LIFT (Livable Incomes for Families Today) the Middle Class Act

II 116TH CONGRESS 1ST SESSION S. 4 To amend the Internal Revenue Code of 1986 to establish a refundable tax credit to increase the take-home pay of American workers and en- hance their financial stability, and for other purposes. IN THE SENATE OF THE UNITED STATES JANUARY 3, 2019 Ms. HARRIS introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to establish a refundable tax credit to increase the take-home pay of American workers and enhance their financial sta- bility, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘LIFT (Livable In- 4 comes for Families Today) the Middle Class Act’’. 5 SEC. 2. ESTABLISHMENT OF MIDDLE CLASS TAX CREDIT. 6 (a) IN GENERAL.—Subpart C of part IV of sub- 7 chapter A of chapter 1 of the Internal Revenue Code of 8 VerDate Sep 11 2014 04:19 Jan 04, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S4.IS S4 kjohnson on DSK79L0C42 with BILLS 2 •S 4 IS 1986 is amended by inserting after section 36 the fol- 1 lowing new section: 2 ‘‘SEC. 36A. MIDDLE CLASS TAX CREDIT. 3 ‘‘(a) ALLOWANCE OF CREDIT.— 4 ‘‘(1) IN GENERAL.—In the case of an eligible 5 individual, for any taxable year beginning after De- 6 cember 31, 2018, there shall be allowed as a credit 7 against the tax imposed by this subtitle for the tax- 8 able year an amount equal to so much of the tax- 9 payer’s earned income for the preceding taxable year 10 as does not exceed $3,000. 11 ‘‘(2) PHASEOUT OF CREDIT.—The amount of 12 the credit allowable to the taxpayer under paragraph 13 (1) for the taxable year shall be reduced (but not 14 below zero) by an amount which bears the same 15 ratio to the amount of the credit determined under 16 such paragraph as— 17 ‘‘(A) the amount (not less than zero) equal 18 to the adjusted gross income (or, if greater, the 19 earned income) of the taxpayer for the pre- 20 ceding taxable year minus $30,000, bears to 21 ‘‘(B) $20,000. 22 ‘‘(3) JOINT RETURNS.— 23 ‘‘(A) IN GENERAL.—For purposes of deter- 24 mining the amount of the credit allowed under 25 VerDate Sep 11 2014 04:19 Jan 04, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S4.IS S4 kjohnson on DSK79L0C42 with BILLS 3 •S 4 IS this section for any taxable year, if a joint re- 1 turn was filed for the preceding taxable year by 2 an eligible individual and such individual’s 3 spouse, each of the dollar amounts under para- 4 graphs (1) and (2) shall be doubled. 5 ‘‘(B) MARRIED INDIVIDUALS.—For pur- 6 poses of determining the amount of the credit 7 allowed under this section for any taxable year, 8 if an individual was married during the pre- 9 ceding taxable year (within the meaning of sec- 10 tion 7703), this section shall apply only if a 11 joint return was filed for the preceding taxable 12 year under section 6013. 13 ‘‘(4) HEAD OF HOUSEHOLD.—For purposes of 14 determining the amount of the credit allowed under 15 this section for any taxable year, if a taxpayer filed 16 a return as a head of household for the preceding 17 taxable year, the reduction of the credit allowable to 18 the taxpayer under paragraph (1) shall be deter- 19 mined under paragraph (2) by substituting 20 ‘$60,000’ for ‘$30,000’ in subparagraph (A) thereof. 21 ‘‘(5) INFLATION ADJUSTMENTS.— 22 ‘‘(A) IN GENERAL.—In the case of any 23 taxable year after 2019, each of the dollar 24 VerDate Sep 11 2014 04:19 Jan 04, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S4.IS S4 kjohnson on DSK79L0C42 with BILLS 4 •S 4 IS amounts under paragraphs (1), (2), and (4) 1 shall be increased by an amount equal to— 2 ‘‘(i) such dollar amount, multiplied by 3 ‘‘(ii) the cost-of-living adjustment de- 4 termined under section 1(f)(3) for the cal- 5 endar year in which the taxable year be- 6 gins, determined by substituting ‘calendar 7 year 2018’ for ‘calendar year 2016’ in sub- 8 paragraph (A)(ii) thereof. 