[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1119 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 1119

To enable a greater number of children to receive child care services, 
           and to improve the quality of child care services.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 16, 1999

    Mr. Cardin (for himself, Mr. Rangel, Mr. Matsui, Mr. Coyne, Mr. 
Jefferson, Mr. Levin, Mr. Lewis of Georgia, Mr. Doggett, and Mr. Stark) 
 introduced the following bill; which was referred to the Committee on 
 Ways and Means, and in addition to the Committee on Education and the 
 Workforce, for a period to be subsequently determined by the Speaker, 
 in each case for consideration of such provisions as fall within the 
                jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
To enable a greater number of children to receive child care services, 
           and to improve the quality of child care services.

    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 ``Child Care Improvement Act of 
1999''.

SEC. 2. CHILD CARE SUBSIDY FUNDING.

    (a) Appropriation; Allocation.--Section 418 of the Social Security 
Act (42 U.S.C. 618) is amended--
            (1) by redesignating subsections (b), (c), and (d) as 
        subsections (d), (e), and (f), respectively; and
            (2) by inserting after subsection (a) the following:
    ``(b) Child Care Subsidy Funding.--
            ``(1) Appropriation.--Out of any funds in the Treasury not 
        otherwise appropriated, there are appropriated for grants and 
        other activities under this subsection--
                    ``(A) $1,155,000,000 for fiscal year 2000;
                    ``(B) $1,280,000,000 for fiscal year 2001;
                    ``(C) $1,400,000,000 for fiscal year 2002;
                    ``(D) $1,600,000,000 for fiscal year 2003; and
                    ``(E) $2,065,000,000 for fiscal year 2004.
            ``(2) Allotment and reservation of funds.--
                    ``(A) Allotments for indian tribes.--From the 
                amount appropriated pursuant to paragraph (1) for a 
                fiscal year, the Secretary shall allot to each Indian 
                tribe that has received a share for the fiscal year 
                under section 658O(c) of the CCDBG Act, an amount that 
                bears the same ratio to such sum as the Secretary may 
                determine that is not less than 1 and not more than 2 
                percent of the amount so appropriated as the share so 
                received by the tribe bears to the total of the shares 
                so received by all Indian tribes.
                    ``(B) Reservation for secretary's activities.--From 
                the amount appropriated pursuant to paragraph (1) for a 
                fiscal year, the Secretary shall reserve $1,000,000 for 
                expenditure by the Secretary for quality assurance and 
                quality improvement activities relating to programs 
                under the CCDBG Act.
                    ``(C) Allotments for states and territories.--From 
                the amount appropriated pursuant to paragraph (1) for a 
                fiscal year that remains after applying subparagraphs 
                (A) and (B) of this paragraph for the fiscal year, the 
                Secretary shall allot to each State and territory an 
                amount that bears the same ratio to such remaining 
                amount as the number of children residing in the State 
                or territory in the second preceding fiscal year bears 
                to the number of children residing in the United States 
                in the second preceding fiscal year.
            ``(3) Matching payments to states and territories.--
                    ``(A) In general.--From the amount allotted to a 
