa 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 

an exemption from employer social security taxes with 

respect to service members and veterans, and to provide 

a business credit for the retention of such individuals 

for at least 1 year. 

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 ‘‘Combat Veterans Back 

5 to Work Act of 2011’’. 


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1 SEC. 2. PAYROLL TAX FORGIVENESS FOR HIRING COMBAT 

2 VETERANS. 

3 (a) IN GENERAL.—Section 3111 of the Internal Rev4 enue Code of 1986 is amended by adding at the end the 

5 following new subsection: 

6 ‘‘(e) SPECIAL EXEMPTION FOR CERTAIN INDIVID7 UALS HIRED IN 2011 AND 2012.— 

8 ‘‘(1) IN GENERAL.—Subsection (a) shall not 

9 apply to wages paid by a qualified employer with re10 spect to employment during the period beginning on 

11 the day after the date of the enactment of this sub12 section and ending on December 31, 2012, of any 

13 qualified individual for services performed— 

14 ‘‘(A) in a trade or business of such quali15 fied employer, or 

16 ‘‘(B) in the case of a qualified employer ex17 empt from tax under section 501(a), in further18 ance of the activities related to the purpose or 

19 function constituting the basis of the employer’s 

20 exemption under section 501. 

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

22 this subsection— 

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

24 employer’ means any employer other than the 

25 United States, any State, or any political subVerDate Mar 15 2010 20:59 Aug 26, 2011 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2826.IH H2826

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1 division thereof, or any instrumentality of the 

2 foregoing. 

3 ‘‘(B) TREATMENT OF EMPLOYEES OF

4 POST-SECONDARY EDUCATIONAL INSTITU5 TIONS.—Notwithstanding subparagraph (A), 

6 the term ‘qualified employer’ includes any em7 ployer which is a public institution of higher 

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

9 Higher Education Act of 1965). 

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

11 this subsection, the term ‘qualified individual’ means 

12 any individual who— 

13 ‘‘(A) begins employment with a qualified 

14 employer after June 30, 2011, and before Jan15 uary 1, 2013, 

16 ‘‘(B) is a current member of the National 

17 Guard or other reserve component of the Armed 

18 Forces or a veteran (as defined in section 101 

19 of title 38, United States Code), 

20 ‘‘(C) within 18 months before beginning 

21 such employment, returned from a deployment 

22 of at least 180 days in support of a contingency 

23 operation (as defined in section 101 of title 10, 

24 United States Code) or under section 502(f) of 

25 title 32, United States Code, 


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1 ‘‘(D) is not employed by the qualified em2 ployer to replace another employee of such em3 ployer unless such other employee separated 

4 from employment voluntarily or for cause, and 

5 ‘‘(E) is not an individual described in sec6 tion 51(i)(1) (applied by substituting ‘qualified 

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

8 ‘‘(4) ELECTION.—A qualified employer may 

9 elect to have this subsection not apply. Such election 

10 shall be made in such manner as the Secretary may 

11 require.’’. 

12 (b) COORDINATION WITH WORK OPPORTUNITY

13 CREDIT.—Section 51(c) of such Code is amended by add14 ing at the end the following new paragraph: 

15 ‘‘(6) COORDINATION WITH PAYROLL TAX FOR16 GIVENESS.—The term ‘wages’ shall not include any 

17 amount paid or incurred to a qualified individual (as 

18 defined in section 3111(e)(3)) during the 1-year pe19 riod beginning on the hiring date of such individual 

20 by a qualified employer (as defined in section 

21 3111(e)) unless such qualified employer makes an 

22 election not to have section 3111(e) apply.’’. 

23 (c) TRANSFERS TO FEDERAL OLD-AGE AND SUR24 VIVORS INSURANCE TRUST FUND.—There are hereby ap25 propriated to the Federal Old-Age and Survivors Trust 


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1 Fund and the Federal Disability Insurance Trust Fund 

2 established under section 201 of the Social Security Act 

3 (42 U.S.C. 401) amounts equal to the reduction in reve4 nues to the Treasury by reason of the amendments made 

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

6 sentence shall be transferred from the general fund at 

7 such times and in such manner as to replicate to the ex8 tent possible the transfers which would have occurred to 

9 such Trust Fund had such amendments not been enacted. 

10 (d) APPLICATION TO RAILROAD RETIREMENT

11 TAXES.— 

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

13 Revenue Code of 1986 is amended by redesignating 

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

15 after subsection (c) the following new subsection: 

16 ‘‘(d) SPECIAL RATE FOR CERTAIN INDIVIDUALS

17 HIRED IN 2011 AND 2012.— 

18 ‘‘(1) IN GENERAL.—In the case of compensa19 tion paid by a qualified employer during the period 

20 beginning on the day after the date of the enactment 

21 of this subsection and ending on December 31, 

22 2012, with respect to having a qualified individual in 

23 the employer’s employ for services rendered to such 

24 qualified employer, the applicable percentage under 


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1 subsection (a) shall be equal to the rate of tax in ef2 fect under section 3111(b) for the calendar year. 

3 ‘‘(2) QUALIFIED EMPLOYER.—The term ‘quali4 fied employer’ means any employer other than the 

5 United States, any State, or any political subdivision 

6 thereof, or any instrumentality of the foregoing. 

