II 116TH CONGRESS 1ST SESSION S. 1138 To amend the Internal Revenue Code of 1986 to expand the earned income and child tax credits, and for other purposes. IN THE SENATE OF THE UNITED STATES APRIL 10, 2019 Mr. BROWN (for himself, Mr. BENNET, Mr. DURBIN, Ms. BALDWIN, Mr. BLUMENTHAL, Mr. BOOKER, Ms. CANTWELL, Mr. CARDIN, Mr. CARPER, Mr. CASEY, Mr. COONS, Ms. CORTEZ MASTO, Ms. DUCKWORTH, Mrs. FEINSTEIN, Mrs. GILLIBRAND, Ms. HARRIS, Ms. HASSAN, Mr. HEIN- RICH, Ms. HIRONO, Mr. JONES, Mr. KAINE, Mr. KING, Ms. KLOBUCHAR, Mr. LEAHY, Mr. MANCHIN, Mr. MARKEY, Mr. MENENDEZ, Mr. MERKLEY, Mr. MURPHY, Mrs. MURRAY, Mr. PETERS, Mr. REED, Ms. ROSEN, Mr. SANDERS, Mr. SCHATZ, Mr. SCHUMER, Mrs. SHAHEEN, Ms. SMITH, Ms. STABENOW, Mr. TESTER, Mr. UDALL, Mr. VAN HOLLEN, Mr. WARNER, Ms. WARREN, Mr. WHITEHOUSE, and Mr. WYDEN) intro- duced the following bill; which was read twice and referred to the Com- mittee on Finance A BILL To amend the Internal Revenue Code of 1986 to expand the earned income and child tax credits, 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. AMENDMENT OF 1986 CODE. 3 Except as otherwise expressly provided, whenever in 4 this Act an amendment or repeal is expressed in terms 5 VerDate Sep 11 2014 20:07 Apr 19, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1138.IS S1138 amozie on DSK9F9SC42PROD with BILLS 2 •S 1138 IS of an amendment to, or repeal of, a section or other provi- 1 sion, the reference shall be considered to be made to a 2 section or other provision of the Internal Revenue Code 3 of 1986. 4 SEC. 2. EXPANSION OF EARNED INCOME CREDIT. 5 (a) CREDIT PERCENTAGE; PHASEOUT PERCENT- 6 AGE.—The table contained in paragraph (1) of section 7 32(b) is amended to read as follows: 8 ‘‘In the case of an eligible individual with: The credit percentage is: The phaseout percentage is: 1 qualifying child ............................................ 42.5 15.98 2 qualifying children ....................................... 50 21.06 3 or more qualifying children ......................... 52.5 21.06 No qualifying children .................................... 20 15.98.’’. (b) EARNED INCOME AMOUNT; PHASEOUT 9 AMOUNT.— 10 (1) IN GENERAL.—The table contained in sub- 11 paragraph (A) of section 32(b)(2) is amended to 12 read as follows: 13 ‘‘In the case of an eligible individual with: The earned income amount is: The phaseout amount is: 1 qualifying child ............................................ $10,180 $18,660 2 or more qualifying children ......................... $14,290 $18,660 No qualifying children .................................... $10,180 $11,380.’’. (2) JOINT FILERS.—Subparagraph (B) of sec- 14 tion 32(b)(2) is amended by striking ‘‘$5,000’’ and 15 inserting ‘‘$5,690’’. 16 VerDate Sep 11 2014 20:07 Apr 19, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1138.IS S1138 amozie on DSK9F9SC42PROD with BILLS 3 •S 1138 IS (3) ADJUSTMENT FOR INFLATION.—Paragraph 1 (1) of section 32(j) is amended— 2 (A) by striking ‘‘after 2015’’ and inserting 3 ‘‘after 2018’’; 4 (B) by striking ‘‘subsections (b)(2)(A) 5 and’’ in subparagraph (B)(i) and inserting 6 ‘‘subsection’’; 7 (C) by striking ‘‘the $5,000 amount in 8 subsection (b)(2)(B)’’ in subparagraph (B)(ii) 9 and inserting ‘‘amounts in subsection (b)(2)’’; 10 and 11 (D) by striking ‘‘calendar year 2008’’ in 12 subparagraph (B)(ii) and inserting ‘‘calendar 13 year 2017’’. 14 (c) AGE OF ELIGIBLE INDIVIDUAL.