[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1325 Introduced in House (IH)]
103d CONGRESS
1st Session
H. R. 1325
To amend the Internal Revenue Code of 1986 to provide tax credits for
Indian investment and employment, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 11, 1993
Mr. Richardson introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide tax credits for
Indian investment and employment, and for other purposes.
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 ``Indian Employment and Investment Act
of 1993''.
SEC. 2. INVESTMENT TAX CREDIT FOR PROPERTY ON INDIAN RESERVATIONS.
(a) Allowance of Indian Reservation Credit.--Section 46 of the
Internal Revenue Code of 1986 (relating to investment credits) is
amended by striking ``and'' at the end of paragraph (2), by striking
the period at the end of paragraph (3) and inserting ``, and'', and by
adding after paragraph (3) the following new paragraph:
``(4) the Indian reservation credit.''.
(b) Amount of Indian Reservation Credit.--
(1) In general.--Section 48 of such Code (relating to the
energy credit and the reforestation credit) is amended by
adding after subsection (b) the following new subsection:
``(c) Indian Reservation Credit.--
``(1) In general.--For purposes of section 46, the Indian
reservation credit for any taxable year is the Indian
reservation percentage of the qualified investment in qualified
Indian reservation property placed in service during such
taxable year, determined in accordance with the following
table:
``In the case of qualified
Indian reservation property
The Indian reservation
which is:
percentage is:
Reservation personal property...... 10
New reservation construction 15
property.
Reservation infrastructure 15.
investment.
``(2) Qualified investment in qualified indian reservation
property defined.--For purposes of this subpart--
``(A) In general.--The term `qualified Indian
reservation property' means property--
``(i) which is--
``(I) reservation personal
property,
``(II) new reservation construction
property, or
``(III) reservation infrastructure
investment, and
``(ii) not acquired (directly or
indirectly) by the taxpayer from a person who
is related to the taxpayer (within the meaning
of section 465(b)(3)(C)).
The term `qualified Indian reservation property' does
not include any property (or any portion thereof)
placed in service for purposes of conducting or housing
class I, II, or III gaming (as defined in section 4 of
the Indian Gaming Regulatory Act (25 U.S.C. 2703)).
``(B) Qualified investment.--The term `qualified
investment' means--
``(i) in the case of reservation
infrastructure investment, the amount expended
by the taxpayer for the acquisition or
construction of the reservation infrastructure
investment; and
``(ii) in the case of all other qualified
Indian reservation property, the taxpayer's
basis for such property.
``(C) Reservation personal property.--The term
`reservation personal property' means qualified
personal property which is used by the taxpayer
predominantly in the active conduct of a trade or
business within an Indian reservation. Property shall
not be treated as `reservation personal property' if it
is used or located outside the Indian reservation on a
regular basis.
``(D) Qualified personal property.--The term
`qualified personal property' means property--
``(i) for which depreciation is allowable
under section 168,
``(ii) which is not--
``(I) nonresidential real property,
``(II) residential rental property,
or
``(III) real property which is not
described in (I) or (II) and which has
a class life of more than 12.5 years.
For purposes of this subparagraph, the terms
`nonresidential real property', `residential rental
property', and `class life' have the respective
meanings given such terms by section 168.
``(E) New reservation construction property.--The
term `new reservation construction property' means
qualified real property--
``(i) which is located in an Indian
reservation,
``(ii) which is used by the taxpayer
predominantly in the active conduct of a trade
or business within an Indian reservation, and
``(iii) which is originally placed in
service by the taxpayer.
``(F) Qualified real property.--The term `qualified
real property' means property for which depreciation is
allowable under section 168 and which is described in
clause (I), (II), or (III) of subparagraph (D)(ii).
``(G) Reservation infrastructure investment.--
``(i) In general.--The term `reservation
infrastructure investment' means qualified
personal property or qualified real property
which--
``(I) benefits the tribal
infrastructure,
``(II) is available to the general
public, and
``(III) is placed in service in
connection with the taxpayer's active
conduct of a trade or business within
an Indian reservation.
