110th CONGRESS
1st Session
S. 384
To provide pay protection for members of the Reserve and the National
Guard, and for other purposes.
IN THE SENATE OF THE UNITED STATES
January 24, 2007
Ms. LANDRIEU (for herself, Mr. DURBIN, Mr. GRAHAM, and Mr. KERRY) introduced
the following bill; which was read twice and referred to the Committee on
Finance
A BILL
To provide pay protection for members of the Reserve and the National
Guard, 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 `Helping Our Patriotic Employers at Helping
Our Military Employees Act of 2007' or the `HOPE at HOME Act of 2007'.
SEC. 2. NONREDUCTION IN PAY WHILE FEDERAL EMPLOYEE IS PERFORMING ACTIVE
SERVICE IN THE UNIFORMED SERVICES.
(a) In General- Subchapter IV of chapter 55 of title 5, United States Code,
is amended by adding at the end the following:
`Sec. 5538. Nonreduction in pay while serving in the uniformed services
`(a) An employee who is absent from a position of employment with the Federal
Government in order to perform service in the uniformed services for a period
of more than 90 days shall be entitled to receive, for each pay period described
in subsection (b), an amount equal to the amount by which--
`(1) the amount of basic pay which would otherwise have been payable to
such employee for such pay period if such employee's civilian employment
with the Government had not been interrupted by that service, exceeds
(if at all)
`(2) the amount of pay and allowances which (as determined under subsection
(d))--
`(A) is payable to such employee for that service; and
`(B) is allocable to such pay period.
`(b)(1) Amounts under this section shall be payable with respect to each
pay period (which would otherwise apply if the employee's civilian employment
had not been interrupted)--
`(A) during which such employee is entitled to reemployment rights under
chapter 43 of title 38 with respect to the position from which such employee
is absent (as referred to in subsection (a)); and
`(B) for which such employee does not otherwise receive basic pay (including
by taking any annual, military, or other paid leave) to which such employee
is entitled by virtue of such employee's civilian employment with the
Government.
`(2) For purposes of this section, the period during which an employee is
entitled to reemployment rights under chapter 43 of title 38--
`(A) shall be determined disregarding the provisions of section 4312(d)
of title 38; and
`(B) shall include any period of time specified in section 4312(e) of
title 38 within which an employee may report or apply for employment or
reemployment following completion of service in the uniformed services.
`(c) Any amount payable under this section to an employee shall be paid--
`(1) by such employee's employing agency;
`(2) from the appropriation or fund which would be used to pay the employee
if such employee were in a pay status; and
`(3) to the extent practicable, at the same time and in the same manner
as would basic pay if such employee's civilian employment had not been
interrupted.
`(d) The Office of Personnel Management shall, in consultation with Secretary
of Defense, prescribe any regulations necessary to carry out the preceding
provisions of this section.
`(e)(1) The head of each agency referred to in section 2302(a)(2)(C)(ii)
shall, in consultation with the Office, prescribe procedures to ensure that
the rights under this section apply to the employees of such agency.
`(2) The Administrator of the Federal Aviation Administration shall, in
consultation with the Office, prescribe procedures to ensure that the rights
under this section apply to the employees of that agency.
`(f) For purposes of this section--
`(1) the terms `employee', `Federal Government', and `uniformed services'
have the same respective meanings as given in section 4303 of title 38;
`(2) the term `service in the uniformed services' has the meaning given
that term in section 4303 of title 38 and includes duty performed by a
member of the National Guard under section 502(f) of title 32 at the direction
of the Secretary of the Army or Secretary of the Air Force;
`(3) the term `employing agency', as used with respect to an employee
entitled to any payments under this section, means the agency or other
entity of the Government (including an agency referred to in section 2302(a)(2)(C)(ii))
with respect to which such employee has reemployment rights under chapter
43 of title 38; and
`(4) the term `basic pay' includes any amount payable under section 5304.'.
(b) Clerical Amendment- The table of sections for chapter 55 of title 5,
United States Code, is amended by inserting after the item relating to section
5537 the following:
`5538. Nonreduction in pay while serving in the uniformed services.'.
