[Congressional Record Volume 147, Number 177 (Wednesday, December 19, 2001)]
[Senate]
[Pages S13710-S13712]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KERRY (for himself, Mr. Burns, Mr. Corzine, and Mr. 
        Baucus):
  S. 1856. A bill to amend the Internal Revenue Code of 1986 to promote 
employer and employee participation in telework arrangements, and for 
other purposes; to the Committee on Finance.
  Mr. KERRY. Mr. President, along with my colleagues Senator Burns, 
Senator Corzine, and Senator Baucus, I wish to introduce legislation of 
critical importance to our Nation's workforce and economy.
   The rapid spread of new telecommunications technologies has 
generated opportunities for firms across the country to improve upon 
the traditional work environment. Today, millions of American workers 
participate in ``telework'' arrangements, otherwise known as 
telecommuting, which allow them to work outside of their normal work 
location. Telework arrangements carry several advantages: the ability 
to spend more time with the children, less time wasted in traffic, 
enhanced productivity, and the environmental benefits of reduced carbon 
dioxide emissions. While teleworking grew substantially during the 
1990s, the number of teleworkers has reached a plateau, with little 
increase in the last year. The social, economic, and environmental 
gains of teleworking are indisputable. Our legislation combines tax 
incentives and an employer awareness campaign to stimulate further 
growth in telework arrangements.
   The term ``telework'' means to perform normal and regular work 
functions at locations other than the traditional workplace of the 
employer, thereby eliminating or substantially reducing the physical 
commute to and from the workplace. Given the opportunity, workers 
choose overwhelmingly to participate in telework arrangements. 
Employees who telework report an enhanced quality of life. 71 percent 
of teleworkers report being more satisfied with their job than before 
they were permitted to telework. Working from home allows parents more 
time with their children and reduces child care expenses. Teleworkers 
also stay in their communities, providing enhanced security and 
presence.
   If teleworking is implemented broadly in a community, the need for 
construction of additional automobile infrastructure, which is often 
driven by peak period commuting demand, may be reduced. Even workers 
who do not telework benefit since traffic congestion is lessened for 
them as well.
  There are also economic benefits. Data indicate that teleworking 
enhances productivity, both because teleworkers report being more 
productive per unit time, and because the teleworker has available the 
previously nonproductive commute time, an average of 62 minutes per day 
spent on an average 44 mile round-trip commute. Because teleworkers are 
able to mix work and personal needs, the number of occasions when they 
need to be absent from work altogether diminishes. One study suggests 
that the productivity improvement of home-based teleworkers averages 15 
percent. Firms also benefit from eliminating unnecessary office space 
and reducing associated overhead costs. For example, one large national 
employer reports that in 2000, their telework program resulted in $100 
million in increased productivity, $18 million in reduced turnover, and 
$25 million in reduced real estate costs. Because of the enhanced 
quality of life and personal freedom that teleworking fosters, firms 
are better able to retain valued employees.
   Telework arrangements are critical to keeping our economy and 
workforce

[[Page S13711]]

on the leading edge of technological developments. Teleworking 
contributes to the residential deployment of broadband technology, 
which has otherwise stagnated. Teleworkers have a disproportionate need 
for high-speed Internet access. Encouraging telework is a means of 
inducing greater demand for broadband technology.
   Allowing employees to work from home saves energy and reduces carbon 
dioxide emissions associated with commuting. It also reduces vehicular 
contributions to local and regional tropospheric pollution both 
directly and, by reducing congestion in general, indirectly. To the 
extent telework reduces demands for additional infrastructure, it also 
leads to less material use in construction and less land-use impact.
   The Teleworking Advancement Act creates two tax-based incentives to 
promote the continued spread of employer-sponsored telework 
arrangements and a pilot program to raise awareness about telecommuting 
among small business employers.
   The employer telework tax credit would allow employers to claim a 
credit of up to $500 for each employee who participates in an employer-
sponsored telework arrangement during the taxable year. For employees 
who telework on a partial basis, the credit would be prorated. 
Employees of small businesses, those with 100 or fewer employees, and 
disabled employees, as defined by the Americans with Disabilities Act, 
would be eligible for a maximum credit of $1,000. An employer-sponsored 
telework arrangement is defined as an arrangement established by an 
employer that enables employees of the employer to telework for a 
minimum of 25 days per year. The arrangement must be supported by a 
written agreement between the employer and each teleworking employee 
that describes the terms of the arrangement.
  The telework equipment tax credit would allow individuals or 
businesses to claim a credit equal to 10 percent of qualified telework 
expenses paid, pursuant to an employer-sponsored telework arrangement. 
Either the employer or the employee, depending on who incurred the 
expense, would be eligible for the credit. The maximum credit would be 
$500. For employees of small businesses (those with 100 or fewer 
employees) and disabled employees, as defined by the Americans with 
Disabilities Act, the credit would be 20 percent of eligible expenses, 
with a maximum credit of $1,000. Qualified telework expenses includes 
expenses paid or incurred for computers, software, modems, 
telecommunications equipment, and access to Internet or broadband 
technologies, including applicable taxes and other expenses for the 
delivery, installation, or maintenance of such equipment.
  Finally, the legislation authorizes $5 million for the Administrator 
of the Small Business Administration to conduct a pilot program to 
raise awareness about telecommuting among small business employers and 
to encourage employers to offer telecommuting options to employees. 
Activities would include producing educational materials, conducting 
outreach, and acquiring telecommuting technologies and equipment to be 
used for demonstration purposes. Special efforts would be made to 
conduct outreach to businesses owned by or employing individuals with 
disabilities.
   The Teleworking Advancement Act will induce more employers to offer 
teleworking opportunities to their employees, creating broad-based 
benefits for the American workforce and helping ensure that our economy 
remains at the forefront of 21st century workplace practices. Through a 
combination of tax incentives and an employer awareness campaign, our 
legislation will stimulate the spread of flexible, innovative, and 
productivity-enhancing labor arrangements. I urge my colleagues to 
support passage of the legislation, and I ask unanimous consent that 
the text of the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1856

