I
103D CONGRESS
1ST SESSION
H. R. 1320
To amend the Internal Revenue Code of 1986 to exclude certain employee
productivity awards from gross income.
IN THE HOUSE OF REPRESENTATIVES
MARCH 11, 1993
Mr. GOODLING 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 exclude
certain employee productivity awards from gross income.
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 ‘‘American Business
Productivity and Quality Enhancement Act of 1993’’.
SEC. 2. EXCLUSION FROM GROSS INCOME FOR CERTAIN
EMPLOYEE PRODUCTIVITY AWARDS.
(a) IN GENERAL.—Section 74 of the Internal Reve-
nue Code of 1986 (relating to prizes and awards) is
amended by adding at the end thereof the following new
subsection:
‘‘(d) EXCEPTION FOR CERTAIN EMPLOYEE PRODUC-
TIVITY AWARDS.—
‘‘(1) IN GENERAL.—Gross income shall not in-
clude the value of an employee productivity award
received by the taxpayer if the cost to the employer
for such award does not exceed—
‘‘(A) $500, reduced by
‘‘(B) the cost to the employer for all other
employee productivity awards previously made
to the taxpayer during the taxable year of the
employer in which such award was made.
‘‘(2) AWARD EXCEEDING COST LIMITATION.—If
the cost to the employer of the employee productivity
award received by the taxpayer exceeds the limita-
tion of paragraph (1), then gross income includes
the greater of—
‘‘(A) the portion of the cost to the em-
ployer in excess of such limitation (but not in
excess of the value of the award), or
‘‘(B) the amount by which the value of the
award exceeds such limitation.
The remaining portion of the value of such award
shall not be included in the gross income of the
recipient.
‘‘(3) EMPLOYEE
PRODUCTIVITY
AWARD.—For
purposes of this subsection, the term ‘employee pro-
ductivity award’ means any property which is—
‘‘(A) transferred by an employer to an em-
ployee for productivity or quality achievement,
‘‘(B) awarded under a written plan or pro-
gram of the taxpayer which does not discrimi-
nate in favor of highly compensated employees
(within the meaning of section 414(q)),
‘‘(C) awarded as part of a meaningful
presentation,
‘‘(D) awarded as a result of employee ac-
tivity which resulted in—
‘‘(i) increased productivity per worker,
‘‘(ii) increased competitiveness in the
marketability of any product of the em-
ployer, or
‘‘(iii) an improvement in, or increased
efficiency in producing, any product of the
employer, and
‘‘(E) awarded under conditions and cir-
cumstances that do not create a significant like-
lihood of the payment of disguised compensa-
tion.
Such term does not include any award made during
any taxable year of the employer which was made
after employee productivity awards (other than
awards excludable under section 132(e)(1)) have
previously been made during such taxable year to
more than 10 percent of the employees of the
taxpayer.’’
(b) EMPLOYMENT TAX AND WITHHOLDING EXCLU-
SION.—Sections 3121(a)(20), 3231(e)(5), 3306(b)(16),
and 3401(a)(19) of such Code are each amended by strik-
ing ‘‘74(c)’’ and inserting ‘‘74 (c) or (d)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to awards made on or after Janu-
ary 1, 1993.
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