Investing in American Workers Act

To amend the Internal Revenue Code of 1986 to provide a credit for employer-provided worker training. 1. Short title This Act may be cited as the Investing in American Workers Act 2. Employer-provided worker training credit (a) In general (1) Determination of credit Subpart D of part IV of subchapter A of chapter 1 45T. Employer-provided worker training credit (a) In general For purposes of section 38, except as provided in subsection (d), the employer-provided worker training credit under this section for the taxable year is an amount equal to 20 percent of the excess (if any) of— (1) the qualified training expenditures for such taxable year, over (2) the average of the qualified training expenditures (if any) for the 3 taxable years preceding such taxable year. (b) Qualified training expenditures For purposes of this section— (1) Qualified training expenditures defined (A) In general The term qualified training expenditures (B) Exclusions The term qualified training expenditures (2) Qualified training (A) In general The term qualified training (i) An apprenticeship program which is registered under the Act of August 16, 1937 (commonly known as the National Apprenticeship Act (ii) An apprenticeship program which is registered or approved by a recognized State apprenticeship agency in accordance with section 1 of such Act and which is in an emerging industry. (iii) A program of training services listed pursuant to section 122(d) of the Workforce Innovation and Opportunity Act. (iv) A program which is conducted by an area career and technical education school, a community college, or a labor organization. (v) A program which is sponsored and administered by an employer, industry trade association, industry or sector partnership, or labor organization. (B) Emerging industry The term emerging industry (C) Community college The term community college (D) Labor organization The term labor organization section 501(c)(5) (E) Industry trade association The term industry trade association (i) is described in paragraph (3) or (6) of section 501(c) (ii) is representing an industry. (F) Other terms The terms area career and technical education school recognized postsecondary credential industry or sector partnership (3) Non-highly compensated employee The term non-highly compensated employee (A) compensation (as such term is defined in section 415(c)(3)) from such employer for services provided for the taxable year does not exceed $82,000, and (B) rate of compensation, if applied to a full-time employee for a year, would not exceed $82,000. (c) Special rules (1) Special rule in case of no qualified training expenditures in any of 3 preceding taxable years (A) Taxpayers to which paragraph applies The credit under this section shall be determined under this paragraph if the taxpayer has no qualified training expenditures in any one of the 3 taxable years preceding the taxable year for which the credit is being determined. (B) Credit rate The credit determined under this paragraph shall be equal to 10 percent of the adjusted qualified training expenditures for the taxable year. (2) Aggregation and allocation of expenditures, etc In determining the amount of the credit under this section, rules similar to the rules of paragraphs (1), (2), (3), (4), and (5) of section 41(f) shall apply. (d) Election To apply credit against payroll taxes (1) In general At the election of a qualified small business (as defined in section 41(h)) or a qualified tax-exempt organization (as defined in section 3111(e)(5)(A)) for any taxable year, section 3111(g) shall apply to the payroll tax credit portion of the credit otherwise determined under subsection (a) for the taxable year and such portion shall not be treated (other than for purposes of section 280C) as a credit determined under subsection (a). (2) Payroll tax credit portion For purposes of this subsection, the payroll tax credit portion of the credit determined under subsection (a) with respect to any taxpayer for any taxable year is the least of— (A) the amount specified in the election made under this subsection, (B) the credit determined under subsection (a) for the taxable year (determined before the application of this subsection), or (C) in the case of a qualified small business other than a partnership or S corporation, the amount of the business credit carryforward under section 39 carried from the taxable year (determined before the application of this subsection to the taxable year). (3) Election (A) In general Any election under this subsection for any taxable year— (i) shall specify the amount of the credit to which such election applies, (ii) shall be made on or before the due date (including extensions) of— (I) in the case of a partnership, the return required to be filed under section 6031, (II) in the case of an S corporation, the return required to be filed under section 6037, and (III) in the case of any other taxpayer, the return of tax for the taxable year, and (iii) may be revoked only with the consent of the Secretary. (B) Limitations (i) Amount The amount specified in any election made under this subsection shall not exceed $250,000. (ii) Number of taxable years A person may not make an election under this subsection if such person (or any other person treated as a single taxpayer with such person under paragraph (5)(A)) has made an election under this subsection for five or more preceding taxable years. (C) Special rule for partnerships and s corporations In the case of a partnership or S corporation, the election made under this subsection shall be made at the entity level. (4) Aggregation rules (A) In general Except as provided in subparagraph (B)— (i) all members of the same controlled group of