TITLE IX--REVENUE PROVISIONS
[edit]Subtitle A--Revenue Offset Provisions
[edit]- (a) In General- Chapter 43 of the Internal Revenue Code of 1986, as amended by section 1513, is amended by adding at the end the following:
- (a) Imposition of Tax- If--
- (1) an employee is covered under any applicable employer-sponsored coverage of an employer at any time during a taxable period, and
- (2) there is any excess benefit with respect to the coverage,
- there is hereby imposed a tax equal to 40 percent of the excess benefit.
- (b) Excess Benefit- For purposes of this section--
- (1) IN GENERAL- The term `excess benefit' means, with respect to any applicable employer-sponsored coverage made available by an employer to an employee during any taxable period, the sum of the excess amounts determined under paragraph (2) for months during the taxable period.
- (2) MONTHLY EXCESS AMOUNT- The excess amount determined under this paragraph for any month is the excess (if any) of--
- (A) the aggregate cost of the applicable employer-sponsored coverage of the employee for the month, over
- (B) an amount equal to 1/12 of the annual limitation under paragraph (3) for the calendar year in which the month occurs.
- (3) ANNUAL LIMITATION- For purposes of this subsection--
- (A) IN GENERAL- The annual limitation under this paragraph for any calendar year is the dollar limit determined under subparagraph (C) for the calendar year.
- (B) APPLICABLE ANNUAL LIMITATION- The annual limitation which applies for any month shall be determined on the basis of the type of coverage (as determined under subsection (f)(1)) provided to the employee by the employer as of the beginning of the month.
- (C) APPLICABLE DOLLAR LIMIT- Except as provided in subparagraph (D)--
- (i) 2013- In the case of 2013, the dollar limit under this subparagraph is--
- (I) in the case of an employee with self-only coverage, $8,500, and
- (II) in the case of an employee with coverage other than self-only coverage, $23,000.
- (ii) EXCEPTION FOR CERTAIN INDIVIDUALS- In the case of an individual who is a qualified retiree or who participates in a plan sponsored by an employer the majority of whose employees are engaged in a high-risk profession or employed to repair or install electrical or telecommunications lines--
- (I) the dollar amount in clause (i)(I) (determined after the application of subparagraph (D)) shall be increased by $1,350, and
- (II) the dollar amount in clause (i)(II) (determined after the application of subparagraph (D)) shall be increased by $3,000.
- (iii) SUBSEQUENT YEARS- In the case of any calendar year after 2013, each of the dollar amounts under clauses (i) and (ii) shall be increased to the amount equal to such amount as in effect for the calendar year preceding such year, increased by an amount equal to the product of--
- (I) such amount as so in effect, multiplied by
- (II) the cost-of-living adjustment determined under section 1(f)(3) for such year (determined by substituting the calendar year that is 2 years before such year for `1992' in subparagraph (B) thereof), increased by 1 percentage point.
- If any amount determined under this clause is not a multiple of $50, such amount shall be rounded to the nearest multiple of $50.
- (D) TRANSITION RULE FOR STATES WITH HIGHEST COVERAGE COSTS-
- (i) IN GENERAL- If an employee is a resident of a high cost State on the first day of any month beginning in 2013, 2014, or 2015, the annual limitation under this paragraph for such month with respect to such employee shall be an amount equal to the applicable percentage of the annual limitation (determined without regard to this subparagraph or subparagraph (C)(ii)).
- (ii) APPLICABLE PERCENTAGE- The applicable percentage is 120 percent for 2013, 110 percent for 2014, and 105 percent for 2015.
- (iii) HIGH COST STATE- The term `high cost State' means each of the 17 States which the Secretary of Health and Human Services, in consultation with the Secretary, estimates had the highest average cost during 2012 for employer-sponsored coverage under health plans. The Secretary's estimate shall be made on the basis of aggregate premiums paid in the State for such health plans, determined using the most recent data available as of August 31, 2012.
- (c) Liability To Pay Tax-
- (1) IN GENERAL- Each coverage provider shall pay the tax imposed by subsection (a) on its applicable share of the excess benefit with respect to an employee for any taxable period.
- (2) COVERAGE PROVIDER- For purposes of this subsection, the term `coverage provider' means each of the following:
- (A) HEALTH INSURANCE COVERAGE- If the applicable employer-sponsored coverage consists of coverage under a group health plan which provides health insurance coverage, the health insurance issuer.
- (B) HSA AND MSA CONTRIBUTIONS- If the applicable employer-sponsored coverage consists of coverage under an arrangement under which the employer makes contributions described in subsection (b) or (d) of section 106, the employer.
- (C) OTHER COVERAGE- In the case of any other applicable employer-sponsored coverage, the person that administers the plan benefits.
- (3) APPLICABLE SHARE- For purposes of this subsection, a coverage provider's applicable share of an excess benefit for any taxable period is the amount which bears the same ratio to the amount of such excess benefit as--
- (A) the cost of the applicable employer-sponsored coverage provided by the provider to the employee during such period, bears to
- (B) the aggregate cost of all applicable employer-sponsored coverage provided to the employee by all coverage providers during such period.
- (4) RESPONSIBILITY TO CALCULATE TAX AND APPLICABLE SHARES-
- (A) IN GENERAL- Each employer shall--
- (i) calculate for each taxable period the amount of the excess benefit subject to the tax imposed by subsection (a) and the applicable share of such excess benefit for each coverage provider, and
- (ii) notify, at such time and in such manner as the Secretary may prescribe, the Secretary and each coverage provider of the amount so determined for the provider.
- (B) SPECIAL RULE FOR MULTIEMPLOYER PLANS- In the case of applicable employer-sponsored coverage made available to employees through a multiemployer plan (as defined in section 414(f)), the plan sponsor shall make the calculations, and provide the notice, required under subparagraph (A).
- (d) Applicable Employer-Sponsored Coverage; Cost- For purposes of this section--
- (1) APPLICABLE EMPLOYER-SPONSORED COVERAGE-
- (A) IN GENERAL- The term `applicable employer-sponsored coverage' means, with respect to any employee, coverage under any group health plan made available to the employee by an employer which is excludable from the employee's gross income under section 106, or would be so excludable if it were employer-provided coverage (within the meaning of such section 106).
- (B) EXCEPTIONS- The term `applicable employer-sponsored coverage' shall not include--
- (i) any coverage (whether through insurance or otherwise) described in section 9832(c)(1)(A) or for long-term care, or
- (ii) any coverage described in section 9832(c)(3) the payment for which is not excludable from gross income and for which a deduction under section 162(l) is not allowable.
- (C) COVERAGE INCLUDES EMPLOYEE PAID PORTION- Coverage shall be treated as applicable employer-sponsored coverage without regard to whether the employer or employee pays for the coverage.
- (D) SELF-EMPLOYED INDIVIDUAL- In the case of an individual who is an employee within the meaning of section 401(c)(1), coverage under any group health plan providing health insurance coverage shall be treated as applicable employer-sponsored coverage if a deduction is allowable under section 162(l) with respect to all or any portion of the cost of the coverage.
- (E) GOVERNMENTAL PLANS INCLUDED- Applicable employer-sponsored coverage shall include coverage under any group health plan established and maintained primarily for its civilian employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any such government.
- (2) DETERMINATION OF COST-
- (A) IN GENERAL- The cost of applicable employer-sponsored coverage shall be determined under rules similar to the rules of section 4980B(f)(4), except that in determining such cost, any portion of the cost of such coverage which is attributable to the tax imposed under this section shall not be taken into account and the amount of such cost shall be calculated separately for self-only coverage and other coverage. In the case of applicable employer-sponsored coverage which provides coverage to retired employees, the plan may elect to treat a retired employee who has not attained the age of 65 and a retired employee who has attained the age of 65 as similarly situated beneficiaries.
- (B) HEALTH FSAS- In the case of applicable employer-sponsored coverage consisting of coverage under a flexible spending arrangement (as defined in section 106(c)(2)), the cost of the coverage shall be equal to the sum of--
- (i) the amount of employer contributions under any salary reduction election under the arrangement, plus
- (ii) the amount determined under subparagraph (A) with respect to any reimbursement under the arrangement in excess of the contributions described in clause (i).
- (C) ARCHER MSAS AND HSAS- In the case of applicable employer-sponsored coverage consisting of coverage under an arrangement under which the employer makes contributions described in subsection (b) or (d) of section 106, the cost of the coverage shall be equal to the amount of employer contributions under the arrangement.
- (D) ALLOCATION ON A MONTHLY BASIS- If cost is determined on other than a monthly basis, the cost shall be allocated to months in a taxable period on such basis as the Secretary may prescribe.
- (e) Penalty for Failure To Properly Calculate Excess Benefit-
- (1) IN GENERAL- If, for any taxable period, the tax imposed by subsection (a) exceeds the tax determined under such subsection with respect to the total excess benefit calculated by the employer or plan sponsor under subsection (c)(4)--
- (A) each coverage provider shall pay the tax on its applicable share (determined in the same manner as under subsection (c)(4)) of the excess, but no penalty shall be imposed on the provider with respect to such amount, and
- (B) the employer or plan sponsor shall, in addition to any tax imposed by subsection (a), pay a penalty in an amount equal to such excess, plus interest at the underpayment rate determined under section 6621 for the period beginning on the due date for the payment of tax imposed by subsection (a) to which the excess relates and ending on the date of payment of the penalty.
- (2) LIMITATIONS ON PENALTY-
- (A) PENALTY NOT TO APPLY WHERE FAILURE NOT DISCOVERED EXERCISING REASONABLE DILIGENCE- No penalty shall be imposed by paragraph (1)(B) on any failure to properly calculate the excess benefit during any period for which it is established to the satisfaction of the Secretary that the employer or plan sponsor neither knew, nor exercising reasonable diligence would have known, that such failure existed.
- (B) PENALTY NOT TO APPLY TO FAILURES CORRECTED WITHIN 30 DAYS- No penalty shall be imposed by paragraph (1)(B) on any such failure if--
- (i) such failure was due to reasonable cause and not to willful neglect, and
- (ii) such failure is corrected during the 30-day period beginning on the 1st date that the employer knew, or exercising reasonable diligence would have known, that such failure existed.
- (C) WAIVER BY SECRETARY- In the case of any such failure which is due to reasonable cause and not to willful neglect, the Secretary may waive part or all of the penalty imposed by paragraph (1), to the extent that the payment of such penalty would be excessive or otherwise inequitable relative to the failure involved.
