I
105TH CONGRESS
2D SESSION
H. R. 3144
To amend the Internal Revenue Code of 1986 to provide additional tax
relief to families to increase the affordability of child care, and for
other purposes.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 3, 1998
Mrs. JOHNSON of Connecticut introduced the following bill; which was referred
to the Committee on Ways and Means, and in addition to the Committees
on Education and the Workforce, Government Reform and Oversight,
House Oversight, and the Judiciary, for a period to be subsequently de-
termined by the Speaker, in each case for consideration of such provisions
as fall within the jurisdiction of the committee concerned
A BILL
To amend the Internal Revenue Code of 1986 to provide
additional tax relief to families to increase the afford-
ability of child care, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Caring for Children Act’’.
(b) TABLE OF CONTENTS.—The table of contents for
this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—TAX RELIEF TO INCREASE CHILD CARE
AFFORDABILITY
Sec. 101. Expansion of dependent care tax credit.
Sec. 102. Promotion of dependent care assistance programs.
Sec. 103. Allowance of credit for employer expenses for child care assistance.
TITLE II—ENCOURAGING QUALITY CHILD CARE
Subtitle A—Dissemination of Information About Quality Child Care
Sec. 201. Collection and dissemination of information.
Sec. 202. Grants for the development of a child care training infrastructure.
Sec. 203. Authorization of appropriations.
Subtitle B—Increased Enforcement of State Health and Safety Standards
Sec. 211. Enforcement of State health and safety standards.
Subtitle C—Removal of Barriers to Increasing the Supply of Quality Child
Care
Sec. 221. Increased authorization of appropriations for the Child Care and De-
velopment Block Grant Act.
Sec. 222. Small business child care grant program.
Sec. 223. GAO report regarding the relationship between legal liability concerns
and the availability and affordability of child care.
Subtitle D—Quality Child Care Through Federal Facilities and Programs
Sec. 231. Providing quality child care in Federal facilities.
TITLE I—TAX RELIEF TO IN-
CREASE 
CHILD 
CARE 
AF-
FORDABILITY
SEC. 101. EXPANSION OF DEPENDENT CARE TAX CREDIT.
(a) PERCENTAGE OF EMPLOYMENT-RELATED EX-
PENSES DETERMINED BY TAXPAYER STATUS.—Section
21(a)(2) of the Internal Revenue Code of 1986 (defining
applicable percentage) is amended to read as follows:
‘‘(2) APPLICABLE PERCENTAGE DEFINED.—For
purposes of paragraph (1), the term ‘applicable per-
centage’ means 50 percent reduced (but not below
zero) by 1 percentage point for each $1,500, or frac-
tion thereof, by which the taxpayers’s adjusted gross
income for the taxable year exceeds $30,000.’’.
(b) MINIMUM CREDIT ALLOWED FOR STAY-AT-HOME
PARENTS.—Section 21(e) of the Internal Revenue Code
of 1986 (relating to special rules) is amended by adding
at the end the following:
‘‘(11) MINIMUM CREDIT ALLOWED FOR STAY-
AT-HOME
PARENTS.—Notwithstanding 
subsection
(d), in the case of any taxpayer with one or more
qualifying 
individuals 
described 
in 
subsection
(b)(1)(A) under the age of 4 at any time during the
taxable year, such taxpayer shall be deemed to have
employment-related expenses with respect to such
qualifying individuals in an amount equal to the
greater of—
‘‘(A) the amount of employment-related ex-
penses incurred for such qualifying individuals
for the taxable year (determined under this sec-
tion without regard to this paragraph), or
‘‘(B) $150 for each month in such taxable
year during which such qualifying individual is
under the age of 4.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section apply to taxable years beginning after Decem-
ber 31, 1998.
SEC. 102. PROMOTION OF DEPENDENT CARE ASSISTANCE
PROGRAMS.
(a) PROMOTION OF DEPENDENT CARE ASSISTANCE
PROGRAMS.—The Secretary of Labor shall establish a
program to promote awareness of the use of dependent
care assistance programs (as described in section 129(d)
of the Internal Revenue Code of 1986) by employers.
(b) AUTHORIZATION OF APPROPRIATIONS.—There is
authorized to be appropriated to carry out the program
under paragraph (1) $1,000,000 for each of fiscal years
1999, 2000, 2001, and 2002.
SEC. 103. ALLOWANCE OF CREDIT FOR EMPLOYER EX-
PENSES FOR CHILD CARE ASSISTANCE.
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to business related credits) is amended by
adding at the end the following:
‘‘SEC. 45D. EMPLOYER-PROVIDED CHILD CARE CREDIT.
