CODE cont'd. IRC § 51(d)(8)

A school which is not a public school shall be treated as a qualified school only if it is exempt from tax under section 501(a).

(D) Wages. In the case of remuneration attributable to services performed while the individual meets the requirements of clauses (i), (ii), and (iii) of subparagraph (A), wages, and unemployment insurance wages, shall be determined without regard to section 3306(c)(10)(C).

(9) Eligible work incentive employees.—The term "eligible work incentive employee" means an individual who has been certified by the designated local agency

as

(A) being eligible for financial assistance under part A of title IV of the Social Security Act and as having continually received such financial assistance during the 90-day period which immediately precedes the date on which such individual is hired by the employer, or

(B) having been placed in employment under a work incentive program established under section 432(b)(1) or 44D of the Social Security Act.

(10) Involuntarily terminated CETA employee.-The term "involuntarily terminated CETA employee" means an individual who is certified by the designated local agency as having been involuntarily terminated after December 31, 1980, from employment financed in whole or in part under a program under part D of title II or title VI of the Comprehensive Employment and Training Act. This paragraph shall not apply to any individual who begins work for the employer after December 31, 1982.

(11) Members of economically disadvantaged families.—An individual is a member of an economically disadvantaged family if the designated local agency determines that such individual was a member of a family which had an income during the 6 months immediately preceding the earlier of the month in which such determination occurs or the month in which the hiring date occurs which, on an annual basis, would be 70 percent or less of the Bureau of Labor Statistics lower living standard. Any such determination shall be valid for the 45-day period beginning on the date such determination is made. Any such determination with respect to an individual who is a qualified summer youth employee or youth participating in a qualified cooperative education program with respect to any employer shall also apply for purposes of determining whether such individual is a member of another targeted group with respect to such employer.

(12) Qualified summer youth employee.

(A) In general.-The term "qualified summer youth employee" means an individual

15.

(i) who performs services for the employer between May 1 and September

(ii) who is certified by the designated local agency as having attained age 16 but not 18 on the hiring date (or if later, on May 1 of the calendar year involved).

(iii) who has not been an employee of the employer during any period prior to the 90-day period described in subparagraph (B)(iii), and

(iv) who is certified by the designated local agency as being a member of an economically disadvantaged family (as determined under paragraph (11)). (B) Special rules for determining amount of credit.-For purposes of applying this subpart to wages paid or incurred to any qualified summer youth employee

(i) subsection (b)(2) shall be applied by substituting "any 90-day period between May and September 15" for "the 1-year period beginning with the day the individual begins work for the employer", and

(ii) subsection (b)(3) shall be applied by substituting "$3,000" for "S6,000". (C) Special rule for continued employment for same employer.-In the case of an individual who, with respect to the same employer, is certified as a member of

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TARGETED JOBS CREDIT

CODE cont'd.

IRC § 51(d)(12)

§ 51 1510

another targeted group after such individual has been a qualified summer youth employee, paragraph (14) shall be applied by substituting "certified" for "hired by the employer."

(13) Preemployment period.-The term "preemployment period" means the 60-day period ending on the hiring date.

(14) Hiring date.-The term "hiring date" means the day the individual is hired by the employer.

(15) Designated local agency.-The term "designated local agency" means a State employment security agency established in accordance with the Act of June 6, 1933, as amended (29 U.S.C. 49-49n).

(16) Special rules for certifications.—

(A) In general.-An individual shall not be treated as a member of a targeted group unless, on or before the day on which such individual begins work for the employer, the employer

(i) has received a certification from a designated local agency that such individual is a member of a targeted group, or

(ii) has requested in writing such certification from the designated local agency.

For purposes of the preceding sentence, if on or before the day on which such individual begins work for the employer, such individual has received from a designated local agency (or other agency or organization designated pursuant to a written agreement with such designated local agency) a written preliminary determination that such individual is a member of a targeted group, then "the fifth day" shall be substituted for "the day” in such sentence.

(B) Incorrect certification.—If—

(i) an individual has been certified as a member of a targeted group, and (ii) such certification is incorrect because it was based on false information provided by such individual,

the certification shall be revoked and wages paid by the employer after the date on which notice of revocation is received by the employer shall not be treated as qualified wages.

(C) Employer request must specify potential basis for eligibility.—In any request · for a certification of an individual as a member of a targeted group, the employer shall

(i) specify each subparagraph (but not more than 2) of paragraph (1) by reason of which the employer believes that such individual is such a member, and (ii) certify that a good faith effort was made to determine that such individual is such a member.

(e) [Repealed]

(f) Remuneration Must Be for Trade or Business Employment.—

(1) In general.-For purposes of this subpart, remuneration paid by an employer to an employee during any taxable year shall be taken into account only if more than one-half of the remuneration so paid is for services performed in a trade or business of the employer.

(2) Special rule for certain determination.—Any determination as to whether paragraph (1), or subparagraph (A) or (B) of subsection (h)(1), applies with respect to any employee for any taxable year shall be made without regard to subsections (a) and (b) of section 52.

[Footnote IRC 351 continued]

IRC §51(dX16XC) in italics added by section 7103(cX1), '89 OBRA.

Effective date (Sec. 7103(c)(2), '89 OBRA).—Applies to individuals who begin work for the employer after 12-31-89.

@PH. Inc.-Federal Taxes 2nd-See also Recent Developments 1-8-90

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CODE cont'd. IRC § 51(g)

@ United States Employment Service To Notify Employers of Availability of Credit.—The United States Employment Service, in consultation with the Internal Revenue Service, shall take such steps as may be necessary or appropriate to keep employers apprised of the availability of the targeted jobs credit determined under this subpart.

