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Problem:SECTION 1. SHORT TITLE.

This Act may be cited as the ''Tax Credits for Jobs Now Act of
2010''.

SEC. 2. CREDIT FOR INCREASING EMPLOYMENT.

(a) In General.--Subpart C of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 (relating to refundable credits)
is amended by inserting after section 36A the following new section:

''SEC. 36B. CREDIT FOR INCREASING EMPLOYMENT.

''(a) In General.--There shall be allowed as a credit against the
tax imposed by this subtitle--
''(1) for any taxable year beginning in 2010, an amount
equal to 60 percent of the excess of--
''(A) the aggregate wages paid during 2010, over
''(B) the aggregate wages paid during 2009, and
''(2) for any taxable year beginning in 2011, an amount
equal to 40 percent of the excess of--
''(A) the aggregate wages paid during 2011, over
''(B) the aggregate inflation-adjusted wages paid
during 2010.
''(b) Higher Credit for Increased Employment in States With High
Unemployment.--
''(1) In general.--The amount of credit allowable by
subsection (a) (without regard to this subsection) shall be
increased by--
''(A) 30 percent of the increased high unemployment
State wages for any taxable year beginning in 2010, and
''(B) 20 percent of such wages for any taxable year
beginning in 2011.
''(2) Definitions.--For purposes of this subsection--
''(A) Increased high unemployment state wages.--The
term 'increased high unemployment State wages' means,
with respect to each high unemployment State, the
excess which would be determined under subsection (a)
for the taxable year (after the application of
subsections (e) and (f)) if only wages paid to
qualified employees with respect to such State were
taken into account.
''(B) Qualified employee.--The term 'qualified
employee' means, with respect to any State, any
employee of an employer if--
''(i) substantially all of the services
performed during the taxable year by such
employee for such employer are performed within
such State in a trade or business of the
employer, and
''(ii) the principal place of abode of such
employee while performing such services is
within such State.
Rules similar to the rules of paragraphs (2) and (3) of
section 1396(d) shall apply for purposes of this
subparagraph.
''(C) High unemployment state.--The term 'high
unemployment State' means any State having an
unemployment rate (using the most recent available
data) as of the beginning of the taxable year for which
the credit is being determined of at least 8.5 percent.
''(3) Maximum wages taken into account.--The aggregate
increased high unemployment State wages which may be taken into
account with respect to all high unemployment States for any
taxable year shall not exceed the excess determined under
subsection (a) for such year.
''(c) Maximum Credit.--The amount of the credit allowable under
this section for any employer with respect to any calendar year shall
not exceed $500,000.
''(d) Special Rules for Employers Which Are Exempt From Income Tax
or Which Have Insufficient Income Tax Liability.--
''(1) In general.--In the case of an employer to which this
subsection applies for any payroll period, the payroll taxes
otherwise required to be paid to the Secretary with respect to
such payroll period shall be reduced (but not below zero) by
such period's proportionate share of the employer's estimated
credit under subsection (a) for the taxable year which includes
such period.
''(2) Employers who which subsection applies.--This
subsection shall apply to--
''(A) any employer which is exempt from tax under
section 501(a), and
''(B) any employer which estimates that the tax
imposed by this subtitle for the taxable year will not
exceed the credit allowable under subsection (a) for
such year.
''(3) Payroll taxes.--For purposes of this subsection, the
term 'payroll taxes' means--
''(A) amounts required to be deducted and withheld
for the payroll period under section 3401 (relating to
wage withholding),
''(B) amounts required to be deducted for the
payroll period under section 3102 (relating to FICA
employee taxes), and
''(C) amounts of the taxes imposed for the payroll
period under section 3111 (relating to FICA employer
taxes).
''(4) Amounts treated as paid to secretary.--The amount of
the reduction under paragraph (1) shall be treated as paid to
the Secretary on the day such amount would be required to be so
paid without regard to this subsection.
''(5) Reconciliation.--
''(A) In general.--If there is a reduction under
this subsection for 1 or more payroll periods ending
during a taxable year, then the tax imposed by this
chapter for such taxable year shall be increased by the
aggregate amount of such reductions.
''(B) Reconciliation.--Any increase in tax under
subparagraph (A) shall not be treated as tax imposed by
this chapter for purposes of determining the amount of
any credit (other than the credit under subsection (a))
allowable under this part.
''(e) Minimum Preceding Year Wages.--For purposes of subsection
(a)--
''(1) the amount taken into account under paragraph (1)(B)
thereof shall not be less than 50 percent of the amount
described in paragraph (1)(A) thereof, and
''(2) the amount taken into account under paragraph (2)(B)
thereof shall not be less than 50 percent of the amount
described in paragraph (2)(A) thereof.
