II

106TH CONGRESS

2D SESSION S. 2601

To amend the Internal Revenue Code of 1986 to exclude from the gross

income of an employee any employer-provided home computer and Internet access.

IN THE SENATE OF THE UNITED STATES

MAY 22, 2000

Mr. ASHCROFT 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 exclude

from the gross income of an employee any employerprovided home computer and Internet access.

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 ‘‘Bridging the Digital

5 Divide Act of 2000’’.

6 SEC. 2. FINDINGS.

7 Congress finds the following:
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1 (1) Only 40 percent of computer sales are being

2 made to households purchasing a computer for the

3 first time.

4 (2) According to Forrester Research, only 33

5 percent of African American households are on-line,

6 10 percent fewer than the national average.

7 (3) According to Forrester Research, income is

8 the main driver of Internet adoption.

9 (4) Too many people are opting out or being

10 left behind by the Internet economy.

11 (5) According to Dr. Mark E. Dean, a specialist

12 in advanced technology development for IBM, the

13 solution to the digital divide is to put computers in

14 as many homes as possible.

15 (6) According to a 1998 study by the Depart16 ment of Commerce, households with income of at

17 least $75,000 are over 20 times more likely to have

18 Internet access than those at the lowest income lev19 els.

20 (7) According to the same report, black and

21 Hispanic households are roughly two-fifths as likely

22 to have Internet access as white households.

23 (8) When employers have tried to help bridge

24 this gap by providing their employees with com25 puters and Internet access, the Federal tax code has
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1 widened the digital divide by treating the receipt of

2 the new equipment as taxable income.

3 SEC. 3. QUALIFIED HOME COMPUTER FRINGE BENEFIT.

4 (a) IN GENERAL.—Section 132(a) of the Internal

5 Revenue Code of 1986 (relating to the exclusion from

6 gross income of certain fringe benefits) is amended by

7 striking ‘‘or’’ at the end of paragraph (5), by striking the

8 period at the end of paragraph (6) and inserting ‘‘, or’’

9 and by adding at the end the following new paragraph:

10 ‘‘(7) qualified home computer fringe.’’.

11 (b) QUALIFIED HOME COMPUTER FRINGE.—Section

12 132 of the Internal Revenue Code of 1986 is amended by

13 redesignating subsections (h) through (m) as subsections

14 (i) through (n), respectively, and by inserting after sub15 section (g) the following new subsection (h):

16 ‘‘(h) QUALIFIED HOME COMPUTER FRINGE.—For

17 purposes of this section—

18 ‘‘(1) IN GENERAL.—The term ‘qualified home

19 computer fringe’ means a home computer or Inter20 net service or both provided by an employer to an

21 employee under a written program adopted by such

22 employer.

23 ‘‘(2) DEFINITIONS AND SPECIAL RULES.—

24 ‘‘(A) HOME COMPUTER.—
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1 ‘‘(i) IN GENERAL.—The term ‘home

2 computer’ means computer technology or

3 equipment (as defined in section

4 170(e)(6)(E)(i)) which—

5 ‘‘(I) at a minimum, is capable of

6 providing access to the Internet, and

7 is able to perform office automation

8 and e-learning functions; and

9 ‘‘(II) is furnished for home use.

10 ‘‘(ii) Home use of computers.—For

11 purposes of clause (i)(II), the rules under

12 subsection (i)(2) shall apply.

13 ‘‘(B) INTERNET SERVICE.—The term ‘Internet

14 service’ means access to the Internet through an

15 Internet Service Provider (including the ability to

16 send and receive electronic mail) from one’s home.’’.

17 (c) NO DISCRIMINATION IN FAVOR OF HIGHLY COM18 PENSATED.—Paragraph (1) of subsection 132(k) of the

19 Internal Revenue Code of 1986, as redesignated by sub20 section (b), is amended to read as follows:

21 ‘‘(1) EXCLUSIONS UNDER SUBSECTION (a)(1),

22 (2), AND (7) APPLY TO HIGHLY COMPENSATED EM23 PLOYEES ONLY IF NO DISCRIMINATION.—Para24 graphs (1), (2), and (7) of subsection (a) shall apply

25 with respect to any fringe benefit described therein
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1 provided with respect to any highly compensated em2 ployee only if such fringe benefit is available on sub3 stantially the same terms to each member of a group

4 of employees which is defined under a reasonable

5 classification set up by the employer which does not

6 discriminate in favor of highly compensated employ7 ees.’’.

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

9 this section shall apply to taxable years beginning after

10 December 31, 2000.

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