RECRUIT Act of 2021
Bill: S.1178 | Sponsor: Sen. Duckworth, Tammy (D-IL)
Policy area: Taxation

Summary:
Reserve Employers Comprehensive Relief and Uniform Incentives on Taxes Act of 2021 or the RECRUIT Act of 2021
This bill allows employers with less than 500 employees a new tax credit for 40% of the wages paid to a member of the National Guard or a reserve component of the Armed Forces. The employer may elect to claim a payroll tax credit for wages paid to such service members.

To amend the Internal Revenue Code of 1986 to allow for a credit 
                against tax for employers of reservists.

    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 ``Reserve Employers Comprehensive 
Relief and Uniform Incentives on Taxes Act of 2021'' or as the 
``RECRUIT Act of 2021''.

SEC. 2. RESERVIST EMPLOYMENT CREDIT.

    (a) Allowance of Credit.--Subpart D of part IV of subchapter A of 
chapter 1 of the Internal Revenue Code of 1986 is amended by adding at 
the end the following new section:

``SEC. 45U. RESERVIST EMPLOYMENT CREDIT.

    ``(a) Establishment of Credit.--For purposes of section 38, in the 
case of an eligible employer, the reservist employment credit for any 
taxable year is an amount equal to 40 percent of the wages paid or 
incurred to qualified reservists by such employer during such taxable 
year.
    ``(b) Limitation.--
            ``(1) In general.--The reservist employment credit 
        determined under subsection (a), with respect to any qualified 
        reservist for any taxable year, shall not exceed the reservist 
        credit amount.
            ``(2) Reservist credit amount.--For purposes of this 
        section, the term `reservist credit amount' means, with respect 
        to a qualified reservist for a taxable year, an amount equal to 
        the sum of--
                    ``(A) $1,000, plus
                    ``(B) in the case of a qualified reservist--
                            ``(i) with 30 or more days, and fewer than 
                        90 days, of service in the uniformed services 
                        during such year, $3,000,
                            ``(ii) with 90 or more days, and fewer than 
                        180 days, of service in the uniformed services 
                        during such year, $5,000, and
                            ``(iii) with 180 or more days of service in 
                        the uniformed services during such year, 
                        $10,000.
            ``(3) Days of service.--For purposes of paragraph (2), any 
        day of service--
                    ``(A) shall not be taken into account if such day 
                constitutes regularly scheduled unit training or annual 
                training, and
                    ``(B) shall only be taken into account with respect 
                to a qualified reservist employed by an eligible 
                employer to the extent such days are during a period of 
                employment of such reservist by such employer.
            ``(4) Qualified reservist.--The term `qualified reservist' 
        means, with respect to a taxable year, an individual who is, at 
        any time during such taxable year, a member of the National 
        Guard or a reserve component of the Armed Forces, as named in 
        section 10101 of title 10, United States Code (except for a 
        member of the Individual Ready Reserve).
            ``(5) Other definitions.--The term `reserve component' has 
        the meanings given such term in section 101 of title 10, United 
        States Code. The term `National Guard' has the meaning given 
        such term in section 101(3) of title 32, United States Code. 
        The term `service in the uniformed services' has the meaning 
        given such term in section 4303 of title 38, United States 
        Code.
    ``(c) Eligible Employer.--For purposes of this section, the term 
`eligible employer' means any employer which has an average of less 
than 500 employees employed on business days during the taxable year.
    ``(d) Aggregation Rule.--All persons treated as a single employer 
under subsection (b), (c), (m), or (o) of section 414 shall be treated 
as 1 employer for purposes of this section.
    ``(e) Election To Have Credit Not Apply.--
            ``(1) In general.--A taxpayer may elect to have this 
        section not apply for any taxable year.
            ``(2) Other rules.--Rules similar to the rules of 
        paragraphs (2) and (3) of section 51(j) shall apply for 
        purposes of this subsection.
    ``(f) Election To Treat Credit as Payroll Tax Credit.--
            ``(1) In general.--At the election of an eligible employer 
        for any taxable year, section 3111(g) shall apply to the 
        payroll tax credit portion of the credit otherwise determined 
        under subsection (a) for the taxable year and such portion 
        shall not be treated (other than for purposes of section 280C) 
        as a credit determined under subsection (a).
            ``(2) Payroll tax credit portion.--For purposes of this 
        subsection, the term `payroll tax credit portion' means the 
        lesser of--
                    ``(A) the amount specified in the election made 
                under this subsection, or