—Clause (ii) of 15 section 32(c)(1)(A) is amended— 16 (1) by striking ‘‘age 25’’ in subclause (II) and 17 inserting ‘‘age 19’’; 18 (2) by striking ‘‘age 65’’ in subclause (II) and 19 inserting ‘‘age 68’’; 20 (3) by striking ‘‘and’’ at the end of subclause 21 (II); 22 (4) by striking the period at the end of sub- 23 clause (III) and inserting ‘‘, and’’; and 24 VerDate Sep 11 2014 20:07 Apr 19, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1138.IS S1138 amozie on DSK9F9SC42PROD with BILLS 4 •S 1138 IS (5) by adding at the end the following new sub- 1 clause: 2 ‘‘(IV) in the case of an individual 3 who has not attained age 25 before 4 the close of the taxable year, such in- 5 dividual is not a student (as defined 6 in section 152(f)(2)).’’. 7 (d) ADVANCE PAYMENT OF EARNED INCOME CRED- 8 IT.— 9 (1) IN GENERAL.—Chapter 25 of subtitle C is 10 amended by inserting after section 3506 the fol- 11 lowing new section: 12 ‘‘SEC. 3507. ADVANCE PAYMENT OF EARNED INCOME CRED- 13 IT. 14 ‘‘(a) ADVANCE PAYMENT.— 15 ‘‘(1) IN GENERAL.—An employer making pay- 16 ment of wages to an employee with respect to whom 17 an eligibility certificate is in effect shall, at the time 18 of paying such wages for the payroll period elected 19 by the employee under paragraph (2), make an addi- 20 tional lump sum payment to such employee equal to 21 the earned income advance amount (except as pro- 22 vided in subsection (b)(1)(C)(ii)) of such employee. 23 ‘‘(2) PAYMENTS AVAILABLE AFTER 6 MONTHS 24 OF EMPLOYMENT DURING CALENDAR YEAR.—For 25 VerDate Sep 11 2014 20:07 Apr 19, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1138.IS S1138 amozie on DSK9F9SC42PROD with BILLS 5 •S 1138 IS purposes of paragraph (1), an employee with respect 1 to whom an eligibility certificate is in effect for the 2 calendar year may elect to receive the earned income 3 advance amount at the same time as wages for any 4 payroll period which begins after the employee has 5 been paid wages by the employer for a period of not 6 less than 6 months during such calendar year. 7 ‘‘(b) ELIGIBILITY CERTIFICATE.— 8 ‘‘(1) IN GENERAL.—For purposes of this sec- 9 tion, an eligibility certificate is a statement sub- 10 mitted by an employee to the employer which— 11 ‘‘(A) certifies that the employee is eligible 12 to receive the credit provided by section 32 for 13 the taxable year, 14 ‘‘(B) certifies that the employee does not 15 have an eligibility certificate in effect for the 16 calendar year with respect to the payment of 17 wages by another employer, and 18 ‘‘(C) certifies that— 19 ‘‘(i) an eligibility certificate has not 20 been in effect for the spouse of the em- 21 ployee on any date during the calendar 22 year, or 23 ‘‘(ii) such a certificate is in effect for 24 the spouse of the employee, and the em- 25 VerDate Sep 11 2014 20:07 Apr 19, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1138.IS S1138 amozie on DSK9F9SC42PROD with BILLS 6 •S 1138 IS ployee is eligible to receive only 1⁄2 the 1 earned income advance amount otherwise 2 determined with respect to the employee. 3 ‘‘(2) EMPLOYER NOT RESPONSIBLE FOR 4 VERIFICATION.—For purposes of this section, an 5 employer shall not— 6 ‘‘(A) be required to verify any certification 7 made by an employee in the statement de- 8 scribed in paragraph (1), or 9 ‘‘(B) be held liable for any false claims or 10 statements made by an employee in regards to 11 such statement. 12 ‘‘(c) EARNED INCOME ADVANCE AMOUNT.— 13 ‘‘(1) DETERMINATION OF AMOUNT.— 14 ‘‘(A) IN GENERAL.—Subject to subpara- 15 graph (B), the term ‘earned income advance 16 amount’ means, with respect to any payroll pe- 17 riod, the amount of the credit provided under 18 section 32 as determined— 19 ‘‘(i) on the basis of the wages of the 20 employee from the employer during such 21 calendar year through such payroll period, 22 and 23 ‘‘(ii) in accordance with tables issued 24 by the Secretary. 