(1) LOCKING DEVICE.—The term ‘‘locking de-
vice’’ means a device that—
(A) when installed and secured (with a
key, electronic code, or electro-mechanically op-
erated combination lock) on the trigger guard
of a firearm, and while activated, prevents the
firearm from being discharged; or
(B) is incorporated into the design of, and
is an integral part of, a handgun, and while ac-
tivated, prevents the handgun from being dis-
charged.
(2) OTHER TERMS.—The terms ‘‘State’’, ‘‘fire-
arm’’, ‘‘handgun’’, ‘‘dealer’’, ‘‘licensed dealer’’,
‘‘manufacturer’’, 
‘‘licensed 
manufacturer’’, 
‘‘im-
porter’’, ‘‘licensed importer’’, and ‘‘Secretary’’ shall
have the meanings given such terms in section
921(a) of title 18, United States Code.
SEC. 305. SAFE AND SOBER STREETS.
(a) STANDARD TO PROHIBIT OPERATION OF MOTOR
VEHICLES BY INTOXICATED INDIVIDUALS.—Chapter 1 of
title 23, United States Code, is amended by adding at the
end the following:
‘‘§ 162. National standard to prohibit the operation of
motor vehicles by intoxicated individuals
‘‘(a) WITHHOLDING OF APPORTIONMENTS FOR NON-
COMPLIANCE.—
‘‘(1) FISCAL YEAR 2001.—The Secretary shall
withhold 5 percent of the amount required to be ap-
portioned to any State under each of sections
104(b)(1), 104(b)(3), and 104(b)(5)(B) on October
1, 2000, if the State does not meet the requirement
of paragraph (3) on such date.
‘‘(2) THEREAFTER.—The Secretary shall with-
hold 10 percent (including any amounts withheld
under paragraph (1)) of the amount required to be
apportioned to any State under each of sections
104(b)(1), 104(b)(3), and 104(b)(5)(B) on October
1, 2001, and on October 1 of each fiscal year there-
after, if the State does not meet the requirement of
paragraph (3) on such date.
‘‘(3) REQUIREMENT.—A State meets the re-
quirement of this paragraph if the State has enacted
and is enforcing a law that considers an individual
who has an alcohol concentration of 0.08 percent or
greater while operating a motor vehicle in the State
to be driving while intoxicated or driving under the
influence of alcohol.
‘‘(b) PERIOD OF AVAILABILITY; EFFECT OF COMPLI-
ANCE AND NONCOMPLIANCE.—
‘‘(1) PERIOD OF AVAILABILITY OF WITHHELD
FUNDS.—
‘‘(A) FUNDS WITHHELD ON OR BEFORE
SEPTEMBER
30, 
2002.—Any funds withheld
under subsection (a) from apportionment to any
State on or before September 30, 2002, shall
remain available until the end of the third fiscal
year following the fiscal year for which such
funds are authorized to be appropriated.
‘‘(B) FUNDS WITHHELD AFTER SEPTEM-
BER 30, 2002.—No funds withheld under this
section from apportionment to any State after
September 30, 2002, shall be available for ap-
portionment to such State.
‘‘(2) APPORTIONMENT
OF
WITHHELD
FUNDS
AFTER COMPLIANCE.—If, before the last day of the
period for which funds withheld under subsection (a)
from apportionment are to remain available for ap-
portionment to a State under paragraph (1), the
State meets the requirement of subsection (a)(3),
the Secretary shall, on the first day on which the
State meets such requirement, apportion to the
State the funds withheld under subsection (a) that
remain available for apportionment to the State.
‘‘(3) PERIOD
OF
AVAILABILITY
OF
SUBSE-
QUENTLY APPORTIONED FUNDS.—Any funds appor-
tioned pursuant to paragraph (2) shall remain avail-
able for expenditure until the end of the third fiscal
year following the fiscal year in which such funds
are so apportioned. Sums not obligated at the end
of such period shall lapse or, in the case of funds
apportioned under section 104(b)(5)(B), shall lapse
and be made available by the Secretary for projects
in accordance with section 118.
