II

103D CONGRESS

1ST SESSION S. 10

To amend the Internal Revenue Code of 1986 to provide tax incentives

for the adoption of flexible family leave policies by employers.

IN THE SENATE OF THE UNITED STATES

JANUARY 21 (legislative day, JANUARY 5), 1993

Mr. CRAIG (for himself, Mr. DOLE, Mr. HATCH, Mr. GRASSLEY, Mr. BURNS,

Mr. SIMPSON, Mr. HATFIELD, and Mr. KEMPTHORNE) 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 provide

tax incentives for the adoption of flexible family leave

policies by employers.

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 ‘‘Flexible Family Leave

5 Tax Credit Act of 1993’’.

6 TITLE I—FAMILY LEAVE CREDIT

7 SEC. 101. CREDIT CREATED.

8 Subpart D of part IV of subchapter A of chapter 1

9 of the Internal Revenue Code of 1986 (relating to business
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1 related credits) is amended by adding at the end the fol2 lowing new section:

3 ‘‘SEC. 45A. FAMILY LEAVE CREDIT.

4 ‘‘(a) AMOUNT OF CREDIT.—

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

6 the amount of the family leave credit for any em7 ployer for any taxable year is 20 percent of the

8 qualified compensation with respect to an employee

9 who is on family leave.

10 ‘‘(2) LIMITATIONS ON AVAILABILITY AND

11 AMOUNT OF CREDIT.—

12 ‘‘(A) FEWER THAN 500 EMPLOYEES.—An

13 employer is not entitled to a family leave credit

14 for any taxable year unless—

15 ‘‘(i) in the case of an employer that is

16 in its first taxable year, the employer had

17 fewer than 500 employees at the close of

18 that year, and

19 ‘‘(ii) in the case of other employers,

20 the employer averaged fewer than 500 em21 ployees for its preceding taxable year.

22 An employer is considered to average fewer

23 than 500 employees for a taxable year if the

24 sum of its employees on the last day of each
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1 quarter in that year divided by the number of

2 quarters is fewer than 500.

3 ‘‘(B) DOLLAR CAP ON QUALIFIED COM4 PENSATION.—The amount of qualified com5 pensation that may be taken into account with

6 respect to an employee may not exceed $100

7 per business day.

8 ‘‘(C) MAXIMUM PERIOD OF FAMILY

9 LEAVE.—No family leave credit will be available

10 to the extent that the period of family leave for

11 an employee exceeds 12 weeks, defined as 60

12 business days, in any 12-month period.

13 ‘‘(D) ADDITIONAL LIMITATION ON LEAVE

14 FOR PERSONAL SERIOUS HEALTH CONDI15 TIONS.—Leave from an employer in connection

16 with a qualified purpose described in subsection

17 (b)(2)(D) will qualify as family leave only if the

18 employee on leave has no unused sick, disability

19 or similar leave.

20 ‘‘(b) FAMILY LEAVE.—For purposes of this section—

21 ‘‘(1) IN GENERAL.—Except as otherwise pro22 vided in this section, an employee is considered to be

23 on ‘family leave’ if the employee is on leave from the

24 employer in connection with any qualified purpose.
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1 ‘‘(2) QUALIFIED PURPOSES.—The term ‘quali2 fied purposes’ means—

3 ‘‘(A) the birth of a child,

4 ‘‘(B) the placement of a child with the em5 ployee for adoption or foster care,

6 ‘‘(C) the care of a child, parent or spouse

7 with a serious health condition, or

8 ‘‘(D) the treatment of a serious health con9 dition which makes the employee unable to per10 form the functions of his or her position.

11 ‘‘(3) DEFINITIONS OF CHILD, PARENT AND SE12 RIOUS HEALTH CONDITION.—

13 ‘‘(A) CHILD.—The term ‘child’ means an

14 individual who is a son, stepson, daughter, step15 daughter, eligible foster child as described in

16 sections 32(c)(3)(B)(iii) (I) and (II), or legal

17 ward of the employee or employee’s spouse, or

18 a child of a person standing in loco parentis

19 and who either has not reached the age of 19

20 by the commencement of the period of family

21 leave or is physically or mentally incapable of

22 caring for himself or herself.

23 ‘‘(B) PARENT.—The term ‘parent’ means

24 an individual with respect to whom the em25 ployee would be considered a ‘child’ within the
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1 meaning of subsection (b)(2)(A) without regard

2 to the age limitation.

3 ‘‘(C) SERIOUS HEALTH CONDITION.—The

4 term ‘serious health condition’ means an illness,

5 injury, impairment, or physical or mental condi6 tion that involves the inpatient care in a hos7 pital, hospice or residential health care facility,

8 or substantial and continuing treatment by a

9 health care provider.

