S.1300 - Promotion and Expansion of Private Employee Ownership Act of 2021

Background

• Senators Benjamin Cardin (D-MD) and Rob Portman (R-OH) re-introduced the Promotion and Expansion of Private Employee Ownership Act (S.1300) on April 22, 2021

• The ESOP Association looks forward to a companion bill being introduced in the House of Representatives.

• The legislation includes provisions that seek to:

  • Expand financing opportunities for S Corp ESOPs

  • Provide technical assistance for companies that may be interested in forming an S Corporation ESOP

  • Ensure that small businesses adopting ESOPs retain their Small Business Administration 8(a) preference when competing for government contracts at all levels

Summary

S. 1300 encourages the establishment of employee stock ownership plans in S corporations, thereby promoting retirement security and employee ownership. 

Under current law, the sale of C corporation stock to an ESOP  qualifies for a deferral of capital gains, however the sale of S  corporation stock to an ESOP does not. The bills would equalize  the treatment of S Corp and C Corp stock under IRC Section  1042(c)(1) by extending the deferral to include S Corps; provide  technical assistance to ESOPs; clarify that S corporation ESOPs  may retain their small business status with the SBA, and take other  steps to encourage the creation of ESOPs in S corporations.

Ask

The ESOP Association requests that you please consider co-sponsoring the legislation and getting this legislation to a vote after more than a decade in Congress.

For more information:
Paul Pflieger
Senior Director of Public Policy and Communications
ppflieger@esopassociation.org
202-494-2220