‘‘(4) EFFECT OF NONCOMPLIANCE.—If, at the
end of the period for which funds withheld under
subsection (a) from apportionment are available for
apportionment to a State under paragraph (1), the
State does not meet the requirement of subsection
(a)(3), such funds shall lapse or, in the case of
funds withheld from apportionment under section
104(b)(5)(B), such funds shall lapse and be made
available by the Secretary for projects in accordance
with section 118.’’.
(b) CLERICAL AMENDMENT.—The table of sections
at the beginning of such chapter is amended by adding
at the end the following:
‘‘162. National standard to prohibit the operation of motor vehicles by intoxi-
cated individuals.’’.
SEC. 306. MINIMUM SENTENCE FOR A PERSON WHO OPER-
ATES A MOTOR VEHICLE WHILE ALCOHOL-IM-
PAIRED.
(a) IN GENERAL.—Chapter 1 of title 23, United
States Code, is amended by adding at the end the follow-
ing:
‘‘§ 162. National minimum sentence for a person who
operates a motor vehicle while alcohol-
impaired
‘‘(a) WITHHOLDING OF APPORTIONMENTS FOR NON-
COMPLIANCE.—
‘‘(1) FISCAL YEAR 2001.—The Secretary shall
withhold 5 percent of the amount required to be ap-
portioned to any State under each of sections
104(b)(1), 104(b)(3), and 104(b)(5)(B) on October
1, 2000, if the State does not meet the requirement
of paragraph (3) on such date.
‘‘(2) THEREAFTER.—The Secretary shall with-
hold 10 percent (including any amounts withheld
under paragraph (1)) of the amount required to be
apportioned to any State under each of sections
104(b)(1), 104(b)(3), and 104(b)(5)(B) on October
1, 2001, and on October 1 of each fiscal year there-
after, if the State does not meet the requirement of
paragraph (3) on such date.
‘‘(3) REQUIREMENT.—A State meets the re-
quirement of this paragraph if the State has enacted
and is enforcing a law which provides for a mini-
mum sentence consistent with the following:
‘‘(A) In the case of the first conviction of
a person of operating a motor vehicle while
under the influence of alcohol, revocation of the
person’s driver’s license for 6 months.
‘‘(B) In the case of the second conviction
of a person of operating a motor vehicle while
alcohol-impaired, revocation of the person’s
driver’s license for 1 year.
‘‘(C) In the case of the third or subsequent
conviction of a person of operating a motor ve-
hicle while alcohol-impaired, permanent revoca-
tion of the person’s driver’s license.
A revocation pursuant to this paragraph shall not be
subject to any exception or condition, including an
exception or condition to avoid hardship to any indi-
vidual.
‘‘(b) PERIOD OF AVAILABILITY; EFFECT OF COMPLI-
ANCE AND NONCOMPLIANCE.—
‘‘(1) PERIOD OF AVAILABILITY OF WITHHELD
FUNDS.—
‘‘(A) FUNDS WITHHELD ON OR BEFORE
SEPTEMBER
30, 
2002.—Any funds withheld
under subsection (a) from apportionment to any
State on or before September 30, 2002, shall
remain available until the end of the third fiscal
year following the fiscal year for which such
funds are authorized to be appropriated.
‘‘(B) FUNDS WITHHELD AFTER SEPTEM-
BER 30, 2002.—No funds withheld under this
section from apportionment to any State after
September 30, 2002, shall be available for ap-
portionment to such State.
‘‘(2) APPORTIONMENT
OF
WITHHELD
FUNDS
AFTER COMPLIANCE.—If, before the last day of the
period for which funds withheld under subsection (a)
from apportionment are to remain available for ap-
portionment to a State under paragraph (1), the
State meets the requirement of subsection (a)(3),
the Secretary shall, on the first day on which the
State meets such requirement, apportion to the
State the funds withheld under subsection (a) that
remain available for apportionment to the State.
