II 109th CONGRESS 1st Session S. 772 IN THE SENATE OF THE UNITED STATES April 13, 2005 Mr. Cornyn (for himself and Mr. Harkin) 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 expand workplace health incentives by equalizing the tax consequences of employee athletic facility use.

1.

Short title

This Act may be cited as the Workforce Health Improvement Program Act of 2005.

2.

Employer-provided off-premises health club services

(a)

Treatment as fringe benefit

Subparagraph (A) of section 132(j)(4) of the Internal Revenue Code of 1986 (relating to on-premises gyms and other athletic facilities) is amended to read as follows: (A)

In general

Gross income shall not include— (i)the value of any on-premises athletic facility provided by an employer to its employees, and (ii)so much of the fees, dues, or membership expenses paid by an employer to an athletic or fitness facility described in subparagraph (C) on behalf of its employees as does not exceed $900 per employee per year. . (b)

Athletic facilities described

Paragraph (4) of section 132(j) of the Internal Revenue Code of 1986 (relating to special rules) is amended by adding at the end the following new subparagraph: (C)

Certain athletic or fitness facilities described

For purposes of subparagraph (A)(ii), an athletic or fitness facility described in this subparagraph is a facility— (i)which provides instruction in a program of physical exercise, offers facilities for the preservation, maintenance, encouragement, or development of physical fitness, or is the site of such a program of a State or local government, (ii)which is not a private club owned and operated by its members, (iii)which does not offer golf, hunting, sailing, or riding facilities, (iv)whose health or fitness facility is not incidental to its overall function and purpose, and (v)which is fully compliant with the State of jurisdiction and Federal anti-discrimination laws. . (c)

Exclusion applies to highly compensated employees only if no discrimination

Section 132(j)(1) of the Internal Revenue Code of 1986 is amended— (1)by striking Paragraphs (1) and (2) of subsection (a) and inserting Subsections (a)(1), (a)(2), and (j)(4), and (2)by striking the heading thereof through (2) apply and inserting Certain exclusions apply. (d)

Employer deduction for dues to certain athletic facilities

(1)

In general

Paragraph (3) of section 274(a) of the Internal Revenue Code of 1986 (relating to denial of deduction for club dues) is amended by adding at the end the following new sentence: The preceding sentence shall not apply to so much of the fees, dues, or membership expenses paid to athletic or fitness facilities (within the meaning of section 132(j)(4)(C)) as does not exceed $900 per employee per year.. (2)

Conforming amendment

The last sentence of section 274(e)(4) of such Code is amended by inserting the first sentence of before subsection (a)(3). (e)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.