To amend the Internal Revenue Code of 1986 to provide a rebate of up to $765 to individuals for payroll taxes paid in 2001, to provide employers with an income tax credit of up to $765 for payroll taxes paid during the payroll tax holiday period, and for other purposes.

April 11, 2003

Ms. LANDRIEU (for herself and Mr. CORZINE) introduced the following bill; which was read twice and referred to the Committee on Finance

To amend the Internal Revenue Code of 1986 to provide a rebate of up to $765 to individuals for payroll taxes paid in 2001, to provide employers with an income tax credit of up to $765 for payroll taxes paid during the payroll tax holiday period, 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 `Wage Tax Cut Act of 2003'.

SEC. 2. REFUND OF EMPLOYEE PAYROLL TAXES.

(a) PAYMENT OF REFUNDS-

(1) IN GENERAL- The Secretary of the Treasury shall pay, out of any money in the Treasury not otherwise appropriated, to each individual an amount equal to the lesser of--

(A) $765, or

(B) the amount of the individual's social security taxes for 2001.

(2) PAYMENT IN INSTALLMENTS- The Secretary of the Treasury shall make the payment under paragraph (1) in two equal installments--

(A) the first of which shall be paid on the date which is 2 months after the date of the enactment of this Act, and

(B) the second of which shall be paid on December 1, 2003.

The Secretary may, after notice to the Senate and House of Representatives, make adjustments in the timing of each installment to the extent the adjustments are administratively necessary.

(3) NO INTEREST- No interest shall be allowed on any payment required by this subsection.

(4) CERTAIN INDIVIDUALS NOT ELIGIBLE- No payment shall be made under this subsection to--

(A) any estate or trust,

(B) any nonresident alien, or

(C) any individual with respect to whom a deduction under section 151 of such Code is allowable to another taxpayer for a taxable year beginning in 2001.

(5) SOCIAL SECURITY TAXES- For purposes of this subsection--

(A) IN GENERAL- The term `social security taxes' has the meaning given such term by section 24(d)(2) of the Internal Revenue Code of 1986.

(B) STATE AND LOCAL EMPLOYEES NOT COVERED BY SOCIAL SECURITY SYSTEM- In the case of any individual--

(i) whose service is not treated as employment by reason of section 3121(b)(7) of such Code (relating to exemption for State and local employees), and

(ii) who, without regard to this subparagraph, has no social security taxes for 2001,

the term `social security taxes' shall include the individual's employee contributions to a governmental pension plan by reason of the service described in clause (i).

(b) 2002 Refund for Individuals Not Receiving Full 2001 Refund- Subchapter B of chapter 65 of the Internal Revenue Code of 1986 (relating to abatements, credits, and refunds) is amended by adding at the end the following new section:

`SEC. 6429. REFUND OF CERTAIN 2002 PAYROLL TAXES.

`(a) IN GENERAL- Each eligible individual shall be treated as having made a payment against the tax imposed by chapter 1 for such individual's first taxable year beginning in 2002 in an amount equal to the payroll tax refund amount for such taxable year.

`(b) PAYROLL TAX REFUND AMOUNT- For purposes of subsection (a), the payroll tax refund amount is the excess (if any) of--

`(1) the lesser of--

`(A) $765, or

`(B) the amount of the individual's social security taxes for 2002, over

`(2) the amount of the payment to the individual under section 2(a) of the Wage Tax Cut Act of 2003.

`(c) ELIGIBLE INDIVIDUAL- For purposes of this section, the term `eligible individual' means any individual other than--

`(1) any estate or trust,

`(2) any nonresident alien, or

`(3) any individual with respect to whom a deduction under section 151 is allowable to another taxpayer for a taxable year beginning in 2002.

`(d) TIMING OF PAYMENTS- In the case of any overpayment attributable to this section, the Secretary shall, subject to the provisions of this title, refund or credit such overpayment as rapidly as possible and, to the extent practicable, before December 31, 2003.

`(e) NO INTEREST- No interest shall be allowed on any overpayment attributable to this section.

`(f) SOCIAL SECURITY TAXES- For purposes of this section, the term `social security taxes' has the meaning given such term by section 2(a)(5) of the Wage Tax Cut Act of 2003.'

(c) CLERICAL AMENDMENT- The table of sections for subchapter B of chapter 65 of such Code is amended by adding at the end the following new item:

SEC. 3. REFUND OF EMPLOYER PAYROLL TAXES ON FIRST $10,000 OF WAGES PER EMPLOYEE.

(a) IN GENERAL- Subchapter B of chapter 65 of the Internal Revenue Code of 1986 (relating to abatements, credits, and refunds), as amended by section 2, is amended by adding at the end the following:

`SEC. 6430. REFUND OF EMPLOYER PAYROLL TAXES ON FIRST $10,000 OF WAGES OF AN EMPLOYEE.

`(a) GENERAL RULE- Each employer subject to tax under section 3111 or 3221(a) with respect to employment during the payroll tax holiday period shall be treated as having made a payment against the tax imposed by chapter 1 for each taxable year which includes any portion of such period in an amount equal to the sum of the payroll tax refund amounts determined for all employees of the employer for such taxable year.

`(b) PAYROLL TAX REFUND AMOUNT- For purposes of this section, the term `payroll tax refund amount' means, with respect to any employee for any taxable year of an employer, the excess (if any) of--

`(1) the lesser of--

`(A) $765, or

`(B) the amount of the employer's social security taxes paid or incurred with respect to employment of the employee during any portion of the payroll tax holiday period within the taxable year, over

`(2) the amount treated as paid by the employer under this section with respect to the employee for any preceding taxable year.

`(c) DEFINITIONS- For purposes of this section--

`(1) PAYROLL TAX HOLIDAY PERIOD- The term `payroll tax holiday period' means the 12-month period beginning with the first month following the date of the enactment of this section. The Secretary may, after notice to the Senate and House of Representatives, delay the beginning of such period if the Secretary determines such delay is administratively necessary to provide adequate notice of the provisions of this section to employers and employees.

`(2) EMPLOYER PAYROLL TAXES-

`(A) IN GENERAL- The term `employer payroll taxes' means the taxes imposed by sections 3111 and 3221(a).

`(B) SPECIAL RULE- A rule similar to the rule of section 24(d)(2)(C) shall apply for purposes of subparagraph (A).

`(3) EMPLOYMENT- The term `employment' includes services subject to tax under chapter 22 (relating to railroad retirement taxes).

`(d) SPECIAL RULES- For purposes of this section--

`(1) COMMON CONTROL- All employers treated as a single employer under subsection (a) or (b) of section 52 shall be treated as a single employer for purposes of this section.

`(2) TRADE OR BUSINESS REQUIREMENT- This section shall not apply to employer payroll taxes paid with respect to an employee unless more than one-half of the employee's remuneration is for services performed in a trade or business of the employer. Any determination under this subparagraph shall be made without regard to subsections (a) and (b) of section 52.'

(b) CONFORMING AMENDMENT- The table of sections for subchapter B of chapter 65 of such Code is amended by adding at the end the following new item:

`Sec. 6430. Refund of employer payroll taxes on first $10,000 of wages of an employee.'

END