,i #aacth ,,congress #b;d ,session ,h4 ,r4 #dhcg ,,in ,,the ,,house ,,of ,,representatives ,june #aa1 #bjad ,mr4 ,reichert 7for himself1 ,mr4 ,kind1 ,mr4 ,tiberi1 ,mr4 ,boustany1 ,mr4 ,paulsen1 ,mr4 ,neal1 ,mr4 ,pascrell1 and ,mr4 ,blumenauer7 introduced the following bill2 which was referred to the ,committee on ,ways and ,means1 and in addition to the ,committees on ,education and the ,workforce and ,small ,business1 for a period to be subsequently determined by the ,speaker1 in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf and the ,small ,business ,act to expand the availability of employee stock ownership plans in ,s corporations1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,promotion and ,expansion of ,private ,employee ,ownership ,act of #bjad4 #b4 ,findings ,congress finds that-- 7#a7 on ,january #a1 #aiih--nearly #be years after the ,employee ,retirement ,income ,security ,act of #aigd was enacted and the employee stock ownership plan 7hereafter in this section referred to as an ,,esop7 was created--employees were first permitted to be owners of subchapter ,s corporations pursuant to the ,small ,business ,job ,protection ,act of #aiif 7,public ,law #ajd-ahh72 7#b7 with the passage of the ,taxpayer ,relief ,act of #aiig 7,public ,law #aje-cd71 ,congress designed incentives to encourage businesses to become ,,esop-owned ,s corporations2 7#c7 since that time1 several thousand companies have become ,,esop-owned ,s corporations1 creating an ownership interest for several million ,americans in companies in every ,state in the country1 in industries ranging from heavy manufacturing to technology development to services2 7#d7 while estimates show that #dj percent of working ,americans have no formal retirement account at all1 every ,united ,states worker who is an employee-owner of an ,s corporation company through an ,,esop has a valuable qualified retirement savings account2 7#e7 recent studies have shown that employees of ,,esop-owned ,s corporations enjoy greater job stability than employees of comparable companies2 7#f7 studies also show that employee-owners of ,s corporation ,,esop companies have amassed meaningful retirement savings through their ,s ,,esop accounts that will give them the means to retire with dignity2 7#g7 under the ,small ,business ,act 7#ae ,u4,s4,c4 #fca et seq47 and the regulations promulgated by the ,administrator of the ,small ,business ,administration1 a small business concern that was eligible under the ,small ,business ,act for the numerous preferences of the ,act is denied treatment as a small business concern after an ,,esop acquires more than #di percent of the business1 even if the number of employees1 the revenue of the small business concern1 and the racial1 gender1 or other criteria used under the ,act to determine whether the small business concern is eligible for benefits under the ,act remain the same1 solely because of the acquisition by the ,,esop2 and 7#h7 it is the goal of ,congress to both preserve and foster employee ownership of ,s corporations through ,e,s,o,ps4 #c4 ,deferral of tax for certain sales of employer stock to employee stock ownership plan sponsored by ,s corporation 7a7 ,in general ,subparagraph 7,a7 of section #ajdb7;c77#a7 of the ,internal ,revenue ,code of #aihf 7defining qualified securities7 is amended by striking domestic ,c corporation and inserting domestic corporation4 7b7 ,effective date ,the amendment made by subsection 7a7 shall apply to sales after the date of the enactment of this ,act4 #d4 ,deduction for interest on loan to finance purchase of employer securities by an employee stock ownership plan sponsored by an ,s corporation 7a7 ,in general ,part ,,vi of subchapter ,b of chapter #a of the ,internal ,revenue ,code of #aihf is amended by inserting after section #aii the following new section3 #bjj4 ,interest on certain loans for the purchase of employer securities by an employee stock ownership plan sponsored by an ,s corporation 7a7 ,in general ,there shall be allowed as a deduction an amount equal to #ej percent of the interest received during the taxable year by a bank 7within the meaning of section #eha7 with respect to a qualified securities acquisition loan4 7b7 ,qualified securities acquisition loan 7#a7 ,in general ,for purposes of this section1 the term qualified securities acquisition loan means-- 7,a7 any loan to an employee stock ownership plan sponsored by an ,s corporation to the extent that the proceeds are used to acquire employer securities for the plan1 and 7,b7 any loan to an ,s corporation that sponsors an employee stock ownership plan to the extent that the proceeds of such loan are loaned to the employee stock ownership plan