S 1237112th CONGRESS
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 SENATE OF
THE UNITED STATES
June 21 (legislative day, June
Mr. BLUMENTHAL (for himself, Mr. LIEBERMAN, and Mr.
ROCKEFELLER) introduced the following bill; which was read twice and referred
to the Committee on Finance
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 2011'.
2. MANUFACTURING REINVESTMENT ACCOUNTS.
(a) In General- Part VI
of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by
inserting after section 199 the following new section:
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.
`(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
`(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.
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.
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
`(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--
subsection (g)(1) (relating to deposits not distributed within 7 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).
`(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.
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.
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.
QUALIFIED REINVESTMENT EXPENSES- The term `qualified reinvestment expenses' means--
`(A) expenses for property to be used by the taxpayer in a manufacturing business,
`(B) expenses for job training and workforce
development for employees of the taxpayer.
`(A) IN GENERAL- The term `eligible
`(i) any insured depository
`(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;
any savings and loan holding company which has total consolidated assets of equal
to or less than $25,000,000,000;
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
`(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.
`(D) CALL REPORT- The term `call
`(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
`(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
`(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.
`(1) TAX ON DEPOSITS IN ACCOUNT WHICH
ARE NOT DISTRIBUTED WITHIN 7 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
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 6th preceding
`(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).
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.
Termination- No deduction shall be allowed under this section for any taxable
year beginning more than 10 years after the date of the enactment of this section.'.
(b) Tax on Excess Contributions-
(1) IN GENERAL- Subsection
(a) of section 4973 of the Internal Revenue Code of 1986 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 the Internal Revenue Code
of 1986 is amended by striking `or' at the end of subparagraph (F), by redesignating
subparagraph (G) as subparagraph (H), and by inserting after subparagraph (F)
`(F) an MRA described in section 199A(c),
(2) SPECIAL RULE- Subsection (c) of section
4975 of such Code is amended by adding at the end the following:
`(7) SPECIAL RULE FOR MANUFACTURING REINVESTMENT ACCOUNTS- 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 the Internal Revenue
Code of 1986 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 manufacturing reinvestment accounts),'.
Amendment- The table of sections for part VI of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 is amended by inserting after the item relating
to section 199 the following new item:
`Sec. 199A. Manufacturing
(f) Effective Date- The amendments
made by this section shall apply to taxable years beginning after the date of
the enactment of this Act.