I 
110TH CONGRESS 
2D SESSION 
H. R. 7155 
To amend the Internal Revenue Code of 1986 to protect the financial stability 
of activated members of the Ready-Reserve and National Guard while 
serving abroad. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 26, 2008 
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 protect 
the financial stability of activated members of the Ready- 
Reserve and National Guard while serving abroad. 
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 ‘‘Guard and Reserve 
Financial Stability Act of 2008’’. 
SEC. 2. READY RESERVE-NATIONAL GUARD EMPLOYEE 
CREDIT 
AND 
READY 
RESERVE-NATIONAL 
GUARD REPLACEMENT EMPLOYEE CREDIT. 
(a) READY RESERVE-NATIONAL GUARD CREDIT.— 
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(1) IN GENERAL.—Subpart D of part IV of 
subchapter A of chapter 1 of the Internal Revenue 
Code of 1986 (relating to business-related credits) is 
amended by inserting after section 45P the following 
new section: 
‘‘SEC. 45Q. READY RESERVE-NATIONAL GUARD EMPLOYEE 
CREDIT. 
‘‘(a) GENERAL RULE.—For purposes of section 38, 
in the case of an eligible taxpayer, the Ready Reserve-Na-
tional Guard employee credit determined under this sec-
tion for any taxable year with respect to each Ready Re-
serve-National Guard employee of such taxpayer is an 
amount equal to 50 percent of the lesser of— 
‘‘(1) the actual compensation amount with re-
spect to such employee for such taxable year, or 
‘‘(2) $30,000. 
‘‘(b) 
DEFINITION
OF
ACTUAL
COMPENSATION 
AMOUNT.—For purposes of this section, the term ‘actual 
compensation amount’ means the amount of compensation 
paid or incurred by an eligible taxpayer with respect to 
a Ready Reserve-National Guard employee on any day 
when the employee was absent from employment for the 
purpose of performing qualified active duty. 
‘‘(c) LIMITATIONS.—No credit shall be allowed with 
respect to any day that a Ready Reserve-National Guard 
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employee who performs qualified active duty was not 
scheduled to work (for reason other than to participate 
in qualified active duty). 
‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section— 
‘‘(1) ELIGIBLE TAXPAYER.— 
‘‘(A) IN GENERAL.—The term ‘eligible tax-
payer’ means a small business employer. 
‘‘(B) SMALL BUSINESS EMPLOYER.— 
‘‘(i) IN GENERAL.—The term ‘small 
business employer’ means, with respect to 
any taxable year, any employer who em-
ployed an average of 50 or fewer employees 
on business days during such taxable year. 
‘‘(ii) 
CONTROLLED
GROUPS.—For 
purposes of clause (i), all persons treated 
as a single employer under subsection (b), 
(c), (m), or (o) of section 414 shall be 
treated as a single employer. 
‘‘(2) QUALIFIED
ACTIVE
DUTY.—The term 
‘qualified active duty’ means— 
‘‘(A) active duty under an order or call for 
a period in excess of 179 days or for an indefi-
nite period, other than the training duty speci-
fied in section 10147 of title 10, United States 
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Code (relating to training requirements for the 
Ready Reserve), or section 502(a) of title 32, 
United States Code (relating to required drills 
and field exercises for the National Guard), in 
connection with which an employee is entitled to 
reemployment rights and other benefits or to a 
leave of absence from employment under chap-
ter 43 of title 38, United States Code, and 
‘‘(B) hospitalization incident to such duty. 
‘‘(3) COMPENSATION.—The term ‘compensa-
tion’ means any remuneration for employment, 
whether in cash or in kind, which is paid or incurred 
by a taxpayer and which is deductible from the tax-
payer’s gross income under section 162(a)(1). 
‘‘(4) READY
RESERVE-NATIONAL
GUARD
EM-
PLOYEE.—The term ‘Ready Reserve-National Guard 
employee’ means an employee who is a member of 
the Ready Reserve of a reserve component of an 
Armed Force of the United States as described in 
sections 10142 and 10101 of title 10, United States 
Code. 
‘‘(5) CERTAIN RULES TO APPLY.—Rules similar 
to the rules of section 52 shall apply. 
‘‘(e) TERMINATION.—This section shall not apply to 
any amount paid or incurred after December 31, 2009.’’. 
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(2) CREDIT TO BE PART OF GENERAL BUSI-
NESS CREDIT.—Subsection (b) of section 38 of the 
Internal Revenue Code of 1986 (relating to general 
business credit) is amended by striking ‘‘plus’’ at the 
end of paragraph (32), by striking the period at the 
end of paragraph (33) and inserting ‘‘, plus’’, and 
by adding at the end the following: 
‘‘(34) the Ready Reserve-National Guard em-
ployee credit determined under section 45Q(a).’’. 
