Puerto Rico Economic Empowerment Act of 2018

Bill: 115-s-2873
Sponsor: full_name: Sen. Hatch, Orrin G. [R-UT]
Introduced: 2018-05-17
Policy area: Commerce
Subjects: Appropriations

Business investment and capital

Caribbean area

Census and government statistics

Congressional oversight

Department of Commerce

Disaster relief and insurance

Economic development

Employment taxes

Government buildings, facilities, and property

Government lending and loan guarantees

Government studies and investigations

Government trust funds

Health programs administration and funding

Health promotion and preventive care

Income tax credits

Public contracts and procurement

Puerto Rico

Small Business Administration

Small business

Social security and elderly assistance

Tax treatment of families

U.S. territories and protectorates
Latest action: action_date: 2018-05-17
text: Read twice and referred to the Committee on Finance.

Summaries:
action_date: 2018-05-17
action_desc: Introduced in Senate
text: <p><b>Puerto Rico Economic Empowerment Act of 2018</b></p> <p>This bill provides for various&nbsp;support for&nbsp;Puerto Rico,&nbsp;including by&nbsp;(1) establishing tax benefits for Puerto Rico,&nbsp;such as&nbsp;a tax credit for employment payroll taxes and an expansion of the child tax credit; (2) relaxing certain requirements related to Small Business Administration loan programs for certain Puerto Rico businesses; (3) prioritizing the&nbsp;transfer of surplus U.S. government property to qualified Puerto Rico businesses; and (4) establishing the Federal and State Technology Partnership Program in Puerto Rico.</p>

tv_txt: II 115th CONGRESS 2d Session S. 2873 IN THE SENATE OF THE UNITED STATES May 17, 2018 Mr. Hatch (for himself and Mr. Rubio ) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To support businesses in Puerto Rico, extend child tax credits for families in Puerto Rico, and for other purposes.

