Chapter 63 of the General Laws is hereby amended by inserting after section 38FF the following section:-
Section 38GG. (a) There is hereby established a child care program tax credit. A business corporation organized under the laws of the commonwealth that implements a child care program in accordance with this section, by providing an affordable, on-site qualified child care center licensed by the department of early education and care for use by its employees shall be allowed a credit against its excise due under this chapter equal to 25 per cent of the qualified childcare expenditures associated with implementing the program, with a maximum credit of $150,000 per business corporation in any 1 taxable year.
(b)The department of early education and care, hereinafter the department, shall determine the criteria for eligibility for the credit, such criteria to be set forth in regulations promulgated pursuant to this section. The regulations shall require proof of the business corporation’s existing, on-site qualified child care center for use by its employees. The department shall set criteria for qualification as affordable child care for purposes of this section, in consideration of the standard daily rates of child care in the commonwealth; provided that such criteria shall include restrictions on the costs a business corporation may charge an employee for participation in the child care program, in consideration of the salary of the employee and said criteria for affordability. The department shall issue a certification of eligibility to the taxpayer after the taxpayer submits documentation as required by the department.
(c) For purposes of this section, “qualified child care expenditures” shall include any amount paid or incurred by the taxpayer:
(i) to acquire, construct, rehabilitate, or expand property:
(A) to be used as part of a qualified child care center;
(B) with respect to which a deduction for depreciation or amortization in lieu of depreciation is allowable; and
(C) which does not constitute part of the principal residence of the taxpayer or any employee of the taxpayer;
(ii) for the operating costs of a qualified child care center, including costs related to the training and compensation of employees and to the providing of increased compensation to employees with higher levels of child care training, or
(iii) under a contract with a qualified child care center to provide on-site child care services to employees of the taxpayer.
The term “qualified child care expenditure” shall not include expenses in excess of the fair market value of such care.
(d) For purposes of this section, a “qualified child care center” means a facility:
(i) the principal use of which is to provide child care for the taxpayer’s employees; and
(ii) that is licensed as a child care center, and otherwise meets the requirements of all applicable laws and regulations of the state and municipality in which it is located.
(e) A facility shall not be treated as a qualified child care center with respect to a taxpayer unless:
(i) enrollment in the child care center is open to all employees of the taxpayer during the taxable year;
(ii) 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; and
(iii) if the facility is the principal trade or business of the taxpayer, at least 30 per cent of the enrollees of such facility are dependents of employees of the taxpayer.
(f) In order to qualify as affordable child care pursuant to this section, the business corporation shall not charge participating employees more than the allowable cost for such child care as determined by the department pursuant to subsection (b).
(g) The credit allowed hereunder for any taxable year shall not reduce the excise to less than the amount due under subsection (b) of section 39, section 67 or any other applicable section. The limitation provided under section 32C shall also apply to any credit allowed hereunder.
(h) Child care program tax credits allowed to a business corporation under this section shall be allowed for the taxable year in which the program is implemented. A taxpayer allowed a credit under this section for a taxable year may carry over and apply against the taxpayer's tax liability in any of the succeeding 5 taxable years, the portion, as reduced from year to year, of those credits which exceed the tax for the taxable year.
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