[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4870 Introduced in House (IH)]
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114th CONGRESS
2d Session
H. R. 4870
To amend the Internal Revenue Code of 1986 to provide for the
establishment of Promise Zones.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 23, 2016
Mr. Larson of Connecticut (for himself, Mr. Rogers of Kentucky, Mr.
Cohen, and Mr. Wilson of South Carolina) 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 for the
establishment of Promise Zones.
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 ``Promise Zone Job Creation Act of
2016''.
SEC. 2. PROMISE ZONES.
(a) In General.--Subchapter Y of chapter 1 of the Internal Revenue
Code of 1986 is amended by adding at the end the following new part:
``PART IV--PROMISE ZONES
``Sec. 1400V-1. Designation of Promise Zones.
``Sec. 1400V-2. Promise Zone employment credit.
``Sec. 1400V-3. Expensing of Promise Zone property.
``SEC. 1400V-1. DESIGNATION OF PROMISE ZONES.
``(a) In General.--For purposes of this part, the term `Promise
Zone' means any area--
``(1) which is nominated by 1 or more local governments or
Indian Tribes (as defined in section 4(13) of the Native
American Housing Assistance and Self-Determination Act of 1996
(25 U.S.C. 4103(13))) for designation as a Promise Zone
(hereafter in this section referred to as a `nominated area'),
``(2) which has a continuous boundary,
``(3) the population of which does not exceed 200,000, and
``(4) which the Secretary of Housing and Urban Development
and the Secretary of Agriculture, acting jointly, designate as
a Promise Zone, after consultation with the Secretary of
Commerce, the Secretary of Education, the Attorney General, the
Secretary of Health and Human Services, the Secretary of Labor,
the Secretary of the Treasury, the Secretary of Transportation,
and other agencies as appropriate.
``(b) Number of Designations.--
``(1) In general.--Not more than 20 nominated areas may be
designated as Promise Zones.
``(2) Number of designations in rural areas.--Of the areas
designated under paragraph (1), six of such areas shall be
areas--
``(A) which are outside of a metropolitan
statistical area (within the meaning of section
143(k)(2)(B)), or
``(B) which are determined by the Secretary of
Agriculture to be rural areas.
``(c) Period of Designations.--
``(1) In general.--The Secretary of Housing and Urban
Development and the Secretary of Agriculture shall, acting
jointly, designate 20 areas as Promise Zones before January 1,
2017.
``(2) Effective dates of designations.--The designation of
any Promise Zone shall take effect--
``(A) for purposes of priority consideration in
Federal grant programs and initiatives (other than this
part), upon execution of the Promise Zone agreement,
and
``(B) for purposes of this part, on January 1 of
the first calendar year beginning after the date of the
execution of the Promise Zone agreement.
``(3) Termination of designations.--The designation of any
Promise Zone shall end on the earlier of--
``(A) the end of the 10-year period beginning on
the date that such designation takes effect, or
``(B) the date of the revocation of such
designation.
``(4) Application to certain zones already designated.--In
the case of any area designated as a Promise Zone by the
Secretary of Housing and Urban Development and the Secretary of
Agriculture before the date of the enactment of this section,
such area shall be taken into account as a Promise Zone
designated under this section and shall reduce the number of
Promise Zones remaining to be designated under paragraph (1).
``(d) Limitations on Designations.--No area may be designated under
this section unless--
``(1) the entities nominating the area have the authority
to nominate the area of designation under this section,
``(2) such entities provide written assurances satisfactory
to the Secretary of Housing and Urban Development and the
Secretary of Agriculture that the competitiveness plan
described in the application under subsection (e) for such area
will be implemented and that such entities will provide the
Secretary of Housing and Urban Development and the Secretary of
Agriculture with such data regarding the economic conditions of
the area (before, during, and after the area's period of
designation as a Promise Zone) as such Secretary may require,
and
``(3) the Secretary of Housing and Urban Development and
the Secretary of Agriculture determine that any information
furnished is reasonably accurate.
``(e) Application.--No area may be designated under this section
unless the application for such designation--
``(1) demonstrates that the nominated area satisfies the
eligibility criteria described in subsection (a), and
``(2) includes a competitiveness plan which--
``(A) addresses the need of the nominated area to
attract investment and jobs and improve educational
opportunities,
``(B) leverages the nominated area's economic
strengths and outlines targeted investments to develop
competitive advantages,
``(C) demonstrates collaboration across a wide
range of stakeholders,
``(D) outlines a strategy which connects the
nominated area to drivers of regional economic growth,
and
``(E) proposes a strategy for focusing on increased
access to high-quality affordable housing and improved
public safety.
``(f) Selection Criteria.--From among the nominated areas eligible
for designation under this section, the Secretary of Housing and Urban
Development and the Secretary of Agriculture shall designate Promise
Zones on the basis of--
``(1) the effectiveness of the competitiveness plan
submitted under subsection (e) and the assurances made under
subsection (d),
``(2) unemployment rates, poverty rates, household income,
home ownership, labor force participation, educational
attainment, and such other factors as the Secretary of Housing
and Urban Development and the Secretary of Agriculture may
identify, and
``(3) other criteria as determined by the Secretary of
Housing and Urban Development and the Secretary of Agriculture.
The Secretary of Housing and Urban Development and the Secretary of
Agriculture may set minimal standards for the levels of unemployment
and poverty that must be satisfied for designation as a Promise Zone.
