[Page S12645]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

  SA 2999. Ms. SNOWE (for herself, Mr. Kerry, and Ms. Landrieu) 
submitted an amendment intended to be proposed to amendment SA 2786 
proposed by Mr. Reid (for himself, Mr. Baucus, Mr. Dodd, and Mr. 
Harkin) to the bill H.R. 3590, to amend the Internal Revenue Code of 
1986 to modify the first-time homebuyers credit in the case of members 
of the Armed Forces and certain other Federal employees, and for other 
purposes; which was ordered to lie on the table; as follows:

       On page 2057, between lines 6 and 7, insert the following:

     SEC. __. APPLICATION OF CAFETERIA PLANS TO SELF-EMPLOYED 
                   INDIVIDUALS.

       (a) In General.--
       (1) Application to self-employed individuals.--Section 
     125(d) of the Internal Revenue Code of 1986 (defining 
     cafeteria plan) is amended by adding at the end the following 
     new paragraph:
       ``(3) Employee to include self-employed.--
       ``(A) In general.--The term `employee' includes an 
     individual who is an employee within the meaning of section 
     401(c)(1) (relating to self-employed individuals).
       ``(B) Limitations.--
       ``(i) In general.--The amount which may be excluded under 
     subsection (a) with respect to a participant in a cafeteria 
     plan by reason of being an employee under subparagraph (A) 
     shall not exceed the employee's earned income (within the 
     meaning of section 401(c)) derived from the trade or business 
     with respect to which the cafeteria plan is established.
       ``(ii) Limitations on certain flexible spending 
     arrangements.--No amount shall be excluded under subsection 
     (a) with respect to any plan which provides benefits in the 
     form of a health flexible spending arrangement or a dependent 
     care flexible spending arrangement and in which an individual 
     described in subparagraph (A) participates unless such plan 
     is administered by a person other than the employer.
       ``(C) Additional tax on unreimbursed amounts.--
       ``(i) In general.--The tax imposed by this chapter on any 
     person who is described in subparagraph (A) and who is a 
     participant in a cafeteria plan which provides benefits in 
     the form of a health flexible spending arrangement or a 
     dependent care flexible spending arrangement shall be 
     increased by an amount equal to 100 percent of the excess (if 
     any) of--

       ``(I) the maximum value of the qualified benefit with 
     respect to such person, over
       ``(II) the amount of covered expenses both incurred during 
     the coverage period for the qualified benefit, and any grace 
     period, and reimbursed during that period or during any 
     appropriate run-out period.

       ``(ii) Collection.--The tax imposed by this subparagraph 
     shall be collected by the person administering the flexible 
     spending arrangement, and to the extent that such person 
     fails to collect such tax, the tax shall be paid by such 
     person.''.
       (2) Application to benefits which may be provided under 
     cafeteria plan.--
       (A) Group-term life insurance.--Section 79 of the Internal 
     Revenue Code of 1986 (relating to group-term life insurance 
     provided to employees) is amended by adding at the end the 
     following new subsection:
       ``(f) Employee Includes Self-Employed.--
       ``(1) In general.--For purposes of this section, the term 
     `employee' includes an individual who is an employee within 
     the meaning of section 401(c)(1) (relating to self-employed 
     individuals).
       ``(2) Limitation.--The amount which may be excluded under 
     the exceptions contained in subsection (a) or (b) with 
     respect to an individual treated as an employee by reason of 
     paragraph (1) shall not exceed the employee's earned income 
     (within the meaning of section 401(c)) derived from the trade 
     or business with respect to which the individual is so 
     treated.''.
       (B) Accident and health plans.--Subsection (g) of section 
     105 of such Code (relating to amounts received under accident 
     and health plans) is amended to read as follows:
       ``(g) Employee Includes Self-Employed.--
       ``(1) In general.--For purposes of this section, in the 
     case of any coverage under an accident or health plan which 
     is provided through a simple cafeteria plan under section 
     125(j), the term `employee' includes an individual who is an 
     employee within the meaning of section 401(c)(1) (relating to 
     self-employed individuals).
       ``(2) Limitation.--The amount which may be excluded under 
     this section by reason of subsection (b) or (c) with respect 
     to an individual treated as an employee by reason of 
     paragraph (1) shall not exceed the employee's earned income 
     (within the meaning of section 401(c)) derived from the trade 
     or business with respect to which the accident or health 
     insurance was established.''.
       (C) Contributions by employers to accident and health 
     plans.--
       (i) In general.--Section 106 of such Code is amended by 
     inserting after subsection (e) the following new subsection:
       ``(f) Special Rule for Benefits Provided Through Simple 
     Cafeteria Plans.--
       ``(1) In general.--For purposes of this section, in the 
     case of any coverage under an accident or health plan which 
     is provided through a simple cafeteria plan under section 
     125(j), the term `employee' includes an individual who is an 
     employee within the meaning of section 401(c)(1) (relating to 
     self-employed individuals).
       ``(2) Limitation.--The amount which may be excluded under 
     subsection (a) with respect to an individual treated as an 
     employee by reason of paragraph (1) shall not exceed the 
     employee's earned income (within the meaning of section 
     401(c)) derived from the trade or business with respect to 
     which the accident or health insurance was established.''.
       (ii) Clarification of limitations on other coverage.--The 
     first sentence of section 162(l)(2)(B) of such Code is 
     amended to read as follows: ``Paragraph (1) shall not apply 
     to any taxpayer for any calendar month for which the taxpayer 
     participates in any subsidized health plan maintained by any 
     employer (other than an employer described in section 
     401(c)(4)) of the taxpayer or the spouse of the taxpayer.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2010.
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