I 
112TH CONGRESS 
1ST SESSION H. R. 2873 
To amend the Internal Revenue Code of 1986 to provide a credit to employers 
for the retention of certain individuals hired before 2013. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 8, 2011 
Ms. VELA´ZQUEZ 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 
a credit to employers for the retention of certain individ-
uals hired before 2013. 
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 ‘‘Small Business Expan-
sion and Hiring Act of 2011’’. 
SEC. 2. BUSINESS CREDIT FOR RETENTION OF CERTAIN IN-
DIVIDUALS NEWLY HIRED BEFORE 2013. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
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1986 (relating to business-related credits) is amended by 
adding at the end the following new section: 
‘‘SEC. 45S. RETENTION OF CERTAIN INDIVIDUALS NEWLY 
HIRED BEFORE 2013. 
‘‘(a) IN GENERAL.—For purposes of section 38, in 
the case of any taxable year ending after the date of the 
enactment of this section and beginning before January 
1, 2013, the retained worker credit determined under this 
section for the taxable year is the aggregate of the lesser 
of— 
‘‘(1) $4,000 ($6,000 in the case of a long-term 
unemployed individual), or 
‘‘(2) 6.2 percent of the wages (as defined in 
section 3401(a)) paid by the taxpayer to such re-
tained worker during the 52 consecutive week period 
referred to in subsection (c)(2). 
‘‘(b) LIMITATIONS.— 
‘‘(1) INCREASE IN EMPLOYMENT.—The number 
of retained workers taken into account under sub-
section (a) shall not exceed the excess of (if any)— 
‘‘(A) the number of employees of the tax-
payer at the end of the taxable year, over 
‘‘(B) the number of employees of the tax-
payer at the beginning of the taxable year. 
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‘‘(2) DOLLAR
LIMITATION.—The amount al-
lowed as a credit under subsection (a) for a taxable 
year with respect to any business location of the em-
ployer shall not exceed $400,000. 
‘‘(3) SPECIAL RULES.— 
‘‘(A) BUSINESS-LOCATION
SPECIFIC.—All 
determinations under this section regarding the 
number of employees shall be determined on a 
location basis. 
‘‘(B) EMPLOYEES ROTATED AMONG BUSI-
NESS
NOT
ELIGIBLE.—An employee who is 
moved from one location of the taxpayer to an-
other location shall not be taken into account 
for purposes of paragraph (1). 
‘‘(c) DEFINITIONS.—For purposes of this section— 
‘‘(1) RETAINED WORKER.—The term ‘retained 
worker’ means any qualified individual— 
‘‘(A) who was employed by the taxpayer on 
any date during the taxable year, 
‘‘(B) who was so employed by the taxpayer 
for a period of not less than 52 consecutive 
weeks, and 
‘‘(C) whose wages (as defined in section 
3401(a)) for such employment during the last 
26 weeks of such period equaled at least 80 
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percent of such wages for the first 26 weeks of 
such period. 
‘‘(2) QUALIFIED INDIVIDUAL.—The term ‘quali-
fied individual’ means any individual who— 
‘‘(A) begins employment with a qualified 
employer after December 31, 2010, and before 
January 1, 2014, 
‘‘(B) certifies by signed affidavit, under 
penalties of perjury, that such individual has 
not been employed for 40 hours or more per 
week during the 60-day period ending on the 
date such individual begins such employment, 
‘‘(C) 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 
‘‘(D) is not an individual described in sec-
tion 51(i)(1) (applied by substituting ‘qualified 
employer’ for ‘taxpayer’ each place it appears). 
‘‘(3) QUALIFIED EMPLOYER.— 
‘‘(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 which employed an average of less 
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than 100 employees on business days during 
such taxable year. 
‘‘(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). 
‘‘(4) LONG-TERM UNEMPLOYED INDIVIDUAL.— 
The term ‘long-term unemployed individual’ means 
an individual who was in receipt of unemployment 
compensation under State or Federal law for not 
less than 26 weeks during the 1-year period ending 
on the day the individual is hired by the employer.’’. 
(b) CREDIT ALLOWED AS BUSINESS CREDIT.—Sec-
tion 38(b) of the Internal Revenue Code of 1986 (relating 
to current year business credit) 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 following new paragraph: 
‘‘(37) the retained worker credit determined 
under section 45S.’’. 
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(c) LIMITATION ON CARRYFORWARD.—Section 39(a) 
of such Code is amended by adding at the end the fol-
lowing: 
‘‘(5) 3-YEAR
CARRYFORWARD
FOR
RETAINED 
WORKER CREDIT.—In the case of the retained work-
er credit, paragraph (2) shall be applied— 
‘‘(A) by substituting ‘3 taxable years’ for 
‘21 taxable years’ in subparagraph (A) thereof, 
and 
‘‘(B) by substituting ‘2 taxable years’ for 
‘20 taxable years’ in subparagraph (B) there-
of.’’. 
(d) CLERICAL 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 in-
serting after the item relating to section 45R the following 
new item: 
‘‘Sec. 45S. Retention of certain individuals newly hired before 2013.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
Æ 
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