- (f) Other Definitions and Special Rules- For purposes of this section--
- (1) COVERAGE DETERMINATIONS-
- (A) IN GENERAL- Except as provided in subparagraph (B), an employee shall be treated as having self-only coverage with respect to any applicable employer-sponsored coverage of an employer.
- (B) MINIMUM ESSENTIAL COVERAGE- An employee shall be treated as having coverage other than self-only coverage only if the employee is enrolled in coverage other than self-only coverage in a group health plan which provides minimum essential coverage (as defined in section 5000A(f)) to the employee and at least one other beneficiary, and the benefits provided under such minimum essential coverage do not vary based on whether any individual covered under such coverage is the employee or another beneficiary.
- (2) QUALIFIED RETIREE- The term `qualified retiree' means any individual who--
- (A) is receiving coverage by reason of being a retiree,
- (B) has attained age 55, and
- (C) is not entitled to benefits or eligible for enrollment under the Medicare program under title XVIII of the Social Security Act.
- (3) EMPLOYEES ENGAGED IN HIGH-RISK PROFESSION- The term `employees engaged in a high-risk profession' means law enforcement officers (as such term is defined in section 1204 of the Omnibus Crime Control and Safe Streets Act of 1968), employees in fire protection activities (as such term is defined in section 3(y) of the Fair Labor Standards Act of 1938), individuals who provide out-of-hospital emergency medical care (including emergency medical technicians, paramedics, and first-responders), and individuals engaged in the construction, mining, agriculture (not including food processing), forestry, and fishing industries. Such term includes an employee who is retired from a high-risk profession described in the preceding sentence, if such employee satisfied the requirements of such sentence for a period of not less than 20 years during the employee's employment.
- (4) GROUP HEALTH PLAN- The term `group health plan' has the meaning given such term by section 5000(b)(1).
- (5) HEALTH INSURANCE COVERAGE; HEALTH INSURANCE ISSUER-
- (A) HEALTH INSURANCE COVERAGE- The term `health insurance coverage' has the meaning given such term by section 9832(b)(1) (applied without regard to subparagraph (B) thereof, except as provided by the Secretary in regulations).
- (B) HEALTH INSURANCE ISSUER- The term `health insurance issuer' has the meaning given such term by section 9832(b)(2).
- (6) PERSON THAT ADMINISTERS THE PLAN BENEFITS- The term `person that administers the plan benefits' shall include the plan sponsor if the plan sponsor administers benefits under the plan.
- (7) PLAN SPONSOR- The term `plan sponsor' has the meaning given such term in section 3(16)(B) of the Employee Retirement Income Security Act of 1974.
- (8) TAXABLE PERIOD- The term `taxable period' means the calendar year or such shorter period as the Secretary may prescribe. The Secretary may have different taxable periods for employers of varying sizes.
- (9) AGGREGATION RULES- All employers treated as a single employer under subsection (b), (c), (m), or (o) of section 414 shall be treated as a single employer.
- (10) DENIAL OF DEDUCTION- For denial of a deduction for the tax imposed by this section, see section 275(a)(6).
- (g) Regulations- The Secretary shall prescribe such regulations as may be necessary to carry out this section.'.
- (b) Clerical Amendment- The table of sections for chapter 43 of such Code, as amended by section 1513, is amended by adding at the end the following new item:
- Sec. 4980I. Excise tax on high cost employer-sponsored health coverage.'.
- (c) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2012.
- (a) In General- Section 6051(a) of the Internal Revenue Code of 1986 (relating to receipts for employees) is amended by striking `and' at the end of paragraph (12), by striking the period at the end of paragraph (13) and inserting `, and', and by adding after paragraph (13) the following new paragraph:
- (14) the aggregate cost (determined under rules similar to the rules of section 4980B(f)(4)) of applicable employer-sponsored coverage (as defined in section 4980I(d)(1)), except that this paragraph shall not apply to--
- (A) coverage to which paragraphs (11) and (12) apply, or
- (B) the amount of any salary reduction contributions to a flexible spending arrangement (within the meaning of section 125).'.
- (b) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2010.
SEC. 9003. DISTRIBUTIONS FOR MEDICINE QUALIFIED ONLY IF FOR PRESCRIBED DRUG OR INSULIN.
[edit]- (a) HSAs- Subparagraph (A) of section 223(d)(2) of the Internal Revenue Code of 1986 is amended by adding at the end the following: `Such term shall include an amount paid for medicine or a drug only if such medicine or drug is a prescribed drug (determined without regard to whether such drug is available without a prescription) or is insulin.'.
- (b) Archer MSAs- Subparagraph (A) of section 220(d)(2) of the Internal Revenue Code of 1986 is amended by adding at the end the following: `Such term shall include an amount paid for medicine or a drug only if such medicine or drug is a prescribed drug (determined without regard to whether such drug is available without a prescription) or is insulin.'.
- (c) Health Flexible Spending Arrangements and Health Reimbursement Arrangements- Section 106 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:
- (f) Reimbursements for Medicine Restricted to Prescribed Drugs and Insulin- For purposes of this section and section 105, reimbursement for expenses incurred for a medicine or a drug shall be treated as a reimbursement for medical expenses only if such medicine or drug is a prescribed drug (determined without regard to whether such drug is available without a prescription) or is insulin.'.
- (d) Effective Dates-
- (1) DISTRIBUTIONS FROM SAVINGS ACCOUNTS- The amendments made by subsections (a) and (b) shall apply to amounts paid with respect to taxable years beginning after December 31, 2010.
- (2) REIMBURSEMENTS- The amendment made by subsection (c) shall apply to expenses incurred with respect to taxable years beginning after December 31, 2010.
SEC. 9004. INCREASE IN ADDITIONAL TAX ON DISTRIBUTIONS FROM HSAS AND ARCHER MSAS NOT USED FOR QUALIFIED MEDICAL EXPENSES.
[edit]- (a) HSAs- Section 223(f)(4)(A) of the Internal Revenue Code of 1986 is amended by striking `10 percent' and inserting `20 percent'.
- (b) Archer MSAs- Section 220(f)(4)(A) of the Internal Revenue Code of 1986 is amended by striking `15 percent' and inserting `20 percent'.
- (c) Effective Date- The amendments made by this section shall apply to distributions made after December 31, 2010.
SEC. 9005. LIMITATION ON HEALTH FLEXIBLE SPENDING ARRANGEMENTS UNDER CAFETERIA PLANS.
[edit]- (a) In General- Section 125 of the Internal Revenue Code of 1986 is amended--
- (1) by redesignating subsections (i) and (j) as subsections (j) and (k), respectively, and
- (2) by inserting after subsection (h) the following new subsection:
- (i) Limitation on Health Flexible Spending Arrangements- For purposes of this section, if a benefit is provided under a cafeteria plan through employer contributions to a health flexible spending arrangement, such benefit shall not be treated as a qualified benefit unless the cafeteria plan provides that an employee may not elect for any taxable year to have salary reduction contributions in excess of $2,500 made to such arrangement.'.
- (b) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2010.
- (a) In General- Section 6041 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsections:
- (h) Application to Corporations- Notwithstanding any regulation prescribed by the Secretary before the date of the enactment of this subsection, for purposes of this section the term `person' includes any corporation that is not an organization exempt from tax under section 501(a).
- (i) Regulations- The Secretary may prescribe such regulations and other guidance as may be appropriate or necessary to carry out the purposes of this section, including rules to prevent duplicative reporting of transactions.'.
- (b) Payments for Property and Other Gross Proceeds- Subsection (a) of section 6041 of the Internal Revenue Code of 1986 is amended--
- (1) by inserting `amounts in consideration for property,' after `wages,',
- (2) by inserting `gross proceeds,' after `emoluments, or other', and
- (3) by inserting `gross proceeds,' after `setting forth the amount of such'.
- (c) Effective Date- The amendments made by this section shall apply to payments made after December 31, 2011.
SEC. 9007. ADDITIONAL REQUIREMENTS FOR CHARITABLE HOSPITALS.
[edit]- (a) Requirements To Qualify as Section 501(c)(3) Charitable Hospital Organization- Section 501 of the Internal Revenue Code of 1986 (relating to exemption from tax on corporations, certain trusts, etc.) is amended by redesignating subsection (r) as subsection (s) and by inserting after subsection (q) the following new subsection:
- (r) Additional Requirements for Certain Hospitals-
- (1) IN GENERAL- A hospital organization to which this subsection applies shall not be treated as described in subsection (c)(3) unless the organization--
- (A) meets the community health needs assessment requirements described in paragraph (3),
- (B) meets the financial assistance policy requirements described in paragraph (4),
- (C) meets the requirements on charges described in paragraph (5), and
- (D) meets the billing and collection requirement described in paragraph (6).
- (2) HOSPITAL ORGANIZATIONS TO WHICH SUBSECTION APPLIES-
- (A) IN GENERAL- This subsection shall apply to--
- (i) an organization which operates a facility which is required by a State to be licensed, registered, or similarly recognized as a hospital, and
- (ii) any other organization which the Secretary determines has the provision of hospital care as its principal function or purpose constituting the basis for its exemption under subsection (c)(3) (determined without regard to this subsection).
- (B) ORGANIZATIONS WITH MORE THAN 1 HOSPITAL FACILITY- If a hospital organization operates more than 1 hospital facility--
- (i) the organization shall meet the requirements of this subsection separately with respect to each such facility, and
- (ii) the organization shall not be treated as described in subsection (c)(3) with respect to any such facility for which such requirements are not separately met.
- (3) COMMUNITY HEALTH NEEDS ASSESSMENTS-
- (A) IN GENERAL- An organization meets the requirements of this paragraph with respect to any taxable year only if the organization--
- (i) has conducted a community health needs assessment which meets the requirements of subparagraph (B) in such taxable year or in either of the 2 taxable years immediately preceding such taxable year, and
- (ii) has adopted an implementation strategy to meet the community health needs identified through such assessment.
- (B) COMMUNITY HEALTH NEEDS ASSESSMENT- A community health needs assessment meets the requirements of this paragraph if such community health needs assessment--
- (i) takes into account input from persons who represent the broad interests of the community served by the hospital facility, including those with special knowledge of or expertise in public health, and
- (ii) is made widely available to the public.
