Foster Care Tax Credit Act

II 116TH CONGRESS 1ST SESSION S. 1599 To amend the Internal Revenue Code of 1986 to create a refundable tax credit for foster families, and for other purposes. IN THE SENATE OF THE UNITED STATES MAY 22, 2019 Mr. KAINE (for himself and Mr. JONES) 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 create a refundable tax credit for foster families, 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 ‘‘Foster Care Tax Cred- 4 it Act’’. 5 SEC. 2. FOSTER CARE TAX CREDIT. 6 (a) ALLOWANCE OF CREDIT.— 7 (1) IN GENERAL.—Subpart C of part IV of sub- 8 chapter A of chapter 1 of the Internal Revenue Code 9 VerDate Sep 11 2014 17:47 Jun 04, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1599.IS S1599 pamtmann on DSKBFK8HB2PROD with BILLS 2 •S 1599 IS of 1986 is amended by inserting after section 36B 1 the following new section: 2 ‘‘SEC. 36C. FOSTER CARE TAX CREDIT. 3 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eli- 4 gible taxpayer, there shall be allowed as a credit against 5 the tax imposed by this chapter for the taxable year an 6 amount equal to $850. 7 ‘‘(b) LIMITATION.— 8 ‘‘(1) IN GENERAL.—The amount of the credit 9 allowable under subsection (a) (determined without 10 regard to this subsection) shall be reduced (but not 11 below zero) by the amount which bears the same 12 ratio to such credit (as so determined) as— 13 ‘‘(A) the excess of— 14 ‘‘(i) the taxpayer’s modified adjusted 15 gross income for such taxable year, over 16 ‘‘(ii) the threshold amount, bears to 17 ‘‘(B) $17,000. 18 ‘‘(2) THRESHOLD AMOUNT.—For purposes of 19 paragraph (1), the term ‘threshold amount’ means— 20 ‘‘(A) $250,000, in the case of a joint re- 21 turn, 22 ‘‘(B) $150,000, in the case of an individual 23 who is not married, and 24 VerDate Sep 11 2014 17:47 Jun 04, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1599.IS S1599 pamtmann on DSKBFK8HB2PROD with BILLS 3 •S 1599 IS ‘‘(C) $125,000, in the case of a married 1 individual filing a separate return. 2 For purposes of this paragraph, marital status shall 3 be determined under section 7703. 4 ‘‘(3) MODIFIED ADJUSTED GROSS INCOME.— 5 For purposes of this subsection, the term ‘modified 6 adjusted gross income’ means the adjusted gross in- 7 come of the taxpayer for the taxable year increased 8 by any amount excluded from gross income under 9 section 911, 931, or 933. 10 ‘‘(c) ELIGIBLE TAXPAYER.—For purposes of this sec- 11 tion— 12 ‘‘(1) IN GENERAL.—The term ‘eligible taxpayer’ 13 means, with respect to any taxable year, any tax- 14 payer— 15 ‘‘(A) with whom a qualifying foster child 16 was placed for a period of not less than 1 17 month during such taxable year, and 18 ‘‘(B) for whom a credit under section 24 19 with respect to such eligible foster child is not 20 allowed for such taxable year. 21 ‘‘(2) QUALIFYING FOSTER CHILD.—The term 22 ‘qualifying foster child’ means an eligible foster child 23 (within the meaning of section 152(f)(1)(C))— 24 ‘‘(A) who has not attained age 17, and 25 VerDate Sep 11 2014 17:47 Jun 04, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1599.IS S1599 pamtmann on DSKBFK8HB2PROD with BILLS 4 •S 1599 IS ‘‘(B) who is a citizen, national, or resident 1 of the United States. 2 ‘‘(3) CALENDAR MONTH.—For purposes of this 3 paragraph (1)(A), if a foster child resides in the 4 home of the taxpayer for more than 15 consecutive 5 days of a calendar month but fewer than the total 6 number of days in such calendar month, such foster 7 child shall be treated as residing in the home of the 8 taxpayer for the full calendar month. 9 ‘‘(d) RESTRICTIONS ON TAXPAYERS WHO IMPROP- 10 ERLY CLAIMED CREDIT IN PRIOR YEAR.— 11 ‘‘(1) TAXPAYERS MAKING PRIOR FRAUDULENT 12 OR RECKLESS CLAIMS.— 13 ‘‘(A) IN GENERAL.—No credit shall be al- 14 lowed under this section for any taxable year in 15 the disallowance period. 16 ‘‘(B) DISALLOWANCE PERIOD.