[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 10 Introduced in Senate (IS)]

103d CONGRESS
  1st Session
                                 S. 10

 To amend the Internal Revenue Code of 1986 to provide tax incentives 
    for the adoption of flexible family leave policies by employers.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

             January 21 (legislative day, January 5), 1993

 Mr. Craig (for himself, Mr. Dole, Mr. Hatch, Mr. Grassley, Mr. Burns, 
Mr. Simpson, Mr. Hatfield, and Mr. Kempthorne) 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 tax incentives 
    for the adoption of flexible family leave policies by employers.

    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 ``Flexible Family Leave Tax Credit Act 
of 1993''.

                      TITLE I--FAMILY LEAVE CREDIT

SEC. 101. CREDIT CREATED.

    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 new section:

``SEC. 45A. FAMILY LEAVE CREDIT.

    ``(a) Amount of Credit.--
            ``(1) In general.--For purposes of section 38, the amount 
        of the family leave credit for any employer for any taxable 
        year is 20 percent of the qualified compensation with respect 
        to an employee who is on family leave.
            ``(2) Limitations on availability and amount of credit.--
                    ``(A) Fewer than 500 employees.--An employer is not 
                entitled to a family leave credit for any taxable year 
                unless--
                            ``(i) in the case of an employer that is in 
                        its first taxable year, the employer had fewer 
                        than 500 employees at the close of that year, 
                        and
                            ``(ii) in the case of other employers, the 
                        employer averaged fewer than 500 employees for 
                        its preceding taxable year.
                An employer is considered to average fewer than 500 
                employees for a taxable year if the sum of its 
                employees on the last day of each quarter in that year 
                divided by the number of quarters is fewer than 500.
                    ``(B) Dollar cap on qualified compensation.--The 
                amount of qualified compensation that may be taken into 
                account with respect to an employee may not exceed $100 
                per business day.
                    ``(C) Maximum period of family leave.--No family 
                leave credit will be available to the extent that the 
                period of family leave for an employee exceeds 12 
                weeks, defined as 60 business days, in any 12-month 
                period.
                    ``(D) Additional limitation on leave for personal 
                serious health conditions.--Leave from an employer in 
                connection with a qualified purpose described in 
                subsection (b)(2)(D) will qualify as family leave only 
                if the employee on leave has no unused sick, disability 
                or similar leave.
    ``(b) Family Leave.--For purposes of this section--
            ``(1) In general.--Except as otherwise provided in this 
        section, an employee is considered to be on `family leave' if 
        the employee is on leave from the employer in connection with 
        any qualified purpose.
            ``(2) Qualified purposes.--The term `qualified purposes' 
        means--
                    ``(A) the birth of a child,
                    ``(B) the placement of a child with the employee 
                for adoption or foster care,
                    ``(C) the care of a child, parent or spouse with a 
                serious health condition, or
                    ``(D) the treatment of a serious health condition 
                which makes the employee unable to perform the 
                functions of his or her position.
            ``(3) Definitions of child, parent and serious health 
        condition.--
                    ``(A) Child.--The term `child' means an individual 
                who is a son, stepson, daughter, stepdaughter, eligible 
                foster child as described in sections 32(c)(3)(B)(iii) 
                (I) and (II), or legal ward of the employee or 
                employee's spouse, or a child of a person standing in 
                loco parentis and who either has not reached the age of 
                19 by the commencement of the period of family leave or 
                is physically or mentally incapable of caring for 
                himself or herself.
                    ``(B) Parent.--The term `parent' means an 
                individual with respect to whom the employee would be 
                considered a `child' within the meaning of subsection 
                (b)(2)(A) without regard to the age limitation.
                    ``(C) Serious health condition.--The term `serious 
                health condition' means an illness, injury, impairment, 
                or physical or mental condition that involves the 
                inpatient care in a hospital, hospice or residential 
                health care facility, or substantial and continuing 
                treatment by a health care provider.
    ``(c) Credit Refundable.--In the case of so much of the section 38 
credit as is attributable to the family leave credit--
            ``(1) section 38(c) will not apply, and
            ``(2) for purposes of this section, such credit will be 
        treated as if it were allowed under section 103 of the Flexible 
        Family Leave Tax Credit Act of 1993.