1. Short title; table of contents (a) Short title This Act may be cited as the Puerto Rico Economic Empowerment Act of 2018 . (b) Table of contents The table of contents of this Act is as follows: Sec. 1. Short title; table of contents. TITLE I—Tax Relief Sec. 101. Temporary employee payroll tax cut for residents of Puerto Rico. Sec. 102. Equal treatment of Puerto Rican families with 1 or more children that is currently provided to families with 3 or more children. TITLE II—Flexibility for Puerto Rico in Small Business Administration programs Sec. 201. Short title. Sec. 202. Definitions. Subtitle A—Lending Sec. 211. Microloan program for Puerto Rico small business concerns. Subtitle B—Procurement Sec. 221. Priority for surplus property transfers. Sec. 222. Subcontracting incentives for protege firms that are Puerto Rico businesses. Sec. 223. Additional mentor-protege relationships for protege firms that are Puerto Rico businesses. Subtitle C—Entrepreneurial Development Sec. 231. FAST grant program for Puerto Rico. Subtitle D—Small Business Administration Oversight Sec. 241. Requirement for the District Director of Puerto Rico. Subtitle E—Disaster Loan Program Expansion Sec. 251. Amendment to definition of disaster for 7( b ) loans. Subtitle F—Amendment to the Investment Company Act of 1940 Sec. 261. Termination of exemption for companies in territories of the United States. TITLE III—Economic statistics Sec. 301. Definition. Sec. 302. Inclusion of Puerto Rico in Census surveys. Sec. 303. Federal Statistical Research Data Center. TITLE IV—Offsets Sec. 401. Prevention and Public Health Fund. I Tax Relief 101. Temporary employee payroll tax cut for residents of Puerto Rico (a) In general Notwithstanding any other provision of law, in the case of a qualified resident of Puerto Rico— (1) there shall be allowed a credit against the tax imposed by section 1401(a) of the Internal Revenue Code of 1986 for any taxable year which begins in the payroll tax holiday period an amount equal to 3.1 percent of the lesser of— (A) the self-employment income (as defined in section 1402(b) of such Code) derived from sources within Puerto Rico (as determined under section 937(b) of such Code) for the taxable year, or (B) the net earnings from self-employment (as defined in section 1402(a) of such Code) for the taxable year, and (2) with respect to remuneration received during the payroll tax holiday period for services performed as an employee within Puerto Rico (except amounts received for services performed as an employee of the United States or any agency thereof), the rate of tax under 3101(a) of such Code shall be 3.1 percent (including for purposes of determining the applicable percentage under sections 3201(a) and 3211(a)(1) of such Code). (b) Special rules (1) Application of rule for special refunds In the case of a qualified resident of Puerto Rico to whom subsection (a)(2) applies, the first sentence of section 6413(c)(1) of the Internal Revenue Code of 1986 shall be applied by substituting for exceeds the tax with respect to the amount of such wages received in such year which is equal to such contribution and benefit base the following: exceeds the sum of— (1) 3.1 percent of the lesser of— (A) the wages received in such year to which section 2(a)(2) of the Puerto Rico Economic Empowerment Act of 2018 applies, or (B) the contribution and benefit base, plus (2) 6.2 percent of the lesser of— (A) the wages received in such year to which such section does not apply, or (B) the contribution and benefits base reduced (but not below zero) by the amount of wages taken into account under paragraph (1). . (2) Employer liability An employer who receives an attestation from an employee, in such form and manner as directed by the Secretary of the Treasury (or the Secretary's delegate), that such employee is a qualified resident of Puerto Rico shall not be liable under section 3102 or 3202 of the Internal Revenue Code of 1986 for any failure to collect taxes in excess of the rate which applies under this section unless a reasonable person would determine that such attestation is not true and correct. (3) De minimis services For purposes of subsection (a)(2), services performed as an employee outside of Puerto Rico shall not be taken into account if such services are de minimis. (c) Definitions (1) Qualified resident The term qualified resident means, with respect to any calendar year, any individual— (A) who was present in Puerto Rico for at least 183 days during the preceding calendar year, and (B) who, as of the first day of the calendar year, does not have a tax home (determined under the principles of section 911(d)(3) of the Internal Revenue Code of 1986 without regard to the second sentence thereof) outside of Puerto Rico and does not have a closer connection (determined under the principles of section 7701(b)(3)(B)(ii) of such Code) to the United States or a foreign country than to Puerto Rico. For purposes of subparagraph (A), the determination of whether a person is present for any day shall be made under the principles of section 7701(b) of such Code. (2) Payroll tax holiday period The term payroll tax holiday period means the period beginning after June 30, 2018, and ending before July 1, 2020. (d) Employer notification The Secretary of the Treasury shall notify employers of the payroll tax holiday period in any manner the Secretary deems appropriate. (e) Transfers of funds (1) Transfers to federal old-age and survivors insurance trust fund There are hereby appropriated to the Federal Old-Age and Survivors Trust Fund and the Federal Disability Insurance Trust Fund established under section 201 of the Social Security Act ( 42 U.S.C. 401 ) amounts equal to the reduction in revenues to the Treasury by reason of the application of subsection (a). 