‘‘(3) PERIOD
OF
AVAILABILITY
OF
SUBSE-
QUENTLY APPORTIONED FUNDS.—Any funds appor-
tioned pursuant to paragraph (2) shall remain avail-
able for expenditure until the end of the third fiscal
year following the fiscal year in which such funds
are so apportioned. Sums not obligated at the end
of such period shall lapse or, in the case of funds
apportioned under section 104(b)(5)(B), shall lapse
and be made available by the Secretary for projects
in accordance with section 118.
‘‘(4) EFFECT OF NONCOMPLIANCE.—If, at the
end of the period for which funds withheld under
subsection (a) from apportionment are available for
apportionment to a State under paragraph (1), the
State does not meet the requirement of subsection
(a)(3), such funds shall lapse or, in the case of
funds withheld from apportionment under section
104(b)(5)(B), such funds shall lapse and be made
available by the Secretary for projects in accordance
with section 118.’’.
(b) CLERICAL AMENDMENT.—The table of sections at
the beginning of such chapter is amended by adding at
the end the following:
‘‘162. National minimum sentence for a person who operates a motor vehicle
while under the influence of alcohol.’’.
SEC. 307. HANDGUN SAFETY.
(a) DEFINITION
OF
LOCKING
DEVICE.—Section
921(a) of title 18, United States Code, is amended by add-
ing at the end the following:
‘‘(34) The term ‘locking device’ means—
‘‘(A) a device that, if installed on a firearm
and secured by means of a key or a mechani-
cally, electronically, or electromechanically oper-
ated combination lock, prevents the firearm
from being discharged without first deactivating
or removing the device by means of a
key 
or 
mechanically, 
electronically, 
or
electromechanically operated combination lock;
or
‘‘(B) a locking mechanism incorporated
into the design of a firearm that prevents dis-
charge of the firearm by any person who does
not have access to the key or other device de-
signed to unlock the mechanism and thereby
allow discharge of the firearm.’’.
(b) UNLAWFUL ACTS.—Section 922 of title 18,
United States Code, is amended by inserting after sub-
section (x) the following:
‘‘(y) LOCKING DEVICES AND WARNINGS.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), beginning 90 days after the date of enact-
ment of the Child Safety Lock Act of 1997, it shall
be unlawful for any licensed manufacturer, licensed
importer, or licensed dealer to sell, deliver, or trans-
fer any handgun—
‘‘(A) to any person, unless the transferee is
provided with a locking device for that hand-
gun; or
‘‘(B) to any person, unless the handgun is
accompanied by the following warning, which
shall appear in conspicuous and legible type in
capital letters, and which shall be printed on a
label affixed to the gun and on a separate sheet
of paper included within the packaging enclos-
ing the handgun:
‘‘ ‘THE USE OF A LOCKING DEVICE OR
SAFETY LOCK IS ONLY ONE ASPECT OF
RESPONSIBLE 
FIREARM 
STORAGE.
FIREARMS SHOULD BE STORED UN-
LOADED AND LOCKED IN A LOCATION
THAT IS BOTH SEPARATE FROM THEIR
AMMUNITION AND INACCESSIBLE TO
CHILDREN.
‘FAILURE TO PROPERLY LOCK AND
STORE YOUR FIREARM MAY RESULT IN
CIVIL OR CRIMINAL LIABILITY UNDER
STATE LAW. IN ADDITION, FEDERAL
LAW PROHIBITS THE POSSESSION OF A
HANDGUN BY A MINOR IN MOST CIR-
CUMSTANCES.’
‘‘(2) EXCEPTIONS.—Paragraph (1) does not
apply to—
‘‘(A) the—
‘‘(i) manufacture for, transfer to, or
possession by, the United States or a State
or a department or agency of the United
States, or a State or a department, agency,
or political subdivision of a State, of a
handgun; or
‘‘(iii) the transfer to, or possession by,
a law enforcement officer employed by an
entity referred to in clause (i) of a hand-
gun for law enforcement purposes (whether
on or off-duty); or
‘‘(B) the transfer to, or possession by, a
rail police officer employed by a rail carrier and
certified or commissioned as a police officer
under the laws of a State of a handgun for pur-
poses of law enforcement (whether on or off-
duty).’’.