- (4) FINANCIAL ASSISTANCE POLICY- An organization meets the requirements of this paragraph if the organization establishes the following policies:
- (A) FINANCIAL ASSISTANCE POLICY- A written financial assistance policy which includes--
- (i) eligibility criteria for financial assistance, and whether such assistance includes free or discounted care,
- (ii) the basis for calculating amounts charged to patients,
- (iii) the method for applying for financial assistance,
- (iv) in the case of an organization which does not have a separate billing and collections policy, the actions the organization may take in the event of non-payment, including collections action and reporting to credit agencies, and
- (v) measures to widely publicize the policy within the community to be served by the organization.
- (B) POLICY RELATING TO EMERGENCY MEDICAL CARE- A written policy requiring the organization to provide, without discrimination, care for emergency medical conditions (within the meaning of section 1867 of the Social Security Act (42 U.S.C. 1395dd)) to individuals regardless of their eligibility under the financial assistance policy described in subparagraph (A).
- (5) LIMITATION ON CHARGES- An organization meets the requirements of this paragraph if the organization--
- (A) limits amounts charged for emergency or other medically necessary care provided to individuals eligible for assistance under the financial assistance policy described in paragraph (4)(A) to not more than the lowest amounts charged to individuals who have insurance covering such care, and
- (B) prohibits the use of gross charges.
- (6) BILLING AND COLLECTION REQUIREMENTS- An organization meets the requirement of this paragraph only if the organization does not engage in extraordinary collection actions before the organization has made reasonable efforts to determine whether the individual is eligible for assistance under the financial assistance policy described in paragraph (4)(A).
- (7) REGULATORY AUTHORITY- The Secretary shall issue such regulations and guidance as may be necessary to carry out the provisions of this subsection, including guidance relating to what constitutes reasonable efforts to determine the eligibility of a patient under a financial assistance policy for purposes of paragraph (6).'.
- (b) Excise Tax for Failures To Meet Hospital Exemption Requirements-
- (1) IN GENERAL- Subchapter D of chapter 42 of the Internal Revenue Code of 1986 (relating to failure by certain charitable organizations to meet certain qualification requirements) is amended by adding at the end the following new section:
SEC. 4959. TAXES ON FAILURES BY HOSPITAL ORGANIZATIONS.
[edit]- If a hospital organization to which section 501(r) applies fails to meet the requirement of section 501(r)(3) for any taxable year, there is imposed on the organization a tax equal to $50,000.'.
- (2) CONFORMING AMENDMENT- The table of sections for subchapter D of chapter 42 of such Code is amended by adding at the end the following new item:
- Sec. 4959. Taxes on failures by hospital organizations.'.
- (c) Mandatory Review of Tax Exemption for Hospitals- The Secretary of the Treasury or the Secretary's delegate shall review at least once every 3 years the community benefit activities of each hospital organization to which section 501(r) of the Internal Revenue Code of 1986 (as added by this section) applies.
- (d) Additional Reporting Requirements-
- (1) COMMUNITY HEALTH NEEDS ASSESSMENTS AND AUDITED FINANCIAL STATEMENTS- Section 6033(b) of the Internal Revenue Code of 1986 (relating to certain organizations described in section 501(c)(3)) is amended by striking `and' at the end of paragraph (14), by redesignating paragraph (15) as paragraph (16), and by inserting after paragraph (14) the following new paragraph:
- (15) in the case of an organization to which the requirements of section 501(r) apply for the taxable year--
- (A) a description of how the organization is addressing the needs identified in each community health needs assessment conducted under section 501(r)(3) and a description of any such needs that are not being addressed together with the reasons why such needs are not being addressed, and
- (B) the audited financial statements of such organization (or, in the case of an organization the financial statements of which are included in a consolidated financial statement with other organizations, such consolidated financial statement).'.
- (2) TAXES- Section 6033(b)(10) of such Code is amended by striking `and' at the end of subparagraph (B), by inserting `and' at the end of subparagraph (C), and by adding at the end the following new subparagraph:
- (D) section 4959 (relating to taxes on failures by hospital organizations),'.
- (e) Reports-
- (1) REPORT ON LEVELS OF CHARITY CARE- The Secretary of the Treasury, in consultation with the Secretary of Health and Human Services, shall submit to the Committees on Ways and Means, Education and Labor, and Energy and Commerce of the House of Representatives and to the Committees on Finance and Health, Education, Labor, and Pensions of the Senate an annual report on the following:
- (A) Information with respect to private tax-exempt, taxable, and government-owned hospitals regarding--
- (i) levels of charity care provided,
- (ii) bad debt expenses,
- (iii) unreimbursed costs for services provided with respect to means-tested government programs, and
- (iv) unreimbursed costs for services provided with respect to non-means tested government programs.
- (B) Information with respect to private tax-exempt hospitals regarding costs incurred for community benefit activities.
- (2) REPORT ON TRENDS-
- (A) STUDY- The Secretary of the Treasury, in consultation with the Secretary of Health and Human Services, shall conduct a study on trends in the information required to be reported under paragraph (1).
- (B) REPORT- Not later than 5 years after the date of the enactment of this Act, the Secretary of the Treasury, in consultation with the Secretary of Health and Human Services, shall submit a report on the study conducted under subparagraph (A) to the Committees on Ways and Means, Education and Labor, and Energy and Commerce of the House of Representatives and to the Committees on Finance and Health, Education, Labor, and Pensions of the Senate.
- (f) Effective Dates-
- (1) IN GENERAL- Except as provided in paragraphs (2) and (3), the amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
- (2) COMMUNITY HEALTH NEEDS ASSESSMENT- The requirements of section 501(r)(3) of the Internal Revenue Code of 1986, as added by subsection (a), shall apply to taxable years beginning after the date which is 2 years after the date of the enactment of this Act.
- (3) EXCISE TAX- The amendments made by subsection (b) shall apply to failures occurring after the date of the enactment of this Act.
SEC. 9008. IMPOSITION OF ANNUAL FEE ON BRANDED PRESCRIPTION PHARMACEUTICAL MANUFACTURERS AND IMPORTERS.
[edit]- (a) Imposition of Fee-
- (1) IN GENERAL- Each covered entity engaged in the business of manufacturing or importing branded prescription drugs shall pay to the Secretary of the Treasury not later than the annual payment date of each calendar year beginning after 2009 a fee in an amount determined under subsection (b).
- (2) ANNUAL PAYMENT DATE- For purposes of this section, the term `annual payment date' means with respect to any calendar year the date determined by the Secretary, but in no event later than September 30 of such calendar year.
- (b) Determination of Fee Amount-
- (1) IN GENERAL- With respect to each covered entity, the fee under this section for any calendar year shall be equal to an amount that bears the same ratio to $2,300,000,000 as--
- (A) the covered entity's branded prescription drug sales taken into account during the preceding calendar year, bear to
- (B) the aggregate branded prescription drug sales of all covered entities taken into account during such preceding calendar year.
- (2) SALES TAKEN INTO ACCOUNT- For purposes of paragraph (1), the branded prescription drug sales taken into account during any calendar year with respect to any covered entity shall be determined in accordance with the following table:
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With respect to a covered entity's aggregate branded prescription drug sales during the calendar year that are: The percentage of such sales taken into account is:
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Not more than $5,000,000 0 percent
More than $5,000,000 but not more than $125,000,000 10 percent
More than $125,000,000 but not more than $225,000,000 40 percent
More than $225,000,000 but not more than $400,000,000 75 percent
More than $400,000,000 100 percent.
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- (3) SECRETARIAL DETERMINATION- The Secretary of the Treasury shall calculate the amount of each covered entity's fee for any calendar year under paragraph (1). In calculating such amount, the Secretary of the Treasury shall determine such covered entity's branded prescription drug sales on the basis of reports submitted under subsection (g) and through the use of any other source of information available to the Secretary of the Treasury.
- (c) Transfer of Fees to Medicare Part B Trust Fund- There is hereby appropriated to the Federal Supplementary Medical Insurance Trust Fund established under section 1841 of the Social Security Act an amount equal to the fees received by the Secretary of the Treasury under subsection (a).
- (d) Covered Entity-
- (1) IN GENERAL- For purposes of this section, the term `covered entity' means any manufacturer or importer with gross receipts from branded prescription drug sales.
- (2) CONTROLLED GROUPS-
- (A) IN GENERAL- For purposes of this subsection, all persons treated as a single employer under subsection (a) or (b) of section 52 of the Internal Revenue Code of 1986 or subsection (m) or (o) of section 414 of such Code shall be treated as a single covered entity.
- (B) INCLUSION OF FOREIGN CORPORATIONS- For purposes of subparagraph (A), in applying subsections (a) and (b) of section 52 of such Code to this section, section 1563 of such Code shall be applied without regard to subsection (b)(2)(C) thereof.
- (e) Branded Prescription Drug Sales- For purposes of this section--
- (1) IN GENERAL- The term `branded prescription drug sales' means sales of branded prescription drugs to any specified government program or pursuant to coverage under any such program.
- (2) BRANDED PRESCRIPTION DRUGS-
- (A) IN GENERAL- The term `branded prescription drug' means--
- (i) any prescription drug the application for which was submitted under section 505(b) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(b)), or
- (ii) any biological product the license for which was submitted under section 351(a) of the Public Health Service Act (42 U.S.C. 262(a)).
- (B) PRESCRIPTION DRUG- For purposes of subparagraph (A)(i), the term `prescription drug' means any drug which is subject to section 503(b) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 353(b)).
- (3) EXCLUSION OF ORPHAN DRUG SALES- The term `branded prescription drug sales' shall not include sales of any drug or biological product with respect to which a credit was allowed for any taxable year under section 45C of the Internal Revenue Code of 1986. The preceding sentence shall not apply with respect to any such drug or biological product after the date on which such drug or biological product is approved by the Food and Drug Administration for marketing for any indication other than the treatment of the rare disease or condition with respect to which such credit was allowed.
- (4) SPECIFIED GOVERNMENT PROGRAM- The term `specified government program' means--
- (A) the Medicare Part D program under part D of title XVIII of the Social Security Act,
- (B) the Medicare Part B program under part B of title XVIII of the Social Security Act,
- (C) the Medicaid program under title XIX of the Social Security Act,
- (D) any program under which branded prescription drugs are procured by the Department of Veterans Affairs,
- (E) any program under which branded prescription drugs are procured by the Department of Defense, or
- (F) the TRICARE retail pharmacy program under section 1074g of title 10, United States Code.