                    ``(B) the amount of the credit otherwise determined 
                under subsection (a) for the taxable year.
            ``(3) Election.--Any election under this subsection for any 
        taxable year--
                    ``(A) shall specify the amount of the credit to 
                which such election applies,
                    ``(B) shall be made on or before the due date 
                (including extensions) of--
                            ``(i) in the case of an eligible employer 
                        which is a partnership, the return required to 
                        be filed under section 6031,
                            ``(ii) in the case of an eligible employer 
                        which is an S corporation, the return required 
                        to be filed under section 6037, and
                            ``(iii) in the case of any other eligible 
                        employer, the return of tax for the taxable 
                        year, and
                    ``(C) may be revoked only with the consent of the 
                Secretary.''.
    (b) Credit Part of General Business Credit.--Section 38(b) of the 
Internal Revenue Code of 1986 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 
new paragraph:
            ``(34) in the case of an eligible employer (as defined in 
        section 45U(c)), the reservist employment credit determined 
        under section 45U(a).''.
    (c) Credit Allowed Against AMT.--Subparagraph (B) of section 
38(c)(4) of the Internal Revenue Code of 1986 is amended by 
redesignating clauses (x) through (xii) as clauses (xi) through (xiii), 
respectively, and by inserting after clause (ix) the following new 
clause:
                            ``(x) the credit determined under section 
                        45U,''.
    (d) Payroll Tax Credit.--Section 3111 of the Internal Revenue Code 
of 1986 is amended by adding at the end the following new subsection:
    ``(g) Reservist Employment Credit.--
            ``(1) In general.--In the case of a taxpayer which has made 
        an election under section 45U(f) for a taxable year, there 
        shall be allowed as a credit against the tax imposed by 
        subsection (a) for the first calendar quarter which begins 
        after the date on which the taxpayer files the return specified 
        in section 45U(f)(3)(B) an amount equal to the payroll tax 
        credit portion determined under section 45U(f)(2).
            ``(2) Limitation.--
                    ``(A) In general.--The credit allowed by paragraph 
                (1) shall not exceed the tax imposed by subsection (a) 
                for any calendar quarter on the wages paid with respect 
                to the employment of all individuals in the employ of 
                the employer. The limitation imposed by the preceding 
                sentence shall be applied to appropriately take into 
                account any other credits allowed against such tax in 
                such manner as the Secretary may provide.
                    ``(B) Temporary refundability.--In the case of any 
                credit allowed by paragraph (1) with respect to a 
                payroll tax credit portion determined for a taxable 
                year beginning in 2021 or 2022, if the amount of such 
                credit exceeds the limitation of subparagraph (A) for 
                the calendar quarter, such excess shall be treated as 
                an overpayment that shall be refunded under sections 
                6402(a) and 6413(b) of such Code. For purposes of 
                section 1324 of title 31, United States Code, any 
                amounts due to an employer under this subparagraph 
                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) Carryover.--In the case of any credit allowed 
                by paragraph (1) with respect to a payroll tax credit 
                portion determined for a taxable year beginning after 
                2022, if the amount of such credit exceeds the 
                limitation of subparagraph (A) for any calendar 
                quarter, such excess shall be carried to the succeeding 
                calendar quarter and allowed as a credit under 
                paragraph (1) for such quarter.
            ``(3) Deduction allowed for credited amounts.--The credit 
        allowed under paragraph (1) shall not be taken into account for 
        purposes of determining the amount of any deduction allowed 
        under chapter 1 for taxes imposed under subsection (a).''.
    (e) Conforming Amendments.--
            (1) Denial of double benefit.--Section 280C(a) of the 
        Internal Revenue Code of 1986 is amended by inserting 
        ``45U(a),'' after ``45S(a),''.
            (2) Election to have credit not apply.--Section 6501(m) of 
        the Internal Revenue Code of 1986 is amended by inserting 
        ``45U(d),'' after ``45H(g),''.
            (3) 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 adding at the end the 
        following new item:

``Sec. 45U. Reservist employment credit.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to wages paid in taxable years beginning after December 31, 2020.
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