Advancing Support for Working Families Act

I 116TH CONGRESS 1ST SESSION H. R. 5296 To amend the Internal Revenue Code of 1986 to provide an election to advance future child tax credits in the year of birth or adoption. IN THE HOUSE OF REPRESENTATIVES DECEMBER 4, 2019 Mr. ALLRED (for himself, Ms. STEFANIK, Mr. CUNNINGHAM, Ms. HERRERA BEUTLER, Mr. VAN DREW, Mr. GONZALEZ of Ohio, Mr. GOTTHEIMER, and Mr. STEIL) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to provide an election to advance future child tax credits in the year of birth or adoption. 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 ‘‘Advancing Support 4 for Working Families Act’’. 5 SEC. 2. ELECTION TO ADVANCE CHILD TAX CREDIT. 6 (a) IN GENERAL.—Section 24 of the Internal Rev- 7 enue Code of 1986 is amended by adding at the end the 8 following new subsection: 9 VerDate Sep 11 2014 04:18 Dec 10, 2019 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H5296.IH H5296 kjohnson on DSK79L0C42 with BILLS 2 •HR 5296 IH ‘‘(i) ELECTION FOR ADVANCED CREDIT IN YEAR OF 1 BIRTH OR ADOPTION.— 2 ‘‘(1) IN GENERAL.—In the case of a taxpayer 3 who makes an election under this subsection with re- 4 spect to any applicable qualifying child— 5 ‘‘(A) the amount of the credit allowed 6 under subsection (a) with respect to such appli- 7 cable qualifying child for the taxable year in 8 which such applicable qualifying child is born or 9 adopted shall be increased by the applicable 10 amount, and 11 ‘‘(B) the amount determined under sub- 12 section (d) shall be increased by the amount of 13 credit allowed to the taxpayer under this section 14 by reason of subparagraph (A). 15 No election may be made under this subsection with 16 respect to an applicable qualifying child unless the 17 applicable qualifying child is alive at the time the 18 election is made. 19 ‘‘(2) OFFSETTING REDUCTION.— 20 ‘‘(A) IN GENERAL.—Except as otherwise 21 provided in this paragraph, if the amount of the 22 credit allowed to the taxpayer under subsection 23 (a) is increased under paragraph (1), the tax 24 imposed by this chapter shall be increased by 25 VerDate Sep 11 2014 04:18 Dec 10, 2019 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H5296.IH H5296 kjohnson on DSK79L0C42 with BILLS 3 •HR 5296 IH the applicable fraction of such increase for each 1 taxable year in the offset period. 2 ‘‘(B) APPLICABLE FRACTION.—For pur- 3 poses of this paragraph, the term ‘applicable 4 fraction’ means a fraction— 5 ‘‘(i) the numerator of which is one, 6 and 7 ‘‘(ii) the denominator of which is the 8 total number of years in the offset period. 9 ‘‘(C) EXCEPTIONS.— 10 ‘‘(i) DEATH.—Subparagraph (A) shall 11 not apply to any taxable year ending after 12 the date of the death of— 13 ‘‘(I) the taxpayer, or 14 ‘‘(II) the applicable qualifying 15 child with respect to the increase. 16 ‘‘(ii) DEFERMENT.— 17 ‘‘(I) IN GENERAL.—In the case 18 of any taxpayer described in subclause 19 (II) for the taxable year, no tax shall 20 be imposed under subparagraph (A) 21 for such taxable year and the number 22 of taxable years in the offset period 23 shall be increased (other than for pur- 24 VerDate Sep 11 2014 04:18 Dec 10, 2019 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H5296.IH H5296 kjohnson on DSK79L0C42 with BILLS 4 •HR 5296 IH poses of subparagraph (B)(ii)) by 1 1 year. 2 ‘‘(II) TAXPAYER DESCRIBED.