—For pur- 17 poses of subparagraph (A), the disallowance pe- 18 riod is— 19 ‘‘(i) the period of 10 taxable years 20 after the most recent taxable year for 21 which there was a final determination that 22 the taxpayer’s claim of credit under this 23 section was due to fraud, and 24 VerDate Sep 11 2014 17:47 Jun 04, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1599.IS S1599 pamtmann on DSKBFK8HB2PROD with BILLS 5 •S 1599 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 (2) CONFORMING AMENDMENTS.— 17 (A) Section 6211(b)(4) of the Internal 18 Revenue Code of 1986 is amended by inserting 19 ‘‘36C,’’ after ‘‘36B,’’. 20 (B) Section 1324(b)(2) of title 31, United 21 States Code, is amended by inserting ‘‘25E,’’ 22 after ‘‘25A,’’. 23 (C) The table of sections for subpart C of 24 part IV of subchapter A of chapter 1 of the In- 25 VerDate Sep 11 2014 17:47 Jun 04, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1599.IS S1599 pamtmann on DSKBFK8HB2PROD with BILLS 6 •S 1599 IS ternal Revenue Code of 1986 is amended by in- 1 serting after the item relating to section 36B 2 the following new item: 3 ‘‘Sec. 36C. Foster care tax credit.’’. (b) INFORMATION RETURNS RELATING TO FOSTER 4 CHILD PLACEMENT.— 5 (1) IN GENERAL.—Subpart A of part III of 6 subchapter A of chapter 61 of the Internal Revenue 7 Code of 1986 is amended by inserting after section 8 6039J the following new section: 9 ‘‘SEC. 6039K. INFORMATION REPORTING WITH RESPECT TO 10 FOSTER CHILD PLACEMENT. 11 ‘‘(a) IN GENERAL.—Every authorized placement 12 agency and court which places a qualifying foster child 13 with a person during a calendar year shall, at such time 14 as the Secretary shall prescribe, make a return described 15 in subsection (b). 16 ‘‘(b) FORM AND MANNER OF RETURN.—A return is 17 described in this subsection if such return— 18 ‘‘(1) is in such form as the Secretary may pre- 19 scribe, and 20 ‘‘(2) contains, with respect to each qualifying 21 foster child placed during the calendar year— 22 ‘‘(A) the name, address, and TIN of each 23 individual with whom such qualifying foster 24 child was placed, 25 VerDate Sep 11 2014 17:47 Jun 04, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1599.IS S1599 pamtmann on DSKBFK8HB2PROD with BILLS 7 •S 1599 IS ‘‘(B) the name of the qualifying foster 1 child, and 2 ‘‘(C) the dates during which such place- 3 ment occurred. 4 ‘‘(c) STATEMENTS TO BE FURNISHED TO FOSTER 5 PARENTS.— 6 ‘‘(1) IN GENERAL.—Every person required to 7 make a return under subsection (a) shall furnish to 8 each individual whose name is required to be set 9 forth under subsection (b)(2)(A) a written statement 10 showing— 11 ‘‘(A) the name and address of the person 12 required to make such return and the phone 13 number of the information contact for such per- 14 son, and 15 ‘‘(B) the information required to be shown 16 on the return with respect to such individual. 17 ‘‘(2) TIME FOR FURNISHING STATEMENTS.— 18 The written statement required under paragraph (1) 19 shall be furnished on or before January 31 of the 20 year following the calendar year for which the return 21 under subsection (a) was required to be made. 22 ‘‘(d) QUALIFYING FOSTER CHILD.—For purposes of 23 this section, the term ‘qualifying foster child’ has the 24 meaning given such term under section 36C(c)(2).’’. 25 VerDate Sep 11 2014 17:47 Jun 04, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1599.IS S1599 pamtmann on DSKBFK8HB2PROD with BILLS 8 •S 1599 IS (2) ASSESSABLE PENALTIES.— 1 (A) Section 6724(d)(1)(B) of such Code is 2 amended by striking ‘‘or’’ at the end of clause 3 (xxv), by striking ‘‘and’’ at the end of clause 4 (xxvi) and inserting ‘‘or’’, and by inserting after 5 clause (xxvi) the following new clause: 6 ‘‘(xxvii) section 6039K (relating to in- 7 formation returns with respect to foster 8 child placement),’’. 