``(ii) Property may be located outside the
reservation.--Qualified personal property and
qualified real property used or located outside
an Indian reservation shall be reservation
infrastructure investment only if its purpose
is to connect to existing tribal infrastructure
in the reservation, and shall include, but not
be limited to, roads, power lines, water
systems, railroad spurs, and communications
facilities.
``(H) Coordination with other credits.--The term
`qualified Indian reservation property' shall not
include any property with respect to which the energy
credit or the rehabilitation credit is allowed.
``(3) Real estate rentals.--For purposes of this section,
the rental to others of real property located within an Indian
reservation shall be treated as the active conduct of a trade
or business in an Indian reservation.
``(4) Indian reservation defined.--For purposes of this
subpart, the term `Indian reservation' means a reservation, as
defined in--
``(A) section 3(d) of the Indian Financing Act of
1974 (25 U.S.C. 1452(d)), or
``(B) section 4(10) of the Indian Child Welfare Act
of 1978 (25 U.S.C. 1903(10)).
``(5) Limitation based on unemployment.--
``(A) General rule.--The Indian reservation credit
allowed under section 46 for any taxable year shall
equal--
``(i) if the Indian unemployment rate on
the applicable Indian reservation for which the
credit is sought exceeds 300 percent of the
national average unemployment rate at any time
during the calendar year in which the property
is placed in service or during the immediately
preceding 2 calendar years, 100 percent of such
credit,
``(ii) if such Indian unemployment rate
exceeds 150 percent but not 300 percent, 50
percent of such credit, and
``(iii) if such Indian unemployment rate
does not exceed 150 percent, 0 percent of such
credit.
``(B) Special rule for large projects.--In the case
of a qualified Indian reservation property which has
(or is a component of a project which has) a projected
construction period of more than 2 years or a cost of
more than $1,000,000, subparagraph (A) shall apply by
substituting `during the earlier of the calendar year
in which the taxpayer enters into a binding agreement
to make a qualified investment or the first calendar
year in which the taxpayer has expended at least 10
percent of the taxpayer's qualified investment, or the
preceding calendar year' for `during the calendar year
in which the property is placed in service or during
the immediately preceding 2 calendar years'.
``(C) Determination of indian unemployment.--For
purposes of this paragraph, with respect to any Indian
reservation, the Indian unemployment rate shall be
based upon Indians unemployed and able to work, and
shall be certified by the Secretary of the Interior.
``(6) Coordination with nonrevenue laws.--Any reference in
this subsection to a provision not contained in this title
shall be treated for purposes of this subsection as a reference
to such provision as in effect on the date of the enactment of
this paragraph.''.
(2) Lodging to qualify.--Paragraph (2) of section 50(b) of
such Code (relating to property used for lodging) is amended--
(A) by striking ``and'' at the end of subparagraph
(C),
(B) by striking the period at the end of
subparagraph (D) and inserting ``; and'' and
(C) by adding at the end thereof the following
subparagraph:
``(E) new reservation construction property.''.
(c) Recapture.--Subsection (a) of section 50 of such Code (relating
to recapture in case of dispositions, etc.), is amended by adding at
the end thereof the following new paragraph:
``(6) Special rules for indian reservation property.--
``(A) In general.--If, during any taxable year,
property with respect to which the taxpayer claimed an
Indian reservation credit--
``(i) is disposed of, or
``(ii) in the case of reservation personal
property--
``(I) otherwise ceases to be
investment credit property with respect
to the taxpayer, or
``(II) is removed from the Indian
reservation, converted or otherwise
ceases to be Indian reservation
property,
the tax under this chapter for such taxable year shall
be increased by the amount described in subparagraph
(B).
``(B) Amount of increase.--The increase in tax
under subparagraph (A) shall equal the aggregate
decrease in the credits allowed under section 38 by
reason of section 48(c) for all prior taxable years
which would have resulted had the qualified investment
taken into account with respect to the property been
limited to an amount which bears the same ratio to the
qualified investment with respect to such property as
the period such property was held by the taxpayer bears
to the applicable recovery period under section 168(g).
