H.R. 996 — Paid Family and Medical Leave Tax Credit Extension and Enhancement Act

This section enhances the paid family and medical leave tax credit under section 45S of the Internal Revenue Code by (1) allowing an eligible employer to elect a credit equal to the applicable percentage of either wages paid to qualifying employees during family and medical leave or premiums paid for an insurance policy providing such leave (with the policy's payment rate determined without regard to whether leave was taken); (2) revising the definition of qualifying employee to include individuals customarily employed for at least 20 hours per week who have been employed for one year or more (or, at employer election, at least six months, from one year or more) with annualized compensation (pro rata for part-time employees) at least equal to the average for all prior periods of employment; (3) replacing the aggregation rule for controlled groups with an exception for persons with a substantial and legitimate business reason for lacking a written leave policy and providing that state- or local government-paid leave counts in determining leave provided by the employer but not the credit amount; and (4) striking subsection (i). It further amends section 280C(a) to deny deductions for premiums equal to the insurance-based credit elected under section 45S(a)(1)(B). This section directs each Small Business Administration district office and resource partner—including small business development centers, women's business centers, Service Corps of Retired Executives chapters, and veteran business outreach centers—to conduct outreach on the credit, including targeted communications, training, technical assistance, and assistance developing a required written leave policy; it also directs the Internal Revenue Service to perform targeted outreach to employers, payroll service providers, tax professionals, and small businesses. The amendments apply to taxable years beginning after the date of enactment.