Summary: H.R.1221 — 101st Congress (1989-1990)All Information (Except Text)

There is one summary for H.R.1221. Bill summaries are authored by CRS.

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Introduced in House (03/01/1989)

Rural Enterprise Zone Act of 1989 - Title I: Designation of Enterprise Zones - Amends the Internal Revenue Code to authorize the Secretary of Housing and Urban Development (Secretary) to designate rural enterprise zones for purposes of providing tax and regulatory relief and improving local services. Limits choices to areas nominated by States and local governments. Limits to 100 the total number of areas that may be designated, and the time period of the designation.

Authorizes the Secretary to designate a zone only if the area meets certain locational, demographic, unemployment, and poverty criteria. Requires nominating local governments, as a condition of the Secretary's designation, to agree in writing to follow a course of action that may include reducing tax rates, improving local services, simplifying or streamlining regulation of business, and providing job training to area residents.

Describes areas to which the Secretary must give preference in selecting areas for designation.

Requires the Secretary to report to the Congress every four years on the effects of such enterprise zones' designation in accomplishing the purposes of this Act.

Title II: Federal Income Tax Incentives - Subtitle A: Credits for Employers and Employees - Allows employers located in enterprise zones a nonrefundable income tax credit for qualified increased employment expenditures and employment of the disadvantaged. Sets the credit amount at ten percent of the increase in payroll plus a specified percentage of wages paid to certain disadvantaged workers through the first 20 years of the enterprise zone designation.

Allows a nonrefundable income tax credit to enterprise zone employees for five percent of wages earned. Phases out both credits in the last four years of the enterprise zone designation.

Subtitle B: Credits for Investment in Tangible Property in Enterprise Zones - Allows businesses an additional investment tax credit for investments made in certain enterprise zone construction property. Limits the credit to ten percent for new property, including rental property. Requires the recapture of credit amounts upon the early disposition of the property.

Subtitle C: Nonrecognition of Qualified Enterprise Zone Capital Gain Where Acquisition of Enterprise Zone Business Property - Provides for the nonrecognition of capital gain on the sale of enterprise zone property if, within one year after the sale, the taxpayer acquires qualified replacement property (generally defined as property related to an enterprise zone or to a business within a zone).

Subtitle D: Deduction for Purchase of Enterprise Stock - Allows a taxpayer to deduct up to $100,000 of the aggregate amount paid for the purchase of enterprise stock on its original issue by a qualified issuer.

Requires any gain from the disposition of the stock to be treated as ordinary income.

Subtitle E: Rules Relating to Industrial Development Bonds - Declares that: (1) limitations on the cost recovery deductions for property financed with tax-exempt bonds shall not apply to enterprise zone property; and (2) the termination of the small issue exemption shall not apply to bonds whose proceeds are used to finance facilities in enterprise zones. Requires that five percent of the private activity bond volume cap for a State that has one or more enterprise zones be set aside exclusively for use in such zones.

Subtitle F: Ordinary Loss Deduction for Securities of Enterprise Zone Business Which Become Worthless - Permits an ordinary loss deduction for securities of enterprise zone business that become worthless during the taxable year.

Subtitle G: Increase in Research Credit for Research Conducted in Enterprise Zones - Increases from 20 percent to 30 percent the tax credit for increasing research conducted in enterprise zones. Applies this subtitle retroactively to taxable years 1987 and thereafter.

Subtitle H: Sense of the Congress with Respect to Tax Simplification - Expresses the sense of the Congress that the Secretary of the Treasury should simplify the administration and enforcement of any provision of the Internal Revenue Code affected by this Act.

Subtitle I: Regulations - Directs the Secretary of the Treasury to issue regulations to carry out the provisions of this Act not later than six months after enactment.

Title III: Regulatory Flexibility - Amends Federal law to revise the definition of "small entity" for purposes of the analysis of regulatory functions to include qualified business, government, and nonprofit enterprises operating within enterprise zones.

Authorizes Federal agencies, upon request by a designating government, to waive or modify rules and regulations pertaining to the implementation of projects or activities within an enterprise zone. Requires agencies to approve the request if the resulting benefits of job creation, community development, or economic revitalization outweigh the public interest in retaining the rule unchanged.

Disallows waiver or modification of a rule that would directly violate a statutory requirement or present a danger to the public health and safety.

Amends the Department of Housing and Urban Development Act to direct the Secretary of Housing and Urban Development to promote the coordination of all enterprise zone programs and to consolidate all periodic reports required under such programs into one summary report.

Title IV: Establishment of Foreign-Trade Zones in Enterprise Zones - Requires the Foreign-Trade Zone Board to consider on a priority basis and to expedite the processing of applications for the establishment of foreign-trade zones within enterprise zones. Requires the Secretary of the Treasury to give priority to, and expedite applications for, the establishment of ports of entry necessary to establish such zones.

Title V: Enterprise Zone Business Incubator Program - Directs the Secretary of Housing and Urban Development to establish a business incubator program to provide loans and grants to State and local governments to give start-up assistance to small businesses in distressed rural areas.