Cost-of-Living Refund Act of 2019

II 116TH CONGRESS 1ST SESSION S. 527 To amend the Internal Revenue Code of 1986 to modify the earned income tax credit to account for the amount by which economic growth has outpaced income growth, and for other purposes. IN THE SENATE OF THE UNITED STATES FEBRUARY 14, 2019 Mr. BROWN 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 modify the earned income tax credit to account for the amount by which economic growth has outpaced income growth, 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 ‘‘Cost-of-Living Refund 4 Act of 2019’’. 5 SEC. 2. MODIFICATION OF EARNED INCOME TAX CREDIT. 6 (a) IN GENERAL.— 7 VerDate Sep 11 2014 04:20 Feb 23, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S527.IS S527 kjohnson on DSK79L0C42 with BILLS 2 •S 527 IS (1) INCREASE IN CREDIT PERCENTAGE.—The 1 table in section 32(b)(1) of the Internal Revenue 2 Code of 1986 is amended— 3 (A) by striking ‘‘7.65’’ in the second col- 4 umn (relating to credit percentage) and insert- 5 ing ‘‘30’’; 6 (B) by striking ‘‘7.65’’ in the third column 7 (relating to phaseout percentage) and inserting 8 ‘‘15.98’’; 9 (C) by striking ‘‘34’’ and inserting 10 ‘‘65.28’’; 11 (D) by striking ‘‘40’’ and inserting 12 ‘‘76.80’’; and 13 (E) by striking ‘‘45’’ and inserting 14 ‘‘86.40’’. 15 (2) EARNED INCOME AMOUNT AND PHASEOUT 16 AMOUNT.— 17 (A) IN GENERAL.—Subparagraph (A) of 18 section 32(b)(2) of such Code is amended by 19 striking ‘‘Subject to subparagraph (B), the 20 earned income amount and the phaseout 21 amount’’ and inserting ‘‘Subject to subpara- 22 graph (B)— 23 ‘‘(i) PHASEOUT AMOUNT.—The phase- 24 out amount is $18,340. 25 VerDate Sep 11 2014 04:20 Feb 23, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S527.IS S527 kjohnson on DSK79L0C42 with BILLS 3 •S 527 IS ‘‘(ii) EARNED INCOME AMOUNT.—The 1 earned income amount’’. 2 (B) CREDIT PHASE-IN ENDS.—Section 3 32(b)(2)(A)(ii) of such Code, as amended by 4 subparagraph (A), is further amended by strik- 5 ing the table and inserting the following: 6 ‘‘In the case of an The earned income eligible individual with: amount is: 1 qualifying child ......................................................................... $10,000 2 or more qualifying children ...................................................... $14,040 No qualifying children ................................................................. $10,000.’’. (b) ELIGIBILITY AGE.—Subclause (II) of section 7 32(c)(1)(A)(ii) of the Internal Revenue Code of 1986 is 8 amended by striking ‘‘25’’ and inserting ‘‘21’’. 9 (c) CONFORMING AND TECHNICAL AMENDMENT.— 10 Paragraph (1) of section 32(j) of the Internal Revenue 11 Code of 1986 is amended to read as follows: 12 ‘‘(1) IN GENERAL.—In the case of any taxable 13 year beginning after 2019, each of the dollar 14 amounts in subsections (b)(2) and (i)(1) shall be in- 15 creased by an amount equal to— 16 ‘‘(A) such dollar amount, multiplied by 17 ‘‘(B) the cost-of-living adjustment deter- 18 mined under section 1(f)(3) for the calendar 19 year in which the taxable year begins, deter- 20 mined by substituting in subparagraph (A)(ii) 21 thereof— 22 VerDate Sep 11 2014 04:20 Feb 23, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S527.IS S527 kjohnson on DSK79L0C42 with BILLS 4 •S 527 IS ‘‘(i) in the case of amounts in sub- 1 section (b)(2)(A), by substituting ‘calendar 2 year 2018’ for ‘calendar year 2016’, and 3 ‘‘(ii) in the case of amounts in sub- 4 section (i)(1), by substituting ‘calendar 5 year 1995’ for ‘calendar year 2016’.’’. 6 (d) EFFECTIVE DATE.