9 (B) Section 6724(d)(2) of such Code is 10 amended by redesignating the second subpara- 11 graph (JJ) as subparagraph (KK), by striking 12 ‘‘or’’ at the end of subparagraph (II), by strik- 13 ing the period at the end of the first subpara- 14 graph (JJ), by striking the period at the end of 15 subparagraph (KK) (as so redesignated) and 16 inserting a comma, and by inserting after such 17 subparagraph (KK) the following new subpara- 18 graph: 19 ‘‘(LL) section 6039K(c) (relating to state- 20 ments with respect to foster child placement).’’. 21 (3) CLERICAL AMENDMENT.—The table of sec- 22 tions of subpart A of part III of subchapter A of 23 chapter 61 of such Code is amended by inserting 24 VerDate Sep 11 2014 17:47 Jun 04, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1599.IS S1599 pamtmann on DSKBFK8HB2PROD with BILLS 9 •S 1599 IS after the item relating to section 6039J the fol- 1 lowing new item: 2 ‘‘Sec. 6039K. Information reporting with respect to foster child placement.’’. (c) ELECTION NOT TO TAKE CHILD TAX CREDIT.— 3 Section 24(h)(4) of the Internal Revenue Code of 1986 4 is amended by adding at the end the following new sub- 5 paragraph: 6 ‘‘(D) ELECTION NOT TO TAKE CREDIT.— 7 A taxpayer may elect not to have this para- 8 graph apply with respect to any dependent of 9 the taxpayer to whom a credit would otherwise 10 be allowed by reason of subparagraph (A). In 11 any case in which a taxpayer makes an election 12 under this subparagraph, the credit allowed 13 under this section shall be treated as not al- 14 lowed with respect to such dependent.’’. 15 (d) APPLICATION OF TAX RETURN PREPARER DUE 16 DILIGENCE PENALTY.—Section 6695(g) of the Internal 17 Revenue Code of 1986 is amended by striking ‘‘or 32’’ 18 and inserting ‘‘32, or 36C’’. 19 (e) EFFECTIVE DATE.—The amendments made by 20 this section shall apply to calendar months beginning after 21 December 31, 2019, in taxable years beginning after such 22 date. 23 (f) EDUCATION.— 24 VerDate Sep 11 2014 17:47 Jun 04, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1599.IS S1599 pamtmann on DSKBFK8HB2PROD with BILLS 10 •S 1599 IS (1) IN GENERAL.—The Secretary of Health and 1 Human Services (or the Secretary’s delegate), in co- 2 ordination with the Secretary of the Treasury or 3 such Secretary’s delegate, shall identify provisions in 4 the Internal Revenue Code of 1986 that can be used 5 by or can benefit foster families, and shall increase 6 outreach efforts to provide information and edu- 7 cational materials regarding such provisions to State 8 and Indian tribal foster care agencies and to foster 9 families. 10 (2) AUTHORIZATION OF APPROPRIATIONS.— 11 There are authorized to be appropriated such sums 12 as necessary for the purposes of carrying out para- 13 graph (1). 14 SEC. 3. STUDY AND REPORT ON EMERGENCY AND SHORT- 15 TERM FOSTER PLACEMENTS. 16 (a) STUDY.—The Secretary of Health and Human 17 services, in coordination with the Secretary of the Treas- 18 ury (or the Secretary’s delegate), shall conduct a study 19 on— 20 (1) the costs and financial burdens on foster 21 families who experience multiple emergency and 22 short-term foster placements annually; and 23 VerDate Sep 11 2014 17:47 Jun 04, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S1599.IS S1599 pamtmann on DSKBFK8HB2PROD with BILLS 11 •S 1599 IS (2) challenges to verifying and documenting the 1 placement of children in emergency and short-term 2 placement. 3 For purposes of this subsection, a short-term placement 4 is a placement that lasts less than 1 week. 5 (b) REPORT.—Not later than 1 year after the date 6 of the enactment of this Act, the Secretary of Health and 7 Human Services shall submit to Congress a report on the 8 study conducted under subsection (a). 9 Æ VerDate Sep 11 2014 17:47 Jun 04, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6301 E:\BILLS\S1599.IS S1599 pamtmann on DSKBFK8HB2PROD with BILLS