I 
111TH CONGRESS 
2D SESSION 
H. R. 4777 
To amend the Internal Revenue Code of 1986 to provide an exemption 
for employer payroll taxes during 2010 for wages with respect to the 
employment of new hires and to provide a credit for retaining employees. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 4, 2010 
Mr. OWENS 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 provide 
an exemption for employer payroll taxes during 2010 
for wages with respect to the employment of new hires 
and to provide a credit for retaining employees. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. PAYROLL TAX FORGIVENESS FOR HIRING UN-
EMPLOYED WORKERS. 
(a) IN GENERAL.—Section 3111 is amended by add-
ing at the end the following new subsection: 
‘‘(d) SPECIAL EXEMPTION FOR CERTAIN INDIVID-
UALS HIRED IN 2010.— 
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‘‘(1) IN
GENERAL.—Subsection (a) shall not 
apply to wages paid by a qualified employer with re-
spect to employment during the period beginning on 
the day after the date of the enactment of this sub-
section and ending on December 31, 2010, of any 
qualified individual for services performed— 
‘‘(A) in a trade or business of such quali-
fied employer, or 
‘‘(B) in the case of a qualified employer ex-
empt from tax under section 501(a), in further-
ance of the activities related to the purpose or 
function constituting the basis of the employer’s 
exemption under section 501. 
‘‘(2) QUALIFIED EMPLOYER.—For purposes of 
this subsection— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
employer’ means any employer other than the 
United States, any State, or any political sub-
division thereof, or any instrumentality of the 
foregoing. 
‘‘(B) TREATMENT
OF
EMPLOYEES
OF 
POST-SECONDARY
EDUCATIONAL
INSTITU-
TIONS.—Notwithstanding 
subparagraph 
(A), 
the term ‘qualified employer’ includes any em-
ployer which is a public institution of higher 
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education (as defined in section 101(b) of the 
Higher Education Act of 1965). 
‘‘(3) QUALIFIED INDIVIDUAL.—For purposes of 
this subsection, the term ‘qualified individual’ means 
any individual who— 
‘‘(A) begins employment with a qualified 
employer after February 3, 2010, and before 
January 1, 2011, 
‘‘(B) certifies by signed affidavit, under 
penalties of perjury, that such individual has 
not been employed for more than 40 hours dur-
ing the 60-day period ending on the date such 
individual begins such employment, 
‘‘(C) is not employed by the qualified em-
ployer to replace another employee of such em-
ployer unless such other employee separated 
from employment voluntarily or for cause, and 
‘‘(D) is not an individual described in sec-
tion 51(i)(1) (applied by substituting ‘qualified 
employer’ for ‘taxpayer’ each place it appears). 
‘‘(4) ELECTION.—A qualified employer may 
elect to have this subsection not apply. Such election 
shall be made in such manner as the Secretary may 
require.’’. 
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(b) COORDINATION
WITH
WORK
OPPORTUNITY 
CREDIT.—Section 51(c) is amended by adding at the end 
the following new paragraph: 
‘‘(5) COORDINATION WITH PAYROLL TAX FOR-
GIVENESS.—The term ‘wages’ shall not include any 
amount paid or incurred to a qualified individual (as 
defined in section 3111(d)(3)) during the 1-year pe-
riod beginning on the hiring date of such individual 
by a qualified employer (as defined in section 
3111(d)) unless such qualified employer makes an 
election not to have section 3111(d) apply.’’. 
(c) TRANSFERS TO FEDERAL OLD-AGE AND SUR-
VIVORS INSURANCE TRUST FUND.—There are hereby ap-
propriated to the Federal Old-Age and Survivors Trust 
Fund and the Federal Disability Insurance Trust Fund 
established under section 201 of the Social Security Act 
(42 U.S.C. 401) amounts equal to the reduction in reve-
nues to the Treasury by reason of the amendments made 
by subsection (a). Amounts appropriated by the preceding 
sentence shall be transferred from the general fund at 
such times and in such manner as to replicate to the ex-
tent possible the transfers which would have occurred to 
such Trust Fund had such amendments not been enacted. 
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(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to wages paid after the date of 
the enactment of this Act. 
SEC. 2. BUSINESS CREDIT FOR RETENTION OF CERTAIN 
NEWLY HIRED INDIVIDUALS IN 2010. 
(a) IN GENERAL.—In the case of any taxable year 
ending after the date of the enactment of this Act, the 
current year business credit determined under section 
38(b) of the Internal Revenue Code of 1986 for such tax-
able year shall be increased by an amount equal to the 
product of— 
(1) $1,000, and 
(2) the number of retained workers with respect 
to which subsection (b)(2) is first satisfied during 
such taxable year. 
(b) LIMITATION.—The increase determined under 
subsection (a) with respect to any retained worker shall 
not exceed an amount equal to 4 percent of the wages (as 
defined in section 3401(a) of the Internal Revenue Code 
of 1986) with respect to such retained worker for the 52 
consecutive week period described in subsection (c)(2). 
(c) RETAINED WORKER.—For purposes of this sec-
tion, the term ‘‘retained worker’’ means any qualified indi-
vidual (as defined in section 3111(d)(3) of the Internal 
Revenue Code of 1986)— 
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(1) who was employed by the taxpayer on any 
date during the taxable year, 
(2) who was so employed by the taxpayer for a 
period of not less than 52 consecutive weeks, and 
(3) whose wages for such employment during 
the last 26 weeks of such period equaled at least 80 
percent of such wages for the first 26 weeks of such 
period. 
(d) LIMITATION ON CARRYBACKS.—No portion of the 
unused business credit under section 38 of the Internal 
Revenue Code of 1986 for any taxable year which is attrib-
utable to the increase in the current year business credit 
under this section may be carried to a taxable year begin-
ning before the date of the enactment of this section. 
Æ 
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