Empowering Employees through Stock Ownership Act

Bill: 114-hr-5719
Sponsor: Rep. Paulsen, Erik [R-MN-3]
Introduced: 2016-07-11 in the House
Policy area: Taxation
Subjects: Corporate finance and management
Employee benefits and pensions
Income tax deferral
Income tax exclusion
Securities
Wages and earnings

Summary:
action_date: 2016-07-11
text: 

Empowering Employees through Stock Ownership Act 

 
This bill amends the Internal Revenue Code to allow an employee to elect to defer, for income tax purposes, income attributable to certain stock transferred to the employee by an employer. 
 
The employee may defer the inclusion of income from the stock until the year that includes the earliest of the dates on which: 
 
 
 the stock is sold, exchanged, or otherwise transferred; 
 
 the employee becomes an excluded employee; 
 
 stock of the corporation becomes readily tradable on an established securities market; 
 
seven years have passed after the rights of the employee in the stock are transferable or are not subject to a substantial risk of forfeiture, whichever occurs earlier; or 
 
the employee elects to include the amount in income. 
 
 
The stock must meet specified requirements and be transferred to the employee from an eligible corporation in connection with the performance of services as an employee. 
 
A corporation is eligible if: (1) no stock of the corporation is readily tradable on an established securities market during the year or any preceding year, and (2) it has a written plan under which at least 80% of all employees have the same rights and privileges to receive stock for the year. 
 
Employees are excluded if they are or have been: (1) a 1% owner, the chief executive officer, or the chief financial officer of the corporation; (2) a family member of the specified individuals; (3) or one of the four highest compensated officers of the corporation. 
 
The corporation transferring stock must notify employees regarding the option of deferring income and meet specified withholding and reporting requirements. 

action_date: 2016-09-16
text: 

Empowering Employees through Stock Ownership Act 

 
(Sec. 2) This bill amends the Internal Revenue Code to allow an employee to elect to defer, for income tax purposes, income attributable to certain stock transferred to the employee by an employer. 
 
The employee may defer the inclusion of income from the stock until the year that includes the earliest of the dates on which: 
 
 
 the stock becomes transferable; 
 
 the employee becomes an excluded employee; 
 
 stock of the corporation becomes readily tradable on an established securities market; 
 
seven years have passed after the rights of the employee in the stock are transferable or are not subject to a substantial risk of forfeiture, whichever occurs earlier; or 
 
the employee revokes the election with respect to the stock. 
 
 
The stock must meet specified requirements and be transferred to the employee from an eligible corporation in connection with the performance of services as an employee. 
 
A corporation is eligible if: (1) no stock of the corporation or a predecessor of the corporation is readily tradable on an established securities market during any preceding calendar year, and (2) it has a written plan under which at least 80% of all employees who provide services to the corporation in the United States (or a U.S. possession) are granted stock options, or restricted stock units, with the same rights and privileges to receive qualified stock.
 
Employees are excluded if they: (1) are a 1% owner, the chief executive officer, or the chief financial officer of the corporation or have been at any time during the 10 preceding calendar years; (2) are a family member of the specified individuals; or (3) have been one of the four highest compensated officers of the corporation during any of the 10 preceding taxable years. 
 
The corporation transferring stock must notify employees regarding the option of deferring income and meet specified withholding and reporting requirements. 

action_date: 2016-09-22
text: 
(This measure has not been amended since it was reported to the House on September 16, 2016. The summary of that version is repeated here.)
 

Empowering Employees through Stock Ownership Act 

 
(Sec. 2) This bill amends the Internal Revenue Code to allow an employee to elect to defer, for income tax purposes, income attributable to certain stock transferred to the employee by an employer. 
 
The employee may defer the inclusion of income from the stock until the year that includes the earliest of the dates on which: 
 
 
 the stock becomes transferable; 
 
 the employee becomes an excluded employee; 
 
 stock of the corporation becomes readily tradable on an established securities market; 
 
seven years have passed after the rights of the employee in the stock are transferable or are not subject to a substantial risk of forfeiture, whichever occurs earlier; or 
 
the employee revokes the election with respect to the stock. 
 