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 had such amendments not been enacted. (2) Transfers to social security equivalent benefit account There are hereby appropriated to 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 the application of subsection (a)(2). 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 Account had such amendments not been enacted. (3) Coordination with other laws For purposes of applying any provision of law other than the provisions of the Internal Revenue Code of 1986, the rate of tax in effect under section 3101(a) of such Code shall be determined without regard to the reduction in such rate under this section. 102. Equal treatment of Puerto Rican families with 1 or more children that is currently provided to families with 3 or more children (a) In general Section 24 of the Internal Revenue Code of 1986, as amended by section 11022 of Public Law 115–97 , is amended by adding at the end the following new subsection: (i) Residents of Puerto Rico In the case of an individual who is a bona fide resident of Puerto Rico during the entire taxable year— (1) subsection (d)(1)(B)(ii) shall be applied (after application of subsection (h)), by substituting 1 or more qualifying children for 3 or more qualifying children , and (2) for purposes of subclause (I) of such subsection, such individual's social security taxes for such taxable year shall be determined as if section 101 of the Puerto Rico Economic Empowerment Act of 2018 did not apply. . (b) Effective date The amendment made by this section shall apply to taxable years beginning after December 31, 2017. II Flexibility for Puerto Rico in Small Business Administration programs 201. Short title This title may be cited as the Puerto Rico Opportunity, Small Business Prosperity, and Economic Revitalization Act of 2018 . 202. Definitions (a) In general In this title: (1) Administration; Administrator The terms Administration and Administrator mean the Small Business Administration and the Administrator thereof. (2) Microloan program The term microloan program means the program established under section 7(m) of the Small Business Act ( 15 U.S.C. 636(m) ). (3) Oversight Board termination date The term Oversight Board termination date means the date on which the Oversight Board established under section 101 of the Puerto Rico Oversight, Management, and Economic Stability Act ( 48 U.S.C. 2121 ) terminates. (4) Puerto Rico The term Puerto Rico means the Commonwealth of Puerto Rico. (5) Puerto Rico business The term Puerto Rico business means a small business concern that has its principal office located in the Commonwealth of Puerto Rico. (6) Small business concern The term small business concern has the meaning given the term in section 3 of the Small Business Act ( 15 U.S.C. 632 ). (b) Small Business Act Section 3 of the Small Business Act ( 15 U.S.C. 632 ) is amended by adding at the end the following: (ee) Puerto Rico business In this Act, the term Puerto Rico business means a small business concern that has its principal office located in the Commonwealth of Puerto Rico. . A Lending 211. Microloan program for Puerto Rico small business concerns (a) Increase in access to capital for certain intermediaries Section 7(m)(3)(C) of the Small Business Act ( 15 U.S.C. 636(m)(3)(C) ) is amended— (1) by inserting and except as provided in clause (ii) after subsection (a)(3) ; (2) by striking Notwithstanding and inserting the following: (i) In general Notwithstanding ; and (3) by adding at the end the following: (ii) Exception for certain Puerto Rico businesses (I) In general No loan shall be made under this subsection if the total amount outstanding and committed to 1 covered intermediary (excluding outstanding grants) from the business loan and investment fund established by this Act would, as a result of such loan, exceed $6,000,000 in the remaining years of the covered intermediary's participation in the program. (II) Definition In this clause, the term covered intermediary means an intermediary that— (aa) is participating in the program; and (bb) submits to the Administrator a certification that not less than 20 percent of the microloans made by the intermediary under this subsection, during such period as the Administrator may specify, will be made to Puerto Rico businesses. . (b) Waiver of 25/75 rule for microloans to Puerto Rico small business concerns Section 7(m)(4)(E) of the Small Business Act ( 15 U.S.C. 636(m)(4)(E) ) is amended— (1) in clause (i), by striking Each and inserting Except as provided in clause (iii), each ; and (2) by adding at the end the following: (iii) Exception for certain intermediaries The Administrator shall waive the requirements of clause (i) for an intermediary for which not less than 25 percent of the loans made by the intermediary are made to Puerto Rico businesses. . (c) SBA study Not later than 1 year after the date of enactment of this Act, the Administrator shall conduct a study and submit to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives a report on the following: (1) The operations (including services provided, structure, size, and area of operation) of a representative sample of— (A) intermediaries