I
105TH CONGRESS
1ST SESSION
H. R. 2995
To amend the Internal Revenue Code of 1986 to allow tax-exempt organiza-
tions (other than governmental units) a credit against employment taxes
in an amount equivalent to the work opportunity credit allowable to
taxable employers, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
NOVEMBER 9, 1997
Mrs. JOHNSON of Connecticut (for herself and Mrs. LOWEY) 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 allow tax-
exempt organizations (other than governmental units)
a credit against employment taxes in an amount equiva-
lent to the work opportunity credit allowable to taxable
employers, and for other purposes.
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 ‘‘Community Employ-
ment Partnership Act of 1997’’.
SEC. 2. TREATMENT OF WORK OPPORTUNITY WAGES AS
PAYMENT OF EMPLOYMENT TAX LIABILITY.
(a) IN GENERAL.—Chapter 25 of the Internal Reve-
nue Code of 1986 (relating to general provisions relating
to employment taxes) is amended by inserting after sec-
tion 3510 the following new section:
‘‘SEC. 3511. TREATMENT OF WORK OPPORTUNITY WAGES
AS PAYMENT OF EMPLOYMENT TAX LIABIL-
ITY.
‘‘(a) GENERAL RULE.—For purposes of this title, the
amount equal to the work opportunity credit amount with
respect to any wages paid for any calendar quarter by an
eligible tax-exempt employer shall be treated as a payment
by such employer of such employer’s employment tax li-
ability for such calendar quarter.
‘‘(b) WORK OPPORTUNITY CREDIT AMOUNT.—For
purposes of this section, the work opportunity credit
amount for any calendar quarter is the amount of the
credit determined under section 51 (relating to work op-
portunity credit) in accordance with the following:
‘‘(1) APPLICABLE PERCENTAGES.—
‘‘(A) INDIVIDUALS PERFORMING AT LEAST
400 HOURS OF SERVICES.—In the case of an in-
dividual who has completed at least 400 hours
of services performed for the eligible tax-exempt
employer, subsection (a) of section 51 shall be
applied by substituting ‘30 percent’ for ‘40 per-
cent’.
‘‘(B) INDIVIDUALS
PERFORMING
FEWER
THAN 400 HOURS OF SERVICES.—In the case of
an individual who has completed at least 120
hours, but less than 400 hours, of services per-
formed for the eligible tax-exempt employer,
subsection (a) of section 51 shall be applied by
substituting ‘20 percent’ for ‘40 percent’.
‘‘(C) DENIAL OF CREDIT FOR INDIVIDUALS
PERFORMING
FEWER
THAN
120
HOURS
OF
SERVICES.—No wages shall be taken into ac-
count for purposes of this section with respect
to any individual unless such individual has
completed at least 120 hours of services per-
formed for the employer.
‘‘(D) QUARTERLY ESTIMATE OF ANNUAL
HOURS OF SERVICES TO BE PERFORMED.—For
purposes of subparagraphs (A), (B), and (C), in
lieu of the hours of services actually performed
by an individual during any of the first 3 quar-
ters of a calendar year, an employer may make
an estimate of the hours of services an individ-
ual is reasonably expected to perform for the
employer in such calendar year. The employer
shall adjust the deemed payments in accordance
with subsection (c) for the last quarter of such
calendar year to reflect the hours of services ac-
tually performed by such individual in such cal-
endar year.
‘‘(2) ELIGIBLE TAX-EXEMPT EMPLOYER.—The
term ‘eligible tax-exempt employer’ means any orga-
nization which is exempt from tax under subtitle A
other than—
‘‘(A) any governmental unit, and
‘‘(B) any agency or instrumentality of a
governmental unit.
‘‘(c) COORDINATION WITH DEPOSITORY REQUIRE-
MENTS.—
‘‘(1) IN GENERAL.—Any employer who is enti-
tled to treat any amount as a payment under sub-
section (a) for any calendar quarter may reduce, in
such manner as the Secretary may by regulations
prescribe, by a like amount, the amount otherwise
required to be deposited during such quarter by rea-
son of the employment tax liability of such employer.
‘‘(2) 
QUARTERLY
DETERMINATIONS.—The
amount of reduction permitted under paragraph (1)
for any calendar quarter shall be based on a sepa-
rate estimate for such quarter of the amount of
deemed payments to which the employer reasonably
expects to be entitled under subsection (a) for the
calendar year which includes such quarter and shall
be properly adjusted (under regulations prescribed
by the Secretary) to reflect the amount by which
prior reductions under subsection (a) during such
calendar year were in excess of, or less than, the
amounts which would be proper under such esti-
mate.
‘‘(3) YEAR-END ADJUSTMENTS.—
‘‘(A) EXCESS OF DEEMED PAYMENTS AL-
LOWABLE
OVER
DEPOSITORY
BENEFIT
CLAIMED.—If the amount of deemed payments
to which an employer is entitled under sub-
section (a) for any calendar year exceeds the
amount claimed by the employer under para-
graph (1) during such year, such excess shall be
treated for purposes of this title as an overpay-
ment made by such employer. For purposes of
determining interest, such overpayment shall be
treated as made on January 31 of the following
calendar year.
‘‘(B) DEPOSITORY BENEFIT CLAIMED EX-
CEEDS DEEMED PAYMENT ALLOWABLE.—If the
amount claimed by the employer under para-
graph (1) during the calendar year exceeds the
amount of deemed payments to which such em-
ployer is entitled under subsection (a) for such
year, such excess shall be treated for purposes
of this title as an underpayment of the tax im-
posed by this chapter for such calendar year.
For purposes of determining interest, such
underpayment shall be allocated ratably among
the calendar quarters in such year (or in such
other manner as the Secretary may by regula-
tions prescribe).
‘‘(d) PAYMENT TREATED AS MADE ON DUE DATE.—
Notwithstanding subsection (c), for purposes of determin-
ing interest, any deemed payment under subsection (a) for
any calendar quarter shall be treated as made on the due
date for the return for such quarter.
‘‘(e) EMPLOYMENT TAX LIABILITY.—For purposes
of this section, the term ‘employment tax liability’ means
liability for the taxes imposed by chapters 21 and 24.
‘‘(f) SOCIAL SECURITY TRUST FUNDS.—This section
shall not be construed to affect amounts appropriated
under sections 201 and 1817(a) of the Social Security
Act.’’
(b) CLERICAL AMENDMENT.—The table of sections
for chapter 25 of such Code is amended by adding at the
end the following new item:
‘‘Sec. 3511. Treatment of work opportunity wages as payment of
employment tax liability.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to individuals who begin work for
the employer after the date of the enactment of this Act.
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