[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4287 Introduced in House (IH)]
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117th CONGRESS
1st Session
H. R. 4287
To amend the Internal Revenue Code of 1986 to allow a credit against
tax for charitable donations to nonprofit organizations providing
workforce training and education scholarships to qualified elementary
and secondary students.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 30, 2021
Mr. Smucker introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to allow a credit against
tax for charitable donations to nonprofit organizations providing
workforce training and education scholarships to qualified elementary
and secondary students.
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 ``USA Workforce Tax Credit Act''.
SEC. 2. TAX CREDIT FOR CONTRIBUTIONS TO WORKFORCE DEVELOPMENT AND
APPRENTICESHIP TRAINING ORGANIZATIONS.
(a) Credit for Individuals.--
(1) In general.--Subpart A of part IV of subchapter A of
chapter 1 of the Internal Revenue Code of 1986 is amended by
inserting after section 25D the following new section:
``SEC. 25E. QUALIFIED WORKFORCE DEVELOPMENT AND APPRENTICESHIP TRAINING
PROGRAMS.
``(a) Allowance of Credit.--In the case of an individual, there
shall be allowed as a credit against the tax imposed by this chapter
for the taxable year an amount equal to the amount of qualified
contributions made by the taxpayer during the year.
``(b) Dollar Limitations.--
``(1) Income limitation.--The amount allowed as a credit
under subsection (a) with respect to any taxpayer shall not
exceed 25 percent of the tax liability of the taxpayer with a
maximum value of $250,000.
``(2) Reduction based on state credit.--The amount allowed
as a credit under subsection (a) for a taxable year shall be
reduced by the amount allowed as a credit on any State tax
return of the individual for qualified contributions made by
the taxpayer during the taxable year.
``(c) Qualified Contributions; Other Definitions.--For purposes of
this section--
``(1) Qualified contribution.--The term `qualified
contribution' means a charitable contribution (as defined by
section 170(c)) to a workforce development or apprenticeship
training organization.
``(2) Workforce development or apprenticeship training
organization.--The term `workforce development or
apprenticeship training organization' means any organization--
``(A) which--
``(i) is described in section 501(c)(3) and
exempt from tax under section 501(a), and
``(ii) is not a private foundation,
``(B) whose exclusive purpose is to provide
workforce development and apprenticeship training to
eligible participants, including--
``(i) community colleges,
``(ii) workforce training programs, as
defined by State workforce agencies,
``(iii) organizations that provide career
and technical education,
``(iv) organizations that provide training
or apprenticeships operated by a collective
bargaining organization,
``(v) community organizations that provide
full certified training, and
``(vi) private schools that confer
diplomas, degrees, or certify completion of
certain grades,
``(C) that is in compliance with all applicable
State laws, including laws relating to unlawful
discrimination, health and safety requirements, and
criminal background checks of employees, and
``(D) which meets the requirements of subsection
(d).
``(3) Eligible participants.--The term `eligible
participant' means an individual who is enrolled in a workforce
development and apprenticeship training organization, as
described in paragraph (2)(B).
``(d) Denial of Double Benefit.--No deduction shall be allowed
under any provision of this chapter for any expense for which a credit
is allowed under this section.
``(e) Election.--This section shall apply to a taxpayer for a
taxable year only if such taxpayer elects to have this section apply
for such taxable year.
``(f) Application of Volume Cap.--A contribution shall be taken
into account under this section only if such contribution is recognized
by the Secretary as applying against the volume cap established under
section 5 of the USA Workforce Tax Credit Act.''.
(2) Clerical amendment.--The table of sections for subpart
A of part IV of subchapter A of chapter 1 of such Code is
amended by inserting after the item relating to section 25D the
following new item:
``Sec. 25E. Qualified Workforce Development and Apprenticeship Training
Programs.''.
(b) Credit for Corporations.--
(1) In general.--Subpart D of part IV of subchapter A of
chapter 1 of such Code is amended by adding at the end the
following new section:
``SEC. 45U. CONTRIBUTIONS TO WORKFORCE DEVELOPMENT OR APPRENTICESHIP
TRAINING ORGANIZATIONS.
``(a) General Rule.--For purposes of section 38, in the case of a
corporation, the workforce development and apprenticeship training
credit determined under this section for the taxable year is the
aggregate amount of qualified contributions for the taxable year.
``(b) Limitation.--
``(1) Income limitation.--The amount of the credit
determined under this section for any taxable year shall not
exceed the lesser of--
``(A) 25 percent of the tax liability of the
taxpayer for the taxable year, and
``(B) $250,000.
