Internal Revenue Code:Sec. 45A. Indian employment credit

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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.
 

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