—The amendments made by 7 this section shall apply to taxable years beginning after 8 December 31, 2018. 9 SEC. 3. EXPANSION OF EARNED INCOME TAX CREDIT. 10 (a) INCLUSION OF INDIVIDUALS WITH QUALIFYING 11 DEPENDENTS.— 12 (1) IN GENERAL.—Section 32(c)(1) of the In- 13 ternal Revenue Code of 1986 is amended— 14 (A) in subparagraph (A), by striking 15 ‘‘qualifying child’’ each place such term appears 16 and inserting ‘‘qualifying dependent’’, and 17 (B) by striking subparagraphs (B) and (F) 18 and by redesignating subparagraphs (C), (D), 19 and (E) as subparagraphs (B), (C), and (D), 20 respectively. 21 (2) QUALIFYING DEPENDENT DEFINED.—Sec- 22 tion 32(c) of such Code is amended by redesignating 23 paragraphs (3) and (4) as paragraphs (4) and (5), 24 VerDate Sep 11 2014 04:20 Feb 23, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S527.IS S527 kjohnson on DSK79L0C42 with BILLS 5 •S 527 IS respectively, and by inserting after paragraph (2) 1 the following: 2 ‘‘(3) QUALIFYING DEPENDENT.— 3 ‘‘(A) IN GENERAL.—The term ‘qualifying 4 dependent’ means, with respect to a taxable 5 year— 6 ‘‘(i) a qualifying child, 7 ‘‘(ii) a dependent for whom a deduc- 8 tion is allowable under section 151 who— 9 ‘‘(I) has attained the age of 65 10 before the close of the taxable year, or 11 ‘‘(II) is an individual described in 12 section 21(b)(1)(B), or 13 ‘‘(iii) an individual described in sec- 14 tion 21(b)(1)(C). 15 ‘‘(B) IDENTIFICATION REQUIREMENTS.— 16 No credit shall be allowed under this section 17 with respect to a qualifying dependent unless 18 the taxpayer includes the name, age, and TIN 19 of the individual on the return of tax for the 20 taxable year. 21 ‘‘(C) PLACE OF ABODE.—The term ‘quali- 22 fying dependent’ shall not include an individual 23 unless such individual has a principal place of 24 VerDate Sep 11 2014 04:20 Feb 23, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S527.IS S527 kjohnson on DSK79L0C42 with BILLS 6 •S 527 IS abode in the United States for more than one- 1 half of such taxable year.’’. 2 (3) CONFORMING AMENDMENTS.— 3 (A) The tables in paragraphs (1) and (2) 4 of section 32(b) of such Code are each amend- 5 ed— 6 (i) by striking ‘‘qualifying child’’ each 7 place it appears and inserting ‘‘qualifying 8 dependent’’, and 9 (ii) by striking ‘‘qualifying children’’ 10 each place it appears and inserting ‘‘quali- 11 fying dependents’’. 12 (B) Section 32(c)(4) of such Code, as re- 13 designated by this Act, is amended by striking 14 subparagraphs (C) and (D). 15 (C) Section 32(m) of such Code is amend- 16 ed by striking ‘‘subsections (c)(1)(E) and 17 (c)(3)(D)’’ and inserting ‘‘subsections (c)(1)(D) 18 and (c)(3)(B)’’. 19 (b) INCLUSION OF QUALIFYING STUDENTS.— 20 (1) IN GENERAL.—Section 32(c)(1)(A) of such 21 Code is amended by striking ‘‘or’’ at the end of 22 clause (i), by striking the period at the end of clause 23 (ii)(III) and inserting ‘‘, or’’, and by inserting after 24 clause (ii)(III) the following new clause: 25 VerDate Sep 11 2014 04:20 Feb 23, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S527.IS S527 kjohnson on DSK79L0C42 with BILLS 7 •S 527 IS ‘‘(iii) any individual who is a quali- 1 fying student.’’. 2 (2) QUALIFYING STUDENT DEFINED.—Section 3 32(c)(1) of such Code, as amended by subsection 4 (a), is further amended by adding at the end the fol- 5 lowing new subparagraph: 6 ‘‘(E) QUALIFYING STUDENT.— 7 ‘‘(i) IN GENERAL.