I 

114TH CONGRESS 

2D SESSION H. R. 6032 

To amend the Internal Revenue Code of 1986 to provide a tax credit for 

purchase of data breach insurance. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 14, 2016 

Mr. PERLMUTTER introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

a tax credit for purchase of data breach insurance. 

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 ‘‘Data Breach Insurance 

5 Act’’. 

6 SEC. 2. CREDITS FOR PURCHASE OF DATA BREACH INSUR7 ANCE. 

8 (a) IN GENERAL.—Subpart D of part IV of sub9 chapter A of chapter 1 of the Internal Revenue Code of 


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1 1986 (relating to business related credits) is amended by 

2 adding at the end the following new section: 

3 ‘‘SEC. 45S. DATA BREACH INSURANCE. 

4 ‘‘(a) IN GENERAL.—For purposes of section 38, the 

5 data breach insurance credit determined under this section 

6 for the taxable year is an amount equal to 15 percent of 

7 the aggregate premiums paid or incurred by the taxpayer 

8 during such taxable year for qualified data breach insur9 ance. 

10 ‘‘(b) QUALIFIED DATA BREACH INSURANCE.— 

11 ‘‘(1) IN GENERAL.—For purposes of this sec12 tion, the term ‘qualified data breach insurance’ 

13 means coverage provided by an insurance company 

14 for expenses or losses in connection with the theft, 

15 loss, disclosure, inaccessibility, or manipulation, of 

16 data. 

17 ‘‘(2) CYBERSECURITY FRAMEWORK REQUIRE18 MENT.—Such term shall not include coverage for 

19 any period unless the taxpayer has adopted, and is 

20 in compliance with, one of the following with respect 

21 to such period: 

22 ‘‘(A) Version 1.0 of the Framework for 

23 Improving Critical Infrastructure Cybersecurity 

24 published by the National Institute of StandVerDate Sep 11 2014 04:19 Sep 15, 2016 Jkt 059200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H6032.IH H6032

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1 ards and Technology as in effect on February 

2 12, 2014, or subsequent versions or iterations. 

3 ‘‘(B) Any similar standard specified by the 

4 Secretary (after consultation with the Secretary 

5 of Homeland Security and the Secretary of 

6 Commerce) for purposes of this paragraph. 

7 ‘‘(3) INSURANCE COMPANY.—The term ‘insur8 ance company’ means any corporation subject to tax 

9 under subchapter L (or which would be so subject 

10 if such corporation were a domestic corporation). 

11 ‘‘(4) TREATMENT OF INSURANCE COVERING

12 MORE THAN DATA.—In the case of coverage under 

13 which amounts are payable for other than expenses 

14 or losses described in paragraph (1)— 

15 ‘‘(A) no amount shall be treated as pre16 miums for qualified data breach insurance un17 less the charge for such insurance is either sep18 arately stated in the contract, or furnished to 

19 the policyholder by the insurance company in a 

20 separate statement, 

21 ‘‘(B) the amount taken into account as the 

22 premium paid or incurred for such insurance 

23 shall not exceed such charge, and 

24 ‘‘(C) no amount shall be treated as paid or 

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1 fied in the contract (or furnished to the policy2 holder by the insurance company in a separate 

3 statement) as the charge for such insurance is 

4 unreasonably large in relation to the total 

5 charges under the contract. 

6 ‘‘(c) PREMIUMS MUST BE TRADE OR BUSINESS EX7 PENSE.—Premiums shall be taken into account under sub8 section (a) only if such premiums are paid or incurred in 

9 the ordinary course of the taxpayer’s trade or business. 

10 ‘‘(d) TERMINATION.—No credit shall be determined 

11 under this section for any taxable year beginning after the 

12 date which is 5 years after the date of the enactment of 

13 this section.’’. 

14 (b) CONFORMING AMENDMENTS.— 

15 (1) Section 38(b) of such Code is amended by 

16 striking ‘‘plus’’ at the end of paragraph (35), by 

17 striking the period at the end of paragraph (36), 

18 and inserting ‘‘, plus’’, and by adding at the end the 

19 following new paragraph: 

20 ‘‘(37) the data breach insurance credit deter21 mined under section 45S.’’. 

22 (2) The table of sections for subpart D of part 

23 IV of subchapter A of chapter 1 of such Code is 

24 amended by adding at the end the following new 

25 item: 

‘‘Sec. 45S. Data breach insurance.’’. 


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

2 this section shall apply to taxable years beginning after 

3 the date of the enactment of this Act. 

Æ 


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