                State or territory for a fiscal year under paragraph 
                (2), the Secretary shall pay to the State or territory 
                for the fiscal year an amount equal to the lesser of 
                the amount so allotted or 80 percent of the amount of 
                eligible child care expenditures of the State or 
                territory during the fiscal year.
                    ``(B) Eligible child care expenditures defined.--In 
                subparagraph (A), the term `eligible child care 
                expenditures' means, with respect to a State or 
                territory, expenditures--
                            ``(i) made under the approved plan of the 
                        State or territory under the CCDBG Act;
                            ``(ii) for which Federal matching payments 
                        or reimbursements have not otherwise been made; 
                        and
                            ``(iii) in the case of a State, to the 
                        extent the amount of such expenditures exceeds 
                        the amount necessary to secure payment of the 
                        full amount of the State's allotment (if any) 
                        under subsection (a)(2) (determined without 
                        regard to subsection (a)(2)(D)).
                    ``(C) Redistribution.--The Secretary shall, to the 
                extent necessary, determine the need for redistribution 
                of, and redistribute, amounts allotted under this 
                subsection to States, in accordance with the procedures 
                and formula set forth in subsection (a)(2)(D).
            ``(4) Payments to indian tribes.--From the amount allotted 
        to an Indian tribe for a fiscal year under paragraph (2), the 
        Secretary shall pay to the tribe for the fiscal year an amount 
        equal to the lesser of the amount so allotted or the total 
        amount expended by the tribe pursuant to the CCDBG Act for 
        which Federal payments have not otherwise been made.
            ``(5) Targeting of funds for working non-welfare 
        families.--Notwithstanding subsection (e) of this section, a 
        State or territory to which amounts are provided under this 
        subsection shall use not less than 70 percent of the amounts 
        for child care assistance to working families who are not 
        recipients of assistance under the State or territory program 
        funded under section 403(a)(1).''.
    (b) Inclusion of Territories in Definitions.--Section 418(f) of 
such Act, as so redesignated by subsection (a)(1) of this section, is 
amended to read as follows:
    ``(f) Definitions.--As used in this section:
            ``(1) CCDBG act.--The term `CCDBG Act' means the Child Care 
        and Development Block Grant Act of 1990 (42 U.S.C. 9801 et 
        seq.).
            ``(2) State.--The term `State' means each of the 50 States, 
        the District of Columbia, and (except for purposes of 
        subsection (a)) the Commonwealth of Puerto Rico.
            ``(3) Territory.--The term `territory' means the United 
        States Virgin Islands, Guam, American Samoa, and the 
        Commonwealth of the Northern Mariana Islands.''.
    (c) Conforming Amendments.--
            (1) Section 418(a)(3) of such Act (42 U.S.C. 618(a)(3)) is 
        amended by striking ``this section'' and inserting ``this 
        subsection''.
            (2) Section 418(d) of such Act (as so redesignated by 
        subsection (a)(1) of this section) is amended in paragraphs (1) 
        and (2) by striking ``under this section'' each place it 
        appears and inserting ``under subsection (a)''.
            (3) Section 1108(a)(2) of such Act (42 U.S.C. 1308(a)(2)) 
        is amended by striking ``or 413(f)'' and inserting ``413(f), or 
        418(b)(3)(A)''.

