[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 2245 Introduced in Senate (IS)]
2d Session
S. 2245
To amend the Internal Revenue Code of 1986 to provide a small business
health tax credit.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
March 26, 2004
Mr. Daschle introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide a small business
health tax credit.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Small Business Health Tax Credit
Act''.
SEC. 2. SMALL BUSINESS TAX CREDIT FOR 50 PERCENT OF HEALTH PREMIUMS.
(a) In General.--Subpart D of part IV of subchapter 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. 45G. EMPLOYEE HEALTH INSURANCE EXPENSES.
``(a) General Rule.--For purposes of section 38, in the case of a
qualified small employer, the employee health insurance expenses credit
determined under this section is an amount equal to the applicable
percentage of the amount paid by the taxpayer during the taxable year
for qualified employee health insurance expenses.
``(b) Applicable Percentage.--For purposes of subsection (a), the
applicable percentage is equal to--
``(1) 50 percent in the case of an employer with less than
26 qualified employees,
``(2) 40 percent in the case of an employer with more than
25 but less than 36 qualified employees, and
``(3) 30 percent in the case of an employer with more than
35 but less than 51 qualified employees.
``(c) Per Employee Dollar Limitation.--The amount of qualified
employee health insurance expenses taken into account under subsection
(a) with respect to any qualified employee for any taxable year shall
not exceed the maximum employer contribution for self-only coverage or
family coverage (as applicable) determined under section 8906(a) of
title 5, United States Code, for the calendar year in which such
taxable year begins.
``(d) Definitions and Special Rules.--For purposes of this
section--
``(1) Qualified small employer.--
``(A) In general.--The term `qualified small
employer' means any small employer which provides
eligibility for health insurance coverage (after any
waiting period (as defined in section 9801(b)(4))) to
all qualified employees of the employer.
``(B) Small employer.--
``(i) In general.--For purposes of this
paragraph, the term `small employer' means,
with respect to any calendar year, any employer
if such employer employed an average of not
less than 2 and not more than 50 qualified
employees on business days during either of the
2 preceding calendar years. For purposes of the
preceding sentence, a preceding calendar year
may be taken into account only if the employer
was in existence throughout such year.
``(ii) Employers not in existence in
preceding year.--In the case of an employer
which was not in existence throughout the 1st
preceding calendar year, the determination
under clause (i) shall be based on the average
number of qualified employees that it is
reasonably expected such employer will employ
on business days in the current calendar year.
``(2) Qualified employee health insurance expenses.--
``(A) In general.--The term `qualified employee
health insurance expenses' means any amount paid by an
employer for health insurance coverage to the extent
such amount is attributable to coverage provided to any
employee while such employee is a qualified employee.
``(B) Exception for amounts paid under salary
reduction arrangements.--No amount paid or incurred for
health insurance coverage pursuant to a salary
reduction arrangement shall be taken into account under
subparagraph (A).
``(C) Health insurance coverage.--The term `health
insurance coverage' has the meaning given such term by
paragraph (1) of section 9832(b) (determined by
disregarding the last sentence of paragraph (2) of such
section).
``(3) Qualified employee.--The term `qualified employee'
means an employee of an employer who, with respect to any
period, is not provided health insurance coverage under--
``(A) a health plan of the employee's spouse,
``(B) title XVIII, XIX, or XXI of the Social
Security Act,
``(C) chapter 17 of title 38, United States Code,
``(D) chapter 55 of title 10, United States Code,
``(E) chapter 89 of title 5, United States Code, or
``(F) any other provision of law.
``(4) Employee--The term `employee'--
``(A) means any individual, with respect to any
calendar year, who is reasonably expected to receive at
least $5,000 of compensation from the employer during
such year,
``(B) does not include an employee within the
meaning of section 401(c)(1), and
``(C) includes a leased employee within the meaning
of section 414(n).
``(5) Compensation.--The term `compensation' means amounts
described in section 6051(a)(3).
``(e) Certain Rules Made Applicable.--For purposes of this section,
rules similar to the rules of section 52 shall apply.
``(f) Denial of Double Benefit.--No deduction or credit under any
other provision of this chapter shall be allowed with respect to
qualified employee health insurance expenses taken into account under
subsection (a).''.
(b) Credit To Be Part of General Business Credit.--Section 38(b) of
the Internal Revenue Code of 1986 (relating to current year business
credit) is amended by striking ``plus'' at the end of paragraph (14),
by striking the period at the end of paragraph (15) and inserting ``,
plus'', and by adding at the end the following:
``(16) the employee health insurance expenses credit
determined under section 45G.''.
(c) Credit Allowed Against Minimum Tax.--
(1) In general.--Subsection (c) of section 38 of the
Internal Revenue Code of 1986 (relating to limitation based on
amount of tax) is amended by redesignating paragraph (4) as
paragraph (5) and by inserting after paragraph (3) the
following new paragraph:
``(4) Special rules for employee health insurance credit.--
``(A) In general.--In the case of the employee
health insurance credit--
``(i) this section and section 39 shall be
applied separately with respect to the credit,
and
``(ii) in applying paragraph (1) to the
credit--
``(I) the amounts in subparagraphs
(A) and (B) thereof shall be treated as
being zero, and
``(II) the limitation under
paragraph (1) (as modified by subclause
(I)) shall be reduced by the credit
allowed under subsection (a) for the
taxable year (other than the employee
health insurance credit).
``(B) Employee health insurance credit.--For
purposes of this subsection, the term `employee health
insurance credit' means the credit allowable under
subsection (a) by reason of section 45G(a).''.
(2) Conforming amendments.--
(A) Subclause (II) of section 38(c)(2)(A)(ii) of
such Code is amended by inserting ``or the employee
health insurance credit'' after ``employee credit''.
(B) Subclause (II) of section 38(c)(3)(A)(ii) of
such Code is amended by inserting ``or the employee
health insurance credit'' after ``employee credit''.
(d) No Carrybacks.--Subsection (d) of section 39 of the Internal
Revenue Code of 1986 (relating to carryback and carryforward of unused
credits) is amended by adding at the end the following:
``(11) No carryback of section 45g credit before effective
date.--No portion of the unused business credit for any taxable
year which is attributable to the employee health insurance
expenses credit determined under section 45G may be carried
back to a taxable year ending before the date of the enactment
of section 45G.''.
(e) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 of the Internal Revenue Code of
1986 is amended by adding at the end the following:
``Sec. 45G. Employee health insurance
expenses.''.
(f) Employer Outreach.--The Internal Revenue Service shall, in
conjunction with the Small Business Administration, develop materials
and implement an educational program to ensure that business personnel
are aware of--
(1) the eligibility criteria for the tax credit provided
under section 45G of the Internal Revenue Code of 1986 (as
added by this section),
(2) the methods to be used in calculating such credit,
(3) the documentation needed in order to claim such credit,
and
(4) any available health plan purchasing alliances
established under title II,
so that the maximum number of eligible businesses may claim the tax
credit.
(g) Effective Date.--The amendments made by this section shall
apply to amounts paid or incurred in taxable years beginning after the
date of the enactment of this Act.
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