—The term ‘quali- 8 fying student’ means, with respect to a 9 taxable year, an individual who is an eligi- 10 ble student (as defined in section 11 25A(b)(3)) with respect to an institution of 12 higher education (as defined in section 101 13 of the Higher Education Act of 1965) 14 who— 15 ‘‘(I)(aa) has qualified for a Fed- 16 eral Pell Grant with respect to the 17 academic year beginning in such tax- 18 able year, or 19 ‘‘(bb) whose modified adjusted 20 gross income (as defined in section 21 24(b)(1)) is less than 250 percent of 22 the poverty line (defined in section 23 529A(b)(7)(B)) as for the size of the 24 VerDate Sep 11 2014 04:20 Feb 23, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S527.IS S527 kjohnson on DSK79L0C42 with BILLS 8 •S 527 IS family involved for the taxable year, 1 and 2 ‘‘(II) is not a dependent for 3 whom a deduction is allowable under 4 section 151 to another taxpayer for 5 any taxable year beginning in the 6 same calendar year as such taxable 7 year. 8 ‘‘(ii) FAMILY SIZE.—For purposes of 9 this subparagraph, in determining the pov- 10 erty line applicable to the taxpayer, the 11 family size with respect to such taxpayer 12 shall be equal to the number of individuals 13 for whom such taxpayer is allowed a de- 14 duction under section 151 for the taxable 15 year.’’. 16 (3) CONFORMING AMENDMENT.—Section 17 32(c)(1)(A)(ii) of such Code is amended by inserting 18 ‘‘(other than a qualifying student)’’ after ‘‘any other 19 individual’’. 20 (c) MINIMUM CREDIT FOR STUDENTS AND FOR INDI- 21 VIDUALS WITH CERTAIN QUALIFYING DEPENDENTS.— 22 Section 32(a) of such Code is amended by adding at the 23 end the following new paragraph: 24 VerDate Sep 11 2014 04:20 Feb 23, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S527.IS S527 kjohnson on DSK79L0C42 with BILLS 9 •S 527 IS ‘‘(3) MINIMUM CREDIT FOR STUDENTS AND 1 FOR INDIVIDUALS WITH CERTAIN QUALIFYING DE- 2 PENDENTS.— 3 ‘‘(A) IN GENERAL.—In the case of an eligi- 4 ble individual who is a qualifying student or 5 who has a specified dependent for the taxable 6 year, the amount determined under paragraph 7 (1) (before the application of paragraph (2)) 8 and the amount determined under paragraph 9 (2)(A) shall not be less than $1,200. 10 ‘‘(B) SPECIFIED DEPENDENT.—For pur- 11 poses of this paragraph, the term ‘specified de- 12 pendent’ means any qualifying dependent (other 13 than a qualifying child who has attained the 14 age of 7 before the close of the taxable year).’’. 15 (d) EFFECTIVE DATE.—The amendments made by 16 this section shall apply to taxable years beginning after 17 the date of the enactment of this Act. 18 SEC. 4. ADVANCE PAYMENT OF EARNED INCOME CREDIT. 19 (a) IN GENERAL.—Chapter 25 of subtitle C of the 20 Internal Revenue Code of 1986 is amended by inserting 21 after section 3506 the following new section: 22 ‘‘SEC. 3507. ADVANCE PAYMENT OF EARNED INCOME CRED- 23 IT. 24 ‘‘(a) ADVANCE PAYMENT.— 25 VerDate Sep 11 2014 04:20 Feb 23, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S527.IS S527 kjohnson on DSK79L0C42 with BILLS 10 •S 527 IS ‘‘(1) IN GENERAL.—An employer making pay- 1 ment of wages to an employee with respect to whom 2 an eligibility certificate is in effect shall, at the time 3 of paying such wages for the payroll period elected 4 by the employee under paragraph (2), make an addi- 5 tional lump sum payment to such employee equal to 6 the earned income advance amount (except as pro- 7 vided in subsection (b)(1)(C)(ii)) of such employee. 8 ‘‘(2) PAYMENTS AVAILABLE AFTER 6 MONTHS 9 OF EMPLOYMENT DURING CALENDAR YEAR.—For 10 purposes of paragraph (1), an employee with respect 11 to whom an eligibility certificate is in effect for the 12 calendar year may elect to receive the earned income 13 advance amount at the same time as wages for any 14 payroll period which begins after the employee has 15 been paid wages by the employer for a period of not 16 less than 6 months during such calendar year. 17 ‘‘(b) ELIGIBILITY CERTIFICATE.