I
105TH CONGRESS
2D SESSION
H. R. 3643
To amend the Internal Revenue Code of 1986 to increase job creation and
small business expansion and formation in economically distressed United
States insular areas.
IN THE HOUSE OF REPRESENTATIVES
APRIL 1, 1998
Ms. CHRISTIAN-GREEN (for herself and Mr. UNDERWOOD) 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 increase
job creation and small business expansion and formation
in economically distressed United States insular areas.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. UNITED STATES INSULAR AREA EMPOWER-
MENT ZONES.
(a) DESIGNATION.—Subsection (b) of section 1391 of
the Internal Revenue Code of 1986 is amended by adding
at the end the following new paragraph:
‘‘(3) UNITED STATES INSULAR AREA EMPOWER-
MENT ZONES.—
‘‘(A) DESIGNATION.—In addition to the
areas designated under paragraph (2), the Sec-
retary of Housing and Urban Development
shall designate in the aggregate 2 nominated
insular areas as empowerment zones under this
section, subject to the availability of nominated
areas.
‘‘(B) PERIOD
DESIGNATIONS
MAY
BE
MADE.—Notwithstanding subsection (c), a des-
ignation may be made under this paragraph
after the date of the enactment of this para-
graph and before January 1, 2001.’’
(b) ELIGIBILITY CRITERIA.—Subsection (a) of sec-
tion 1392 of such Code is amended by adding at the end
the following new paragraph:
‘‘(5) UNITED STATES INSULAR AREA EMPOWER-
MENT ZONES.—In the case of a nominated insular
area under section 1391(b)(3)—
‘‘(A) POPULATION.—Such area has a max-
imum population of 200,000.
‘‘(B) SIZE.—Such area is the possession of
the United States in its entirety.
‘‘(C) 
INAPPLICABLE
REQUIREMENTS.—
Paragraphs (1), (3), and (4) shall not apply.’’
(c) DEFINITIONS AND SPECIAL RULES.—Subsection
(a) of section 1393 of such Code is amended by adding
at the end the following new paragraph:
‘‘(10) SPECIAL RULE FOR INSULAR AREAS.—In
the case of insular areas—
‘‘(A) 
APPROPRIATE
SECRETARY.—The
term ‘appropriate Secretary’ means the Sec-
retary of Housing and Urban Development.
‘‘(B) NOMINATED AREA.—The term ‘nomi-
nated area’ means a nominated insular area.
‘‘(C) NOMINATED
INSULAR
AREA.—The
term ‘nominated insular area’ means an insular
area which is nominated for designation under
section 1391(b)(3).
‘‘(D) STATE.—The term ‘State’ includes
an insular area of the United States.’’
(d) LIMITATION ON AMOUNT OF TAX-EXEMPT EN-
TERPRISE ZONE FACILITY BONDS.—Subsection (c) of sec-
tion 1394 of such Code is amended by adding at the end
the following new paragraph:
‘‘(3) SPECIAL RULE FOR UNITED STATES INSU-
LAR AREA EMPOWERMENT ZONE.—In the case of an
empowerment 
zone 
designated 
under 
section
1391(b)(3), paragraph (1)(A) shall be applied by
substituting ‘$1,000,000’ for ‘$3,000,000’.’’
(e) APPLICABLE PERCENTAGE RELATING TO EM-
POWERMENT ZONE EMPLOYMENT CREDIT.—
(1) IN
GENERAL.—Subsection (b) of section
1396 of such Code is amended by adding at the end
the following new paragraph:
‘‘(2) SPECIAL RULE FOR UNITED STATES INSU-
LAR
AREAS.—With respect to each empowerment
zone designated pursuant to section 1391(b)(3), the
following table shall apply in lieu of the table in
paragraph (1):
‘‘In the case of wages paid or
The applicable
incurred during calendar year—
percentage is—
2000 through 2004 ..............................................................
2005 .....................................................................................
2006 .....................................................................................
2007 .....................................................................................
5.’’.
(2) CONFORMING AMENDMENT.—Paragraph (1)
of section 1396(b) of such Code is amended by strik-
ing ‘‘paragraph (2)’’ and inserting ‘‘paragraphs (2)
and (3)’’.
(f) DEFINITION OF INSULAR AREA.—Subsection (a)
of section 7701 of such Code is amended by adding at
the end the following new paragraph:
‘‘(47) INSULAR AREA.—The term ‘insular area’
means a possession of the United States.’’.
(g) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
the date of the enactment of this Act.
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