[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6025 Introduced in House (IH)]
111th CONGRESS
2d Session
H. R. 6025
To amend the Internal Revenue Code of 1986 to allow manufacturing
businesses to establish tax-free manufacturing reinvestment accounts to
assist them in providing for new equipment and facilities and workforce
training.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 30, 2010
Ms. DeLauro (for herself, Mr. Ryan of Ohio, Mr. Manzullo, Mr.
Perriello, Ms. Sutton, and Mr. Carnahan) 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 allow manufacturing
businesses to establish tax-free manufacturing reinvestment accounts to
assist them in providing for new equipment and facilities and workforce
training.
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 ``Manufacturing Reinvestment Account
Act of 2010''.
SEC. 2. MANUFACTURING REINVESTMENT ACCOUNTS.
(a) In General.--Part VI of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 (relating to itemized deductions for
individuals and corporations) is amended by inserting after section 199
the following new section:
``SEC. 199A. MANUFACTURING REINVESTMENT ACCOUNTS.
``(a) Deduction Allowed.--In the case of a taxpayer engaged in a
manufacturing business, there shall be allowed as a deduction for the
taxable year the amount paid in cash by the taxpayer during the taxable
year to a manufacturing reinvestment account (hereinafter referred to
as an `MRA') for the taxpayer's benefit.
``(b) Limitation.--
``(1) In general.--The amount which a taxpayer may pay into
an MRA for the taxable year shall not exceed the lesser of--
``(A) the domestic manufacturing gross receipts of
the taxpayer for the taxable year, or
``(B) $250,000.
``(2) Controlled groups.--
``(A) In general.--For purposes of this subsection,
all persons treated as a single employer under
subsection (a) or (b) of section 52 or subsection (m)
or (o) of section 414 shall be treated as a single
manufacturer.
``(B) Inclusion of foreign corporations.--For
purposes of subparagraph (A), in applying subsections
(a) and (b) of section 52 to this section, section 1563
shall be applied without regard to subsection (b)(2)(C)
thereof.
``(c) MRA.--For purposes of this section, the term `MRA' means a
trust created or organized in the United States for the exclusive
benefit of the taxpayer, but only if the written governing instrument
creating the trust meets the following requirements:
``(1) No contribution will be accepted for any taxable year
unless it is in cash.
``(2) Contributions will not be accepted for any taxable
year in excess of the amount allowed as a deduction under
subsection (a) for such year.
``(3) The trustee is an eligible institution.
``(4) No part of the trust assets will be invested in life
insurance contracts.
``(5) No part of the trust assets will be invested in any
collectible (as defined in section 408(m)).
``(6) The assets of the trust will not be commingled with
other property except in a common trust fund or common
investment fund.
``(d) Tax Treatment of Accounts.--
``(1) In general.--An MRA is exempt from taxation under
this subtitle unless the account has ceased to be an MRA.
Notwithstanding the preceding sentence, an MRA is subject to
the taxes imposed by section 511 (relating to imposition of tax
on unrelated business income of charitable, etc.
organizations).
``(2) Account terminations.--Rules similar to the rules of
paragraphs (2) and (4) of section 408(e) shall apply to MRAs,
and any amount treated as distributed under such rules shall be
treated as not used to pay qualified reinvestment expenses.
``(e) Treatment of Distributions.--
``(1) In general.--Except as provided in paragraphs (3) and
(4), there shall be includible in the gross income of the
taxpayer for any taxable year--
``(A) any amount distributed from an MRA of the
taxpayer during such taxable year, and
``(B) any deemed distribution under--
``(i) subsection (g)(1) (relating to
deposits not distributed within 5 years),
``(ii) subsection (g)(2) (relating to
cessation in manufacturing business), and
``(iii) subparagraph (A) or (B) of
subsection (g)(3) (relating to prohibited
transactions and pledging account as security).
``(2) Additional tax.--
``(A) In general.--The tax imposed by this chapter
on the taxpayer for any taxable year in which there is
a distribution from an MRA shall be increased by 10
percent of the amount of such distribution which is
includible in gross income.
``(B) Exception.--Subparagraph (A) shall not apply
to distributions during the taxable year to the extent
necessary, under regulations prescribed by the
Secretary, to avoid bankruptcy.