- (f) Tax Treatment of Fees- The fees imposed by this section--
- (1) for purposes of subtitle F of the Internal Revenue Code of 1986, shall be treated as excise taxes with respect to which only civil actions for refund under procedures of such subtitle shall apply, and
- (2) for purposes of section 275 of such Code, shall be considered to be a tax described in section 275(a)(6).
- (g) Reporting Requirement- Not later than the date determined by the Secretary of the Treasury following the end of any calendar year, the Secretary of Health and Human Services, the Secretary of Veterans Affairs, and the Secretary of Defense shall report to the Secretary of the Treasury, in such manner as the Secretary of the Treasury prescribes, the total branded prescription drug sales for each covered entity with respect to each specified government program under such Secretary's jurisdiction using the following methodology:
- (1) MEDICARE PART D PROGRAM- The Secretary of Health and Human Services shall report, for each covered entity and for each branded prescription drug of the covered entity covered by the Medicare Part D program, the product of--
- (A) the per-unit ingredient cost, as reported to the Secretary of Health and Human Services by prescription drug plans and Medicare Advantage prescription drug plans, minus any per-unit rebate, discount, or other price concession provided by the covered entity, as reported to the Secretary of Health and Human Services by the prescription drug plans and Medicare Advantage prescription drug plans, and
- (B) the number of units of the branded prescription drug paid for under the Medicare Part D program.
- (2) MEDICARE PART B PROGRAM- The Secretary of Health and Human Services shall report, for each covered entity and for each branded prescription drug of the covered entity covered by the Medicare Part B program under section 1862(a) of the Social Security Act, the product of--
- (A) the per-unit average sales price (as defined in section 1847A(c) of the Social Security Act) or the per-unit Part B payment rate for a separately paid branded prescription drug without a reported average sales price, and
- (B) the number of units of the branded prescription drug paid for under the Medicare Part B program.
- The Centers for Medicare and Medicaid Services shall establish a process for determining the units and the allocated price for purposes of this section for those branded prescription drugs that are not separately payable or for which National Drug Codes are not reported.
- (3) MEDICAID PROGRAM- The Secretary of Health and Human Services shall report, for each covered entity and for each branded prescription drug of the covered entity covered under the Medicaid program, the product of--
- (A) the per-unit ingredient cost paid to pharmacies by States for the branded prescription drug dispensed to Medicaid beneficiaries, minus any per-unit rebate paid by the covered entity under section 1927 of the Social Security Act and any State supplemental rebate, and
- (B) the number of units of the branded prescription drug paid for under the Medicaid program.
- (4) DEPARTMENT OF VETERANS AFFAIRS PROGRAMS- The Secretary of Veterans Affairs shall report, for each covered entity and for each branded prescription drug of the covered entity the total amount paid for each such branded prescription drug procured by the Department of Veterans Affairs for its beneficiaries.
- (5) DEPARTMENT OF DEFENSE PROGRAMS AND TRICARE- The Secretary of Defense shall report, for each covered entity and for each branded prescription drug of the covered entity, the sum of--
- (A) the total amount paid for each such branded prescription drug procured by the Department of Defense for its beneficiaries, and
- (B) for each such branded prescription drug dispensed under the TRICARE retail pharmacy program, the product of--
- (i) the per-unit ingredient cost, minus any per-unit rebate paid by the covered entity, and
- (ii) the number of units of the branded prescription drug dispensed under such program.
- (h) Secretary- For purposes of this section, the term `Secretary' includes the Secretary's delegate.
- (i) Guidance- The Secretary of the Treasury shall publish guidance necessary to carry out the purposes of this section.
- (j) Application of Section- This section shall apply to any branded prescription drug sales after December 31, 2008.
- (k) Conforming Amendment- Section 1841(a) of the Social Security Act is amended by inserting `or section 9008(c) of the Patient Protection and Affordable Care Act of 2009' after `this part'.
SEC. 9009. IMPOSITION OF ANNUAL FEE ON MEDICAL DEVICE MANUFACTURERS AND IMPORTERS.
[edit]- (a) Imposition of Fee-
- (1) IN GENERAL- Each covered entity engaged in the business of manufacturing or importing medical devices shall pay to the Secretary not later than the annual payment date of each calendar year beginning after 2009 a fee in an amount determined under subsection (b).
- (2) ANNUAL PAYMENT DATE- For purposes of this section, the term `annual payment date' means with respect to any calendar year the date determined by the Secretary, but in no event later than September 30 of such calendar year.
- (b) Determination of Fee Amount-
- (1) IN GENERAL- With respect to each covered entity, the fee under this section for any calendar year shall be equal to an amount that bears the same ratio to $2,000,000,000 as--
- (A) the covered entity's gross receipts from medical device sales taken into account during the preceding calendar year, bear to
- (B) the aggregate gross receipts of all covered entities from medical device sales taken into account during such preceding calendar year.
- (2) GROSS RECEIPTS FROM SALES TAKEN INTO ACCOUNT- For purposes of paragraph (1), the gross receipts from medical device sales taken into account during any calendar year with respect to any covered entity shall be determined in accordance with the following table:
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
With respect to a covered entity's aggregate gross receipts from medical device sales during the calendar year that are: The percentage of gross receipts taken into account is:
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Not more than $5,000,000 0 percent
More than $5,000,000 but not more than $25,000,000 50 percent
More than $25,000,000 100 percent.
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
- (3) SECRETARIAL DETERMINATION- The Secretary shall calculate the amount of each covered entity's fee for any calendar year under paragraph (1). In calculating such amount, the Secretary shall determine such covered entity's gross receipts from medical device sales on the basis of reports submitted by the covered entity under subsection (f) and through the use of any other source of information available to the Secretary.
- (c) Covered Entity-
- (1) IN GENERAL- For purposes of this section, the term `covered entity' means any manufacturer or importer with gross receipts from medical device sales.
- (2) CONTROLLED GROUPS-
- (A) IN GENERAL- For purposes of this subsection, all persons treated as a single employer under subsection (a) or (b) of section 52 of the Internal Revenue Code of 1986 or subsection (m) or (o) of section 414 of such Code shall be treated as a single covered entity.
- (B) INCLUSION OF FOREIGN CORPORATIONS- For purposes of subparagraph (A), in applying subsections (a) and (b) of section 52 of such Code to this section, section 1563 of such Code shall be applied without regard to subsection (b)(2)(C) thereof.
- (d) Medical Device Sales- For purposes of this section--
- (1) IN GENERAL- The term `medical device sales' means sales for use in the United States of any medical device, other than the sales of a medical device that--
- (A) has been classified in class II under section 513 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360c) and is primarily sold to consumers at retail for not more than $100 per unit, or
- (B) has been classified in class I under such section.
- (2) UNITED STATES- For purposes of paragraph (1), the term `United States' means the several States, the District of Columbia, the Commonwealth of Puerto Rico, and the possessions of the United States.
- (3) MEDICAL DEVICE- For purposes of paragraph (1), the term `medical device' means any device (as defined in section 201(h) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321(h))) intended for humans.
- (e) Tax Treatment of Fees- The fees imposed by this section--
- (1) for purposes of subtitle F of the Internal Revenue Code of 1986, shall be treated as excise taxes with respect to which only civil actions for refund under procedures of such subtitle shall apply, and
- (2) for purposes of section 275 of such Code, shall be considered to be a tax described in section 275(a)(6).
- (f) Reporting Requirement-
- (1) IN GENERAL- Not later than the date determined by the Secretary following the end of any calendar year, each covered entity shall report to the Secretary, in such manner as the Secretary prescribes, the gross receipts from medical device sales of such covered entity during such calendar year.
- (2) PENALTY FOR FAILURE TO REPORT-
- (A) IN GENERAL- In the case of any failure to make a report containing the information required by paragraph (1) on the date prescribed therefor (determined with regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause, there shall be paid by the covered entity failing to file such report, an amount equal to--
- (i) $10,000, plus
- (ii) the lesser of--
- (I) an amount equal to $1,000, multiplied by the number of days during which such failure continues, or
- (II) the amount of the fee imposed by this section for which such report was required.
- (B) TREATMENT OF PENALTY- The penalty imposed under subparagraph (A)--
- (i) shall be treated as a penalty for purposes of subtitle F of the Internal Revenue Code of 1986,
- (ii) shall be paid on notice and demand by the Secretary and in the same manner as tax under such Code, and
- (iii) with respect to which only civil actions for refund under procedures of such subtitle F shall apply.
- (g) Secretary- For purposes of this section, the term `Secretary' means the Secretary of the Treasury or the Secretary's delegate.
- (h) Guidance- The Secretary shall publish guidance necessary to carry out the purposes of this section, including identification of medical devices described in subsection (d)(1)(A) and with respect to the treatment of gross receipts from sales of medical devices to another covered entity or to another entity by reason of the application of subsection (c)(2).
- (i) Application of Section- This section shall apply to any medical device sales after December 31, 2008.
SEC. 9010. IMPOSITION OF ANNUAL FEE ON HEALTH INSURANCE PROVIDERS.
[edit]- (a) Imposition of Fee-
- (1) IN GENERAL- Each covered entity engaged in the business of providing health insurance shall pay to the Secretary not later than the annual payment date of each calendar year beginning after 2009 a fee in an amount determined under subsection (b).
- (2) ANNUAL PAYMENT DATE- For purposes of this section, the term `annual payment date' means with respect to any calendar year the date determined by the Secretary, but in no event later than September 30 of such calendar year.
- (b) Determination of Fee Amount-
- (1) IN GENERAL- With respect to each covered entity, the fee under this section for any calendar year shall be equal to an amount that bears the same ratio to $6,700,000,000 as--
- (A) the sum of--
- (i) the covered entity's net premiums written with respect to health insurance for any United States health risk that are taken into account during the preceding calendar year, plus
- (ii) 200 percent of the covered entity's third party administration agreement fees that are taken into account during the preceding calendar year, bears to
- (B) the sum of--
- (i) the aggregate net premiums written with respect to such health insurance of all covered entities that are taken into account during such preceding calendar year, plus
- (ii) 200 percent of the aggregate third party administration agreement fees of all covered entities that are taken into account during such preceding calendar year.
