I
107TH CONGRESS
1ST SESSION
H. R. 253
To amend the Internal Revenue Code of 1986 to expand alternatives for
families with children and to establish incentives to improve the quality
and supply of child care.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 30, 2001
Mr. GILMAN (for himself and Mrs. MCCARTHY of New York) 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 expand
alternatives for families with children and to establish
incentives to improve the quality and supply of child
care.
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 ‘‘Tax Relief For Fami-
lies With Children Act’’.
TITLE I—TAX BENEFITS FOR
FAMILIES WITH CHILDREN
SEC. 101. EXPANSION OF DEPENDENT CARE TAX CREDIT.
(a) DOLLAR LIMIT ON CREDITABLE EMPLOYMENT-
RELATED EXPENSES INCREASED.—Section 21(c) of the
Internal Revenue Code of 1986 (relating to dollar limit
on amount creditable) is amended—
(1) by striking ‘‘$2,400’’ in paragraph (1) and
inserting ‘‘$3,600’’, and
(2) by striking ‘‘$4,800’’ in paragraph (2) and
inserting ‘‘$6,000’’.
(b) PERCENTAGE OF EMPLOYMENT-RELATED EX-
PENSES INCREASED.—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 40 percent reduced (but not below
10 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
$50,000.’’.
(c) EMPLOYMENT-RELATED EXPENSES EXPANDED
TO INCLUDE TRANSPORTATION COSTS AND COSTS OF
EDUCATIONAL PROGRAMS.—Section 21(b)(2)(A) of the
Internal Revenue Code of 1986 (defining employment-re-
lated expenses) is amended—
(1) by striking ‘‘and’’ at the end of clause (i),
(2) by striking the period at the end of clause
(ii) and inserting ‘‘(including expenses for edu-
cational activities provided during such care), and’’,
and
(3) by adding at the end the following:
‘‘(iii) expenses for transportation—
‘‘(I) related to such services or
care, and
‘‘(II) provided by a person not
described in subsection (e)(6).’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2000.
SEC. 102. INCREASE IN CHILD TAX CREDIT.
(a) IN GENERAL.—Section 24(a) of the Internal Rev-
enue Code of 1986 (relating to allowance of credit) is
amended by striking ‘‘$500 ($400 in the case of taxable
years beginning in 1998)’’ and inserting ‘‘$900’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years beginning after
December 31, 2000.
SEC. 103. EXPANSION OF DEPENDENT CARE ASSISTANCE
PROGRAM.
(a) 
DOLLAR
LIMIT
INCREASED.—Section
129(a)(2)(A) of the Internal Revenue Code of 1986 (relat-
ing to limitation of exclusion) is amended to read as fol-
lows:
‘‘(A) DOLLAR LIMITATION.—
‘‘(i) IN GENERAL.—The amount which
may be excluded under paragraph (1) for
dependent care assistance with respect to
dependent care services provided during a
taxable year shall not exceed—
‘‘(I) in the case of dependent
care services provided for 1 qualifying
individual 
described 
in 
section
21(b)(1), $5,000, and
‘‘(II) in the case of dependent
care services provided for 2 or more
qualifying individuals so described,
$7,000.
‘‘(ii) AMOUNTS
FOR
MARRIED
INDI-
VIDUALS FILING SEPARATE RETURNS.—In
the case of a separate return by a married
individual, the amount applicable under
clause (i) shall be one-half of the amount
specified.’’.
(b) PAYMENTS FOR INFANT CARE, INCLUDING STAY-
AT-HOME CARE, ALLOWED.—
(1) IN GENERAL.—Section 129(e)(1) of the In-
ternal Revenue Code of 1986 (relating to definitions
and special rules) is amended to read as follows:
‘‘(1) DEPENDENT
CARE
ASSISTANCE.—The
term ‘dependent care assistance’ means—
‘‘(A) the payment of, or provision of, those
services which if paid for by the employee would
be 
considered 
employment-related 
expenses
under section 21(b)(2) (relating to expenses for
household and dependent care services nec-
essary for gainful employment), and
‘‘(B) any payment to the employee or any
individual described in subsection (c)(2) from
amounts contributed to the employee’s account
during the 9-month period ending with the
birth of a qualifying individual described in sec-
tion 21(b)(1)(A), if paid during a period ending
1 year after such birth.’’.
(2) CONFORMING
AMENDMENT.—Section 125
of such Code (relating to cafeteria plans) is amended
by redesignating subsections (h) and (i) as sub-
sections (i) and (j) and by inserting after subsection
(g) the following:
‘‘(h) ALLOWANCE OF CARRYOVERS OF CERTAIN UN-
USED DEPENDENT CARE ASSISTANCE TO LATER TAX-
ABLE YEARS.—For purposes of this title—
‘‘(1) a plan or other arrangement shall not fail
to be treated as a cafeteria plan or flexible spending
or similar arrangement, and
‘‘(2) no amount shall be required to be included
in gross income by reason of this section or any
other provision of this chapter,
solely because under such plan or other arrangement any
dependent 
care 
assistance 
described 
in 
section
129(e)(1)(B) which is unused as of the close of a taxable
year may be carried forward to the succeeding taxable
year.’’.
(c) PAYMENTS TO CERTAIN RELATED INDIVIDUALS
FOR ROUTINE CARE ALLOWED.—Section 129(c) of the
Internal Revenue Code of 1986 (relating to payments to
related individuals) is amended by adding at the end the
following flush sentence:
‘‘The preceding sentence shall not apply to any amount
paid or incurred to any individual otherwise described in
paragraph (1) if such amount is paid or incurred for care
of a qualifying individual during the period ending with
the first day of State mandatory schooling of such quali-
fying individual.’’.