American Family Act of 2019

II 116TH CONGRESS 1ST SESSION S. 690 To amend the Internal Revenue Code of 1986 to make the child tax credit fully refundable, establish an increased child tax credit for young chil- dren, and for other purposes. IN THE SENATE OF THE UNITED STATES MARCH 6, 2019 Mr. BENNET (for himself, Mr. BROWN, Ms. BALDWIN, Mr. BLUMENTHAL, Mr. BOOKER, Mr. CARDIN, Mr. CASEY, Mr. COONS, Ms. CORTEZ MASTO, Ms. DUCKWORTH, Mr. DURBIN, Mrs. GILLIBRAND, Ms. HARRIS, Ms. HAS- SAN, Mr. HEINRICH, Ms. HIRONO, Mr. JONES, Ms. KLOBUCHAR, Mr. LEAHY, Mr. MARKEY, Mr. MENENDEZ, Mr. MERKLEY, Mr. MURPHY, Mrs. MURRAY, Mr. PETERS, Mr. REED, Mr. SANDERS, Mr. SCHATZ, Mr. SCHUMER, Mrs. SHAHEEN, Ms. SMITH, Ms. STABENOW, Mr. TESTER, Mr. VAN HOLLEN, Ms. WARREN, Mr. WHITEHOUSE, and Mr. WYDEN) 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 make the child tax credit fully refundable, establish an in- creased child tax credit for young children, 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 VerDate Sep 11 2014 04:31 Mar 16, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S690.IS S690 kjohnson on DSK79L0C42 with BILLS 2 •S 690 IS SECTION 1. SHORT TITLE. 1 This Act may be cited as the ‘‘American Family Act 2 of 2019’’. 3 SEC. 2. ESTABLISHMENT OF FULLY REFUNDABLE CHILD 4 TAX CREDIT. 5 (a) ELIMINATION OF EXISTING CHILD TAX CRED- 6 IT.—Subpart A of part IV of subchapter A of chapter 1 7 of subtitle A of the Internal Revenue Code of 1986 is 8 amended by striking section 24. 9 (b) ESTABLISHMENT OF FULLY REFUNDABLE 10 CHILD TAX CREDIT.—Subpart C of part IV of subchapter 11 A of chapter 1 of subtitle A of such Code is amended by 12 inserting after section 36B the following new section: 13 ‘‘SEC. 36C. CHILD TAX CREDIT. 14 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al- 15 lowed as a credit against the tax imposed by this chapter 16 for the taxable year an amount equal to the sum of— 17 ‘‘(1) with respect to each qualifying child of the 18 taxpayer who has attained 6 years of age before the 19 close of such taxable year and for which the tax- 20 payer is allowed a deduction under section 151, an 21 amount equal to $3,000, and 22 ‘‘(2) with respect to each qualifying child of the 23 taxpayer who has not attained 6 years of age before 24 the close of such taxable year and for which the tax- 25 payer is allowed a deduction under section 151, an 26 VerDate Sep 11 2014 04:31 Mar 16, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S690.IS S690 kjohnson on DSK79L0C42 with BILLS 3 •S 690 IS amount equal to 120 percent of the dollar amount 1 in paragraph (1). 2 ‘‘(b) LIMITATION.— 3 ‘‘(1) IN GENERAL.—The amount of the credit 4 allowable under subsection (a) shall be reduced (but 5 not below zero) by the applicable amount for each 6 $1,000 (or fraction thereof) by which the taxpayer’s 7 modified adjusted gross income exceeds the thresh- 8 old amount. For purposes of the preceding sentence, 9 the term ‘modified adjusted gross income’ means ad- 10 justed gross income increased by any amount ex- 11 cluded from gross income under section 911, 931, or 12 933. 13 ‘‘(2) THRESHOLD AMOUNT.— 14 ‘‘(A) IN GENERAL.—For purposes of para- 15 graph (1), the term ‘threshold amount’ 16 means— 17 ‘‘(i) $180,000 in the case of a joint 18 return, 19 ‘‘(ii) $130,000 in the case of an indi- 20 vidual who is not married, and 21 ‘‘(iii) $90,000 in the case of a married 22 individual filing a separate return. 23 VerDate Sep 11 2014 04:31 Mar 16, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S690.IS S690 kjohnson on DSK79L0C42 with BILLS 4 •S 690 IS ‘‘(B) MARITAL STATUS.