Worker adaptation contributions; excess displacement accountability

(a) Worker adaptation contributions Subtitle C of the Internal Revenue Code of 1986 is amended by inserting after chapter 23A the following new chapter: 23B Worker adaptation contributions Sec. 3324. Worker adaptation contribution. 3324. Worker adaptation contribution (a) Imposition There is hereby imposed on every covered employer for each calendar quarter a contribution equal to the product of— (1) the applicable contribution rate of such employer for such quarter, and (2) the total wages paid by such employer during such quarter with respect to employment within the United States. (b) Applicable contribution rate For purposes of this section— (1) In general The applicable contribution rate of a covered employer for each calendar quarter of a calendar year is the displacement ratio of such employer for the computation period applicable to such calendar year, rounded to the nearest 1/10 of 1 percent, except that such rate shall not exceed the maximum rate. (2) Displacement ratio The term displacement ratio means, with respect to an employer for any period, the ratio of— (A) the aggregate amounts charged to such employer under subsection (d) for such period, to (B) the total wages paid by such employer during such period. (3) Computation period The term computation period means, with respect to any calendar year, the 12-calendar-quarter period ending on June 30 of the preceding calendar year. (4) Maximum rate The term maximum rate means 2 percent. (5) Employers without chargeable experience The applicable contribution rate of a covered employer to which no amount has been charged under subsection (d) for the computation period shall be zero. (6) Notice of rates Not later than October 15 of each calendar year, the Secretary shall notify each covered employer of the applicable contribution rate of such employer for the following calendar year. (c) Definitions For purposes of this chapter— (1) Covered employer The term covered employer means any employer other than a small business concern, as defined in section 5000F(h). (2) Covered worker The term covered worker means a covered worker (as defined in section 4(a) of the FUTURE of Workers Act) who is described in paragraph (2)(A)(ii)(I) of such section and was terminated as described in such paragraph by a covered employer. (3) Employer; employment The respective meaning of the terms employer and employment shall be determined under rules similar to the rules of section 3121. (4) Responsible employer The term responsible employer means the covered employer that terminated a covered worker as described in section 4(a)(2)(A)(ii)(I) of the FUTURE of Workers Act, as identified in the worker’s attestation under section 4(a)(2)(A) of the FUTURE of Workers Act and verified in such manner as the Secretary of Labor shall prescribe. (5) Wages The term wages has the meaning given such term by section 3121(a), determined without regard to any dollar limitation on the amount of remuneration treated as wages. (d) Charging (1) In general There shall be charged to each responsible employer the costs of the benefits and services provided under section 4 of the FUTURE of Workers Act to each covered worker, with respect to the responsible employer, determined eligible for such benefits and services under such section, as certified by the Secretary of Labor to the Secretary at such times and in such manner as such Secretaries shall jointly prescribe. (2) Noncharging No amount shall be charged under this subsection with respect to a termination— (A) attributable to the sale or divestiture of a trade or business (or a substantial portion thereof), except as provided by the Secretary of Labor to prevent the avoidance of this section, (B) occurring while the employer is a debtor in a case under title 11, United States Code, or (C) attributable to natural disaster or such other circumstances beyond the control of the employer as the Secretary of Labor may prescribe. (3) Notice and opportunity to contest The Secretary of Labor shall provide each responsible employer notice of each charge proposed under this subsection and an opportunity to contest, in such manner and within such time as the Secretary of Labor shall prescribe, whether the termination involved is chargeable to such employer, including on the ground that the termination was not attributable to covered technology as defined in section 2 of the FUTURE of Workers Act or that the worker was not terminated from such employer. Any charge not successfully contested shall be final for purposes of this section. (4) Quarterly statements of charges The Secretary of Labor shall provide to each responsible employer, not later than 45 days after the close of each calendar quarter, a statement of the amounts charged to such employer under this subsection for such quarter. (e) Protection of workers No determination with respect to the eligibility of any worker for, or the amount or timing of, any benefit or service under section 4 