RECRUIT Act of 2024

Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:

For purposes of section 38, in the case of an eligible employer, the reservist employment credit for any taxable year is an amount equal to 40 percent of the wages paid or incurred to qualified reservists by such employer during such taxable year.

The reservist employment credit determined under subsection (a), with respect to any qualified reservist for any taxable year, shall not exceed the reservist credit amount.

For purposes of this section, the term reservist credit amount means, with respect to a qualified reservist for a taxable year, an amount equal to the sum of—

(A) $1,000, plus

(B) in the case of a qualified reservist—

(i) with 30 or more days, and fewer than 90 days, of service in the uniformed services during such year, $3,000,

(ii) with 90 or more days, and fewer than 180 days, of service in the uniformed services during such year, $5,000, and

(iii) with 180 or more days of service in the uniformed services during such year, $10,000.

For purposes of paragraph (2), any day of service—

(A) shall not be taken into account if such day constitutes inactive-duty training, or active duty or full-time National Guard duty for a period of 30 days or less, and

(B) shall only be taken into account with respect to a qualified reservist employed by an eligible employer to the extent such days are during a period of employment of such reservist by such employer.

The term qualified reservist means, with respect to a taxable year, an individual who is, at any time during such taxable year, a member of the National Guard or a reserve component of the Armed Forces, as named in section 10101 of title 10, United States Code, in active status.

The term reserve component means any of the reserve components of the Armed Forces named in section 10101 of title 10, United States Code.

The term National Guard has the meaning given such term in section 101(3) of title 32, United States Code.

The term service in the uniformed services means active duty or full-time National Guard duty for a period of more than 30 days, but does not include active Guard and Reserve duty.

The term active status has the meaning given such term in section 101 of title 10, United States Code.

The term inactive-duty training has the meaning given such term in section 101 of title 10, United States Code.

For purposes of this section, the term eligible employer means any employer which—

(1) has an average of less than 500 employees employed on business days during the taxable year,

(2) meets the gross receipts test of section 448(c) for the taxable year, and

(3) is not a tax shelter prohibited from using the cash receipts and disbursements method of accounting under section 448(a)(3).

In the case of any taxpayer which is not a corporation or partnership, the gross receipts test of section 448(c) shall, for purposes of paragraph (2) of this subsection, be applied in the same manner as if such taxpayer were a corporation or partnership.

All persons treated as a single employer under subsection (b), (c), (m), or (o) of section 414 shall be treated as 1 employer for purposes of this section.

A taxpayer may elect to have this section not apply for any taxable year.

Rules similar to the rules of paragraphs (2) and (3) of section 51(j) shall apply for purposes of this subsection.

Section 38(b) of the Internal Revenue Code of 1986 is amended by striking plus at the end of paragraph (40), by striking the period at the end of paragraph (41) and inserting, plus, and by adding at the end the following new paragraph:

(42) in the case of an eligible employer (as defined in section 45BB(c)), the reservist employment credit determined under section 45BB(a).

Subparagraph (B) of section 38(c)(4) of the Internal Revenue Code of 1986 is amended by redesignating clauses (x) through (xii) as clauses (xi) through (xiii), respectively, and by inserting after clause (ix) the following new clause:

(x) the credit determined under section 45BB,

Section 280C(a) of the Internal Revenue Code of 1986 is amended by inserting 45BB(a), after 45S(a),.

Section 6501(m) of the Internal Revenue Code of 1986 is amended by inserting 45BB(d), after 45H(g),.

The table of sections for subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:

The Secretary of the Treasury shall pay to each possession of the United States with a mirror code tax system amounts equal to the loss to that possession by reason of the amendments made by this section. Such amounts shall be determined by the Secretary of the Treasury based on information provided by the government of the respective possession of the United States.

The Secretary of the Treasury shall pay to each possession of the United States which does not have a mirror code tax system the amount estimated by the Secretary of the Treasury as being equal to the loss to that possession that would have occurred by reason of the amendments made by this section if a mirror code tax system had been in effect in such possession. The preceding sentence shall not apply with respect to any possession of the United States unless such possession establishes to the satisfaction of the Secretary that the possession has implemented (or, at the discretion of the Secretary, will implement) an income tax benefit which is substantially equivalent to the income tax credit in effect after the amendments made by this section.

The credit allowed under section 45BB of the Internal Revenue Code of 1986 (as added by this section) to any eligible employer with respect to any qualified reservist shall be reduced by the amount of any credit (or other tax benefit described in paragraph (1)(B)) against income taxes imposed by a possession of the United States allowed to such employer with respect to such reservist by reason of this section for the taxable year.

For purposes of this subsection, the term possession of the United States shall include such possessions as are specified in section 937(a)(1) of the Internal Revenue Code of 1986.

For purposes of this subsection, the term mirror code tax system means, with respect to any possession of the United States, the income tax system of such possession if the income tax liability of the residents of such possession under such system is determined by reference to the income tax laws of the United States as if such possession were the United States.

For purposes of section 1324(b)(2) of title 31, United States Code, the payments under this subsection shall be treated in the same manner as a refund due from credit provisions described in such section.

The amendments made by this section shall apply to wages paid in taxable years beginning after December 31, 2023.