9 ‘‘(B) ROUNDING.—If any increase deter- 10 mined under subparagraph (A) is not a multiple 11 of $50, such increase shall be rounded to the 12 nearest multiple of $50. 13 ‘‘(b) DEFINITIONS.—For purposes of determining the 14 credit allowed under this section for any taxable year— 15 ‘‘(1) ELIGIBLE INDIVIDUAL.— 16 ‘‘(A) IN GENERAL.—The term ‘eligible in- 17 dividual’ means an individual— 18 ‘‘(i) who attained 18 years of age be- 19 fore the close of the preceding taxable 20 year, 21 ‘‘(ii) whose principal place of abode 22 was in the United States for more than 23 one-half of the preceding taxable year, 24 VerDate Sep 11 2014 04:19 Jan 04, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S4.IS S4 kjohnson on DSK79L0C42 with BILLS 5 •S 4 IS ‘‘(iii) who was not a dependent for 1 whom a deduction is allowable under sec- 2 tion 151 to another taxpayer for any tax- 3 able year beginning in the same calendar 4 year as the preceding taxable year, and 5 ‘‘(iv) who did not claim the benefits of 6 section 911 for the preceding taxable year. 7 ‘‘(B) LIMITATION ON ELIGIBILITY OF NON- 8 RESIDENT ALIENS.—The term ‘eligible indi- 9 vidual’ shall not include any individual who is 10 a nonresident alien individual for any portion of 11 the preceding taxable year, unless such indi- 12 vidual is treated for such taxable year as a resi- 13 dent of the United States for purposes of this 14 chapter by reason of an election under sub- 15 section (g) or (h) of section 6013. 16 ‘‘(C) IDENTIFICATION NUMBER REQUIRE- 17 MENT.—No credit shall be allowed under this 18 section to an eligible individual who does not in- 19 clude on the return of tax for the taxable 20 year— 21 ‘‘(i) such individual’s taxpayer identi- 22 fication number, and 23 ‘‘(ii) if the individual was married 24 during the preceding taxable year (within 25 VerDate Sep 11 2014 04:19 Jan 04, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S4.IS S4 kjohnson on DSK79L0C42 with BILLS 6 •S 4 IS the meaning of section 7703), the taxpayer 1 identification number of such individual’s 2 spouse. 3 ‘‘(D) TREATMENT OF MILITARY PER- 4 SONNEL STATIONED OUTSIDE OF THE UNITED 5 STATES.—For purposes of subparagraph 6 (A)(ii), the principal place of abode of a mem- 7 ber of the Armed Forces of the United States 8 shall be treated as in the United States during 9 any period during which such member is sta- 10 tioned outside the United States while serving 11 on extended active duty with the Armed Forces 12 of the United States. For purposes of the pre- 13 ceding sentence, the term ‘extended active duty’ 14 means any period of active duty pursuant to a 15 call or order to such duty for a period in excess 16 of 90 days or for an indefinite period. 17 ‘‘(2) EARNED INCOME.—The term ‘earned in- 18 come’ has the same meaning given such term under 19 section 32(c)(2), except that such term shall include 20 any amounts received by the taxpayer as a Federal 21 Pell Grant under section 401 of the Higher Edu- 22 cation Act of 1965. 23 ‘‘(c) TAXABLE YEAR MUST BE FULL TAXABLE 24 YEAR.—Except in the case of a taxable year closed by rea- 25 VerDate Sep 11 2014 04:19 Jan 04, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S4.IS S4 kjohnson on DSK79L0C42 with BILLS 7 •S 4 IS son of the death of the taxpayer, no credit shall be allow- 1 able under this section in the case of a taxable year cov- 2 ering a period of less than 12 months. 