May 14, 1992 TO: Senator Dole FROM: Mo West SUBJECT: Assistance for Disability-Related Expenditures The recently enacted Americans with Disabilities Act (ADA) will require businesses and other public facilities to make "reasonable accommodations" for persons with disabilities. In some cases this could mean that a business will be required to make expenditures to adapt a job or service to a person with a disability. A number of legislative initiatives designed to ease the financial burden placed on businesses by ADA were passed by Congress after passage of the ADA. Outlined below are four programs you sponsored that provide financial and/or technical assistance to businesses for disability-expenditures: EEOC technical assistance, targeted jobs tax credit (TJTC), Disability Access Tax Credit, and Section 190 deductions. Technical Assistance You authorized a technical assistance amendment to ADA that would assist with its implementation. Section 506 of the ADA directs the Equal Employment Opportunity Commission (EEOC) and the Department of Justice to clarify and answer questions regarding the rights of persons with disabilities and the obligations of businesses under ADA. You are requesting an increase in technical assistance funding in this year's Commerce, Justice, State, and Judiciary Appropriations Bill. Targeted Jobs Tax Credit The targeted jobs tax credit, which aims to increase the employability of disadvantaged youth and persons with disabilities, has been extended for another 15 months. Many businesses in Kansas have successfully utilized this program to employ people with disabilities. The extension will further ease the burden faced by businesses in accommodating persons with disabilities as required by the ADA. Disability Access Tax Credit The tax credit is designed to assist the small business community with the cost of ADA compliance. The credit applies to any ADA-related expenditures for the accommodation of persons with disabilities. ADA-related expenditures include the following: removal of architectural, transportation, physical, or communications barriers; procurement or modification of equipment and/or services; translation of materials for the visually or hearing impaired; personal assistant services; technical support and training for business and employee compliance; auxiliary aids and services. The variety of eligible disability related expenditures will enable businesses to more easily accommodate persons with disabilities. Small businesses are responsible for the first $250 of expense to accommodate the disabled. Costs above $250 are eligible for a 50% non-refundable credit, up to $10,250. Any ADA-disability related expenditure above $10,250 is eligible for a more restricted deduction of $15,000. If the entire access tax credit is not used in one year, it can be accumulated and carried forward to subsequent years or carried back to previous tax years. Only small businesses are eligible to receive tax credit. A small business is defined as any business with less than $1 million gross receipts or fewer than 30 full time employees qualify for the credit. Eligibility for the tax credit is narrowly defined for several reasons. Small businesses will be called on most often to accommodate and employee persons with disabilities. Small businesses have limited resources and, therefore, require the most technical and financial assistance to comply with ADA. In addition, all other businesses qualify for the $15,000 deduction. Section 190 Section 190 of the Internal Revenue Code, which you authored, provides a $35,000 deduction for disability related expenditures. A disability related expenditure is defined as the removal of architectural and transportation barriers to the disabled and elderly. Given a number of assumptions related to company size and income, large businesses have tended to benefit more from the Section 190 deduction. The Disability Access Tax Credit (as described above) lowers the deduction to $15,000. Justification for this change to the Section 190 deduction is based upon two arguments. First, Section 190 does not focus assistance effectively to small businesses. Small businesses, however, will bare the burden of ADA and will most need help. And second, Section 190 deductions for disability related expenditures apply to only a limited class of expenditures. Consequently, Section 190 provides a $15,000 deduction for disability related expenditures.