Internal Revenue Code:Sec. 45A. Indian employment credit
From TaxAlmanac, A Free Online Resource
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.
From TaxAlmanac
Contents |
Location in Internal Revenue Code
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART IV - CREDITS AGAINST TAX
Subpart D - Business Related Credits
Statute
Sec. 45A. Indian employment credit
(a) Amount of credit
For purposes of section 38, the amount of the Indian employment
credit determined under this section with respect to any employer
for any taxable year is an amount equal to 20 percent of the excess
(if any) of -
(1) the sum of -
(A) the qualified wages paid or incurred during such taxable
year, plus
(B) qualified employee health insurance costs paid or
incurred during such taxable year, over
(2) the sum of the qualified wages and qualified employee
health insurance costs (determined as if this section were in
effect) which were paid or incurred by the employer (or any
predecessor) during calendar year 1993.
(b) Qualified wages; qualified employee health insurance costs
For purposes of this section -
(1) Qualified wages
(A) In general
The term ''qualified wages'' means any wages paid or incurred
by an employer for services performed by an employee while such
employee is a qualified employee.
(B) Coordination with work opportunity credit
The term ''qualified wages'' shall not include wages
attributable to service rendered during the 1-year period
beginning with the day the individual begins work for the
employer if any portion of such wages is taken into account in
determining the credit under section 51.
(2) Qualified employee health insurance costs
(A) In general
The term ''qualified employee health insurance costs'' means
any amount paid or incurred by an employer for health insurance
to the extent such amount is attributable to coverage provided
to any employee while such employee is a qualified employee.
(B) Exception for amounts paid under salary reduction
arrangements
No amount paid or incurred for health insurance pursuant to a
salary reduction arrangement shall be taken into account under
subparagraph (A).
(3) Limitation
The aggregate amount of qualified wages and qualified employee
health insurance costs taken into account with respect to any
employee for any taxable year (and for the base period under
subsection (a)(2)) shall not exceed $20,000.
(c) Qualified employee
For purposes of this section -
(1) In general
Except as otherwise provided in this subsection, the term
''qualified employee'' means, with respect to any period, any
employee of an employer if -
(A) the employee is an enrolled member of an Indian tribe or
the spouse of an enrolled member of an Indian tribe,
(B) substantially all of the services performed during such
period by such employee for such employer are performed within
an Indian reservation, and
(C) the principal place of abode of such employee while
performing such services is on or near the reservation in which
the services are performed.
(2) Individuals receiving wages in excess of $30,000 not eligible
An employee shall not be treated as a qualified employee for
any taxable year of the employer if the total amount of the wages
paid or incurred by such employer to such employee during such
taxable year (whether or not for services within an Indian
reservation) exceeds the amount determined at an annual rate of
$30,000.
(3) Inflation adjustment
The Secretary shall adjust the $30,000 amount under paragraph
(2) for years beginning after 1994 at the same time and in the
same manner as under section 415(d), except that the base period
taken into account for purposes of such adjustment shall be the
calendar quarter beginning October 1, 1993.
(4) Employment must be trade or business employment
An employee shall be treated as a qualified employee for any
taxable year of the employer only if more than 50 percent of the
wages paid or incurred by the employer to such employee during
such taxable year are for services performed in a trade or
business of the employer. Any determination as to whether the
preceding sentence applies with respect to any employee for any
taxable year shall be made without regard to subsection (e)(2).
(5) Certain employees not eligible
The term ''qualified employee'' shall not include -
(A) any individual described in subparagraph (A), (B), or (C)
of section 51(i)(1),
(B) any 5-percent owner (as defined in section 416(i)(1)(B)),
and
(C) any individual if the services performed by such
individual for the employer involve the conduct of class I, II,
or III gaming as defined in section 4 of the Indian Gaming
Regulatory Act (25 U.S.C. 2703), or are performed in a building
housing such gaming activity.
(6) Indian tribe defined
The term ''Indian tribe'' means any Indian tribe, band, nation,
pueblo, or other organized group or community, including any
Alaska Native village, or regional or village corporation, as
defined in, or established pursuant to, the Alaska Native Claims
Settlement Act (43 U.S.C. 1601 et seq.) which is recognized as
eligible for the special programs and services provided by the
United States to Indians because of their status as Indians.
(7) Indian reservation defined
The term ''Indian reservation'' has the meaning given such term
by section 168(j)(6).
(d) Early termination of employment by employer
(1) In general
If the employment of any employee is terminated by the taxpayer
before the day 1 year after the day on which such employee began
work for the employer -
(A) no wages (or qualified employee health insurance costs)
with respect to such employee shall be taken into account under
subsection (a) for the taxable year in which such employment is
terminated, and
(B) the tax under this chapter for the taxable year in which
such employment is terminated shall be increased by the
aggregate credits (if any) allowed under section 38(a) for
prior taxable years by reason of wages (or qualified employee
health insurance costs) taken into account with respect to such
employee.
(2) Carrybacks and carryovers adjusted
In the case of any termination of employment to which paragraph
(1) applies, the carrybacks and carryovers under section 39 shall
be properly adjusted.
(3) Subsection not to apply in certain cases
(A) In general
Paragraph (1) shall not apply to -
(i) a termination of employment of an employee who
voluntarily leaves the employment of the taxpayer,
(ii) a termination of employment of an individual who
before the close of the period referred to in paragraph (1)
becomes disabled to perform the services of such employment
unless such disability is removed before the close of such
period and the taxpayer fails to offer reemployment to such
individual, or
(iii) a termination of employment of an individual if it is
determined under the applicable State unemployment
compensation law that the termination was due to the
misconduct of such individual.