``(2) Reduction based on state credit.--The amount allowed
as a credit under subsection (a) for a taxable year shall be
reduced by the amount allowed as a credit on any State tax
return of the individual for qualified contributions made by
the taxpayer during the taxable year.
``(3) Qualified contributions.--For purposes of this
section, the term `qualified contribution' has the meaning
given such term under section 25E.
``(c) Denial of Double Benefit.--No deduction shall be allowed
under any provision of this chapter for any expense for which a credit
is allowed under this section.
``(d) Election.--This section shall apply to a taxpayer for a
taxable year only if such taxpayer elects to have this section apply
for such taxable year.
``(e) Application of Volume Cap.--A contribution shall be taken
into account under this section only if such contribution is recognized
by the Secretary as applying against the volume cap established under
section 5 of the USA Workforce Tax Credit Act.''.
(2) Conforming amendments.--Section 38(b) of such Code is
amended by striking ``plus'' at the end of paragraph (32), by
striking the period and inserting ``, plus'' at the end of
paragraph (33), and by adding at the end the following new
paragraph:
``(34) the workforce development or apprenticeship training
credit determined under section 45U(a).''.
(3) Clerical amendment.--The table of sections for subpart
D of part IV of subchapter A of chapter 1 of such Code is
amended by adding at the end the following new item:
``Sec. 45U. Contributions to workforce development or apprenticeship
training organizations.''.
SEC. 3. TAX CREDIT FOR CONTRIBUTIONS TO SCHOLARSHIP GRANTING
ORGANIZATIONS.
(a) Credit for Individuals.--
(1) In general.--Subpart A of part IV of subchapter A of
chapter 1 of the Internal Revenue Code of 1986, as amended by
this Act, is amended by inserting after section 25E the
following new section:
``SEC. 25F. QUALIFIED ELEMENTARY AND SECONDARY EDUCATION SCHOLARSHIPS.
``(a) Allowance of Credit.--In the case of an individual, there
shall be allowed as a credit against the tax imposed by this chapter
for the taxable year an amount equal to the amount of qualified
contributions made by the taxpayer during the taxable year.
``(b) Dollar Limitations.--
``(1) Income limitation.--The amount allowed as a credit
under subsection (a) with respect to any taxpayer shall not
exceed the lesser of--
``(A) 25 percent of the tax liability of the
taxpayer, and
``(B) $250,000.
``(2) Reduction based on state credit.--The amount allowed
as a credit under subsection (a) for a taxable year shall be
reduced by the amount allowed as a credit on any State tax
return of the individual for qualified contributions made by
the taxpayer during the taxable year.
``(c) Qualified Contributions; Other Definitions.--For purposes of
this section--
``(1) Qualified contribution.--The term `qualified
contribution' means a charitable contribution (as defined by
section 170(c)) to a scholarship granting organization.
``(2) Scholarship granting organization.--The term
`scholarship granting organization' means any organization--
``(A) which--
``(i) is described in section 501(c)(3) and
exempt from tax under section 501(a), and
``(ii) is not a private foundation,
``(B) whose exclusive purpose is to provide
scholarships for tuition for qualified elementary and
secondary education expenses of eligible students, and
``(C) which meets the requirements of subsection
(d).
``(d) Requirements for Scholarship Granting Organizations.--
``(1) In general.--An organization meets the requirements
of this subsection if--
``(A) such organization provides scholarships to--
``(i) more than 1 student, and
``(ii) different students attending more
than 1 school,
``(B) such organization does not provide
scholarships for any expenses other than qualified
elementary and secondary education expenses,
``(C) such organization provides a scholarship to
eligible students with a priority for students awarded
a scholarship the previous school year,
``(D) such organization does not earmark or set
aside contributions for scholarships on behalf of any
particular student,
``(E) such organization takes appropriate steps to
verify the annual household income and family size of
eligible students to whom it awards scholarships, and
limits them to a member of a household with a total
annual household income, which does not exceed 200
percent of the median gross income, as determined by
the Secretary of Housing and Urban Development, for the
purposes of the low-income housing credit under section
42,
``(F) such organization obtains from an independent
certified public accountant annual financial and
compliance audits and submits such audits to the
Secretary,
``(G) no officer or board member of such
organization has been convicted of a felony, and
``(H) such organization requires any eligible
student who receives a scholarship to permit such
organization to share assessment information and other
data regarding the student for the purpose of providing
reports described in subsection (e), and such other
information as necessary for the purposes of reporting
on the academic achievement of eligible students
receiving a scholarship from such organization.