25 VerDate Sep 11 2014 20:07 Apr 19, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1138.IS S1138 amozie on DSK9F9SC42PROD with BILLS 7 •S 1138 IS ‘‘(B) LIMITATION.—For each calendar 1 year, except as provided in subparagraph (C), 2 the earned income advance amount shall not ex- 3 ceed $500. 4 ‘‘(C) ADJUSTMENT FOR INFLATION.— 5 ‘‘(i) IN GENERAL.—In the case of any 6 taxable year beginning after 2019, the 7 $500 amount in subparagraph (B) shall be 8 increased by an amount equal to— 9 ‘‘(I) such dollar amount, multi- 10 plied by 11 ‘‘(II) the cost-of-living adjust- 12 ment determined under section 1(f)(3) 13 for the calendar year in which the tax- 14 able year begins determined by sub- 15 stituting ‘calendar year 2018’ for ‘cal- 16 endar year 2016’ in subparagraph 17 (A)(ii) thereof. 18 ‘‘(ii) ROUNDING.—If any increase de- 19 termined under paragraph (1) is not a 20 multiple of $10, such increase shall be 21 rounded to the nearest multiple of $10. 22 ‘‘(2) ARMED FORCES.—In the case of an em- 23 ployee who is a member of the Armed Forces of the 24 United States, the earned income advance amount 25 VerDate Sep 11 2014 20:07 Apr 19, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1138.IS S1138 amozie on DSK9F9SC42PROD with BILLS 8 •S 1138 IS shall be determined by taking into account the total 1 wages of such employee, as determined for purposes 2 of section 32. 3 ‘‘(3) ADVANCE AMOUNT TABLES.—For pur- 4 poses of paragraph (1)(A)(ii), the tables issued by 5 the Secretary shall be similar in form to the tables 6 issued under section 3402 and, to the extent fea- 7 sible, coordinated with such tables. 8 ‘‘(d) PAYMENTS TO BE TREATED AS PAYMENTS OF 9 WITHHOLDING AND FICA TAXES.— 10 ‘‘(1) IN GENERAL.—Payments made by an em- 11 ployer under subsection (a) to an employee— 12 ‘‘(A) shall not be treated as payment of 13 compensation, and 14 ‘‘(B) shall be treated as made out of— 15 ‘‘(i) amounts required to be deducted 16 and withheld for the payroll period under 17 section 3401, 18 ‘‘(ii) amounts required to be deducted 19 for the payroll period under section 3102, 20 and 21 ‘‘(iii) amounts of the taxes imposed 22 for the payroll period under section 3111, 23 VerDate Sep 11 2014 20:07 Apr 19, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1138.IS S1138 amozie on DSK9F9SC42PROD with BILLS 9 •S 1138 IS as if the employer had paid to the Secretary, on 1 the day on which the wages are paid to the em- 2 ployee, an amount equal to such payments. 3 ‘‘(2) ADVANCE PAYMENTS EXCEED TAXES 4 DUE.—In the case of any employer, if for any pay- 5 roll period the aggregate amount of earned income 6 advance payments exceeds the sum of the amounts 7 referred to in paragraph (1)(B), the employer shall 8 pay only so much of such earned income advance 9 payment as does not exceed such sum, and shall not 10 make any further advance payments to the employee 11 for the calendar year. 12 ‘‘(3) FAILURE TO MAKE ADVANCE PAY- 13 MENTS.—Failure to make any payment of an earned 14 income advance amount as required under this sec- 15 tion shall be treated as the failure at such time to 16 deduct and withhold under chapter 24 an amount 17 equal to the earned income advance amount. 18 ‘‘(e) SUBMISSION OF CERTIFICATE.— 19 ‘‘(1) EFFECTIVE PERIOD.—An eligibility certifi- 20 cate submitted to an employer at any time during 21 the calendar year shall continue in effect with re- 22 spect to the employee during such calendar year 23 until revoked by the employee or until another such 24 certificate takes effect under this section. 