Filtering and Retrofitting the Environment for Safe and Healthy Activities Indoors and Revenue (FRESH AIR) for Businesses Act
Bill: S.122 | Sponsor: Sen. Rosen, Jacky (D-NV)
Policy area: Taxation

Summary:
Filtering and Retrofitting the Environment for Safe and Healthy Activities Indoors and Revenue (FRESH AIR) for Businesses Act
This bill allows employers a payroll tax credit in each calendar quarter through 2021 equal to 50% of the cost of qualified ventilation, zoning, and air filtration and purification expenses. This includes the purchase and installation of a heating, ventilation, and air conditioning system, updates to such systems, and the purchase of any air filter, air cleaner, or air purifier. The maximum amount of this credit for any employer may not exceed $15,000 for all calendar quarters.
The bill requires the Environmental Protection Agency to establish a framework and guidelines for a voluntary label to certify that air pressure, ventilation, zoning, fresh air intake, purification, or filtration systems meet the standards established by this bill.

To provide a credit against payroll taxes to businesses and nonprofit 
 organizations that purchase or upgrade ventilation and air filtration 
   systems to help prevent the spread of COVID-19 and other airborne 
                         communicable diseases.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Filtering and Retrofitting the 
Environment for Safe and Healthy Activities Indoors and Revenue (FRESH 
AIR) for Businesses Act''.

SEC. 2. BUSINESS VENTILATION TAX CREDIT.

