[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 99 Introduced in Senate (IS)]







110th CONGRESS
  1st Session
                                 S. 99

  To amend the Internal Revenue Code of 1986 to provide a refundable 
     credit for small business employee health insurance expenses.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 4, 2007

   Mr. Kerry 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 a refundable 
     credit for small business employee health insurance expenses.

    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 ``Small Business Health Care Tax 
Credit Act''.

SEC. 2. CREDIT FOR EMPLOYEE HEALTH INSURANCE EXPENSES.

    (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:

``SEC. 45O. EMPLOYEE HEALTH INSURANCE EXPENSES.

    ``(a) General Rule.--For purposes of section 38, in the case of a 
qualified small employer, the employee health insurance expenses credit 
determined under this section is an amount equal to the applicable 
percentage of the amount paid by the taxpayer during the taxable year 
for qualified employee health insurance expenses.
    ``(b) Applicable Percentage.--For purposes of subsection (a), the 
applicable percentage is--
            ``(1) 50 percent in the case of an employer with less than 
        10 qualified employees,
            ``(2) 25 percent in the case of an employer with more than 
        9 but less than 25 qualified employees, and
            ``(3) 20 percent in the case of an employer with more than 
        24 but less than 50 qualified employees.
    ``(c) Per Employee Dollar Limitation.--The amount of qualified 
employee health insurance expenses taken into account under subsection 
(a) with respect to any qualified employee for any taxable year shall 
not exceed--
            ``(1) $4,000 for self-only coverage, and
            ``(2) $10,000 for family coverage.
    ``(d) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Qualified small employer.--
                    ``(A) In general.--The term `qualified small 
                employer' means any small employer which--
                            ``(i) provides eligibility for health 
                        insurance coverage (after any waiting period 
                        (as defined in section 9801(b)(4))) to all 
                        qualified employees of the employer, and
                            ``(ii) pays at least 50 percent of the cost 
                        of such coverage for each qualified employee.
                    ``(B) Small employer.--
                            ``(i) In general.--For purposes of this 
                        paragraph, the term `small employer' means, 
                        with respect to any taxable year, any employer 
                        if--
                                    ``(I) the average gross receipts of 
                                such employer for the preceding 3 
                                taxable years does not exceed 
                                $5,000,000, and
                                    ``(II) such employer employed an 
                                average of more than 1 but less than 50 
                                qualified employees on business days 
                                during the preceding taxable year.
                            ``(ii) Aggregate gross assets.--For 
                        purposes of clause (i)(I), the term `aggregate 
                        gross assets' shall have meaning given such 
                        term by section 1202(d)(2).
                            ``(iii) Employers not in existence in 
                        preceding year.--For purposes of clause 
                        (i)(II)--
                                    ``(I) a preceding taxable year may 
                                be taken into account only if the 
                                employer was in existence throughout 
                                such year, and
                                    ``(II) in the case of an employer 
                                which was not in existence throughout 
                                the preceding taxable year, the 
                                determination of whether such employer 
                                is a qualified small employer shall be 
                                based on the average number of 
                                employees that it is reasonably 
                                expected such employer will employ on 
                                business days in the current taxable 
                                year.
                            ``(iv) Aggregation rules.--All persons 
                        treated as a single employer under subsection 
                        (a) or (b) of section 52 or subsection (m) or 
                        (o) of section 414 shall be treated as one 
                        person for purposes of this subparagraph.
                            ``(v) Predecessors.--The Secretary may 
                        prescribe regulations which provide for 
                        references in this subparagraph to an employer 
                        to be treated as including references to 
                        predecessors of such employer.
            ``(2) Qualified employee health insurance expenses.--
                    ``(A) In general.--The term `qualified employee 
                health insurance expenses' means any amount paid by an 
                employer for health insurance coverage to the extent 
                such amount is attributable to coverage provided to any 
                employee while such employee is a qualified employee.
                    ``(B) Exception for amounts paid under salary 
                reduction arrangements.--No amount paid or incurred for 