(c) CIVIL PENALTIES.—Section 924 of title 18,
United States Code, is amended—
(1) in subsection (a)(1), by striking ‘‘or (f)’’
and inserting ‘‘(f), or (p)’’; and
(2) by adding at the end the following:
‘‘(p) PENALTIES RELATING TO LOCKING DEVICES
AND WARNINGS.—
‘‘(1) IN GENERAL.—
‘‘(A) SUSPENSION OR REVOCATION OF LI-
CENSE; CIVIL
PENALTIES.—With respect to
each violation of subparagraph (A) or (B) of
section 922(y)(1) by a license, the Secretary
may, after notice and opportunity for hearing—
‘‘(i) suspend or revoke any license is-
sued to the licensee under this chapter; or
‘‘(ii) subject the licensee to a civil
penalty in an amount equal to not more
than $10,000.
‘‘(B) REVIEW.—An action of the Secretary
under this paragraph may be reviewed only as
provided in section 923(f).
‘‘(2) ADMINISTRATIVE REMEDIES.—the suspen-
sion or revocation of a license or the imposition of
a civil penalty under paragraph (1) does not pre-
clude any administrative remedy that is otherwise
available to the Secretary.’’.
TITLE IV—ECONOMIC SECURITY
SEC. 401. FAMILY INVESTMENT PACKAGE.
(a) REFUNDABLE
CREDIT
AND
INCREASE
OF
AMOUNT OF EMPLOYMENT-RELATED EXPENSES TAKEN
INTO ACCOUNT AND AMOUNT AT WHICH PHASE-DOWN
OF PERCENTAGE BEGINS.—Subpart C of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to refundable credits) is amended by insert-
ing after section 34 the following new section:
‘‘SEC. 34A. EXPENSES FOR HOUSEHOLD AND DEPENDENT
CARE SERVICES NECESSARY FOR GAINFUL
EMPLOYMENT.
‘‘(a) ALLOWANCE OF CREDIT.—
‘‘(1) IN GENERAL.—In the case of an individual
who maintains a household which includes as a
member one or more qualifying individuals (as de-
fined in subsection (b)(1)), there shall be allowed as
a credit against the tax imposed by this chapter for
the taxable year an amount equal to the applicable
percentage of the employment-related expenses (as
defined in subsection (b)(2)) paid by such individual
during the taxable year.
‘‘(2) APPLICABLE PERCENTAGE DEFINED.—For
purposes of paragraph (1), the term ‘applicable per-
centage’ means 30 percent reduced (but not below
20 percent) by 1 percentage point for each $2,000
(or fraction thereof) by which the taxpayer’s ad-
justed gross income for the taxable year exceeds
$20,000.
‘‘(b) DEFINITIONS OF QUALIFYING INDIVIDUAL AND
EMPLOYMENT-RELATED EXPENSES.—For purposes of
this section—
‘‘(1) 
QUALIFYING
INDIVIDUAL.—The 
term
‘qualifying individual’ means—
‘‘(A) a dependent of the taxpayer who is
under the age of 13 and with respect to whom
the taxpayer is entitled to a deduction under
section 151(c),
‘‘(B) a dependent of the taxpayer who is
physically or mentally incapable of caring for
himself, or
‘‘(C) the spouse of the taxpayer, if he is
physically or mentally incapable of caring for
himself.
‘‘(2) EMPLOYMENT-RELATED EXPENSES.—
‘‘(A) IN
GENERAL.—The term ‘employ-
ment-related expenses’ means amounts paid for
the following expenses, but only if such ex-
penses are incurred to enable the taxpayer to be
gainfully employed for any period for which
there are 1 or more qualifying individuals with
respect to the taxpayer:
‘‘(i) expenses for household services,
and
‘‘(ii) expenses for the care of a quali-
fying individual.
Such term shall not include any amount paid
for services outside the taxpayer’s household at
a camp where the qualifying individual stays
overnight.
‘‘(B) 
EXCEPTION.—Employment-related
expenses described in subparagraph (A) which
are incurred for services outside the taxpayer’s
household shall be taken into account only if in-
curred for the care of—
‘‘(i) a qualifying individual described
in paragraph (1)(A), or
‘‘(ii) a qualifying individual (not de-
scribed in paragraph (1)(A)) who regularly
spends at least 8 hours each day in the
taxpayer’s household.
