I 
109TH CONGRESS 
1ST SESSION 
H. R. 614 
To amend the Internal Revenue Code of 1986 to provide tax incentives 
and job training grants for communities affected by the migration of 
businesses and jobs to Canada or Mexico as a result of the North 
American Free Trade Agreement. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 8, 2005 
Mr. MCINTYRE introduced the following bill; which was referred to the Com-
mittee on Ways and Means, and in addition to the Committee on Edu-
cation and the Workforce, for a period to be subsequently determined by 
the Speaker, in each case for consideration of such provisions as fall with-
in the jurisdiction of the committee concerned 
A BILL 
To amend the Internal Revenue Code of 1986 to provide 
tax incentives and job training grants for communities 
affected by the migration of businesses and jobs to Can-
ada or Mexico as a result of the North American Free 
Trade Agreement. 
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 ‘‘NAFTA-Impacted 
Communities Relief Act’’.
SEC. 2. DESIGNATION OF AND TAX INCENTIVES FOR 
NAFTA-IMPACTED COMMUNITIES. 
(a) IN GENERAL.—Chapter 1 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new subchapter: 
‘‘Subchapter Z—NAFTA-Impacted 
Communities 
‘‘Sec. 1400M. Designation of NAFTA-impacted communities. 
‘‘Sec. 1400N. NAFTA-impacted community employment credit. 
‘‘Sec. 1400O. Increase in expensing under Section 179. 
‘‘Sec. 1400P. NAFTA-impacted community business defined. 
‘‘SEC. 1400M. DESIGNATION OF NAFTA-IMPACTED COMMU-
NITIES. 
‘‘(a) DESIGNATION.— 
‘‘(1) 
NAFTA-IMPACTED
COMMUNITY.—For 
purposes of this title, the term ‘NAFTA-impacted 
community’ means any area— 
‘‘(A) which is nominated by one or more 
local governments and the State or States in 
which it is located for designation as a commu-
nity impacted by the North American Free 
Trade Agreement (hereinafter in this section re-
ferred to as a ‘nominated area’), and 
‘‘(B) which the Secretary of Commerce 
designates as a NAFTA-impacted community, 
after consultation with—
‘‘(i) in the case of an area in a rural 
area, the Secretary of Agriculture; 
‘‘(ii) in the case of an area in an 
urban area, the Secretary of Housing and 
Urban Development; and 
‘‘(iii) in the case of an area on an In-
dian reservation, the Secretary of the Inte-
rior. 
‘‘(2) NUMBER
OF
DESIGNATIONS.—The Sec-
retary of Commerce may designate not more than 
35 nominated areas as NAFTA-impacted commu-
nities. 
‘‘(3) AREAS DESIGNATED BASED ON DEGREE 
OF LOSS OF JOBS RESULTING FROM NAFTA, ETC.— 
Except as otherwise provided in this section, the 
nominated areas designated as NAFTA-impacted 
communities under this subsection shall be those 
nominated areas with the highest average ranking 
with respect to the criteria described in subsection 
(c)(3). For purposes of the preceding sentence, an 
area shall be ranked within each such criterion on 
the basis of the amount by which the area exceeds 
such criterion, with the area which exceeds such cri-
terion by the greatest amount given the highest 
ranking.
‘‘(4) LIMITATION ON DESIGNATIONS.— 
‘‘(A) PUBLICATION
OF
REGULATIONS.— 
The Secretary of Commerce shall prescribe by 
regulation no later than 4 months after the 
date of the enactment of this section, after con-
sultation with the officials described in para-
graph (1)(B)— 
‘‘(i) the procedures for nominating an 
area under paragraph (1)(A), 
‘‘(ii) the parameters relating to the 
size and population characteristics of a 
NAFTA-impacted community, and 
‘‘(iii) the manner in which nominated 
areas will be evaluated based on the cri-
teria specified in subsection (c). 
‘‘(B) PROCEDURAL RULES.—The Secretary 
of Commerce shall not make any designation of 
a nominated area as a NAFTA-impacted com-
munity under paragraph (2) unless— 
‘‘(i) a nomination regarding such area 
is submitted in such a manner and in such 
form, and contains such information, as 
the Secretary of Commerce shall by regula-
tion prescribe, and
‘‘(ii) the Secretary of Commerce de-
termines that any information furnished is 
reasonably accurate. 