``(3) Reduced inclusion for amounts reinvested.--Only 43
percent of the aggregate amount distributed from an MRA during
the taxable year shall be includible in income under paragraph
(1)(A) to the extent that such aggregate amount does not exceed
the aggregate amount of qualified reinvestment expenses paid or
incurred by the taxpayer during such year.
``(4) Distribution of excess contributions.--Paragraph (1)
shall not apply to the distribution of any contribution paid
during a taxable year to an MRA to the extent that such
contribution exceeds the limitation applicable under subsection
(b) if requirements similar to the requirements of section
408(d)(4) are met.
``(f) Definitions.--For purposes of this section--
``(1) Manufacturing business.--The term `manufacturing
business' means any trade or business having domestic
manufacturing gross receipts.
``(2) Domestic manufacturing gross receipts.--The term
`domestic manufacturing gross receipts' means gross receipts of
the taxpayer which are derived from any lease, rental, license,
sale, exchange, or other disposition of tangible personal
property which was manufactured by the taxpayer in whole or in
significant part within the United States. Rules similar to the
rules of section 199 shall apply in determining the gross
receipts of the taxpayer for purposes of the preceding
sentence.
``(3) Qualified reinvestment expenses.--The term `qualified
reinvestment expenses' means--
``(A) expenses for property to be used by the
taxpayer in a manufacturing business, and
``(B) expenses for job training and workforce
development for employees of the taxpayer.
``(4) Eligible institution.--
``(A) In general.--The term `eligible institution'
means--
``(i) any insured depository institution,
which--
``(I) is not controlled by a bank
holding company or savings and loan
holding company that is also an
eligible institution,
``(II) has total assets of equal to
or less than $25,000,000,000, as
reported in the call report as of the
end of the fourth quarter of calendar
year 2009, and
``(III) is not directly or
indirectly controlled by any company or
other entity that has total
consolidated assets of more than
$25,000,000,000, as so reported;
``(ii) any bank holding company which has
total consolidated assets of equal to or less
than $25,000,000,000;
``(iii) any savings and loan holding
company which has total consolidated assets of
equal to or less than $25,000,000,000;
``(iv) any community development financial
institution loan fund which has total assets of
equal to or less than $25,000,000,000; and
``(v) any small business lending company
that has total assets of equal to or less than
$25,000,000,000.
``(B) Insured depository institution.--The term
`insured depository institution' has the meaning given
such term under section 3(c)(2) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(c)(2)).
``(C) Bank holding company.--The term `bank holding
company' has the meaning given such term under section
2(a)(1) of the Bank Holding Company Act of 1956 (12
U.S.C. 1841(2)(a)(1)).
``(D) Call report.--The term `call report' means--
``(i) reports of Condition and Income
submitted to the Office of the Comptroller of
the Currency, the Board of Governors of the
Federal Reserve System, and the Federal Deposit
Insurance Corporation;
``(ii) the Office of Thrift Supervision
Thrift Financial Report;
``(iii) any report that is designated by
the Office of the Comptroller of the Currency,
the Board of Governors of the Federal Reserve
System, the Federal Deposit Insurance
Corporation, or the Office of Thrift
Supervision, as applicable, as a successor to
any report referred to in clause (i) or (ii);
``(iv) standard reports of Condition and
Income submitted by Community Development
Financial Institution loan funds to the
Community Development Financial Institutions
Fund; and
``(v) with respect to an eligible
institution for which no report exists that is
described under clause (i), (ii), or (iii),
such other report or set of information as the
Secretary, in consultation with the
Administrator of the Small Business
Administration, may prescribe.
``(g) Special Rules.--
``(1) Tax on deposits in account which are not distributed
within 5 years.--
``(A) In general.--If, at the close of any taxable
year, there is a nonqualified balance in any MRA--
``(i) there shall be deemed distributed
from the MRA during such taxable year an amount
equal to such balance, and
``(ii) the taxpayer's tax imposed by this
chapter for such taxable year shall be
increased by 10 percent of such deemed
distribution.
``(B) Nonqualified balance.--For purposes of
subparagraph (A), the term `nonqualified balance' means
any balance in the MRA on the last day of the taxable
year which is attributable to amounts deposited in such
account before the 4th preceding taxable year.