- (2) AMOUNTS TAKEN INTO ACCOUNT- For purposes of paragraph (1)--
- (A) NET PREMIUMS WRITTEN- The net premiums written with respect to health insurance for any United States health risk that are taken into account during any calendar year with respect to any covered entity shall be determined in accordance with the following table:
------------------------------------------------------------------------------------------------------------------------------------------------------------------
With respect to a covered entity's net premiums written during the calendar year that are: The percentage of net premiums written that are taken into account is:
------------------------------------------------------------------------------------------------------------------------------------------------------------------
Not more than $25,000,000 0 percent
More than $25,000,000 but not more than $50,000,000 50 percent
More than $50,000,000 100 percent.
------------------------------------------------------------------------------------------------------------------------------------------------------------------
- (B) THIRD PARTY ADMINISTRATION AGREEMENT FEES- The third party administration agreement fees that are taken into account during any calendar year with respect to any covered entity shall be determined in accordance with the following table:
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
With respect to a covered entity's third party administration agreement fees during the calendar year that are: The percentage of third party administration agreement fees that are taken into account is:
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Not more than $5,000,000 0 percent
More than $5,000,000 but not more than $10,000,000 50 percent
More than $10,000,000 100 percent.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
- (3) SECRETARIAL DETERMINATION- The Secretary shall calculate the amount of each covered entity's fee for any calendar year under paragraph (1). In calculating such amount, the Secretary shall determine such covered entity's net premiums written with respect to any United States health risk and third party administration agreement fees on the basis of reports submitted by the covered entity under subsection (g) and through the use of any other source of information available to the Secretary.
- (c) Covered Entity-
- (1) IN GENERAL- For purposes of this section, the term `covered entity' means any entity which provides health insurance for any United States health risk.
- (2) EXCLUSION- Such term does not include--
- (A) any employer to the extent that such employer self-insures its employees' health risks, or
- (B) any governmental entity (except to the extent such an entity provides health insurance coverage through the community health insurance option under section 1323).
- (3) CONTROLLED GROUPS-
- (A) IN GENERAL- For purposes of this subsection, all persons treated as a single employer under subsection (a) or (b) of section 52 of the Internal Revenue Code of 1986 or subsection (m) or (o) of section 414 of such Code shall be treated as a single covered entity (or employer for purposes of paragraph (2)).
- (B) INCLUSION OF FOREIGN CORPORATIONS- For purposes of subparagraph (A), in applying subsections (a) and (b) of section 52 of such Code to this section, section 1563 of such Code shall be applied without regard to subsection (b)(2)(C) thereof.
- (d) United States Health Risk- For purposes of this section, the term `United States health risk' means the health risk of any individual who is--
- (1) a United States citizen,
- (2) a resident of the United States (within the meaning of section 7701(b)(1)(A) of the Internal Revenue Code of 1986), or
- (3) located in the United States, with respect to the period such individual is so located.
- (e) Third Party Administration Agreement Fees- For purposes of this section, the term `third party administration agreement fees' means, with respect to any covered entity, amounts received from an employer which are in excess of payments made by such covered entity for health benefits under an arrangement under which such employer self-insures the United States health risk of its employees.
- (f) Tax Treatment of Fees- The fees imposed by this section--
- (1) for purposes of subtitle F of the Internal Revenue Code of 1986, shall be treated as excise taxes with respect to which only civil actions for refund under procedures of such subtitle shall apply, and
- (2) for purposes of section 275 of such Code shall be considered to be a tax described in section 275(a)(6).
- (g) Reporting Requirement-
- (1) IN GENERAL- Not later than the date determined by the Secretary following the end of any calendar year, each covered entity shall report to the Secretary, in such manner as the Secretary prescribes, the covered entity's net premiums written with respect to health insurance for any United States health risk and third party administration agreement fees for such calendar year.
- (2) PENALTY FOR FAILURE TO REPORT-
- (A) IN GENERAL- In the case of any failure to make a report containing the information required by paragraph (1) on the date prescribed therefor (determined with regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause, there shall be paid by the covered entity failing to file such report, an amount equal to--
- (i) $10,000, plus
- (ii) the lesser of--
- (I) an amount equal to $1,000, multiplied by the number of days during which such failure continues, or
- (II) the amount of the fee imposed by this section for which such report was required.
- (B) TREATMENT OF PENALTY- The penalty imposed under subparagraph (A)--
- (i) shall be treated as a penalty for purposes of subtitle F of the Internal Revenue Code of 1986,
- (ii) shall be paid on notice and demand by the Secretary and in the same manner as tax under such Code, and
- (iii) with respect to which only civil actions for refund under procedures of such subtitle F shall apply.
- (h) Additional Definitions- For purposes of this section--
- (1) SECRETARY- The term `Secretary' means the Secretary of the Treasury or the Secretary's delegate.
- (2) UNITED STATES- The term `United States' means the several States, the District of Columbia, the Commonwealth of Puerto Rico, and the possessions of the United States.
- (3) HEALTH INSURANCE- The term `health insurance' shall not include insurance for long-term care or disability.
- (i) Guidance- The Secretary shall publish guidance necessary to carry out the purposes of this section.
- (j) Application of Section- This section shall apply to any net premiums written after December 31, 2008, with respect to health insurance for any United States health risk, and any third party administration agreement fees received after such date.
SEC. 9011. STUDY AND REPORT OF EFFECT ON VETERANS HEALTH CARE.
[edit]- (a) In General- The Secretary of Veterans Affairs shall conduct a study on the effect (if any) of the provisions of sections 9008, 9009, and 9010 on--
- (1) the cost of medical care provided to veterans, and
- (2) veterans' access to medical devices and branded prescription drugs.
- (b) Report- The Secretary of Veterans Affairs shall report the results of the study under subsection (a) to the Committee on Ways and Means of the House of Representatives and to the Committee on Finance of the Senate not later than December 31, 2012.
SEC. 9012. ELIMINATION OF DEDUCTION FOR EXPENSES ALLOCABLE TO MEDICARE PART D SUBSIDY.
[edit]- (a) In General- Section 139A of the Internal Revenue Code of 1986 is amended by striking the second sentence.
- (b) Effective Date- The amendment made by this section shall apply to taxable years beginning after December 31, 2010.
SEC. 9013. MODIFICATION OF ITEMIZED DEDUCTION FOR MEDICAL EXPENSES.
[edit]- (a) In General- Subsection (a) of section 213 of the Internal Revenue Code of 1986 is amended by striking `7.5 percent' and inserting `10 percent'.
- (b) Temporary Waiver of Increase for Certain Seniors- Section 213 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:
- (f) Special Rule for 2013, 2014, 2015, and 2016- In the case of any taxable year beginning after December 31, 2012, and ending before January 1, 2017, subsection (a) shall be applied with respect to a taxpayer by substituting `7.5 percent' for `10 percent' if such taxpayer or such taxpayer's spouse has attained age 65 before the close of such taxable year.'.
- (c) Conforming Amendment- Section 56(b)(1)(B) of the Internal Revenue Code of 1986 is amended by striking `by substituting `10 percent' for `7.5 percent' and inserting `without regard to subsection (f) of such section'.
- (d) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2012.
SEC. 9014. LIMITATION ON EXCESSIVE REMUNERATION PAID BY CERTAIN HEALTH INSURANCE PROVIDERS.
[edit]- (a) In General- Section 162(m) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:
- (6) SPECIAL RULE FOR APPLICATION TO CERTAIN HEALTH INSURANCE PROVIDERS-
- (A) IN GENERAL- No deduction shall be allowed under this chapter--
- (i) in the case of applicable individual remuneration which is for any disqualified taxable year beginning after December 31, 2012, and which is attributable to services performed by an applicable individual during such taxable year, to the extent that the amount of such remuneration exceeds $500,000, or
- (ii) in the case of deferred deduction remuneration for any taxable year beginning after December 31, 2012, which is attributable to services performed by an applicable individual during any disqualified taxable year beginning after December 31, 2009, to the extent that the amount of such remuneration exceeds $500,000 reduced (but not below zero) by the sum of--
- (I) the applicable individual remuneration for such disqualified taxable year, plus
- (II) the portion of the deferred deduction remuneration for such services which was taken into account under this clause in a preceding taxable year (or which would have been taken into account under this clause in a preceding taxable year if this clause were applied by substituting `December 31, 2009' for `December 31, 2012' in the matter preceding subclause (I)).
- (B) DISQUALIFIED TAXABLE YEAR- For purposes of this paragraph, the term `disqualified taxable year' means, with respect to any employer, any taxable year for which such employer is a covered health insurance provider.
- (C) COVERED HEALTH INSURANCE PROVIDER- For purposes of this paragraph--
- (i) IN GENERAL- The term `covered health insurance provider' means--
- (I) with respect to taxable years beginning after December 31, 2009, and before January 1, 2013, any employer which is a health insurance issuer (as defined in section 9832(b)(2)) and which receives premiums from providing health insurance coverage (as defined in section 9832(b)(1)), and
- (II) with respect to taxable years beginning after December 31, 2012, any employer which is a health insurance issuer (as defined in section 9832(b)(2)) and with respect to which not less than 25 percent of the gross premiums received from providing health insurance coverage (as defined in section 9832(b)(1)) is from minimum essential coverage (as defined in section 5000A(f)).
- (ii) AGGREGATION RULES- Two or more persons who are treated as a single employer under subsection (b), (c), (m), or (o) of section 414 shall be treated as a single employer, except that in applying section 1563(a) for purposes of any such subsection, paragraphs (2) and (3) thereof shall be disregarded.
- (D) APPLICABLE INDIVIDUAL REMUNERATION- For purposes of this paragraph, the term `applicable individual remuneration' means, with respect to any applicable individual for any disqualified taxable year, the aggregate amount allowable as a deduction under this chapter for such taxable year (determined without regard to this subsection) for remuneration (as defined in paragraph (4) without regard to subparagraphs (B), (C), and (D) thereof) for services performed by such individual (whether or not during the taxable year). Such term shall not include any deferred deduction remuneration with respect to services performed during the disqualified taxable year.
- (E) DEFERRED DEDUCTION REMUNERATION- For purposes of this paragraph, the term `deferred deduction remuneration' means remuneration which would be applicable individual remuneration for services performed in a disqualified taxable year but for the fact that the deduction under this chapter (determined without regard to this paragraph) for such remuneration is allowable in a subsequent taxable year.