                health insurance coverage pursuant to a salary 
                reduction arrangement shall be taken into account under 
                subparagraph (A).
                    ``(C) Health insurance coverage.--The term `health 
                insurance coverage' has the meaning given such term by 
                section 9832(b)(1).
            ``(3) Qualified employee.--
                    ``(A) In general.--The term `qualified employee' 
                means an employee of an employer who, with respect to 
                any period, is not provided health insurance coverage 
                under--
                            ``(i) a health plan of the employee's 
                        spouse,
                            ``(ii) title XVIII, XIX, or XXI of the 
                        Social Security Act,
                            ``(iii) chapter 17 of title 38, United 
                        States Code,
                            ``(iv) chapter 55 of title 10, United 
                        States Code,
                            ``(v) chapter 89 of title 5, United States 
                        Code, or
                            ``(vi) any other provision of law.
                    ``(B) Employee.--The term `employee'--
                            ``(i) means any individual, with respect to 
                        any calendar year, who is reasonably expected 
                        to receive not more than $50,000 of 
                        compensation from the employer during such 
                        year,
                            ``(ii) does not include an employee within 
                        the meaning of section 401(c)(1), and
                            ``(iii) includes a leased employee within 
                        the meaning of section 414(n).
                    ``(C) Compensation.--The term `compensation' means 
                amounts described in section 6051(a)(3).
                    ``(D) Inflation adjustment.--
                            ``(i) In general.--In the case of a taxable 
                        year beginning after 2007, the $50,000 amount 
                        in subparagraph (B)(i) shall be increased by an 
                        amount equal to--
                                    ``(I) such dollar amount, 
                                multiplied by
                                    ``(II) the cost-of-living 
                                adjustment determined under section 
                                1(f)(3) for the calendar year in which 
                                the taxable year begins, determined by 
                                substituting `calendar year 2006' for 
                                `calendar year 1992' in subparagraph 
                                (B) thereof.
                            ``(ii) Rounding.--If any amount as adjusted 
                        under clause (i) is not a multiple of $1,000, 
                        such amount shall be rounded to the next lowest 
                        multiple of $1,000.
            ``(4) No qualified employees excluded.--Subsection (a) 
        shall not apply to an employer for any period unless at all 
        times during such period health insurance coverage is available 
        to all qualified employees of such employer under similar 
        terms.
    ``(e) Portion of Credit Made Refundable.--
            ``(1) In general.--The aggregate credits allowed to a 
        taxpayer under subpart C shall be increased by the lesser of--
                    ``(A) the credit which would be allowed under 
                subsection (a) without regard to this subsection and 
                the limitation under section 38(c), or
                    ``(B) the amount by which the aggregate amount of 
                credits allowed by this subpart (determined without 
                regard to this subsection) would increase if the 
                limitation imposed by section 38(c) for any taxable 
                year were increased by the amount of employer payroll 
                taxes imposed on the taxpayer during the calendar year 
                in which the taxable year begins.
        The amount of the credit allowed under this subsection shall 
        not be treated as a credit allowed under this subpart and shall 
        reduce the amount of the credit otherwise allowable under 
        subsection (a) without regard to section 38(c).
            ``(2) Employer payroll taxes.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `employer payroll 
                taxes' means the taxes imposed by--
                            ``(i) section 3111(b), and
                            ``(ii) sections 3211(a) and 3221(a) 
                        (determined at a rate equal to the rate under 
                        section 3111(b)).
                    ``(B) Special rule.--A rule similar to the rule of 
                section 24(d)(2)(C) shall apply for purposes of 
                subparagraph (A).
    ``(f) Denial of Double Benefit.--No deduction or credit under any 
other provision of this chapter shall be allowed with respect to 
qualified employee health insurance expenses taken into account under 
subsection (a).''.
    (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 ``plus'' at the end of paragraph (30), 
by striking the period at the end of paragraph (31) and inserting ``, 
plus'', and by adding at the end the following:
            ``(32) the employee health insurance expenses credit 
        determined under section 45O.''.
    (c) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by adding at the end the following:

``Sec. 45O. Employee health insurance expenses.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred in taxable years beginning after 
December 31, 2006.
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