``(C) Ordering rule.--For purposes of this
paragraph, distributions from an MRA shall be treated
as made from deposits (and income thereon) in the order
in which such deposits were made, beginning with the
earliest deposits.
``(2) Cessation of manufacturing business.--If the taxpayer
ceases to be engaged in a manufacturing business, there shall
be deemed distributed from the MRA of the taxpayer at the close
of the first taxable year beginning after such cessation an
amount equal to the balance in the MRA (if any) at such close.
``(3) Certain rules to apply.--Rules similar to the
following rules shall apply for purposes of this section:
``(A) Section 408(e)(2) (relating to loss of
exemption of account where taxpayer engages in
prohibited transaction).
``(B) Section 408(e)(4) (relating to effect of
pledging account as security).
``(C) Section 408(h) (relating to custodial
accounts).
``(4) Time when payments deemed made.--For purposes of this
section, a taxpayer shall be deemed to have made a payment to
an MRA on the last day of a taxable year if such payment is
made on account of such taxable year and is made on or before
the due date (without regard to extensions) for filing the
return of tax for such taxable year.
``(5) Deduction not allowed for self-employment tax.--The
deduction allowable by reason of subsection (a) shall not be
taken into account in determining an individual's net earnings
from self-employment (within the meaning of section 1402(a))
for purposes of chapter 2.
``(h) Reports.--The trustee of an MRA shall make such reports
regarding such account to the Secretary and to the person for whose
benefit the account is maintained with respect to contributions,
distributions, and such other matters as the Secretary may require
under regulations. The reports required by this subsection shall be
filed at such time and in such manner and furnished to such persons at
such time and in such manner as may be required by such regulations.
``(i) Termination.--No deduction shall be allowed under this
section for any taxable year beginning more than 7 years after the date
of the enactment of this section.''.
(b) Tax on Excess Contributions.--
(1) In general.--Subsection (a) of section 4973 of such
Code (relating to tax on excess contributions to certain tax-
favored accounts and annuities) is amended by striking ``or''
at the end of paragraph (4), by adding ``or'' at the end of
paragraph (5), and by inserting after paragraph (5) the
following new paragraph:
``(6) an MRA (within the meaning of section 199A(c)),''.
(2) Excess contribution defined.--Section 4973 of such Code
is amended by adding at the end the following new subsection:
``(h) Excess Contributions to MRAs.--For purposes of this section,
in the case of MRAs (within the meaning of section 199A(c)), the term
`excess contributions' means the amount by which the amount contributed
for the taxable year to the MRAs of the taxpayer exceeds the amount
which may be contributed to such MRAs under section 199A(b) for such
taxable year. For purposes of this subsection, any contribution which
is distributed out of an MRA in a distribution to which section
199A(e)(3) applies shall be treated as an amount not contributed.''.
(c) Tax on Prohibited Transactions.--
(1) In general.--Paragraph (1) of section 4975(e) of such
Code is amended by striking ``or'' at the end of subparagraph
(F), by redesignating subparagraph (G) as subparagraph (H), and
by inserting after subparagraph (F) the following:
``(F) an MRA described in section 199A(c), or''.
(2) Special rule.--Subsection (c) of section 4975 of such
Code (relating to tax on prohibited transactions) is amended by
adding at the end the following:
``(7) Special rule for mras.--A person for whose benefit an
MRA (within the meaning of section 199A(c)) is established
shall be exempt from the tax imposed by this section with
respect to any transaction concerning such account (which would
otherwise be taxable under this section) if, with respect to
such transaction, the account ceases to be an MRA by reason of
the application of section 199A(g)(3)(A) to such account.''.
(d) Failure To Provide Reports on MRAs.--Paragraph (2) of section
6693(a) of such Code (relating to failure to provide reports on certain
tax-favored accounts or annuities) is amended by redesignating
subparagraphs (A) through (E) as subparagraphs (B) and (F),
respectively, and by inserting before subparagraph (B), as so
redesignated, the following new subparagraph:
``(A) section 199A(h) (relating to MRAs),''.
(e) Clerical Amendment.--The table of sections for part VI of
subchapter B of chapter 1 of such Code is amended by inserting after
the item relating to section 199 the following new item:
``Sec. 199A. Manufacturing reinvestment accounts.''.
(f) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
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