Sec. 2. Findings
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Congress finds that— on January 1, 1998—nearly 25 years after the Employee Retirement Income Security Act of 1974 was enacted and the employee stock ownership plan (hereafter in this section referred to as an ESOP ) was created—employees were first permitted to be owners of subchapter S corporations pursuant to the Small Business Job Protection Act of 1996 ( Public Law 104–188 ); with the passage of the Taxpayer Relief Act of 1997 ( Public Law 105–34 ), Congress designed incentives to encourage businesses to become ESOP-owned S corporations; since that time, several thousand companies have become ESOP-owned S corporations, creating an ownership interest for several million Americans in companies in every State in the country, in industries ranging from heavy manufacturing to construction to services; while estimates show that 40 percent of working Americans have no formal retirement account at all, every United States worker who is an employee-owner of an S corporation company through an ESOP has a valuable qualified retirement savings account; recent studies have shown that employees of ESOP-owned S corporations enjoy greater job stability than employees of comparable companies; studies also show that employee-owners of S corporation ESOP companies have amassed meaningful retirement savings through their S ESOP accounts that will give them the means to retire with dignity; under the Small Business Act ( 15 U.S.C. 631 et seq. ) and the regulations promulgated by the Administrator of the Small Business Administration, a small business concern that was eligible under the Small Business Act for the numerous preferences of the Act is denied treatment as a small business concern after an ESOP acquires more than 49 percent of the business, even if the number of employees, the revenue of the small business concern, and the racial, gender, or other criteria used under the Act to determine whether the small business concern is eligible for benefits under the Act remain the same, solely because of the acquisition by the ESOP; and it is the goal of Congress to both preserve and foster employee ownership of S corporations through ESOPs.
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U.S. Code
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- Pub. L. 104-188
- Pub. L. 105-34
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