SEC. 3. CHILD CARE QUALITY AND EARLY LEARNING PROGRAM.

    (a) Funding.--Section 418 of the Social Security Act (42 U.S.C. 
618), as amended by section 2(b) of this Act, is amended by inserting 
after subsection (b) the following:
    ``(c) Appropriations for Child Care Quality and Early Learning 
Program.--
            ``(1) In general.--Out of any funds in the Treasury not 
        otherwise appropriated, there are appropriated $600,000,000 for 
        each of fiscal years 2000 through 2004 for carrying out 
        activities related to early learning programs in accordance 
        with this section and section 658T of the CCDBG Act.
            ``(2) Allotment and reservation of funds.--
                    ``(A) Allotments for indian tribes.--From the 
                amount appropriated pursuant to paragraph (1) for a 
                fiscal year, the Secretary shall allot to each Indian 
                tribe that has received a share for the fiscal year 
                under section 658O(c) of the CCDBG Act, an amount that 
                bears the same ratio to such sum as the Secretary may 
                determine that is not more than 2 percent of the amount 
                so appropriated as the share so received by the tribe 
                bears to the total of the shares so received by all 
                Indian tribes.
                    ``(B) Allottments for territories.--From the amount 
                appropriated pursuant to paragraph (1) for a fiscal 
                year, the Secretary shall allot to each territory an 
                amount that bears the same ratio to \1/2\ of 1 percent 
                of the amount so appropriated as the amount allotted to 
                the territory for the fiscal year under section 
                658O(a)(1) of the CCDBG Act bears to the total amount 
                received by all territories for the fiscal year under 
                such section.
                    ``(C) Reservation for secretary's activities.--From 
                the amount appropriated pursuant to paragraph (1) for a 
                fiscal year, the Secretary shall reserve $6,000,000 for 
                expenditure by the Secretary for costs of providing 
                technical assistance to, and conducting national 
                evaluations of, State, local, and tribal early learning 
                programs under such section 658T of the CCDBG Act.
                    ``(D) Allotments to states and territories.--From 
                the amount appropriated pursuant to paragraph (1) for a 
                fiscal year that remains after applying subparagraphs 
                (A), (B), and (C) of this paragraph for the fiscal 
                year, the Secretary shall allot to each State an amount 
                based on the formula used for determining the amount of 
                Federal payments to the State under section 658O of the 
                CCDBG Act.
            ``(3) Matching payments to states and territories.--
                    ``(A) In general.--From the amount allotted to a 
                State or territory for a fiscal year under paragraph 
                (2), the Secretary shall pay to the State or territory 
                for the fiscal year an amount equal to the lesser of 
                the amount so allotted or 80 percent of the amount 
                expended by the State or territory during the fiscal 
                year for an early learning program under a plan 
                approved under section 658T of the CCDBG Act.
                    ``(B) Redistribution.--The Secretary shall, to the 
                extent necessary, determine the need for redistribution 
                of, and redistribute, amounts allotted under this 
                subsection to States, in accordance with the procedures 
                and formula set forth in subsection (a)(2)(D).
            ``(4) Payments to indian tribes.--The Secretary shall pay 
        to each Indian tribe for a fiscal year an amount equal to the 
        lesser of its allotment under paragraph (2)(A) or the total 
        amount of expenditures by the tribe for an early learning 
        program under section 658T of the CCDBG Act.''.
    (b) Establishment of Child Care Quality and Early Learning 
Program.--
            (1) State plan requirement.--Section 658E(c) of the Child 
        Care and Development Block Grant Act of 1990 (42 U.S.C. 
        9858c(c)) is amended by adding at the end the following new:
            ``(6) Early learning program plan requirements.--In the 
        case of a State electing to implement an early learning program 
        under section 658T, the State plan shall meet the requirements 
        specified in section 658T(b)(2).''.
            (2) Early learning program.--The Child Care and Development 
        Block Grant Act of 1990 (42 U.S.C. 9858 et seq.) is amended by 
        adding at the end the following:

``SEC. 658T. EARLY LEARNING PROGRAM.