(c) Effective Date- The amendments made by this section shall apply with
respect to pay periods (as described in section 5538(b) of title 5, United
States Code, as added by this section) beginning on or after September 11,
2001.
SEC. 3. READY RESERVE-NATIONAL GUARD EMPLOYEE CREDIT ADDED TO GENERAL
BUSINESS CREDIT.
(a) Ready Reserve-National Guard Credit- 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:
`SEC. 45O. READY RESERVE-NATIONAL GUARD EMPLOYEE CREDIT.
`(a) General Rule- For purposes of section 38, the Ready Reserve-National
Guard employee credit determined under this section for any taxable year
is an amount equal to 50 percent of the actual compensation amount for such
taxable year.
`(b) Definition of Actual Compensation Amount- For purposes of this section,
the term `actual compensation amount' means the amount of compensation paid
or incurred by an employer with respect to a Ready Reserve-National Guard
employee on any day during a taxable year when the employee was absent from
employment for the purpose of performing qualified active duty.
`(c) Limitation- No credit shall be allowed with respect to a Ready Reserve-National
Guard employee who performs qualified active duty on any day on which the
employee was not scheduled to work (for reason other than to participate
in qualified active duty).
`(d) Definitions- For purposes of this section--
`(1) QUALIFIED ACTIVE DUTY- The term `qualified active duty' means--
`(A) active duty, other than the training duty specified in section
10147 of title 10, United States Code (relating to training requirements
for the Ready Reserve), or 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 duty.
`(2) COMPENSATION- The term `compensation' means any remuneration for
employment, whether in cash or in kind, which is paid or incurred by a
taxpayer and which is deductible from the taxpayer's gross income under
section 162(a)(1).
`(3) READY RESERVE-NATIONAL GUARD EMPLOYEE- The term `Ready Reserve-National
Guard employee' means an employee who is a member of the Ready Reserve
of a reserve component of an Armed Force of the United States as described
in sections 10142 and 10101 of title 10, United States Code.
`(4) CERTAIN RULES TO APPLY- Rules similar to the rules of section 52
shall apply.
`(e) Portion of Credit Made Refundable-
`(1) IN GENERAL- In the case of an eligible employer of a Ready Reserve-National
Guard employee, the aggregate credits allowed to a taxpayer under subpart
C shall be increased by the lesser of--
`(A) the credit which would be allowed under this section without regard
to this subsection and the limitation under section 38(c), or
`(B) the amount by which the aggregate amount of credits allowed by
this subpart (determined without regard to this subsection) would increase
if the limitation imposed by section 38(c) for any taxable year were
increased by the amount of employer payroll taxes imposed on the taxpayer
during the calendar year in which the taxable year begins.
The amount of the credit allowed under this subsection shall not be treated
as a credit allowed under this subpart and shall reduce the amount of
the credit otherwise allowable under subsection (a) without regard to
section 38(c).
`(2) ELIGIBLE EMPLOYER- For purposes of this subsection, the term `eligible
employer' means an employer which is a State or local government or subdivision
thereof.
`(3) EMPLOYER PAYROLL TAXES- For purposes of this subsection--
`(A) IN GENERAL- The term `employer payroll taxes' means the taxes imposed
by--
`(i) section 3111(b), and
`(ii) sections 3211(a) and 3221(a) (determined at a rate equal to
the rate under section 3111(b)).
`(B) SPECIAL RULE- A rule similar to the rule of section 24(d)(2)(C)
shall apply for purposes of subparagraph (A).'.
(b) 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
`plus' at the end of paragraph (309), by striking the period at the end
of paragraph (31) and inserting `, plus', and by adding at the end the following:
`(32) the Ready Reserve-National Guard employee credit determined under
section 45O(a).'.
(c) Denial of Double Benefit- Section 280C(a) (relating to rule for employment
credits) is amended by inserting `45O(a),' after `45A(a),'.