of the FUTURE of Workers Act shall be delayed, conditioned, or reduced by reason of any dispute or contest concerning the charging of costs under this section, and the resolution of any such dispute or contest shall affect only the charging of costs to the responsible employer and not the entitlement of any worker to any such benefit or service. (f) Successorship; anti-Manipulation (1) Transfer of experience If an employer transfers its trade or business (or a portion thereof) to another person, and there is substantially common ownership, management, or control of the transferor and transferee, the charging experience and wage history attributable to the transferred trade or business shall be transferred to the transferee. In any other transfer of a trade or business, such experience and history shall be transferred to the extent provided by the Secretary. (2) Prohibited rate manipulation If a person transfers or acquires a trade or business solely or primarily for the purpose of obtaining a lower applicable contribution rate, the applicable contribution rate of each person party to the transaction shall be determined without regard to the transaction, and each such person shall pay a penalty of $10,000 for each calendar quarter to which such determination applies. (3) Aggregation All persons treated as a single employer under subsection (a) or (b) of section 52, or subsection (m) or (o) of section 414, shall be treated as 1 employer for purposes of this chapter. (g) Election by nonprofit and governmental employers To reimburse in lieu of contributions (1) In general Any entity described in paragraph (2) may elect, at such time and in such manner as the Secretary shall prescribe, to pay for each calendar quarter, in lieu of the contribution imposed by subsection (a), an amount equal to the amounts charged to such employer under subsection (d) for such quarter. (2) Entity described An entity described in this paragraph is— (A) an organization which is described in section 501(c)(3) and exempt from tax under section 501(a), or (B) a State, a political subdivision of a State, an Indian tribe (as defined in section 45A(c)(6)), a Native Hawaiian organization (as defined in section 6207 of the Native Hawaiian Education Act (20 U.S.C. 7517)), or an instrumentality of any of the foregoing. (3) Treatment of payments Amounts payable under paragraph (1) shall be assessed, collected, deposited, and administered in the same manner as contributions imposed by subsection (a), except that the maximum rate shall not apply to such amounts. (4) Duration An election under this subsection shall remain in effect for not fewer than 8 consecutive calendar quarters and thereafter until revoked in such manner as the Secretary shall prescribe. (5) United States The United States and any instrumentality thereof shall be treated as having an election in effect under this subsection. (6) Section 5000F inapplicable Section 5000F shall not apply to any employer with an election in effect under this subsection. (h) Payment; returns Contributions imposed by this section shall be paid quarterly at the time prescribed for the return of taxes imposed by section 3111, and shall be reported on such returns and in such manner as the Secretary shall prescribe. (i) Deposit Amounts received in the Treasury under this section shall be deposited in the Worker Adaptation Trust Fund established under section 9512. (j) Regulations The Secretary, in consultation with the Secretary of Labor, shall prescribe such regulations and other guidance as may be necessary to carry out this chapter, including regulations governing the computation and notice of applicable contribution rates, the resolution of charging disputes, and the prevention of avoidance of this chapter.. (b) Excess displacement accountability Chapter 50B of the Internal Revenue Code of 1986, as added by section 11 of this Act, is amended by adding at the end the following new section: 5000F. Excess displacement accountability (a) Imposition of tax There is hereby imposed on each employer, for each calendar quarter of the restitution period with respect to each eliminated position of such employer, a tax equal to the amount of tax that would have been imposed under sections 3111 and 3301 (determined without regard to the credits allowed under section 3302) for such quarter with respect to the baseline compensation allocable to such position if such position had not been eliminated. (b) Reduction in tax The aggregate tax imposed by subsection (a) on an employer for any calendar quarter shall be reduced (but not below zero) by the amount of contributions paid by the employer under section 3324 for such quarter. (c) Definitions For purposes of this section— (1) Restitution period The term restitution period means, with respect to an eliminated position, the 5-year period beginning on the date of the elimination of such position, reduced as provided in subsection (d). (2) Eliminated position (A) In general The term eliminated position means each domestic full-time