USA Workforce Tax Credit Act
Bill: H.R.4287 | Sponsor: Rep. Smucker, Lloyd (R-PA)
Policy area: Taxation

Summary:
USA Workforce Tax Credit Act
This bill allows tax credits for charitable contributions to certain nonprofit organizations with the exclusive purpose of providing (1) workforce development and apprenticeship training, or (2) scholarships for elementary and secondary education expenses of students from households with income that does not exceed 200% of the median gross income.
The bill limits the credits to specified amounts for individuals and corporations. It also (1) imposes a tax on workforce development, apprenticeship training, and scholarship granting organizations that fail to distribute a specified portion of their receipts; and (2) establishes a $2 billion annual volume cap for the tax credits allowed under this bill.

To amend the Internal Revenue Code of 1986 to allow a credit against 
   tax for charitable donations to nonprofit organizations providing 
 workforce training and education scholarships to qualified elementary 
                        and secondary students.

    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 ``USA Workforce Tax Credit Act''.

SEC. 2. TAX CREDIT FOR CONTRIBUTIONS TO WORKFORCE DEVELOPMENT AND 
              APPRENTICESHIP TRAINING ORGANIZATIONS.

    (a) Credit for Individuals.--
            (1) In general.--Subpart A of part IV of subchapter A of 
        chapter 1 of the Internal Revenue Code of 1986 is amended by 
        inserting after section 25D the following new section:

``SEC. 25E. QUALIFIED WORKFORCE DEVELOPMENT AND APPRENTICESHIP TRAINING 
              PROGRAMS.

    ``(a) Allowance of Credit.--In the case of an individual, there 
shall be allowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to the amount of qualified 
contributions made by the taxpayer during the year.
    ``(b) Dollar Limitations.--
            ``(1) Income limitation.--The amount allowed as a credit 
        under subsection (a) with respect to any taxpayer shall not 
        exceed 25 percent of the tax liability of the taxpayer with a 
        maximum value of $250,000.
            ``(2) Reduction based on state credit.--The amount allowed 
        as a credit under subsection (a) for a taxable year shall be 
        reduced by the amount allowed as a credit on any State tax 
        return of the individual for qualified contributions made by 
        the taxpayer during the taxable year.
    ``(c) Qualified Contributions; Other Definitions.--For purposes of 
this section--
            ``(1) Qualified contribution.--The term `qualified 
        contribution' means a charitable contribution (as defined by 
        section 170(c)) to a workforce development or apprenticeship 
        training organization.
            ``(2) Workforce development or apprenticeship training 
        organization.--The term `workforce development or 
        apprenticeship training organization' means any organization--
                    ``(A) which--
                            ``(i) is described in section 501(c)(3) and 
                        exempt from tax under section 501(a), and
                            ``(ii) is not a private foundation,
                    ``(B) whose exclusive purpose is to provide 
                workforce development and apprenticeship training to 
                eligible participants, including--
                            ``(i) community colleges,
                            ``(ii) workforce training programs, as 
                        defined by State workforce agencies,
                            ``(iii) organizations that provide career 
                        and technical education,
                            ``(iv) organizations that provide training 
                        or apprenticeships operated by a collective 
                        bargaining organization,
                            ``(v) community organizations that provide 
                        full certified training, and
                            ``(vi) private schools that confer 
                        diplomas, degrees, or certify completion of 
                        certain grades,
                    ``(C) that is in compliance with all applicable 
                State laws, including laws relating to unlawful 
                discrimination, health and safety requirements, and 
                criminal background checks of employees, and
                    ``(D) which meets the requirements of subsection 
                (d).
            ``(3) Eligible participants.--The term `eligible 
        participant' means an individual who is enrolled in a workforce 
        development and apprenticeship training organization, as 
        described in paragraph (2)(B).
    ``(d) Denial of Double Benefit.--No deduction shall be allowed 
under any provision of this chapter for any expense for which a credit 
is allowed under this section.
    ``(e) Election.--This section shall apply to a taxpayer for a 
taxable year only if such taxpayer elects to have this section apply 
for such taxable year.
    ``(f) Application of Volume Cap.--A contribution shall be taken 
into account under this section only if such contribution is recognized 
by the Secretary as applying against the volume cap established under 
section 5 of the USA Workforce Tax Credit Act.''.
            (2) Clerical amendment.--The table of sections for subpart 
        A of part IV of subchapter A of chapter 1 of such Code is 
        amended by inserting after the item relating to section 25D the 
        following new item:

``Sec. 25E. Qualified Workforce Development and Apprenticeship Training 
                            Programs.''.
    (b) Credit for Corporations.--
            (1) In general.--Subpart D of part IV of subchapter A of 
        chapter 1 of such Code is amended by adding at the end the 
        following new section:

``SEC. 45U. CONTRIBUTIONS TO WORKFORCE DEVELOPMENT OR APPRENTICESHIP 
              TRAINING ORGANIZATIONS.

    ``(a) General Rule.--For purposes of section 38, in the case of a 
corporation, the workforce development and apprenticeship training 
credit determined under this section for the taxable year is the 
aggregate amount of qualified contributions for the taxable year.
    ``(b) Limitation.--
            ``(1) Income limitation.--The amount of the credit 
        determined under this section for any taxable year shall not 
        exceed the lesser of--
                    ``(A) 25 percent of the tax liability of the 
                taxpayer for the taxable year, and
                    ``(B) $250,000.
            ``(2) Reduction based on state credit.--The amount allowed 
        as a credit under subsection (a) for a taxable year shall be 
        reduced by the amount allowed as a credit on any State tax 
        return of the individual for qualified contributions made by 
        the taxpayer during the taxable year.
            ``(3) Qualified contributions.--For purposes of this 
        section, the term `qualified contribution' has the meaning 
        given such term under section 25E.
    ``(c) Denial of Double Benefit.--No deduction shall be allowed 
under any provision of this chapter for any expense for which a credit 
is allowed under this section.
    ``(d) Election.--This section shall apply to a taxpayer for a 
taxable year only if such taxpayer elects to have this section apply 
for such taxable year.
    ``(e) Application of Volume Cap.--A contribution shall be taken 
into account under this section only if such contribution is recognized 
by the Secretary as applying against the volume cap established under 
section 5 of the USA Workforce Tax Credit Act.''.
            (2) Conforming amendments.--Section 38(b) of such Code is 
        amended by striking ``plus'' at the end of paragraph (32), by 
        striking the period and inserting ``, plus'' at the end of 
        paragraph (33), and by adding at the end the following new 
        paragraph:
            ``(34) the workforce development or apprenticeship training 
        credit determined under section 45U(a).''.
            (3) Clerical amendment.--The table of sections for subpart 
        D of part IV of subchapter A of chapter 1 of such Code is 
        amended by adding at the end the following new item:

``Sec. 45U. Contributions to workforce development or apprenticeship 
                            training organizations.''.

SEC. 3. TAX CREDIT FOR CONTRIBUTIONS TO SCHOLARSHIP GRANTING 
              ORGANIZATIONS.

    (a) Credit for Individuals.--
            (1) In general.--Subpart A of part IV of subchapter A of 
        chapter 1 of the Internal Revenue Code of 1986, as amended by 
        this Act, is amended by inserting after section 25E the 
        following new section:

``SEC. 25F. QUALIFIED ELEMENTARY AND SECONDARY EDUCATION SCHOLARSHIPS.