``(C) Coordination with other recapture
provisions.--In the case of property to which this
paragraph applies, paragraph (1) shall not apply and
the rules of paragraphs (3), (4), and (5) shall
apply.''.
(d) Basis Adjustment To Reflect Investment Credit.--Paragraph (3)
of section 50(c) of such Code (relating to basis adjustment to
investment credit property) is amended by striking ``energy credit or
reforestation credit'' and inserting ``energy credit, reforestation
credit or Indian reservation credit other than with respect to any
expenditure for new reservation construction property''.
(e) Certain Governmental Use Property To Qualify.--Paragraph (4) of
section 50(b) of such Code (relating to property used by governmental
units or foreign persons or entities) is amended by redesignating
subparagraphs (D) and (E) as subparagraphs (E) and (F), respectively,
and inserting after subparagraph (C) the following new subparagraph:
``(D) Exception for reservation infrastructure
investment.--This paragraph shall not apply for
purposes of determining the Indian reservation credit
with respect to reservation infrastructure
investment.''.
(f) Application of At-Risk Rules.--Subparagraph (C) of section
49(a)(1) of such Code is amended by striking ``and'' at the end of
clause (ii), by striking the period at the end of clause (iii) and
inserting ``, and'', and by adding at the end the following new clause:
``(iv) the qualified investment in
qualified Indian reservation property.''.
(g) Clerical Amendments.--
(1) Section 48 of such Code is amended by striking the
heading and inserting the following:
``SEC. 48. ENERGY CREDIT; REFORESTATION CREDIT; INDIAN RESERVATION
CREDIT.''.
(2) The table of sections for subpart E of part IV of
subchapter A of chapter 1 is amended by striking out the item
relating to section 48 and inserting the following:
``Sec. 48. Energy credit; reforestation
credit; Indian reservation
credit.''.
(h) Effective Date.--The amendments made by this section shall
apply to property placed in service after December 31, 1993.
SEC. 3. INDIAN EMPLOYMENT CREDIT.
(a) Allowance of Indian Employment Credit.--Section 38(b) of the
Internal Revenue Code of 1986 (relating to general business credits) is
amended by striking ``plus'' at the end of paragraph (7), by striking
the period at the end of paragraph (8) and inserting ``, plus'', and by
adding after paragraph (8) the following new paragraph:
``(9) the Indian employment credit as determined under
section 45A(a).''.
(b) Amount of Indian Employment Credit.--Subpart D of Part IV of
subchapter A of chapter 1 of such Code (relating to business related
credits) is amended by adding at the end thereof the following new
section:
``SEC. 45A . INDIAN EMPLOYMENT CREDIT.
``(a) Amount of Credit.--
``(1) In general.--For purposes of section 38, the amount
of the Indian employment credit determined under this section
with respect to any employer for any taxable year is 10 percent
(30 percent in the case of an employer with at least 85 percent
Indian employees throughout the taxable year) of the sum of--
``(A) the qualified wages paid or incurred during
such taxable year, plus
``(B) qualified employee health insurance costs
paid or incurred during such taxable year.
In no event shall the amount of the Indian employment credit
for any taxable year exceed the credit limitation amount
determined under subsection (e) for such taxable year.
``(2) Indian employee.--For purposes of paragraph (1), the
term `Indian employee' means an employee who is an enrolled
member of an Indian tribe or the spouse of such a member.
``(b) Qualified Wages; Qualified Employee Health Insurance Costs.--
For purposes of this section--
``(1) Qualified wages.--
``(A) In general.--The term `qualified wages' means
any wages paid or incurred by an employer for services
performed by an employee while such employee is a
qualified employee.
``(B) Coordination with targeted jobs credit.--The
term `qualified wages' shall not include wages
attributable to service rendered during the 1-year
period beginning with the day the individual begins
work for the employer if any portion of such wages is
taken into account in determining the credit under
section 51.
``(2) Qualified employee health insurance costs.--
``(A) In general.--The term `qualified employee
health insurance costs' means any amount paid or
incurred by an employer for health insurance to the
extent such amount is attributable to coverage provided
to any employee while such employee is a qualified
employee.
