Relief for Working Families Act

To amend the Internal Revenue Code of 1986 to modify the employer credit for paid family and medical leave, and for other purposes. 1. Short title This Act may be cited as the Relief for Working Families Act 2. Modifications to employer credit for paid family and medical leave (a) Credit made permanent and limited to first 5 years after establishment of plan (1) In general Section 45S(i) (2) Phase-out Section 45S of such Code is amended by adding at the end the following new subsection: (i) Credit limited to first 5 years after establishment of plan (1) In general No credit shall be allowed under this section with respect to any taxpayer after the 5-taxable-year period beginning with the taxable year which includes the date on which the taxpayer first has in place a policy described in subsection (c)(1). (2) Phase-down of credit The credit determined under this section (without regard to this subsection) shall be reduced by— (A) in the case of the fourth taxable year in the 5-taxable-year period described in paragraph (1), 25 percent of the amount of such credit, and (B) in the case of the fifth taxable year in such 5-taxable-year period, 50 percent of the amount of such credit. (3) Transitional rule The 5-taxable-year period described in paragraph (1) shall not be treated as beginning before the beginning of the taxpayer’s first taxable year beginning after December 31, 2022. . (b) Enhanced credit for new plans of small employers (1) In general Section 45S of such Code is amended by adding at the end the following new subsection: (j) Enhanced credit for certain new plans of small employers (1) In general In the case of an eligible small employer— (A) subsection (a)(2) shall be applied— (i) by substituting 25 percent 12.5 percent (ii) by substituting 50 percent 25 percent (B) the credit determined under subsection (a)(1) for any taxable year shall be increased by the applicable percentage (determined after application of subparagraph (A)) of the sum of— (i) so much of the amounts paid during such taxable year as administrative expenses of carrying out the policy described in subsection (c)(1) (other than any amounts paid to establish such policy), including payments to third-party administrators and premiums for short-term disability insurance, as do not exceed $50,000, plus (ii) in the case of the taxable year which includes the date on which the policy described in subsection (c)(1) takes effect, so much of the amounts paid to establish such policy as do not exceed $1,000. (2) Eligible small employer For purposes of this subsection, the term eligible small employer (A) the gross receipts of which for such taxable year do not exceed $25,000,000, (B) which employed on average 50 or fewer employees on business days during the taxable year, and (C) which did not have a policy described in subsection (c)(1) in place at any time prior to the date of the enactment of this Act. . (2) Effective date The amendment made by this subsection shall apply to taxable years beginning after the date of the enactment of this Act. (c) Employer requirements for rate of payment (1) In general Subsection (c) of section 45S of such Code is amended— (A) in paragraph (1)(B), by inserting after the first sentence the following: For purposes of determining the rate of payment under the program, any family and medical leave which is paid by a State or local government or required by State or local law, determined as a percentage of the wages normally paid to such employee for services performed for the employer, shall be taken into account. (B) in paragraph (4)— (i) by striking For purposes of this section, any Any (ii) by striking amount of paid family and medical leave provided by the employer wages taken into account under subsection (a) (2) Effective date The amendments made by this subsection shall take effect as if included in section 13403 of Public Law 115–97 (d) Technical corrections (1) In general Section 45S of such Code is amended— (A) in subsection (b)(1), by striking credit allowed wages taken into account (B) in subsection (c), by striking paragraph (3) and inserting the following: (3) Aggregation rule (A) In general Except as provided in subparagraph (B), all persons which are treated as a single employer under subsections (b) and (c) of section 414 shall be treated as a single employer. (B) Exception (i) In general Subparagraph (A) shall not apply to any person who establishes to the satisfaction of the Secretary that such person has a substantial and legitimate business reason for failing to provide a written policy described in paragraph (1) or (2). (ii) Substantial and legitimate business reason For purposes of clause (i), the term substantial and legitimate business reason ; and (C) in subsection (d)(2), by inserting , as determined on an annualized basis (pro-rata for part-time employees), compensation (2) Effective date The amendments made by this subsection shall take effect as if included in section 13403 of Public Law 115–97

Summary: Relief for Working Families Act This bill modifies the tax credit for employer-paid family and medical leave. Specifically, it extends the credit for a five-year period after an employer plan for payment of family and medical leave benefits is established. The bill also provides for an increased credit for plans established by certain small employers (i.e., employers with gross receipts not exceeding $25 million and 50 or fewer employees during the taxable year).