WASHINGTON, D.C. – Democratic Whip Katherine Clark (MA-5) coauthored a letter with Senator Michael Bennet (D-CO), Chair of the Senate Finance Committee’s Subcommittee on Taxation and IRS Oversight, urging the Internal Revenue Service to improve outreach promoting awareness of the Employer-Provided Child Care Credit. Addressed to Secretary of the Treasury Janet Yellen and Acting IRS Commissioner Douglas O’Donnell, the letter follows a Government Accountability Office (GAO) report that found few employers are aware of the credit – an important tool for families struggling to find and pay for child care.

“The child care sector was pushed to a breaking point during the COVID-19 pandemic, and there remains an ongoing need for investments and policy solutions that support child care providers and help parents access affordable, high-quality child care options. Half of all workers and nearly 60 percent of parents cited a lack of child care as their reason for leaving the workforce last year.  Annually, businesses lose an estimated $23 billion in lost earnings, revenue, and productivity when working parents do not have adequate child care. Without actions that help connect parents to affordable, high-quality child care, this crisis will continue to deepen while keeping working parents, especially mothers, out of the workforce and hindering national economic growth,” wrote the lawmakers.

“Given that only 11 percent of all workers have access to employer-provided child care, now is the time to ensure that this important tool to help connect parents to child care is working as effectively as possible.”

Through the Fiscal Year 2023 budget, Whip Clark led the effort to encourage the IRS to increase awareness of the Employer-Provided Child Tax Credit and brief the House Appropriations Committee on its efforts within 180 days of enactment. Clark also helped secure $40 billion in child care relief funding through the American Rescue Plan in order to ensure that child care providers could stay afloat, parents could get back to work, and families and businesses could thrive. Most recently, she secured a 30% increase to the Child Care Development Block Grant in the Fiscal Year 2023 budget.

Full text of the letter can be found HERE and below:

Dear Secretary Yellen and Acting Commissioner O’Donnell:

We write to call to your attention report language accompanying the Consolidated Appropriations Act for FY23 that recommends that the Internal Revenue Service (IRS) increase awareness of the Employer-Provided Child Care Credit among employers.

The child care sector was pushed to a breaking point during the COVID-19 pandemic, and there remains an ongoing need for investments and policy solutions that support child care providers and help parents access affordable, high-quality child care options. Half of all workers and nearly 60 percent of parents cited a lack of child care as their reason for leaving the workforce last year.  Annually, businesses lose an estimated $23 billion in lost earnings, revenue, and productivity when working parents do not have adequate child care.  Without actions that help connect parents to affordable, high-quality child care, this crisis will continue to deepen while keeping working parents, especially mothers, out of the workforce and hindering national economic growth.

The federal tax code provides a credit designed to offset some of the costs an employer incurs providing child care for their employees, known as the Employer-Provided Child Care Credit.  The President’s FY2022 budget called for an increase in the size of the credit with the Treasury Greenbook arguing that “[o]n-site childcare is valued by parents, and may generate important benefits such as lower absenteeism, higher employee performance, higher employee retention, and higher employee satisfaction.”

A recent GAO report reviewed the credit and made recommendations to improve the credit design and take-up rates.  Included in the report was a finding that employers are often not aware of the Employer-Provided Child Care Credit and lack a clear understanding of how the credit can be applied. In response, House Report 117-393, adopted by the Consolidated Appropriations Act, 2023, Public Law 117-328, recommended that the IRS conduct an awareness campaign of the credit, including bolstering efforts to disseminate information on how the tax credit works and how employers can utilize it in various situations to help their employees access child care services.  Given that only 11 percent of all workers have access to employer-provided child care, now is the time to ensure that this important tool to help connect parents to child care is working as effectively as possible.

We look forward to being briefed on your efforts to increase awareness of this credit and remain committed to working together on child care solutions that meet the needs of families.

Sincerely,

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