USA Workforce Tax Credit Act

Subjects: Taxation

Summary:  <p> <strong>USA Workforce Tax Credit Act </strong></p> <p>This bill allows individual taxpayers and business entities a new tax credit for charitable contributions to a workforce development or apprenticeship training organization.</p>

<html><body><pre>[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1656 Introduced in House (IH)]

&lt;DOC&gt;






118th CONGRESS
  1st Session
                                H. R. 1656

 To amend the Internal Revenue Code of 1986 to allow a credit against 
   tax for charitable donations to nonprofit organizations providing 
                          workforce training.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 17, 2023

 Mr. Smucker 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 allow a credit against 
   tax for charitable donations to nonprofit organizations providing 
                          workforce training.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``USA Workforce Tax Credit Act''.

SEC. 2. TAX CREDIT FOR CONTRIBUTIONS TO WORKFORCE DEVELOPMENT AND 
              APPRENTICESHIP TRAINING ORGANIZATIONS.

    (a) Credit for Individuals.--
            (1) In general.--Subpart A of part IV of subchapter A of 
        chapter 1 of the Internal Revenue Code of 1986 is amended by 
        inserting after section 25E the following new section:

``SEC. 25F. QUALIFIED WORKFORCE DEVELOPMENT AND APPRENTICESHIP TRAINING 
              PROGRAMS.

    ``(a) Allowance of Credit.--In the case of an individual, there 
shall be allowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to the amount of qualified 
contributions made by the taxpayer during the year.
    ``(b) Dollar Limitations.--
            ``(1) Income limitation.--The amount allowed as a credit 
        under subsection (a) with respect to any taxpayer shall not 
        exceed 25 percent of the tax liability of the taxpayer with a 
        maximum value of $250,000.
            ``(2) Reduction based on state credit.--The amount allowed 
        as a credit under subsection (a) for a taxable year shall be 
        reduced by the amount allowed as a credit on any State tax 
        return of the individual for qualified contributions made by 
        the taxpayer during the taxable year.
    ``(c) Qualified Contributions; Other Definitions.--For purposes of 
this section--
            ``(1) Qualified contribution.--The term `qualified 
        contribution' means a charitable contribution (as defined by 
        section 170(c)) to a workforce development or apprenticeship 
        training organization.
            ``(2) Workforce development or apprenticeship training 
        organization.--The term `workforce development or 
        apprenticeship training organization' means any organization--
                    ``(A) which--
                            ``(i) is described in section 501(c)(3) and 
                        exempt from tax under section 501(a), and
                            ``(ii) is not a private foundation,
                    ``(B) the exclusive purpose if which is--
                            ``(i) to provide workforce development and 
                        apprenticeship training to eligible 
                        participants, including--
                                    ``(I) community colleges,
                                    ``(II) workforce training programs, 
                                as defined by State workforce agencies,
                                    ``(III) organizations that provide 
                                career and technical education,
                                    ``(IV) organizations that provide 
                                training or apprenticeships operated by 
                                a collective bargaining organization,
                                    ``(V) community organizations that 
                                provide full certified training, and
                                    ``(VI) private schools that confer 
                                diplomas, degrees, or certify 
                                completion of certain grades, or
                            ``(ii) to provide scholarships for use in 
                        obtaining workforce development and 
                        apprenticeship training described in clause (i) 
                        at an organization which is exempt from tax 
                        under section 501(a) (other than a private 
                        foundation), and
                    ``(C) that is in compliance with all applicable 
                State laws, including laws relating to unlawful 
                discrimination, health and safety requirements, and 
                criminal background checks of employees.
            ``(3) Eligible participants.--The term `eligible 
        participant' means an individual who is enrolled in a workforce 
        development and apprenticeship training organization, as 
        described in paragraph (2)(B).
    ``(d) Denial of Double Benefit.--No deduction shall be allowed 
under any provision of this chapter for any expense for which a credit 
is allowed under this section.
    ``(e) Election.--This section shall apply to a taxpayer for a 
taxable year only if such taxpayer elects to have this section apply 
for such taxable year.
    ``(f) Application of Volume Cap.--A contribution shall be taken 
into account under this section only if such contribution is recognized 
by the Secretary as applying against the volume cap established under 
section 4 of the USA Workforce Tax Credit Act.''.
            (2) Clerical amendment.--The table of sections for subpart 
        A of part IV of subchapter A of chapter 1 of such Code is 
        amended by inserting after the item relating to section 25E the 
        following new item:

``Sec. 25F. Qualified Workforce Development and Apprenticeship Training 
                            Programs.''.
    (b) Business Credit.--
            (1) In general.--Subpart D of part IV of subchapter A of 
        chapter 1 of such Code is amended by adding at the end the 
        following new section:

``SEC. 45BB. CONTRIBUTIONS TO WORKFORCE DEVELOPMENT OR APPRENTICESHIP 
              TRAINING ORGANIZATIONS.

    ``(a) General Rule.--For purposes of section 38, in the case of a 
corporation, the workforce development and apprenticeship training 
credit determined under this section for the taxable year is the 
aggregate amount of qualified contributions for the taxable year.
    ``(b) Limitation.--
            ``(1) Income limitation.--The amount of the credit 
        determined under this section for any taxable year shall not 
        exceed the lesser of--
                    ``(A) 25 percent of the tax liability of the 
                taxpayer for the taxable year, and
                    ``(B) $250,000.
            ``(2) Reduction based on state credit.--The amount allowed 
        as a credit under subsection (a) for a taxable year shall be 
        reduced by the amount allowed as a credit on any State tax 
        return of the individual for qualified contributions made by 
        the taxpayer during the taxable year.
            ``(3) Qualified contributions.--For purposes of this 
        section, the term `qualified contribution' has the meaning 
        given such term under section 25F.
    ``(c) Denial of Double Benefit.--No deduction shall be allowed 
under any provision of this chapter for any expense for which a credit 
is allowed under this section.
    ``(d) Election.--This section shall apply to a taxpayer for a 
taxable year only if such taxpayer elects to have this section apply 
for such taxable year.
    ``(e) Application of Volume Cap.--A contribution shall be taken 
into account under this section only if such contribution is recognized 
by the Secretary as applying against the volume cap established under 
section 4 of the USA Workforce Tax Credit Act.''.
            (2) Conforming amendments.--Section 38(b) of such Code is 
        amended by striking ``plus'' at the end of paragraph (40), by 
        striking the period and inserting ``, plus'' at the end of 
        paragraph (41), and by adding at the end the following new 
        paragraph:
            ``(42) the workforce development or apprenticeship training 
        credit determined under section 45BB(a).''.
            (3) Clerical amendment.--The table of sections for subpart 
        D of part IV of subchapter A of chapter 1 of such Code is 
        amended by adding at the end the following new item:

``Sec. 45BB. Contributions to workforce development or apprenticeship 
                            training organizations.''.
    (c) Excise Tax on Failure of Scholarship Granting Organizations To 
Make Distributions.--
            (1) In general.--Chapter 42 of such Code is amended by 
        adding at the end the following new subchapter:

   ``Subchapter I--Organizations Providing Workforce Development or 
                        Apprenticeship Training

``Sec. 4969. Tax on failure to distribute receipts.

``SEC. 4969. TAX ON FAILURE TO DISTRIBUTE RECEIPTS.