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

8 this subsection, the term ‘qualified individual’ means 

9 any individual who— 

10 ‘‘(A) begins employment with a qualified 

11 employer after June 30, 2011, and before Jan12 uary 1, 2013, 

13 ‘‘(B) is a current member of the National 

14 Guard or other reserve component of the Armed 

15 Forces or a veteran (as defined in section 101 

16 of title 38, United States Code), 

17 ‘‘(C) within 18 months before beginning 

18 such employment, returned from a deployment 

19 of at least 180 days in support of a contingency 

20 operation (as defined in section 101 of title 10, 

21 United States Code) or under section 502(f) of 

22 title 32, United States Code, 

23 ‘‘(D) is not employed by the qualified em24 ployer to replace another employee of such emVerDate Mar 15 2010 20:59 Aug 26, 2011 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2826.IH H2826

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1 ployer unless such other employee separated 

2 from employment voluntarily or for cause, and 

3 ‘‘(E) is not an individual described in sec4 tion 51(i)(1) (applied by substituting ‘qualified 

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

6 ‘‘(4) ELECTION.—A qualified employer may 

7 elect to have this subsection not apply. Such election 

8 shall be made in such manner as the Secretary may 

9 require.’’. 

10 (2) TRANSFERS TO SOCIAL SECURITY EQUIVA11 LENT BENEFIT ACCOUNT.—There are hereby appro12 priated to the Social Security Equivalent Benefit Ac13 count established under section 15A(a) of the Rail14 road Retirement Act of 1974 (45 U.S.C. 231n–1(a)) 

15 amounts equal to the reduction in revenues to the 

16 Treasury by reason of the amendments made by 

17 paragraph (1). Amounts appropriated by the pre18 ceding sentence shall be transferred from the general 

19 fund at such times and in such manner as to rep20 licate to the extent possible the transfers which 

21 would have occurred to such Account had such 

22 amendments not been enacted. 

23 (e) EFFECTIVE DATE.— 


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1 (1) IN GENERAL.—The amendments made by 

2 this section shall apply to wages paid after the date 

3 of the enactment of this Act. 

4 (2) RAILROAD RETIREMENT TAXES.—The 

5 amendments made by subsection (d) shall apply to 

6 compensation paid after the date of the enactment 

7 of this Act. 

8 SEC. 3. BUSINESS CREDIT FOR RETENTION OF CERTAIN 

9 NEWLY HIRED VETERANS. 

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

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

12 current year business credit determined under section 

13 38(b) of the Internal Revenue Code of 1986 for such tax14 able year shall be increased by an amount equal to the 

15 product of— 

16 (1) $1,000, and 

17 (2) the number of retained workers with respect 

18 to which subsection (b)(2) is first satisfied during 

19 such taxable year. 

20 (b) RETAINED WORKER.—For purposes of this sec21 tion, the term ‘‘retained worker’’ means any qualified indi22 vidual (as defined in section 3111(e)(3) of the Internal 

23 Revenue Code of 1986)— 

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

25 date during the taxable year, 


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

2 period of not less than 52 consecutive weeks, and 

3 (3) whose wages for such employment during 

4 the last 26 weeks of such period equaled at least 80 

5 percent of such wages for the first 26 weeks of such 

6 period. 

7 (c) LIMITATION ON CARRYBACKS.—No portion of the 

8 unused business credit under section 38 of the Internal 

9 Revenue Code of 1986 for any taxable year which is attrib10 utable to the increase in the current year business credit 

11 under this section may be carried to a taxable year begin12 ning before the date of the enactment of this section. 

13 (d) TREATMENT OF POSSESSIONS.— 

14 (1) PAYMENTS TO POSSESSIONS.— 

15 (A) MIRROR CODE POSSESSIONS.—The 

16 Secretary of the Treasury shall pay to each pos17 session of the United States with a mirror code 

18 tax system amounts equal to the loss to that 

19 possession by reason of the application of this 

20 section (other than this subsection). Such 

21 amounts shall be determined by the Secretary 

22 of the Treasury based on information provided 

23 by the government of the respective possession. 

24 (B) OTHER POSSESSIONS.—The Secretary 

25 of the Treasury shall pay to each possession of 


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1 the United States which does not have a mirror 

2 code tax system amounts estimated by the Sec3 retary of the Treasury as being equal to the ag4 gregate benefits that would have been provided 

5 to residents of such possession by reason of the 

6 application of this section (other than this sub7 section) if a mirror code tax system had been 

8 in effect in such possession. The preceding sen9 tence shall not apply with respect to any posses10 sion of the United States unless such possession 

11 has a plan, which has been approved by the 

12 Secretary of the Treasury, under which such 

13 possession will promptly distribute such pay14 ments to the residents of such possession. 

15 (2) COORDINATION WITH CREDIT ALLOWED

16 AGAINST UNITED STATES INCOME TAXES.—No in17 crease in the credit determined under section 38(b) 

18 of the Internal Revenue Code of 1986 against 

19 United States income taxes for any taxable year de20 termined under subsection (a) shall be taken into ac21 count with respect to any person— 

22 (A) to whom a credit is allowed against 

23 taxes imposed by the possession by reason of 

24 this section for such taxable year, or 


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

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

3 to such taxable year. 

4 (3) DEFINITIONS AND SPECIAL RULES.— 

5 (A) POSSESSION OF THE UNITED

6 STATES.—For purposes of this subsection, the 

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

8 the Commonwealth of Puerto Rico and the 

9 Commonwealth of the Northern Mariana Is10 lands. 

11 (B) MIRROR CODE TAX SYSTEM.—For pur12 poses of this subsection, the term ‘‘mirror code 

13 tax system’’ means, with respect to any posses14 sion of the United States, the income tax sys15 tem of such possession if the income tax liabil16 ity of the residents of such possession under 

17 such system is determined by reference to the 

18 income tax laws of the United States as if such 

19 possession were the United States. 

20 (C) TREATMENT OF PAYMENTS.—For pur21 poses of section 1324(b)(2) of title 31, United 

22 States Code, rules similar to the rules of section 

23 1001(b)(3)(C) of the American Recovery and 

24 Reinvestment Tax Act of 2009 shall apply. 

Æ 


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