—A 3 taxpayer is described in this subclause 4 for any taxable year if the earned in- 5 come amount of the taxpayer for such 6 taxable year is more than 20 percent 7 less than the earned income amount 8 of the taxpayer for the preceding tax- 9 able year and the taxpayer makes an 10 election under this clause. The Sec- 11 retary shall promulgate rules for cal- 12 culating differences in the earned in- 13 come amount of any taxpayer whose 14 filing status is not the same as such 15 taxpayer’s filing status in the pre- 16 ceding taxable year. 17 ‘‘(III) ELECTION.—An election 18 made under this clause shall apply to 19 all applicable qualifying children of 20 the taxpayer with respect to whom an 21 increase is allowed under this sub- 22 section and may not be made with re- 23 spect to more than 3 taxable years in 24 any offset period. 25 VerDate Sep 11 2014 04:18 Dec 10, 2019 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H5296.IH H5296 kjohnson on DSK79L0C42 with BILLS 5 •HR 5296 IH ‘‘(D) JOINT RETURNS.—In the case of an 1 increase in credit allowed under paragraph (1) 2 with respect to a joint return, half of such in- 3 crease shall be treated as having been allowed 4 to each individual filing such return for pur- 5 poses of this paragraph. 6 ‘‘(E) RETURN REQUIREMENT.—If the tax 7 imposed by this chapter for the taxable year is 8 increased under this paragraph, the taxpayer 9 shall, notwithstanding section 6012, be required 10 to file a return with respect to the taxes im- 11 posed under this subtitle. 12 ‘‘(F) OFFSET PERIOD.— 13 ‘‘(i) IN GENERAL.—Except as pro- 14 vided in subparagraph (C)(ii), the term 15 ‘offset period’ means, with respect to any 16 increase under this paragraph, the 10 tax- 17 able years beginning with the taxable year 18 in which the applicable qualifying child is 19 born or adopted. 20 ‘‘(ii) SPECIAL RULE.—In the case of a 21 qualifying child who is adopted by the tax- 22 payer and who is over the age of 5 on the 23 date the adoption becomes final, the num- 24 ber of taxable years in the offset period 25 VerDate Sep 11 2014 04:18 Dec 10, 2019 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H5296.IH H5296 kjohnson on DSK79L0C42 with BILLS 6 •HR 5296 IH shall be reduced by 1 year for each year by 1 which the age attained by the qualifying 2 child on the date the adoption becomes 3 final is over the age of 5. 4 ‘‘(3) ELECTION TO CLAIM CREDIT ON PRIOR 5 YEAR RETURN.—In the case of an applicable quali- 6 fying child born or adopted after the date that is 7 120 days after the date of the enactment of this 8 subsection, a taxpayer may elect to treat such child 9 as born or adopted on December 31 of the calendar 10 year preceding such birth or adoption for purposes 11 of this section. 12 ‘‘(4) DEFINITIONS.—For purposes of this sub- 13 section— 14 ‘‘(A) APPLICABLE QUALIFYING CHILD.— 15 The term ‘applicable qualifying child’ means 16 any qualifying child other than an eligible foster 17 child (as defined in section 152(f)(1)(C)). 18 ‘‘(B) APPLICABLE AMOUNT.— 19 ‘‘(i) IN GENERAL.—The applicable 20 amount is the amount, not to exceed the 21 maximum credit amount, elected by the 22 taxpayer. 23 ‘‘(ii) MAXIMUM CREDIT AMOUNT.— 24 VerDate Sep 11 2014 04:18 Dec 10, 2019 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H5296.IH H5296 kjohnson on DSK79L0C42 with BILLS 7 •HR 5296 IH ‘‘(I) IN GENERAL.—The max- 1 imum credit amount is $5,000. 2 ‘‘(II) SPECIAL RULE FOR CER- 3 TAIN ADOPTED CHILDREN.—In the 4 case of a qualifying child who is 5 adopted by the taxpayer and who is 6 over the age of 5 on the date the 7 adoption becomes final, the maximum 8 credit amount shall be reduced by 9 $500 for each year by which the age 10 attained by the qualifying child on the 11 date the adoption becomes final is 12 over the age of 5. 13 ‘‘(C) EARNED INCOME AMOUNT.