I 
114TH CONGRESS 
2D SESSION 
H. R. 4870 
To amend the Internal Revenue Code of 1986 to provide for the establishment 
of Promise Zones. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 23, 2016 
Mr. LARSON of Connecticut (for himself, Mr. ROGERS of Kentucky, Mr. 
COHEN, and Mr. WILSON of South Carolina) 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 
for the establishment of Promise Zones. 
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 ‘‘Promise Zone Job Cre-
ation Act of 2016’’. 
SEC. 2. PROMISE ZONES. 
(a) IN GENERAL.—Subchapter Y of chapter 1 of the 
Internal Revenue Code of 1986 is amended by adding at 
the end the following new part: 
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‘‘PART IV—PROMISE ZONES 
‘‘Sec. 1400V–1. Designation of Promise Zones. 
‘‘Sec. 1400V–2. Promise Zone employment credit. 
‘‘Sec. 1400V–3. Expensing of Promise Zone property. 
‘‘SEC. 1400V–1. DESIGNATION OF PROMISE ZONES. 
‘‘(a) IN GENERAL.—For purposes of this part, the 
term ‘Promise Zone’ means any area— 
‘‘(1) which is nominated by 1 or more local gov-
ernments or Indian Tribes (as defined in section 
4(13) of the Native American Housing Assistance 
and Self-Determination Act of 1996 (25 U.S.C. 
4103(13))) for designation as a Promise Zone (here-
after in this section referred to as a ‘nominated 
area’), 
‘‘(2) which has a continuous boundary, 
‘‘(3) the population of which does not exceed 
200,000, and 
‘‘(4) which the Secretary of Housing and Urban 
Development and the Secretary of Agriculture, act-
ing jointly, designate as a Promise Zone, after con-
sultation with the Secretary of Commerce, the Sec-
retary of Education, the Attorney General, the Sec-
retary of Health and Human Services, the Secretary 
of Labor, the Secretary of the Treasury, the Sec-
retary of Transportation, and other agencies as ap-
propriate. 
‘‘(b) NUMBER OF DESIGNATIONS.— 
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‘‘(1) IN GENERAL.—Not more than 20 nomi-
nated areas may be designated as Promise Zones. 
‘‘(2) NUMBER
OF
DESIGNATIONS
IN
RURAL 
AREAS.—Of the areas designated under paragraph 
(1), six of such areas shall be areas— 
‘‘(A) which are outside of a metropolitan 
statistical area (within the meaning of section 
143(k)(2)(B)), or 
‘‘(B) which are determined by the Sec-
retary of Agriculture to be rural areas. 
‘‘(c) PERIOD OF DESIGNATIONS.— 
‘‘(1) IN GENERAL.—The Secretary of Housing 
and Urban Development and the Secretary of Agri-
culture shall, acting jointly, designate 20 areas as 
Promise Zones before January 1, 2017. 
‘‘(2) EFFECTIVE DATES OF DESIGNATIONS.— 
The designation of any Promise Zone shall take ef-
fect— 
‘‘(A) for purposes of priority consideration 
in Federal grant programs and initiatives 
(other than this part), upon execution of the 
Promise Zone agreement, and 
‘‘(B) for purposes of this part, on January 
1 of the first calendar year beginning after the 
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date of the execution of the Promise Zone 
agreement. 
‘‘(3) TERMINATION
OF
DESIGNATIONS.—The 
designation of any Promise Zone shall end on the 
earlier of— 
‘‘(A) the end of the 10-year period begin-
ning on the date that such designation takes ef-
fect, or 
‘‘(B) the date of the revocation of such 
designation. 
‘‘(4) APPLICATION
TO
CERTAIN
ZONES
AL-
READY DESIGNATED.—In the case of any area des-
ignated as a Promise Zone by the Secretary of 
Housing and Urban Development and the Secretary 
of Agriculture before the date of the enactment of 
this section, such area shall be taken into account as 
a Promise Zone designated under this section and 
shall reduce the number of Promise Zones remaining 
to be designated under paragraph (1). 