(d) Conforming Amendment- The table of sections for subpart D of part IV
of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended
by inserting after the item relating to section 45N the following:
`Sec. 45O. Ready Reserve-National Guard employee credit.'.
(e) Effective Date- The amendments made by this section shall apply to taxable
years beginning after the date of the enactment of this Act.
SEC. 4. READY RESERVE-NATIONAL GUARD REPLACEMENT EMPLOYEE CREDIT.
(a) In General- Subpart B of part IV of subchapter A of chapter 1 of the
Internal Revenue Code of 1986 (relating to foreign tax credit, etc.) is
amended by adding after section 30C the following new section:
`SEC. 30D. READY RESERVE-NATIONAL GUARD REPLACEMENT EMPLOYEE CREDIT.
`(a) Allowance of Credit-
`(1) IN GENERAL- In the case of an eligible taxpayer, there shall be allowed
as a credit against the tax imposed by this chapter for the taxable year
the sum of the employment credits for each qualified replacement employee
under this section.
`(2) EMPLOYMENT CREDIT- The employment credit with respect to a qualified
replacement employee of the taxpayer for any taxable year is equal to
50 percent of the lesser of--
`(A) the individual's qualified compensation attributable to service
rendered as a qualified replacement employee, or
`(b) Qualified Compensation- The term `qualified compensation' means--
`(1) compensation which is normally contingent on the qualified replacement
employee's presence for work and which is deductible from the taxpayer's
gross income under section 162(a)(1),
`(2) compensation which is not characterized by the taxpayer as vacation
or holiday pay, or as sick leave or pay, or as any other form of pay for
a nonspecific leave of absence, and
`(3) group health plan costs (if any) with respect to the qualified replacement
employee.
`(c) Qualified Replacement Employee- For purposes of this section--
`(1) IN GENERAL- The term `qualified replacement employee' means an individual
who is hired to replace a Ready Reserve-National Guard employee or a Ready
Reserve-National Guard self-employed taxpayer, but only with respect to
the period during which--
`(A) such Ready Reserve-National Guard employee is receiving an actual
compensation amount (as defined in section 45O(b)) from the employee's
employer and is participating in qualified active duty, including time
spent in travel status, or
`(B) such Ready Reserve-National Guard self-employed taxpayer is participating
in such qualified active duty.
`(2) READY RESERVE-NATIONAL GUARD EMPLOYEE- The term `Ready Reserve-National
Guard employee' has the meaning given such term by section 45O(d)(3).
`(3) READY RESERVE-NATIONAL GUARD SELF-EMPLOYED TAXPAYER- The term `Ready
Reserve-National Guard self-employed taxpayer' means a taxpayer who--
`(A) has net earnings from self-employment (as defined in section 1402(a))
for the taxable year, and
`(B) is a member of the Ready Reserve of a reserve component of an Armed
Force of the United States as described in section 10142 and 10101 of
title 10, United States Code.
`(d) Coordination With Other Credits- The amount of credit otherwise allowable
under sections 51(a), 1396(a), or any other provision of this chapter with
respect to any wages or other compensation paid to an employee shall be
reduced by the credit allowed by this section with respect to such employee.
`(1) APPLICATION WITH OTHER CREDITS- The credit allowed under subsection
(a) for any taxable year shall not exceed the excess (if any) of--
`(A) the regular tax for the taxable year reduced by the sum of the
credits allowable under subpart A and sections 27, 29, and 30, over
`(B) the tentative minimum tax for the taxable year.
`(2) DISALLOWANCE FOR FAILURE TO COMPLY WITH EMPLOYMENT OR REEMPLOYMENT
RIGHTS OF MEMBERS OF THE RESERVE COMPONENTS OF THE ARMED FORCES OF THE
UNITED STATES- No credit shall be allowed under subsection (a) to a taxpayer
for--
`(A) any taxable year, beginning after the date of the enactment of
this section, in which the taxpayer is under a final order, judgment,
or other process issued or required by a district court of the United
States under section 4323 of title 38 of the United States Code with
respect to a violation of chapter 43 of such title, and
`(B) the 2 succeeding taxable years.
