S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   10267
 
                           I N  A S S E M B L Y
 
                               May 13, 2022
                                ___________
 
 Introduced  by  COMMITTEE ON RULES -- (at request of M. of A. Hevesi) --
   read once and referred to the Committee on Ways and Means
 
 AN ACT to amend the tax law, in relation to employer-provided child care
   credits
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section  1. Section 44 of the tax law, as amended by section 1 of part
 L of chapter 59 of the laws of 2019 and subdivision (a)  as  amended  by
 section  5  of  part  D of chapter 59 of the laws of 2021, is amended to
 read as follows:
   § 44. Employer-provided child care credit.  (a)  General.  A  taxpayer
 subject to tax under article nine-A, twenty-two, or thirty-three of this
 chapter shall be allowed a credit against such tax in an amount equal to
 [two hundred percent of the portion of the credit that is allowed to the
 taxpayer  under  section  45F  of  the internal revenue code] THE SUM OF
 FIFTY PERCENT OF  THE  QUALIFIED  CHILD  CARE  EXPENDITURES  AND  TWENTY
 PERCENT  OF  THE QUALIFIED CHILD CARE RESOURCE AND REFERRAL EXPENDITURES
 FOR THE TAXPAYER FOR SUCH TAXABLE YEAR,  that  is  attributable  to  (i)
 qualified  child  care  expenditures  paid or incurred with respect to a
 qualified child care facility with a situs in the state, [and  to]  (ii)
 qualified child care resource and referral expenditures paid or incurred
 with  respect  to  the  taxpayer's employees working in the state, (III)
 QUALIFIED IN-HOME CARE EXPENDITURES PAID OR INCURRED WITH RESPECT TO THE
 TAXPAYER'S EMPLOYEES WORKING IN THE STATE,  AND  (IV)  QUALIFIED  BACKUP
 CARE  EXPENDITURES  PAID  OR  INCURRED  WITH  RESPECT  TO THE TAXPAYER'S
 EMPLOYEES WORKING IN THE STATE. The credit allowable under this subdivi-
 sion for any  taxable  year  shall  not  exceed  five  hundred  thousand
 dollars.  If the entity operating the qualified child care facility is a
 partnership or a New York S corporation, then such cap shall be  applied
 at the entity level, so the aggregate credit allowed to all the partners
 or  shareholders  of  such entity in a taxable year does not exceed five
 hundred thousand dollars.
   (b) Credit recapture. (I) If there is  a  cessation  of  operation  or
 change  in ownership[, as defined by section 45F of the internal revenue

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD15676-01-2
 A. 10267                            2

 code] relating to a qualified child care facility with a  situs  in  the
 state,  the  taxpayer shall add back the applicable recapture percentage
 of the credit allowed under this section, in accordance with the  recap-
 ture  provisions  of  [section 45F of the internal revenue code, but the
 recapture amount shall be limited  to  the  credit  allowed  under  this
 section] THIS SUBDIVISION.
   (II)  IF,  AS  OF  THE CLOSE OF ANY TAXABLE YEAR, THERE IS A RECAPTURE
 EVENT WITH RESPECT TO ANY QUALIFIED CHILD CARE FACILITY OF THE TAXPAYER,
 THEN THE TAX OF THE TAXPAYER UNDER THIS CHAPTER FOR  SUCH  TAXABLE  YEAR
 SHALL BE INCREASED BY AN AMOUNT EQUAL TO THE PRODUCT OF:
   (A) THE APPLICABLE RECAPTURE PERCENTAGE; AND
   (B)  THE AGGREGATE DECREASE IN THE CREDITS ALLOWED UNDER SECTION 38 OF
 THE INTERNAL REVENUE CODE FOR ALL PRIOR TAXABLE YEARS WHICH  WOULD  HAVE
 RESULTED  IF  THE QUALIFIED CHILD CARE EXPENDITURES OF THE TAXPAYER WITH
 RESPECT TO SUCH FACILITY HAD BEEN ZERO.
   (III) (A) FOR THE PURPOSES OF THIS SUBDIVISION, THE APPLICABLE  RECAP-
 TURE PERCENTAGE SHALL BE DETERMINED FROM THE FOLLOWING TABLE:
 
      IF THE RECAPTURE    THE APPLICABLE RECAPTURE
      EVENT OCCURS IN:    PERCENTAGE IS:
 
      YEARS ONE--THREE    ONE HUNDRED
      YEAR FOUR           EIGHTY-FIVE
      YEAR FIVE           SEVENTY
      YEAR SIX            FIFTY-FIVE
      YEAR SEVEN          FORTY
      YEAR EIGHT          TWENTY-FIVE
      YEARS NINE--TEN     TEN
      YEAR ELEVEN OR      ZERO.
      THEREAFTER
 