    ``(a) Tax Imposed.--There is hereby imposed a tax on the failure of 
a workforce development or apprenticeship training organization (as 
defined in section 25F(c)) to make distributions in any taxable year in 
an amount equal to or in excess of the required distribution amount 
before the distribution deadline relating to a taxable year.
    ``(b) Amount of Tax.--The tax imposed by subsection (a) with 
respect to a taxable year shall be equal to 15 percent of the excess 
(if any) of--
            ``(1) the required distribution amount with respect to the 
        taxable year, over
            ``(2) the amount of receipts of the workforce development 
        or apprenticeship training organization for each taxable year 
        which are distributed before the distribution deadline with 
        respect to such receipts.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Required distribution amount.--
                    ``(A) In general.--The required distribution amount 
                with respect to a taxable year is the amount equal to 
                100 percent of the total receipts of the workforce 
                development or apprenticeship training organization for 
                such taxable year--
                            ``(i) reduced by the sum of such receipts 
                        that are retained for administrative expenses 
                        for the taxable year or are carried to the 
                        succeeding taxable year under subparagraph (C), 
                        and
                            ``(ii) increased by the amount of the 
                        carryover under subparagraph (C) from the 
                        preceding taxable year.
                    ``(B) Administrative expenses.--For purposes of 
                this paragraph, not more than 10 percent of total 
                receipts of a qualified workforce development or 
                apprenticeship training organization for a taxable year 
                may be used for administrative purposes.
                    ``(C) Carryover.--Receipts of a qualified workforce 
                development or apprenticeship training organization 
                that are not disbursed for the taxable year or retained 
                for administrative purposes for the taxable year shall 
                be carried to the succeeding taxable year. The amount 
                carried to the taxable year under the preceding 
                sentence shall not exceed 15 percent of total receipts 
                of the qualified workforce development or 
                apprenticeship training organization for the taxable 
                year.
            ``(2) Distributions.--The term `distribution' includes 
        amounts which are formally committed but not distributed. A 
        formal commitment described in the preceding sentence may 
        include contributions set aside for eligible students or 
        participants for more than one year.
            ``(3) Distribution deadline.--The distribution deadline 
        with respect to receipts for a taxable year is the first day of 
        the second taxable year following the taxable year in which 
        such receipts are received by the scholarship granting 
        organization.
    ``(d) Reasonable Cause Exception.--The tax imposed by subsection 
(a) shall not apply with respect to any failure to make required 
distributions before the distribution deadline which is not willful and 
is due to reasonable cause.''.
            (2) Abatement of tax.--
                    (A) General rule.--Subsection (b) of section 4962 
                of such Code is amended by striking ``or G'' and 
                inserting ``G, or I''.
                    (B) First tier tax.--Subsection (a) of section 4963 
                of such Code is amended by inserting ``4969,'' after 
                ``4967,''.
                    (C) Taxable event.--Subsection (c) of section 4963 
                of such Code is amended by inserting ``4969,'' after 
                ``4967,''.
            (3) Correction period.--Subparagraph (A) of section 
        4963(e)(2) of such Code is amended by inserting ``or 4969'' 
        after ``4942''.
            (4) Clerical amendment.--The table of subchapters for 
        chapter 42 of such Code is amended by adding at the end the 
        following new item:

    ``subchapter i. organizations providing workforce development, 
              apprenticeship training, or scholarships''.

    (c) Effective Date.--The amendments made by this Act shall apply to 
taxable years beginning after December 31, 2023.

SEC. 3. ORGANIZATIONAL AUTONOMY.

    A participating eligible organization or entity under the programs 
established pursuant to this Act are autonomous and not agents of the 
State or Federal Government and therefore--
            (1) a Federal or State agency may not in any way regulate 
        the program of a participating entity that accepts a 
        contribution under this Act;
            (2) the provision of tax credits under this Act does not 
        expand the regulatory authority of the Federal Government, the 
        State, its officers, or any school district to impose any 
        additional regulation of an entity beyond those necessary to 
        enforce the requirements of this Act; and
            (3) participating eligible entities shall be given the 
        maximum freedom to provide for the needs of their participants 
        without government control.

SEC. 4. VOLUME CAP.

    (a) Amount.--The volume cap amount available for tax credits 
allowed under sections 25F and 45BB of the Internal Revenue Code of 
1986, as added by this Act, shall be $2,000,000,000 annually, beginning 
for taxable years beginning in 2024 and for each succeeding calendar 
year thereafter.
    (b) Application for Credits.--The Secretary shall develop a system 
to track and make available information in real time, regarding 
availability of such tax credits to donors which will be available on a 
first-come, first-serve basis.
                                 &lt;all&gt;
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