``(B) Exception for amounts paid under salary
reduction arrangements.--No amount paid or incurred for
health insurance pursuant to a salary reduction
arrangement shall be taken into account under
subparagraph (A).
``(c) Qualified Employee.--For purposes of this section--
``(1) In general.--Except as otherwise provided in this
subsection, the term `qualified employee' means, with respect
to any period, any employee of an employer if--
``(A) substantially all of the services performed
during such period by such employee for such employer
are performed within an Indian reservation,
``(B) the principal place of abode of such employee
while performing such services is on or near the
reservation in which the services are performed, and
``(C) the employee began work for such employer on
or after January 1, 1994.
``(2) Credit allowed only for first 7 years.--An employee
shall not be treated as a qualified employee for any period
after the date 7 years after the day on which such employee
first began work for the employer.
``(3) Individuals receiving wages in excess of $30,000 not
eligible.--An employee shall not be treated as a qualified
employee for any taxable year of the employer if the total
amount of the wages paid or incurred by such employer to such
employee during such taxable year (whether or not for services
within an Indian reservation) exceeds the amount determined at
an annual rate of $30,000. The Secretary shall adjust the
$30,000 amount contained in the preceding sentence for years
beginning after 1993 at the same time and in the same manner as
under section 415(d).
``(4) Employment must be trade or business employment.--An
employee shall be treated as a qualified employee for any
taxable year of the employer only if more than 50 percent of
the wages paid or incurred by the employer to such employee
during such taxable year are for services performed in a trade
or business of the employer. Any determination as to whether
the preceding sentence applies with respect to any employee for
any taxable year shall be made without regard to subsection
(f)(2).
``(5) Certain employees not eligible.--The term `qualified
employee' shall not include--
``(A) any individual described in subparagraph (A),
(B), or (C) of section 51(i)(1),
``(B) any 5-percent owner (as defined in section
416(i)(1)(B)),
``(C) any individual who is neither an enrolled
member of an Indian tribe nor the spouse of an enrolled
member of an Indian tribe, and
``(D) any individual if the services performed by
such individual for the employer involve the conduct of
class I, II, or III gaming as defined in section 4 of
the Indian Gaming Regulatory Act (25 U.S.C. 2703), or
are performed in a building housing such gaming
activity.
``(6) Indian tribe defined.--The term `Indian tribe' means
any Indian tribe, band, nation, pueblo, or other organized
group or community, including any Alaska Native village, or
regional or village corporation, as defined in, or established
pursuant to, the Alaska Native Claims Settlement Act (43 U.S.C.
1601 et seq.) which is recognized as eligible for the special
programs and services provided by the United States to Indians
because of their status as Indians.
``(7) Indian reservation defined.--The term `Indian
reservation' means a reservation, as defined in--
``(A) section 3(d) of the Indian Financing Act of
1974 (25 U.S.C. 1452(d)), or
``(B) section 4(10) of the Indian Child Welfare Act
of 1978 (25 U.S.C. 1903 (10)).
``(d) Early Termination of Employment by Employer.--
``(1) In general.--If the employment of any employee is
terminated by the taxpayer before the day 1 year after the day
on which such employee began work for the employer--
``(A) no wages (or qualified employee health
insurance costs) with respect to such employee shall be
taken into account under subsection (a) for the taxable
year in which such employment is terminated, and
``(B) the tax under this chapter for the taxable
year in which such employment is terminated shall be
increased by the aggregate credits (if any) allowed
under section 38(a) for prior taxable years by reason
of wages (or qualified employee health insurance costs)
taken into account with respect to such employee.
``(2) Carrybacks and carryovers adjusted.--In the case of
any termination of employment to which paragraph (1) applies,
the carrybacks and carryovers under section 39 shall be
properly adjusted.
``(3) Subsection not to apply in certain cases.--
``(A) In general.--Paragraph (1) shall not apply
to--
``(i) a termination of employment of an
employee who voluntarily leaves the employment
of the taxpayer,
``(ii) a termination of employment of an
individual who before the close of the period
referred to in paragraph (1) becomes disabled
to perform the services of such employment
unless such disability is removed before the
close of such period and the taxpayer fails to
offer reemployment to such individual, or
``(iii) a termination of employment of an
individual if it is determined under the
applicable State unemployment compensation law
that the termination was due to the misconduct
of such individual.