(h) Special Rules for Agricultural Labor and Railway Labor.-For purposes of this subpart

(1) Unemployment insurance wages.—

(A) Agricultural labor.-If the services performed by any employee for an employer during more than one-half of any pay period (within the meaning of section 3306(d)) taken into account with respect to any year constitute agricultural labor (within the meaning of section 3306(k)), the term “unemployment insurance wages" means, with respect to the remuneration paid by the employer to such employee for such year, an amount equal to so much of such remuneration as constitutes "wages" within the meaning of section 3121(a), except that the contribution and benefit base for each calendar year shall be deemed to be $6,000.

(B) Railway labor.-If more than one-half of remuneration paid by an employer to an employee during any year is remuneration for service described in section 3306(c)(9), the term “unemployment insurance wages" means, with respect to such employee for such year, an amount equal to so much of the remuneration paid to such employee during such year which would be subject to contributions under section 8(a) of the Railroad Unemployment Insurance Act (45 U.S.C. 358(a)) if the maximum amount subject to such contributions were $500 per month (2) Wages. In any case to which subparagraph (A) and (B) of paragraph (1) applies, the term "wages" means unemployment insurance wages (determined without regard to any dollar limitation).

(i) Certain Individuals Ineligible.

(1) Related individuals.—No wages shall be taken into account under subsection (a) with respect to an individual who

(A) bears any of the relationships described in paragraphs (1) through (8) of section 152(a) to the taxpayer, or, if the taxpayer is a corporation, to an individual who owns, directly or indirectly, more than 50 percent in value of the outstanding stock of the corporation (determined with the application of section 267(c)),

(B) If the taxpayer is an estate or trust, is a grantor, beneficiary or fiduciary of the estate or trust, or is an individual who bears any of the relationships described in paragraphs (1) through (8) of section 152(a) to a grantor, beneficiary, or fiduciary of the estate or trust, or

(C) is a dependent (described in section 152(a)(9)) of the taxpayer, or, if the taxpayer is a corporation, of an individual described in subparagraph (A), or, if the taxpayer is an estate or trust, of a grantor, beneficiary, or fiduciary of the estate or

trust.

(2) Nonqualifying rehires.-No wages shall be taken into account under subsection (a) with respect to any individual if, prior to the hiring date of such individual, such individual had been employed by the employer at any time during which he was not a member of a targeted group.

(3) Individuals not meeting minimum employment period.-No wages shall be taken into account under subsection (a) with respect to any individual unless such individual either

(A) is employed by the employer at least 90 days (14 days in the case of an individual described in subsection (d)(12)), or

(B) has completed at least 120 hours (20 hours in the case of an individual described in subsection (d)(12)) of services performed for the employer.

(j) Treatment of Successor Employers; Treatment of Employees Performing Services for other Persons.—

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conta.

51(jX(1)

§ 5 1511.00!

(1) Treatment of successor employers.—Under regulations prescribed by the Secre tary, in the case of a successor employer referred to in section 3306(b)(1), the determi nation of the amount of the credit under this section with respect to wages paid b such successor employer shall be made in the same manner as if such wages were paic by the predecessor employer referred to in such section.

(2) Treatment of employees performing services for other persons.-No credi shall be determined under this section with respect to remuneration paid by an em ployer to an employee for services performed by such employee for another persor unless the amount reasonably expected to be received by the employer for such ser vices from such other person exceeds the remuneration paid by the employer to such employee for such services.

(k) Election to Have Targeted Jobs Credit Not Apply.—

(1) In general.-A taxpayer may elect to have this section not apply for any taxable year.

(2) Time for making election.—An election under paragraph (1) for any taxable year may be made (or revoked) at any time before the expiration of the 3-year period beginning on the last date prescribed by law for filing the return for such taxable year (determined without regard to extension).

(2) Manner of making election.-An election under paragraph (1) (or revocation be made in such manner as the Secretary may by regulations prescribe.

REPORTS

[1511] (89 OBRA, P.L. 101-239, 12-19-89). Extension of targeted jobs credit.

[Conference Explanation] House bill

The credit is extended for two years, through December 31, 1991, with one modification. The modification would require that employers: (1) specifically identify the categories (but not to exceed two) for which the individual is believed to be eligible when requesting certification and (2) indicate that a good faith effort was made to determine that the individual is eligible for the credit.

The authorization for appropriations is extended for two years, October 1, 1989September 30, 1991.

The provision applies with respect to targeted-group individuals who begin work for the employer after December 31, 1989, and before January 1, 1992. Under the

provision, the credit does not apply with
respect to individuals who begin work for
the employer after December 31, 1991.
Senate amendment
No provision.

Conference agreement

The conference agreement follows the House bill, except that the credit is extended for nine months. The provision applies with respect to targeted-group individuals who begin work for the employer after December 31, 1989, and before October 1, 1990. Under the provision, the credit does not apply with respect to individuals who begin work for the employer after September 30, 1990.

The authorization for appropriations is extended for one year, October 1, 1989September 30, 1990.

[¶511.005] ('88 Technical and Miscellaneous Revenue Act ('88 TAMRA, P.L. 100-647, 11-10-88). Extension of targeted jobs credit.

[House Explanation]

Present Law-Tax credit provisions. The targeted jobs tax credit is available on an elective basis for hiring individuals from nine targeted groups. The targeted groups

©PH. Inc.-Federal Taxes 2nd-See also Recent Developments

are: (1) vocational rehabilitation referrals; (2) economically disadvangted youths aged 18 through 24; (3) economically disadvantaged Vietnam-era veterans; (4) Supplemental Security Income (SSI) recipients; (5) general assistance recipients; (6) economi1453

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