       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 ``Teleworking Advancement 
     Act''.

      SEC. 2. CREDIT FOR TELEWORKING.

       (a) In General.--Subpart B of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     foreign tax credit, etc.) is amended by inserting after 
     section 30A the following new section:

     ``SEC. 30B. TELEWORK CREDIT.

       ``(a) General Rule.--There shall be allowed as a credit 
     against the tax imposed by this chapter for any taxable year 
     an amount equal to the sum of--
       ``(1) the employer telework tax credit, plus
       ``(2) the telework equipment tax credit.
       ``(b) Employer Telework Tax Credit; Telework Equipment Tax 
     Credit.--For purposes of this section--
       ``(1) Employer telework tax credit.--Except as provided for 
     in subsection (c)(1), the employer telework tax credit for 
     any taxable year is equal to $500 for each employee who 
     participates in an employer sponsored telework arrangement 
     during the taxable year.
       ``(2) Telework equipment tax credit.--Except as provided 
     for in subsection (c)(2), the telework equipment tax credit 
     for any taxable year is equal to 10 percent of qualified 
     telework expenses paid or incurred during the taxable year by 
     either the employer on behalf of the employee, or directly by 
     the employee, pursuant to an employer sponsored telework 
     arrangement.
       ``(c) Special Rule for Disabled Employees and Employees of 
     Small Businesses.--For purposes of this section:
       ``(1) For each employee who is covered under the Americans 
     with Disabilities Act of 1990 (42 U.S.C. 1201), or for each 
     employee of a small business, the employer telework tax 
     credit for any taxable year is equal to $1,000 for each 
     employee who participates in an employer sponsored telework 
     arrangement during the taxable year.
       ``(2) For each employee who is covered under the Americans 
     with Disabilities Act of 1990 (42 U.S.C. 1201), or for each 
     employee of a small businesses, the telework equipment tax 
     credit for any taxable year is equal to 20 percent of 
     qualified telework expenses paid or incurred during the 
     taxable year by either the employer on behalf of the 
     employee, or directly by the employee, pursuant to an 
     employer sponsored telework arrangement.
       ``(d) Credit Adjustments and Limitations.--
       ``(1) Credit adjustments.--In computing the credit allowed 
     under subsection (b)(1) or (c)(1) for any taxable year, the 
     following adjustments shall apply:
       ``(A) In the case of an employee who participates in an 
     employer sponsored telework arrangement for less than the 
     full taxable year, the credit amount identified in subsection 
     (b)(1) or (c)(1), whichever is applicable, shall be 
     multiplied by a fraction, the numerator of which is the total 
     number of months in the taxable year that the employee 
     participates in an employer sponsored telework arrangement 
     and the denominator of which is 12. For purposes of the 
     preceding sentence, an employee is considered to be 
     participating in an employer sponsored telework arrangement 
     for a month if the employee teleworks for at least one full 
     day of such month.
       ``(B) In the case of an employee who participates in an 
     employer sponsored telework arrangement but does not telework 
     every day of the taxable year that the employee is required 
     by his or her employer to work, the credit amount identified 
     in subsection (b)(1) or (c)(1), whichever is applicable, 
     shall be multiplied by a fraction, the numerator of which is 
     the total number of full days in the taxable year that the 
     employee teleworks and the denominator of which is the total 
     number of days in the taxable year that the employee is 
     required by his or her employer to work.
       ``(2) Telework equipment credit limitations.--
       ``(A) In computing the credit allowed under subsection 
     (b)(2) for any taxable year, the following limitations shall 
     apply:
       ``(i) The maximum credit claimed by any employer with 
     respect to qualified telework expenses paid or incurred on 
     behalf of an employee shall not exceed $500 for each employee 
     who participates in an employer sponsored telework 
     arrangement.
       ``(ii) The maximum credit claimed by any employee with 
     respect to qualified telework expenses paid or incurred 
     directly by the employee pursuant to an employer sponsored 
     telework arrangement shall not exceed $500.
       ``(B) In computing the credit allowed under subsection 
     (c)(2) for any taxable year with respect to employees who are 
     covered under the Americans with Disabilities Act of 1990 (42 
     U.S.C. 1201), or for each employee of a small business, the 
     following limitations shall apply:
       ``(i) The maximum credit claimed by any employer with 
     respect to qualified telework expenses paid or incurred on 
     behalf of an employee shall not exceed $1,000 for each 
     employee who participates in an employer sponsored telework 
     arrangement.
       ``(ii) The maximum credit claimed by any employee with 
     respect to qualified telework expenses paid or incurred 
     directly by the employee pursuant to an employer sponsored 
     telework arrangement shall not exceed $1,000.
       ``(e) Definitions.--For purposes of this section--
       ``(1) Employer sponsored telework arrangement.--The term 
     `employer sponsored telework arrangement' means an 
     arrangement established by an employer that enables employees 
     of the employer to telework for a minimum of 25 full days per 
     taxable