‘‘(C) DEPENDENT
CARE
CENTERS.—Em-
ployment-related expenses described in subpara-
graph (A) which are incurred for services pro-
vided outside the taxpayer’s household by a de-
pendent care center (as defined in subpara-
graph (D)) shall be taken into account only if—
‘‘(i) such center complies with all ap-
plicable laws and regulations of a State or
unit of local government, and
‘‘(ii) the requirements of subpara-
graph (B) are met.
‘‘(D) DEPENDENT
CARE
CENTER
DE-
FINED.—For purposes of this paragraph, the
term ‘dependent care center’ means any facility
which—
‘‘(i) provides care for more than six
individuals (other than individuals who re-
side at the facility), and
‘‘(ii) receives a fee, payment, or grant
for providing services for any of the indi-
viduals (regardless of whether such facility
is operated for profit).
‘‘(c) DOLLAR LIMIT ON AMOUNT CREDITABLE.—The
amount of the employment-related expenses incurred dur-
ing any taxable year which may be taken into account
under subsection (a) shall not exceed—
‘‘(1) $3,600 if there is 1 qualifying individual
with respect to the taxpayer for such taxable year,
or
‘‘(2) $5,400 if there are 2 or more qualifying
individuals with respect to the taxpayer for such tax-
able year.
The amount determined under paragraph (1) or (2)
(whichever is applicable) shall be reduced by the aggregate
amount excludable from gross income under section 129
for the taxable year.
‘‘(d) EARNED INCOME LIMITATION.—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, the amount of the employ-
ment-related expenses incurred during any taxable
year which may be taken into account under sub-
section (a) shall not exceed—
‘‘(A) in the case of an individual who is
not married at the close of such year, such indi-
vidual’s earned income for such year, or
‘‘(B) in the case of an individual who is
married at the close of such year, the lesser of
such individual’s earned income or the earned
income of his spouse for such year.
100
‘‘(2) SPECIAL
RULE
FOR
SPOUSE
WHO
IS
A
STUDENT
OR
INCAPABLE
OF
CARING
FOR
HIM-
SELF.—In the case of a spouse who is a student or
a qualifying individual described in subsection
(b)(1)(C), for purposes of paragraph (1), such
spouse shall be deemed for each month during which
such spouse is a full-time student at an educational
institution, or is such a qualifying individual, to be
gainfully employed and to have earned income of not
less than—
‘‘(A) $200 if subsection (c)(1) applies for
the taxable year, or
‘‘(B) $400 if subsection (c)(2) applies for
the taxable year.
In the case of any husband and wife, this paragraph
shall apply with respect to only one spouse for any
one month.
‘‘(e) SPECIAL RULES.—For purposes of this sec-
tion—
‘‘(1) MAINTAINING
HOUSEHOLD.—An individ-
ual shall be treated as maintaining a household for
any period only if over half the cost of maintaining
the household for such period is furnished by such
individual (or, if such individual is married during
101
such period, is furnished by such individual and his
spouse).
‘‘(2) MARRIED COUPLES MUST FILE JOINT RE-
TURN.—If the taxpayer is married at the close of
the taxable year, the credit shall be allowed under
subsection (a) only if the taxpayer and his spouse
file a joint return for the taxable year.
‘‘(3) MARITAL STATUS.—An individual legally
separated from his spouse under a decree of divorce
or of separate maintenance shall not be considered
as married.
‘‘(4) CERTAIN
MARRIED
INDIVIDUALS
LIVING
APART.—If—
‘‘(A) an individual who is married and who
files a separate return—
‘‘(i) maintains as his home a house-
hold which constitutes for more than one-
half of the taxable year the principal place
of abode of a qualifying individual, and
‘‘(ii) furnishes over half of the cost of
maintaining such household during the
taxable year, and
‘‘(B) during the last 6 months of such tax-
able year such individual’s spouse is not a mem-
ber of such household,
102
such individual shall not be considered as married.