''(f) Total Wages Must Increase.--The amount of credit allowed
under this section for any taxable year shall not exceed the amount
which would be so allowed for such year (without regard to subsection
(e)) if--
''(1) the aggregate amounts taken into account as wages
were determined without any dollar limitation, and
''(2) 103 percent of the amount of wages otherwise required
to be taken into account under subsection (a)(1)(B) or
subsection (a)(2)(B), as the case may be, were taken into
account.
''(g) Wages; Inflation-Adjusted Wages.--For purposes of this
section--
''(1) In general.--Except as provided in paragraph (2), the
term 'wages' has the meaning given to such term by section
3306(b).
''(2) Railway and agricultural labor.--Rules similar to the
rules of section 51(h) shall apply for purposes of this
section.
''(3) Inflation-adjusted wages.--The term 'inflation-
adjusted wages' means the aggregate wages paid during 2010
increased by an amount equal to--
''(A) such aggregate wages, multiplied by
''(B) the cost-of-living adjustment determined
under section 1(f)(3) for 2010, determined by
substituting 'calendar year 2008' for 'calendar year
1992' in subparagraph (B) thereof.
Any increase determined under the preceding sentence shall be
rounded in such manner as the Secretary shall prescribe.
''(h) Special Rules.--
''(1) Adjustments for certain acquisitions, etc.--
''(A) Acquisitions.--If, after December 31, 2008,
an employer acquires the major portion of a trade or
business of another person (hereinafter in this
subparagraph referred to as the 'predecessor') or the
major portion of a separate unit of a trade or business
of a predecessor, then, for purposes of applying this
section for any calendar year ending after such
acquisition, the amount of wages deemed paid by the
employer during periods before such acquisition shall
be increased by so much of such wages paid by the
predecessor with respect to the acquired trade or
business as is attributable to the portion of such
trade or business acquired by the employer.
''(B) Dispositions.--If, after December 31, 2008--
''(i) an employer disposes of the major
portion of any trade or business of the
employer or the major portion of a separate
unit of a trade or business of the employer in
a transaction to which subparagraph (A)
applies, and
''(ii) the employer furnishes the acquiring
person such information as is necessary for the
application of subparagraph (A),
then, for purposes of applying this section for any
calendar year ending after such disposition, the amount
of wages deemed paid by the employer during periods
before such disposition shall be decreased by so much
of such wages as is attributable to such trade or
business or separate unit.
''(2) Change in status from self-employed to employee.--
If--
''(A) during 2009 or 2010 an individual has net
earnings from self-employment (as defined in section
1402(a)) which are attributable a trade or business,
and
''(B) for any portion of the succeeding calendar
year such individual is an employee of such trade or
business,
then, for purposes of determining the credit allowable for a
taxable year beginning in such succeeding calendar year, the
employer's aggregate wages for 2009 or 2010, as the case may
be, shall be increased by an amount equal to so much of the net
earnings referred to in subparagraph (A) as does not exceed the
median household income in the United States for 2009 or 2010,
as the case may be.
''(3) Certain other rules to apply.--Rules similar to the
following rules shall apply for purposes of this section:
''(A) Section 51(f) (relating to remuneration must
be for trade or business employment).
''(B) Section 51(1)(1) (relating to related
individuals ineligible).
''(C) Section 51(k) (relating to treatment of
successor employers; treatment of employees performing
services for other persons).
''(D) Section 52 (relating to special rules).
''(4) Short taxable years.--If the employer has more than 1
taxable year beginning in 2010 or 2011, the credit under this
section shall be determined for the employer's last taxable
year beginning in 2010 or 2011, as the case may be.
''(i) Tax-Exempt Employers Treated as Taxpayers.--Solely for
purposes of this section and section 6402, employers exempt from tax
under section 501(a) shall be treated as taxpayers.''.
(b) Denial of Double Benefit.--Subsection (a) of section 280C of
such Code is amended by inserting ''36B(a),'' before ''45A(a)''.
(c) Conforming Amendments.--
(1) Section 1324(b)(2) of title 31, United States Code, is
amended by inserting ''36B,'' after ''36A,''.
(2) The table of sections for subpart C of part IV of
subchapter A of chapter 1 of such Code is amended by inserting
after the item relating to section 36A the following new item:

''Sec. 36B. Credit for increasing employment.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2009.
Solution:
Tax Credits for Jobs Now Act of 2010 - Amends the Internal Revenue Code allow employers a refundable tax credit for increasing aggregate employee wages paid in 2010 over those paid in 2009, and for increasing aggregate employee wages paid in 2011 over those paid in 2010. Increases the rate of such credit for increasing wage payments in high unemployment states (states with an unemployment rage of at least 8.5%). Limits the annual amount of such credit to $500,000.