[[Page S13712]]

     year. Such an arrangement shall be supported by a written 
     agreement between the employer and each teleworking employee 
     that describes the terms of the employer sponsored telework 
     arrangement.
       ``(2) Qualified telework expenses.--
       ``(A) In general.--The term `qualified telework expenses' 
     shall include expenses paid or incurred for computers, 
     computer-related hardware and software, modems, data 
     processing equipment, telecommunications equipment, and 
     access to Internet or broadband technologies, including 
     applicable taxes and other expenses for the delivery, 
     installation, or maintenance of such equipment.
       ``(B) Only certain expenses taken into account.--Expenses 
     shall be taken into account under subparagraph (A) only to 
     the extent they are authorized by the employer pursuant to an 
     employer sponsored telework arrangement and are necessary to 
     enable the employee to telework.
       ``(3) Small business.--The term `small business' means a 
     business with an average of 100 or fewer employees during the 
     taxable year.
       ``(4) Telework.--An employee shall be treated as engaged in 
     telework if--
       ``(A) the employee's normal and regular work functions are 
     performed at a fixed location provided by the employer,
       ``(B)(i) the employee, under an employer sponsored telework 
     arrangement, performs such functions at the employee's 
     residence or at a location specifically designed to allow 
     employees to perform such functions closer to their 
     residence, and
       ``(ii) the performance of such functions at such residence 
     or location eliminates or substantially reduces the physical 
     commute of the employee to the fixed location described in 
     subparagraph (A), and
       ``(C) the employee transmits by electronic or other 
     communications medium the employee's work product from such 
     residence or location to the fixed location where such 
     functions would otherwise have been performed.
       ``(f) Special Rules.--
       ``(1) Limitation based on amount of tax.--
       ``(A) Liability for tax.--The credit allowable under 
     subsection (a) for any taxable year shall not exceed the 
     excess (if any) of--
       ``(i) the regular tax for the taxable year, reduced by the 
     sum of the credits allowable under subpart A and the 
     preceding sections of this subpart, over
       ``(ii) the tentative minimum tax for the taxable year.
       ``(B) Carryforward of unused credit.--If the amount of the 
     credit allowable under subsection (a) for any taxable year 
     exceeds the limitation under paragraph (1)(A) for the taxable 
     year, the excess shall be carried to the succeeding taxable 
     year and added to the amount allowable as a credit under 
     subsection (a) for such succeeding taxable year.
       ``(2) Basis reduction.--The basis of any property for which 
     a credit is allowable under subsection (a) shall be reduced 
     by the amount of such credit (determined without regard to 
     paragraph (1)).
       ``(3) Recapture.--The Secretary shall, by regulations, 
     provide for recapturing the benefit of any credit allowable 
     under subsection (a) with respect to any property which 
     ceases to be property eligible for such credit.
       ``(4) Property used outside united states, etc., not 
     qualified.--No credit shall be allowed under subsection (a) 
     with respect to any property referred to in section 50(b) or 
     with respect to the portion of the cost of any property taken 
     into account under section 179.
       ``(5) Election not to take credits.--No credits shall be 
     allowed under subsection (a) for any expense if the taxpayer 
     elects to not have this section apply with respect to such 
     expense.
       ``(6) Denial of double benefit.--No deduction or credit 
     (other than under this section) shall be allowed under this 
     chapter with respect to any expense which is taken into 
     account in determining the credit under this section.
       ``(7) Documentation.--Employers and employees are 
     responsible for maintaining adequate documentation to support 
     any credits claimed under this section.''
       (b) Conforming Amendment.--Subsection (a) of section 1016 
     of the Internal Revenue Code of 1986 (relating to general 
     rule for adjustments to basis) is amended by striking ``and'' 
     at the end of paragraph (27), by striking the period at the 
     end of paragraph (28) and inserting ``, and'', and by adding 
     at the end the following:
       ``(29) in the case of property with respect to which a 
     credit was allowed under section 30B, to the extent provided 
     in section 30B(f)(2).''
       (c) Clerical Amendment.--The table of sections for subpart 
     B 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 30A the following new item:

``Sec. 30B. Telework credit.''

       (d) Regulatory Matters.--
       (1) Prohibition.--No Federal or State agency or 
     instrumentality shall adopt regulations or ratemaking 
     procedures that would have the effect of confiscating any 
     credit or portion thereof allowed under sections 30B of the 
     Internal Revenue Code of 1986 (as added by this Act) or 
     otherwise subverting the purpose of this Act.
       (2) Treasury regulatory authority.--It is the intent of 
     Congress in providing the telework tax credit under section 
     30B of the Internal Revenue Code of 1986 (as added by this 
     Act) to promote broad participation in employer sponsored 
     telework arrangements by providing incentives to both 
     employers and employees. Accordingly, the Secretary of the 
     Treasury shall prescribe such regulations as may be necessary 
     or appropriate to carry out the purposes of section 30B of 
     such Code, including regulations describing the information, 
     records, and data that employers and employees are required 
     to provide the Secretary to substantiate compliance with the 
     requirements of this section and section 30B of such Code. 
     Until the Secretary prescribes such regulations, employers 
     and employees may base such determinations on any reasonable 
     method that is consistent with the purposes of section 30B of 
     such Code.
       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

     SEC. 3. SMALL BUSINESS TELECOMMUTING PILOT PROGRAM.

       (a) In General.--In accordance with this section, the 
     Administrator shall conduct, in not more than 5 of the Small 
     Business Administration's regions, a pilot program to raise 
     awareness about telecommuting among small business employers 
     and to encourage such employers to offer telecommuting 
     options to employees.
       (b) Special Outreach to Individuals With Disabilities.--In 
     carrying out subsection (a), the Administrator shall make 
     special efforts to do outreach to--
       (1) businesses owned by or employing individuals with 
     disabilities, and disabled American veterans in particular;
       (2) Federal, State, and local agencies having knowledge and 
     expertise in assisting individuals with disabilities or 
     disabled American veterans; and
       (3) any group or organization, the primary purpose of which 
     is to aid individuals with disabilities or disabled American 
     veterans.
       (c) Permissible Activities.--In carrying out the pilot 
     program, the Administrator may only--
       (1) produce educational materials and conduct presentations 
     designed to raise awareness in the small business community 
     of the benefits and the ease of telecommuting;
       (2) conduct outreach--
       (A) to small business concerns that are considering 
     offering telecommuting options; and
       (B) as provided in subsection (b); and
       (3) acquire telecommuting technologies and equipment to be 
     used for demonstration purposes.
       (d) Selection of Regions.--In determining which regions 
     will participate in the pilot program, the Administrator 
     shall give priority consideration to regions in which Federal 
     agencies and private-sector employers have demonstrated a 
     strong regional commitment to telecommuting.
       (e) Report to Congress.--Not later than 2 years after the 
     first date on which funds are appropriated to carry out this 
     section, the Administrator shall transmit to the Committee on 
     Small Business of the House of Representatives and the 
     Committee on Small Business of the Senate a report containing 
     the results of an evaluation of the pilot program and any 
     recommendations as to whether the pilot program, with or 
     without modification, should be extended to include the 
     participation of all Small Business Administration regions.
       (f) Definitions.--In this section--
       (1) the term ``Administrator'' means the Administrator of 
     the Small Business Administration;
       (2) the term ``disability'' has the same meaning as in 
     section 3 of the Americans with Disabilities Act of 1990 (42 
     U.S.C. 12102);
       (3) the term ``pilot program'' means the program 
     established under this section; and
       (4) the term ``telecommuting'' means the use of 
     telecommunications to perform work functions under 
     circumstances which reduce or eliminate the need to commute.
       (g) Termination.--The pilot program shall terminate 2 years 
     after the first date on which funds are appropriated to carry 
     out this section.
       (h) Authorization of Appropriations.--There is authorized 
     to be appropriated to the Small Business Administration 
     $5,000,000 to carry out this section.
                                 ______