I
104TH CONGRESS
1ST SESSION
H. R. 1168
To amend the Internal Revenue Code of 1986 to allow a credit against
income tax to employers who employ members of the reserve components
of the Armed Forces of the United States and to self-employed individ-
uals who are members of such reserve components.
IN THE HOUSE OF REPRESENTATIVES
MARCH 8, 1995
Mr. MONTGOMERY 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 income tax to employers who employ mem-
bers of the reserve components of the Armed Forces
of the United States and to self-employed individuals
who are members of such reserve components.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. RESERVE FORCES PARTICIPATION CREDIT.
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to business-related credits) is amended by
adding at the end the following new section:
‘‘SEC. 45C. RESERVE FORCES PARTICIPATION CREDIT.
‘‘(a) GENERAL RULE.—For purposes of section 38,
the reserve forces participation credit determined under
this section is an amount equal to the sum of—
‘‘(1) the aggregate of the employment credits
with respect to qualified employees of a taxpayer,
plus
‘‘(2) if the taxpayer is a qualified self-employed
taxpayer, the self-employment credit.
‘‘(b) EMPLOYMENT CREDIT.—For purposes of this
section—
‘‘(1) IN
GENERAL.—The employment credit
with respect to a qualified employee of a taxpayer
for any taxable year is an amount equal to the lesser
of—
‘‘(A) 50 percent of the amount of qualified
compensation that would have been paid to the
employee with respect to all periods during
which the employee participates in qualified re-
serve duty to the exclusion of normal employ-
ment duties, including time spent in a travel
status had the employee not been participating
in qualified reserve duty, or
‘‘(B) $2,000.
‘‘(2) QUALIFIED
COMPENSATION.—The term
‘qualified compensation’ means compensation—
‘‘(A) which is normally contingent on the
employee’s presence for work and which would
be deductible from the taxpayer’s gross income
under section 162(a)(1) if the employee were
present and receiving such compensation; and
‘‘(B) which is not characterized by the tax-
payer as vacation or holiday pay, or as sick
leave or pay, or as any other form of pay for
a nonspecific leave absence, and with respect to
which the number of days the employee partici-
pates in qualified reserve duty does not result
in any reduction in the amount of vacation
time, sick leave, or other nonspecific leave pre-
viously credited to or earned by the employee.
‘‘(3) QUALIFIED EMPLOYEE.—The term ‘quali-
fied employee’ means a person who—
‘‘(A) has been a full-time employee of a
taxpayer for the 21-day period immediately pre-
ceding the period during which the employee
participates in qualified reserve duty, and
‘‘(B) is a member of the Ready Reserve of
a reserve component of an Armed Force of the
United States.
‘‘(4) CREDIT IN ADDITION TO DEDUCTION.—
The employment credit provided in this section is in