‘‘(5) NOMINATION PROCESS FOR INDIAN RES-
ERVATIONS.—For purposes of this subchapter, in 
the case of a nominated area on an Indian reserva-
tion, the reservation governing body (as determined 
by the Secretary of the Interior) shall be treated as 
being both the State and local governments with re-
spect to such area. 
‘‘(b) PERIOD FOR WHICH DESIGNATION IS IN EF-
FECT.— 
‘‘(1) IN GENERAL.—Any designation of an area 
as a NAFTA-impacted community shall remain in 
effect during the period beginning on the date of the 
designation and ending on the earliest of— 
‘‘(A) December 31, 2012, 
‘‘(B) the termination date designated by 
the State and local governments in their nomi-
nation, or 
‘‘(C) the date the Secretary of Commerce 
revokes such designation. 
‘‘(2) REVOCATION OF DESIGNATION.—The Sec-
retary of Commerce may revoke the designation 
under this section of an area if the Secretary deter-
mines that the loss of jobs and other effects of 
NAFTA on the area have been substantially allevi-
ated. Such determination shall include, at a min-
imum, a finding that the unemployment rate in the 
area is equal to or lower than the national unem-
ployment rate, and a finding that new businesses are 
being attracted to the area. 
‘‘(c) AREA AND ELIGIBILITY REQUIREMENTS.— 
‘‘(1) IN
GENERAL.—The Secretary of Com-
merce may designate a nominated area as a 
NAFTA-impacted community under subsection (a) 
only if the area meets the requirements of para-
graphs (2) and (3) of this subsection. 
‘‘(2) AREA REQUIREMENTS.—For purposes of 
paragraph (1), a nominated area meets the require-
ments of this paragraph if— 
‘‘(A) the area is within the jurisdiction of 
one or more local governments, 
‘‘(B) the boundary of the area is contin-
uous, 
‘‘(C) the area does not include an em-
powerment zone (as defined in section 1393(b)), 
and 
‘‘(D) the area does not include a renewal 
community designated under section 1400E.
‘‘(3) ELIGIBILITY REQUIREMENTS.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), a nominated area meets the require-
ments of this paragraph if the State and the 
local governments in which it is located certify 
(and the Secretary of Commerce, after such re-
view of Department of Labor data and other 
appropriate supporting data as he deems appro-
priate, accepts such certification) that— 
‘‘(i) the unemployment rate in the 
area, as determined by the most recent 
available data, was at least 1 percentage 
point above the national unemployment 
rate for the period to which such data re-
late, and 
‘‘(ii) in the case of— 
‘‘(I) a rural area, at least 300 
workers who live or work in the area 
have been certified as eligible to apply 
for NAFTA transitional adjustment 
assistance under subchapter D of 
chapter 2 of title II of the Trade Act 
of 1974 (19 U.S.C. 2341 et seq.), and 
‘‘(II) an urban area, at least 500 
workers have been so certified.
‘‘(B) RURAL
AREA
DEFINED.—For pur-
poses of this section, the term ‘rural area’ 
means an area— 
‘‘(i) which is within a local govern-
ment jurisdiction or jurisdictions with a 
population of less than 10,000, 
‘‘(ii) which is outside of a metropoli-
tan statistical area (within the meaning of 
section 143(k)(2)(B)), or 
‘‘(iii) which is determined by the Sec-
retary of Commerce, after consultation 
with the Secretary of Agriculture, to be a 
rural area. 
‘‘(C) URBAN
AREA
DEFINED.—For pur-
poses of this section, the term ‘urban area’ 
means any area that is not a rural area. 
‘‘(d) COORDINATION WITH TREATMENT OF ENTER-
PRISE COMMUNITIES.—For purposes of this title, if there 
are in effect with respect to the same area both— 
‘‘(1) a designation as a NAFTA-impacted com-
munity, and 
‘‘(2) a designation as an enterprise community, 
both of such designations shall be given full effect with 
respect to such area.