— 18 ‘‘(1) IN GENERAL.—For purposes of this sec- 19 tion, an eligibility certificate is a statement sub- 20 mitted by an employee to the employer which— 21 ‘‘(A) certifies that the employee is eligible 22 to receive the credit provided by section 32 for 23 the taxable year, 24 VerDate Sep 11 2014 04:20 Feb 23, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S527.IS S527 kjohnson on DSK79L0C42 with BILLS 11 •S 527 IS ‘‘(B) certifies that the employee does not 1 have an eligibility certificate in effect for the 2 calendar year with respect to the payment of 3 wages by another employer, and 4 ‘‘(C) certifies that— 5 ‘‘(i) an eligibility certificate has not 6 been in effect for the spouse of the em- 7 ployee on any date during the calendar 8 year, or 9 ‘‘(ii) such a certificate is in effect for 10 the spouse of the employee, and the em- 11 ployee is eligible to receive only 1⁄2 the 12 earned income advance amount otherwise 13 determined with respect to the employee. 14 ‘‘(2) EMPLOYER NOT RESPONSIBLE FOR 15 VERIFICATION.—For purposes of this section, an 16 employer shall not— 17 ‘‘(A) be required to verify any certification 18 made by an employee in the statement de- 19 scribed in paragraph (1), or 20 ‘‘(B) be held liable for any false claims or 21 statements made by an employee in regards to 22 such statement. 23 ‘‘(c) EARNED INCOME ADVANCE AMOUNT.— 24 ‘‘(1) DETERMINATION OF AMOUNT.— 25 VerDate Sep 11 2014 04:20 Feb 23, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S527.IS S527 kjohnson on DSK79L0C42 with BILLS 12 •S 527 IS ‘‘(A) IN GENERAL.—Subject to subpara- 1 graph (B), the term ‘earned income advance 2 amount’ means, with respect to any payroll pe- 3 riod, the amount of the credit provided under 4 section 32 as determined— 5 ‘‘(i) on the basis of the wages of the 6 employee from the employer during such 7 calendar year through such payroll period, 8 and 9 ‘‘(ii) in accordance with tables issued 10 by the Secretary. 11 ‘‘(B) LIMITATION.—For each calendar 12 year, except as provided in subparagraph (C), 13 the earned income advance amount shall not ex- 14 ceed $500. 15 ‘‘(C) ADJUSTMENT FOR INFLATION.— 16 ‘‘(i) IN GENERAL.—In the case of any 17 taxable year beginning after 2021, the 18 $500 amount in subparagraph (B) shall be 19 increased by an amount equal to— 20 ‘‘(I) such dollar amount, multi- 21 plied by 22 ‘‘(II) the cost-of-living adjust- 23 ment determined under section 1(f)(3) 24 for the calendar year in which the tax- 25 VerDate Sep 11 2014 04:20 Feb 23, 2019 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S527.IS S527 kjohnson on DSK79L0C42 with BILLS 13 •S 527 IS able year begins determined by sub- 1 stituting ‘calendar year 2020’ for ‘cal- 2 endar year 2016’ in subparagraph 3 (A)(ii) thereof. 4 ‘‘(ii) ROUNDING.—If any increase de- 5 termined under paragraph (1) is not a 6 multiple of $10, such increase shall be 7 rounded to the nearest multiple of $10. 8 ‘‘(2) ARMED FORCES.—In the case of an em- 9 ployee who is a member of the Armed Forces of the 10 United States, the earned income advance amount 11 shall be determined by taking into account the total 12 wages of such employee, as determined for purposes 13 of section 32. 14 ‘‘(3) ADVANCE AMOUNT TABLES.—For pur- 15 poses of paragraph (1)(A)(ii), the tables issued by 16 the Secretary shall be similar in form to the tables 17 issued under section 3402 and, to [Text truncated for display. 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