equivalent position by which the domestic full-time equivalent employment of an employer during a saturation period falls below the domestic full-time equivalent employment of such employer as of the first day of such saturation period, identified, and determined with appropriate adjustments for seasonal variation, under regulations prescribed by the Secretary. (B) Contractor substitution The termination of employees accompanied by the substitution of independent contractors, or of workers provided by a staffing or outsourcing agency, performing substantially similar services shall be treated as an elimination of positions and shall not be treated as a restoration. (C) Baseline compensation The term baseline compensation means, with respect to an eliminated position, the annual rate of wages and benefits in effect for such position on the date of the elimination. (D) Domestic full-time equivalent employment The domestic full-time equivalent employment of an employer shall be determined under regulations prescribed by the Secretary, on the basis of hours of service of employees within the United States. (3) Saturation period (A) In general The term saturation period means any period of 1 or more consecutive calendar years for each of which the uncapped displacement ratio of the employer exceeds the maximum rate (as defined in section 3324(b)(4)). (B) Uncapped displacement ratio The term uncapped displacement ratio means, for any calendar year, the displacement ratio determined under section 3324(b)(2) for the computation period applicable to such calendar year, determined without regard to the maximum rate. (d) Abatement upon restoration (1) In general For each domestic full-time equivalent position restored by the employer at an annual rate of wages and benefits equal to or greater than the baseline compensation of an eliminated position (matched under regulations prescribed by the Secretary), no tax shall be imposed under subsection (a) with respect to such eliminated position for calendar quarters beginning after the date of the restoration. (2) Sustained restoration; recapture Paragraph (1) shall apply with respect to a restored position only if such position is maintained for 4 consecutive calendar quarters. If a restored position is eliminated during the 24-month period beginning on the date of the restoration, any amount not imposed by reason of paragraph (1) shall be assessed, with interest determined under section 6621, and the restitution period with respect to such position shall be applied without regard to the period of the restoration. (e) Additional corporate surtax during saturation In the case of an employer which is a C corporation, for each of the 3 taxable years beginning with the taxable year in which a saturation period of such employer begins, the tax imposed by chapter 1 shall be increased by an amount equal to the sum of— (1) 2 percent of so much of the taxable income of such employer for the taxable year as does not exceed $100,000,000, (2) 4 percent of so much of such taxable income as exceeds $100,000,000 but does not exceed $1,000,000,000, and (3) 6 percent of so much of such taxable income as exceeds $1,000,000,000. (f) Recapture of accelerated cost recovery (1) In general The tax imposed by chapter 1 on an employer for the taxable year in which a saturation period of such employer begins shall be increased by the aggregate excess of— (A) the deductions allowed by reason of sections 168(k) and 179 with respect to automation assets placed in service by the employer during the 5-taxable-year period ending with such taxable year (other than any asset previously taken into account under this subsection), over (B) the deductions that would have been allowed with respect to such assets for such period under the alternative depreciation system of section 168(g). (2) Basis adjustment Proper adjustment shall be made to the basis of any asset to which paragraph (1) applies, under regulations prescribed by the Secretary. (3) Automation asset The term automation asset means property (whether tangible or intangible, whether or not owned by the taxpayer, and including rights of use or access under a license, subscription, or service arrangement) the primary function of which is to perform, through automation technologies or artificial intelligence (as defined in section 5002 of the National Artificial Intelligence Initiative Act of 2020 (15 U.S.C. 9401)), 1 or more tasks previously performed by employees of the taxpayer, including autonomous industrial robotics, systems incorporating a covered artificial intelligence model (as defined in section 5000E(c)(5)), and autonomous logistics systems. (g) Aggregation; anti-Arbitrage Rules similar to the rules of section 3324(f) shall apply for purposes of this section, and any transfer of automation assets, functions, or employees between persons treated as 1 employer under such rules shall be disregarded in determining the occurrence or duration of a saturation period and the identification of eliminated