3 ‘‘(d) RESTRICTIONS ON TAXPAYER WHO IMPROP- 4 ERLY CLAIMED CREDIT IN PRIOR YEAR.—Rules similar 5 to subsection (k) of section 32 shall apply for purposes 6 of this section. 7 ‘‘(e) AMOUNT OF CREDIT TO BE DETERMINED 8 UNDER TABLES.— 9 ‘‘(1) IN GENERAL.—The amount of the credit 10 allowed by this section shall be determined under ta- 11 bles prescribed by the Secretary. 12 ‘‘(2) REQUIREMENTS FOR TABLES.—The tables 13 prescribed under paragraph (1) shall reflect the pro- 14 visions of subsection (a) and shall have income 15 brackets of not greater than $50 each— 16 ‘‘(A) for earned income between $0 and 17 the amount of earned income at which the cred- 18 it is phased out under subsection (a)(2), and 19 ‘‘(B) for adjusted gross income between 20 the dollar amount at which the phaseout begins 21 under subsection (a)(2) and the amount of ad- 22 justed gross income at which the credit is 23 phased out under such subsection. 24 VerDate Sep 11 2014 04:19 Jan 04, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S4.IS S4 kjohnson on DSK79L0C42 with BILLS 8 •S 4 IS ‘‘(f) RECONCILIATION OF CREDIT AND ADVANCE 1 PAYMENTS.—The amount of the credit allowed under this 2 section for any taxable year shall be reduced (but not 3 below zero) by the aggregate amount of any advance pay- 4 ments of such credit under section 7527A for such taxable 5 year.’’. 6 (b) ADVANCE PAYMENT OF MIDDLE CLASS TAX 7 CREDIT.— 8 (1) IN GENERAL.—Chapter 77 of the Internal 9 Revenue Code of 1986 is amended by inserting after 10 section 7527 the following new section: 11 ‘‘SEC. 7527A. ADVANCE PAYMENT OF MIDDLE CLASS TAX 12 CREDIT. 13 ‘‘(a) IN GENERAL.—Not later than 6 months after 14 the date of the enactment of the LIFT (Livable Incomes 15 for Families Today) the Middle Class Act, the Secretary 16 shall establish a program for making advance payments 17 of the credit allowed under section 36A on a monthly basis 18 (determined without regard to subsection (f) of such sec- 19 tion) to any taxpayer who— 20 ‘‘(1) the Secretary has determined will be al- 21 lowed such credit for the taxable year, and 22 ‘‘(2) has made an election under subsection (c). 23 ‘‘(b) AMOUNT OF ADVANCE PAYMENT.— 24 VerDate Sep 11 2014 04:19 Jan 04, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S4.IS S4 kjohnson on DSK79L0C42 with BILLS 9 •S 4 IS ‘‘(1) IN GENERAL.—For purposes of subsection 1 (a), the amount of the monthly advance payment of 2 the credit provided to a taxpayer during the applica- 3 ble period shall be equal to the lesser of— 4 ‘‘(A) an amount equal to— 5 ‘‘(i) the amount of the credit which 6 the Secretary has determined will be al- 7 lowed to such taxpayer under section 36A 8 for the taxable year ending in such applica- 9 ble period, divided by 10 ‘‘(ii) 12, or 11 ‘‘(B) such other amount as is elected by 12 the taxpayer. 13 ‘‘(2) APPLICABLE PERIOD.—For purposes of 14 this section, the term ‘applicable period’ means the 15 12-month period from the month of July of the tax- 16 able year through the month of June of the subse- 17 quent taxable year. 18 ‘‘(c) ELECTION OF ADVANCE PAYMENT.—A taxpayer 19 may elect to receive an advance payment of the credit al- 20 lowed under section 36A for any taxable year by including 21 such election on a timely filed return for the preceding 22 taxable year. 23 ‘‘(d) INTERNAL REVENUE SERVICE NOTIFICA- 24 TION.—The Internal Revenue Service shall take such 25 VerDate Sep 11 2014 04:19 Jan 04, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S4.IS S4 kjohnson on DSK79L0C42 with BILLS 10 •S 4 IS steps as may be appropriate to ensure that taxpayers who 1 are eligible to receive the credit under section 36A are 2 aware of the availability of the advance payment of such 3 credit under this section. 