Sec. 6. Credit for insourcing expenses
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Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section: For purposes of section 38, the insourcing expenses credit for any taxable year is an amount equal to 30 percent of the eligible insourcing expenses of the taxpayer which are taken into account in such taxable year under subsection (d). For purposes of this section— The term eligible insourcing expenses means— eligible expenses paid or incurred by the taxpayer in connection with the elimination of any business unit of the taxpayer (or of any member of any expanded affiliated group in which the taxpayer is also a member) located outside the United States, and eligible expenses paid or incurred by the taxpayer in connection with the establishment of any business unit of the taxpayer (or of any member of any expanded affiliated group in which the taxpayer is also a member) located within— a HUBZone (as defined in section 31(b) of the Small Business Act ( 15 U.S.C. 657a(b) )), or a low-income community (as described in section 45D(e)), if such establishment constitutes the relocation of the business unit so eliminated.
For purposes of the preceding sentence, a relocation shall not be treated as failing to occur merely because such elimination occurs in a different taxable year than such establishment. The term eligible expenses means— any amount for which a deduction is allowed to the taxpayer under section 162, and permit and license fees, lease brokerage fees, equipment installation costs, and, to the extent provided by the Secretary, other similar expenses. Such term does not include any compensation which is paid or incurred in connection with severance from employment and, to the extent provided by the Secretary, any similar amount.
The term business unit means— any trade or business within the garment industry (as defined in section 8(f) of the Fair Labor Standards Act of 1938), and any line of business, or functional unit, which is part of any trade or business described in subparagraph (A). The term expanded affiliated group means an affiliated group as defined in section 1504(a), determined without regard to section 1504(b)(3) and by substituting more than 50 percent for at least 80 percent each place it appears in section 1504(a).
A partnership or any other entity (other than a corporation) shall be treated as a member of an expanded affiliated group if such entity is controlled (within the meaning of section 954(d)(3)) by members of such group (including any entity treated as a member of such group by reason of this paragraph). Amounts shall be taken into account under paragraph
(1)only to the extent that such amounts are paid or incurred pursuant to a written plan to carry out the relocation described in paragraph (1). Any amount paid or incurred in connection with the on-going operation of a business unit shall not be treated as an amount paid or incurred in connection with the establishment or elimination of such business unit. No credit shall be allowed under this section unless the number of full-time equivalent employees of the taxpayer for the taxable year for which the credit is claimed exceeds the number of full-time equivalent employees of the taxpayer for the last taxable year ending before the first taxable year in which such eligible insourcing expenses were paid or incurred. For purposes of this subsection, full-time equivalent employees has the meaning given such term under section 45R(d) (and the applicable rules of section 45R(e)). All employers treated as a single employer under subsection (b), (c), (m), or
(o)of section 414 shall be treated as a single employer for purposes of this subsection. Except as provided in paragraph (2), eligible insourcing expenses shall be taken into account under subsection
(a)in the taxable year during which the plan described in subsection (b)(5) has been completed and all eligible insourcing expenses pursuant to such plan have been paid or incurred. If the taxpayer elects the application of this paragraph, eligible insourcing expenses shall be taken into account under subsection
(a)in the first taxable year after the taxable year described in paragraph (1). For purposes of this section, the term United States shall be treated as including each possession of the United States (including the Commonwealth of Puerto Rico and the Commonwealth of the Northern Mariana Islands). The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section. . Subsection
(b)of section 38 of such Code is amended by striking plus at the end of paragraph (32), by striking the period at the end of paragraph
(33)and inserting , plus , and by adding at the end the following new paragraph: the insourcing expenses credit determined under section 45U(a). . 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. Credit for insourcing expenses. . The amendments made by this section shall apply to amounts paid or incurred after the date of the enactment of this Act. The Secretary of the Treasury shall make periodic payments to each possession of the United States with a mirror code tax system in an amount equal to the loss to that possession by reason of section 45U of the Internal Revenue Code of 1986. Such amount shall be determined by the Secretary of the Treasury based on information provided by the government of the respective possession. The Secretary of the Treasury shall make annual payments to each possession of the United States which does not have a mirror code tax system in an amount estimated by the Secretary of the Treasury as being equal to the aggregate benefits that would have been provided to residents of such possession by reason of section 45U of such Code if a mirror code tax system had been in effect in such possession. The preceding sentence shall not apply with respect to any possession of the United States unless such possession has a plan, which has been approved by the Secretary of the Treasury, under which such possession will promptly distribute such payment to the residents of such possession. No credit shall be allowed against United States income taxes under section 45U of such Code to any person— to whom a credit is allowed against taxes imposed by the possession by reason of such section, or who is eligible for a payment under a plan described in paragraph (1)(B). For purposes of this section, the term possession of the United States includes the Commonwealth of Puerto Rico and the Commonwealth of the Northern Mariana Islands. For purposes of this section, the term mirror code tax system means, with respect to any possession of the United States, the income tax system of such possession if the income tax liability of the residents of such possession under such system is determined by reference to the income tax laws of the United States as if such possession were the United States. For purposes of section 1324(b)(2) of title 31, United States Code, the payments under this section shall be treated in the same manner as a refund due from sections referred to in such section 1324(b)(2).
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Sec. 6
Credit for insourcing expenses
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