text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Combat Veterans Back to Work Act of 
  2011''.
  
  SEC. 2. PAYROLL TAX FORGIVENESS FOR HIRING COMBAT VETERANS.
  
      (a) In General.--Section 3111 of the Internal Revenue Code of 1986 
  is amended by adding at the end the following new subsection:
      ``(e) Special Exemption for Certain Individuals Hired in 2011 and 
  2012.--
              ``(1) In general.--Subsection (a) shall not apply to wages 
          paid by a qualified employer with respect to employment during 
          the period beginning on the day after the date of the enactment 
          of this subsection and ending on December 31, 2012, of any 
          qualified individual for services performed--
                      ``(A) in a trade or business of such qualified 
                  employer, or
                      ``(B) in the case of a qualified employer exempt 
                  from tax under section 501(a), in furtherance of the 
                  activities related to the purpose or function 
                  constituting the basis of the employer's exemption 
                  under section 501.
              ``(2) Qualified employer.--For purposes of this 
          subsection--
                      ``(A) In general.--The term `qualified employer' 
                  means any employer other than the United States, any 
                  State, or any political subdivision thereof, or any 
                  instrumentality of the foregoing.
                      ``(B) Treatment of employees of post-secondary 
                  educational institutions.--Notwithstanding subparagraph 
                  (A), the term `qualified employer' includes any 
                  employer which is a public institution of higher 
                  education (as defined in section 101(b) of the Higher 
                  Education Act of 1965).
              ``(3) Qualified individual.--For purposes of this 
          subsection, the term `qualified individual' means any 
          individual who--
                      ``(A) begins employment with a qualified employer 
                  after June 30, 2011, and before January 1, 2013,
                      ``(B) is a current member of the National Guard or 
                  other reserve component of the Armed Forces or a 
                  veteran (as defined in section 101 of title 38, United 
                  States Code),
                      ``(C) within 18 months before beginning such 
                  employment, returned from a deployment of at least 180 
                  days in support of a contingency operation (as defined 
                  in section 101 of title 10, United States Code) or 
                  under section 502(f) of title 32, United States Code,
                      ``(D) is not employed by the qualified employer to 
                  replace another employee of such employer unless such 
                  other employee separated from employment voluntarily or 
                  for cause, and
                      ``(E) is not an individual described in section 
                  51(i)(1) (applied by substituting `qualified employer' 
                  for `taxpayer' each place it appears).
              ``(4) Election.--A qualified employer may elect to have 
          this subsection not apply. Such election shall be made in such 
          manner as the Secretary may require.''.
      (b) Coordination With Work Opportunity Credit.--Section 51(c) of 
  such Code is amended by adding at the end the following new paragraph:
              ``(6) Coordination with payroll tax forgiveness.--The term 
          `wages' shall not include any amount paid or incurred to a 
          qualified individual (as defined in section 3111(e)(3)) during 
          the 1-year period beginning on the hiring date of such 
          individual by a qualified employer (as defined in section 
          3111(e)) unless such qualified employer makes an election not 
          to have section 3111(e) apply.''.
      (c) Transfers to Federal Old-Age and Survivors Insurance Trust 
  Fund.--There are hereby appropriated to the Federal Old-Age and 
  Survivors Trust Fund and the Federal Disability Insurance Trust Fund 
  established under section 201 of the Social Security Act (42 U.S.C. 
  401) amounts equal to the reduction in revenues to the Treasury by 
  reason of the amendments made by subsection (a). Amounts appropriated 
  by the preceding sentence shall be transferred from the general fund at 
  such times and in such manner as to replicate to the extent possible 
  the transfers which would have occurred to such Trust Fund had such 
  amendments not been enacted.
      (d) Application to Railroad Retirement Taxes.--
              (1) In general.--Section 3221 of the Internal Revenue Code 
          of 1986 is amended by redesignating subsection (d) as 
          subsection (e) and by inserting after subsection (c) the 
          following new subsection:
      ``(d) Special Rate for Certain Individuals Hired in 2011 and 
  2012.--
              ``(1) In general.--In the case of compensation paid by a 
          qualified employer during the period beginning on the day after 
          the date of the enactment of this subsection and ending on 
          December 31, 2012, with respect to having a qualified 
          individual in the employer's employ for services rendered to 
          such qualified employer, the applicable percentage under 
          subsection (a) shall be equal to the rate of tax in effect 
          under section 3111(b) for the calendar year.
              ``(2) Qualified employer.--The term `qualified employer' 
          means any employer other than the United States, any State, or 
          any political subdivision thereof, or any instrumentality of 
          the foregoing.
              ``(3) Qualified individual.--For purposes of this 
          subsection, the term `qualified individual' means any 
          individual who--
                      ``(A) begins employment with a qualified employer 
                  after June 30, 2011, and before January 1, 2013,
                      ``(B) is a current member of the National Guard or 
                  other reserve component of the Armed Forces or a 
                  veteran (as defined in section 101 of title 38, United 
                  States Code),
                      ``(C) within 18 months before beginning such 
                  employment, returned from a deployment of at least 180 
                  days in support of a contingency operation (as defined 
                  in section 101 of title 10, United States Code) or 
                  under section 502(f) of title 32, United States Code,
                      ``(D) is not employed by the qualified employer to 
                  replace another employee of such employer unless such 
                  other employee separated from employment voluntarily or 
                  for cause, and
                      ``(E) is not an individual described in section 
                  51(i)(1) (applied by substituting `qualified employer' 
                  for `taxpayer' each place it appears).
              ``(4) Election.--A qualified employer may elect to have 
          this subsection not apply. Such election shall be made in such 
          manner as the Secretary may require.''.
              (2) Transfers to social security equivalent benefit 
          account.--There are hereby appropriated to the Social Security 
          Equivalent Benefit Account established under section 15A(a) of 
          the Railroad Retirement Act of 1974 (45 U.S.C. 231n-1(a)) 
          amounts equal to the reduction in revenues to the Treasury by 
          reason of the amendments made by paragraph (1). Amounts 
          appropriated by the preceding sentence shall be transferred 
          from the general fund at such times and in such manner as to 
          replicate to the extent possible the transfers which would have 
          occurred to such Account had such amendments not been enacted.
      (e) Effective Date.--
              (1) In general.--The amendments made by this section shall 
          apply to wages paid after the date of the enactment of this 
          Act.
              (2) Railroad retirement taxes.--The amendments made by 
          subsection (d) shall apply to compensation paid after the date 
          of the enactment of this Act.
  