    (a) In General.--In the case of an employer, there shall be allowed 
as a credit against applicable employment taxes for each calendar 
quarter an amount equal to 50 percent of the qualified ventilation, 
zoning, and air filtration and purification expenses paid or incurred 
by the employer during such calendar quarter.
    (b) Limitations and Refundability.--
            (1) Overall dollar limitation on credit.--The amount of the 
        credit allowed under subsection (a) with respect to any 
        employer for all calendar quarters with respect to any 
        qualified location shall not exceed $15,000.
            (2) Credit limited to employment taxes.--The credit allowed 
        by subsection (a) with respect to any calendar quarter shall 
        not exceed the applicable employment taxes (reduced by any 
        credits allowed under subsections (e) and (f) of section 3111 
        of the Internal Revenue Code of 1986, sections 7001 and 7003 of 
        the Families First Coronavirus Response Act, and section 2301 
        of the CARES Act) on the wages paid with respect to the 
        employment of all the employees of the employer for such 
        calendar quarter.
            (3) Refundability of excess credit.--
                    (A) In general.--If the amount of the credit under 
                subsection (a) exceeds the limitation of paragraph (2) 
                for any calendar quarter, such excess shall be treated 
                as an overpayment that shall be refunded under sections 
                6402(a) and 6413(b) of the Internal Revenue Code of 
                1986.
                    (B) Treatment of payments.--For purposes of section 
                1324 of title 31, United States Code, any amounts due 
                to the employer under this paragraph shall be treated 
                in the same manner as a refund due from a credit 
                provision referred to in subsection (b)(2) of such 
                section.
    (c) Qualified Ventilation, Zoning, and Air Filtration and 
Purification Expenses; Qualified Location.--For purposes of this 
section--
            (1) In general.--The term ``qualified ventilation, zoning, 
        and air filtration and purification expenses'' means amounts 
        paid or incurred by the employer for--
                    (A) the purchase and installation of a heating, 
                ventilation, and air conditioning system--
                            (i) which is placed in service at a 
                        qualified location,
                            (ii) which includes indoor air quality 
                        sensors and controls, and
                            (iii) which--
                                    (I) is designed to filter air at a 
                                rate equivalent to or in excess of a 
                                MERV 13 or equivalent level of 
                                filtration,
                                    (II) uses UV-based purification, or
                                    (III) provides a fresh air supply 
                                at least 17 cubic feet per minute per 
                                occupant, the ability to conduct zoning 
                                and sub-zoning, and the ability to 
                                direct air via directional and 
                                controlled air outlets in order to 
                                minimize draft air exchange between 
                                neighboring occupants or zones,
                    (B) upgrading a heating, ventilation, and air 
                conditioning system at a qualified location which does 
                not meet the requirements of any item of subparagraph 
                (A)(iii) so that the system meets such requirements,
                    (C) the purchase of any--
                            (i) air filter--
                                    (I) which is used in a heating, 
                                ventilation, and air conditioning 
                                system at a qualified location, and
                                    (II) which filters air at a rate 
                                equivalent to or in excess of a MERV 13 
                                or equivalent level of filtration, or
                            (ii) UV light bulb which is used in a 
                        heating, ventilation, and air conditioning 
                        system at a qualified location,
                    (D) the purchase of any stand alone air cleaner or 
                air purifier--
                            (i) which is placed in service at such 
                        qualified location by the employer,
                            (ii) which is capable of providing at least 
                        5 air changes per hour at such qualified 
                        location, and
                            (iii) which--
                                    (I) is capable of using HEPA 
                                filters,
                                    (II) uses UV-based purification, or
                                    (III) uses electronic air cleaners 
                                or ionizers to clean air at a rate 
                                equivalent to a HEPA filter, and
                    (E) the purchase of any--
                            (i) HEPA filter used in an air cleaner 
                        described in subparagraph (D)(iii)(I),
                            (ii) UV light bulb used in an air purifier 
                        described in subparagraph (D)(iii)(II), or
                            (iii) purification component used in an air 
                        purifier described in subparagraph 
                        (D)(iii)(III).
            (2) Termination.--Such term shall not include any expenses 
        for property placed in service after December 31, 2021.
    (d) Other Definitions.--For purposes of this section--
            (1) Applicable employment taxes.--The term ``applicable 
        employment taxes'' means the following:
                    (A) The taxes imposed under section 3111(a) of the 
                Internal Revenue Code of 1986.
                    (B) So much of the taxes imposed under section 
                3221(a) of such Code as are attributable to the rate in 
                effect under section 3111(a) of such Code.
            (2) Qualified location.--The term ``qualified location'' 
        means any location in the United States--
                    (A) which is leased or owned by the employer, and
                    (B) at which an employer conducts business.
            (3) COVID-19.--Except where the context clearly indicates 
        otherwise, any reference in this section to COVID-19 shall be 
        treated as including a reference to the virus which causes 
        COVID-19.
            (4) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury or such Secretary's delegate.
            (5) Other terms.--Any term used in this section which is 
        also used in chapter 21 or 22 of the Internal Revenue Code of 
        1986 shall have the same meaning as when used in such chapter.
    (e) Certain Governmental Employers.--This section shall not apply 
to the Government of the United States, the government of any State or 
political subdivision thereof, or any agency or instrumentality of any 
of the foregoing.
    (f) Rules Relating to Employer, etc.--
            (1) Aggregation rule.--All persons treated as a single 
        employer under subsection (a) or (b) of section 52 of the 
        Internal Revenue Code of 1986, or subsection (m) or (o) of 
        section 414 of such Code, shall be treated as one employer for 
        purposes of this section.
            (2) Third-party payors.--Any credit allowed under 
        subsection (a) shall be treated as a credit described in 
        section 3511(d)(2) of such Code.
    (g) Treatment of Deposits.--The Secretary shall waive any penalty 
under section 6656 of the Internal Revenue Code of 1986 for any failure 
to make a deposit of any applicable employment taxes if the Secretary 
determines that such failure was due to the reasonable anticipation of 
the credit allowed under subsection (a).
    (h) Denial of Double Benefit.--For purposes of chapter 1 of such 
Code--
            (1) the gross income of any employer, for the taxable year 
        which includes the last day of any calendar quarter with 
        respect to which a credit is allowed under this section, shall 
        be increased by the amount of such credit, and
            (2) no deduction or other benefit shall be denied or 
        reduced by reason of expenses taking into account for purposes 
        of determining the amount of the credit allowed under this 
        section.
    (i) Election Not To Have Section Apply.--This section shall not 
apply with respect to any employer for any calendar quarter if such 
employer elects (at such time and in such manner as the Secretary may 
prescribe) not to have this section apply.
    (j) Transfers to Certain Trust Funds.--There are hereby 
appropriated to the Federal Old-Age and Survivors Insurance Trust Fund 
and the Federal Disability Insurance Trust Fund established under 
section 201 of the Social Security Act (42 U.S.C. 401) and the Social 
Security Equivalent Benefit Account established under section 15A(a) of 
the Railroad Retirement Act of 1974 (45 U.S.C. 231n-1(a)) amounts equal 
to the reduction in revenues to the Treasury by reason of this section 
(without regard to this subsection). Amounts appropriated by the 
preceding sentence shall be transferred from the general fund at such 
times and in such manner as to replicate to the extent possible the 
transfers which would have occurred to such Trust Fund or Account had 
this section not been enacted.
    (k) Regulations and Guidance.--The Secretary shall prescribe such 
regulations and other guidance as may be necessary or appropriate to 
carry out the purposes of this section, including--
            (1) with respect to the application of the credit under 
        subsection (a) to third-party payors (including professional 
        employer organizations, certified professional employer 
        organizations, or agents under section 3504 of the Internal 
        Revenue Code of 1986), regulations or other guidance allowing 
        such payors to submit documentation necessary to substantiate 
        the amount of the credit allowed under subsection (a),
            (2) regulations or other guidance for recapturing the 
        benefit of credits determined under subsection (a) in cases 
        where there is a subsequent adjustment to the credit determined 
        under such subsection, and
            (3) regulations or other guidance to prevent abuse of the 
        purposes of this section.
    (l) Application.--
            (1) In general.--This section shall only apply to amounts 
        paid or incurred after January 31, 2020, and before January 1, 
        2022.
            (2) Special rule for certain amounts paid or incurred in 
        calendar quarters ending before the date of the enactment of 
        this act.--For purposes of this section, in the case of any 
        amount paid or incurred after January 31, 2020, and on or 
        before the last day of the last calendar quarter ending before 
        the date of the enactment of this Act, such amount shall be 
        treated as paid or incurred on such date of enactment.
    (m) Voluntary Labeling.--Not later than 90 days after the date of 
the enactment of this Act, the Administrator of the Environmental 
Protection Agency, in consultation with the Director of the Centers for 
Disease Control and Prevention and other appropriate agencies, shall 
establish a framework and guidelines for a voluntary label to certify 
that air pressure ventilation, zoning, fresh air intake, purification, 
or filtration systems meet the applicable standards provided under 
subsection (c)(1).
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