``SEC. 1400V-2. PROMISE ZONE EMPLOYMENT CREDIT.
``(a) Amount of Credit.--For purposes of section 38, the amount of
the Promise Zone employment credit determined under this section with
respect to any employer for any taxable year is the applicable
percentage of the qualified wages paid or incurred during the calendar
year which ends with or within such taxable year.
``(b) Applicable Percentage.--For purposes of this section, the
term `applicable percentage' means--
``(1) in the case of qualified wages described in
subsection (c)(1)(A), 20 percent, and
``(2) in the case of qualified wages described in
subsection (c)(1)(B), 10 percent.
``(c) Qualified Wages.--For purposes of this section--
``(1) 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) a qualified zone employee, or
``(B) a qualified resident employee.
``(2) Only first $15,000 of wages per year taken into
account.--With respect to each qualified employee, the amount
of qualified wages taken into account for a calendar year shall
not exceed $15,000.
``(3) Coordination with work opportunity credit.--
``(A) In general.--The term `qualified wages' shall
not include wages taken into account in determining the
credit under section 51.
``(B) Coordination with dollar limitation.--The
$15,000 amount in paragraph (2) shall be reduced for
any calendar year by the amount of wages paid or
incurred during such year which are taken into account
in determining the credit under section 51.
``(4) Wages.--The term `wages' has the meaning given such
term by section 1397(a).
``(d) Qualified Employee.--For purposes of this section--
``(1) Qualified employee.--The term `qualified employee'
means any employee who is a qualified zone employee or a
qualified resident employee.
``(2) Qualified zone employee.--Except as otherwise
provided in this subsection, the term `qualified zone 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 a Promise Zone in a trade or
business of the employer, and
``(B) the principal place of abode of such employee
while performing such services is within a Promise
Zone.
``(3) Qualified resident employee.--Except as otherwise
provided in this subsection, the term `qualified resident
employee' means, with respect to any period, an employee of an
employer if the principal place of abode of such employee
during such period is within a Promise Zone, but substantially
all of the services performed during such period by such
employee for such employer are not performed within a Promise
Zone in a trade or business of the employer.
``(4) Certain individuals not eligible.--The terms
`qualified zone employee' and `qualified resident employee'
shall not include any individual described in paragraph (2) of
section 1396(d)(2) (determined after application of paragraph
(3) thereof).
``(e) Special Rules.--Rules similar to the rules of section 1397
shall apply for purposes of this section.
``(f) Taxpayer Reporting.--No credit shall be determined under this
section with respect to any taxpayer for any taxable year unless such
taxpayer provides the Secretary with such information as the Secretary
may require to allow the Secretary to evaluate the effectiveness of the
program established under this part.
``SEC. 1400V-3. EXPENSING OF PROMISE ZONE PROPERTY.
``(a) In General.--A taxpayer may elect to treat the cost of any
Promise Zone property as an expense which is not chargeable to capital
account. Any cost so treated shall be allowed as a deduction for the
taxable year in which the Promise Zone property is placed in service.
``(b) Promise Zone Property.--For purposes of this section--
``(1) In general.--Except as otherwise provided in this
subsection, the term `Promise Zone property' means property--
``(A) which is--
``(i) tangible property (to which section
168 applies) with an applicable recovery period
(within the meaning of section 168) of 20 years
or less,
``(ii) water utility property described in
section 168(e)(5),
``(iii) computer software described in
section 179(d)(1)(A)(ii), or
``(iv) qualified leasehold improvement
property (as defined in section 168(e)),
``(B) which is acquired by purchase (as defined in
section 179(d)(2)) for use in the active conduct of a
trade or business, and
``(C) which is originally placed in service by the
taxpayer in a Promise Zone.
``(2) Exception for certain property.--Such term shall not
include any property to which section 168(g) applies.
``(c) Election.--An election under this section shall be made under
rules similar to the rules of section 179(c).
``(d) Coordination With Section 179.--For purposes of section 179,
Promise Zone property shall not be treated as section 179 property.
``(e) Application of Other Rules.--Rules similar to the rules of
paragraphs (3), (4), (5), (7), (9), and (10) of section 179(d) shall
apply for purposes of this section.
``(f) Taxpayer Reporting.--This section shall not apply with
respect to any taxpayer for any taxable year unless such taxpayer
provides the Secretary with such information as the Secretary may
require to allow the Secretary to evaluate the effectiveness of the
program established under this part.''.
(b) Conforming Amendments.--
(1) Section 38(b) of such Code is amended by striking
``plus'' at the end of paragraph (35), by striking the period
at the end of paragraph (36) and inserting ``, plus'', and by
adding at the end the following new paragraph:
``(37) the Promise Zone employment credit determined under
section 1400V-2.''.
(2) The table of parts for subchapter Y of chapter 1 of
such Code is amended by adding at the end the following new
item:
``Part IV. Promise Zones''.
(c) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall take
effect on the date of the enactment of this Act.
(2) Promise zone employment credit.--Section 1400V-2 of the
Internal Revenue Code of 1986, as added by this section, shall
apply to wages paid after the date of the enactment of this
Act, in taxable years ending after such date.
(3) Expensing of promise zone property.--Section 1400V-3 of
such Code, as so added, shall apply to property placed in
service after the date of the enactment of this Act, in taxable
years ending after such date.
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