[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1525 Introduced in House (IH)]
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116th CONGRESS
1st Session
H. R. 1525
To provide tax incentives to promote economic development in
economically distressed zones.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 5, 2019
Miss Gonzalez-Colon of Puerto Rico (for herself and Mrs. Kirkpatrick)
introduced the following bill; which was referred to the Committee on
Ways and Means
_______________________________________________________________________
A BILL
To provide tax incentives to promote economic development in
economically distressed 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 ``Economic Development Act for
Distressed Zones of 2019''.
SEC. 2. ECONOMICALLY DISTRESSED ZONES.
(a) In General.--Chapter 1 of the Internal Revenue Code of 1986 is
amended by adding at the end the following new subchapter:
``Subchapter AA--Economically Distressed Zones
``Sec. 1400AA-1. Economically distressed zone credit.
``Sec. 1400AA-2. Designation of economically distressed zones.
``SEC. 1400AA-1. ECONOMICALLY DISTRESSED ZONE CREDIT.
``(a) Allowance of Credit.--There shall be allowed as a credit
against the tax imposed by subtitle A for the taxable year an amount
equal to the sum of--
``(1) an amount equal to 40 percent of the sum of--
``(A) the aggregate amount of the taxpayer's
economically distressed zone wages for such taxable
year, plus
``(B) the allocable employee fringe benefit
expenses of the taxpayer for such taxable year,
``(2) an amount equal to 40 percent of the depreciation and
amortization allowances for the taxable year with respect to
property of the taxpayer which are located and used in the
active conduct of a trade or business within an economically
distressed zone, and
``(3) an amount equal to 30 percent of the payments made by
the taxpayer in course of a trade or business for purchases of
services or tangible property from an unrelated person (40
percent in the case of such a purchase from an unrelated
minority business) located within an economically distressed
zone.
``(b) Denial of Double Benefit.--Any wages or other expenses taken
into account in determining the credit under this section may not be
taken into account in determining the credit under sections 41, and any
other provision determined by the Secretary to be substantially
similar.
``(c) Definitions and Special Rules.--For purposes of this
section--
``(1) Qualified economically distressed zone wages.--
``(A) In general.--The term `qualified economically
distressed zone wages' means amounts paid or incurred
by the taxpayer for the taxable year which are--
``(i) in connection with the active conduct
of a trade or business of the taxpayer within
an economically distressed zone, and
``(ii) for wages of an employee for
services provided, and the principal place of
employment of whom is, in such economically
distressed zone.
``(B) Limitation on amount of wages taken into
account.--
``(i) In general.--The amount of wages
which may be taken into account under
subparagraph (A) with respect to any employee
for any taxable year shall not exceed the
contribution and benefit base determined under
section 230 of the Social Security Act for the
calendar year in which such taxable year
begins.
``(ii) Treatment of part-time employees,
etc.--If--
``(I) any employee is not employed
by the taxpayer on a substantially
full-time basis at all times during the
taxable year, or
``(II) the principal place of
employment of any employee is not
within an economically distressed zone
at all times during the taxable year,
the limitation applicable under clause (i) with
respect to such employee shall be the
appropriate portion (as determined by the
Secretary) of the limitation which would
otherwise be in effect under clause (i).
``(C) Treatment of certain employees.--The term
`qualified economically distressed zone wages' shall
not include any wages paid to employees who are
assigned by the employer to perform services for
another person, unless the principal trade or business
of the employer is to make employees available for
temporary periods to other persons in return for
compensation.
``(2) Allocable employee fringe benefit expenses.--
``(A) In general.--The term `allocable employee
fringe benefit expenses' means the aggregate amount
allowable as a deduction under this chapter to the
taxpayer for the taxable year for the following amounts
which are allocable to employment in an economically
distressed zone:
``(i) Employer contributions under a stock
bonus, pension, profit-sharing, or annuity
plan.
``(ii) Employer-provided coverage under any
accident or health plan for employees.
``(iii) The cost of life or disability
insurance provided to employees.