—For purposes of 1 this paragraph, marital status shall be deter- 2 mined under section 7703. 3 ‘‘(3) APPLICABLE AMOUNT.—For purposes of 4 paragraph (1), the term ‘applicable amount’ means 5 an amount equal to the quotient of— 6 ‘‘(A) the amount of the credit allowable 7 under subsection (a), as determined without re- 8 gard to this subsection, divided by 9 ‘‘(B) an amount equal to the product of— 10 ‘‘(i) $20, multiplied by 11 ‘‘(ii) the total number of qualifying 12 children of the taxpayer. 13 ‘‘(c) QUALIFYING CHILD.— 14 ‘‘(1) IN GENERAL.—In this section, the term 15 ‘qualifying child’ means a qualifying child of the tax- 16 payer (as defined in section 152(c)) who has not at- 17 tained 17 years of age. 18 ‘‘(2) EXCEPTION FOR CERTAIN NON-CITI- 19 ZENS.—The term ‘qualifying child’ shall not include 20 any individual who would not be a dependent if sub- 21 paragraph (A) of section 152(b)(3) were applied 22 without regard to all that follows ‘resident of the 23 United States’. 24 ‘‘(d) INFLATION ADJUSTMENT.— 25 VerDate Sep 11 2014 04:31 Mar 16, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S690.IS S690 kjohnson on DSK79L0C42 with BILLS 5 •S 690 IS ‘‘(1) IN GENERAL.—In the case of any taxable 1 year beginning after 2020, the $3,000 amount in 2 subsection (a)(1) shall be increased by an amount 3 equal to— 4 ‘‘(A) such dollar amount, multiplied by 5 ‘‘(B) the cost-of-living adjustment deter- 6 mined under paragraph (2) for the calendar 7 year in which the taxable year begins. 8 ‘‘(2) COST-OF-LIVING ADJUSTMENT.—For pur- 9 poses of paragraph (1), the cost-of-living adjustment 10 for any calendar year is the percentage (if any) by 11 which— 12 ‘‘(A) the CPI for the preceding calendar 13 year (as determined pursuant to section 14 1(f)(4)), exceeds 15 ‘‘(B) the CPI for calendar year 2019. 16 ‘‘(3) ROUNDING.—If any increase determined 17 under paragraph (1) is not a multiple of $50, such 18 increase shall be rounded to the nearest multiple of 19 $50. 20 ‘‘(e) PARTIAL NON-REFUNDABLE CREDIT ALLOWED 21 FOR CERTAIN OTHER DEPENDENTS.— 22 ‘‘(1) IN GENERAL.—In the case of a taxable 23 year beginning after December 31, 2019, and before 24 January 1, 2026, the aggregate credits allowed to a 25 VerDate Sep 11 2014 04:31 Mar 16, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S690.IS S690 kjohnson on DSK79L0C42 with BILLS 6 •S 690 IS taxpayer under subpart A shall be increased by $500 1 for each dependent of the taxpayer (as defined in 2 section 152) other than a qualifying child described 3 in subsection (c). The amount of the credit allowed 4 under this subsection shall not be treated as a credit 5 allowed under this subpart. 6 ‘‘(2) EXCEPTION FOR CERTAIN NONCITIZENS.— 7 Paragraph (1) shall not apply with respect to any 8 individual who would not be a dependent if subpara- 9 graph (A) of section 152(b)(3) were applied without 10 regard to all that follows ‘resident of the United 11 States’. 12 ‘‘(3) LIMITATION.— 13 ‘‘(A) IN GENERAL.—The amount of the 14 credit allowable under paragraph (1) shall be 15 reduced (but not below zero) by $50 for each 16 $1,000 (or fraction thereof) by which the tax- 17 payer’s modified adjusted gross income exceeds 18 the threshold amount. 19 ‘‘(B) MODIFIED ADJUSTED GROSS IN- 20 COME.—For purposes of subparagraph (A), the 21 term ‘modified adjusted gross income’ means 22 adjusted gross income increased by any amount 23 excluded from gross income under section 911, 24 931, or 933. 25 VerDate Sep 11 2014 04:31 Mar 16, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S690.IS S690 kjohnson on DSK79L0C42 with BILLS 7 •S 690 IS ‘‘(C) THRESHOLD AMOUNT.— 1 ‘‘(i) IN GENERAL.