Nonrefundable credit for certain primary health service providers serving health professional shortage areas

(a)

In general

Subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to nonrefundable personal credits) is amended by inserting after section 25D the following new section:

25E.

Primary health service providers serving health professional shortage areas

(a)

Allowance of credit

In the case of a qualified primary health service provider, there is allowed as a credit against the tax imposed by this chapter for any taxable year in a mandatory service period an amount equal to the product of— (1)the lesser of— (A)the number of months of such period occurring in such taxable year, or (B)60 months, reduced by the number of months taken into account under this paragraph with respect to such provider for all preceding taxable years (whether or not in the same mandatory service period), multiplied by (2)$1,000. (b)

Qualified primary health service provider

For purposes of this section, the term qualified primary health service provider means any qualified health provider who for any month during a mandatory service period is certified by the Bureau to be a primary health service provider who— (1)is providing health services described in subsection (c)— (A)full time, and (B)to individuals at least 80 percent of whom reside in a health professional shortage area, (2)is not receiving during such year a scholarship under the National Health Service Corps Scholarship Program or the Indian health professions scholarship program or a loan repayment under the National Health Service Corps Loan Repayment Program or the Indian Health Service Loan Repayment Program, (3)is not fulfilling service obligations under such Programs, and (4)has not defaulted on such obligations. (c)

Health services described

Health services described in this subsection are— (1)basic health services (as described in section 330(b)(1)(A)(i) of the Public Health Service Act), (2)qualified psychologist services (as defined in section 1861(ii) of the Social Security Act), and (3)clinical social worker services (as defined in section 1861(hh) of the Social Security Act. (d)

Other definitions

For purposes of this section— (1)

Qualified health provider

The term qualified health provider means a physician (as defined in section 1861(r) of the Social Security Act), a clinical psychologist (within the meaning of section 1861(ii) of such Act), and a clinical social worker (as defined in section 1861(hh)(1) of such Act). (2)

Mandatory Service Period

The term mandatory service period means the period of 60 consecutive calendar months beginning with the first month the taxpayer is a qualified primary health service provider. In the case of an individual who is such a provider on the date of enactment of the Health Care Access Improvement Act, such term means the period of 60 consecutive calendar months beginning with the first month after such date. (3)

Health professional shortage area

The term health professional shortage area means a health professional shortage area designated under section 332 of the Public Health Service Act. (4)

Bureau

The term Bureau means the Bureau of Primary Health Care, Health Resources and Services Administration of the Public Health Service. (e)

Recapture of credit

(1)

In general

If, during any taxable year, there is a recapture event, 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 percentage, and (B)the aggregate unrecaptured credits allowed to such taxpayer under this section for all prior taxable years. (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: Months 1–24100 Months 25–3675 Months 37–4850 Months 49–6025 Months 61 and thereafter0.

(B)

Timing

For purposes of subparagraph (A), month 1 shall begin on the first day of the mandatory service period. (3)

Recapture event defined

(A)

In general

For purposes of this subsection, the term recapture event means the failure of the taxpayer to be a qualified primary health service provider for any month during any mandatory service period. (B)

Cessation of designation

The cessation of the designation of any area as a rural health professional shortage area after the beginning of the mandatory service period for any taxpayer shall not constitute a recapture event. (C)

Secretarial waiver

The Secretary may waive any recapture event caused by extraordinary circumstances. (4)

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.

(b)

Clerical Amendment

The table of sections for subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 25D the following new item:

Sec. 25E. Primary health service providers serving health professional shortage areas.

(c)

Effective Date

The amendments made by this section shall apply to taxable years beginning after December 31, 2007.