positions. (h) Exemption for small business concerns This section shall not apply to any person that is a small business concern (within the meaning of section 3 of the Small Business Act (15 U.S.C. 632)). (i) Payment; returns The tax imposed by subsection (a) shall be paid quarterly at the time prescribed for the return of taxes imposed by section 3111, and shall be reported on such returns and in such manner as the Secretary shall prescribe. (j) Deposit of amounts The portion of the amounts received in the Treasury under this section which is attributable to the taxes described in section 3111 shall be credited to the Federal Old-Age and Survivors Insurance Trust Fund, the Federal Disability Insurance Trust Fund, and the Federal Hospital Insurance Trust Fund in the same manner as if such amounts were taxes received under such section, and the remainder shall be deposited in the Worker Adaptation Trust Fund established under section 9512. (k) Regulations The Secretary, in consultation with the Secretary of Labor, shall prescribe such regulations and other guidance as may be necessary to carry out this section, including regulations governing the identification and matching of eliminated and restored positions, the determination of wage and benefit equivalence, and the prevention of avoidance of this section.. (c) Denial of accelerated cost recovery during saturation periods (1) Bonus depreciation Section 168(k)(2) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph: (I) Exclusion of certain automation assets The term qualified property shall not include any automation asset (as defined in section 5000F(f)(3)) placed in service during a saturation period (as defined in section 5000F(c)) of the taxpayer.. (2) Alternative depreciation system required Section 168(g)(1) of such Code is amended by striking and at the end of subparagraph (F), by inserting and at the end of subparagraph (G), and by inserting after subparagraph (G) the following new subparagraph: (H) any automation asset (as defined in section 5000F(f)(3)) placed in service during a saturation period (as defined in section 5000F(c)) of the taxpayer,. (3) Section 179 property Section 179(d)(1) of such Code is amended by adding at the end the following: Such term shall not include any automation asset (as defined in section 5000F(f)(3)) placed in service during a saturation period (as defined in section 5000F(c)) of the taxpayer.. (d) Information sharing (1) Certification by the Secretary of Labor The Secretary of Labor shall certify to the Secretary of the Treasury, at such times and in such manner as such Secretaries shall jointly prescribe, the eligibility determinations, charges, and terminations determined under section 4 of this Act and section 3324 of the Internal Revenue Code of 1986 (as added by this section). (2) Disclosure of return information Section 6103(l) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: (23) Disclosure of return information for administration of worker adaptation contributions (A) In general The Secretary may, upon written request from the Secretary of Labor, disclose to officers and employees of the Department of Labor return information with respect to any employer or worker (including taxpayer identity information, information on wages reported under section 6051, and information with respect to contributions and charges under chapter 23B) only for purposes of, and to the extent necessary in, the administration of section 3324 and section 4 of the FUTURE of Workers Act, including the verification of worker attestations and the determination and charging of costs under section 3324(c). (B) Restriction on use and redisclosure Return information disclosed under subparagraph (A) may be used by officers and employees of the Department of Labor only for the purposes described in such subparagraph and may not be disclosed to any other person except as otherwise authorized by this section.. (3) Safeguards Section 6103(p)(4) of such Code is amended by inserting, (l)(23) after (l)(22) each place it appears. (e) Clerical amendments (1) The table of chapters for subtitle C of the Internal Revenue Code of 1986 is amended by inserting after the item relating to chapter 23A the following new item: 23B Worker adaptation contributions. (2) The table of sections for chapter 50B of such Code, as added by section 11 of this Act, is amended by adding at the end the following new item: 5000F. Excess displacement accountability. (f) Effective dates (1) Contributions The amendments made by subsection (a) shall apply to calendar years beginning after the date that is 1 year after the date of the enactment of this Act. (2) Excess displacement accountability The amendments made by subsections (b) and (c) shall apply to saturation periods beginning after the date described in paragraph (1), except that no automation asset placed in service on or before the date of the enactment of this Act shall be taken into account under section 5000F(f) of the Internal Revenue Code of 1986, as added by this section.