HR 5751 - Reservist's Employer Support Paycheck Enhancement Act of 2006

109th CONGRESS
2d Session

H. R. 5751

To amend the Internal Revenue Code of 1986 to allow employers a credit against income tax equal to 50 percent of the compensation paid to employees while they are performing active duty service as members of the Ready Reserve or the National Guard and of the compensation paid to temporary replacement employees.

IN THE HOUSE OF REPRESENTATIVES

July 10, 2006

Mr. POE introduced the following bill; which was referred to the Committee on Ways and Means

A BILL

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 `Reservist's Employer Support Paycheck Enhancement Act of 2006'.

SEC. 2. EMPLOYER CREDIT FOR COMPENSATION PAID TO EMPLOYEES WHILE SERVING ON ACTIVE DUTY AS MEMBERS OF READY RESERVE OR THE NATIONAL GUARD.

(a) In General- Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to business-related credits) is amended by adding at the end the following new section:

`SEC. 45N. EMPLOYER CREDIT FOR COMPENSATION PAID TO EMPLOYEES WHILE SERVING ON ACTIVE DUTY AS MEMBERS OF READY RESERVE OR THE NATIONAL GUARD AND FOR COMPENSATION PAID TO TEMPORARY REPLACEMENT EMPLOYEES.

`(a) General Rule- For purposes of section 38, in the case of an employer, the employer Ready Reserve-National Guard active duty credit determined under this section for the taxable year is an amount equal to--

`(1) 50 percent of the compensation paid or incurred to each Ready Reserve-National Guard employee of the taxpayer while the employee is absent from employment while performing qualified active duty, and

`(2) 50 percent of the compensation paid or incurred to each qualified replacement employee of the taxpayer.

`(b) Limitation Applicable to Ready Reserve-National Guard Employees-

`(1) IN GENERAL- The amount of compensation taken into account under subsection (a) for any period of qualified active duty with respect to a Ready Reserve-National Guard employee shall not exceed the active duty wage differential of such employee for such period.

`(2) ACTIVE DUTY WAGE DIFFERENTIAL-

`(A) IN GENERAL- For purposes of paragraph (1), the active duty wage differential of a Ready Reserve-National Guard employee for any period of qualified active duty is the amount equal to the product of--

`(i) the daily wage differential of such employee for such period, multiplied by

`(ii) the number of days that such employee is on qualified active duty during such period.

`(B) DAILY WAGE DIFFERENTIAL- For purposes of subparagraph (A), the daily wage differential of a Ready Reserve-National Guard employee for any period is an amount equal to the excess of--

`(i) such employee's average daily employer-provided compensation for such period, over

`(ii) such employee's average daily military pay for such period.

`(C) AVERAGE DAILY EMPLOYER-PROVIDED COMPENSATION-

`(i) IN GENERAL- For purposes of subparagraph (B), an employee's average daily employer-provided compensation for any period is the average daily compensation paid by the employer to the employee for the 1-year period ending on the day before the date that the employee begins qualified active duty, adjusted for cost-of-living and other increases generally applicable to employees of the employer for such period.

`(ii) EMPLOYER-PROVIDED COMPENSATION- The term `compensation' means any remuneration for employment, whether in cash or in kind, which is allowable as a deduction under section 162(a)(1).

`(D) AVERAGE DAILY MILITARY PAY-

`(i) IN GENERAL- For purposes of subparagraph (B), a Ready Reserve-National Guard employee's average daily military pay is the average daily military pay and allowances received by the employee on account of the employees's performance of qualified active duty during the period.

`(ii) MILITARY PAY AND ALLOWANCES- For purposes of clause (i)--

`(I) MILITARY PAY- The term `military pay' means pay (as defined in section 101(21) of title 37, United States Code).

`(II) ALLOWANCES- The term `allowances' means the allowances payable to a member of the Armed Forces of the United States under chapter 7 of such title.

`(c) Limitation Applicable to Qualified Replacement Employees-

`(1) IN GENERAL- The amount of compensation taken into account under subsection (a) with respect to any qualified replacement employee for any period shall not exceed the amount equal to the product of--

`(A) the average daily employer-provided compensation for such period of the Ready Reserve-National Guard employee being replaced by such replacement employee for such period, and

`(B) the number of days that the Ready Reserve-National Guard employee is on qualified active duty during such period.

`(d) Definitions- For purposes of this section--

`(1) READY RESERVE-NATIONAL GUARD EMPLOYEE-

`(A) IN GENERAL- The term `Ready Reserve-National Guard employee' means any employee--

`(i) who is a member of the Ready Reserve or of the National Guard, and

`(ii) who was an employee of the taxpayer during the 1-year period ending on the day before the date that the employee begins qualified active duty.

`(B) NATIONAL GUARD- The term `National Guard' has the meaning given such term by section 101(c)(1) of title 10, United States Code.

`(C) READY RESERVE- The term `Ready Reserve' has the meaning given such term by section 10142 of title 10, United States Code.

`(2) QUALIFIED ACTIVE DUTY- The term `qualified active duty' means--

`(A) active duty under an order or call for a period in excess of 90 days or for an indefinite period, other than the training duty specified in--

`(i) section 10147 of title 10, United States Code (relating to training requirements for the Ready Reserve), or

`(ii) section 502(a) of title 32, United States Code (relating to required drills and field exercises for the National Guard), in connection with which an employee is entitled to reemployment rights and other benefits or to a leave of absence from employment under chapter 43 of title 38, United States Code, and

`(B) hospitalization incident to such active duty.

`(3) QUALIFIED REPLACEMENT EMPLOYEE- The term `qualified replacement employee' means any employee who is hired by the taxpayer to replace a Ready Reserve-National Guard employee during a period of qualified active duty.'.

(b) Denial of Double Benefit- Subsection (a) of section 280C of such Code (relating to certain expenses for which credits are allowable) is amended by inserting `45N(a),' after `45A(a),'

(c) Credit To Be Part of General Business Credit- Subsection (b) of section 38 of such Code (relating to general business credit) is amended by striking `and' at the end of paragraph (29), by striking the period at the end of paragraph (30) and inserting `, and', and by inserting after paragraph (30) the following new paragraph:

`(31) in the case of an employer, the employer Ready Reserve-National Guard employee credit determined under section 45N(a).'.

(d) Conforming Amendment- The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 45M the following new item:

`Sec. 45N. Employer credit for compensation paid to employees while serving on active duty as members of Ready Reserve or the National Guard and for compensation paid to temporary replacement employees.'.

(e) Effective Date- The amendments made by this section shall apply to periods of qualified active duty (as defined in section 45N(d) of the Internal Revenue Code of 1986, as added by this section) in taxable years beginning after December 31, 2005.

(f) Information on Military Pay and Allowances- The Secretary concerned (as defined in section 101 of title 10, United States Code) shall provide to employers and the Secretary of the Treasury such information as is necessary to determine the proper amount of credit allowable to employers under such section 45N.

END