Recovery Startup Assistance Act
Bill: S.551 | Sponsor: Sen. Hassan, Margaret Wood (D-NH)
Policy area: Taxation

Summary:
Recovery Startup Assistance Act
This bill expands the employee retention tax credit to include recovery startup businesses. The bill defines recovery startup business as any employer that began a trade or business after February 15, 2020, had less than 50 full-time employees, and did not have gross receipts in excess of $25,000 in the preceding five-year period.

To amend the Internal Revenue Code of 1986 to expand the Employee 
      Retention Tax Credit to include certain startup businesses.

    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 ``Recovery Startup Assistance Act''.

SEC. 2. EXPANSION OF EMPLOYEE RETENTION TAX CREDIT TO INCLUDE CERTAIN 
              STARTUP BUSINESSES.

    (a) In General.--Section 2301 of the CARES Act, as amended by 
sections 206 and 207 of the Taxpayer Certainty and Disaster Tax Relief 
Act of 2020 (Public Law 116-260), is amended--
            (1) in subsection (c)--
                    (A) in paragraph (2)(A)(ii)--
                            (i) in subclause (I), by striking ``or'' at 
                        the end,
                            (ii) in subclause (II), by striking the 
                        period at the end and inserting ``, or'', and
                            (iii) by inserting after subclause (II) the 
                        following:
                                    ``(III) the employer is a recovery 
                                startup business (as defined in 
                                paragraph (6)).'',
                    (B) by redesignating paragraph (6) as paragraph 
                (7), and
                    (C) by inserting after paragraph (5) the following:
            ``(6) Recovery startup business.--
                    ``(A) In general.--The term `recovery startup 
                business' means any employer which--
                            ``(i) began carrying on a trade or business 
                        after February 15, 2020,
                            ``(ii) had less than 50 full-time employees 
                        (as defined in section 4980H(c)(4) of the 
                        Internal Revenue Code of 1986, except that 
                        subparagraph (A) of such section shall be 
                        applied by substituting `quarter' for `month') 
                        during the calendar quarter for which the 
                        credit is determined under subsection (a),
                            ``(iii) did not have gross receipts (as 
                        determined under the rules of section 448(c)(3) 
                        of such Code, without regard to subparagraph 
                        (A) thereof) in excess of $25,000 for any 
                        taxable year preceding the 5-taxable-year 
                        period ending with the taxable year preceding 
                        such quarter, and
                            ``(iv) elected to have this paragraph apply 
                        for such quarter.
                    ``(B) Phaseout of credit.--In the case of any 
                recovery startup business, the amount of the credit 
                allowed under subsection (a) for any calendar quarter 
                (as determined without regard to this subparagraph) 
                shall be reduced (but not below zero) by an amount 
                equal to 1 percent of the amount of such credit for 
                each $40,000 (or fraction thereof) by which the gross 
                receipts (as determined under the rules of section 
                448(c)(3) of the Internal Revenue Code of 1986, without 
                regard to subparagraph (A) thereof) of such business 
                for the last taxable year ending before such quarter 
                exceeds $1,000,000.
                    ``(C) Extensions and modifications.--
                            ``(i) Limitation on number of employees.--
                        In the case of a recovery startup business, the 
                        amount of qualified wages which may be taken 
                        into account under subsection (a) by such 
                        employer for any calendar quarter shall not 
                        exceed $50,000.
                            ``(ii) Limitation on number of quarters.--
                                    ``(I) In general.--Subject to 
                                subclause (II), in the case of a 
                                recovery startup business, the credit 
                                allowed under subsection (a) shall only 
                                apply to wages paid during any period 
                                of 2 consecutive calendar quarters (as 
                                elected by such business), as reduced 
                                by the total number of calendar 
                                quarters in which the recovery startup 
                                business--
                                            ``(aa) claimed the credit 
                                        under this section, and
                                            ``(bb) did not make an 
                                        election described in 
                                        subparagraph (A)(iv).
                                    ``(II) Exclusion.--The period 
                                described in subclause (I) shall not 
                                include any calendar quarter which ends 
                                before the later of--
                                            ``(aa) the date of 
                                        enactment of the Recovery 
                                        Startup Assistance Act, or
                                            ``(bb) the date on which 
                                        such business began operations.
                            ``(iii) Extension.--In the case of a 
                        recovery startup business, subsection (m) shall 
                        be applied by substituting `January 1, 2022' 
                        for `July 1, 2021'.'',
            (2) in subsection (j)(2), by adding at the end the 
        following:
                    ``(D) Recovery startup business.--Without regard to 
                subparagraphs (A) through (C), under rules provided by 
                the Secretary, a recovery startup business may elect 
                for any calendar quarter to receive an advance payment 
                of the credit under subsection (a) (after application 
                of subsection (c)(6)) for such quarter.'', and
            (3) in subsection (l)--
                    (A) in paragraph (2), by striking ``and'' at the 
                end,
                    (B) in paragraph (3), by striking the period at the 
                end and inserting ``, and'', and
                    (C) by inserting after paragraph (3) the following:
            ``(4) to prevent fraudulent and abusive claims of the 
        credit allowed under subsection (a) by recovery startup 
        businesses.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to calendar quarters beginning after December 31, 2020.
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