`(f) General Definitions and Special Rules- For purposes of this section--
`(1) ELIGIBLE TAXPAYER- The term `eligible taxpayer' means a small business
employer or a Ready Reserve-National Guard self-employed taxpayer.
`(2) SMALL BUSINESS EMPLOYER-
`(A) IN GENERAL- The term `small business employer' means, with respect
to any taxable year, any employer who employed an average of 50 or fewer
employees on business days during such taxable year.
`(B) CONTROLLED GROUPS- For purposes of subparagraph (A), all persons
treated as a single employer under subsection (b), (c), (m), or (o)
of section 414 shall be treated as a single employer.
`(3) QUALIFIED ACTIVE DUTY- The term `qualified active duty' has the meaning
given such term by section 45N(d)(1).
`(4) SPECIAL RULES FOR CERTAIN MANUFACTURERS-
`(A) IN GENERAL- In the case of any qualified manufacturer--
`(i) subsection (a)(2)(B) shall be applied by substituting `$20,000'
for `$12,000', and
`(ii) paragraph (2)(A) of this subsection shall be applied by substituting
`100' for `50'.
`(B) QUALIFIED MANUFACTURER- For purposes of this paragraph, the term
`qualified manufacturer' means any person if--
`(i) the primary business of such person is classified in sector 31,
32, or 33 of the North American Industrial Classification System,
and
`(ii) all of such person's facilities which are used for production
in such business are located in the United States.
`(5) CARRYBACK AND CARRYFORWARD ALLOWED-
`(A) IN GENERAL- If the credit allowable under subsection (a) for a
taxable year exceeds the amount of the limitation under subsection (e)(1)
for such taxable year (in this paragraph referred to as the `unused
credit year'), such excess shall be a credit carryback to each of the
3 taxable years preceding the unused credit year and a credit carryforward
to each of the 20 taxable years following the unused credit year.
`(B) RULES- Rules similar to the rules of section 39 shall apply with
respect to the credit carryback and credit carryforward under subparagraph
(A).
`(6) CERTAIN RULES TO APPLY- Rules similar to the rules of subsections
(c), (d), and (e) of section 52 shall apply.'.
(b) No Deduction for Compensation Taken Into Account for Credit- Section
280C(a) of the Internal Revenue Code of 1986 (relating to rule for employment
credits), as amended by this Act, is amended--
(1) by inserting `or compensation' after `salaries', and
(2) by inserting `30D,' before `45A(a),'.
(c) Conforming Amendment- Section 55(c)(3) of the Internal Revenue Code
of 1986 is amended by inserting `30D(e)(1),' after `30C(d)(2),'.
(d) Clerical Amendment- The table of sections for subpart B of part IV of
subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended
by adding after the item relating to section 30C the following new item:
`Sec. 30D. Ready Reserve-National Guard Replacement Employee Credit.'.
(e) Effective Date- The amendments made by this section shall apply to taxable
years beginning after the date of the enactment of this Act.
SEC. 5. INCOME TAX WITHHOLDING ON DIFFERENTIAL WAGE PAYMENTS.
(a) In General- Section 3401 of the Internal Revenue Code of 1986 (relating
to definitions) is amended by adding at the end the following new subsection:
`(h) Differential Wage Payments to Active Duty Members of the Uniformed
Services-
`(1) IN GENERAL- For purposes of subsection (a), any differential wage
payment shall be treated as a payment of wages by the employer to the
employee.
`(2) DIFFERENTIAL WAGE PAYMENT- For purposes of paragraph (1), the term
`differential wage payment' means any payment which--
`(A) is made by an employer to an individual with respect to any period
during which the individual is performing service in the uniformed services
while on active duty for a period of more than 30 days, and
`(B) represents all or a portion of the wages the individual would have
received from the employer if the individual were performing service
for the employer.'.
(b) Effective Date- The amendment made by this section shall apply to remuneration
paid after December 31, 2006.
