II 

118TH CONGRESS 

2D SESSION S. 3680 

To amend the Internal Revenue Code of 1986 to enhance the paid family 

and medical leave credit, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 30, 2024 

Mrs. FISCHER (for herself and Mr. KING) introduced the following bill; which 

was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to enhance 

the paid family and medical leave credit, and for other 

purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Paid Family and Med5 ical Leave Tax Credit Extension and Enhancement Act’’. 

6 SEC. 2. ENHANCEMENT OF PAID FAMILY AND MEDICAL 

7 LEAVE CREDIT. 

8 (a) IN GENERAL.—Section 45S of the Internal Rev9 enue Code of 1986 is amended— 

10 (1) in subsection (a)— 


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1 (A) by striking paragraph (1) and insert2 ing the following: 

3 ‘‘(1) IN GENERAL.—For purposes of section 38, 

4 in the case of an eligible employer, the paid family 

5 and medical leave credit is an amount equal to ei6 ther of the following (as elected by such employer): 

7 ‘‘(A) The applicable percentage of the 

8 amount of wages paid to qualifying employees 

9 with respect to any period in which such em10 ployees are on family and medical leave. 

11 ‘‘(B) If such employer has an insurance 

12 policy with regards to the provision of paid 

13 family and medical leave which is in force dur14 ing the taxable year, the applicable percentage 

15 of the total amount of premiums paid or in16 curred by such employer during such taxable 

17 year with respect to such insurance policy.’’, 

18 and 

19 (B) by adding at the end the following: 

20 ‘‘(3) RATE OF PAYMENT DETERMINED WITH21 OUT REGARD TO WHETHER LEAVE IS TAKEN.—For 

22 purposes of determining the applicable percentage 

23 with respect to paragraph (1)(B), the rate of pay24 ment under the insurance policy shall be determined 

25 without regard to whether any qualifying employees 


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1 were on family and medical leave during the taxable 

2 year.’’, 

3 (2) in subsection (b)(1), by striking ‘‘credit al4 lowed’’ and inserting ‘‘wages taken into account’’, 

5 (3) in subsection (c), by striking paragraphs (3) 

6 and (4) and inserting the following: 

7 ‘‘(3) AGGREGATION RULE.— 

8 ‘‘(A) IN GENERAL.—Except as provided in 

9 subparagraph (B), all persons which are treated 

10 as a single employer under subsections (b) and 

11 (c) of section 414 shall be treated as a single 

12 employer. 

13 ‘‘(B) EXCEPTION.— 

14 ‘‘(i) IN GENERAL.—Subparagraph (A) 

15 shall not apply to any person who estab16 lishes to the satisfaction of the Secretary 

17 that such person has a substantial and le18 gitimate business reason for failing to pro19 vide a written policy described in para20 graph (1) or (2). 

21 ‘‘(ii) SUBSTANTIAL AND LEGITIMATE

22 BUSINESS REASON.—For purposes of 

23 clause (i), the term ‘substantial and legiti24 mate business reason’ shall not include the 

25 operation of a separate line of business, 


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1 the rate of wages or category of jobs for 

2 employees (or any similar basis), or the ap3 plication of State or local laws relating to 

4 family and medical leave, but may include 

5 the grouping of employees of a common 

6 law employer. 

7 ‘‘(4) TREATMENT OF BENEFITS MANDATED OR

8 PAID FOR BY STATE OR LOCAL GOVERNMENTS.—For 

9 purposes of this section, any leave which is paid by 

10 a State or local government or required by State or 

11 local law— 

12 ‘‘(A) except as provided in subparagraph 

13 (B), shall be taken into account in determining 

14 the amount of paid family and medical leave 

15 provided by the employer, and 

16 ‘‘(B) shall not be taken into account in de17 termining the amount of the paid family and 

18 medical leave credit under subsection (a).’’, 

19 (4) in subsection (d)— 

20 (A) in paragraph (1), by inserting ‘‘(or, at 

21 the election of the employer, for not less than 

22 6 months)’’ after ‘‘1 year or more’’, and 

23 (B) in paragraph (2)— 


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1 (i) by inserting ‘‘, as determined on 

2 an annualized basis (pro-rata for part-time 

3 employees),’’ after ‘‘compensation’’, and 

4 (ii) by striking the period at the end 

5 and inserting ‘‘, and’’, and 

6 (C) by adding at the end the following: 

7 ‘‘(3) is customarily employed for not less than 

8 20 hours per week.’’, and 

9 (5) by striking subsection (i). 

10 (b) NO DOUBLE BENEFIT.—Section 280C(a) of the 

11 Internal Revenue Code of 1986 is amended— 

12 (1) by striking ‘‘45S(a)’’ and inserting 

13 ‘‘45S(a)(1)(A)’’, and 

14 (2) by inserting after the first sentence the fol15 lowing: ‘‘No deduction shall be allowed for that por16 tion of the premiums paid or incurred for the tax17 able year which is equal to that portion of the paid 

18 family and medical leave credit which is determined 

19 for the taxable year under section 45S(a)(1)(B).’’. 

20 (c) OUTREACH.— 

21 (1) SBA AND RESOURCE PARTNERS.—Each 

22 district office of the Small Business Administration 

23 and each resource partner of the Small Business Ad24 ministration, including small business development 

25 centers described in section 21 of the Small BusiVerDate Sep 11 2014 02:26 Feb 07, 2024 Jkt 049200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S3680.IS S3680

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1 ness Act (15 U.S.C. 648), women’s business centers 

2 described in section 29 of such Act (15 U.S.C. 656), 

3 each chapter of the Service Corps of Retired Execu4 tives described in section 8(b)(1)(B) of such Act (15 

5 U.S.C. 637(b)(1)(B)), and Veteran Business Out6 reach Centers described in section 32 of such Act 

7 (15 U.S.C. 657b), shall conduct outreach to relevant 

8 parties regarding the paid family and medical leave 

9 credit under section 45S of the Internal Revenue 

10 Code of 1986, including through— 

11 (A) targeted communications, education, 

12 training, and technical assistance; and 

13 (B) the development of a written paid fam14 ily leave policy, as described in paragraphs (1) 

15 and (2) of section 45S(c) of the Internal Rev16 enue Code of 1986. 

17 (2) INTERNAL REVENUE SERVICE.—The Sec18 retary of the Treasury (or the Secretary’s delegate) 

19 shall perform targeted outreach to employers and 

20 other relevant entities regarding the availability and 

21 requirements of the paid family and medical leave 

22 credit under section 45S of the Internal Revenue 

23 Code of 1986, including providing relevant informa24 tion as part of Internal Revenue Service communica25 tions that are regularly issued to entities that proVerDate Sep 11 2014 02:26 Feb 07, 2024 Jkt 049200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S3680.IS S3680

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1 vide payroll services, tax professionals, and small 

2 businesses. 

3 (d) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to taxable years beginning after 

5 the date of enactment of this Act. 

Æ 


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