I 

112TH CONGRESS 

1ST SESSION H. R. 2873 

To amend the Internal Revenue Code of 1986 to provide a credit to employers 

for the retention of certain individuals hired before 2013. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 8, 2011 

Ms. VELA ́ZQUEZ 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 

a credit to employers for the retention of certain individuals hired before 2013. 

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 ‘‘Small Business Expan5 sion and Hiring Act of 2011’’. 

6 SEC. 2. BUSINESS CREDIT FOR RETENTION OF CERTAIN IN7 DIVIDUALS NEWLY HIRED BEFORE 2013. 

8 (a) IN GENERAL.—Subpart D of part IV of sub9 chapter A of chapter 1 of the Internal Revenue Code of 


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1 1986 (relating to business-related credits) is amended by 

2 adding at the end the following new section: 

3 ‘‘SEC. 45S. RETENTION OF CERTAIN INDIVIDUALS NEWLY 

4 HIRED BEFORE 2013. 

5 ‘‘(a) IN GENERAL.—For purposes of section 38, in 

6 the case of any taxable year ending after the date of the 

7 enactment of this section and beginning before January 

8 1, 2013, the retained worker credit determined under this 

9 section for the taxable year is the aggregate of the lesser 

10 of— 

11 ‘‘(1) $4,000 ($6,000 in the case of a long-term 

12 unemployed individual), or 

13 ‘‘(2) 6.2 percent of the wages (as defined in 

14 section 3401(a)) paid by the taxpayer to such re15 tained worker during the 52 consecutive week period 

16 referred to in subsection (c)(2). 

17 ‘‘(b) LIMITATIONS.— 

18 ‘‘(1) INCREASE IN EMPLOYMENT.—The number 

19 of retained workers taken into account under sub20 section (a) shall not exceed the excess of (if any)— 

21 ‘‘(A) the number of employees of the tax22 payer at the end of the taxable year, over 

23 ‘‘(B) the number of employees of the tax24 payer at the beginning of the taxable year. 


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1 ‘‘(2) DOLLAR LIMITATION.—The amount al2 lowed as a credit under subsection (a) for a taxable 

3 year with respect to any business location of the em4 ployer shall not exceed $400,000. 

5 ‘‘(3) SPECIAL RULES.— 

6 ‘‘(A) BUSINESS-LOCATION SPECIFIC.—All 

7 determinations under this section regarding the 

8 number of employees shall be determined on a 

9 location basis. 

10 ‘‘(B) EMPLOYEES ROTATED AMONG BUSI11 NESS NOT ELIGIBLE.—An employee who is 

12 moved from one location of the taxpayer to an13 other location shall not be taken into account 

14 for purposes of paragraph (1). 

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

16 ‘‘(1) RETAINED WORKER.—The term ‘retained 

17 worker’ means any qualified individual— 

18 ‘‘(A) who was employed by the taxpayer on 

19 any date during the taxable year, 

20 ‘‘(B) who was so employed by the taxpayer 

21 for a period of not less than 52 consecutive 

22 weeks, and 

23 ‘‘(C) whose wages (as defined in section 

24 3401(a)) for such employment during the last 

25 26 weeks of such period equaled at least 80 


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1 percent of such wages for the first 26 weeks of 

2 such period. 

3 ‘‘(2) QUALIFIED INDIVIDUAL.—The term ‘quali4 fied individual’ means any individual who— 

5 ‘‘(A) begins employment with a qualified 

6 employer after December 31, 2010, and before 

7 January 1, 2014, 

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

9 penalties of perjury, that such individual has 

10 not been employed for 40 hours or more per 

11 week during the 60-day period ending on the 

12 date such individual begins such employment, 

13 ‘‘(C) is not employed by the qualified em14 ployer to replace another employee of such em15 ployer unless such other employee separated 

16 from employment voluntarily or for cause, and 

17 ‘‘(D) is not an individual described in sec18 tion 51(i)(1) (applied by substituting ‘qualified 

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

20 ‘‘(3) QUALIFIED EMPLOYER.— 

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

22 employer’ means any employer other than the 

23 United States, any State, or any political sub24 division thereof, or any instrumentality of the 

25 foregoing which employed an average of less 


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1 than 100 employees on business days during 

2 such taxable year. 

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 ‘‘(4) LONG-TERM UNEMPLOYED INDIVIDUAL.— 

11 The term ‘long-term unemployed individual’ means 

12 an individual who was in receipt of unemployment 

13 compensation under State or Federal law for not 

14 less than 26 weeks during the 1-year period ending 

15 on the day the individual is hired by the employer.’’. 

16 (b) CREDIT ALLOWED AS BUSINESS CREDIT.—Sec17 tion 38(b) of the Internal Revenue Code of 1986 (relating 

18 to current year business credit) is amended by striking 

19 ‘‘plus’’ at the end of paragraph (35), by striking the period 

20 at the end of paragraph (36) and inserting ‘‘, plus’’, and 

21 by adding at the end the following new paragraph: 

22 ‘‘(37) the retained worker credit determined 

23 under section 45S.’’. 


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1 (c) LIMITATION ON CARRYFORWARD.—Section 39(a) 

2 of such Code is amended by adding at the end the fol3 lowing: 

4 ‘‘(5) 3-YEAR CARRYFORWARD FOR RETAINED

5 WORKER CREDIT.—In the case of the retained work6 er credit, paragraph (2) shall be applied— 

7 ‘‘(A) by substituting ‘3 taxable years’ for 

8 ‘21 taxable years’ in subparagraph (A) thereof, 

9 and 

10 ‘‘(B) by substituting ‘2 taxable years’ for 

11 ‘20 taxable years’ in subparagraph (B) there12 of.’’. 

13 (d) CLERICAL AMENDMENT.—The table of sections 

14 for subpart D of part IV of subchapter A of chapter 1 

15 of the Internal Revenue Code of 1986 is amended by in16 serting after the item relating to section 45R the following 

17 new item: 

‘‘Sec. 45S. Retention of certain individuals newly hired before 2013.’’. 

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

19 this section shall apply to taxable years beginning after 

20 the date of the enactment of this Act. 

Æ 


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