‘‘(a) ALLOWANCE OF CREDIT.—For purposes of sec-
tion 38, the employer-provided child care credit deter-
mined under this section for the taxable year is an amount
‘‘(ii) for the operating costs of a quali-
fied child care facility of the taxpayer, in-
cluding costs related to the training of em-
ployees,
‘‘(iii) under a contract with a qualified
child care facility to provide child care
services to employees of the taxpayer, or
‘‘(iv) under a contract to provide child
care resource and referral services to em-
ployees of the taxpayer.
‘‘(2) EXCLUSION
FOR
AMOUNTS
FUNDED
BY
GRANTS, ETC.—The term ‘qualified child care ex-
penditure’ shall not include any amount to the ex-
tent such amount is funded by any grant, contract,
or otherwise by another person (or any governmental
entity).
‘‘(3) QUALIFIED CHILD CARE FACILITY.—
‘‘(A) IN
GENERAL.—The term ‘qualified
child care facility’ means a facility—
‘‘(i) the principal use of which is to
provide child care assistance, and
‘‘(ii) which meets the requirements of
all applicable laws and regulations of the
State or local government in which it is lo-
cated, including, but not limited to, the li-
censing of the facility as a child care facil-
ity.
Clause (i) shall not apply to a facility which is
the principal residence (within the meaning of
section 1034) of the operator of the facility.
‘‘(B) SPECIAL RULES WITH RESPECT TO A
TAXPAYER.—A facility shall not be treated as a
qualified child care facility with respect to a
taxpayer unless—
‘‘(i) enrollment in the facility is open
to employees of the taxpayer during the
taxable year,
‘‘(ii) the facility is not the principal
trade or business of the taxpayer unless at
least 30 percent of the enrollees of such fa-
cility are dependents of employees of the
taxpayer, and
‘‘(iii) the use of such facility (or the
eligibility to use such facility) does not dis-
criminate in favor of employees of the tax-
payer who are highly compensated employ-
ees (within the meaning of section 414(q)).
‘‘(d) RECAPTURE OF ACQUISITION AND CONSTRUC-
TION CREDIT.—
‘‘(1) IN GENERAL.—If, as of the close of any
taxable year, there is a recapture event with respect
to any qualified child care facility of the taxpayer,
then the tax of the taxpayer under this chapter for
such taxable year shall be increased by an amount
equal to the product of—
‘‘(A) the applicable recapture percentage,
and
‘‘(B) the aggregate decrease in the credits
allowed under section 38 for all prior taxable
years which would have resulted if the qualified
child care expenditures of the taxpayer de-
scribed in subsection (c)(1)(A) with respect to
such facility had been zero.
‘‘(2) APPLICABLE RECAPTURE PERCENTAGE.—
‘‘(A) IN GENERAL.—For purposes of this
subsection, the applicable recapture percentage
shall be determined from the following table:
The applicable
recapture
‘‘If the recapture event occurs in:
percentage is:
Years 1–3 ..................................................................
100
Year 4 ........................................................................
Year 5 ........................................................................
Year 6 ........................................................................
Year 7 ........................................................................
Year 8 ........................................................................
Years 9 and 10 ..........................................................
Years 11 and thereafter ............................................
0.
‘‘(B) YEARS.—For purposes of subpara-
graph (A), year 1 shall begin on the first day
of the taxable year in which the qualified child
care facility is placed in service by the taxpayer.
‘‘(3) RECAPTURE EVENT DEFINED.—For pur-
poses of this subsection, the term ‘recapture event’
means—
‘‘(A) CESSATION
OF
OPERATION.—The
cessation of the operation of the facility as a
qualified child care facility.
‘‘(B) CHANGE IN OWNERSHIP.—
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (ii), the disposition of a
taxpayer’s interest in a qualified child care
facility with respect to which the credit de-
scribed in subsection (a) was allowable.
‘‘(ii) AGREEMENT TO ASSUME RECAP-
TURE
LIABILITY.—Clause (i) shall not
apply if the person acquiring such interest
in the facility agrees in writing to assume
the recapture liability of the person dispos-
ing of such interest in effect immediately
before such disposition. In the event of
such an assumption, the person acquiring
the interest in the facility shall be treated
as the taxpayer for purposes of assessing
determined with respect to any property the
basis of which was reduced under subparagraph
(A), the basis of such property (immediately be-
fore the event resulting in such recapture) shall
be increased by an amount equal to such recap-
ture amount. For purposes of the preceding
sentence, the term ‘recapture amount’ means
any 
increase 
in 
tax 
(or 
adjustment 
in
carrybacks or carryovers) determined under
subsection (d).
‘‘(2) OTHER DEDUCTIONS AND CREDITS.—No
deduction or credit shall be allowed under any other
provision of this chapter with respect to the amount
of the credit determined under this section.
