Tuesday, April 16, 2013

Tax Credit for Mine Rescue Training



Internal Revenue Code section 45N provides a lucrative tax credit for American mining companies to train their employees in mine rescue operations.  

The tax credit is equal to 20% of the training costs of the employee, up to $10,000 of credits per employee each year.   

The employee should complete a 20-hour initial training course or a 40-hour refresher course in mine rescue during the year.  Congress did not explain why the "refresher" course has to be longer than the initial training course.

Tax credits are normally provided to encourage taxpayers to do things that they would otherwise be reluctant to do (hire summer teenagers, guard agricultural chemicals, buy homes in 2009-2010).  It is not clear why a special tax credit is necessary for a class in rescue operations, given the bad publicity usually associated with unrescued miners.  The credit is not available to companies operating mines only outside the United States.

The Internal Revenue Code does not contain special tax incentives for checking the brakes on school buses, cleaning aircraft engines, and other safety-related tasks in other industries.

The mine safety tax credit was enacted in late 2006 by the Tax Relief and Health Care Act, by a Congress eager to show that the can do something after the Sago Mine disaster earlier that year.  The credit originally expired after three years, but the credit has been continually extended (most recently through December 31, 2013).

No tax deduction is permitted for the 20% of training costs allowed as a credit.  The remaining 80% of training costs are fully deductible, which provides an even greater tax benefit for training mine employees in rescue operations.  
 Section 45N Mine rescue team training credit.
(a) Amount of credit.
For purposes of section 38 , the mine rescue team training credit determined under this section with respect to each qualified mine rescue team employee of an eligible employer for any taxable year is an amount equal to the lesser of— (1) 20 percent of the amount paid or incurred by the taxpayer during the taxable year with respect to the training program costs of such qualified mine rescue team employee (including wages of such employee while attending such program), or (2) $10,000.
(b) Qualified mine rescue team employee.
For purposes of this section, the term “qualified mine rescue team employee” means with respect to any taxable year any full-time employee of the taxpayer who is—
(1) a miner eligible for more than 6 months of such taxable year to serve as a mine rescue team member as a result of completing, at a minimum, an initial 20-hour course of instruction as prescribed by the Mine Safety and Health Administration's Office of Educational Policy and Development, or
(2) a miner eligible for more than 6 months of such taxable year to serve as a mine rescue team member by virtue of receiving at least 40 hours of refresher training in such instruction.
(c) Eligible employer.
For purposes of this section, the term “eligible employer” means any taxpayer which employs individuals as miners in underground mines in the United States.
(d) Wages.
For purposes of this section, the term “wages” has the meaning given to such term by subsection (b) of section 3306 (determined without regard to any dollar limitation contained in such section).
(e) Termination.
This section shall not apply to taxable years beginning after December 31, 2013.


Section 280C(e) Mine rescue team training credit.
No deduction shall be allowed for that portion of the expenses otherwise allowable as a deduction for the taxable year which is equal to the amount of the credit determined for the taxable year under section 45N(a).

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