‘‘(d) LIMITATIONS ON DESIGNATIONS.—No area may 
be designated under this section unless— 
‘‘(1) the entities nominating the area have the 
authority to nominate the area of designation under 
this section, 
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‘‘(2) such entities provide written assurances 
satisfactory to the Secretary of Housing and Urban 
Development and the Secretary of Agriculture that 
the competitiveness plan described in the application 
under subsection (e) for such area will be imple-
mented and that such entities will provide the Sec-
retary of Housing and Urban Development and the 
Secretary of Agriculture with such data regarding 
the economic conditions of the area (before, during, 
and after the area’s period of designation as a 
Promise Zone) as such Secretary may require, and 
‘‘(3) the Secretary of Housing and Urban De-
velopment and the Secretary of Agriculture deter-
mine that any information furnished is reasonably 
accurate. 
‘‘(e) APPLICATION.—No area may be designated 
under this section unless the application for such designa-
tion— 
‘‘(1) demonstrates that the nominated area sat-
isfies the eligibility criteria described in subsection 
(a), and 
‘‘(2) includes a competitiveness plan which— 
‘‘(A) addresses the need of the nominated 
area to attract investment and jobs and im-
prove educational opportunities, 
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‘‘(B) leverages the nominated area’s eco-
nomic strengths and outlines targeted invest-
ments to develop competitive advantages, 
‘‘(C) demonstrates collaboration across a 
wide range of stakeholders, 
‘‘(D) outlines a strategy which connects 
the nominated area to drivers of regional eco-
nomic growth, and 
‘‘(E) proposes a strategy for focusing on 
increased access to high-quality affordable 
housing and improved public safety. 
‘‘(f) SELECTION CRITERIA.—From among the nomi-
nated areas eligible for designation under this section, the 
Secretary of Housing and Urban Development and the 
Secretary of Agriculture shall designate Promise Zones on 
the basis of— 
‘‘(1) the effectiveness of the competitiveness 
plan submitted under subsection (e) and the assur-
ances made under subsection (d), 
‘‘(2) unemployment rates, poverty rates, house-
hold income, home ownership, labor force participa-
tion, educational attainment, and such other factors 
as the Secretary of Housing and Urban Develop-
ment and the Secretary of Agriculture may identify, 
and 
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‘‘(3) other criteria as determined by the Sec-
retary of Housing and Urban Development and the 
Secretary of Agriculture. 
The Secretary of Housing and Urban Development and 
the Secretary of Agriculture may set minimal standards 
for the levels of unemployment and poverty that must be 
satisfied for designation as a Promise Zone. 
‘‘SEC. 1400V–2. PROMISE ZONE EMPLOYMENT CREDIT. 
‘‘(a) AMOUNT OF CREDIT.—For purposes of section 
38, the amount of the Promise Zone employment credit 
determined under this section with respect to any em-
ployer for any taxable year is the applicable percentage 
of the qualified wages paid or incurred during the calendar 
year which ends with or within such taxable year. 
‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 
this section, the term ‘applicable percentage’ means— 
‘‘(1) in the case of qualified wages described in 
subsection (c)(1)(A), 20 percent, and 
‘‘(2) in the case of qualified wages described in 
subsection (c)(1)(B), 10 percent. 
‘‘(c) QUALIFIED WAGES.—For purposes of this sec-
tion— 
‘‘(1) IN GENERAL.—The term ‘qualified wages’ 
means any wages paid or incurred by an employer 
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for services performed by an employee while such 
employee is— 
‘‘(A) a qualified zone employee, or 
‘‘(B) a qualified resident employee. 
‘‘(2) ONLY FIRST $15,000 OF WAGES PER YEAR 
TAKEN INTO ACCOUNT.—With respect to each quali-
fied employee, the amount of qualified wages taken 
into account for a calendar year shall not exceed 
$15,000. 
‘‘(3) COORDINATION WITH WORK OPPORTUNITY 
CREDIT.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
wages’ shall not include wages taken into ac-
count in determining the credit under section 
51. 
‘‘(B) COORDINATION WITH DOLLAR LIMI-
TATION.—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 de-
termining the credit under section 51. 
‘‘(4) WAGES.—The term ‘wages’ has the mean-
ing given such term by section 1397(a). 
‘‘(d) QUALIFIED EMPLOYEE.—For purposes of this 
section— 
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‘‘(1) QUALIFIED EMPLOYEE.—The term ‘quali-
fied employee’ means any employee who is a quali-
fied zone employee or a qualified resident employee. 
‘‘(2) QUALIFIED ZONE EMPLOYEE.—Except as 
otherwise provided in this subsection, the term 
‘qualified zone 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 Promise 
Zone in a trade or business of the employer, 
and 
‘‘(B) the principal place of abode of such 
employee while performing such services is 
within a Promise Zone. 