25 VerDate Sep 11 2014 20:07 Apr 19, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1138.IS S1138 amozie on DSK9F9SC42PROD with BILLS 10 •S 1138 IS ‘‘(2) REQUIREMENT TO REVOKE CERTIFI- 1 CATE.—In the case of an employee who has sub- 2 mitted an eligibility certificate under this section and 3 subsequently becomes ineligible for the credit pro- 4 vided under section 32 for the taxable year, the em- 5 ployee shall, not later than 10 days after becoming 6 ineligible for such credit, submit to the employer a 7 revocation of such certificate. 8 ‘‘(3) FORM AND CONTENTS OF CERTIFICATE.— 9 Eligibility certificates shall be in such form and con- 10 tain such other information as the Secretary may by 11 regulations prescribe. 12 ‘‘(f) TAXPAYERS MAKING PRIOR FRAUDULENT OR 13 RECKLESS CLAIMS.— 14 ‘‘(1) IN GENERAL.—No earned income advance 15 amount shall be paid under this section for any tax- 16 able year in the disallowance period. 17 ‘‘(2) DISALLOWANCE PERIOD.—For purposes of 18 paragraph (1), the disallowance period is— 19 ‘‘(A) the period of 10 taxable years after 20 the most recent taxable year for which there 21 was a final determination that the taxpayer’s 22 claim of an earned income advance amount 23 under this section was due to fraud, and 24 VerDate Sep 11 2014 20:07 Apr 19, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S1138.IS S1138 amozie on DSK9F9SC42PROD with BILLS 11 •S 1138 IS ‘‘(B) the period of 2 taxable years after 1 the most recent taxable year for which there 2 was a final determination that the taxpayer’s 3 claim of an earned income advance amount 4 under this section was due to reckless or inten- 5 tional disregard of rules and regulations (but 6 not due to fraud). 7 ‘‘(g) TAXABLE YEAR.—The term ‘taxable year’ 8 means the last taxable year of the employee under subtitle 9 A beginning in the calendar year in which the wages are 10 paid. 11 ‘‘(h) IRS NOTIFICATION.—The Internal Revenue 12 Service shall take such steps as may be appropriate to en- 13 sure that taxpayers who receive a refund of the credit 14 under section 32 are aware of the availability of earned 15 income advance amounts under this section.’’. 16 (2) COORDINATION WITH ADVANCE PAY- 17 MENTS.—Section 32 is amended by inserting after 18 subsection (f) the following new subsection: 19 ‘‘(g) COORDINATION WITH ADVANCE PAYMENTS OF 20 EARNED INCOME CREDIT.— 21 ‘‘(1) RECAPTURE OF ADVANCE PAYMENTS.—If 22 any payment is made to the individual by an em- 23 ployer under section 3507 during any calendar year, 24 then the tax imposed by this chapter for the individ- 25 VerDate Sep 11 2014 20:07 Apr 19, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S1138.IS S1138 amozie on DSK9F9SC42PROD with BILLS 12 •S 1138 IS ual’s last taxable year beginning in such calendar 1 year shall be increased by the aggregate amount of 2 such payments. 3 ‘‘(2) RECONCILIATION OF PAYMENTS AD- 4 VANCED AND CREDIT ALLOWED.—Any increase in 5 tax under paragraph (1) shall not be treated as tax 6 imposed by this chapter for purposes of determining 7 the amount of any credit (other than the credit al- 8 lowed by subsection (a)) allowable under this part.’’. 9 (3) FILING REQUIREMENT.—Section 6012(a) is 10 amended— 11 (A) in paragraph (7), by striking ‘‘and’’ at 12 the end; 13 (B) in paragraph (8), by adding ‘‘and’’ at 14 the end; and 15 (C) by inserting after paragraph (8) the 16 following new paragraph: 17 ‘‘(9) every individual who receives payments 18 during the calendar year in which the taxable year 19 begins under section 3507.’’. 20 (4) RECEIPTS FOR EMPLOYEES.—Section 21 6051(a) is amen [Text truncated for display. Full text available on Congress.gov.]