I 
114TH CONGRESS 
2D SESSION 
H. R. 6032 
To amend the Internal Revenue Code of 1986 to provide a tax credit for 
purchase of data breach insurance. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 14, 2016 
Mr. PERLMUTTER introduced the following bill; which was referred to the 
Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to provide 
a tax credit for purchase of data breach insurance. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Data Breach Insurance 
Act’’. 
SEC. 2. CREDITS FOR PURCHASE OF DATA BREACH INSUR-
ANCE. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
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1986 (relating to business related credits) is amended by 
adding at the end the following new section: 
‘‘SEC. 45S. DATA BREACH INSURANCE. 
‘‘(a) IN GENERAL.—For purposes of section 38, the 
data breach insurance credit determined under this section 
for the taxable year is an amount equal to 15 percent of 
the aggregate premiums paid or incurred by the taxpayer 
during such taxable year for qualified data breach insur-
ance. 
‘‘(b) QUALIFIED DATA BREACH INSURANCE.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘qualified data breach insurance’ 
means coverage provided by an insurance company 
for expenses or losses in connection with the theft, 
loss, disclosure, inaccessibility, or manipulation, of 
data. 
‘‘(2) CYBERSECURITY
FRAMEWORK
REQUIRE-
MENT.—Such term shall not include coverage for 
any period unless the taxpayer has adopted, and is 
in compliance with, one of the following with respect 
to such period: 
‘‘(A) Version 1.0 of the Framework for 
Improving Critical Infrastructure Cybersecurity 
published by the National Institute of Stand-
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ards and Technology as in effect on February 
12, 2014, or subsequent versions or iterations. 
‘‘(B) Any similar standard specified by the 
Secretary (after consultation with the Secretary 
of Homeland Security and the Secretary of 
Commerce) for purposes of this paragraph. 
‘‘(3) INSURANCE COMPANY.—The term ‘insur-
ance company’ means any corporation subject to tax 
under subchapter L (or which would be so subject 
if such corporation were a domestic corporation). 
‘‘(4) TREATMENT
OF
INSURANCE
COVERING 
MORE THAN DATA.—In the case of coverage under 
which amounts are payable for other than expenses 
or losses described in paragraph (1)— 
‘‘(A) no amount shall be treated as pre-
miums for qualified data breach insurance un-
less the charge for such insurance is either sep-
arately stated in the contract, or furnished to 
the policyholder by the insurance company in a 
separate statement, 
‘‘(B) the amount taken into account as the 
premium paid or incurred for such insurance 
shall not exceed such charge, and 
‘‘(C) no amount shall be treated as paid or 
incurred for such insurance if the amount speci-
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fied in the contract (or furnished to the policy-
holder by the insurance company in a separate 
statement) as the charge for such insurance is 
unreasonably large in relation to the total 
charges under the contract. 
‘‘(c) PREMIUMS MUST BE TRADE OR BUSINESS EX-
PENSE.—Premiums shall be taken into account under sub-
section (a) only if such premiums are paid or incurred in 
the ordinary course of the taxpayer’s trade or business. 
‘‘(d) TERMINATION.—No credit shall be determined 
under this section for any taxable year beginning after the 
date which is 5 years after the date of the enactment of 
this section.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 38(b) of such Code is amended by 
striking ‘‘plus’’ at the end of paragraph (35), by 
striking the period at the end of paragraph (36), 
and inserting ‘‘, plus’’, and by adding at the end the 
following new paragraph: 
‘‘(37) the data breach insurance credit deter-
mined under section 45S.’’. 
(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. 45S. Data breach insurance.’’. 
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(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
Æ 
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