   (B)  FOR  THE PURPOSES OF SUBPARAGRAPH (A) OF THIS PARAGRAPH, YEAR ONE
 SHALL BEGIN ON THE FIRST DAY OF THE TAXABLE YEAR IN WHICH THE  QUALIFIED
 CHILD CARE FACILITY IS PLACED IN SERVICE BY THE TAXPAYER.
   (IV)  (A)  THE TAX FOR THE TAXABLE YEAR SHALL BE INCREASED UNDER PARA-
 GRAPH (II) OF THIS SUBDIVISION ONLY WITH RESPECT TO CREDITS  ALLOWED  BY
 REASON OF THIS SECTION WHICH WERE USED TO REDUCE TAX LIABILITY.
   (B) ANY INCREASE IN TAX UNDER THIS SUBDIVISION SHALL NOT BE TREATED AS
 A  TAX IMPOSED BY THIS CHAPTER FOR PURPOSES OF DETERMINING THE AMOUNT OF
 ANY CREDIT UNDER THIS CHAPTER.
   (C) THE INCREASE IN TAX UNDER THIS SUBDIVISION SHALL NOT  APPLY  TO  A
 CESSATION OF OPERATION OF THE FACILITY AS A QUALIFIED CHILD CARE FACILI-
 TY  BY  REASON OF A CASUALTY LOSS TO THE EXTENT SUCH LOSS IS RESTORED BY
 RECONSTRUCTION OR REPLACEMENT WITHIN A REASONABLE PERIOD ESTABLISHED  BY
 THE COMMISSIONER.
   (c) SPECIAL RULES. FOR THE PURPOSES OF THIS SECTION:
   (I)  ALL  PERSONS  WHICH  ARE  TREATED  AS  A  SINGLE  EMPLOYER  UNDER
 SUBSECTIONS (A) AND (B) OF SECTION 52 OF THE INTERNAL REVENUE CODE SHALL
 BE TREATED AS A SINGLE TAXPAYER.
   (II) UNDER REGULATIONS PRESCRIBED BY THE COMMISSIONER,  RULES  SIMILAR
 TO  THE  RULES  OF  SUBSECTION (D) OF SECTION 52 OF THE INTERNAL REVENUE
 CODE SHALL APPLY.
   (III) IN THE CASE OF PARTNERSHIPS, THE CREDIT SHALL BE ALLOCATED AMONG
 PARTNERS UNDER REGULATIONS PRESCRIBED BY THE COMMISSIONER.
   (D) NO DOUBLE BENEFIT. (I) FOR PURPOSES OF THIS CHAPTER:
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   (A) IF A CREDIT IS DETERMINED UNDER THIS SECTION WITH RESPECT  TO  ANY
 PROPERTY  BY  REASON  OF QUALIFIED CHILD CARE EXPENDITURES, THE BASIS OF
 SUCH PROPERTY SHALL BE REDUCED BY THE AMOUNT OF  THE  CREDIT  SO  DETER-
 MINED.
   (B)  IF,  DURING  ANY TAXABLE YEAR, THERE IS A RECAPTURE AMOUNT DETER-
 MINED WITH RESPECT TO ANY PROPERTY THE BASIS OF WHICH WAS REDUCED  UNDER
 SUBPARAGRAPH  (A)  OF  THIS PARAGRAPH, THE BASIS OF SUCH PROPERTY (IMME-
 DIATELY BEFORE THE EVENT RESULTING IN SUCH RECAPTURE) SHALL BE INCREASED
 BY AN AMOUNT EQUAL TO  SUCH  RECAPTURE  AMOUNT.  FOR  PURPOSES  OF  THIS
 SUBPARAGRAPH, THE TERM "RECAPTURE AMOUNT" SHALL MEAN ANY INCREASE IN TAX
 DETERMINED UNDER SUBDIVISION (B) OF THIS SECTION.
   (II) NO DEDUCTION OR CREDIT SHALL BE ALLOWED UNDER ANY OTHER PROVISION
 OF  THIS  CHAPTER  WITH  RESPECT  TO THE AMOUNT OF THE CREDIT DETERMINED
 UNDER THIS SECTION.
   (E) Reporting requirements. A taxpayer that has claimed a credit under
 this section shall notify the commissioner of any  cessation  of  opera-
 tion,  change  in  ownership, or agreement to assume recapture liability
 [as such terms are defined by section 45F of the internal revenue code],
 in the form and manner prescribed by the commissioner.
   [(d)] (F) Definitions. [The terms "qualified child care expenditures",
 "qualified child care facility",  "qualified  child  care  resource  and