- (F) APPLICABLE INDIVIDUAL- For purposes of this paragraph, the term `applicable individual' means, with respect to any covered health insurance provider for any disqualified taxable year, any individual--
- (i) who is an officer, director, or employee in such taxable year, or
- (ii) who provides services for or on behalf of such covered health insurance provider during such taxable year.
- (G) COORDINATION- Rules similar to the rules of subparagraphs (F) and (G) of paragraph (4) shall apply for purposes of this paragraph.
- (H) REGULATORY AUTHORITY- The Secretary may prescribe such guidance, rules, or regulations as are necessary to carry out the purposes of this paragraph.'.
- (b) Effective Date- The amendment made by this section shall apply to taxable years beginning after December 31, 2009, with respect to services performed after such date.
SEC. 9015. ADDITIONAL HOSPITAL INSURANCE TAX ON HIGH-INCOME TAXPAYERS.
[edit]- (a) FICA-
- (1) IN GENERAL- Section 3101(b) of the Internal Revenue Code of 1986 is amended--
- (A) by striking `In addition' and inserting the following:
- (1) IN GENERAL- In addition',
- (B) by striking `the following percentages of the' and inserting `1.45 percent of the',
- (C) by striking `(as defined in section 3121(b))--' and all that follows and inserting `(as defined in section 3121(b)).', and
- (D) by adding at the end the following new paragraph:
- (2) ADDITIONAL TAX- In addition to the tax imposed by paragraph (1) and the preceding subsection, there is hereby imposed on every taxpayer (other than a corporation, estate, or trust) a tax equal to 0.5 percent of wages which are received with respect to employment (as defined in section 3121(b)) during any taxable year beginning after December 31, 2012, and which are in excess of--
- (A) in the case of a joint return, $250,000, and
- (B) in any other case, $200,000.'.
- (2) COLLECTION OF TAX- Section 3102 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:
- (f) Special Rules for Additional Tax-
- (1) IN GENERAL- In the case of any tax imposed by section 3101(b)(2), subsection (a) shall only apply to the extent to which the taxpayer receives wages from the employer in excess of $200,000, and the employer may disregard the amount of wages received by such taxpayer's spouse.
- (2) COLLECTION OF AMOUNTS NOT WITHHELD- To the extent that the amount of any tax imposed by section 3101(b)(2) is not collected by the employer, such tax shall be paid by the employee.
- (3) TAX PAID BY RECIPIENT- If an employer, in violation of this chapter, fails to deduct and withhold the tax imposed by section 3101(b)(2) and thereafter the tax is paid by the employee, the tax so required to be deducted and withheld shall not be collected from the employer, but this paragraph shall in no case relieve the employer from liability for any penalties or additions to tax otherwise applicable in respect of such failure to deduct and withhold.'.
- (b) SECA-
- (1) IN GENERAL- Section 1401(b) of the Internal Revenue Code of 1986 is amended--
- (A) by striking `In addition' and inserting the following:
- (1) IN GENERAL- In addition', and
- (B) by adding at the end the following new paragraph:
- (2) ADDITIONAL TAX-
- (A) IN GENERAL- In addition to the tax imposed by paragraph (1) and the preceding subsection, there is hereby imposed on every taxpayer (other than a corporation, estate, or trust) for each taxable year beginning after December 31, 2012, a tax equal to 0.5 percent of the self-employment income for such taxable year which is in excess of--
- (i) in the case of a joint return, $250,000, and
- (ii) in any other case, $200,000.
- (B) COORDINATION WITH FICA- The amounts under clauses (i) and (ii) of subparagraph (A) shall be reduced (but not below zero) by the amount of wages taken into account in determining the tax imposed under section 3121(b)(2) with respect to the taxpayer.'.
- (2) NO DEDUCTION FOR ADDITIONAL TAX-
- (A) IN GENERAL- Section 164(f) of such Code is amended by inserting `(other than the taxes imposed by section 1401(b)(2))' after `section 1401)'.
- (B) DEDUCTION FOR NET EARNINGS FROM SELF-EMPLOYMENT- Subparagraph (B) of section 1402(a)(12) is amended by inserting `(determined without regard to the rate imposed under paragraph (2) of section 1401(b))' after `for such year'.
- (c) Effective Date- The amendments made by this section shall apply with respect to remuneration received, and taxable years beginning, after December 31, 2012.
SEC. 9016. MODIFICATION OF SECTION 833 TREATMENT OF CERTAIN HEALTH ORGANIZATIONS.
[edit]- (a) In General- Subsection (c) of section 833 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:
- (5) NONAPPLICATION OF SECTION IN CASE OF LOW MEDICAL LOSS RATIO- Notwithstanding the preceding paragraphs, this section shall not apply to any organization unless such organization's percentage of total premium revenue expended on reimbursement for clinical services provided to enrollees under its policies during such taxable year (as reported under section 2718 of the Public Health Service Act) is not less than 85 percent.'.
- (b) Effective Date- The amendment made by this section shall apply to taxable years beginning after December 31, 2009.
SEC. 9017. EXCISE TAX ON ELECTIVE COSMETIC MEDICAL PROCEDURES.
[edit]- (a) In General- Subtitle D of the Internal Revenue Code of 1986, as amended by this Act, is amended by adding at the end the following new chapter:
CHAPTER 49--ELECTIVE COSMETIC MEDICAL PROCEDURES
[edit]- Sec. 5000B. Imposition of tax on elective cosmetic medical procedures.
SEC. 5000B. IMPOSITION OF TAX ON ELECTIVE COSMETIC MEDICAL PROCEDURES.
[edit]- (a) In General- There is hereby imposed on any cosmetic surgery and medical procedure a tax equal to 5 percent of the amount paid for such procedure (determined without regard to this section), whether paid by insurance or otherwise.
- (b) Cosmetic Surgery and Medical Procedure- For purposes of this section, the term `cosmetic surgery and medical procedure' means any cosmetic surgery (as defined in section 213(d)(9)(B)) or other similar procedure which--
- (1) is performed by a licensed medical professional, and
- (2) is not necessary to ameliorate a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma, or disfiguring disease.
- (c) Payment of Tax-
- (1) IN GENERAL- The tax imposed by this section shall be paid by the individual on whom the procedure is performed.
- (2) COLLECTION- Every person receiving a payment for procedures on which a tax is imposed under subsection (a) shall collect the amount of the tax from the individual on whom the procedure is performed and remit such tax quarterly to the Secretary at such time and in such manner as provided by the Secretary.
- (3) SECONDARY LIABILITY- Where any tax imposed by subsection (a) is not paid at the time payments for cosmetic surgery and medical procedures are made, then to the extent that such tax is not collected, such tax shall be paid by the person who performs the procedure.'.
- (b) Clerical Amendment- The table of chapters for subtitle D of the Internal Revenue Code of 1986, as amended by this Act, is amended by inserting after the item relating to chapter 48 the following new item:
Chapter 49--Elective Cosmetic Medical Procedures'.
[edit]- (c) Effective Date- The amendments made by this section shall apply to procedures performed on or after January 1, 2010.
Subtitle B--Other Provisions
[edit]SEC. 9021. EXCLUSION OF HEALTH BENEFITS PROVIDED BY INDIAN TRIBAL GOVERNMENTS.
[edit]- (a) In General- Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 139C the following new section:
SEC. 139D. INDIAN HEALTH CARE BENEFITS.
[edit]- (a) General Rule- Except as otherwise provided in this section, gross income does not include the value of any qualified Indian health care benefit.
- (b) Qualified Indian Health Care Benefit- For purposes of this section, the term `qualified Indian health care benefit' means--
- (1) any health service or benefit provided or purchased, directly or indirectly, by the Indian Health Service through a grant to or a contract or compact with an Indian tribe or tribal organization, or through a third-party program funded by the Indian Health Service,
- (2) medical care provided or purchased by, or amounts to reimburse for such medical care provided by, an Indian tribe or tribal organization for, or to, a member of an Indian tribe, including a spouse or dependent of such a member,
- (3) coverage under accident or health insurance (or an arrangement having the effect of accident or health insurance), or an accident or health plan, provided by an Indian tribe or tribal organization for medical care to a member of an Indian tribe, include a spouse or dependent of such a member, and
- (4) any other medical care provided by an Indian tribe or tribal organization that supplements, replaces, or substitutes for a program or service relating to medical care provided by the Federal government to Indian tribes or members of such a tribe.
- (c) Definitions- For purposes of this section--
- (1) INDIAN TRIBE- The term `Indian tribe' has the meaning given such term by section 45A(c)(6).
- (2) TRIBAL ORGANIZATION- The term `tribal organization' has the meaning given such term by section 4(l) of the Indian Self-Determination and Education Assistance Act.
- (3) MEDICAL CARE- The term `medical care' has the same meaning as when used in section 213.
- (4) ACCIDENT OR HEALTH INSURANCE; ACCIDENT OR HEALTH PLAN- The terms `accident or health insurance' and `accident or health plan' have the same meaning as when used in section 105.
- (5) DEPENDENT- The term `dependent' has the meaning given such term by section 152, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof.
- (d) Denial of Double Benefit- Subsection (a) shall not apply to the amount of any qualified Indian health care benefit which is not includible in gross income of the beneficiary of such benefit under any other provision of this chapter, or to the amount of any such benefit for which a deduction is allowed to such beneficiary under any other provision of this chapter.'.
- (b) Clerical Amendment- The table of sections for part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 139C the following new item:
- Sec. 139D. Indian health care benefits.'.
- (c) Effective Date- The amendments made by this section shall apply to benefits and coverage provided after the date of the enactment of this Act.
- (d) No Inference- Nothing in the amendments made by this section shall be construed to create an inference with respect to the exclusion from gross income of--
- (1) benefits provided by an Indian tribe or tribal organization that are not within the scope of this section, and
- (2) benefits provided prior to the date of the enactment of this Act.
SEC. 9022. ESTABLISHMENT OF SIMPLE CAFETERIA PLANS FOR SMALL BUSINESSES.
[edit]- (a) In General- Section 125 of the Internal Revenue Code of 1986 (relating to cafeteria plans), as amended by this Act, is amended by redesignating subsections (j) and (k) as subsections (k) and (l), respectively, and by inserting after subsection (i) the following new subsection:
- (j) Simple Cafeteria Plans for Small Businesses-
- (1) IN GENERAL- An eligible employer maintaining a simple cafeteria plan with respect to which the requirements of this subsection are met for any year shall be treated as meeting any applicable nondiscrimination requirement during such year.