—For purposes of 2 subparagraph (A), the term ‘threshold 3 amount’ means— 4 ‘‘(I) $200,000 in the case of a 5 joint return, 6 ‘‘(II) $150,000 in the case of an 7 individual who is not married, and 8 ‘‘(III) $100,000 in the case of a 9 married individual filing a separate 10 return. 11 ‘‘(ii) MARTIAL STATUS.—For pur- 12 poses of this subparagraph, marital status 13 shall be determined under section 7703. 14 ‘‘(f) IDENTIFICATION REQUIREMENTS.— 15 ‘‘(1) QUALIFYING CHILD AND DEPENDENT 16 IDENTIFICATION REQUIREMENT.—No credit shall be 17 allowed under this section to a taxpayer with respect 18 to any qualifying child or dependent unless the tax- 19 payer includes the name and taxpayer identification 20 number of such qualifying child or dependent on the 21 return of tax for the taxable year and such taxpayer 22 identification number was issued on or before the 23 due date for filing such return. 24 VerDate Sep 11 2014 04:31 Mar 16, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S690.IS S690 kjohnson on DSK79L0C42 with BILLS 8 •S 690 IS ‘‘(2) TAXPAYER IDENTIFICATION REQUIRE- 1 MENT.—No credit shall be allowed under this section 2 if the taxpayer identification number of the taxpayer 3 was issued after the due date for filing the return 4 for the taxable year. 5 ‘‘(g) TAXABLE YEAR MUST BE FULL TAXABLE 6 YEAR.—Except in the case of a taxable year closed by rea- 7 son of the death of the taxpayer, no credit shall be allow- 8 able under this section in the case of a taxable year cov- 9 ering a period of less than 12 months. 10 ‘‘(h) RESTRICTIONS ON TAXPAYERS WHO IMPROP- 11 ERLY CLAIMED CREDIT IN PRIOR YEAR.— 12 ‘‘(1) TAXPAYERS MAKING PRIOR FRAUDULENT 13 OR RECKLESS CLAIMS.— 14 ‘‘(A) IN GENERAL.—No credit shall be al- 15 lowed under this section for any taxable year in 16 the disallowance period. 17 ‘‘(B) DISALLOWANCE PERIOD.—For pur- 18 poses of subparagraph (A), the disallowance pe- 19 riod is— 20 ‘‘(i) the period of 10 taxable years 21 after the most recent taxable year for 22 which there was a final determination that 23 the taxpayer’s claim of credit under this 24 section was due to fraud, and 25 VerDate Sep 11 2014 04:31 Mar 16, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S690.IS S690 kjohnson on DSK79L0C42 with BILLS 9 •S 690 IS ‘‘(ii) the period of 2 taxable years 1 after the most recent taxable year for 2 which there was a final determination that 3 the taxpayer’s claim of credit under this 4 section was due to reckless or intentional 5 disregard of rules and regulations (but not 6 due to fraud). 7 ‘‘(2) TAXPAYERS MAKING IMPROPER PRIOR 8 CLAIMS.—In the case of a taxpayer who is denied 9 credit under this section for any taxable year as a 10 result of the deficiency procedures under subchapter 11 B of chapter 63, no credit shall be allowed under 12 this section for any subsequent taxable year unless 13 the taxpayer provides such information as the Sec- 14 retary may require to demonstrate eligibility for 15 such credit. 16 ‘‘(i) RECONCILIATION OF CREDIT AND ADVANCE 17 CREDIT.— 18 ‘‘(1) IN GENERAL.—The amount of the credit 19 allowed under this section for any taxable year shall 20 be reduced (but not below zero) by the aggregate 21 amount of any advance payments of such credit 22 under section 7527A for such taxable year. 23 ‘‘(2) EXCESS ADVANCE PAYMENTS.—If the ag- 24 gregate amount of advance payments under section 25 VerDate Sep 11 2014 04:31 Mar 16, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S690.IS S690 kjohnson on DSK79L0C42 with BILLS 10 •S 690 IS 7527A for the taxable year exceed the amount of the 1 credit allowed under this section for such taxable 2 year (determined without regard to paragraph (1)), 3 the tax imposed by this chapter for such taxable 4 year shall be increased by the amount of such ex- 5 cess’’. 