10 ‘‘(c) CREDIT REFUNDABLE.—In the case of so much

11 of the section 38 credit as is attributable to the family

12 leave credit—

13 ‘‘(1) section 38(c) will not apply, and

14 ‘‘(2) for purposes of this section, such credit

15 will be treated as if it were allowed under section

16 103 of the Flexible Family Leave Tax Credit Act of

17 1993.

18 ‘‘(d) NONDISCRIMINATION REQUIREMENT.—The

19 family leave credit is available to an employer for a taxable

20 year only if the employer provides family leave to its em21 ployees for that year on a nondiscriminatory basis.

22 ‘‘(e) OTHER DEFINITIONS AND SPECIAL RULES.—

23 ‘‘(1) IN GENERAL.—For purposes of this sec24 tion—
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1 ‘‘(A) EMPLOYER.—Except as otherwise

2 provided in this subpart, the term ‘employer’

3 has the meaning provided by section 3306(a)(1)

4 and (3).

5 ‘‘(B) EMPLOYEE.—The term ‘employee’ in6 cludes only permanent employees who have been

7 employed by the employer for at least 12

8 months and have provided over 1000 hours of

9 service to the employer during the 12 months

10 preceding commencement of the family leave.

11 ‘‘(C) QUALIFIED COMPENSATION.—The

12 term ‘qualified compensation’ means the greater

13 of—

14 ‘‘(i) cash wages paid or incurred by

15 the employer to or on behalf of the em16 ployee as remuneration for services during

17 the period of family leave, and

18 ‘‘(ii) cash wages that would have been

19 paid or incurred by the employer to or on

20 behalf of the employee as remuneration for

21 services during the period of family leave

22 had the employee not taken the leave.

23 ‘‘(D) COMPUTATION.—For purposes of

24 subsection (e)(1)(C)(ii), the amount of cash

25 wages that would have been paid to the em-
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1 ployee for any business day the employee is on

2 family leave is the average daily cash wages of

3 that employee for the four calendar quarters

4 preceding the commencement of the family

5 leave.

6 ‘‘(E) AVERAGE DAILY CASH WAGES.—For

7 purposes of the computation described in sub8 section (e)(1)(D), an employee’s average daily

9 cash wages is his or her total cash wages for

10 the period described in such subsection divided

11 by the number of business days in that period.

12 ‘‘(F) BUSINESS DAY.—The term ‘business

13 day’ includes any day other than a Saturday,

14 Sunday or legal holiday.

15 ‘‘(2) EMPLOYMENT AND BENEFITS PROTEC16 TION.—

17 ‘‘(A) IN GENERAL.—Leave taken under

18 this section shall qualify an employer for a fam19 ily leave credit only if—

20 ‘‘(i) upon return from such leave, the

21 employee is entitled to be restored by the

22 employer to the position of employment

23 held by the employee when the leave com24 menced, or to be restored to an equivalent

25 position with equivalent employment bene-
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1 fits, pay, and other terms and conditions of

2 employment;

3 ‘‘(ii) the taking of such leave does not

4 result in the loss of any employment bene5 fit accrued prior to the date on which the

6 leave commenced; and

7 ‘‘(iii) the employer maintains coverage

8 under any ‘group health plan’ (as defined

9 in section 5000(b)(1)) for the duration of

10 such leave, at the level and under the con11 ditions coverage would have been provided

12 if the employee had continued in employ13 ment continuously during the leave period.

14 ‘‘(B) LIMITATION.—Nothing in this para15 graph shall be construed to require an em16 ployer, as a condition of qualifying for a family

17 leave credit, to entitle any employee taking

18 leave to—

19 ‘‘(i) the accrual of any seniority or

20 employment benefits during any period of

21 leave; or

22 ‘‘(ii) any right, benefit, or position of

23 employment other than any right, benefit,

24 or position to which the employee would
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1 have been entitled had the employee not

2 taken the leave.

3 ‘‘(3) EXPECTATION THAT EMPLOYEE WILL RE4 TURN TO WORK.—No family leave credit will be

5 available for any portion of a period of family leave

6 during which the employer does not reasonably be7 lieve that the employee will return from leave to

8 work for the employer.

9 ‘‘(4) SPECIAL RULES.—Rules similar to the

10 rules of section 52 shall apply for purposes of this

11 section.

12 ‘‘(5) REGULATORY AUTHORITY.—The Secretary

13 may prescribe such regulations or other guidance as

14 may be necessary or appropriate to carry out the

15 purposes of this section, including guidance relating

16 to ensuring adequate employment and benefits pro17 tection and guidance to prevent abuse of this sec18 tion.’’.