    ``(a) Allowance of Credit.--In the case of an individual, there 
shall be allowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to the amount of qualified 
contributions made by the taxpayer during the taxable year.
    ``(b) Dollar Limitations.--
            ``(1) Income limitation.--The amount allowed as a credit 
        under subsection (a) with respect to any taxpayer shall not 
        exceed the lesser of--
                    ``(A) 25 percent of the tax liability of the 
                taxpayer, and
                    ``(B) $250,000.
            ``(2) Reduction based on state credit.--The amount allowed 
        as a credit under subsection (a) for a taxable year shall be 
        reduced by the amount allowed as a credit on any State tax 
        return of the individual for qualified contributions made by 
        the taxpayer during the taxable year.
    ``(c) Qualified Contributions; Other Definitions.--For purposes of 
this section--
            ``(1) Qualified contribution.--The term `qualified 
        contribution' means a charitable contribution (as defined by 
        section 170(c)) to a scholarship granting organization.
            ``(2) Scholarship granting organization.--The term 
        `scholarship granting organization' means any organization--
                    ``(A) which--
                            ``(i) is described in section 501(c)(3) and 
                        exempt from tax under section 501(a), and
                            ``(ii) is not a private foundation,
                    ``(B) whose exclusive purpose is to provide 
                scholarships for tuition for qualified elementary and 
                secondary education expenses of eligible students, and
                    ``(C) which meets the requirements of subsection 
                (d).
    ``(d) Requirements for Scholarship Granting Organizations.--
            ``(1) In general.--An organization meets the requirements 
        of this subsection if--
                    ``(A) such organization provides scholarships to--
                            ``(i) more than 1 student, and
                            ``(ii) different students attending more 
                        than 1 school,
                    ``(B) such organization does not provide 
                scholarships for any expenses other than qualified 
                elementary and secondary education expenses,
                    ``(C) such organization provides a scholarship to 
                eligible students with a priority for students awarded 
                a scholarship the previous school year,
                    ``(D) such organization does not earmark or set 
                aside contributions for scholarships on behalf of any 
                particular student,
                    ``(E) such organization takes appropriate steps to 
                verify the annual household income and family size of 
                eligible students to whom it awards scholarships, and 
                limits them to a member of a household with a total 
                annual household income, which does not exceed 200 
                percent of the median gross income, as determined by 
                the Secretary of Housing and Urban Development, for the 
                purposes of the low-income housing credit under section 
                42,
                    ``(F) such organization obtains from an independent 
                certified public accountant annual financial and 
                compliance audits and submits such audits to the 
                Secretary,
                    ``(G) no officer or board member of such 
                organization has been convicted of a felony, and
                    ``(H) such organization requires any eligible 
                student who receives a scholarship to permit such 
                organization to share assessment information and other 
                data regarding the student for the purpose of providing 
                reports described in subsection (e), and such other 
                information as necessary for the purposes of reporting 
                on the academic achievement of eligible students 
                receiving a scholarship from such organization.
            ``(2) Independent certified public accountant.--For 
        purposes of paragraph (1)(F), the term `independent certified 
        public accountant' means, with respect to an organization, a 
        certified public accountant who is not a related person (within 
        the meaning of section 465(b)(3)(C)) with respect to such 
        organization or any employee of such organization.
    ``(e) Eligible School Reporting Requirement.--
            ``(1) In general.--The reports described in this subsection 
        include--
                    ``(A) a report to the parents on the student's 
                academic achievement, and
                    ``(B) a report to each qualified scholarship 
                granting organization that provides scholarships to 
                students at the school, that includes the test results, 
                in the aggregate and disaggregated by race or ethnicity 
                and grade level, of the students receiving such 
                scholarships who are in grades 3 through 12 on a grade-
                appropriate nationally norm-referenced standardized 
                test.
            ``(2) No personally identifiable information.--In preparing 
        and submitting the report described in paragraph (1)(B), a 
        school shall not include any personally identifiable 
        information regarding a student.
    ``(f) Denial of Double Benefit.--No deduction shall be allowed 
under any provision of this chapter for any expense for which a credit 
is allowed under this section.
    ``(g) Election.--This section shall apply to a taxpayer for a 
taxable year only if such taxpayer elects to have this section apply 
for such taxable year.
    ``(h) Application of Volume Cap.--A contribution shall be taken 
into account under this section only if such contribution is recognized 
by the Secretary as applying against the volume cap established under 
section 5 of the USA Workforce Tax Credit Act.''.
            (2) Clerical amendment.--The table of sections for subpart 
        A of part IV of subchapter A of chapter 1 of such Code, as 
        amended by this Act, is amended by inserting after the item 
        relating to section 25E the following new item:

``Sec. 25F. Qualified elementary and secondary education 
                            scholarships.''.
    (b) Credit for Corporations.--
            (1) In general.--Subpart D of part IV of subchapter A of 
        chapter 1 of such Code, as amended by this Act, is amended by 
        adding after section 45U the following:

``SEC. 45V. CONTRIBUTIONS TO SCHOLARSHIP GRANTING ORGANIZATIONS.