(3) DENIAL
OF
DOUBLE
BENEFIT.—Section 
280C(a) of the Internal Revenue Code of 1986 (re-
lating to rule for employment credits) is amended by 
inserting ‘‘45Q(a),’’ after ‘‘45P(a),’’. 
(4) CONFORMING AMENDMENT.—The table of 
sections for subpart D of part IV of subchapter A 
of chapter 1 of the Internal Revenue Code of 1986 
is amended by inserting after the item relating to 
section 45P the following: 
‘‘Sec. 45Q. Ready Reserve-National Guard employee credit.’’. 
(5) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to amounts paid or in-
curred after September 30, 2008, in taxable years 
ending after such date. 
(b) READY RESERVE-NATIONAL GUARD REPLACE-
MENT EMPLOYEE CREDIT.— 
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(1) IN
GENERAL.—Paragraph (1) of section 
51(d) of the Internal Revenue Code of 1986 (relat-
ing to members of targeted groups) is amended by 
striking ‘‘or’’ at the end of subparagraph (H), by 
striking the period at the end of subparagraph (I) 
and inserting ‘‘, or’’ and by adding at the end the 
following new subparagraph: 
‘‘(J) a qualified replacement employee.’’. 
(2) QUALIFIED
REPLACEMENT
EMPLOYEE.— 
Section 51(d) of the Internal Revenue Code of 1986 
is amended by redesignating paragraphs (11), (12), 
and (13) as paragraphs (12), (13), and (14), respec-
tively, and by inserting after paragraph (10) the fol-
lowing new paragraph: 
‘‘(11) QUALIFIED REPLACEMENT EMPLOYEE.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
replacement employee’ means an individual who 
is certified by the designated local agency as 
being hired by an eligible taxpayer to replace a 
Ready Reserve-National Guard employee of 
such taxpayer, but only with respect to the pe-
riod during which such Ready Reserve-National 
Guard employee participates in qualified active 
duty, including time spent in travel status. 
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‘‘(B) GENERAL DEFINITIONS AND SPECIAL 
RULES.—For purposes of this paragraph— 
‘‘(i) ELIGIBLE TAXPAYER.—The term 
‘eligible taxpayer’ means a small business 
employer. 
‘‘(ii) SMALL BUSINESS EMPLOYER.— 
‘‘(I) IN
GENERAL.—The term 
‘small business employer’ means, with 
respect to any taxable year, any em-
ployer who employed an average of 50 
or fewer employees on business days 
during such taxable year. 
‘‘(II) CONTROLLED
GROUPS.— 
For purposes of subclause (I), all per-
sons treated as a single employer 
under subsection (b), (c), (m), or (o) 
of section 414 shall be treated as a 
single employer. 
‘‘(iii) 
READY
RESERVE-NATIONAL 
GUARD EMPLOYEE.—The term ‘Ready Re-
serve-National Guard employee’ has the 
meaning given such term by section 
45Q(d)(3). 
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‘‘(iv) QUALIFIED ACTIVE DUTY.—The 
term ‘qualified active duty’ has the mean-
ing given such term by section 45Q(d)(1). 
‘‘(C) DISALLOWANCE
FOR
FAILURE
TO 
COMPLY
WITH
EMPLOYMENT
OR
REEMPLOY-
MENT RIGHTS OF MEMBERS OF THE RESERVE 
COMPONENTS OF THE ARMED FORCES OF THE 
UNITED
STATES.—No credit shall be allowed 
under subsection (a) by reason of paragraph 
(1)(J) to a taxpayer for— 
‘‘(i) any taxable year, beginning after 
the date of the enactment of this section, 
in which the taxpayer is under a final 
order, judgment, or other process issued or 
required by a district court of the United 
States under section 4323 of title 38 of the 
United States Code with respect to a viola-
tion of chapter 43 of such title, and 
‘‘(ii) the 2 succeeding taxable years.’’. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to amounts paid or in-
curred to an individual who begins work for the em-
ployer after September 30, 2008. 
(c) STUDY BY GAO.— 
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(1) IN GENERAL.—The Comptroller General of 
the United States shall study the following: 
(A) What, if any, problems exist in recruit-
ing individuals for a reserve component of an 
Armed Force of the United States. 
(B) Whether the credit allowed under sec-
tion 45Q of the Internal Revenue Code of 1986 
(as added by this section) is an effective incen-
tive for the hiring and retention of employees 
who are individuals described in subparagraph 
(A) and whether there exists any compliance 
problems in the administration of such credit. 
(2) REPORT.—The Comptroller General of the 
United States shall report on the results of the 
study required under paragraph (1) to the Com-
mittee on Finance of the Senate and the Committee 
on Ways and Means of the House of Representatives 
before December 1, 2009. 
Æ 
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