March 13, 1992
TO: Senator Dole/Nina
FROM: Mo West
SUBJECT: Finance Mark-up Disability Amendments

There are several key tax issues of importance to people with disabilities and employers wishing to hire an employee with a disability.

As you know, the tax code was expanded after passage of the ADA 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 expenditures, transportation, physical, or communications barriers; procurement or modification of equipment, personal assistance services, translation of materials for the visually or hearing impaired and auxiliary aids and services.

Under the current tax code small businesses are responsible for the first $250 of expenses 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 credits. A small business is defined as any business with less than $1 million in gross receipts or fewer than 30 full time employees qualify for the credit.

People with disabilities often incur extra living expenses that are disability-related such as the need for personal assistants to carry out activities of daily living. These expenses become especially burdensome when the individual is not employed and as you are aware the employment rate of people with disabilities is the lowest of all minorities.

The current tax credit is based on barrier removal and job accommodation. Eligible small businesses may try to claim the provision of "Personal Assistance Services" (PAS) as an eligible access expenditure. However, there is no definition of PAS in the code to verify that this is an allowable claim. With the inclusion of a PAS definition, claims for such services will assist in making claims and providing this incentive to employers.

Dole Archives: s-leg_554_002_014_d.pdf 	Page 1 of 3

I have drafted four amendments for your consideration to offer at mark up or on the floor. I haven’t shared any of the amendments with Finance staff, however, the disability community has spoken with them and has indicated that you could get bipartisan support for these.

AMENDMENT #1
An amendment to add the definition of "Personal Assistance Services" under the Disability Access Expenditures of the Tax Code (Section 151) would read as follows:

The term Personal Assistance Services (PAS) is defined as "one person assisting another individual with tasks which such individual would typically do if such individual did not have a disability and which are necessary to enable the individual with a disability to carry out activities of daily living".

Do you want to add the definition of Personal Assistance Services to the Disability Access Expenditures of the Tax Code? (You successfully added this definition to the Higher Education Act last week).

Yes_ No_

AMENDMENT #2
A taxpayer with a disability who pays for a reasonable accommodation that exceeds a firm’s "undue burden" requirement in the ADA should be provided with tax relief when they rely on "personal assistance services" to work and lead lives which encourage less dependency on government benefits. This amendment would read:

"A taxpayer with a disability can elect to take a credit in the amount equal to 100% of the cost of a job accommodation which the person agrees to pay for when it exceeds a firm’s undue burden. In addition, a taxpayer with a disability may elect to take a credit in the amount equal to 100% of eligible personal assistance expenditures that exceed 2% of their net income".

Do you want to offer an amendment to give a taxpayer with a disability the authority to take a tax credit for the amount their employee does not take in providing a reasonable accommodation?

Yes_ No_

Dole Archives: s-leg_554_002_014_d.pdf 	Page 2 of 3

Amendment #3
Firms with fewer than 15 employees are not covered by Title I of the ADA Employment requirements but could be the richest job source in the nation. Federal tax policy can encourage this sector of the economy to hire and provide job accommodations to qualified employees with disabilities. An amendment to address this issue would read as:

"Allow firms with fewer than 15 employees to elect to take a credit in an amount equal to 75% of eligible access expenditures that exceeds $250 but does not exceed $10,250 and that are spent specifically on providing job accommodations to one or more persons with disabilities".

Do you want to offer this amendment?

Yes_ No_

AMENDMENT #4
Eligible small businesses that provide job accommodations of an ongoing nature such as "personal assistance services" or "supported employment" that exceeds the undue burden requirement under the ADA should have added incentive to offer such accommodations. The amendment would read as follows:

"Allow firms that incur reasonable accommodation costs that are ongoing in nature or exceed undue burden to elect to take a credit in the amount equal to 25% of eligible access expenditures that exceed $10,250 but do not exceed $15,500.

Do you want to offer this amendment which will provide a tax credit for ongoing accommodations for people with disabilities?

Yes_ No_

Only small businesses are eligible to receive tax credits. 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 employ persons with disabilities. Additionally, 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 tax deduction.

Small businesses, however, will bare the burden of ADA and will need more incentives and greater assistance. Additionally, Section 190 deductions for disability related expenditures apply to only a limited class of expenditures.

Dole Archives: s-leg_554_002_014_d.pdf 	Page 3 of 3