‘‘(g) TERMINATION.—This section shall not apply to
taxable years beginning after December 31, 2003.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 38(b) of the Internal Revenue Code
of 1986 is amended—
(A) by striking out ‘‘plus’’ at the end of
paragraph (11),
(B) by striking out the period at the end
of paragraph (12), and inserting a comma and
‘‘plus’’, and
(C) by adding at the end the following new
paragraph:
‘‘(13) the employer-provided child care credit
determined under section 45D.’’.
(2) The table of sections for subpart D of part
IV of subchapter A of chapter 1 of such Code is
amended by adding at the end the following new
item:
‘‘Sec. 45D. Employer-provided child care credit.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1998.
TITLE II—ENCOURAGING
QUALITY CHILD CARE
Subtitle A—Dissemination of Infor-
mation 
About 
Quality 
Child
Care
SEC. 201. COLLECTION AND DISSEMINATION OF INFORMA-
TION.
(a) COLLECTION AND DISSEMINATION OF INFORMA-
TION.—The Secretary of Health and Human Services
shall, directly or through a contract awarded on a competi-
tive basis to a qualified entity, collect and disseminate—
(1) information concerning health and safety in
various child care settings that would assist—
(A) the provision of safe and healthful en-
vironments by child care providers; and
(B) the evaluation of child care providers
by parents; and
(2) relevant findings in the field of early child-
hood learning and development.
(b) INFORMATION
AND FINDINGS TO BE GEN-
ERALLY AVAILABLE.—
(1) SECRETARIAL RESPONSIBILITY.—The Sec-
retary of Health and Human Services shall make the
information and findings described in subsection (a)
generally available to States, units of local govern-
ments, private nonprofit child care organizations (in-
cluding resource and referral agencies), employers,
child care providers, and parents.
(2) DEFINITION OF GENERALLY AVAILABLE.—
For purposes of paragraph (1), the term ‘‘generally
available’’ means that the information and findings
shall be distributed through resources that are used
by, and available to, the public, including such re-
sources as brochures, Internet web sites, toll-free
telephone information lines, and public and private
resource and referral organizations.
SEC. 202. GRANTS FOR THE DEVELOPMENT OF A CHILD
CARE TRAINING INFRASTRUCTURE.
(a) AUTHORITY TO AWARD GRANTS.—The Secretary
of Health and Human Services shall award grants to eligi-
ble entities to develop distance learning child care training
technology infrastructures and to develop model tech-
nology-based training courses for child care providers and
child care workers. The Secretary shall, to the maximum
extent possible, ensure that grants for the development of
distance learning child care training technology infrastruc-
tures are awarded in those regions of the United States
with the fewest training opportunities for child care pro-
viders.
(b) ELIGIBILITY REQUIREMENTS.—To be eligible to
receive a grant under subsection (a), an entity shall—
(1) develop the technological and logistical as-
pects of the infrastructure described in this section
and have the capability of implementing and main-
taining the infrastructure;
(2) to the maximum extent possible, develop
partnerships with secondary schools, institutions of
higher education, State and local government agen-
cies, and private child care organizations for the
purpose of sharing equipment, technical assistance,
and other technological resources, including—
(A) sites from which individuals may ac-
cess the training;
(B) conversion of standard child care
training courses to programs for distance learn-
ing; and
(C) ongoing networking among program
participants; and
(3) develop a mechanism for participants to—
(A) evaluate the effectiveness of the infra-
structure, including the availability and afford-
ability of the infrastructure, and the training
offered the infrastructure; and
(B) make recommendations for improve-
ments to the infrastructure.
(c) APPLICATION.—To be eligible to receive a grant
under subsection (a), an entity shall submit an application
to the Secretary at such time and in such manner as the
Secretary may require, and that includes—
(1) a description of the partnership organiza-
tions through which the distance learning programs
will be disseminated and made available;
(2) the capacity of the infrastructure in terms
of the number and type of distance learning pro-
grams that will be made available;
(3) the expected number of individuals to par-
ticipate in the distance learning programs; and
(4) such additional information as the Secretary
may require.
(d) LIMITATION ON FEES.—No entity receiving a
grant under this section may collect fees from an individ-
ual for participation in a distance learning child care
training program funded in whole or in part by this sec-
tion that exceed the pro rata share of the amount ex-
pended by the entity to provide materials for the training
program and to develop, implement, and maintain the in-
frastructure (minus the amount of the grant awarded by
this section).
(e) RULE OF CONSTRUCTION.—Nothing in this sec-
tion shall be construed as requiring a child care provider
to subscribe to or complete a distance learning child care
training program made available by this section.
SEC. 203. AUTHORIZATION OF APPROPRIATIONS.
There is authorized to be appropriated to carry out
this subtitle $50,000,000 for each of fiscal years 1999
through 2003.