- (2) SIMPLE CAFETERIA PLAN- For purposes of this subsection, the term `simple cafeteria plan' means a cafeteria plan--
- (A) which is established and maintained by an eligible employer, and
- (B) with respect to which the contribution requirements of paragraph (3), and the eligibility and participation requirements of paragraph (4), are met.
- (3) CONTRIBUTION REQUIREMENTS-
- (A) IN GENERAL- The requirements of this paragraph are met if, under the plan the employer is required, without regard to whether a qualified employee makes any salary reduction contribution, to make a contribution to provide qualified benefits under the plan on behalf of each qualified employee in an amount equal to--
- (i) a uniform percentage (not less than 2 percent) of the employee's compensation for the plan year, or
- (ii) an amount which is not less than the lesser of--
- (I) 6 percent of the employee's compensation for the plan year, or
- (II) twice the amount of the salary reduction contributions of each qualified employee.
- (B) MATCHING CONTRIBUTIONS ON BEHALF OF HIGHLY COMPENSATED AND KEY EMPLOYEES- The requirements of subparagraph (A)(ii) shall not be treated as met if, under the plan, the rate of contributions with respect to any salary reduction contribution of a highly compensated or key employee at any rate of contribution is greater than that with respect to an employee who is not a highly compensated or key employee.
- (C) ADDITIONAL CONTRIBUTIONS- Subject to subparagraph (B), nothing in this paragraph shall be treated as prohibiting an employer from making contributions to provide qualified benefits under the plan in addition to contributions required under subparagraph (A).
- (D) DEFINITIONS- For purposes of this paragraph--
- (i) SALARY REDUCTION CONTRIBUTION- The term `salary reduction contribution' means, with respect to a cafeteria plan, any amount which is contributed to the plan at the election of the employee and which is not includible in gross income by reason of this section.
- (ii) QUALIFIED EMPLOYEE- The term `qualified employee' means, with respect to a cafeteria plan, any employee who is not a highly compensated or key employee and who is eligible to participate in the plan.
- (iii) HIGHLY COMPENSATED EMPLOYEE- The term `highly compensated employee' has the meaning given such term by section 414(q).
- (iv) KEY EMPLOYEE- The term `key employee' has the meaning given such term by section 416(i).
- (4) MINIMUM ELIGIBILITY AND PARTICIPATION REQUIREMENTS-
- (A) IN GENERAL- The requirements of this paragraph shall be treated as met with respect to any year if, under the plan--
- (i) all employees who had at least 1,000 hours of service for the preceding plan year are eligible to participate, and
- (ii) each employee eligible to participate in the plan may, subject to terms and conditions applicable to all participants, elect any benefit available under the plan.
- (B) CERTAIN EMPLOYEES MAY BE EXCLUDED- For purposes of subparagraph (A)(i), an employer may elect to exclude under the plan employees--
- (i) who have not attained the age of 21 before the close of a plan year,
- (ii) who have less than 1 year of service with the employer as of any day during the plan year,
- (iii) who are covered under an agreement which the Secretary of Labor finds to be a collective bargaining agreement if there is evidence that the benefits covered under the cafeteria plan were the subject of good faith bargaining between employee representatives and the employer, or
- (iv) who are described in section 410(b)(3)(C) (relating to nonresident aliens working outside the United States).
- A plan may provide a shorter period of service or younger age for purposes of clause (i) or (ii).
- (5) ELIGIBLE EMPLOYER- For purposes of this subsection--
- (A) IN GENERAL- The term `eligible employer' means, with respect to any year, any employer if such employer employed an average of 100 or fewer employees on business days during either of the 2 preceding years. For purposes of this subparagraph, a year may only be taken into account if the employer was in existence throughout the year.
- (B) EMPLOYERS NOT IN EXISTENCE DURING PRECEDING YEAR- If an employer was not in existence throughout the preceding year, the determination under subparagraph (A) shall be based on the average number of employees that it is reasonably expected such employer will employ on business days in the current year.
- (C) GROWING EMPLOYERS RETAIN TREATMENT AS SMALL EMPLOYER-
- (i) IN GENERAL- If--
- (I) an employer was an eligible employer for any year (a `qualified year'), and
- (II) such employer establishes a simple cafeteria plan for its employees for such year,
- then, notwithstanding the fact the employer fails to meet the requirements of subparagraph (A) for any subsequent year, such employer shall be treated as an eligible employer for such subsequent year with respect to employees (whether or not employees during a qualified year) of any trade or business which was covered by the plan during any qualified year.
- (ii) EXCEPTION- This subparagraph shall cease to apply if the employer employs an average of 200 or more employees on business days during any year preceding any such subsequent year.
- (D) SPECIAL RULES-
- (i) PREDECESSORS- Any reference in this paragraph to an employer shall include a reference to any predecessor of such employer.
- (ii) AGGREGATION RULES- All persons treated as a single employer under subsection (a) or (b) of section 52, or subsection (n) or (o) of section 414, shall be treated as one person.
- (6) APPLICABLE NONDISCRIMINATION REQUIREMENT- For purposes of this subsection, the term `applicable nondiscrimination requirement' means any requirement under subsection (b) of this section, section 79(d), section 105(h), or paragraph (2), (3), (4), or (8) of section 129(d).
- (7) COMPENSATION- The term `compensation' has the meaning given such term by section 414(s).'.
- (b) Effective Date- The amendments made by this section shall apply to years beginning after December 31, 2010.
SEC. 9023. QUALIFYING THERAPEUTIC DISCOVERY PROJECT CREDIT.
[edit]- (a) In General- Subpart E of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 48C the following new section:
SEC. 48D. QUALIFYING THERAPEUTIC DISCOVERY PROJECT CREDIT.
[edit]- (a) In General- For purposes of section 46, the qualifying therapeutic discovery project credit for any taxable year is an amount equal to 50 percent of the qualified investment for such taxable year with respect to any qualifying therapeutic discovery project of an eligible taxpayer.
- (b) Qualified Investment-
- (1) IN GENERAL- For purposes of subsection (a), the qualified investment for any taxable year is the aggregate amount of the costs paid or incurred in such taxable year for expenses necessary for and directly related to the conduct of a qualifying therapeutic discovery project.
- (2) LIMITATION- The amount which is treated as qualified investment for all taxable years with respect to any qualifying therapeutic discovery project shall not exceed the amount certified by the Secretary as eligible for the credit under this section.
- (3) EXCLUSIONS- The qualified investment for any taxable year with respect to any qualifying therapeutic discovery project shall not take into account any cost--
- (A) for remuneration for an employee described in section 162(m)(3),
- (B) for interest expenses,
- (C) for facility maintenance expenses,
- (D) which is identified as a service cost under section 1.263A-1(e)(4) of title 26, Code of Federal Regulations, or
- (E) for any other expense as determined by the Secretary as appropriate to carry out the purposes of this section.
- (4) CERTAIN PROGRESS EXPENDITURE RULES MADE APPLICABLE- In the case of costs described in paragraph (1) that are paid for property of a character subject to an allowance for depreciation, rules similar to the rules of subsections (c)(4) and (d) of section 46 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of this section.
- (5) APPLICATION OF SUBSECTION- An investment shall be considered a qualified investment under this subsection only if such investment is made in a taxable year beginning in 2009 or 2010.
- (c) Definitions-
- (1) QUALIFYING THERAPEUTIC DISCOVERY PROJECT- The term `qualifying therapeutic discovery project' means a project which is designed--
- (A) to treat or prevent diseases or conditions by conducting pre-clinical activities, clinical trials, and clinical studies, or carrying out research protocols, for the purpose of securing approval of a product under section 505(b) of the Federal Food, Drug, and Cosmetic Act or section 351(a) of the Public Health Service Act,
- (B) to diagnose diseases or conditions or to determine molecular factors related to diseases or conditions by developing molecular diagnostics to guide therapeutic decisions, or
- (C) to develop a product, process, or technology to further the delivery or administration of therapeutics.
- (2) ELIGIBLE TAXPAYER-
- (A) IN GENERAL- The term `eligible taxpayer' means a taxpayer which employs not more than 250 employees in all businesses of the taxpayer at the time of the submission of the application under subsection (d)(2).
- (B) 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 so treated for purposes of this paragraph.
- (3) FACILITY MAINTENANCE EXPENSES- The term `facility maintenance expenses' means costs paid or incurred to maintain a facility, including--
- (A) mortgage or rent payments,
- (B) insurance payments,
- (C) utility and maintenance costs, and
- (D) costs of employment of maintenance personnel.
- (d) Qualifying Therapeutic Discovery Project Program-
- (1) ESTABLISHMENT-
- (A) IN GENERAL- Not later than 60 days after the date of the enactment of this section, the Secretary, in consultation with the Secretary of Health and Human Services, shall establish a qualifying therapeutic discovery project program to consider and award certifications for qualified investments eligible for credits under this section to qualifying therapeutic discovery project sponsors.
- (B) LIMITATION- The total amount of credits that may be allocated under the program shall not exceed $1,000,000,000 for the 2-year period beginning with 2009.
- (2) CERTIFICATION-
- (A) APPLICATION PERIOD- Each applicant for certification under this paragraph shall submit an application containing such information as the Secretary may require during the period beginning on the date the Secretary establishes the program under paragraph (1).
- (B) TIME FOR REVIEW OF APPLICATIONS- The Secretary shall take action to approve or deny any application under subparagraph (A) within 30 days of the submission of such application.
- (C) MULTI-YEAR APPLICATIONS- An application for certification under subparagraph (A) may include a request for an allocation of credits for more than 1 of the years described in paragraph (1)(B).
- (3) SELECTION CRITERIA- In determining the qualifying therapeutic discovery projects with respect to which qualified investments may be certified under this section, the Secretary--
- (A) shall take into consideration only those projects that show reasonable potential--
- (i) to result in new therapies--
- (I) to treat areas of unmet medical need, or
- (II) to prevent, detect, or treat chronic or acute diseases and conditions,
- (ii) to reduce long-term health care costs in the United States, or
- (iii) to significantly advance the goal of curing cancer within the 30-year period beginning on the date the Secretary establishes the program under paragraph (1), and
- (B) shall take into consideration which projects have the greatest potential--
- (i) to create and sustain (directly or indirectly) high quality, high-paying jobs in the United States, and
- (ii) to advance United States competitiveness in the fields of life, biological, and medical sciences.