``(2) Independent certified public accountant.--For
purposes of paragraph (1)(F), the term `independent certified
public accountant' means, with respect to an organization, a
certified public accountant who is not a related person (within
the meaning of section 465(b)(3)(C)) with respect to such
organization or any employee of such organization.
``(e) Eligible School Reporting Requirement.--
``(1) In general.--The reports described in this subsection
include--
``(A) a report to the parents on the student's
academic achievement, and
``(B) a report to each qualified scholarship
granting organization that provides scholarships to
students at the school, that includes the test results,
in the aggregate and disaggregated by race or ethnicity
and grade level, of the students receiving such
scholarships who are in grades 3 through 12 on a grade-
appropriate nationally norm-referenced standardized
test.
``(2) No personally identifiable information.--In preparing
and submitting the report described in paragraph (1)(B), a
school shall not include any personally identifiable
information regarding a student.
``(f) Denial of Double Benefit.--No deduction shall be allowed
under any provision of this chapter for any expense for which a credit
is allowed under this section.
``(g) Election.--This section shall apply to a taxpayer for a
taxable year only if such taxpayer elects to have this section apply
for such taxable year.
``(h) Application of Volume Cap.--A contribution shall be taken
into account under this section only if such contribution is recognized
by the Secretary as applying against the volume cap established under
section 5 of the USA Workforce Tax Credit Act.''.
(2) Clerical amendment.--The table of sections for subpart
A of part IV of subchapter A of chapter 1 of such Code, as
amended by this Act, is amended by inserting after the item
relating to section 25E the following new item:
``Sec. 25F. Qualified elementary and secondary education
scholarships.''.
(b) Credit for Corporations.--
(1) In general.--Subpart D of part IV of subchapter A of
chapter 1 of such Code, as amended by this Act, is amended by
adding after section 45U the following:
``SEC. 45V. CONTRIBUTIONS TO SCHOLARSHIP GRANTING ORGANIZATIONS.
``(a) General Rule.--For purposes of section 38, in the case of a
corporation, the education scholarship credit determined under this
section for the taxable year is the aggregate amount of qualified
contributions for the taxable year.
``(b) Limitation.--
``(1) Income limitation.--The amount of the credit
determined under this section for any taxable year shall not
exceed the lesser of--
``(A) 25 percent of the tax liability of the
taxpayer for the taxable year, and
``(B) $250,000.
``(2) Reduction based on state credit.--The amount allowed
as a credit under subsection (a) for a taxable year shall be
reduced by the amount allowed as a credit on any State tax
return of the individual for qualified contributions made by
the taxpayer during the taxable year.
``(c) Qualified Contributions.--For purposes of this section, the
term `qualified contribution' has the meaning given such term under
section 25F.
``(d) Denial of Double Benefit.--No deduction shall be allowed
under any provision of this chapter for any expense for which a credit
is allowed under this section.
``(e) Election.--This section shall apply to a taxpayer for a
taxable year only if such taxpayer elects to have this section apply
for such taxable year.
``(f) Application of Volume Cap.--A contribution shall be taken
into account under this section only if such contribution is recognized
by the Secretary as applying against the volume cap established under
section 5 of the USA Workforce Tax Credit Act.''.
(2) Conforming amendments.--Section 38(b) of such Code, as
amended by this Act, is amended by striking ``plus'' at the end
of paragraph (33), by striking the period and inserting ``,
plus'' at the end of paragraph (34), and by adding at the end
the following new paragraph:
``(35) the education scholarship credit determined under
section 45V(a).''.
(3) Clerical amendment.--The table of sections for subpart
D of part IV of subchapter A of chapter 1 of such Code, as
amended by this Act, is amended by adding at the end the
following new item:
``Sec. 45V. Contributions to scholarship granting organizations.''.
(c) Excise Tax on Failure of Scholarship Granting Organizations To
Make Distributions.--
(1) In general.--Chapter 42 of such Code is amended by
adding at the end the following new subchapter:
``Subchapter I--Organizations Providing Workforce Development,
Apprenticeship Training, or Scholarships
``Sec. 4969. Tax on failure to distribute receipts.
``SEC. 4969. TAX ON FAILURE TO DISTRIBUTE RECEIPTS.
``(a) Tax Imposed.--There is hereby imposed a tax on the failure of
a workforce development or apprenticeship training organization (as
defined in section 25E) or a scholarship granting organization (as
defined in section 25F) to make distributions in any taxable year in an
amount equal to or in excess of the required distribution amount before
the distribution deadline relating to a taxable year.