‘‘(e) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this subchapter, rules similar to the rules of para-
graphs (5) and (7) of section 1393 shall apply. 
‘‘SEC. 1400N. NAFTA-IMPACTED COMMUNITY EMPLOYMENT 
CREDIT. 
‘‘(a) AMOUNT OF CREDIT.—For purposes of section 
38, the amount of the NAFTA-impacted community em-
ployment credit determined under this section with respect 
to any employer for any taxable year is 8.5 percent of the 
qualified NAFTA-impacted community wages paid or in-
curred during the calendar year which ends with or within 
such taxable year. 
‘‘(b) QUALIFIED
NAFTA-IMPACTED
COMMUNITY 
WAGES.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘qualified NAFTA-impacted commu-
nity wages’ means any wages paid or incurred by an 
employer for services performed by an employee 
while such employee is a qualified NAFTA-impacted 
community employee. 
‘‘(2) ONLY FIRST $15,000 OF WAGES PER YEAR 
TAKEN INTO ACCOUNT.—With respect to each quali-
fied NAFTA-impacted community employee, the 
amount of qualified NAFTA-impacted community
wages which may be taken into account for a cal-
endar year shall not exceed $15,000. 
‘‘(3) COORDINATION WITH WORK OPPORTUNITY 
CREDIT.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
NAFTA-impacted community wages’ shall not 
include wages taken into account in deter-
mining the credit under section 51. 
‘‘(B) COORDINATION
WITH
PARAGRAPH 
(2).—The $15,000 amount in paragraph (2) 
shall be reduced for any calendar year by the 
amount of wages paid or incurred during such 
year which are taken into account in deter-
mining the credit under section 51. 
‘‘(c) QUALIFIED
NAFTA-IMPACTED
COMMUNITY 
EMPLOYEE.—For purposes of this section— 
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, the term ‘qualified NAFTA- 
impacted community employee’ means, with respect 
to any period, any employee of an employer if— 
‘‘(A) substantially all of the services per-
formed during such period by such employee for 
such employer are performed within a NAFTA- 
impacted community in a trade or business of 
the employer, and
‘‘(B) the principal place of abode of such 
employee while performing such services is 
within such NAFTA-impacted community. 
‘‘(2) OTHER RULES.—Rules similar to the rules 
of paragraphs (2) and (3) of section 1396(d) shall 
apply. 
‘‘(d) OTHER DEFINITIONS AND SPECIAL RULES.— 
For purposes of this section, the rules of section 1397 
shall apply. 
‘‘SEC. 1400O. INCREASE IN EXPENSING UNDER SECTION 179. 
‘‘(a) GENERAL RULE.—In the case of a NAFTA-im-
pacted community business (as defined in section 1400P), 
for purposes of section 179— 
‘‘(1) the limitation under section 179(b)(1) 
shall be increased by the lesser of— 
‘‘(A) $10,000, or 
‘‘(B) the cost of section 179 property 
which is qualified NAFTA-impacted property 
placed in service during the taxable year, and 
‘‘(2) the amount taken into account under sec-
tion 179(b)(2) with respect to any section 179 prop-
erty which is qualified NAFTA-impacted property 
shall be 50 percent of the cost thereof. 
‘‘(b) RECAPTURE.—Rules similar to the rules under 
section 179(d)(10) shall apply with respect to any quali-
fied NAFTA-impacted property which ceases to be used 
in a NAFTA-impacted community by a NAFTA-impacted 
community business. 
‘‘(c) QUALIFIED NAFTA-IMPACTED PROPERTY.— 
For purposes of this section— 
‘‘(1) 
IN
GENERAL.—The 
term 
‘qualified 
NAFTA-impacted property’ means section 179 prop-
erty (as defined in section 179(d)) if— 
‘‘(A) such property was acquired by the 
taxpayer after December 31, 2001, and before 
January 1, 2011, and 
‘‘(B) such property would be qualified zone 
property (as defined in section 1397C) if ref-
erences to NAFTA-impacted communities were 
substituted for references to empowerment 
zones in section 1397C. 