‘‘(5) SPECIAL DEPENDENCY TEST IN CASE OF
DIVORCED PARENTS, ETC..—If—
‘‘(A) paragraph (2) or (4) of section
152(e) applies to any child with respect to any
calendar year, and
‘‘(B) such child is under the age of 13 or
is physically or mentally incapable of caring for
himself,
in the case of any taxable year beginning in such
calendar year, such child shall be treated as a quali-
fying individual described in subparagraph (A) or
(B) of subsection (b)(1) (whichever is appropriate)
with respect to the custodial parent (within the
meaning of section 152(e)(1)), and shall not be
treated as a qualifying individual with respect to the
noncustodial parent.
‘‘(6) PAYMENTS TO RELATED INDIVIDUALS.—
No credit shall be allowed under subsection (a) for
any amount paid by the taxpayer to an individual—
‘‘(A) with respect to whom, for the taxable
year, a deduction under section 151(c) (relating
to deduction for personal exemptions for de-
pendents) is allowable either to the taxpayer or
his spouse, or
103
‘‘(B) who is a child of the taxpayer (within
the meaning of section 151(c)(3)) who has not
attained the age of 19 at the close of the tax-
able year.
For purposes of this paragraph, the term ‘taxable
year’ means the taxable year of the taxpayer in
which the service is performed.
‘‘(7) STUDENT.—The term ‘student’ means an
individual who during each of 5 calendar months
during the taxable year is a full-time student at an
educational organization.
‘‘(8) EDUCATIONAL ORGANIZATION.—The term
‘educational organization’ means an educational or-
ganization described in section 170(b)(1)(A)(ii).
‘‘(9) IDENTIFYING
INFORMATION
REQUIRED
WITH RESPECT TO SERVICE PROVIDER.—No credit
shall be allowed under subsection (a) for any amount
paid to any person unless—
‘‘(A) the name, address, and taxpayer
identification number of such person are in-
cluded on the return claiming the credit, or
‘‘(B) if such person is an organization de-
scribed in section 501(c)(3) and exempt from
tax under section 501(a), the name and address
104
of such person are included on the return
claiming the credit.
In the case of a failure to provide the information
required under the preceding sentence, the preceding
sentence shall not apply if it is shown that the tax-
payer exercised due diligence in attempting to pro-
vide the information so required.
‘‘(f) REGULATIONS.—The Secretary shall prescribe
such regulations as may be necessary to carry out the pur-
poses of this section.’’
(b) CONFORMING AMENDMENTS RELATED TO EX-
PENSES FOR HOUSEHOLD AND DEPENDENT CARE EX-
PENSES.—
(1) IN GENERAL.—
(A) REPEAL OF SECTION 21.—Subpart A
of part IV of subchapter A chapter 1 of such
Code (relating to nonrefundable personal cred-
its) is amended by striking section 21.
(B) ADDITIONAL
CONFORMING
AMEND-
MENTS.—Each of the following provisions of
such Code is amended by striking ‘‘section 21’’
and inserting ‘‘section 34A’’:
(i) Section 129(a)(2)(C).
(ii) Section 129(b)(2).
(iii) Section 129(e)(1).
105
(iv) Section 213(e).
(2) CLERICAL AMENDMENTS.—
(A) The table of sections for subpart C of
part IV of subchapter A of chapter 1 of such
Code is amended by inserting after the item re-
lating to section 34 the following new item:
‘‘Sec. 34A. Expenses for household and dependent care services
necessary for gainful employment.’’
(B) The table of sections for subpart A of
part IV of subchapter A chapter 1 of such Code
is amended by striking the item relating to sec-
tion 21.
(c) EFFECTIVE DATE.—The amendments made by
subsections (a) and (b) shall apply to taxable years begin-
ning after December 31, 1996.
(d) ALLOWANCE OF CREDIT FOR EMPLOYER EX-
PENSES FOR CHILD CARE ASSISTANCE.—Subpart D of
part IV of subchapter A of chapter 1 of the Internal Reve-
nue Code of 1986 (relating to business related credits) is
amended by adding at the end the following new section:
‘‘SEC. 45D. EMPLOYER-PROVIDED CHILD CARE CREDIT.
