I 
112TH CONGRESS 
1ST SESSION H. R. 2742 
To amend the Internal Revenue Code of 1986 to provide tax incentives 
to employers for providing training programs for jobs specific to the 
needs of the employers. 
IN THE HOUSE OF REPRESENTATIVES 
AUGUST 1, 2011 
Ms. FUDGE 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 
tax incentives to employers for providing training pro-
grams for jobs specific to the needs of the employers. 
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 ‘‘Hire, Train, Retain 
Act of 2011’’. 
SEC. 2. FINDINGS. 
The Congress finds the following: 
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(1) As of June 2011 9.2 percent of all Ameri-
cans eligible to work were unemployed, or 14.1 mil-
lion people. 
(2) There are millions of workers who were dis-
placed during the recent ‘‘Great Recession’’ who 
need to be re-trained so that they can re-integrate 
into the workforce. According to the bi-annual Dis-
placed Workers Survey, the unemployment rate was 
4.5 percent in 2007 before spiking to nearly 10 per-
cent in 2010. 
(3) Often overlooked are the 982,000 discour-
aged workers, people who are not looking for work 
because they do not believe that they are qualified 
for any available jobs. 
(4) Paradoxically, there are enough jobs avail-
able to employ just over 20 percent of these per-
sons—there were 3.0 million job openings on the 
last business day of May 2011 according to the Bu-
reau of Labor Statistics. 
(5) The disconnect is that many people search-
ing for work lack the job-specific skills that they 
need to be competitive for many of these vacancies. 
Specifically, technology is outpacing the country’s 
current approach to job-related education and train-
ing. The difference between white collar and blue 
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collar jobs is fading because traditionally ‘‘blue col-
lar jobs’’ are more specialized than ever before. 
SEC. 3. PAYROLL TAX FORGIVENESS FOR HIRING AND 
TRAINING WORKERS. 
(a) IN GENERAL.—Section 3111 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new subsection: 
‘‘(e) SPECIAL EXEMPTION FOR CERTAIN INDIVID-
UALS HIRED IN BETWEEN 2011 AND 2015.— 
‘‘(1) IN GENERAL.—During the period begin-
ning on the day after the date of the enactment of 
this subsection and ending on December 31, 2015, 
subsection (a) shall not apply to wages paid by a 
qualified employer with respect to employment 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— 
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‘‘(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 that provides a qualified job training 
program for or on behalf its employees. 
‘‘(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 
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 the date of the enactment of this 
subsection and before January 1, 2016, 
‘‘(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, 
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‘‘(C) certifies by signed affidavit, under 
penalties of perjury, that such individual has 
satisfactorily completed a qualified job training 
program, 
‘‘(D) 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 
‘‘(E) is not an individual described in sec-
tion 51(i)(1) (applied by substituting ‘qualified 
employer’ for ‘taxpayer’ each place it appears). 
‘‘(4) QUALIFIED JOB TRAINING PROGRAM.—For 
purposes of this subsection, the term ‘qualified job 
training program’ means— 
‘‘(A) a program provided by a qualified 
employer that is in-house and is specific train-
ing for available jobs at such employer, or 
‘‘(B) a program under which a qualified 
employer partners with a public institution of 
higher education (as defined in section 101(b) 
of the Higher Education Act of 1965) to pro-
vide specific training for available jobs at such 
employer. 
‘‘(5) ELECTION.—A qualified employer may 
elect to have this subsection not apply. Such election 
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shall be made in such manner as the Secretary may 
require.’’. 
(b) COORDINATION
WITH
WORK
OPPORTUNITY 
CREDIT.—Section 51(c) of such Code is amended by add-
ing at the end the following new paragraph: 
‘‘(6) COORDINATION WITH PAYROLL TAX FOR-
GIVENESS FOR HIRING AND TRAINING WORKERS.— 
The term ‘wages’ shall not include any amount paid 
or incurred to a qualified individual (as defined in 
section 3111(e)(3)) during the 1-year period begin-
ning on the hiring date of such individual by a quali-
fied employer (as defined in section 3111(e)) unless 
such qualified employer makes an election not to 
have section 3111(e) 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-
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tent possible the transfers that would have occurred to 
such Trust Fund had such amendments not been enacted. 
(d) 
APPLICATION
TO
RAILROAD
RETIREMENT 
TAXES.— 
(1) IN GENERAL.—Section 3221 of the Internal 
Revenue Code of 1986 is amended by redesignating 
subsection (d) as subsection (e) and by inserting 
after subsection (c) the following new subsection: 
‘‘(d) SPECIAL RATE
FOR CERTAIN INDIVIDUALS 
HIRED IN BETWEEN 2011 AND 2015.— 
‘‘(1) IN GENERAL.—In the case of compensa-
tion paid by a qualified employer during the period 
beginning on the day after the date of the enactment 
of this subsection and ending on December 31, 
2015, with respect to having a qualified individual in 
the employer’s employ for services rendered to such 
qualified employer, the applicable percentage under 
subsection (a) shall be equal to the rate of tax in ef-
fect under section 3111(b) for the calendar year. 
‘‘(2) QUALIFIED EMPLOYER.—For purposes of 
this subsection, the term ‘qualified employer’ means 
any employer other than the United States, any 
State, or any political subdivision thereof, or any in-
strumentality of the foregoing that provides a quali-
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fied job training program for or on behalf its em-
ployees. 