—The 14 term ‘earned income amount’ means the 15 amount of earned income (within the meaning 16 of section 32) which is taken into account in 17 computing taxable income for the taxable year. 18 For purposes of the preceding sentence, any 19 amount excluded from gross income by reason 20 of section 112 shall be treated as earned income 21 which is taken into account in computing tax- 22 able income for the taxable year. 23 ‘‘(5) SPECIAL RULE FOR CERTAIN LOW-INCOME 24 INDIVIDUALS.— 25 VerDate Sep 11 2014 04:18 Dec 10, 2019 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H5296.IH H5296 kjohnson on DSK79L0C42 with BILLS 8 •HR 5296 IH ‘‘(A) IN GENERAL.—In the case of a tax- 1 payer described in subparagraph (B)— 2 ‘‘(i) the applicable amount shall not 3 exceed the lesser of— 4 ‘‘(I) the maximum credit amount, 5 or 6 ‘‘(II) the applicable percentage of 7 the earned income amount of the tax- 8 payer for the taxable year, and 9 ‘‘(ii) paragraph (2)(F) shall be ap- 10 plied— 11 ‘‘(I) by substituting ‘15 taxable 12 years’ for ‘10 taxable years’ in clause 13 (i) thereof, and 14 ‘‘(II) by substituting ‘age of 0’ 15 for ‘age of 5’ each place it appears in 16 clause (ii). 17 ‘‘(B) TAXPAYER DESCRIBED.—A taxpayer 18 is described in this subparagraph if the increase 19 in credits allowed under subpart C for the tax- 20 able year by reason of subsection (d)(1) (deter- 21 mined without regard to paragraph (1)(B)) is 22 less than the amount that would be so deter- 23 mined if subsection (d)(1) were applied without 24 regard to subparagraph (B) thereof. 25 VerDate Sep 11 2014 04:18 Dec 10, 2019 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H5296.IH H5296 kjohnson on DSK79L0C42 with BILLS 9 •HR 5296 IH ‘‘(C) APPLICABLE PERCENTAGE.—For 1 purposes of subparagraph (A)— 2 ‘‘(i) IN GENERAL.—The applicable 3 percentage is 25 percent. 4 ‘‘(ii) SPECIAL RULE FOR CERTAIN 5 ADOPTED CHILDREN.—In the case of a 6 qualifying child who is adopted by the tax- 7 payer and who is over the age of 5 on the 8 date the adoption becomes final, the appli- 9 cable percentage shall be reduced by 2.5 10 percentage points for each year by which 11 the age attained by the qualifying child on 12 the date the adoption becomes final is over 13 the age of 5. 14 ‘‘(6) SPECIAL RULE FOR YEAR OF BIRTH OR 15 ADOPTION.— 16 ‘‘(A) IN GENERAL.—In the case of a quali- 17 fying child who is born or adopted during the 18 taxable year and with respect to whom an elec- 19 tion is made under this subsection— 20 ‘‘(i) subsection (h)(7) shall not apply, 21 and 22 ‘‘(ii) no credit shall be allowed under 23 this section with respect to such qualifying 24 VerDate Sep 11 2014 04:18 Dec 10, 2019 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H5296.IH H5296 kjohnson on DSK79L0C42 with BILLS 10 •HR 5296 IH child unless the taxpayer includes one of 1 the following: 2 ‘‘(I) In the case of a qualifying 3 child who is adopted, the adoption 4 taxpayer identification number of such 5 child. 6 ‘‘(II) A social security number 7 (within the meaning of subsection 8 (h)(7)) of such child. 9 ‘‘(III) Such documentation as de- 10 termined by the Secretary as appro- 11 priate to establish that the qualifying 12 child qualifies for a social security 13 number (within the meaning of sub- 14 section (h)(7)). 15 ‘‘(B) ACCELERATION.— 16 ‘‘(i) IN GENERAL.