``(B) Allocation.--For purposes of subparagraph
(A), an amount shall be treated as allocable to an
economically distressed zone only if such amount is
with respect to employment of an individual for
services provided, and the principal place of
employment of whom is, in such zone.
``(3) Minority business.--
``(A) In general.--The term `minority business'
means--
``(i) a sole proprietorship carried on by a
qualified individual, or
``(ii) a corporation or partnership--
``(I) at least 50 percent of the
ownership interests in which are held
by one or more qualified individuals,
and
``(II) of which a qualified
individual is the president or chief
executive officer (or a substantially
equivalent position).
``(B) Qualified individual.--The term `qualified
individual' means any individual who--
``(i) is of Asian-Indian, Asian-Pacific,
Black, Hispanic or Native American origin or
descent, and
``(ii) is a United States citizen or legal
resident of the United States or any of its
territories or possessions.
``(4) Aggregation rules.--
``(A) In general.--Members of an affiliated group
shall be treated as a single taxpayer.
``(B) Affiliated group.--The term `qualified group'
means an affiliated group (as defined in section
1504(a), determined without regard to section
1504(b)(3)) one or more members of which are engaged in
the active conduct of a trade or business within an
economically distressed zone.
``(C) Related persons.--Persons shall be treated as
related to each other if such persons would be treated
as a single employer under the regulations prescribed
under section 52(b).
``SEC. 1400AA-2. DESIGNATION OF ECONOMICALLY DISTRESSED ZONES.
``(a) In General.--For purposes of this subchapter, the term
`economically distressed zone' means any population census tract
which--
``(1) has pervasive poverty, unemployment, low labor force
participation, and general distress measured as a prolonged
period of economic decline measured by real gross national
product,
``(2) has a poverty rate of not less than 35 percent, and
``(3) has been designated as such by the Secretary and the
Secretary of Commerce pursuant to an application under
subsection (b).
``(b) Application for Designation.--
``(1) In general.--An application for designation as an
economically distressed zone may be filed by a State or local
government in which the population census tract to which the
application applies is located.
``(2) Requirements.--Such application shall include--
``(A) a Fiscal Plan submitted pursuant to section
201 of the Puerto Rico Oversight, Management, and
Economic Stability Act, or
``(B) a strategic plan for accomplishing the
purposes of this subchapter, which--
``(i) describes the coordinated economic,
human, community, and physical development plan
and related activities proposed for the
nominated area,
``(ii) describes the process by which the
affected community is a full partner in the
process of developing and implementing the plan
and the extent to which local institutions and
organizations have contributed to the planning
process,
``(iii) identifies the amount of State,
local, and private resources that will be
available in the nominated area and the
private/public partnerships to be used, which
may include participation by, and cooperation
with, universities, medical centers, and other
private and public entities,
``(iv) identifies the funding requested
under any Federal program in support of the
proposed economic, human, community, and
physical development and related activities,
``(v) identifies baselines, methods, and
benchmarks for measuring the success of
carrying out the strategic plan, including the
extent to which poor persons and families will
be empowered to become economically self-
sufficient, and
``(vi) does not include any action to
assist any establishment in relocating from one
area outside the nominated area to the
nominated area, except that assistance for the
expansion of an existing business entity
through the establishment of a new branch,
affiliate, or subsidiary is permitted if--
``(I) the establishment of the new
branch, affiliate, or subsidiary will
not result in a decrease in employment
in the area of original location or in
any other area where the existing
business entity conducts business
operations,
``(II) there is no reason to
believe that the new branch, affiliate,
or subsidiary is being established with
the intention of closing down the
operations of the existing business
entity in the area of its original
location or in any other area where the
existing business entity conducts
business operation, and
``(III) includes such other
information as may be required by the
Secretary and the Secretary of
Commerce.
``(c) Period for Which Designations Are in Effect.--Designation as
an economically distressed zone may be made at any time during the 10-
year period beginning on the date of the enactment of this section, and
shall remain in effect with respect to such zone during the 15-year
period beginning on the date of such designation.
``(d) Territories and Possessions.--The term `State' includes
territories and possessions of the United States.''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2018.
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