    ``(a) General Rule.--For purposes of section 38, in the case of a 
corporation, the education scholarship credit determined under this 
section for the taxable year is the aggregate amount of qualified 
contributions for the taxable year.
    ``(b) Limitation.--
            ``(1) Income limitation.--The amount of the credit 
        determined under this section for any taxable year shall not 
        exceed the lesser of--
                    ``(A) 25 percent of the tax liability of the 
                taxpayer for the taxable year, and
                    ``(B) $250,000.
            ``(2) Reduction based on state credit.--The amount allowed 
        as a credit under subsection (a) for a taxable year shall be 
        reduced by the amount allowed as a credit on any State tax 
        return of the individual for qualified contributions made by 
        the taxpayer during the taxable year.
    ``(c) Qualified Contributions.--For purposes of this section, the 
term `qualified contribution' has the meaning given such term under 
section 25F.
    ``(d) Denial of Double Benefit.--No deduction shall be allowed 
under any provision of this chapter for any expense for which a credit 
is allowed under this section.
    ``(e) Election.--This section shall apply to a taxpayer for a 
taxable year only if such taxpayer elects to have this section apply 
for such taxable year.
    ``(f) Application of Volume Cap.--A contribution shall be taken 
into account under this section only if such contribution is recognized 
by the Secretary as applying against the volume cap established under 
section 5 of the USA Workforce Tax Credit Act.''.
            (2) Conforming amendments.--Section 38(b) of such Code, as 
        amended by this Act, is amended by striking ``plus'' at the end 
        of paragraph (33), by striking the period and inserting ``, 
        plus'' at the end of paragraph (34), and by adding at the end 
        the following new paragraph:
            ``(35) the education scholarship credit determined under 
        section 45V(a).''.
            (3) Clerical amendment.--The table of sections for subpart 
        D of part IV of subchapter A of chapter 1 of such Code, as 
        amended by this Act, is amended by adding at the end the 
        following new item:

``Sec. 45V. Contributions to scholarship granting organizations.''.
    (c) Excise Tax on Failure of Scholarship Granting Organizations To 
Make Distributions.--
            (1) In general.--Chapter 42 of such Code is amended by 
        adding at the end the following new subchapter:

    ``Subchapter I--Organizations Providing Workforce Development, 
                Apprenticeship Training, or Scholarships

``Sec. 4969. Tax on failure to distribute receipts.

``SEC. 4969. TAX ON FAILURE TO DISTRIBUTE RECEIPTS.