    ``(d) Nondiscrimination Requirement.--The family leave credit is 
available to an employer for a taxable year only if the employer 
provides family leave to its employees for that year on a 
nondiscriminatory basis.
    ``(e) Other Definitions and Special Rules.--
            ``(1) In general.--For purposes of this section--
                    ``(A) Employer.--Except as otherwise provided in 
                this subpart, the term `employer' has the meaning 
                provided by section 3306(a)(1) and (3).
                    ``(B) Employee.--The term `employee' includes only 
                permanent employees who have been employed by the 
                employer for at least 12 months and have provided over 
                1000 hours of service to the employer during the 12 
                months preceding commencement of the family leave.
                    ``(C) Qualified compensation.--The term `qualified 
                compensation' means the greater of--
                            ``(i) cash wages paid or incurred by the 
                        employer to or on behalf of the employee as 
                        remuneration for services during the period of 
                        family leave, and
                            ``(ii) cash wages that would have been paid 
                        or incurred by the employer to or on behalf of 
                        the employee as remuneration for services 
                        during the period of family leave had the 
                        employee not taken the leave.
                    ``(D) Computation.--For purposes of subsection 
                (e)(1)(C)(ii), the amount of cash wages that would have 
                been paid to the employee for any business day the 
                employee is on family leave is the average daily cash 
                wages of that employee for the four calendar quarters 
                preceding the commencement of the family leave.
                    ``(E) Average daily cash wages.--For purposes of 
                the computation described in subsection (e)(1)(D), an 
                employee's average daily cash wages is his or her total 
                cash wages for the period described in such subsection 
                divided by the number of business days in that period.
                    ``(F) Business day.--The term `business day' 
                includes any day other than a Saturday, Sunday or legal 
                holiday.
            ``(2) Employment and benefits protection.--
                    ``(A) In general.--Leave taken under this section 
                shall qualify an employer for a family leave credit 
                only if--
                            ``(i) upon return from such leave, the 
                        employee is entitled to be restored by the 
                        employer to the position of employment held by 
                        the employee when the leave commenced, or to be 
                        restored to an equivalent position with 
                        equivalent employment benefits, pay, and other 
                        terms and conditions of employment;
                            ``(ii) the taking of such leave does not 
                        result in the loss of any employment benefit 
                        accrued prior to the date on which the leave 
                        commenced; and
                            ``(iii) the employer maintains coverage 
                        under any `group health plan' (as defined in 
                        section 5000(b)(1)) for the duration of such 
                        leave, at the level and under the conditions 
                        coverage would have been provided if the 
                        employee had continued in employment 
                        continuously during the leave period.
                    ``(B) Limitation.--Nothing in this paragraph shall 
                be construed to require an employer, as a condition of 
                qualifying for a family leave credit, to entitle any 
                employee taking leave to--
                            ``(i) the accrual of any seniority or 
                        employment benefits during any period of leave; 
                        or
                            ``(ii) any right, benefit, or position of 
                        employment other than any right, benefit, or 
                        position to which the employee would have been 
                        entitled had the employee not taken the leave.
            ``(3) Expectation that employee will return to work.--No 
        family leave credit will be available for any portion of a 
        period of family leave during which the employer does not 
        reasonably believe that the employee will return from leave to 
        work for the employer.
            ``(4) Special rules.--Rules similar to the rules of section 
        52 shall apply for purposes of this section.
            ``(5) Regulatory authority.--The Secretary may prescribe 
        such regulations or other guidance as may be necessary or 
        appropriate to carry out the purposes of this section, 
        including guidance relating to ensuring adequate employment and 
        benefits protection and guidance to prevent abuse of this 
        section.''.

SEC. 102. COORDINATION WITH REFUND PROVISION.

    For purposes of section 1324(b)(2) of title 31 of the United States 
Code, section 45A of the Internal Revenue Code of 1986 (as added by 
this Act) will be considered to be a credit provision of the Internal 
Revenue Code of 1954 enacted before January 1, 1978.