    ``(a) Program Purpose.--The purpose of the program under this 
section is to enable States, through grants to communities, to support 
activities that--
            ``(1) promote children's healthy development during the 
        earliest years of life;
            ``(2) improve the quality and safety of child care for 
        children aged five and under, including those with 
        disabilities;
            ``(3) encourage and facilitate emerging literacy and 
        language development, and school readiness, based on research-
        based practices; and
            ``(4) enhance programs designed to achieve these goals.
    ``(b) Requirements for State Participation.--
            ``(1) In general.--In order to be eligible for Federal 
        matching funds under section 418(c) of the Social Security Act, 
        the State shall have in effect under its plan under section 
        658E an early learning program plan meeting the requirements 
        specified in paragraph (2).
            ``(2) Early learning program plan requirements.--The early 
        learning program plan shall meet the following requirements:
                    ``(A) Lead agency.--The plan shall provide that the 
                program will be administered by the lead agency 
                designated under 658D.
                    ``(B) Community grant procedures.--The plan shall 
                describe the standards and procedures to be applied in 
                the review and approval of community applications, and 
                in setting amounts, terms, and conditions of community 
                grants, including the methods to be used to ensure that 
                no less than 70 percent of grant funds are awarded to 
                low-income communities.
                    ``(C) Community participation in planning and 
                monitoring.--The plan shall describe the methods to be 
                used to ensure participation, in planning and 
                monitoring activities under the community plan, of 
                representatives of concerned elements of the community, 
                including parents of young children, child care 
                providers, child development and mental health 
                professionals, early intervention specialists, health 
                care providers, public school representatives, local 
                interagency coordinating councils for children with 
                disabilities, local government, and business leaders.
                    ``(D) Program activities.--The plan shall specify 
                which of the allowable activities enumerated in 
                subsection (c) may be carried out under community 
                grants under the plan.
                    ``(E) Performance goals and measures.--The plan 
                shall specify--
                            ``(i) performance goals to be achieved and 
                        the interim and long term performance measures 
                        and timetables, as appropriate, to be used to 
                        assess progress toward each goal under the 
                        plan, which--
                                    ``(I) shall be developed pursuant 
                                to guidance provided by the Secretary 
                                and in consultation with local 
                                government authorities in accordance 
                                with section 658D(b)(2); and
                                    ``(II) shall be designed to improve 
                                child development through coordination 
                                with health care and mental health 
                                services; enhanced early learning 
                                environments, especially those that 
                                promote language skills and literacy 
                                growth of children; quality of infant 
                                and toddler care; parental involvement; 
                                consumer education; reduced staff 
                                turnover; and increased rates of 
                                accreditation by nationally recognized 
                                accreditation organizations;
                            ``(ii) the steps to be taken by the State 
                        or grantees in accordance with guidance 
                        provided by the Secretary if the specified 
                        benchmarks are not achieved.
                    ``(F) Coordination with activities to improve the 
                quality of child care.--The State plan shall specify 
                the methods to be used to coordinate activities under 
                this section and section 658G(a), including 
                coordination of planning and of performance goals and 
                measures, in order to maximize the effectiveness of 
                both programs.
    ``(c) Allowable Activities.--An early learning program under a 
State plan under this section may provide for any or all of the 
following activities to promote cognitive, social, emotional, and 
physical development in order to enhance emerging literacy and language 
development, and school readiness:
            ``(1) Information and resources.--
                    ``(A) Parenting education.--Provision of parenting 
                education, including use of or collaboration with Head 
                Start, Even Start or similar programs, for parents of 
young children by means including use of community-based resource 
centers, family literacy programs with parenting education components, 
collaboration with early intervention and preschool providers of 
services for children, public elementary schools, centers that serve 
children with special health care needs or disabilities and their 
families, and home visiting programs.
                    ``(B) Information and referral.--Initiatives to 
                develop or increase the availability of consumer 
                education information and referral services and other 
                resources to assist parents to locate and assess the 