    ``(a) Tax Imposed.--There is hereby imposed a tax on the failure of 
a workforce development or apprenticeship training organization (as 
defined in section 25E) or a scholarship granting organization (as 
defined in section 25F) to make distributions in any taxable year in an 
amount equal to or in excess of the required distribution amount before 
the distribution deadline relating to a taxable year.
    ``(b) Amount of Tax.--The tax imposed by subsection (a) with 
respect to a taxable year shall be equal to 15 percent of the greater 
of--
            ``(1) the required distribution amount with respect to the 
        taxable year, or
            ``(2) the amount of receipts of the qualified scholarship 
        granting organization for each taxable year which are 
        distributed before the distribution deadline with respect to 
        such receipts.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Required distribution amount.--
                    ``(A) In general.--The required distribution amount 
                with respect to a taxable year is the amount equal to 
                100 percent of the total receipts of the scholarship 
                granting organization for such taxable year--
                            ``(i) reduced by the sum of such receipts 
                        that are retained for administrative expenses 
                        for the taxable year or are carried to the 
                        succeeding taxable year under subparagraph (C), 
                        and
                            ``(ii) increased by the amount of the 
                        carryover under subparagraph (C) from the 
                        preceding taxable year.
                    ``(B) Administrative expenses.--For purposes of 
                this paragraph, not more than 10 percent of total 
                receipts of a qualified workforce development 
                organization, apprenticeship training organization or 
                scholarship granting organization for a taxable year 
                may be used for administrative purposes.
                    ``(C) Carryover.--
                            ``(i) Qualified scholarship granting 
                        organization.--Receipts of a qualified 
                        scholarship granting organization for a taxable 
                        year that are not awarded scholarships for the 
                        taxable year or retained for administrative 
                        purposes for the taxable year shall be carried 
                        to the succeeding taxable year. The amount 
                        carried to a taxable year under the preceding 
                        sentence shall not exceed 15 percent of total 
                        receipts of the qualified scholarship granting 
                        organization for the taxable year.
                            ``(ii) Qualified workforce development or 
                        apprenticeship training organization.--Receipts 
                        of a qualified workforce development or 
                        apprenticeship training organization that are 
                        not disbursed for the taxable year or retained 
                        for administrative purposes for the taxable 
                        year shall be carried to the succeeding taxable 
                        year. The amount carried to the taxable year 
                        under the preceding sentence shall not exceed 
                        15 percent of total receipts of the qualified 
                        workforce development or apprenticeship 
                        training organization for the taxable year.
            ``(2) Distributions.--The term `distribution' includes 
        amounts which are formally committed but not distributed. A 
        formal commitment described in the preceding sentence may 
        include contributions set aside for eligible students or 
        participants for more than one year.
            ``(3) Distribution deadline.--The distribution deadline 
        with respect to receipts for a taxable year is the first day of 
        the second taxable year following the taxable year in which 
        such receipts are received by the scholarship granting 
        organization.
    ``(d) Reasonable Cause Exception.--The tax imposed by subsection 
(a) shall not apply with respect to any failure to make required 
distributions before the distribution deadline which is not willful and 
is due to reasonable cause.''.
            (2) Abatement of tax.--
                    (A) General rule.--Subsection (b) of section 4962 
                of such Code is amended by striking ``or G'' and 
                inserting ``G, or I''.
                    (B) First tier tax.--Subsection (a) of section 4963 
                of such Code is amended by inserting ``4969,'' after 
                ``4967,''.
                    (C) Taxable event.--Subsection (c) of section 4963 
                of such Code is amended by inserting ``4969,'' after 
                ``4967,''.
            (3) Correction period.--Subparagraph (A) of section 
        4963(e)(2) of such Code is amended by inserting ``or 4969'' 
        after ``4942''.
            (4) Clerical amendment.--The table of subchapters for 
        chapter 42 of such Code is amended by adding at the end the 
        following new item:

    ``subchapter i. organizations providing workforce development, 
              apprenticeship training, or scholarships''.

SEC. 4. ORGANIZATIONAL AUTONOMY.

    A participating eligible organization or entity under the programs 
established pursuant to the USA Workforce Tax Credit Act are autonomous 
and not agents of the State or Federal Government and therefore--
            (1) a Federal or State agency may not in any way regulate 
        the program of a participating entity that accepts a 
        contribution or a scholarship under this Act;
            (2) the provision of tax credits under this Act does not 
        expand the regulatory authority of the Federal Government, the 
        State, its officers, or any school district to impose any 
        additional regulation of an entity beyond those necessary to 
        enforce the requirements of this Act; and
            (3) participating eligible entities shall be given the 
        maximum freedom to provide for the needs of their participants 
        without government control.

SEC. 5. VOLUME CAP.

    (a) Amount.--The volume cap amount available for tax credits for 
purposes of this Act shall be $2,000,000,000 annually, beginning for 
taxable years beginning in 2022 and for each succeeding calendar year 
thereafter.
    (b) Application for Credits.--The Secretary shall develop a system 
to track and make available information in real time, regarding 
availability of tax credits to donors which will be available on a 
first-come, first-serve basis.
    (c) Distribution.--Fifty percent of the annual amount made 
available shall be allotted by the Secretary for donations to workforce 
development and apprenticeship training organizations and 50 percent 
for donations to scholarship granting organizations.

SEC. 6. EFFECTIVE DATE.

    The amendments made by this Act shall apply to taxable years 
beginning after December 31, 2021.
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