corporations shall be treated as a single taxpayer, and (ii) all trades or businesses (whether or not incorporated) which are under common control shall be treated as a single taxpayer. (B) Special rules For purposes of this subsection and section 3111(g)— (i) each of the persons treated as a single taxpayer under subparagraph (A) may separately make the election under paragraph (1) for any taxable year, and (ii) the $250,000 amount under paragraph (4)(B)(i) shall be allocated among all persons treated as a single taxpayer under subparagraph (A) in the same manner as under section 41(f)(1). (5) Regulations The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this subsection, including— (A) regulations to prevent the avoidance of the purposes of the limitations and aggregation rules under this subsection, (B) regulations to minimize compliance and recordkeeping burdens under this subsection, and (C) regulations for recapturing the benefit of credits determined under section 3111(g) in cases where there is a recapture or a subsequent adjustment to the payroll tax credit portion of the credit determined under subsection (a), including requiring amended income tax returns in the cases where there is such an adjustment. . (2) Credit part of general business credit Section 38(b) plus , plus (33) the employer-provided worker training credit determined under section 45T(a). . (3) Coordination with deductions Section 280C (i) Employer-Provided worker training credit No deduction shall be allowed for that portion of the expenses otherwise allowable as a deduction taken into account in determining the credit under section 45T for the taxable year which is equal to the amount of the credit determined for such taxable year under section 45T(a). . (4) Clerical amendment The table of sections for subpart D of part IV of subchapter A of chapter 1 Sec. 45T. Employer-provided worker training credit. . (b) Credit allowed against alternative minimum tax Subparagraph (B) of section 38(c)(4) (1) by redesignating clauses (x), (xi), and (xii) as clauses (xi), (xii), and (xiii), respectively, and (2) by inserting after clause (ix) the following new clause: (x) the credit determined under section 45T with respect to an eligible small business (as defined in paragraph (5)(A), after application of rules similar to the rules of paragraph (5)(B)), . (c) Payroll tax credit Section 3111 (g) Credit for worker training expenses (1) In general In the case of a taxpayer who has made an election under section 45T(d) for a taxable year, there shall be allowed as a credit against the tax imposed by subsection (a) for the first calendar quarter which begins after the date on which the taxpayer files the return specified in section 45T(d)(3)(A)(ii) an amount equal to the payroll tax credit portion determined under section 45T(d)(2). (2) Limitation The credit allowed by paragraph (1) shall not exceed the tax imposed by subsection (a) for any calendar quarter on the wages paid with respect to the employment of all individuals in the employ of the employer. (3) Carryover of unused credit If the amount of the credit under paragraph (1) exceeds the limitation of paragraph (2) for any calendar quarter, such excess shall be carried to the succeeding calendar quarter and allowed as a credit under paragraph (1) for such quarter. (4) Deduction allowed for credited amounts The credit allowed under paragraph (1) shall not be taken into account for purposes of determining the amount of any deduction allowed under chapter 1 for taxes imposed under subsection (a). . (d) Simplified filing for certain small businesses The Secretary of the Treasury shall provide for a method of filing returns of tax and information returns required under the Internal Revenue Code of 1986 in a simplified format, to the extent possible, for employers with less than $5,000,000 in annual gross receipts. (e) Regulations relating to postsecondary credentials Not later than 1 year after the date of the enactment of this Act, the Secretary of Labor, in consultation with the Secretary of the Treasury, shall issue regulations or other guidance applying the definition of the term recognized postsecondary credential 29 U.S.C. 3102 (f) Effective date The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

Summary: Investing in American Workers Act This bill allows a business-related tax credit for employers who increase worker training expenditures. The credit is equal to 20% of the excess of (1) the qualified training expenditures for the taxable year, over (2) the average of the adjusted qualified training expenditures for the three previous taxable years. If the employer had no qualified training expenditures in any one of the three previous years, the credit is equal to 10% of the adjusted qualified training expenditures for the year. The credit applies to expenditures for the training of non-highly compensated employees (annual compensation does not exceed $82,000). The training must result in the attainment of a recognized postsecondary credential and be provided through an apprenticeship program; a program of training services that is included on a list of eligible training providers that states are required to maintain under the Workforce Innovation and Opportunity Act; a program that is conducted by an area career and technical education school, a community college, or a labor organization; or a program that is sponsored and administered by an employer, industry trade association, industry or sector partnership, or labor organization. Certain small businesses and tax-exempt organizations may apply the credit against payroll taxes, subject to specified limits and requirements. Eligible small businesses may also apply the credit against the alternative minimum tax.