Corporate Freeloader Fee Act

Bill: 116-s-219
Sponsor: full_name: Sen. Brown, Sherrod [D-OH]
Introduced: 2019-01-24
Policy area: Taxation
Subjects: Corporate finance and management

Employee benefits and pensions

Health care costs and insurance

Health care coverage and access

Poverty and welfare assistance

Sales and excise taxes

Wages and earnings
Latest action: action_date: 2019-01-24
text: Read twice and referred to the Committee on Finance.

Summaries:
action_date: 2019-01-24
action_desc: Introduced in Senate
text: <p><b>Corporate Freeloader Fee Act </b></p> <p>This bill imposes a specified excise tax on certain employers who employ low-wage employees during the year. A "low-wage" employee is an employee who receives wages from the employer that are less than 218% of the federal poverty line. The bill reduces the amount of the tax for employers who provide certain health and retirement benefits to low-wage employees. Government employers, churches, and church organizations are exempt from the tax. </p>

tv_txt: II 116th CONGRESS 1st Session S. 219 IN THE SENATE OF THE UNITED STATES January 24, 2019 Mr. Brown (for himself and Mr. Durbin ) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to impose an excise tax on employers with low-wage employees.

1. Short title This Act may be cited as the Corporate Freeloader Fee Act . 2. Imposition of excise tax on corporations with low-wage employees (a) In general Subtitle D of the Internal Revenue Code of 1986 is amended by adding after chapter 36 the following new chapter: 37 Corporate responsibility tax Sec. 4511. Imposition of tax. 4511. Imposition of tax (a) In general In the case of an applicable employer who employs a low-wage employee during the calendar year, there is imposed a tax equal to the applicable percentage of the aggregate amount of wages paid by the applicable employer with respect to employment of all employees of the employer during the calendar year. (b) Applicable employer; low-Wage employee For purposes of this section— (1) Applicable employer (A) In general The term applicable employer means, with respect to any calendar year, any employer who was required to make deposits of taxes under chapters 21 and 24 (or who would have been required to make such deposits if the rules of subparagraph (C) applied for such purposes) by the close of the next day for periods aggregating more than 180 days during the preceding calendar year. (B) Exception Such term shall not include a Federal or other governmental entity or a church or qualified church organization (as such terms are defined in section 3121(w)(3)). (C) Aggregation rules The rules of subsections (b), (c), (m), and (o) of section 414 shall apply for purposes of this section, except that in applying subsections (b) and (c) of such section, the phrase more than 50 percent shall be substituted for the phrase more than 80 percent each place it appears. (2) Low-wage employee (A) In general The term low-wage employee means any employee who receives wages from an applicable employer during the calendar year in an amount less than 218 percent of the Federal poverty line (within the meaning of section 2110(c)(5) of the Social Security Act) for an individual. Rules similar to the rules of section 36B(d)(3)(B) shall apply for purposes of this subparagraph. (B) Employees employed for less than entire year In the case of any employee employed by an applicable taxpayer for less than the entire calendar year, the amount described in subparagraph (A) shall be reduced by an amount which bears the same ratio to such amount as— (i) the number of weeks during the calendar year in which such individual was not an employee of such applicable employer, bears to (ii) 52. (c) Applicable percentage For purposes of subsection (a)— (1) In general (A) Determination The applicable percentage shall be determined as follows: In the case of an applicable employer with a low-wage employee ratio of: The applicable percentage is: 25 percent or less 25 percent Greater than 25 percent, but not greater than 50 percent 50 percent Greater than 50 percent, but not greater than 75 percent 75 percent Greater than 75 percent 100 percent. (B) Low-wage employee ratio For purposes of subparagraph (A), the low-wage employee ratio with respect to any applicable employer is the ratio (expressed as a percentage) of— (i) the number of low-wage employees employed by the applicable employer during the calendar year, to (ii) the total number of individuals employed by the applicable employer during such calendar year. (2) Health and retirement offset (A) In general In the case of an applicable employer who meets the requirements of subparagraph (B), the applicable percentage shall be reduced (but not below zero) by 25 percentage points. (B) Requirements An applicable employer meets the requirements of this subparagraph if such applicable employer— (i) offers to all full-time low-wage employees (and their spouse and dependents) the opportunity to enroll for all