19 SEC. 102. COORDINATION WITH REFUND PROVISION.

20 For purposes of section 1324(b)(2) of title 31 of the

21 United States Code, section 45A of the Internal Revenue

22 Code of 1986 (as added by this Act) will be considered

23 to be a credit provision of the Internal Revenue Code of

24 1954 enacted before January 1, 1978.
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1 SEC. 103. CONFORMING AMENDMENTS.

2 (a) Section 38 is amended by deleting the ‘‘plus’’

3 after subsection (b)(7) and ‘‘.’’ after subsection (b)(8), by

4 inserting ‘‘, plus’’ after subsection (b)(8), and by adding

5 a new subsection (b)(9) to read as follows:

6 ‘‘(9) the family leave credit under section 45A.’’

7 (b) The table of sections for subpart D of part IV

8 of subchapter A of chapter 1 is amended by adding at

9 the end the following new item:

‘‘Sec. 45A. Family leave credit.’’

10 SEC. 104. EFFECTIVE DATE.

11 The amendments made by this title shall apply to

12 family leave that commences 90 days after the date of the

13 enactment of this Act.

14 TITLE II—DEFICIT NEUTRAL

15 REVENUE OFFSET

16 SEC. 201. CORPORATE ESTIMATED TAX PROVISIONS.

17 (a) INCREASE IN ESTIMATED TAX.—

18 (1) IN GENERAL.—Subsection (d) of section

19 6655 of the Internal Revenue Code of 1986 (relating

20 to amount of required installments) is amended—

21 (A) by striking ‘‘91 percent’’ each place it

22 appears in paragraph (1)(B)(i) and inserting

23 ‘‘100 percent’’,
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1 (B) by striking ‘‘91 PERCENT’’ in the head2 ing of paragraph (2) and inserting ‘‘100 PER3 CENT’’, and

4 (C) by striking paragraph (3).

5 (2) CONFORMING AMENDMENTS.—

6 (A) Clause (ii) of section 6655(e)(2)(B) of

7 such Code is amended by striking the table con8 tained therein and inserting the following new

9 table:

The

‘‘In the case of the following applicable

required installments: percentage is:

1st .............................................................. 25

2nd ............................................................. 50

3rd ............................................................. 75

4th .............................................................. 100.’’

10 (B) Clause (i) of section 6655(e)(3)(A) of

11 such Code is amended by striking ‘‘91 percent’’

12 and inserting ‘‘100 percent’’.

13 (b) MODIFICATION OF PERIODS FOR APPLYING

14 ANNUALIZATION.—

15 (1) Clause (i) of section 6655(e)(2)(A) of such

16 Code is amended—

17 (A) by striking ‘‘or for the first 5 months’’

18 in subclause (II),

19 (B) by striking ‘‘or for the first 8 months’’

20 in subclause (III), and

21 (C) by striking ‘‘or for the first 11

22 months’’ in subclause (IV).
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1 (2) Paragraph (2) of section 6655(e) of such

2 Code is amended by adding at the end thereof the

3 following new subparagraph:

4 ‘‘(C) ELECTION FOR DIFFERENT

5 ANNUALIZATION PERIODS.—

6 ‘‘(i) If the taxpayer makes an election

7 under this clause—

8 ‘‘(I) subclause (II) of subpara9 graph (A)(i) shall be applied by sub10 stituting ‘4 months’ for ‘3 months’,

11 ‘‘(II) subclause (III) of subpara12 graph (A)(i) shall be applied by sub13 stituting ‘7 months’ for ‘6 months’,

14 and

15 ‘‘(III) subclause (IV) of subpara16 graph (A)(i) shall be applied by sub17 stituting ‘10 months’ for ‘9 months’.

18 ‘‘(ii) If the taxpayer makes an election

19 under this clause—

20 ‘‘(I) subclause (II) of subpara21 graph (A)(i) shall be applied by sub22 stituting ‘5 months’ for ‘3 months’,

23 ‘‘(II) subclause (III) of subpara24 graph (A)(i) shall be applied by sub-
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1 stituting ‘8 months’ for ‘6 months’,

2 and

3 ‘‘(III) subclause (IV) of subpara4 graph (A)(i) shall be applied by sub5 stituting ‘11 months’ for ‘9 months’.

6 ‘‘(iii) An election under clause (i) or

7 (ii) shall apply to the taxable year for

8 which made and such an election shall be

9 effective only if made on or before the date

10 required for the payment of the second re11 quired installment for such taxable year.’’

12 (3) The last sentence of section 6655(g)(3) of

13 such Code is amended by striking ‘‘and subsection

14 (e)(2)(A)’’ and inserting ‘‘and, except in the case of

15 an election under subsection (e)(2)(C), subsection

16 (e)(2)(A)’’.

17 (c) EFFECTIVE DATE.—The amendments made by

18 this section shall apply to any installment due date occur19 ring more than 90 days after the date of enactment of

20 this Act.

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