SEC. 103. CONFORMING AMENDMENTS.

    (a) Section 38 is amended by deleting the ``plus'' after subsection 
(b)(7) and ``.'' after subsection (b)(8), by inserting ``, plus'' after 
subsection (b)(8), and by adding a new subsection (b)(9) to read as 
follows:
            ``(9) the family leave credit under section 45A.''
    (b) The table of sections for subpart D of part IV of subchapter A 
of chapter 1 is amended by adding at the end the following new item:

``Sec. 45A. Family leave credit.''

SEC. 104. EFFECTIVE DATE.

    The amendments made by this title shall apply to family leave that 
commences 90 days after the date of the enactment of this Act.

                TITLE II--DEFICIT NEUTRAL REVENUE OFFSET

SEC. 201. CORPORATE ESTIMATED TAX PROVISIONS.

    (a) Increase in Estimated Tax.--
            (1) In general.--Subsection (d) of section 6655 of the 
        Internal Revenue Code of 1986 (relating to amount of required 
        installments) is amended--
                    (A) by striking ``91 percent'' each place it 
                appears in paragraph (1)(B)(i) and inserting ``100 
                percent'',
                    (B) by striking ``91 percent'' in the heading of 
                paragraph (2) and inserting ``100 percent'', and
                    (C) by striking paragraph (3).
            (2) Conforming amendments.--
                    (A) Clause (ii) of section 6655(e)(2)(B) of such 
                Code is amended by striking the table contained therein 
                and inserting the following new table:
                    
                                                                    The
                    ``In the case of the following
                                                             applicable
                      required installments:
                                                         percentage is:
                            1st......................               254
                            2nd......................               504
                            3rd......................               754
                            4th......................            100.''

                    (B) Clause (i) of section 6655(e)(3)(A) of such 
                Code is amended by striking ``91 percent'' and 
                inserting ``100 percent''.
    (b) Modification of Periods for Applying Annualization.--
            (1) Clause (i) of section 6655(e)(2)(A) of such Code is 
        amended--
                    (A) by striking ``or for the first 5 months'' in 
                subclause (II),
                    (B) by striking ``or for the first 8 months'' in 
                subclause (III), and
                    (C) by striking ``or for the first 11 months'' in 
                subclause (IV).
            (2) Paragraph (2) of section 6655(e) of such Code is 
        amended by adding at the end thereof the following new 
        subparagraph:
                    ``(C) Election for different annualization 
                periods.--
                            ``(i) If the taxpayer makes an election 
                        under this clause--
                                    ``(I) subclause (II) of 
                                subparagraph (A)(i) shall be applied by 
                                substituting `4 months' for `3 months',
                                    ``(II) subclause (III) of 
                                subparagraph (A)(i) shall be applied by 
                                substituting `7 months' for `6 months', 
                                and
                                    ``(III) subclause (IV) of 
                                subparagraph (A)(i) shall be applied by 
                                substituting `10 months' for `9 
                                months'.
                            ``(ii) If the taxpayer makes an election 
                        under this clause--
                                    ``(I) subclause (II) of 
                                subparagraph (A)(i) shall be applied by 
                                substituting `5 months' for `3 months',
                                    ``(II) subclause (III) of 
                                subparagraph (A)(i) shall be applied by 
                                substituting `8 months' for `6 months', 
                                and
                                    ``(III) subclause (IV) of 
                                subparagraph (A)(i) shall be applied by 
                                substituting `11 months' for `9 
                                months'.
                            ``(iii) An election under clause (i) or 
                        (ii) shall apply to the taxable year for which 
                        made and such an election shall be effective 
                        only if made on or before the date required for 
                        the payment of the second required installment 
                        for such taxable year.''
            (3) The last sentence of section 6655(g)(3) of such Code is 
        amended by striking ``and subsection (e)(2)(A)'' and inserting 
        ``and, except in the case of an election under subsection 
        (e)(2)(C), subsection (e)(2)(A)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to any installment due date occurring more than 90 days after the 
date of enactment of this Act.

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