‘‘(2) CERTAIN RULES TO APPLY.—The rules of 
subsections (a)(2) and (b) of section 1397C shall 
apply for purposes of this section. 
‘‘SEC. 1400P. NAFTA-IMPACTED COMMUNITY BUSINESS DE-
FINED. 
‘‘For purposes of this part, the term ‘NAFTA-im-
pacted community business’ means any entity or propri-
etorship which would be a qualified business entity or 
qualified proprietorship under section 1397C if references
to NAFTA-impacted communities were substituted for 
references to empowerment zones in such section.’’. 
(b) TECHNICAL AND CONFORMING AMENDMENTS.— 
(1) NAFTA-IMPACTED
COMMUNITY
EMPLOY-
MENT CREDIT PART OF GENERAL BUSINESS CRED-
IT.—Subsection (b) of section 38 of such Code (re-
lating to current year business credit) is amended by 
striking ‘‘plus’’ at the end of paragraph (18), by 
striking the period at the end of paragraph (19) and 
inserting ‘‘, plus’’, and by adding at the end the fol-
lowing new paragraph: 
‘‘(20) the NAFTA-impacted community employ-
ment credit determined under section 1400N(a).’’. 
(2) DENIAL OF DEDUCTION FOR PORTION OF 
WAGES
EQUAL
TO
NAFTA-IMPACTED
COMMUNITY 
EMPLOYMENT CREDIT.— 
(A) Subsection (a) of section 280C of such 
Code (relating to rule for employment credits) 
is amended by striking ‘‘and 1396(a)’’ and in-
serting ‘‘1396(a), and 1400N(a)’’. 
(B) Subsection (c) of section 196 of such 
Code (relating to deduction for certain unused 
business credits) is amended by striking ‘‘and’’ 
at the end of paragraph (11), by striking the 
period at the end of paragraph (12) and insert-
ing ‘‘, and’’, and by adding at the end the fol-
lowing new paragraph: 
‘‘(13) the NAFTA-impacted community employ-
ment credit determined under section 1400N(a).’’. 
(3) CARRYOVERS.—Subsection (c) of section 
381 of such Code (relating to carryovers in certain 
corporate acquisitions) is amended by adding at the 
end the following new paragraph: 
‘‘(27) NAFTA-IMPACTED
COMMUNITY
PROVI-
SIONS.—The acquiring corporation shall take into 
account (to the extent proper to carry out the pur-
poses of this section and subchapter XI, and under 
such regulations as may be prescribed by the Sec-
retary) the items required to be taken into account 
for purposes of subchapter XI in respect of the dis-
tributor or transferor corporation.’’. 
(c) CLERICAL AMENDMENTS.—The table of sub-
chapters for chapter 1 of such Code is amended by adding 
at the end the following new item: 
‘‘SUBCHAPTER Z. NAFTA-IMPACTED COMMUNITIES’’. 
SEC. 3. GRANTS FOR JOB TRAINING ASSISTANCE FOR 
NAFTA-IMPACTED COMMUNITIES. 
(a) IN GENERAL.—The Secretary of Labor shall pro-
vide grants to States that contain NAFTA-impacted com-
munities, as designated under section 1400M of the Inter-
nal Revenue Code of 1986 (as added by section 2(a) of
this Act), for the purpose of providing sub-grants to non-
profit organizations and community or junior colleges in 
order to provide short-term job training courses, courses 
in entrepreneurism and self-employment, and other related 
job training assistance that will promote the economic self- 
sufficiency of individuals located in NAFTA-impacted 
communities. 
(b) MAXIMUM
AMOUNT
OF
GRANT.—The total 
amount provided under a grant to a State under sub-
section (a) for a fiscal year may not exceed the product 
of— 
(1) $1,000,000; and 
(2) the number of NAFTA-impacted commu-
nities located in the State. 
(c) AUTHORIZATION OF APPROPRIATIONS.— 
(1) IN GENERAL.—There are authorized to be 
appropriated to carry out this section $35,000,000 
for each of the fiscal years 2006 through 2012. 
(2) AVAILABILITY.—Amounts appropriated pur-
suant to the authorization of appropriations under 
paragraph (1) are authorized to remain available 
until expended. 
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