‘‘(3) QUALIFIED
RESIDENT
EMPLOYEE.—Ex-
cept as otherwise provided in this subsection, the 
term ‘qualified resident employee’ means, with re-
spect to any period, an employee of an employer if 
the principal place of abode of such employee during 
such period is within a Promise Zone, but substan-
tially all of the services performed during such pe-
riod by such employee for such employer are not 
performed within a Promise Zone in a trade or busi-
ness of the employer. 
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‘‘(4) CERTAIN INDIVIDUALS NOT ELIGIBLE.— 
The terms ‘qualified zone employee’ and ‘qualified 
resident employee’ shall not include any individual 
described in paragraph (2) of section 1396(d)(2) 
(determined after application of paragraph (3) 
thereof). 
‘‘(e) SPECIAL RULES.—Rules similar to the rules of 
section 1397 shall apply for purposes of this section. 
‘‘(f) TAXPAYER REPORTING.—No credit shall be de-
termined under this section with respect to any taxpayer 
for any taxable year unless such taxpayer provides the 
Secretary with such information as the Secretary may re-
quire to allow the Secretary to evaluate the effectiveness 
of the program established under this part. 
‘‘SEC. 1400V–3. EXPENSING OF PROMISE ZONE PROPERTY. 
‘‘(a) IN GENERAL.—A taxpayer may elect to treat the 
cost of any Promise Zone property as an expense which 
is not chargeable to capital account. Any cost so treated 
shall be allowed as a deduction for the taxable year in 
which the Promise Zone property is placed in service. 
‘‘(b) PROMISE ZONE PROPERTY.—For purposes of 
this section— 
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, the term ‘Promise Zone 
property’ means property— 
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‘‘(A) which is— 
‘‘(i) tangible property (to which sec-
tion 168 applies) with an applicable recov-
ery period (within the meaning of section 
168) of 20 years or less, 
‘‘(ii) water utility property described 
in section 168(e)(5), 
‘‘(iii) computer software described in 
section 179(d)(1)(A)(ii), or 
‘‘(iv) qualified leasehold improvement 
property (as defined in section 168(e)), 
‘‘(B) which is acquired by purchase (as de-
fined in section 179(d)(2)) for use in the active 
conduct of a trade or business, and 
‘‘(C) which is originally placed in service 
by the taxpayer in a Promise Zone. 
‘‘(2) EXCEPTION
FOR
CERTAIN
PROPERTY.— 
Such term shall not include any property to which 
section 168(g) applies. 
‘‘(c) ELECTION.—An election under this section shall 
be made under rules similar to the rules of section 179(c). 
‘‘(d) COORDINATION WITH SECTION 179.—For pur-
poses of section 179, Promise Zone property shall not be 
treated as section 179 property. 
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‘‘(e) APPLICATION OF OTHER RULES.—Rules similar 
to the rules of paragraphs (3), (4), (5), (7), (9), and (10) 
of section 179(d) shall apply for purposes of this section. 
‘‘(f) TAXPAYER REPORTING.—This section shall not 
apply with respect to any taxpayer for any taxable year 
unless such taxpayer provides the Secretary with such in-
formation as the Secretary may require to allow the Sec-
retary to evaluate the effectiveness of the program estab-
lished under this part.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 38(b) of such Code is amended by 
striking ‘‘plus’’ at the end of paragraph (35), by 
striking the period at the end of paragraph (36) and 
inserting ‘‘, plus’’, and by adding at the end the fol-
lowing new paragraph: 
‘‘(37) the Promise Zone employment credit de-
termined under section 1400V–2.’’. 
(2) The table of parts for subchapter Y of chap-
ter 1 of such Code is amended by adding at the end 
the following new item: 
‘‘PART IV. PROMISE ZONES’’. 
(c) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall take effect on the date of the en-
actment of this Act. 
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(2) PROMISE
ZONE
EMPLOYMENT
CREDIT.— 
Section 1400V–2 of the Internal Revenue Code of 
1986, as added by this section, shall apply to wages 
paid after the date of the enactment of this Act, in 
taxable years ending after such date. 
(3) EXPENSING
OF
PROMISE
ZONE
PROP-
ERTY.—Section 1400V–3 of such Code, as so added, 
shall apply to property placed in service after the 
date of the enactment of this Act, in taxable years 
ending after such date. 
Æ 
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