6 (c) ADVANCE PAYMENT OF CREDIT.—Chapter 77 of 7 the Internal Revenue Code of 1986 is amended by insert- 8 ing after section 7527 the following new section: 9 ‘‘SEC. 7527A. ADVANCE PAYMENT OF CHILD TAX CREDIT. 10 ‘‘(a) IN GENERAL.—As soon as practicable and not 11 later than 1 year after the date of the enactment of this 12 section, the Secretary shall establish a program for mak- 13 ing advance payments of the credit allowed under sub- 14 section (a) of section 36C on a monthly basis (determined 15 without regard to subsection (i)(1) of such section), or as 16 frequently as the Secretary determines to be administra- 17 tively feasible, to taxpayers allowed such credit. 18 ‘‘(b) LIMITATION.— 19 ‘‘(1) IN GENERAL.—The Secretary may make 20 payments under subsection (a) only to the extent 21 that the total amount of such payments made to any 22 taxpayer during the taxable year does not exceed an 23 amount equal to the excess, if any, of— 24 VerDate Sep 11 2014 04:31 Mar 16, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S690.IS S690 kjohnson on DSK79L0C42 with BILLS 11 •S 690 IS ‘‘(A) subject to paragraph (2), the amount 1 determined under subsection (a) of section 36C 2 with respect to such taxpayer (determined with- 3 out regard to subsection (i) of such section) for 4 such taxable year, over 5 ‘‘(B) the estimated tax imposed by subtitle 6 A, as reduced by the credits allowable under 7 subparts A and C (with the exception of section 8 36C) of such part IV, with respect to such tax- 9 payer for such taxable year, as determined in 10 such manner as the Secretary deems appro- 11 priate. 12 ‘‘(2) APPLICATION OF THRESHOLD AMOUNT 13 LIMITATION.—The program described in subsection 14 (a) shall make reasonable efforts to apply the limita- 15 tion of section 36C(b) with respect to payments 16 made under such program.’’. 17 (d) CONFORMING AMENDMENTS.— 18 (1) The table of sections for subpart A of part 19 IV of subchapter A of chapter 1 of subtitle A of the 20 Internal Revenue Code of 1986 is amended by strik- 21 ing the item relating to section 24. 22 (2) The table of sections for subpart C of part 23 IV of subchapter A of chapter 1 of subtitle A of 24 VerDate Sep 11 2014 04:31 Mar 16, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S690.IS S690 kjohnson on DSK79L0C42 with BILLS 12 •S 690 IS such Code is amended by inserting after the item re- 1 lating to section 36B the following: 2 ‘‘Sec. 36C. Child tax credit.’’. (3) The table of sections for chapter 77 of such 3 Code is amended by inserting after the item relating 4 to section 7527 the following new item: 5 ‘‘Sec. 7527A. Advance payment of child tax credit.’’. (4) Subparagraph (B) of section 45R(f)(3) of 6 such Code is amended to read as follows: 7 ‘‘(B) SPECIAL RULE.—Any amounts paid 8 pursuant to an agreement under section 3121(l) 9 (relating to agreements entered into by Amer- 10 ican employers with respect to foreign affiliates) 11 which are equivalent to the taxes referred to in 12 subparagraph (A) shall be treated as taxes re- 13 ferred to in such subparagraph.’’. 14 (5) Section 152(f)(6)(B)(ii) of such Code is 15 amended by striking ‘‘section 24’’ and inserting 16 ‘‘section 36C’’. 17 (6) Paragraph (26) of section 501(c) of such 18 Code is amended in the flush matter at the end by 19 striking ‘‘section 24(c))’’ and inserting ‘‘section 20 36C(c))’’. 21 (7) Section 6211(b)(4)(A [Text truncated for display. Full text available on Congress.gov.]