  SEC. 3. BUSINESS CREDIT FOR RETENTION OF CERTAIN NEWLY HIRED VETERANS.
  
      (a) In General.--In the case of any taxable year ending after the 
  date of the enactment of this Act, the current year business credit 
  determined under section 38(b) of the Internal Revenue Code of 1986 for 
  such taxable year shall be increased by an amount equal to the product 
  of--
              (1) $1,000, and
              (2) the number of retained workers with respect to which 
          subsection (b)(2) is first satisfied during such taxable year.
      (b) Retained Worker.--For purposes of this section, the term 
  ``retained worker'' means any qualified individual (as defined in 
  section 3111(e)(3) of the Internal Revenue Code of 1986)--
              (1) who was employed by the taxpayer on any date during the 
          taxable year,
              (2) who was so employed by the taxpayer for a period of not 
          less than 52 consecutive weeks, and
              (3) whose wages for such employment during the last 26 
          weeks of such period equaled at least 80 percent of such wages 
          for the first 26 weeks of such period.
      (c) Limitation on Carrybacks.--No portion of the unused business 
  credit under section 38 of the Internal Revenue Code of 1986 for any 
  taxable year which is attributable to the increase in the current year 
  business credit under this section may be carried to a taxable year 
  beginning before the date of the enactment of this section.
      (d) Treatment of Possessions.--
              (1) Payments to possessions.--
                      (A) Mirror code possessions.--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 
                  application of this section (other than this 
                  subsection). Such amounts shall be determined by the 
                  Secretary of the Treasury based on information provided 
                  by the government of the respective possession.
                      (B) Other possessions.--The Secretary of the 
                  Treasury shall pay to each possession of the United 
                  States which does not have a mirror code tax system 
                  amounts estimated by the Secretary of the Treasury as 
                  being equal to the aggregate benefits that would have 
                  been provided to residents of such possession by reason 
                  of the application of this section (other than this 
                  subsection) 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 has a plan, which has 
                  been approved by the Secretary of the Treasury, under 
                  which such possession will promptly distribute such 
                  payments to the residents of such possession.
              (2) Coordination with credit allowed against united states 
          income taxes.--No increase in the credit determined under 
          section 38(b) of the Internal Revenue Code of 1986 against 
          United States income taxes for any taxable year determined 
          under subsection (a) shall be taken into account with respect 
          to any person--
                      (A) to whom a credit is allowed against taxes 
                  imposed by the possession by reason of this section for 
                  such taxable year, or
                      (B) who is eligible for a payment under a plan 
                  described in paragraph (1)(B) with respect to such 
                  taxable year.
              (3) Definitions and special rules.--
                      (A) Possession of the united states.--For purposes 
                  of this subsection, the term ``possession of the United 
                  States'' includes the Commonwealth of Puerto Rico and 
                  the Commonwealth of the Northern Mariana Islands.
                      (B) Mirror code tax system.--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.
                      (C) Treatment of payments.--For purposes of section 
                  1324(b)(2) of title 31, United States Code, rules 
                  similar to the rules of section 1001(b)(3)(C) of the 
                  American Recovery and Reinvestment Tax Act of 2009 
                  shall apply.
target: Combat Veterans Back to Work Act of 2011 - Amends the Internal Revenue Code to: (1) allow nongovernmental employers an exemption from, or reduction in, employment taxes for the period beginning after the enactment of this Act and ending on December 31, 2012, for wages paid to a qualified individual; and (2) allow an employer a business tax credit for each such worker retained by such employer who has been employed for not less than 52 consecutive weeks at a specified wage level. 
  
  Defines a "qualified individual" as any individual who: (1) begins employment after June 30, 2011, and before January 1, 2013; (2) is a current member of the National Guard or a reserve component; (3) within 18 months before beginning such employment, returned from a deployment of at least 180 days in support of a contingency operation; and (4) has not been hired to replace another employee unless such other employee separated from employment voluntarily or for cause.
feat_title: To amend the Internal Revenue Code of 1986 to provide an exemption from employer social security taxes with respect to service members and veterans, and to provide a business credit for the retention of such individuals for at least 1 year.