(B) Changes in form of business
For purposes of paragraph (1), the employment relationship
between the taxpayer and an employee shall not be treated as
terminated -
(i) by a transaction to which section 381(a) applies if the
employee continues to be employed by the acquiring
corporation, or
(ii) by reason of a mere change in the form of conducting
the trade or business of the taxpayer if the employee
continues to be employed in such trade or business and the
taxpayer retains a substantial interest in such trade or
business.
(4) Special rule
Any increase in tax under paragraph (1) shall not be treated as
a tax imposed by this chapter for purposes of -
(A) determining the amount of any credit allowable under this
chapter, and
(B) determining the amount of the tax imposed by section 55.
(e) Other definitions and special rules
For purposes of this section -
(1) Wages
The term ''wages'' has the same meaning given to such term in
section 51.
(2) Controlled groups
(A) All employers treated as a single employer under section
(a) or (b) of section 52 shall be treated as a single employer
for purposes of this section.
(B) The credit (if any) determined under this section with
respect to each such employer shall be its proportionate share of
the wages and qualified employee health insurance costs giving
rise to such credit.
(3) Certain other rules made applicable
Rules similar to the rules of section 51(k) and subsections
(c), (d), and (e) of section 52 shall apply.
(4) Coordination with nonrevenue laws
Any reference in this section to a provision not contained in
this title shall be treated for purposes of this section as a
reference to such provision as in effect on the date of the
enactment of this paragraph.
(5) Special rule for short taxable years
For any taxable year having less than 12 months, the amount
determined under subsection (a)(2) shall be multiplied by a
fraction, the numerator of which is the number of days in the
taxable year and the denominator of which is 365.
(f) Termination
This section shall not apply to taxable years beginning after
December 31, 2007.
Sources
(Added Pub. L. 103-66, title XIII, Sec. 13322(b), Aug. 10, 1993,
107 Stat. 559; amended Pub. L. 104-188, title I, Sec. 1201(e)(1),
Aug. 20, 1996, 110 Stat. 1772; Pub. L. 105-206, title VI, Sec.
6023(1), July 22, 1998, 112 Stat. 824.)
References in Text
REFERENCES IN TEXT
The Alaska Native Claims Settlement Act, referred to in subsec.
(c)(6), is Pub. L. 92-203, Dec. 18, 1971, 85 Stat. 688, as amended,
which is classified generally to chapter 33 (Sec. 1601 et seq.) of
Title 43, Public Lands. For complete classification of this Act to
the Code, see Short Title note set out under section 1601 of Title
43 and Tables.
The date of the enactment of this paragraph, referred to in
subsec. (e)(4), is the date of enactment of Pub. L. 103-66, which
was approved Aug. 10, 1993.
Miscellaneous
AMENDMENTS
2006 - Tax Relief and Health Care Act of 2006 (P.L. 109-432))
SEC. 111. INDIAN EMPLOYMENT TAX CREDIT.
(a) In General.--Section 45A(f) is amended by striking ``2005'' and
inserting ``2007''.
2004 - Pub.L. 108-311, Sec 404(b)(1). Paragraph (3) of section 45A(c)
<<NOTE: 26 USC 45A.>> is amended by inserting ``, except that the base
period taken into account for purposes of such adjustment shall be the
calendar quarter beginning October 1, 1993'' before the period at the end.
<<NOTE: 26 USC 45A note.>> Effective Date.--The amendments made
by this section shall take effect as if included in the provisions of
the Economic Growth and Tax Relief Reconciliation Act of 2001 to which
they relate.
2004 - Subsec.315,PL108-311, amended Sec.45A(f) by striking
"December 31, 2004" and inserting "December 31, 2005".
2002 - Pub. L. 107-147, Sec. 613(a) amended Subsection (f) of
section 45A by striking ``December 31, 2003'' and inserting
``December 31, 2004''.
1998 - Subsec. (b)(1)(B). Pub. L. 105-206 substituted ''work
opportunity credit'' for ''targeted jobs credit'' in heading.
1996 - Subsec. (b)(1)(B). Pub. L. 104-188, which directed that
subsec. (b)(1)(B) of this section be amended in the text by
substituting ''work opportunity credit'' for ''targeted jobs
credit'', could not be executed because the words ''targeted jobs
credit'' did not appear in the text.
EFFECTIVE DATE OF 2006 AMENDMENT
2006 - Tax Relief and Health Care Act of 2006 (P.L. 109-432))
SEC. 111. INDIAN EMPLOYMENT TAX CREDIT.
(b) <<NOTE: 26 USC 45A note.>> Effective Date.--The amendment made
by this section shall apply to taxable years beginning after December
31, 2005.
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by Pub. L. 104-188 applicable to individuals who begin
work for the employer after Sept. 30, 1996, see section 1201(g) of
Pub. L. 104-188, set out as a note under section 38 of this title.
EFFECTIVE DATE
Section applicable to wages paid or incurred after Dec. 31, 1993,
see section 13322(f) of Pub. L. 103-66, set out as an Effective
Date of 1993 Amendment note under section 38 of this title.
References
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 38, 39, 196, 280C of this
title.
