SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Work Opportunity Tax
Credit Reform and Improvement Act of 1999’’.
SEC. 2. PERMANENT EXTENSION AND MODIFICATION OF
WORK OPPORTUNITY TAX CREDIT.
(a) CREDIT MADE PERMANENT.—Subsection (c) of
section 51 of the Internal Revenue Code of 1986 is amend-
ed by striking paragraph (4) (relating to termination).
(b) CERTAIN BENEFITS TREATED AS WAGES ELIGI-
BLE FOR CREDIT.—Subsection (c) of section 51 of such
Code is amended by redesignating paragraph (3) as para-
graph (4) and by inserting after paragraph (2) the fol-
lowing new paragraph:
‘‘(3) CERTAIN AMOUNTS TREATED AS WAGES.—
The term ‘wages’ includes amounts paid or incurred
by the employer which are excludable from the em-
ployee’s gross income under—
‘‘(A) section 105 (relating to amounts re-
ceived under accident and health plans),
‘‘(B) section 106 (relating to contributions
by employer to accident and health plans),
‘‘(C) section 127 (relating to educational
assistance programs) or would be so excludable
but for section 127(d), but only to the extent
paid or incurred to a person not related to the
employer, or
‘‘(D) section 129 (relating to dependent
care assistance programs).
The amount treated as wages by subparagraph (A)
or (B) for any period shall be based on the reason-
able cost of coverage for the period, but shall not ex-
ceed the applicable premium for the period under
section 4980B(f)(4).’’
(c) CONSOLIDATION
OF WELFARE-TO-WORK TAX
CREDIT AND WORK OPPORTUNITY TAX CREDIT.—
(1) IN
GENERAL.—Paragraph (1) of section
51(d) of such Code is amended by striking ‘‘or’’ at
the end of subparagraph (G), by striking the period
at the end of subparagraph (H) and inserting ‘‘, or’’,
and by adding at the end the following new subpara-
graph:
‘‘(I) a long-term family assistance recipi-
ent.’’
(2) DEFINITION.—Subsection (d) of section 51
of such Code is amended by redesignating para-
graphs (10), (11), and (12) as paragraphs (11),
(12), and (13), respectively, and by inserting after
paragraph (9) the following new paragraph:
‘‘(10) LONG-TERM FAMILY ASSISTANCE RECIPI-
ENT.—
‘‘(A) IN GENERAL.—The term ‘long-term
family assistance recipient’ means any indi-
vidual who is certified by the designated local
agency—
‘‘(i) as being a member of a family re-
ceiving assistance under a IV-A program
for at least the 18-month period ending on
the hiring date,
‘‘(ii)(I) as being a member of a family
receiving such assistance for at least 18
months beginning after August 5, 1997,
and
‘‘(II) as having a hiring date which is
not more than 2 years after the end of the
18th month beginning after August 5,
1997, that the individual is a member of a
family receiving such assistance, or
‘‘(iii)(I) as being a member of a fam-
ily which ceased to be eligible after August
5, 1997, for such assistance by reason of
any limitation imposed by Federal or State
law on the maximum period such assist-
ance is payable to a family, and
‘‘(II) as having a hiring date which is
not more than 2 years after the date of
such cessation.
‘‘(B) SPECIAL RULES FOR DETERMINING
AMOUNT OF CREDIT.—For purposes of applying
this subpart to wages paid or incurred to any
long-term family assistance recipient—
‘‘(i) the credit determined under this
section shall include 40 percent of the
qualified second-year wages for the taxable
year,
‘‘(ii) 
notwithstanding 
subsection
(b)(3), the amount of the qualified first-
year wages, and the amount of qualified
second-year wages, which may be taken
into account with respect to any individual
shall not exceed $10,000 per year, and
‘‘(iii) paragraph (1) of subsection (h)
shall be applied by substituting ‘$10,000’
for ‘$6,000’ in subparagraph (A) and
‘$833.33’ for ‘$500’ in subparagraph (B).
‘‘(C) QUALIFIED SECOND-YEAR WAGES.—
For purposes of subparagraph (B), the term
‘qualified second-year wages’ means, with re-
spect to any individual, qualified wages attrib-
utable to service rendered during the 1-year pe-
riod beginning on the day after the last day of
the 1-year period with respect to such indi-
vidual determined under subsection (b)(2).’’
(3) REPEAL OF SEPARATE WELFARE-TO-WORK
CREDIT.—
(A) Section 51A of such Code is hereby re-
pealed.
(B) The table of sections for subpart E of
part IV of subchapter A of chapter 1 of such
Code is amended by striking the item relating
to section 51A.
(d) CLARIFICATION OF FIRST YEAR OF EMPLOY-
MENT.—Paragraph (2) of section 51(i) of such Code is
amended by striking ‘‘during which he was not a member
of a targeted group’’.
(e) TECHNICAL CORRECTION.—Subparagraph (B) of
section 51(d)(2) of such Code is amended—
(1) by striking ‘‘plan approved’’ and inserting
‘‘program funded’’, and
(2) by striking ‘‘(relating to assistance for
needy families with minor children)’’.
(f) EFFECTIVE DATE.—
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by
this section shall apply to individuals who begin
work for the employer after June 30, 1999.
(2) CLARIFICATION.—The amendment made by
subsection (d) shall apply to individuals who begin
work for the employer after June 30, 1999.
(3) TECHNICAL CORRECTION.—The amendment
made by subsection (e) shall take effect as if in-
cluded in the amendments made by section 1201 of
the Small Business Job Protection Act of 1996.
SEC. 3. TREATMENT OF WORK OPPORTUNITY WAGES AS
PAYMENT OF EMPLOYMENT TAX LIABILITY.
(a) IN GENERAL.—Chapter 25 of the Internal Rev-
enue Code of 1986 (relating to general provisions relating
to employment taxes) is amended by inserting after sec-
tion 3510 the following new section:
‘‘SEC. 3511. TREATMENT OF WORK OPPORTUNITY WAGES
AS PAYMENT OF EMPLOYMENT TAX LIABIL-
ITY.
‘‘(a) GENERAL RULE.—For purposes of this title, the
amount equal to the work opportunity credit amount with
respect to any wages paid for any calendar quarter by an
eligible tax-exempt employer shall be treated as a payment
by such employer of such employer’s employment tax li-
ability for such calendar quarter.