``(b) Amount of Tax.--The tax imposed by subsection (a) with
respect to a taxable year shall be equal to 15 percent of the greater
of--
``(1) the required distribution amount with respect to the
taxable year, or
``(2) the amount of receipts of the qualified scholarship
granting organization for each taxable year which are
distributed before the distribution deadline with respect to
such receipts.
``(c) Definitions.--For purposes of this section--
``(1) Required distribution amount.--
``(A) In general.--The required distribution amount
with respect to a taxable year is the amount equal to
100 percent of the total receipts of the scholarship
granting organization for such taxable year--
``(i) reduced by the sum of such receipts
that are retained for administrative expenses
for the taxable year or are carried to the
succeeding taxable year under subparagraph (C),
and
``(ii) increased by the amount of the
carryover under subparagraph (C) from the
preceding taxable year.
``(B) Administrative expenses.--For purposes of
this paragraph, not more than 10 percent of total
receipts of a qualified workforce development
organization, apprenticeship training organization or
scholarship granting organization for a taxable year
may be used for administrative purposes.
``(C) Carryover.--
``(i) Qualified scholarship granting
organization.--Receipts of a qualified
scholarship granting organization for a taxable
year that are not awarded scholarships for the
taxable year or retained for administrative
purposes for the taxable year shall be carried
to the succeeding taxable year. The amount
carried to a taxable year under the preceding
sentence shall not exceed 15 percent of total
receipts of the qualified scholarship granting
organization for the taxable year.
``(ii) Qualified workforce development or
apprenticeship training organization.--Receipts
of a qualified workforce development or
apprenticeship training organization that are
not disbursed for the taxable year or retained
for administrative purposes for the taxable
year shall be carried to the succeeding taxable
year. The amount carried to the taxable year
under the preceding sentence shall not exceed
15 percent of total receipts of the qualified
workforce development or apprenticeship
training organization for the taxable year.
``(2) Distributions.--The term `distribution' includes
amounts which are formally committed but not distributed. A
formal commitment described in the preceding sentence may
include contributions set aside for eligible students or
participants for more than one year.
``(3) Distribution deadline.--The distribution deadline
with respect to receipts for a taxable year is the first day of
the second taxable year following the taxable year in which
such receipts are received by the scholarship granting
organization.
``(d) Reasonable Cause Exception.--The tax imposed by subsection
(a) shall not apply with respect to any failure to make required
distributions before the distribution deadline which is not willful and
is due to reasonable cause.''.
(2) Abatement of tax.--
(A) General rule.--Subsection (b) of section 4962
of such Code is amended by striking ``or G'' and
inserting ``G, or I''.
(B) First tier tax.--Subsection (a) of section 4963
of such Code is amended by inserting ``4969,'' after
``4967,''.
(C) Taxable event.--Subsection (c) of section 4963
of such Code is amended by inserting ``4969,'' after
``4967,''.
(3) Correction period.--Subparagraph (A) of section
4963(e)(2) of such Code is amended by inserting ``or 4969''
after ``4942''.
(4) Clerical amendment.--The table of subchapters for
chapter 42 of such Code is amended by adding at the end the
following new item:
``subchapter i. organizations providing workforce development,
apprenticeship training, or scholarships''.
SEC. 4. ORGANIZATIONAL AUTONOMY.
A participating eligible organization or entity under the programs
established pursuant to the USA Workforce Tax Credit Act are autonomous
and not agents of the State or Federal Government and therefore--
(1) a Federal or State agency may not in any way regulate
the program of a participating entity that accepts a
contribution or a scholarship under this Act;
(2) the provision of tax credits under this Act does not
expand the regulatory authority of the Federal Government, the
State, its officers, or any school district to impose any
additional regulation of an entity beyond those necessary to
enforce the requirements of this Act; and
(3) participating eligible entities shall be given the
maximum freedom to provide for the needs of their participants
without government control.
SEC. 5. VOLUME CAP.
(a) Amount.--The volume cap amount available for tax credits for
purposes of this Act shall be $2,000,000,000 annually, beginning for
taxable years beginning in 2022 and for each succeeding calendar year
thereafter.
(b) Application for Credits.--The Secretary shall develop a system
to track and make available information in real time, regarding
availability of tax credits to donors which will be available on a
first-come, first-serve basis.
(c) Distribution.--Fifty percent of the annual amount made
available shall be allotted by the Secretary for donations to workforce
development and apprenticeship training organizations and 50 percent
for donations to scholarship granting organizations.
SEC. 6. EFFECTIVE DATE.
The amendments made by this Act shall apply to taxable years
beginning after December 31, 2021.
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