‘‘(a) IN GENERAL.—For purposes of section 38, the
employer-provided child care credit determined under this
section for the taxable year is an amount equal to 50 per-
cent of the qualified child care expenditures of the tax-
payer for such taxable year.
106
‘‘(b) DOLLAR LIMITATION.—The credit allowable
under subsection (a) for any taxable year shall not exceed
$150,000.
‘‘(c) DEFINITIONS.—For purposes of this section—
‘‘(1) QUALIFIED CHILD CARE EXPENDITURE.—
The term ‘qualified child care expenditure’ means
any amount paid or incurred—
‘‘(A) to acquire, construct, rehabilitate, or
expand property—
‘‘(i) which is to be used as part of a
qualified child care facility of the taxpayer,
‘‘(ii) with respect to which a deduction
for depreciation (or amortization in lieu of
depreciation) is allowable, and
‘‘(iii) which does not constitute part of
the principal residence (within the meaning
of section 1034) of the taxpayer or any
employee of the taxpayer,
‘‘(B) for the operating costs of a qualified
child care facility of the taxpayer, including
costs related to the training of employees, to
scholarship programs, and to the providing of
increased compensation to employees with high-
er levels of child care training,
107
‘‘(C) under a contract with a qualified
child care facility to provide child care services
to employees of the taxpayer, or
‘‘(D) under a contract to provide child care
resource and referral services to employees of
the taxpayer.
‘‘(2) 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—
108
‘‘(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
109
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.—
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‘‘(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
any recapture liability (computed as if
there had been no change in ownership).
‘‘(4) SPECIAL RULES.—
‘‘(A) TAX
BENEFIT
RULE.—The tax for
the taxable year shall be increased under para-
graph (1) only with respect to credits allowed
by reason of this section which were used to re-
duce tax liability. In the case of credits not so
used to reduce tax liability, the carryforwards
111
and carrybacks under section 39 shall be appro-
priately adjusted.
‘‘(B) NO CREDITS AGAINST TAX.—Any in-
crease in tax under this subsection shall not be
treated as a tax imposed by this chapter for
purposes of determining the amount of any
credit under subpart A, B, or D of this part.
‘‘(C) NO RECAPTURE BY REASON OF CAS-
UALTY LOSS.—The increase in tax under this
subsection shall not apply to a cessation of op-
eration of the facility as a qualified child care
facility by reason of a casualty loss to the ex-
tent such loss is restored by reconstruction or
replacement within a reasonable period estab-
lished by the Secretary.
‘‘(e) SPECIAL RULES.—For purposes of this sec-
tion—
‘‘(1) AGGREGATION RULES.—All persons which
are treated as a single employer under subsections
(a) and (b) of section 52 shall be treated as a single
taxpayer.
‘‘(2) PASS-THRU IN THE CASE OF ESTATES AND
TRUSTS.—Under regulations prescribed by the Sec-
retary, rules similar to the rules of subsection (d) of
section 52 shall apply.
112
‘‘(3) ALLOCATION IN THE CASE OF PARTNER-
SHIPS.—In the case of partnerships, the credit shall
be allocated among partners under regulations pre-
scribed by the Secretary.
‘‘(f) NO DOUBLE BENEFIT.—
‘‘(1) REDUCTION IN BASIS.—For purposes of
this subtitle—
‘‘(A) IN GENERAL.—If a credit is deter-
mined under this section with respect to any
property by reason of expenditures described in
subsection (c)(1)(A), the basis of such property
shall be reduced by the amount of the credit so
determined.
‘‘(B) CERTAIN
DISPOSITIONS.—If during
any taxable year there is a recapture amount
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).
113
‘‘(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, 1999.’’
(e) CONFORMING AMENDMENTS RELATED TO EM-
PLOYER EXPENSES FOR CHILD CARE ASSISTANCE.—
(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 is amended by add-
ing 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, 1996.
114
(f) ASSISTANCE FOR LOW-INCOME WORKING FAMI-
LIES.—Section 658B of the Child Care Development
Block Grant Act of 1990 (42 U.S.C. 9858) is amended
to read as follows:
‘‘SEC. 658B. FUNDING OF GRANTS.