                quality of available child care services.
                    ``(C) Family child care networks.--Development of 
                support networks, information and referral services, 
                and other supportive services addressing needs of 
                family child care providers for access to such 
                resources as education, training, and community support 
                services.''.
            ``(2) Quality and availability.--
                    ``(A) Provider training.--Training of child care 
                personnel, which may include training in early 
                childhood development, early literacy, health, 
                nutrition, hygiene, first-aid and safety, best 
                practices for serving children with disabilities in 
                child care, awareness of resources in the community, 
                awareness of Medicaid, the Children's Health Insurance 
                Program (CHIP), and other health services, and other 
                appropriate matters.
                    ``(B) Improved staffing ratios.--Initiatives to 
                increase ratios of child care staff to children in care 
                and to reduce child care group sizes.
                    ``(C) Licensing and accreditation assistance.--
                Assistance to entities and individuals in meeting 
                applicable child care accreditation and licensing 
                requirements and in obtaining licensing or 
                accreditation.
                    ``(D) Standards enforcement.--Initiatives to 
                increase the numbers of qualified child care licensing 
                and standards enforcement staff and activities to 
                increase monitoring and enforcement of State and local 
                health and safety standards, and activities to educate 
                child care providers on the requirements of State and 
                local health and safety standards.
                    ``(E) Health services.--Improving coordination of 
                child care with appropriate health services including 
                health and mental health consultations, hearing and 
                vision testing, blood lead level screening, and 
                immunizations, by methods such as co-location of health 
                and child care services, referrals of children in child 
                care to health care providers or screening services, 
                and transfer of child health records to public school 
                at school entry. Services under this subparagraph shall 
                not include direct provision of or payment for health 
                care services.
                    ``(F) Care for children with special needs.--
                Increasing the availability and quality of child care 
                for young children with special health care needs, 
                developmental delays, and disabilities; and 
                coordinating with early intervention and preschool 
                special education services.
                    ``(G) Salary and benefit enhancement.--Assistance 
                to child care programs to increase the quality and 
                continuity of care by attracting or retaining highly 
                qualified child care staff working directly with 
                children through enhanced compensation.
                    ``(H) Monitoring and technical assistance.--
                Technical assistance to grantees, and monitoring of 
                programs, assisted under this section. State 
                expenditures under this subparagraph shall not exceed a 
                percentage of total State expenditures for the program 
                under this section equal to 10 percent for each of 
                fiscal years 2000 through 2002, and 5 percent for 
                fiscal year 2003 and each succeeding fiscal year.''.
    (c) Annual Report.--Section 658K(a)(2) of the Child Care and 
Development Block Grant Act of 1990 (42 U.S.C. 9858i(a)(2)) is 
amended--
            (1) by striking ``and'' at the end of subparagraph (D);
            (2) by striking the period at the end of subparagraph (E) 
        and inserting a semicolon; and
            (3) by inserting after and below subparagraph (E) the 
        following new subparagraphs:
                    ``(F) the early learning program under section 
                658T, including--
                            ``(i) the number and average dollar amount 
                        of grants awarded;
                            ``(ii) the number, average dollar amount, 
                        and percentage of the total State award of such 
                        grants made to low-income communities;
                            ``(iii) the number of early learning 
                        programs;
                            ``(iv) the number of children served with 
                        special health care needs, disabilities or 
                        developmental delays;
                            ``(v) the number of early learning programs 
                        that assist children with special needs;
                            ``(vi) progress toward achievement of each 
                        performance goal, for each specific, 
                        quantifiable and measurable objective;
                            ``(vii) expenditures for each allowable 
                        activity listed in section 658T(c), total 
                        expenditures and, to the extent feasible, the 
                        volume or frequency of such activity and the 
                        average expenditure per unit of such activity; 
                        and
                            ``(viii) with respect to any allowable 
                        activity listed in section 658T(c) for which 
                        expenditures are made by the State both under 
                        section 658G(a) and under section 658T, the 
                        amount expended under each such section; and
                            ``(ix) such other data as the Secretary may 
                        require.''.

