I
106TH CONGRESS
1ST SESSION
H. R. 2138
To amend the Internal Revenue Code of 1986 to extend and modify the
credits for businesses operating in Puerto Rico and other possessions
of the United States.
IN THE HOUSE OF REPRESENTATIVES
JUNE 10, 1999
Mr. CRANE (for himself, Mr. RANGEL, Mr. ROMERO-BARCELO´, and Mr.
WELLER) introduced the following bill; which was referred to the Com-
mittee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to extend
and modify the credits for businesses operating in Puerto
Rico and other possessions of the United States.
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 ‘‘Puerto Rico Economic
Activity Credit Improvement Act of 1999’’.
SEC. 2. MODIFICATIONS OF PUERTO RICO ECONOMIC AC-
TIVITY CREDIT.
(a) CREDIT NOT LIMITED
TO EXISTING CLAIM-
ANTS.—Subsection (a) of section 30A of the Internal Rev-
enue Code of 1986 is amended by striking paragraphs (2)
and (3) and inserting the following new paragraphs:
‘‘(2) QUALIFIED
DOMESTIC
CORPORATION.—
For purposes of paragraph (1), the term ‘qualified
domestic corporation’ means a domestic corporation
with respect to which section 936(a)(4)(B) does not
apply for the taxable year.
‘‘(3) SEPARATE APPLICATION.—For purposes of
determining the amount of the credit allowed under
this section, this section (and so much of section 936
as relates to this section) shall be applied separately
with respect to Puerto Rico.’’
(b) REPEAL
OF
BASE
PERIOD
CAP.—Section
30A(a)(1) of such Code is amended by striking the last
sentence.
(c) APPLICATION
OF CREDIT.—Section 30A(g) of
such Code is amended to read as follows:
‘‘(g) APPLICATION OF SECTION.—
‘‘(1) IN GENERAL.—This section shall apply to
taxable years beginning after December 31, 1995,
and before the termination date.
‘‘(2) TERMINATION
DATE.—For purposes of
paragraph (1)—
‘‘(A) IN GENERAL.—The termination date
is the first day of the 4th calendar year fol-
lowing the close of the first period for which a
certification is issued by the Secretary under
subparagraph (B).
‘‘(B) CERTIFICATION.—
‘‘(i) IN
GENERAL.—The Secretary
shall issue a certification under this sub-
paragraph for the first 3-consecutive cal-
endar year period beginning after Decem-
ber 31, 1999, for which the Secretary de-
termines that Puerto Rico has met the re-
quirements of clause (ii) for each calendar
year within the period.
‘‘(ii) REQUIREMENTS.—The require-
ments of this clause are met with respect
to Puerto Rico for any calendar year if—
‘‘(I) the average monthly rate of
unemployment in Puerto Rico does
not exceed 150 percent of the average
monthly rate of unemployment for the
United States for such year,
‘‘(II) the per capita income of
Puerto Rico is at least 66 percent of
the per capita income of the United
States, and
‘‘(III) the poverty level within
Puerto Rico does not exceed 30 per-
cent.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
SEC. 3. COMPARABLE TREATMENT FOR OTHER CREDITS.
(a) CREDIT NOT LIMITED
TO EXISTING CLAIM-
ANTS.—
(1) Subparagraph (A) of section 936(j)(2) of
the Internal Revenue Code of 1986 is amended to
read as follows:
‘‘(A) ECONOMIC
ACTIVITY
CREDIT.—The
credit determined under subsection (a)(1)(A)—
‘‘(i) with respect to a possession other
than Puerto Rico, and
‘‘(ii) for a taxpayer to which sub-
section (a)(4)(B) does not apply,
shall be allowed for taxable years beginning
after December 31, 1995, and before January
1, 2002.’’
(2) Paragraphs (2)(B)(i) and (8)(A) of section
936(j) of such Code are each amended by striking
‘‘an existing claimant’’ and inserting ‘‘a taxpayer’’.
(and so much of this section as relates to this sub-
section) shall be applied separately with respect to
each possession.’’
(c) APPLICATION OF CREDIT.—
(1) IN GENERAL.—Section 936(j)(3)(A) of such
Code (as amended by subsection (b)) is amended by
striking ‘‘January 1, 2006’’ and inserting ‘‘the ter-
mination date (as defined in paragraph (6))’’.
(2) CERTAIN
OTHER
POSSESSIONS.—Section
936(j)(4)(A) of such Code (as redesignated by sub-
section (b)) is amended by striking ‘‘January 1,
2006’’ and inserting ‘‘the termination date (as de-
fined in paragraph (6))’’.
(3) TERMINATION
DATE.—Section 936(j) of
such Code (as amended by subsection (b)) is amend-
ed by adding at the end the following new para-
graph.
‘‘(6) TERMINATION
DATE.—For purposes of
paragraphs (3)(A) and (4)(A)—
‘‘(A) IN GENERAL.—The termination date
for any possession is the first day of the 4th
calendar year following the close of the first pe-
riod for which a certification is issued by the
Secretary under subparagraph (B).
‘‘(B) CERTIFICATION.—
‘‘(i) IN
GENERAL.—The Secretary
shall issue a certification for a possession
under this subparagraph for the first 3-
consecutive calendar year period beginning
after December 31, 1999, for which the
Secretary determines that the possession
has met the requirements of clause (ii) for
each calendar year within the period.
‘‘(ii) REQUIREMENTS.—The require-
ments of this clause are met with respect
to a possession for any calendar year if—
‘‘(I) the average monthly rate of
unemployment in the possession does
not exceed 150 percent of the average
monthly rate of unemployment for the
United States for such year,
‘‘(II) the per capita income of the
possession is at least 66 percent of
the per capita income of the United
States, and
‘‘(III) the poverty level within the
possession does not exceed 30 per-
cent.’’
(d) ELECTION NOT TO CLAIM REDUCED CREDIT.—
Clause (ii) of section 936(j)(2)(B) of such Code is
amended—
(1) by striking ‘‘1997’’ in the heading and in-
serting ‘‘2005’’, and
(2) by striking ‘‘unless’’ in the text and all that
follows and inserting ‘‘unless it is revoked for a tax-
able year before the taxpayer’s first taxable year be-
ginning in 2006 and applies to the taxable year for
which revoked and all subsequent taxable years.’’
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
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