to acquire employer securities for the plan4 ,for purposes of this paragraph1 the term employer securities has the meaning given such term by section #dji7l74 7#b7 ,terms ,applicable to certain qualified securities acquisition loans ,for purposes of paragraph 7#a77;,b71 the term qualified securities acquisition loan shall not include any loan to the ,s corporation unless the loan to the employee stock ownership plan has repayment terms which are substantially similar to the terms of the loan to the ,s corporation4 7#c7 ,treatment of refinancings ,the term qualified securities acquisition loan shall include any loan which is 7or is part of a series of loans7 used to refinance a loan described in paragraph 7#a7 7after the application of paragraph 7#b774 7#d7 ,plan must hold more than #ej percent of stock after acquisition or transfer 7,a7 ,in general ,a loan shall not be treated as a qualified securities acquisition loan for purposes of this section unless1 immediately after an acquisition of employer securities referred to in paragraph 7#a71 the employee stock ownership plan owns more than #ej percent of the outstanding stock of the ,s corporation4 7,b7 ,failure to retain minimum stock interest 7i7 ,in general ,subsection 7a7 shall not apply to any interest received with respect to a qualified securities acquisition loan which is allocable to any period during which the employee stock ownership plan does not own stock meeting the requirements of subparagraph 7,a74 7ii7 ,exception ,to the extent provided by the ,secretary1 clause 7i7 shall not apply to any period if1 within #ij days of the first date on which the failure occurred 7or such longer period not in excess of #ahj days as the ,secretary may prescribe71 the plan acquires stock which results in its meeting the requirements of subparagraph 7,a74 7,c7 ,stock ,for purposes of subparagraph 7,a71 the ,secretary may provide that warrants1 options1 contracts to acquire stock1 convertible debt interests and other similar interests be treated as stock for #a or more purposes under subparagraph 7,a74 7c7 ,employee stock ownership plan ,for purposes of this section1 the term employee stock ownership plan has the meaning given to such term by section #dige7;e77#g74 4 7b7 ,clerical amendment ,the table of sections for part ,,vi of subchapter ,b of chapter #a of such ,code is amended by inserting after the item relating to section #aii the following new item3 ,sec4 #bjj4 ,interest on certain loans for the purchase of employer securities by an employee stock ownership plan sponsored by an ,s corporation4 4 7c7 ,effective date ,the amendments made by this section shall apply to interest accrued on loans made after the date of the enactment of this ,act4 #e4 ,department of the ,treasury ,technical ,assistance ,office 7a7 ,establishment required ,before the end of the #ij-;day period beginning on the date of enactment of this ,act1 the ,secretary of the ,treasury shall establish the ,s ,corporation ,employee ,ownership ,assistance ,office to foster increased employee ownership of ,s corporations4 7b7 ,duties of the office ,the ,s ,corporation ,employee ,ownership ,assistance ,office shall provide-- 7#a7 education and outreach to inform companies and individuals about the possibilities and benefits of employee ownership of ,s corporations2 and 7#b7 technical assistance to assist ,s corporations in sponsoring employee stock ownership plans4 #f4 ,small business and employee stock ownership 7a7 ,in general ,the ,small ,business ,act 7#ae ,u4,s4,c4 #fca et seq47 is amended-- 7#a7 by redesignating section #dg as section #dh2 and 7#b7 by inserting after section #df the following3 #dg4 ,employee stock ownership plans 7a7 ,definitions ,in this section-- 7#a7 the term ,,esop means an employee stock ownership plan1 as defined in section #dige7;e77#g7 of the ,internal ,revenue ,code of #aihf1 as amended2 and 7#b7 the term ,,esop business concern means a business concern that was a small business concern eligible for a loan or to participate in a contracting assistance or business development program under this ,act before the date on which more than #di percent of the business concern was acquired by an ,,esop4 7b7 ,continued eligibility ,in determining whether an ,,esop business concern qualifies as a small business concern for purposes of a loan1 preference1 or other program under this ,act1 each ,,esop participant shall be treated as directly owning his or her proportionate share of the stock in the ,,esop business concern owned by the ,,esop4 4 7b7 ,effective date ,the amendments made by this section shall take effect on ,january #a of the first calendar year beginning after the date of the enactment of this ,act4