SEC. 4. 4% MINIMUM QUALITY EXPENDITURES.

    Section 658G of the Child Care and Development Block Grant Act of 
1990 (42 U.S.C. 9858e) is amended--
    (1) by striking ``A State'' and inserting the following:
    ``(a) 4 Percent Minimum Quality Expenditures.--Subject to 
subsection (b), a State''; and
    (2) by adding at the end the following new subsection:
    ``(b) Disregard of Early Learning Program Funds.--For purposes of 
subsection (a), amounts received by the State from amounts appropriated 
under section 418(c) of the Social Security Act and expended under a 
plan in accordance with section 658T shall be disregarded.''.

SEC. 5. EXPANSION OF DEPENDENT CARE TAX CREDIT.

    (a) In General.--Paragraph (2) of section 21(a) of the Internal 
Revenue Code of 1986 (relating to expenses for household and dependent 
care services necessary for gainful employment) is amended to read as 
follows:
            ``(2) Applicable percentage defined.--For purposes of 
        paragraph (1), the term `applicable percentage' means 50 
        percent reduced (but not below 20 percent) by 1 percentage 
        point for each $1,000 (or fraction thereof) by which the 
        taxpayer's adjusted gross income for the taxable year exceeds 
        $30,000.''
    (b) Minimum Credit Allowed for Stay-At-Home Parents.--Section 21(e) 
of such Code (relating to special rules) is amended by adding at the 
end the following:
            ``(11) Minimum credit allowed for stay-at-home parents.--
        Notwithstanding subsection (d), in the case of any taxpayer 
        with one or more qualifying individuals described in subsection 
        (b)(1)(A) under the age of 1 at any time during the taxable 
        year, such taxpayer shall be deemed to have employment-related 
        expenses with respect to such qualifying individuals in an 
        amount equal to the greater of--
                    ``(A) the amount of employment-related expenses 
                incurred for such qualifying individuals for the 
                taxable year (determined under this section without 
                regard to this paragraph), or
                    ``(B) $125 for each month in such taxable year 
                during which such qualifying individual is under the 
                age of 1.''.
    (c) Inflation Adjustment of Dollar Amounts.--
            (1) Section 21 of such Code is amended by redesignating 
        subsection (f) as subsection (g) and by inserting after 
        subsection (e) the following new subsection:
    ``(f) Inflation Adjustment.--In the case of any taxable year 
beginning in a calendar year after 2000, the $30,000 amount contained 
in subsection (a), the $2,400 amount in subsection (c), and the $125 
amount in subsection (e)(11) shall be increased by an amount equal to--
            ``(1) such dollar amount, multiplied by
            ``(2) the cost-of-living adjustment determined under 
        section 1(f)(3) for such calendar year by substituting 
        `calendar year 1999' for `calendar year 1992' in subparagraph 
        (B) thereof.
If the increase determined under the preceding sentence is not a 
multiple of $50 ($5 in the case of the amount in subsection (e)(11)), 
such amount shall be rounded to the next lowest multiple thereof.''
            (2) Paragraph (2) of section 21(c) of such Code is amended 
        by striking ``$4,800'' and inserting ``twice the dollar amount 
        applicable under paragraph (1)''.
            (3) Paragraph (2) of section 21(d) of such Code is amended 
        by striking ``less than--'' and all that follows through the 
        end of the first sentence and inserting ``less than \1/12\ of 
        the amount which applies under subsection (c) to the taxpayer 
        for the taxable year.''
    (d) Credit Allowed Based on Residency in Certain Cases.--Subsection 
(e) of section 21 of such Code is amended by adding at the end the 
following new paragraph:
            ``(12) Credit allowed based on residency in certain 
        cases.--In the case of a taxpayer--
                    ``(A) who does not satisfy the household 
                maintenance test of subsection (a) for any period, but
                    ``(B) whose principal place of abode for such 
                period is also the principal place of abode of any 
                qualifying individual,
        then such taxpayer shall be treated as satisfying such test for 
        such period but the amount of credit allowable under this 
        section with respect to such individual shall be determined by 
        allowing only \1/12\ of the limitation under subsection (c) for 
        each full month that the requirement of subparagraph (B) is 
        met.''
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

SEC. 6. ALLOWANCE OF CREDIT FOR EMPLOYER EXPENSES FOR CHILD CARE 
              ASSISTANCE.