‘‘(a) AUTHORIZATION OF APPROPRIATIONS.—Except
as provided in subsection (b), there is authorized to be
appropriated to carry out this subchapter $2,000,000,000
for each of fiscal years 1997 through 2002.
‘‘(b) APPROPRIATION.—The Secretary shall pay,
from funds in the Treasury not otherwise appropriated,
$1,400,000,000 for fiscal years 1997 through 2002,
through the awarding of grants to States under this sub-
chapter for the purpose of providing child care services
for families who have left the State program of assistance
under part A of title IV of the Social Security Act because
of employment, families that are at risk of becoming de-
pendent on such assistance program, and low-income
working families described in section 658E(c)(3)(D).
Funds shall be paid under this subsection to the States
in the same manner, and subject to the same requirements
and limitations, as funds are paid to the States under sec-
tion 418 of the Social Security Act (42 U.S.C. 618).’’.
(g) GRANTS
FOR CHILD CARE SUPPLY SHORT-
AGES.—Section 658E(c)(3) of the Child Care Develop-
115
ment Block Grant Act of 1990 (42 U.S.C. 9858c(c)(3))
is amended by adding at the end the following:
‘‘(E) CHILD CARE SUPPLY SHORTAGES.—
‘‘(i) IN GENERAL.—A State shall en-
sure that 100 percent of amounts paid to
the State out of funds appropriated under
section 658B(a)(2) with respect to each of
the fiscal years 1997 through 2002 shall
be used to carry out child care activities
described in clause (ii) in geographic areas
within the State that have a shortage, as
determined by the State, in consultation
with localities, of child care services.
‘‘(ii) CHILD
CARE
ACTIVITIES
DE-
SCRIBED.—The child care activities de-
scribed in this clause include the following:
‘‘(I) Infant care programs.
‘‘(II) Before- and after-school
child care programs.
‘‘(III) Resource and referral pro-
grams.
‘‘(IV) Nontraditional work hours
child care programs.
116
‘‘(V) Extending the hours of pre-
kindergarten programs to provide full-
day services.
‘‘(VI) Any other child care pro-
grams that the Secretary determines
are appropriate.’’.
(h) AUTHORIZATION OF APPROPRIATIONS FOR LOW-
INCOME WORKING FAMILIES.—
(1) IN
GENERAL.—Section 658B(a) of the
Child Care Development Block Grant Act of 1990
(42 U.S.C. 9858(a)), as amended by subsection (f),
is amended—
(A) by striking ‘‘Except as provided in’’
and inserting the following:
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2) and’’; and
(B) by adding at the end the following:
‘‘(2) CHILD CARE SUPPLY SHORTAGES.—There
is authorized to be appropriated to carry out section
658E(c)(3)(E), $500,000,000 for each of fiscal
years 1997 through 2002.’’.
(2) 
CONFORMING
AMENDMENT.—Section
658(c)(3)(A) of the Child Care Development Block
Grant Act of 1990 (42 U.S.C. 9858c(c)(3)(A)) is
amended by striking ‘‘(D)’’ and inserting ‘‘(E)’’.
149
graph and that the Secretary finds is sufficiently recent
for the purpose of carrying out this part.
(d) APPLICATION CONTENTS.—Each local applica-
tion under this part shall include—
(1) an identification of the local agency to re-
ceive the grant under this part;
(2) a summary of the results of the survey of
school facility needs, as described in subsection (c);
(3) a description of how the local agency will
implement its program under this part;
(4) a description of the criteria the local agency
has used to determine which construction projects to
support with grant funds;
(5) a description of the construction projects
that will be supported with grant funds;
(6) a description of the mechanisms that will be
used to finance construction projects supported by
grant funds;
(7) a requested level of Federal subsidy, with a
justification for that level, for each construction
project to be supported by the grant, in accordance
with section 528(a), including the financial and de-
mographic information the Secretary may require;
(8) a description of the steps the agency will
take to ensure that facilities constructed or improved