Credit for certain employer-provided retiree health care coverage

(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:

45N.

Employer-provided retiree health care coverage

(a)

General rule

For purposes of section 38, in the case of an eligible employer, the retiree health care coverage credit determined under this section for the taxable year is an amount equal to 10 percent of qualified retiree health care expenses paid or incurred by the taxpayer during such taxable year in connection with the provision of qualified retiree health care coverage. (b)

Eligible employer

For purposes of this section, the term eligible employer means for a taxable year any employer— (1)which is eligible for the deduction under section 199 for such taxable year, or (2)at least 50 percent of the gross receipts of which derived from activities within the United States for such taxable year are domestic production gross receipts (as defined in section 199(c)(4)). (c)

Qualified retiree health care expenses

For purposes of this section, the term qualified retiree health care expenses means any amount paid or incurred by an eligible employer for qualified retiree health care coverage to the extent such amount is attributable to coverage provided to any employee and such employee's spouse and dependents while such employee is a qualified employee. (d)

Qualified employee

For purposes of this section— (1)

In general

The term qualified employee means any retired employee of an employer who, with respect to any period— (A)has attained 55 but not 66 years of age, and (B)is not provided health insurance coverage under title XVIII of the Social Security Act. (2)

Employee

The term employee does not include an employee within the meaning of section 401(c)(1). (e)

Qualified retiree health care coverage

For purposes of this section, the term qualified retiree health care coverage means health care coverage, through the purchase of insurance or otherwise, the value of which meets or exceeds on an actuarial basis the value of any service benefit plan (standard option with preferred provider organization) offered under chapter 89 of title 5, United States Code. (f)

Certain rules made applicable

For purposes of this section, rules similar to the rules of section 52 shall apply. (g)

Denial of double benefits

(1)

Other credits

No credit under any other provision of this chapter shall be allowed with respect to qualified retiree health care expenses taken into account under subsection (a). (2)

Deduction

The amount of any deduction allowable under this chapter with respect to any qualified retiree health care expenses paid or incurred during the taxable year shall be reduced by the amount of the credit allowed under subsection (a) with respect to such expenses for such taxable year. (h)

Election

This section shall apply to any taxpayer for any taxable year only if such taxpayer elects (at such time and in such manner as the Secretary may by regulations prescribe) to have this section apply for such taxable year. (i)

Termination

This section shall not apply to premiums paid or incurred after December 31, 2009.

(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 and at the end of paragraph (29), by striking the period at the end of paragraph (30) and inserting , plus, and by adding at the end the following:

(31)the retiree health care coverage credit determined under section 45N.

(c)

Credit allowed against the alternative minimum tax

Section 38(c)(4)(B) of the Internal Revenue Code of 1986 (defining specified credits) is amended by striking the period at the end of clause (ii)(II) and inserting , and, and by adding at the end the following new clause:

(iii)the credit determined under section 45N.

(d)

10-year carryback and unlimited carryforward of credit

Subsection (a) of section 39 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

(4)

10-year carryback and unlimited carryforward for premiums credit

In the case of the retiree health care coverage credit under section 45N— (A)this section shall be applied separately from the business credit (other than such retiree health care coverage credit), (B)paragraph (1) shall be applied by substituting 10 taxable years for 1 taxable years in subparagraph (A) thereof and by striking 20 in subparagraph (B) thereof, and (C)paragraph (2) shall be applied by striking 21 in subparagraph (A) thereof and by striking 20 in subparagraph (B) thereof.

(e)

Conforming amendments

(1)Section 6501(m) of the Internal Revenue Code of 1986 is amended by inserting 45N(h), after 45C(d)(4),. (2)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:

Sec. 45N. Employer-provided retiree health care insurance premiums.

(f)

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.