    (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 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 25 percent of the qualified child 
care expenditures of the taxpayer for such taxable year.
    ``(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 121) 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 higher levels of child care training,
                    ``(C) under a contract with a qualified child care 
                facility to provide child care services to employees of 
                the taxpayer,
                    ``(D) under a contract to provide child care 
                resource and referral services to employees of the 
                taxpayer, or
                    ``(E) for the costs of seeking accreditation from a 
                child care credentialing or accreditation entity.
            ``(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 located, 
                        including, but not limited to, the licensing of 
                        the facility as a child care facility.
                Clause (i) shall not apply to a facility which is the 
                principal residence (within the meaning of section 121) 
                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--
                            ``(i) enrollment in the facility is open to 
                        all employees of the taxpayer during the 
                        taxable year,
                            ``(ii) services available at such facility 
                        do not discriminate in favor of employees of 
                        the taxpayer who are highly compensated 
                        employees (within the meaning of section 
                        414(q)), and
                            ``(iii) in the case of a facility which is 
                        owned or operated by the taxpayer, at least 30 
                        percent of the enrollees of such facility are 
                        dependents of employees of the taxpayer.
    ``(d) Recapture of Acquisition and Construction 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 years which 
                would have resulted if the qualified child care 
                expenditures of the taxpayer described 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...............................           85     
                Year 5...............................           70     
                Year 6...............................           55     
                Year 7...............................           40     
                Year 8...............................           25     
                Years 9 and 10.......................           10     
                Years 11 and thereafter..............            0.    
                    ``(B) Years.--For purposes of subparagraph (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 purposes 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.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), the disposition of a taxpayer's 
                        interest in a qualified child care facility 
                        with respect to which the credit described in 
                        subsection (a) was allowable.
                            ``(ii) Agreement to assume recapture 
                        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 disposing 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 paragraph (1) only with 
                respect to credits allowed by reason of this section 
                which were used to reduce tax liability. In the case of 
                credits not so used to reduce tax liability, the 
                carryforwards and carrybacks under section 39 shall be 
                appropriately adjusted.
                    ``(B) No credits against tax.--Any increase 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 casualty loss.--The 
                increase in tax under this subsection shall not apply 
                to a cessation of operation of the facility as a 
                qualified child care facility by reason of a casualty 
                loss to the extent such loss is restored by 
                reconstruction or replacement within a reasonable 
                period established by the Secretary.
    ``(e) Special Rules.--For purposes of this section--
            ``(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 Secretary, rules similar to the 
        rules of subsection (d) of section 52 shall apply.
            ``(3) Partnerships.--In the case of partnerships, the 
        credit under this section shall be determined at the 
        partnership level and allocated among the partners under 
        regulations prescribed by the Secretary; except that--
                    ``(A) subsection (b) shall be applied at the 
                partner level, and
                    ``(B) the employees of the partnership and of each 
                partner shall be treated as employees of the taxpayer 
                for purposes of applying subsection (c)(2)(B)(iii).
    ``(f) No Double Benefit.--
            ``(1) Reduction in basis.--For purposes of this subtitle--
                    ``(A) In general.--If a credit is determined 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 before the event resulting in such 
                recapture) shall be increased by an amount equal to 
                such recapture 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).
            ``(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.''
    (b) Conforming Amendments.--
            (1) Section 38(b) of such Code is amended--
                    (A) by striking ``plus'' at the end of paragraph 
                (11),
                    (B) by striking 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) Subsection (d) of section 39 of such Code (relating to 
        carryback and carryforward of unused credits) is amended by 
        adding at the end the following new paragraph:
            ``(9) No carryback of section 45d credit before january 1, 
        2000.--No portion of the unused business credit for any taxable 
        year which is attributable to the credit determined under 
        section 45D may be carried back to a taxable year beginning 
        before January 1, 2000.''.
            (3) 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. 45D. Employer-provided child care 
                                        credit.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

SEC. 7. DEPENDENT CARE CREDIT ALLOWED AGAINST THE ALTERNATIVE MINIMUM 
              TAX.

    (a) In General.--Subsection (a) of section 26 of the Internal 
Revenue Code of 1986 is amended by inserting ``(other than the credit 
allowed by section 21)'' after ``credits allowed by this subpart''.
    (b) Conforming Amendment.--Section 21 of such Code is amended by 
adding at the end the following new subsection:
    ``(f) Limitation Based on Amount of Tax.--The aggregate credit 
allowed by this section for the taxable year shall not exceed the sum 
of--
            ``(1) the taxpayer's regular tax liability for the taxable 
        year reduced by the sum of the credits allowed by this subpart 
        other than this section, plus
            ``(2) the tax imposed by section 55 for such taxable 
        year.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.
                                 <all>