 referral  expenditure", "cessation of operation", "change of ownership",
 and "applicable recapture percentage" shall have the same meanings as in
 section 45F of the internal revenue code.]  FOR  THE  PURPOSES  OF  THIS
 SECTION, THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS:
   (I)  (A)  "QUALIFIED  CHILD CARE EXPENDITURE" MEANS ANY AMOUNT PAID OR
 INCURRED:
   (1) TO ACQUIRE, CONSTRUCT, REHABILITATE, OR EXPAND PROPERTY:
   (I) WHICH IS TO BE USED AS PART OF A QUALIFIED CHILD CARE FACILITY  OF
 THE TAXPAYER;
   (II)  WITH  RESPECT  TO WHICH A DEDUCTION FOR DEPRECIATION (OR AMORTI-
 ZATION IN LIEU OF DEPRECIATION) IS ALLOWABLE; AND
   (III) WHICH IS NOT PART OF THE PRINCIPAL RESIDENCE OF THE TAXPAYER  OR
 ANY EMPLOYEE OF THE TAXPAYER;
   (2)  FOR THE OPERATING COSTS OF A QUALIFIED CHILD CARE FACILITY OF THE
 TAXPAYER, INCLUDING COSTS RELATED TO THE TRAINING OF EMPLOYEES, TO SCHO-
 LARSHIP PROGRAMS, AND TO THE  PROVIDING  OF  INCREASED  COMPENSATION  TO
 EMPLOYEES WITH HIGHER LEVELS OF CHILD CARE TRAINING; OR
   (3)  UNDER  A CONTRACT WITH A QUALIFIED CHILD CARE FACILITY TO PROVIDE
 CHILD CARE SERVICES TO EMPLOYEES OF THE TAXPAYER.
   (B) THE TERM "QUALIFIED CHILD CARE  EXPENDITURES"  SHALL  NOT  INCLUDE
 EXPENSES IN EXCESS OF THE FAIR MARKET VALUE OF SUCH CARE.
   (II) (A) "QUALIFIED CHILD CARE FACILITY" MEANS A FACILITY:
   (1)  THE  PRINCIPAL  USE OF WHICH IS TO PROVIDE CHILD CARE ASSISTANCE;
 AND
   (2) WHICH MEETS THE REQUIREMENTS OF  ALL  APPLICABLE  LAWS  AND  REGU-
 LATIONS OF THE STATE OR LOCAL GOVERNMENT IN WHICH IT IS LOCATED, INCLUD-
 ING  THE  LICENSING OF THE FACILITY AS A CHILD CARE FACILITY. CLAUSE ONE
 OF THIS SUBPARAGRAPH SHALL NOT APPLY TO A FACILITY WHICH IS THE  PRINCI-
 PAL RESIDENCE OF THE OPERATOR OF THE FACILITY.
   (B)  A  FACILITY  SHALL  NOT BE A "QUALIFIED CHILD CARE FACILITY" WITH
 RESPECT TO A TAXPAYER UNLESS:
   (1) ENROLLMENT IN THE FACILITY IS OPEN TO EMPLOYEES  OF  THE  TAXPAYER
 DURING THE TAXABLE YEAR;
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   (2)  IF THE FACILITY IS THE PRINCIPAL TRADE OR BUSINESS OF THE TAXPAY-
 ER, AT LEAST THIRTY PERCENT OF THE ENROLLEES OF SUCH FACILITY ARE DEPEN-
 DENTS OF EMPLOYEES OF THE TAXPAYER; AND
   (3) THE USE OF SUCH FACILITY (OR THE ELIGIBILITY TO USE SUCH FACILITY)
 DOES  NOT  DISCRIMINATE  IN  FAVOR  OF EMPLOYEES OF THE TAXPAYER WHO ARE
 HIGHLY COMPENSATED EMPLOYEES, AS DEFINED BY SECTION 414 OF THE  INTERNAL
 REVENUE CODE.
   (III)  "QUALIFIED  CHILD CARE RESOURCE AND REFERRAL EXPENDITURE" MEANS
 ANY AMOUNT PAID OR INCURRED UNDER  A  CONTRACT  TO  PROVIDE  CHILD  CARE
 RESOURCE AND REFERRAL SERVICES TO AN EMPLOYEE OF THE TAXPAYER.
   (IV)  "APPLICABLE  RECAPTURE  PERCENTAGE"  MEANS THE AMOUNT DETERMINED
 UNDER SUBPARAGRAPH (A) OF PARAGRAPH (III) OF  SUBDIVISION  (B)  OF  THIS
 SECTION.
   (V) "RECAPTURE EVENT" MEANS:
   (A)  THE  CESSATION  OF OPERATION OF THE FACILITY AS A QUALIFIED CHILD