months during the calendar year in minimum essential coverage under an eligible employer sponsored health plan (as defined in section 5000A(f)(2)) for which— (I) the plan's share of the allowed costs of benefits provided under the plan is not less than 60 percent of such costs, and (II) the required contribution (within the meaning of section 5000A(e)(1)(B)) of the employee does not exceed the applicable percentage of the annual wages paid to the employee by the applicable employer, and (ii) meets the retirement plan requirements of subsection (d) for all employees who are low-wage employees. For purposes of clause (i)(II), the applicable percentage is the percentage in effect under section 36B(b)(2)(B)(ii) for the plan year. (d) Retirement plan requirements (1) In general The requirements of this subsection are met for any calendar year with respect to an employee of the applicable employer who is a low-wage employee if the employee is eligible to participate in one or more applicable eligible retirement plans maintained by the applicable employer (or any member of the group of employers treated as an applicable employer under subsection (b)(1)(C)) for a plan year ending with or within the calendar year. (2) Applicable eligible retirement plan For purposes of this subsection, the term applicable eligible retirement plan means an eligible retirement plan which, with respect to the plan year described in paragraph (1), is either— (A) a defined contribution plan which requires the employer to make nonelective contributions of at least 5 percent of the compensation of the employee, or (B) a defined benefit plan— (i) with respect to which the accrued benefit of the employee derived from employer contributions, when expressed as an annual retirement benefit, is not less than the product of— (I) the lesser of 2 percent multiplied by the employee's years of service (determined under the rules of paragraphs (4), (5), and (6) of section 411(a)) with the employer or 20 percent, multiplied by (II) the employee's final average pay, or (ii) which is an applicable defined benefit plan (as defined in section 411(a)(13)(B))— (I) which meets the interest credit requirements of section 411(b)(5)(B)(i) with respect to the plan year, and (II) under which the employee receives a pay credit for the plan year which is not less than 5 percent of compensation. (3) Definitions and special rules For purposes of this subsection— (A) Eligible retirement plan The term eligible retirement plan has the meaning given such term by section 402(c)(8)(B), except that in the case of an account or annuity described in clause (i) or (ii) thereof, such term shall only include an account or annuity which is a simplified employee pension (as defined in section 408(k)). (B) Final average pay For purposes of paragraph (2)(B)(i)(II), final average pay shall be determined using the period of consecutive years (not exceeding 5) during which the employee had the greatest compensation from the applicable employer. (C) Alternative plan designs The Secretary may prescribe regulations for an applicable employer to meet the requirements of this subsection through a combination of defined contribution plans or defined benefit plans described in paragraph (1) or through a combination of both such types of plans. (D) Plans must meet requirements without taking into account Social Security and similar contributions and benefits A rule similar to the rule of section 416(e) shall apply. (E) Certain employees may be excluded For purposes of paragraph (2)(B)(ii), an employer shall not be treated as failing to meet the requirements of this subsection with respect to employees— (i) who have not attained the age of 21 before the close of a plan year, (ii) who have less than 1 year of service with the employer as of any day during the plan year, (iii) who are covered under an agreement which the Secretary of Labor finds to be a collective bargaining agreement if there is evidence that the benefits covered under the plan were the subject of good faith bargaining between employee representatives and the employer, or (iv) who are described in section 410(b)(3)(C) (relating to nonresident aliens working outside the United States). (e) Definitions and special rules For purposes of this section— (1) Wages The term wages has the meaning given such term by section 3121(a) (determined without regard to any dollar limitation contained in such section). (2) Allocation of tax The Secretary shall prescribe such rules as necessary for the allocation of the tax imposed by subsection (a) among different entities treated as a single employer under subsection (b)(1)(C). . (b) Conforming amendment The table of chapters of the Internal Revenue Code of 1986 is amended by inserting after the item relating to chapter 36 the following new item: Chapter 37—Corporate responsibility tax . (c) Effective date The amendments made by this section shall apply to calendar years beginning after the date of the enactment of this Act.