SEC. 6. TREATMENT OF DIFFERENTIAL WAGE PAYMENTS FOR RETIREMENT PLAN PURPOSES.
(1) IN GENERAL- Section 414(u) of the Internal Revenue Code of 1986 (relating
to special rules relating to veterans' reemployment rights under USERRA)
is amended by adding at the end the following new paragraph:
`(11) TREATMENT OF DIFFERENTIAL WAGE PAYMENTS-
`(A) IN GENERAL- Except as provided in this paragraph, for purposes
of applying this title to a retirement plan to which this subsection
applies--
`(i) an individual receiving a differential wage payment shall be
treated as an employee of the employer making the payment,
`(ii) the differential wage payment shall be treated as compensation,
and
`(iii) the plan shall not be treated as failing to meet the requirements
of any provision described in paragraph (1)(C) by reason of any contribution
which is based on the differential wage payment.
`(B) SPECIAL RULE FOR DISTRIBUTIONS-
`(i) IN GENERAL- Notwithstanding subparagraph (A)(i), for purposes
of section 401(k)(2)(B)(i)(I), 403(b)(7)(A)(ii), 403(b)(11)(A), or
457(d)(1)(A)(ii), an individual shall be treated as having been severed
from employment during any period the individual is performing service
in the uniformed services described in section 3401(h)(2)(A).
`(ii) LIMITATION- If an individual elects to receive a distribution
by reason of clause (i), the plan shall provide that the individual
may not make an elective deferral or employee contribution during
the 6-month period beginning on the date of the distribution.
`(C) NONDISCRIMINATION REQUIREMENT- Subparagraph (A)(iii) shall apply
only if all employees of an employer performing service in the uniformed
services described in section 3401(h)(2)(A) are entitled to receive
differential wage payments on reasonably equivalent terms and, if eligible
to participate in a retirement plan maintained by the employer, to make
contributions based on the payments. For purposes of applying this subparagraph,
the provisions of paragraphs (3), (4), and (5), of section 410(b) shall
apply.
`(D) DIFFERENTIAL WAGE PAYMENT- For purposes of this paragraph, the
term `differential wage payment' has the meaning given such term by
section 3401(h)(2).'.
(2) CONFORMING AMENDMENT- The heading for section 414(u) of such Code
is amended by inserting `and to Differential Wage Payments to Members
on Active Duty' after `USERRA'.
(b) Differential Wage Payments Treated as Compensation for Individual Retirement
Plans- Section 219(f)(1) of the Internal Revenue Code of 1986 (defining
compensation) is amended by adding at the end the following new sentence:
`The term `compensation' includes any differential wage payment (as defined
in section 3401(h)(2)).'.
(c) Effective Date- The amendments made by this section shall apply to plan
years beginning after December 31, 2006.
(d) Provisions Relating to Plan Amendments-
(1) IN GENERAL- If this subsection applies to any plan or annuity contract
amendment--
(A) such plan or contract shall be treated as being operated in accordance
with the terms of the plan or contract during the period described in
paragraph (2)(B)(i), and
(B) except as provided by the Secretary of the Treasury, such plan shall
not fail to meet the requirements of the Internal Revenue Code of 1986
or the Employee Retirement Income Security Act of 1974 by reason of
such amendment.
(2) AMENDMENTS TO WHICH SECTION APPLIES-
(A) IN GENERAL- This subsection shall apply to any amendment to any
plan or annuity contract which is made--
(i) pursuant to any amendment made by this section, and
(ii) on or before the last day of the first plan year beginning on
or after January 1, 2009.
(B) CONDITIONS- This subsection shall not apply to any plan or annuity
contract amendment unless--
(i) during the period beginning on the date the amendment described
in subparagraph (A)(i) takes effect and ending on the date described
in subparagraph (A)(ii) (or, if earlier, the date the plan or contract
amendment is adopted), the plan or contract is operated as if such
plan or contract amendment were in effect, and
(ii) such plan or contract amendment applies retroactively for such
period.
END