 CARE FACILITY; OR
   (B) A CHANGE IN OWNERSHIP OF THE FACILITY.
   (VI) "CHANGE IN OWNERSHIP"  MEANS  THE  DISPOSITION  OF  A  TAXPAYER'S
 INTEREST  IN  A  QUALIFIED CHILD CARE FACILITY WITH RESPECT TO WHICH THE
 CREDIT DESCRIBED IN SUBDIVISION (A) OF THIS SECTION WAS  ALLOWABLE.  THE
 TERM  "CHANGE IN OWNERSHIP" SHALL NOT APPLY IF THE PERSON ACQUIRING SUCH
 INTEREST IN THE FACILITY AGREES  IN  WRITING  TO  ASSUME  THE  RECAPTURE
 LIABILITY OF THE PERSON DISPOSING OF SUCH INTEREST IN EFFECT IMMEDIATELY
 BEFORE  SUCH DISPOSITION. IN THE EVENT OF SUCH AN ASSUMPTION, THE PERSON
 ACQUIRING THE INTEREST IN THE FACILITY SHALL BE TREATED AS THE  TAXPAYER
 FOR  PURPOSES OF ASSESSING ANY RECAPTURE LIABILITY (COMPUTED AS IF THERE
 HAD BEEN NO CHANGE IN OWNERSHIP).
   (VII) "BACKUP CARE" MEANS CARE PROVIDED TO A DEPENDENT WHEN AN EMPLOY-
 EE'S REGULAR CARE CANNOT BE UTILIZED.   A TAXPAYER  MAY  PROVIDE  BACKUP
 CARE IN ANY OF THE FOLLOWING WAYS:
   (A)  BY  CONTRACTING  WITH  A  PROVIDER OR A BACKUP CHILDCARE BENEFITS
 PROVIDER AND PROVIDING DIRECT PAYMENTS TO THE QUALIFIED CARE PROVIDER OR
 MAKING PAYMENTS TO A BACKUP CHILDCARE BENEFITS PROVIDER FOR BACKUP  CARE
 SERVICES.
   (B)  BY  DIRECTLY  PAYING OR ARRANGING FOR PAYMENT OF BACKUP CHILDCARE
 ANNUALLY TO A QUALIFIED CARE PROVIDER OR  A  BACKUP  CHILDCARE  BENEFITS
 PROVIDER  UPON RECEIPT OF AN INVOICE DETAILING THE NUMBER OF BACKUP CARE
 HOURS USED BY AN EMPLOYEE.
   (C) BY REIMBURSING AN EMPLOYEE DIRECTLY OR THROUGH A BACKUP  CHILDCARE
 BENEFIT PROVIDER FOR BACKUP CHILDCARE PAID DIRECTLY BY THE EMPLOYEE.
   (VIII)  "BACKUP  CHILDCARE  BENEFIT PROVIDER" MEANS THIRD-PARTY VENDOR
 THAT OFFERS SERVICES THAT PROVIDE EMPLOYEES OPTIONS FOR LOCATING  AND/OR
 ARRANGING  FOR THE PROVISION OF BACKUP CHILDCARE, EITHER THROUGH VARIOUS
 BACKUP CHILDCARE PROVIDERS OR THROUGH A REIMBURSEMENT PROGRAM  FOR  CARE
 PAID DIRECTLY BY THE EMPLOYEE.
   (IX) "IN-HOME CARE EXPENDITURES" MEANS EXPENSES FOR CHILDCARE PROVIDED
 IN  THE  EMPLOYEE'S HOME, OR EXPENSES FOR CARE ARRANGED THROUGH A THIRD-
 PARTY VENDOR THAT OFFERS SERVICES FOR LOCATING AND/OR ARRANGING FOR  THE
 PROVISION  OF  CHILDCARE IN THE EMPLOYEE'S HOME, OR THROUGH A REIMBURSE-
 MENT PROGRAM FOR CARE PAID DIRECTLY BY THE EMPLOYEE.
   (X) "PAID BACKUP CHILDCARE" OR "PAID BACKUP CHILDCARE  BENEFIT"  MEANS
 AN  EMPLOYEE  BENEFIT  CONSISTING  OF  THE  EMPLOYER PAYING FOR ALL OR A
 PORTION OF BACKUP CHILDCARE FOR AN EMPLOYEE'S DEPENDENT.
   [(e)] (G) Cross-references. For application of the credit provided for
 in this section, see the following provisions of this chapter:
   (1) article 9-A: section 210-B, subdivision 53;
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   (2) article 22: section 606(i), subsections (i) and (jjj);
   (3) article 33: section 1511, subdivision (dd).
   § 2. This act shall take effect immediately and shall apply to taxable
 years beginning on or after January 1, 2023.