Section 1 Short title
This Act may be cited as the “USA Workforce Tax Credit Act”.
USA Workforce Tax Credit Act
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.
Sec. 2 Tax credit for contributions to workforce development and apprenticeship training organizations
Credit for individuals—
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 25E the following new section:
“25F. 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) the exclusive purpose if which is—
“(i) 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, or
“(ii) to provide scholarships for use in obtaining workforce development and apprenticeship training described in clause (i) at an organization which is exempt from tax under section 501(a) (other than a private foundation), and
“(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.
“(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 4 of the USA Workforce Tax Credit Act.”
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 25E the following new item:
Business credit—
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:
“45BB. 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 25F.
“(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 4 of the USA Workforce Tax Credit Act.”
Conforming amendments— Section 38(b) of such Code is amended by striking “plus” at the end of paragraph (40), by striking the period and inserting “, plus” at the end of paragraph (41), and by adding at the end the following new paragraph:
“(42) the workforce development or apprenticeship training credit determined under section 45BB(a).”
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:
Excise tax on failure of scholarship granting organizations To make distributions—
In general— Chapter 42 of such Code is amended by adding at the end the following new subchapter:
“I Organizations Providing Workforce Development or Apprenticeship Training
“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 25F(c)) 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 excess (if any) of—
“(1) the required distribution amount with respect to the taxable year, over
“(2) the amount of receipts of the workforce development or apprenticeship training 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 workforce development or apprenticeship training 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 or apprenticeship training organization for a taxable year may be used for administrative purposes.
“(C) Carryover—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.”
Abatement of tax—
General rule— Subsection (b) of section 4962 of such Code is amended by striking “or G” and inserting “G, or I”.
First tier tax— Subsection (a) of section 4963 of such Code is amended by inserting “4969,” after “4967,”.
Taxable event— Subsection (c) of section 4963 of such Code is amended by inserting “4969,” after “4967,”.
Correction period— Subparagraph (A) of section 4963(e)(2) of such Code is amended by inserting “or 4969” after “4942”.
Clerical amendment— The table of subchapters for chapter 42 of such Code is amended by adding at the end the following new item:
Effective date— The amendments made by this Act shall apply to taxable years beginning after December 31, 2023.
Sec. 3 Organizational autonomy
A participating eligible organization or entity under the programs established pursuant to this Act are autonomous and not agents of the State or Federal Government and therefore—
a Federal or State agency may not in any way regulate the program of a participating entity that accepts a contribution under this Act;
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
participating eligible entities shall be given the maximum freedom to provide for the needs of their participants without government control.
Sec. 4 Volume cap
Amount— The volume cap amount available for tax credits allowed under sections 25F and 45BB of the Internal Revenue Code of 1986, as added by this Act, shall be $2,000,000,000 annually, beginning for taxable years beginning in 2024 and for each succeeding calendar year thereafter.
Application for credits— The Secretary shall develop a system to track and make available information in real time, regarding availability of such tax credits to donors which will be available on a first-come, first-serve basis.