 
The stock must meet specified requirements and be transferred to the employee from an eligible corporation in connection with the performance of services as an employee. 
 
A corporation is eligible if: (1) no stock of the corporation or a predecessor of the corporation is readily tradable on an established securities market during any preceding calendar year, and (2) it has a written plan under which at least 80% of all employees who provide services to the corporation in the United States (or a U.S. possession) are granted stock options, or restricted stock units, with the same rights and privileges to receive qualified stock.
 
Employees are excluded if they: (1) are a 1% owner, the chief executive officer, or the chief financial officer of the corporation or have been at any time during the 10 preceding calendar years; (2) are a family member of the specified individuals; or (3) have been one of the four highest compensated officers of the corporation during any of the 10 preceding taxable years. 
 
The corporation transferring stock must notify employees regarding the option of deferring income and meet specified withholding and reporting requirements. 


Legislative actions:
action_date: 2016-09-26
text: Received in the Senate.
action_date: 2016-09-22
text: Motion to reconsider laid on the table Agreed to without objection.
action_date: 2016-09-22
text: On passage Passed by the Yeas and Nays: 287 - 124 (Roll no. 544). (text of amendment in the nature of a substitute: CR H5822-5824)
action_date: 2016-09-22
text: Passed/agreed to in House: On passage Passed by the Yeas and Nays: 287 - 124 (Roll no. 544).(text of amendment in the nature of a substitute: CR H5822-5824)
action_date: 2016-09-22
text: Considered as unfinished business. (consideration: CR H5719-5835)
action_date: 2016-09-22
text: POSTPONED PROCEEDINGS - At the conclusion of debate on H.R. 5719, the Chair put the question on passage and by voice vote, announced that the ayes had prevailed. Mr. Crowley demanded the yeas and nays and the Chair postponed further proceedings on passage of the bill until a time to be announced.
action_date: 2016-09-22
text: The previous question was ordered pursuant to the rule. (consideration: CR H5829)
action_date: 2016-09-22
text: DEBATE - The House proceeded with one hour of debate on H.R. 5719.
action_date: 2016-09-22
text: Rule provides for consideration of H.R. 3438 and H.R. 5719. The resolution provides for one hour of general debate on H.R. 3438 and H.R. 5719. The resolution provides that it shall be in order at any time on the legislative day of September 22, 2016 or September 23, 2016, for the Speaker to entertain motions that the House suspend the rules.
action_date: 2016-09-22
text: Considered under the provisions of rule H. Res. 875. (consideration: CR H5822-5830)
action_date: 2016-09-21
text: Rule H. Res. 875 passed House.
action_date: 2016-09-20
text: Rules Committee Resolution H. Res. 875 Reported to House. Rule provides for consideration of H.R. 3438 and H.R. 5719. The resolution provides for one hour of general debate on H.R. 3438 and H.R. 5719. The resolution provides that it shall be in order at any time on the legislative day of September 22, 2016 or September 23, 2016, for the Speaker to entertain motions that the House suspend the rules.
action_date: 2016-09-16
text: Placed on the Union Calendar, Calendar No. 581.
action_date: 2016-09-16
text: Reported (Amended) by the Committee on Ways and Means. H. Rept. 114-748.
action_date: 2016-09-16
text: Reported (Amended) by the Committee on Ways and Means. H. Rept. 114-748.
action_date: 2016-09-14
text: Ordered to be Reported (Amended) by Voice Vote.
action_date: 2016-09-14
text: Committee Consideration and Mark-up Session Held.
action_date: 2016-07-11
text: Referred to the House Committee on Ways and Means.
action_date: 2016-07-11
text: Introduced in House
action_date: 2016-07-11
text: Introduced in House