‘‘(3) QUALIFIED INDIVIDUAL.—For purposes of 
this subsection, the term ‘qualified individual’ means 
any individual who— 
‘‘(A) begins employment with a qualified 
employer after the date of the enactment of this 
subsection and before January 1, 2016, 
‘‘(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) certifies by signed affidavit, under 
penalties of perjury, that such individual has 
satisfactorily completed a qualified job training 
program, 
‘‘(D) 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 
‘‘(E) is not an individual described in sec-
tion 51(i)(1) (applied by substituting ‘qualified 
employer’ for ‘taxpayer’ each place it appears). 
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‘‘(4) QUALIFIED JOB TRAINING PROGRAM.—For 
purposes of this subsection, the term ‘qualified job 
training program’ means— 
‘‘(A) a program provided by a qualified 
employer that is in-house and is specific train-
ing for available jobs at such employer, or 
‘‘(B) a program under which a qualified 
employer partners with a public institution of 
higher education (as defined in section 101(b) 
of the Higher Education Act of 1965) to pro-
vide specific training for available jobs at such 
employer. 
‘‘(5) 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.’’. 
(2) TRANSFERS TO SOCIAL SECURITY EQUIVA-
LENT BENEFIT ACCOUNT.—There are hereby appro-
priated to the Social Security Equivalent Benefit Ac-
count established under section 15A(a) of the Rail-
road Retirement Act of 1974 (45 U.S.C. 231n–1(a)) 
amounts equal to the reduction in revenues to the 
Treasury by reason of the amendments made by 
paragraph (1). Amounts appropriated by the pre-
ceding sentence shall be transferred from the general 
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fund at such times and in such manner as to rep-
licate to the extent possible the transfers which 
would have occurred to such Account had such 
amendments not been enacted. 
(e) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this subsection 
shall apply to wages paid after the date of the enact-
ment of this Act. 
(2) 
RAILROAD
RETIREMENT
TAXES.—The 
amendments made by subsection (d) shall apply to 
compensation paid after the date of the enactment 
of this Act. 
SEC. 4. BUSINESS CREDIT FOR RETENTION OF CERTAIN 
NEWLY HIRED INDIVIDUALS IN 2011. 
(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, with respect to each retained 
worker with respect to which subsection (b)(2) is first sat-
isfied during such taxable year, by the lesser of— 
(1) $1,000, or 
(2) 6.2 percent of the wages (as defined in sec-
tion 3401(a) of such Code) paid by the taxpayer to 
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such retained worker during the 52 consecutive week 
period referred to in subsection (b)(2). 
(b) RETAINED WORKER.—For purposes of this sec-
tion, the term ‘‘retained worker’’ means any qualified indi-
vidual (as defined in section 3111(e)(3) or section 
3221(d)(3) of the Internal Revenue Code of 1986)— 
(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 (as defined in section 3401(a)) 
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. 
(c) EMPLOYER STAFFING AND PAYROLL MUST IN-
CREASE.—No amount shall be allowed as a credit under 
this section to an employer for a taxable year unless the 
employer has a net increase for the taxable year in those 
who work at least 20 hours per week for the employer 
during the taxable year and the amount of its payroll dur-
ing the taxable year. 
(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 
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under this section may be carried to a taxable year begin-
ning before the date of the enactment of this section. 
(e) TREATMENT OF POSSESSIONS.— 
(1) PAYMENTS TO POSSESSIONS.— 
(A) MIRROR
CODE
POSSESSIONS.—The 
Secretary of the Treasury shall pay to each pos-
session of the United States with a mirror code 
tax system amounts equal to the loss to that 
possession by reason of the application of this 
section (other than this subsection). Such 
amounts shall be determined by the Secretary 
of the Treasury based on information provided 
by the government of the respective possession. 
(B) OTHER POSSESSIONS.—The Secretary 
of the Treasury shall pay to each possession of 
the United States which does not have a mirror 
code tax system amounts estimated by the Sec-
retary of the Treasury as being equal to the ag-
gregate benefits that would have been provided 
to residents of such possession by reason of the 
application of this section (other than this sub-
section) if a mirror code tax system had been 
in effect in such possession. The preceding sen-
tence shall not apply with respect to any posses-
sion of the United States unless such possession 
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has a plan, which has been approved by the 
Secretary of the Treasury, under which such 
possession will promptly distribute such pay-
ments to the residents of such possession. 
(2) COORDINATION
WITH
CREDIT
ALLOWED 
AGAINST UNITED STATES INCOME TAXES.—No in-
crease in the credit determined under section 38(b) 
of the Internal Revenue Code of 1986 against 
United States income taxes for any taxable year de-
termined under subsection (a) shall be taken into ac-
count with respect to any person— 
(A) to whom a credit is allowed against 
taxes imposed by the possession by reason of 
this section for such taxable year, or 
(B) who is eligible for a payment under a 
plan described in paragraph (1)(B) with respect 
to such taxable year. 
(3) DEFINITIONS AND SPECIAL RULES.— 
(A) 
POSSESSION
OF
THE
UNITED 
STATES.—For purposes of this subsection, the 
term ‘‘possession of the United States’’ includes 
the Commonwealth of Puerto Rico and the 
Commonwealth of the Northern Mariana Is-
lands. 
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(B) MIRROR CODE TAX SYSTEM.—For pur-
poses of this subsection, the term ‘‘mirror code 
tax system’’ means, with respect to any posses-
sion of the United States, the income tax sys-
tem of such possession if the income tax liabil-
ity of the residents of such possession under 
such system is determined by reference to the 
income tax laws of the United States as if such 
possession were the United States. 
(C) TREATMENT OF PAYMENTS.—For pur-
poses of section 1324(b)(2) of title 31, United 
States Code, rules similar to the rules of section 
1001(b)(3)(C) of the American Recovery and 
Reinvestment Tax Act of 2009 shall apply. 
Æ 
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