that are eligible for participation in the microloan program and that participate in the microloan program; and (B) intermediaries (including those operated for profit, operated as nonprofit organizations, and affiliated with a United States institution of higher learning (as defined in section 3452 of title 38, United States Code)) that are so eligible and that do not participate in the microloan program. (2) The reasons why intermediaries described in paragraph (1)(B) choose not to participate in the microloan program. (3) Recommendations on how to encourage increased participation in the microloan program by intermediaries described in paragraph (1)(B). (4) Recommendations for increasing the number of intermediaries located in the territories of the United States or in economically distressed areas (as defined in section 7(m)(11)(D) of the Small Business Act ( 15 U.S.C. 636(m)(11)(D) )) that are eligible for participation in the microloan program. (5) Recommendations on how to decrease the costs associated with participation in the microloan program for eligible intermediaries. (d) GAO study on microloan intermediary practices Not later than 1 year after the date of enactment of this Act, the Comptroller General of the United States shall submit to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives a report evaluating— (1) oversight of the microloan program by the Administration, including oversight of intermediaries participating in the microloan program; and (2) the specific processes used by the Administration to ensure— (A) compliance by intermediaries participating in the microloan program; and (B) the overall performance of the microloan program. B Procurement 221. Priority for surplus property transfers Section 7(j)(13)(F) of the Small Business Act ( 15 U.S.C. 636(j)(13)(F) ) is amended by adding at the end the following: (iii) (I) In this clause, the term covered period means the period beginning on the date of enactment of this clause and ending on the date on which the Oversight Board established under section 101 of the Puerto Rico Oversight, Management, and Economic Stability Act ( 48 U.S.C. 2121 ) terminates. (II) The Administrator may transfer technology or surplus property under clause (i) on a priority basis to a Puerto Rico business if the Puerto Rico business meets the requirements for such a transfer, without regard to whether the Puerto Rico business is a Program Participant. . 222. Subcontracting incentives for protege firms that are Puerto Rico businesses Section 45(a) of the Small Business Act ( 15 U.S.C. 657r(a) ) is amended by adding at the end the following: (3) Puerto Rico small business concerns (A) In general During the period beginning on the date of enactment of this paragraph and ending on the date on which the Oversight Board established under section 101 of the Puerto Rico Oversight, Management, and Economic Stability Act ( 48 U.S.C. 2121 ) terminates, the Administrator shall provide additional incentives to covered mentors, including providing additional credit for subcontracts awarded to covered proteges and costs incurred for providing training to covered proteges. (B) Definitions In this paragraph— (i) the term covered mentor means a mentor that enters into an agreement under this Act, or under any mentor-protege program approved under subsection (b)(1), with a covered protege; and (ii) the term covered protege means a protege— (I) of a covered mentor; and (II) that has its principal office located in the Commonwealth of Puerto Rico. . 223. Additional mentor-protege relationships for protege firms that are Puerto Rico businesses Section 45(b)(3)(A) of the Small Business Act ( 15 U.S.C. 657r(b)(3)(A) ) is amended by inserting , except that such restrictions shall not apply to a relationship that was entered into before the date on which the Oversight Board established under section 101 of the Puerto Rico Oversight, Management, and Economic Stability Act ( 48 U.S.C. 2121 ) terminates and in which the principal office of the protege is located in the Commonwealth of Puerto Rico after each participant . C Entrepreneurial Development 231. FAST grant program for Puerto Rico (a) In general Section 34 of the Small Business Act ( 15 U.S.C. 657d ) is amended by adding at the end the following: (j) FAST grant program for Puerto Rico (1) Establishment The Administrator shall establish a program that shall be part of the FAST program to make awards to, or enter into cooperative agreements with, a Puerto Rico business. (2) Technical assistance If no applicant is selected to receive assistance under this subsection, the Administrator shall use amounts appropriated to carry out this subsection to provide business advice and counseling to a Puerto Rico business. (3) Waiver of matching requirements The Administrator may, upon application, waive the matching requirements under subsection (e)(2) for an applicant that receives an award or has in effect a cooperative agreement under this subsection. (4) Funding There is authorized to be appropriated $100,000 for fiscal year 2019, and each fiscal year thereafter, to carry out this subsection. . (b) Prospective repeal Effective on the Oversight Board termination date, section 34 of the Small Business Act ( 15 U.S.C. 657d ), as amended by subsection (a), is amended by striking subsection (j). D Small Business Administration Oversight 241. Requirement for the District Director of Puerto Rico (a) In general During the period beginning on the date