``(B) Changes in form of business.--For purposes of
paragraph (1), the employment relationship between the
taxpayer and an employee shall not be treated as
terminated--
``(i) by a transaction to which section
381(a) applies if the employee continues to be
employed by the acquiring corporation, or
``(ii) by reason of a mere change in the
form of conducting the trade or business of the
taxpayer if the employee continues to be
employed in such trade or business and the
taxpayer retains a substantial interest in such
trade or business.
``(4) Special rule.--Any increase in tax under paragraph
(1) shall not be treated as a tax imposed by this chapter for
purposes of--
``(A) determining the amount of any credit
allowable under this chapter, and
``(B) determining the amount of the tax imposed by
section 55.
``(e) Credit Limitation Amount.--For purposes of this section--
``(1) Credit limitation amount.--The credit limitation
amount for a taxable year shall be an amount equal to the
credit rate (10 or 30 percent as determined under subsection
(a)) multiplied by the increased credit base.
``(2) Increased credit base.--The increased credit base for
a taxable year shall be the excess of--
``(A) the sum of any qualified wages and qualified
employee health insurance costs paid or incurred by the
employer during the taxable year with respect to
employees whose wages (paid or incurred by the
employer) during the taxable year do not exceed the
amount determined under paragraph (3) of subsection
(c), over
``(B) the sum of any qualified wages and qualified
employee health insurance costs paid or incurred by the
employer (or any predecessor) during calendar year 1993
with respect to employees whose wages (paid or incurred
by the employer or any predecessor) during 1993 did not
exceed $30,000.
``(3) Special rule for short taxable years.--For any
taxable year having less than 12 months--
``(A) the amounts paid or incurred by the employer
shall be annualized for purposes of determining the
increased credit base, and
``(B) the credit limitation amount shall be
multiplied by a fraction, the numerator of which is the
number of days in the taxable year and the denominator
of which is 365.
``(f) Other Definitions and Special Rules.--For purposes of this
section--
``(1) Wages.--The term `wages' has the same meaning given
to such term in section 51.
``(2) Controlled groups.--
``(A) All employers treated as a single employer
under section (a) or (b) of section 52 shall be treated
as a single employer for purposes of this section.
``(B) The credit (if any) determined under this
section with respect to each such employer shall be its
proportionate share of the wages and qualified employee
health insurance costs giving rise to such credit.
``(3) Certain other rules made applicable.--Rules similar
to the rules of section 51(k) and subsections (c), (d), and (e)
of section 52 shall apply.
``(4) Coordination with nonrevenue laws.--Any reference in
this section to a provision not contained in this title shall
be treated for purposes of this section as a reference to such
provision as in effect on the date of the enactment of this
paragraph.''.
(c) Denial of Deduction for Portion of Wages Equal to Indian
Employment Credit.--
(1) Subsection (a) of section 280C of such Code (relating
to rule for targeted jobs credit) is amended by striking
``51(a)'' and inserting ``45A(a), 51(a), and''.
(2) Subsection (c) of section 196 of such Code (relating to
deduction for certain unused business credits) is amended by
striking ``and'' at the end of paragraph (5), by striking the
period at the end of paragraph (6) and inserting ``, and'', and
by adding at the end the following new paragraph:
``(7) the Indian employment credit determined under section
45A(a).''.
(d) Denial of Carrybacks to Preenactment Years.--Subsection (d) of
section 39 of such Code is amended by adding at the end thereof the
following new paragraph:
``(4) No carryback of section 45a credit before
enactment.--No portion of the unused business credit for any
taxable year which is attributable to the Indian employment
credit determined under section 45A may be carried to a taxable
year ending before the date of the enactment of section 45A.''.
(e) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 of such Code is amended by adding
at the end thereof the following:
``Sec. 45A. Indian employment credit.''.
(f) Effective Date.--The amendments made by this section shall
apply to wages paid or incurred after December 31, 1993.
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