‘‘(5) ELECTION OF ALTERNATIVE SIMPLIFIED 
CREDIT.— 
‘‘(A) IN GENERAL.—At the election of the 
taxpayer, the credit determined under sub-
section (a)(1) shall be equal to 12 percent of so 
much of the qualified research expenses for the 
taxable year as exceeds 50 percent of the aver-
age qualified research expenses for the 3 tax-
able years preceding the taxable year for which 
the credit is being determined. 
‘‘(B) SPECIAL
RULE
IN
CASE
OF
NO 
QUALIFIED RESEARCH EXPENSES IN ANY OF 3 
PRECEDING TAXABLE YEARS.— 
‘‘(i) TAXPAYERS TO WHICH SUBPARA-
GRAPH
APPLIES.—The credit under this 
paragraph shall be determined under this 
subparagraph if the taxpayer has no quali-
fied research expenses in any one of the 3 
taxable years preceding the taxable year 
for which the credit is being determined. 
‘‘(ii) CREDIT RATE.—The credit de-
termined under this subparagraph shall be 
equal to 6 percent of the qualified research 
expenses for the taxable year. 
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‘‘(C) ELECTION.—An election under this 
paragraph shall apply to the taxable year for 
which made and all succeeding taxable years 
unless revoked with the consent of the Sec-
retary. An election under this paragraph may 
not be made for any taxable year to which an 
election under paragraph (4) applies.’’. 
(2) COORDINATION WITH ELECTION OF ALTER-
NATIVE INCREMENTAL CREDIT.— 
(A) IN
GENERAL.—Section 41(c)(4)(B) 
(relating to election) is amended by adding at 
the end the following: ‘‘An election under this 
paragraph may not be made for any taxable 
year to which an election under paragraph (5) 
applies.’’. 
(B) TRANSITION RULE.—In the case of an 
election under section 41(c)(4) of the Internal 
Revenue Code of 1986 which applies to the tax-
able year which includes the date of the enact-
ment of this Act, such election shall be treated 
as revoked with the consent of the Secretary of 
the Treasury if the taxpayer makes an election 
under section 41(c)(5) of such Code (as added 
by subsection (c)) for such year. 
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(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to amounts paid or in-
curred after December 31, 2006. 
SEC. 205. WORK OPPORTUNITY TAX CREDIT AND WELFARE- 
TO-WORK CREDIT. 
(a) IN GENERAL.—Sections 51(c)(4)(B) and 51A(f) 
are each amended by striking ‘‘2005’’ and inserting 
‘‘2007’’. 
(b) ELIGIBILITY
OF
EX-FELONS
DETERMINED 
WITHOUT REGARD TO FAMILY INCOME.—Paragraph (4) 
of section 51(d) is amended by adding ‘‘and’’ at the end 
of subparagraph (A), by striking ‘‘, and’’ at the end of 
subparagraph (B) and inserting a period, and by striking 
all that follows subparagraph (B). 
(c) INCREASE IN MAXIMUM AGE FOR ELIGIBILITY OF 
FOOD
STAMP
RECIPIENTS.—Clause (i) of section 
51(d)(8)(A) is amended by striking ‘‘25’’ and inserting 
‘‘40’’. 
(d) EXTENSION
OF PAPERWORK FILING DEAD-
LINE.—Section 51(d)(12)(A)(ii)(II) is amended by strik-
ing ‘‘21st day’’ and inserting ‘‘28th day’’. 
(e) CONSOLIDATION OF WORK OPPORTUNITY CRED-
IT WITH WELFARE-TO-WORK CREDIT.— 
(1) IN
GENERAL.—Paragraph (1) of section 
51(d) is amended by striking ‘‘or’’ at the end of sub-
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paragraph (G), by striking the period at the end of 
subparagraph (H) and inserting ‘‘, or’’, and by add-
ing at the end the following new subparagraph: 
‘‘(I) a long-term family assistance recipi-
ent.’’. 
(2) LONG-TERM
FAMILY
ASSISTANCE
RECIPI-
ENT.—Subsection (d) of section 51 is amended by 
redesignating paragraphs (10) through (12) as para-
graphs (11) through (13), respectively, and by in-
serting after paragraph (9) the following new para-
graph: 
‘‘(10) LONG-TERM FAMILY ASSISTANCE RECIPI-
ENT.—The term ‘long-term family assistance recipi-
ent’ means any individual who is certified by the 
designated local agency— 
‘‘(A) as being a member of a family receiv-
ing assistance under a IV–A program (as de-
fined in paragraph (2)(B)) for at least the 18- 
month period ending on the hiring date, 
‘‘(B)(i) as being a member of a family re-
ceiving such assistance for 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 earliest 
such 18-month period, or 
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‘‘(C)(i) as being a member of a family 
which ceased to be eligible for such assistance 
by reason of any limitation imposed by Federal 
or State law on the maximum period such as-
sistance is payable to a family, and 
‘‘(ii) as having a hiring date which is not 
more than 2 years after the date of such ces-
sation.’’. 
(3) INCREASED CREDIT FOR EMPLOYMENT OF 
LONG-TERM FAMILY ASSISTANCE RECIPIENTS.—Sec-
tion 51 is amended by inserting after subsection (d) 
the following new subsection: 
‘‘(e) CREDIT FOR SECOND-YEAR WAGES FOR EM-
PLOYMENT OF LONG-TERM FAMILY ASSISTANCE RECIPI-
ENTS.— 
‘‘(1) IN GENERAL.—With respect to the em-
ployment of a long-term family assistance recipi-
ent— 
‘‘(A) the amount of the work opportunity 
credit determined under this section for the tax-
able year shall include 50 percent of the quali-
fied second-year wages for such year, and 
‘‘(B) in lieu of applying subsection (b)(3), 
the amount of the qualified first-year wages, 
and the amount of qualified second-year wages, 
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which may be taken into account with respect 
to such a recipient shall not exceed $10,000 per 
year. 
‘‘(2) QUALIFIED
SECOND-YEAR
WAGES.—For 
purposes of this subsection, the term ‘qualified sec-
ond-year wages’ means qualified wages— 
‘‘(A) which are paid to a long-term family 
assistance recipient, and 
‘‘(B) which are attributable to service ren-
dered during the 1-year period beginning on the 
day after the last day of the 1-year period with 
respect to such recipient determined under sub-
section (b)(2). 
‘‘(3) SPECIAL RULES FOR AGRICULTURAL AND 
RAILWAY LABOR.—If such recipient is an employee 
to whom subparagraph (A) or (B) of subsection 
(h)(1) applies, rules similar to the rules of such sub-
paragraphs shall apply except that— 
‘‘(A) such subparagraph (A) shall be ap-
plied by substituting ‘$10,000’ for ‘$6,000’, and 
‘‘(B) such subparagraph (B) shall be ap-
plied by substituting ‘$833.33’ for ‘$500’.’’. 
(4) REPEAL OF SEPARATE WELFARE-TO-WORK 
CREDIT.— 
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