- (4) DISCLOSURE OF ALLOCATIONS- The Secretary shall, upon making a certification under this subsection, publicly disclose the identity of the applicant and the amount of the credit with respect to such applicant.
- (e) Special Rules-
- (1) BASIS ADJUSTMENT- For purposes of this subtitle, if a credit is allowed under this section for an expenditure related to property of a character subject to an allowance for depreciation, the basis of such property shall be reduced by the amount of such credit.
- (2) DENIAL OF DOUBLE BENEFIT-
- (A) BONUS DEPRECIATION- A credit shall not be allowed under this section for any investment for which bonus depreciation is allowed under section 168(k), 1400L(b)(1), or 1400N(d)(1).
- (B) DEDUCTIONS- No deduction under this subtitle shall be allowed for the portion of the expenses otherwise allowable as a deduction taken into account in determining the credit under this section for the taxable year which is equal to the amount of the credit determined for such taxable year under subsection (a) attributable to such portion. This subparagraph shall not apply to expenses related to property of a character subject to an allowance for depreciation the basis of which is reduced under paragraph (1), or which are described in section 280C(g).
- (C) CREDIT FOR RESEARCH ACTIVITIES-
- (i) IN GENERAL- Except as provided in clause (ii), any expenses taken into account under this section for a taxable year shall not be taken into account for purposes of determining the credit allowable under section 41 or 45C for such taxable year.
- (ii) EXPENSES INCLUDED IN DETERMINING BASE PERIOD RESEARCH EXPENSES- Any expenses for any taxable year which are qualified research expenses (within the meaning of section 41(b)) shall be taken into account in determining base period research expenses for purposes of applying section 41 to subsequent taxable years.
- (f) Coordination With Department of Treasury Grants- In the case of any investment with respect to which the Secretary makes a grant under section 9023(e) of the Patient Protection and Affordable Care Act of 2009--
- (1) DENIAL OF CREDIT- No credit shall be determined under this section with respect to such investment for the taxable year in which such grant is made or any subsequent taxable year.
- (2) RECAPTURE OF CREDITS FOR PROGRESS EXPENDITURES MADE BEFORE GRANT- If a credit was determined under this section with respect to such investment for any taxable year ending before such grant is made--
- (A) the tax imposed under subtitle A on the taxpayer for the taxable year in which such grant is made shall be increased by so much of such credit as was allowed under section 38,
- (B) the general business carryforwards under section 39 shall be adjusted so as to recapture the portion of such credit which was not so allowed, and
- (C) the amount of such grant shall be determined without regard to any reduction in the basis of any property of a character subject to an allowance for depreciation by reason of such credit.
- (3) TREATMENT OF GRANTS- Any such grant shall not be includible in the gross income of the taxpayer.'.
- (b) Inclusion as Part of Investment Credit- Section 46 of the Internal Revenue Code of 1986 is amended--
- (1) by adding a comma at the end of paragraph (2),
- (2) by striking the period at the end of paragraph (5) and inserting `, and', and
- (3) by adding at the end the following new paragraph:
- (6) the qualifying therapeutic discovery project credit.'.
- (c) Conforming Amendments-
- (1) Section 49(a)(1)(C) of the Internal Revenue Code of 1986 is amended--
- (A) by striking `and' at the end of clause (iv),
- (B) by striking the period at the end of clause (v) and inserting `, and', and
- (C) by adding at the end the following new clause:
- (vi) the basis of any property to which paragraph (1) of section 48D(e) applies which is part of a qualifying therapeutic discovery project under such section 48D.'.
- (2) Section 280C of such Code is amended by adding at the end the following new subsection:
- (g) Qualifying Therapeutic Discovery Project Credit-
- (1) IN GENERAL- No deduction shall be allowed for that portion of the qualified investment (as defined in section 48D(b)) otherwise allowable as a deduction for the taxable year which--
- (A) would be qualified research expenses (as defined in section 41(b)), basic research expenses (as defined in section 41(e)(2)), or qualified clinical testing expenses (as defined in section 45C(b)) if the credit under section 41 or section 45C were allowed with respect to such expenses for such taxable year, and
- (B) is equal to the amount of the credit determined for such taxable year under section 48D(a), reduced by--
- (i) the amount disallowed as a deduction by reason of section 48D(e)(2)(B), and
- (ii) the amount of any basis reduction under section 48D(e)(1).
- (2) SIMILAR RULE WHERE TAXPAYER CAPITALIZES RATHER THAN DEDUCTS EXPENSES- In the case of expenses described in paragraph (1)(A) taken into account in determining the credit under section 48D for the taxable year, if--
- (A) the amount of the portion of the credit determined under such section with respect to such expenses, exceeds
- (B) the amount allowable as a deduction for such taxable year for such expenses (determined without regard to paragraph (1)),
- the amount chargeable to capital account for the taxable year for such expenses shall be reduced by the amount of such excess.
- (3) CONTROLLED GROUPS- Paragraph (3) of subsection (b) shall apply for purposes of this subsection.'.
- (d) Clerical Amendment- The table of sections for subpart E 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 48C the following new item:
- Sec. 48D. Qualifying therapeutic discovery project credit.'.
- (e) Grants for Qualified Investments in Therapeutic Discovery Projects in Lieu of Tax Credits-
- (1) IN GENERAL- Upon application, the Secretary of the Treasury shall, subject to the requirements of this subsection, provide a grant to each person who makes a qualified investment in a qualifying therapeutic discovery project in the amount of 50 percent of such investment. No grant shall be made under this subsection with respect to any investment unless such investment is made during a taxable year beginning in 2009 or 2010.
- (2) APPLICATION-
- (A) IN GENERAL- At the stated election of the applicant, an application for certification under section 48D(d)(2) of the Internal Revenue Code of 1986 for a credit under such section for the taxable year of the applicant which begins in 2009 shall be considered to be an application for a grant under paragraph (1) for such taxable year.
- (B) TAXABLE YEARS BEGINNING IN 2010- An application for a grant under paragraph (1) for a taxable year beginning in 2010 shall be submitted--
- (i) not earlier than the day after the last day of such taxable year, and
- (ii) not later than the due date (including extensions) for filing the return of tax for such taxable year.
- (C) INFORMATION TO BE SUBMITTED- An application for a grant under paragraph (1) shall include such information and be in such form as the Secretary may require to state the amount of the credit allowable (but for the receipt of a grant under this subsection) under section 48D for the taxable year for the qualified investment with respect to which such application is made.
- (3) TIME FOR PAYMENT OF GRANT-
- (A) IN GENERAL- The Secretary of the Treasury shall make payment of the amount of any grant under paragraph (1) during the 30-day period beginning on the later of--
- (i) the date of the application for such grant, or
- (ii) the date the qualified investment for which the grant is being made is made.
- (B) REGULATIONS- In the case of investments of an ongoing nature, the Secretary shall issue regulations to determine the date on which a qualified investment shall be deemed to have been made for purposes of this paragraph.
- (4) QUALIFIED INVESTMENT- For purposes of this subsection, the term `qualified investment' means a qualified investment that is certified under section 48D(d) of the Internal Revenue Code of 1986 for purposes of the credit under such section 48D.
- (5) APPLICATION OF CERTAIN RULES-
- (A) IN GENERAL- In making grants under this subsection, the Secretary of the Treasury shall apply rules similar to the rules of section 50 of the Internal Revenue Code of 1986. In applying such rules, any increase in tax under chapter 1 of such Code by reason of an investment ceasing to be a qualified investment shall be imposed on the person to whom the grant was made.
- (B) SPECIAL RULES-
- (i) RECAPTURE OF EXCESSIVE GRANT AMOUNTS- If the amount of a grant made under this subsection exceeds the amount allowable as a grant under this subsection, such excess shall be recaptured under subparagraph (A) as if the investment to which such excess portion of the grant relates had ceased to be a qualified investment immediately after such grant was made.
- (ii) GRANT INFORMATION NOT TREATED AS RETURN INFORMATION- In no event shall the amount of a grant made under paragraph (1), the identity of the person to whom such grant was made, or a description of the investment with respect to which such grant was made be treated as return information for purposes of section 6103 of the Internal Revenue Code of 1986.
- (6) EXCEPTION FOR CERTAIN NON-TAXPAYERS- The Secretary of the Treasury shall not make any grant under this subsection to--
- (A) any Federal, State, or local government (or any political subdivision, agency, or instrumentality thereof),
- (B) any organization described in section 501(c) of the Internal Revenue Code of 1986 and exempt from tax under section 501(a) of such Code,
- (C) any entity referred to in paragraph (4) of section 54(j) of such Code, or
- (D) any partnership or other pass-thru entity any partner (or other holder of an equity or profits interest) of which is described in subparagraph (A), (B) or (C).
- In the case of a partnership or other pass-thru entity described in subparagraph (D), partners and other holders of any equity or profits interest shall provide to such partnership or entity such information as the Secretary of the Treasury may require to carry out the purposes of this paragraph.
- (7) SECRETARY- Any reference in this subsection to the Secretary of the Treasury shall be treated as including the Secretary's delegate.
- (8) OTHER TERMS- Any term used in this subsection which is also used in section 48D of the Internal Revenue Code of 1986 shall have the same meaning for purposes of this subsection as when used in such section.
- (9) DENIAL OF DOUBLE BENEFIT- No credit shall be allowed under section 46(6) of the Internal Revenue Code of 1986 by reason of section 48D of such Code for any investment for which a grant is awarded under this subsection.
- (10) APPROPRIATIONS- There is hereby appropriated to the Secretary of the Treasury such sums as may be necessary to carry out this subsection.
- (11) TERMINATION- The Secretary of the Treasury shall not make any grant to any person under this subsection unless the application of such person for such grant is received before January 1, 2013.
- (12) PROTECTING MIDDLE CLASS FAMILIES FROM TAX INCREASES- It is the sense of the Senate that the Senate should reject any procedural maneuver that would raise taxes on middle class families, such as a motion to commit the pending legislation to the Committee on Finance, which is designed to kill legislation that provides tax cuts for American workers and families, including the affordability tax credit and the small business tax credit.
- (f) Effective Date- The amendments made by subsections (a) through (d) of this section shall apply to amounts paid or incurred after December 31, 2008, in taxable years beginning after such date.