of enactment of this Act and ending on the Oversight Board termination date, the director of the district office of the Administration located in Puerto Rico shall submit directly to Congress and the Administrator an annual report on the activities of the Administration in Puerto Rico. (b) Coordination In preparing each report described in subsection (a), the director described in such subsection shall consult with other Federal agencies to collect data on grants, programs, and outreach activities carried out by such agencies that affect any Puerto Rico business. E Disaster Loan Program Expansion 251. Amendment to definition of disaster for 7( b ) loans (a) In general Section 3(k)(2) of the Small Business Act ( 15 U.S.C. 632(k)(2) ) is amended— (1) in subparagraph (B), by striking and at the end; (2) in subparagraph (C), striking the period and inserting ; and ; and (3) by adding at the end the following: (D) communicable diseases for which the Federal Government issues a travel alert or travel warning. . (b) Applicability The amendment made by subsection (a) shall apply to a communicable disease— (1) for which the Federal Government issues a travel alert or travel warning before, on, or after the date of enactment of this Act; and (2) the effects of which are experienced on or after the date of enactment of this Act. F Amendment to the Investment Company Act of 1940 261. Termination of exemption for companies in territories of the United States (a) In general Section 6(a) of the Investment Company Act of 1940 ( 15 U.S.C. 80a–6(a) ) is amended— (1) by striking paragraph (1); and (2) by redesignating paragraphs (2) through (5) as paragraphs (1) through (4), respectively. (b) Effective date and safe harbor (1) Effective date Except as provided in paragraph (2), the amendment made by subsection (a) shall take effect on the date of enactment of this Act. (2) Safe harbor With respect to a company that is exempt under section 6(a)(1) of the Investment Company Act of 1940 ( 15 U.S.C. 80a–6(a)(1) ), as in effect on the day before the date of enactment of this Act, the amendment made by subsection (a) shall take effect on the date that is 3 years after the date of enactment of this Act. (3) Extension of safe harbor The Securities and Exchange Commission, by rule and regulation upon its own motion, or by order upon application, may conditionally or unconditionally, under section 6(c) of the Investment Company Act of 1940 ( 15 U.S.C. 80a–6(c) ), further delay the effective date for a company described in paragraph (2) to be not later than the date that is 6 years after the date of enactment of this Act if, before the end of the initial 3-year period, the Commission determines that such a rule, regulation, motion, or order is necessary or appropriate in the public interest and for the protection of investors. III Economic statistics 301. Definition In this title, the term Secretary means the Secretary of Commerce, acting through the Director of the Bureau of the Census. 302. Inclusion of Puerto Rico in Census surveys (a) Study on inclusion in Current Population Survey The Secretary shall study the feasibility of including Puerto Rico in the Current Population Survey conducted by the Secretary. (b) Interagency working group on improving data (1) Establishment The Chief Statistician of the United States shall establish a technical interagency working group to study the most effective approach to improving the quality and availability of data about or from Puerto Rico for the purpose of Federal statistical programs. (2) Report Not later than October 31, 2018, and on a quarterly basis thereafter, the technical interagency working group established under paragraph (1) shall submit a report on the activities and findings of the working group to— (A) the Committee on Finance of the Senate; and (B) the Committee on Ways and Means of the House of Representatives. (c) Inclusion in other surveys and programs of the Bureau of the Census The Secretary shall conduct a proof of concept for including, or expanding the inclusion of, Puerto Rico in each of the following surveys and programs conducted by the Secretary: (1) The Census of Governments and Related Annual Programs. (2) The Survey of Business Owners. (3) The Building Permits Survey. (4) The Quarterly Workforce Indicators, derived from the Longitudinal Employer-Household Dynamics Program. (5) The Statistics of U.S. Businesses. 303. Federal Statistical Research Data Center (a) In general The Secretary shall establish a facility, to be known as the Federal Statistical Research Data Center , in San Juan, Puerto Rico. (b) Dual capacity The facility established under subsection (a) shall serve as both— (1) an office of the International Trade Management Division of the Bureau of the Census; and (2) a research data center of the Bureau of the Census. IV Offsets 401. Prevention and Public Health Fund Section 4002(b) of the Patient Protection and Affordable Care Act ( 42 U.S.C. 300u–11(b) ), as amended by section 53119 of Public Law 115–123 , is amended— (1) in paragraph (3), by striking $900,000,000 and inserting $841,000,000 ; (2) in paragraph (4), by striking $900,000,000 and inserting $848,000,000 ; (3) by striking paragraphs (5) through (8); (4) by redesignating paragraph (9) as paragraph (7); and (5) by inserting after paragraph (4) the following new paragraphs: (5) for fiscal year 2020, $900,000,000; (6) for each fiscal year during the period of fiscal years 2021 through 2027, $700,000,000; and; .