Improvements to the employer-provided child care tax credit

(a)

Credit allowed for reimbursement of employee child care expenses

Section 45F(c)(1)(A) of the Internal Revenue Code of 1986 is amended by striking or at the end of clause (ii), by striking the period at the end of clause (iii) and inserting , or, and by adding at the end the following new clause:

(iv)to reimburse an employee for child care costs necessary for the employee's employment.

(b)

Credit not restricted to child care facilities providing employer-Provided child care

(1)

In general

Section 45F(c)(2)(B) of such Code is amended in clause (i) by inserting and after the comma, by striking clause (ii), and by redesignating clause (iii) as clause (ii).(2)

Conforming amendments

(A)The heading for section 45F of such Code is amended to read as follows:

45F

Child care business credit

(B)The table of sections for subpart D of part IV of subchapter A of chapter 1 of subtitle A of such Code is amended by striking the item relating to section 45F and inserting the following new item:

45F. Child care business credit.

(c)

Credit percentage for small employers

Section 45F(e) of such Code is amended by adding at the end the following new paragraph:

(4)

Credit percentage for small employers

(A)

In general

With respect to a small employer, subsection (a)(1) shall be applied by substituting 50 percent for 25 percent.(B)

Small employer

For the purposes of this paragraph, the term small employer means, with respect to any taxable year, any employer if—(i)the average number of employees of such employer on business days during such taxable year does not exceed 50, and(ii)the gross receipts of such employer during such taxable year do not exceed $25,000,000.

(d)

Study of impact of tax credit for employer-Provided child care

(1)

In general

Not later than 18 months after the date of the enactment of this Act, the Comptroller General of the United States, in consultation with the Secretary of the Treasury and the Secretary of Labor, shall—(A)complete a study that examines the tax credit for employer-provided child care authorized under section 45F of the Internal Revenue Code of 1986 by considering such metrics as—(i)the characteristics of employers that take the credit, including the size of such employer, whether such employer is in a rural or urban location, and whether such employer also offers a dependent care assistance program described in section 129 of such Code,(ii) the characteristics of employers that do not take the credit,(iii)the extent to which employees benefit when employers provide child care and take the credit,(iv)any challenges identified by employers that do not take the credit, and(v)any explanations from employers as to why they do or do not take the credit, and(B)prepare and submit a report to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives setting forth the conclusions of the study conducted under subparagraph (A) in such a manner that the recommendations included in the report can inform future legislative action. Such report shall also be made publicly available on the website of the Government Accountability Office.(2)

Prohibition

In carrying out the requirements of this section, the Comptroller General of the United States may request qualitative and quantitative information from employers claiming the credit under section 45F of the Internal Revenue Code of 1986, but nothing in this section shall be construed as mandating additional reporting requirements for such employers beyond what is already required by law.(e)

Effective date

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