I
107TH CONGRESS
1ST SESSION
H. R. 3001
To amend the Internal Revenue Code of 1986 to exclude certain severance
payments from gross income and to allow a refundable credit for job
training expenses of older long-time employees who are laid off.
IN THE HOUSE OF REPRESENTATIVES
OCTOBER 2, 2001
Mr. SMITH of New Jersey (for himself, Mr. MORAN of Virginia, Mr. KING,
Mr. BORSKI, Ms. HART, Mr. HALL of Ohio, Mr. FORD, and Mr. CAL-
VERT) introduced the following bill; which was referred to the Committee
on Ways and Means, and in addition to the Committee on Education and
the Workforce, for a period to be subsequently determined by the Speak-
er, in each case for consideration of such provisions as fall within the ju-
risdiction of the committee concerned
A BILL
To amend the Internal Revenue Code of 1986 to exclude
certain severance payments from gross income and to
allow a refundable credit for job training expenses of
older long-time employees who are laid off.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Displaced Older Work-
er Assistance Act of 2001’’.
SEC. 2. EXCLUSION FROM INCOME OF SEVERANCE PAY-
MENT AMOUNTS.
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
items specifically excluded from gross income) is amended
by redesignating section 139 as section 139A and by in-
serting after section 138 the following new section:
‘‘SEC. 139. SEVERANCE PAYMENTS.
‘‘(a) IN GENERAL.—In the case of an individual,
gross income shall not include any qualified severance pay-
ment.
‘‘(b) LIMITATIONS.—
‘‘(1) AMOUNT.—The amount to which the ex-
clusion under subsection (a) applies shall not
exceed—
‘‘(A) $15,000, with respect to any separa-
tion from employment, reduced by
‘‘(B) the aggregate amount excluded from
gross income under subsection (a) in prior tax-
able years.
‘‘(2) YEARS TO WHICH EXCLUSION APPLIES.—
No qualified severance payment shall be excluded
from gross income under subsection (a) unless such
payment is received in the taxable year in which sep-
aration from employment occurs or in one of the two
succeeding taxable years.
‘‘(c) QUALIFIED SEVERANCE PAYMENT.—For pur-
poses of this section, the term ‘qualified severance pay-
ment’ means any payment received by an individual if—
‘‘(1) such payment was paid by such individ-
ual’s employer on account of such individual’s sepa-
ration from employment, and
‘‘(2) such individual received a written notice
from such employer indicating that such payment is
a severance payment.’’
(b) CLERICAL AMENDMENT.—The table of sections
for part III of subchapter B of chapter 1 of such Code
is amended by striking the item relating to section 139
and inserting the following new items:
‘‘Sec. 139. Severance payments.
‘‘Sec. 139A. Cross references to other Acts.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending after the
date of the enactment of this Act.
SEC. 3. REFUNDABLE CREDIT FOR RETRAINING EXPENSES
FOR CERTAIN OLDER LONG-TIME EMPLOY-
EES WHO ARE LAID OFF.
(a) IN GENERAL.—Subpart C of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to refundable credits) is amended by redes-
ignating section 35 as section 36 and by inserting after
section 34 the following new section:
‘‘SEC. 35. RETRAINING EXPENSES FOR CERTAIN OLDER
LONG-TIME EMPLOYEES WHO ARE LAID OFF.
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eli-
gible individual, there shall be allowed as a credit against
the tax imposed by this subtitle an amount equal to the
qualified job training expenses which are paid or incurred
during the taxable year.
‘‘(b) MAXIMUM CREDIT.—The amount of qualified
job training expenses of an individual which may be taken
into account under subsection (a) with respect to a reduc-
tion in a work force for the taxable year shall not exceed
$2,000, reduced by the amount of such expenses which
were taken into account under subsection (a) (or would
have been so taken into account but for subsection (c))
with respect to such reduction for all prior taxable years.
‘‘(c) LIMITATION BASED ON ADJUSTED GROSS IN-
COME.—
‘‘(1) IN
GENERAL.—The dollar amount con-
tained in subsection (b) shall be reduced (but not
below zero) by an amount which bears the same
ratio to such limitation as—
‘‘(A) the excess of—
‘‘(i) the taxpayer’s adjusted gross in-
come for such taxable year, over
‘‘(ii) the applicable dollar amount,
bears to
‘‘(B) $20,000.
‘‘(2) 
ROUNDING.—Any 
amount 
determined
under paragraph (1) which is not a multiple of $10
shall be rounded to the next lowest $10.
‘‘(3) APPLICABLE DOLLAR AMOUNT.—For pur-
poses of this subsection, the term ‘applicable dollar
amount’ means—
‘‘(A) in the case of a taxpayer filing a joint
return, $100,000,
‘‘(B) in the case of any other taxpayer
(other than a married individual filing a sepa-
rate return), $75,000, and
‘‘(C) in the case of a married individual fil-
ing a separate return, $50,000.
A rule similar to the rule of section 219(g)(4) shall
apply for purposes of this paragraph.
‘‘(d) DEFINITIONS.—For purposes of this section—
‘‘(1) ELIGIBLE INDIVIDUAL.—The term ‘eligible
individual’ means any individual if—
‘‘(A) during the taxable year or the pre-
ceding taxable year, such individual separated
from employment in connection with a reduc-
tion in the work force of such individual’s em-
ployer (other than a seasonal reduction), and