4 ‘‘(e) AUTHORITY.—The Secretary may prescribe such 5 regulations or other guidance as may be appropriate or 6 necessary for the purposes of carrying out this section.’’. 7 (c) INCOME DISREGARD.—Any credit or refund al- 8 lowed or made to any individual by reason of section 36A 9 of the Internal Revenue Code of 1986 (as added by this 10 section) shall not be taken into account as income and 11 shall not be taken into account as resources for purposes 12 of determining the eligibility of such individual or any 13 other individual for benefits or assistance, or the amount 14 or extent of benefits or assistance, under any Federal pro- 15 gram or under any State or local program financed in 16 whole or in part with Federal funds. 17 (d) CONFORMING AMENDMENTS.— 18 (1) Section 6211(b)(4)(A) of the Internal Rev- 19 enue Code of 1986 is amended by inserting ‘‘36A,’’ 20 after ‘‘36,’’. 21 (2) Section 6213(g)(2) of such Code is amend- 22 ed— 23 (A) in subparagraph (F), by inserting ‘‘or 24 section 36A’’ after ‘‘credit)’’; 25 VerDate Sep 11 2014 04:19 Jan 04, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S4.IS S4 kjohnson on DSK79L0C42 with BILLS 11 •S 4 IS (B) in subparagraph (G), by inserting ‘‘or 1 36A’’ after ‘‘section 32’’; 2 (C) by striking subparagraph (K) and in- 3 serting the following: 4 ‘‘(K) an omission of information required 5 by section 32(k)(2) or 36(e) or an entry on the 6 return claiming— 7 ‘‘(i) the credit under section 32 for a 8 taxable year for which the credit is dis- 9 allowed under subsection (k)(1) thereof, or 10 ‘‘(ii) the credit under section 36A for 11 a taxable year for which the credit is dis- 12 allowed under subsection (d) thereof,’’; and 13 (D) in subparagraph (L), by striking ‘‘or 14 32’’ and inserting ‘‘32, or 36A’’. 15 (3) The table of sections for subpart C of part 16 IV of subchapter A of chapter 1 of such Code is 17 amended by inserting after the item relating to sec- 18 tion 36 the following new item: 19 ‘‘Sec. 36A. Middle class tax credit.’’. (4) The table of sections for chapter 77 of such 20 Code is amended by inserting after the item relating 21 to section 7527 the following: 22 ‘‘Sec. 7527A. Advance payment of middle class tax credit.’’. VerDate Sep 11 2014 04:19 Jan 04, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6211 E:\BILLS\S4.IS S4 kjohnson on DSK79L0C42 with BILLS 12 •S 4 IS (e) EFFECTIVE DATE.—The amendments made by 1 this section shall apply to earned income received after De- 2 cember 31, 2017. 3 SEC. 3. RETURN PREPARATION PROGRAMS FOR LOW-IN- 4 COME TAXPAYERS. 5 (a) IN GENERAL.—Chapter 77 of the Internal Rev- 6 enue Code of 1986 is amended by inserting after section 7 7526 the following new section: 8 ‘‘SEC. 7526A. RETURN PREPARATION PROGRAMS FOR LOW- 9 INCOME TAXPAYERS. 10 ‘‘(a) VOLUNTEER INCOME TAX ASSISTANCE MATCH- 11 ING GRANT PROGRAM.— 12 ‘‘(1) ESTABLISHMENT OF PROGRAM.—The Sec- 13 retary, through the Internal Revenue Service, shall 14 establish a Community Volunteer Income Tax As- 15 sistance Matching Grant Program (hereinafter in 16 this section referred to as the ‘VITA grant pro- 17 gram’). Except as otherwise provided in this section, 18 the VITA grant program shall be administered in a 19 manner which is substantially similar to the Commu- 20 nity Volunteer Income Tax Assistance matching 21 grants demonstration program established under 22 title I of division D of the Consolidated Appropria- 23 tions Act, 2008. 24 ‘‘(2) M [Text truncated for display. Full text available on Congress.gov.]