[Congressional Record Volume 148, Number 41 (Monday, April 15, 2002)]
[Senate]
[Pages S2678-S2679]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BINGAMAN:
  S. 2131. A bill to amend the Internal Revenue Code of 1986 to adjust 
the dollar amounts used to calculate the credit for the elderly and the 
permanently disabled for inflation since 1985; to the Committee on 
Finance.
  Mr. BINGAMAN. Madam President, I rise today to introduce three pieces 
of legislation that combined are an important step in creating a fairer 
and simpler Internal Revenue Code. These bills simplify the tax filing 
process and/or reduce the tax burden for the self employed, home-based 
service workers, the elderly and the disabled. These proposals are 
consistent with recommendations contained in the 2001 Taxpayer 
Advocate's Report and need our attention in Congress this year.
  The first piece of legislation will address a problem that negatively 
impacts many recipients and providers of state supported home-based 
service programs. Under current law, depending on the manner in which 
States manage their home-based service programs, these workers are 
sometimes treated for Federal income tax purposes as independent 
contractors instead of employees. This improper classification results 
in these workers being responsible for paying all of the payroll taxes 
owed on payments received for their services instead of paying only 
half as would be required if they were properly treated as employees. 
In other States, the home-based

[[Page S2679]]

service worker is treated as an employee, but the recipients of the 
service, generally the disabled and/or elderly, are treated as the 
employer thereby making them responsible for remitting payroll taxes 
for the worker. My first proposal would correct these inconsistent 
treatments and, for tax purposes, deem all home-based service workers 
to be employees. At the same time, it would deem the State or State-
funded organization to be the employer. These changes will 
significantly reduce inadvertent tax filing errors and make certain 
that the elderly and disabled are not responsible for payroll taxes for 
their State supported home-based care. It will also guarantee that 
home-based care service workers will only pay their share of payroll 
taxes and not be burdened with paying the employer's share as well.
  The second piece of legislation that I am introducing would allow 
self-employed workers to treat their expenses related to the purchase 
of health insurance in the same fashion as those workers who receive 
their health insurance on a pre-tax basis through their employer. Under 
current law, self-employed workers are required to remit payroll taxes 
on the amounts they pay for their health insurance coverage. This 
legislation would remove this inequity and allow the self-employed to 
reduce their net earnings by the cost of their health insurance for 
purposes of determining their payroll tax liability for the year. This 
proposal is another step in an effort to make sure that health 
insurance is an affordable option for all self-employed workers and 
their families.
  The final piece of legislation that I am introducing would increase 
the number of taxpayers who would be eligible for the existing tax 
credit for the elderly and disabled as well as raise the amount that 
some would receive. This tax credit was created to guarantee that the 
elderly and disabled are able to support themselves when their Social 
Security or other non-taxable pensions are insufficient to cover their 
modest expenses. Since 1983, however, the amounts used to calculate the 
availability and amount of this credit have not been increased. By not 
indexing this provision for inflation, the number of taxpayers claiming 
this credit has dropped substantially. In 1998, the most recent year 
available from the IRS, 180,473 taxpayers claimed the credit as 
compared to 339,818 in 1990. This proposal would raise the limits of 
this credit to the level it would currently be at if the provision had 
been indexed for inflation starting in 1983 as well index it going 
forward.
  I look forward to working with my colleagues on both sides of the 
aisle in advancing these pieces of legislation.
  I ask unanimous consent that the text of the three bills be printed 
in the Record.
  There being no objection, the bills were ordered to be printed in the 
Record, as follows:

                                S. 2129

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. CLARIFICATION OF EMPLOYEE STATUS OF HOME-BASED 
                   SERVICE WORKERS.

       (a) In General.--Section 3121(d)(3) of the Internal Revenue 
     Code of 1986 (defining employee) is amended by striking 
     ``and'' at the end of subparagraph (C), by adding ``or'' at 
     the end of subparagraph (D), and by inserting after 
     subparagraph (D) the following new subparagraph:
       ``(E) any qualified home-based service worker;''.
       (b) Definition.--Section 3121(d) of the Internal Revenue 
     Code of 1986 is amended by adding at the end the following 
     new flush sentence:
     ``For purposes of paragraph (3)(E), the term `qualified home-
     based service worker' means an individual providing in-home 
     household or personal care services for disabled and elderly 
     individuals under a program the funding of which is 
     administered by a State, State agency, or an intermediate 
     services organization.''.
       (c) Program Agent Treated as Employer of Qualified Home-
     Based Service Worker.--Section 3504 of the Internal Revenue 
     Code of 1986 (relating to acts to be performed by agents) is 
     amended--
       (1) by striking ``In case a fiduciary'' and inserting:
       ``(a) In General.--In case of a fiduciary'', and
       (2) by adding at the end the following new subsection:
       ``(b) Home-Based Service Worker Programs.--For purposes of 
     subsection (a), in the case of any program under which is 
     provided funding for the employment of qualified home-based 
     service workers (as defined in section 3121(d)), the 
     administrator of such funding shall be treated as the agent 
     for any employer of such worker and such employer shall not 
     remain subject to the provisions of law (including penalties) 
     applicable in respect of such an employer.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to services performed after December 31, 2002.
                                  ____


                                S. 2130

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. DEDUCTION FOR HEALTH INSURANCE COSTS IN COMPUTING 
                   SELF-EMPLOYMENT TAXES.

       (a) In General.--Section 161(l) of the Internal Revenue 
     Code of 1986 (relating to special rules for health insurance 
     costs of self-employed individuals) is amended by striking 
     paragraph (4) and by redesignating paragraph (5) as paragraph 
     (4).
       (b) Effective date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.
                                  ____


                                S. 2131

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. INFLATION ADJUSTMENT FOR ELDERLY AND DISABLED 
                   CREDIT DOLLAR AMOUNTS.

       (a) In General.--Section 22 of the Internal Revenue Code of 
     1986 (relating to credit for the elderly and the permanently 
     disabled) is amended by adding at the end the following new 
     subsection:
       ``(g) Inflation Adjustment.--
       ``(1) In general.--In the case of any taxable year 
     beginning after 2002, each of the dollar amounts contained in 
     subsections (c) and (d) 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 such calendar year, by substituting 
     `1983' for `1992' in subparagraph (B) thereof.
       ``(B) Rounding.--If any increase determined under 
     subparagraph (A) is not a multiple of $50, such increase 
     shall be rounded to the nearest multiple of $50.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2002.
                                 ______