—In any case in 17 which a taxpayer does not include a social 18 security number (within the meaning of 19 subsection (h)(7)) of a qualifying child 20 with respect to whom an election is made 21 under this subsection on the return of tax 22 for the taxable year of birth or adoption— 23 ‘‘(I) the tax imposed by this 24 chapter for the taxable year suc- 25 VerDate Sep 11 2014 04:26 Dec 13, 2019 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H5296.IH H5296 kjohnson on DSK79L0C42 with BILLS 11 •HR 5296 IH ceeding the taxable year in which the 1 birth or adoption of the qualifying 2 child occurs shall be increased by the 3 excess of the amount of the increase 4 in credit under paragraph (1) over the 5 amounts of tax imposed by paragraph 6 (2) for the preceding taxable year, 7 and 8 ‘‘(II) paragraph (2) shall not 9 apply with respect to such increase for 10 such taxable year or any subsequent 11 taxable year. 12 For purposes of this title, any increase in 13 tax under this subparagraph shall be treat- 14 ed in the same manner as an increase in 15 tax under paragraph (2). 16 ‘‘(ii) EXCEPTION IF SOCIAL SECURITY 17 NUMBER PROVIDED.—Clause (i) shall not 18 apply if the taxpayer includes on the re- 19 turn of tax for the taxable year succeeding 20 the taxable year in which the birth or 21 adoption of the qualifying child occurs the 22 social security number (within the meaning 23 of subsection (h)(7)) of such qualifying 24 child. 25 VerDate Sep 11 2014 04:18 Dec 10, 2019 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H5296.IH H5296 kjohnson on DSK79L0C42 with BILLS 12 •HR 5296 IH ‘‘(7) ADMINISTRATION AND REGULATIONS.— 1 The Secretary shall take such steps as necessary, in- 2 cluding through regulations and other guidance, in 3 order to— 4 ‘‘(A) enable and encourage taxpayers to 5 claim an increased credit under this subsection 6 as soon as practical after the birth or adoption 7 of a child, including through a process available 8 on the internet, 9 ‘‘(B) expedite the processing of refunds in 10 connection with an election to claim the in- 11 creased credit on a prior year return under 12 paragraph (3), 13 ‘‘(C) prevent fraud and abuse of the in- 14 creased credit, including, if necessary, through 15 the submission of additional third party infor- 16 mation related to the birth or adoption of a 17 child with respect to whom an increased credit 18 is claimed under this subsection, and 19 ‘‘(D) provide annual information to elect- 20 ing taxpayers relating to outstanding liability 21 with respect to offsetting reductions under 22 paragraph (2).’’. 23 (b) CREDITS NOT ALLOWED AGAINST OFFSET.— 24 Section 26(b)(2) of the Internal Revenue Code of 1986 25 VerDate Sep 11 2014 04:18 Dec 10, 2019 Jkt 099200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H5296.IH H5296 kjohnson on DSK79L0C42 with BILLS 13 •HR 5296 IH is amended by striking ‘‘and’’ at the end of subparagraph 1 (X), by striking the period at the end of subparagraph 2 (Y) and inserting ‘‘, and’’, and by adding at the end the 3 following new subparagraph: 4 ‘‘(Z) section 24(i)(2) (relating to offset of 5 advanced child tax credit in year of birth or 6 adoption).’’. 7 (c) MATH ERROR AUTHORITY.—Section 6213(g)(2) 8 of the Internal Revenue Code of 1986 is amended by strik- 9 ing ‘‘and’’ at the end of subparagraph (P), by striking the 10 period at the end of subparagraph (Q) and inserting ‘‘, 11 and’’, and by inserting after subparagraph (Q) the fol- 12 lowing new subparagraph: 13 ‘‘(R) in the case of a taxpayer to whom 14 section 24(i)(2) applies, an omission of correct 15 information relating to the amount of any in- 16 crease allowed under section 24(i), the applica- 17 ble fraction (as defined in such section) of such 18 increase, or the determination of whether the 19 taxpayer is described in section 20 24(i)(2)(C)(ii)(II).’’. 21 (d) EFFECTIVE DATE.— 22 (1) IN GENERAL.—Except as provided in para- 23 graph (2), the amendments ma [Text truncated for display. Full text available on Congress.gov.]