Parent Tax Credit Act

II 117TH CONGRESS 1ST SESSION S. 1426 To amend the Internal Revenue Code of 1986 to establish a refundable tax credit for parents. IN THE SENATE OF THE UNITED STATES APRIL 28, 2021 Mr. HAWLEY 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 establish a refundable tax credit for parents. 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 ‘‘Parent Tax Credit 4 Act’’. 5 SEC. 2. ESTABLISHMENT OF PARENT TAX CREDIT. 6 (a) IN GENERAL.—Subpart C of part IV of sub- 7 chapter A of chapter 1 of the Internal Revenue Code of 8 1986 is amended by inserting after section 36B the fol- 9 lowing new section: 10 VerDate Sep 11 2014 01:55 Jun 02, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1426.IS S1426 pbinns on DSKJLVW7X2PROD with BILLS 2 •S 1426 IS ‘‘SEC. 36C. PARENT TAX CREDIT. 1 ‘‘(a) IN GENERAL.—In the case of an eligible indi- 2 vidual, there shall be allowed as a credit against the tax 3 imposed by this subtitle for the taxable year an amount 4 equal to $6,000 ($12,000 in the case of a joint return). 5 ‘‘(b) LIMITATION BASED ON EARNED INCOME.— 6 ‘‘(1) IN GENERAL.—No credit shall be allowed 7 under this section to any taxpayer for any taxable 8 year in which the earned income (as defined in sec- 9 tion 32(c)(2)) of such taxpayer during such taxable 10 year is not equal to or greater than the minimum in- 11 come level. 12 ‘‘(2) MINIMUM INCOME LEVEL.—For purposes 13 of this subsection, the minimum income level shall 14 be an amount equal to the product of— 15 ‘‘(A) the minimum wage rate in effect 16 under section 6(a)(1) of the Fair Labor Stand- 17 ards Act of 1938 (29 U.S.C. 206(a)(1)), multi- 18 plied by 19 ‘‘(B) 1040 hours. 20 ‘‘(c) ELIGIBLE INDIVIDUAL.—The term ‘eligible indi- 21 vidual’ means any individual— 22 ‘‘(1) who, for the taxable year, has a qualifying 23 child (as defined in section 152(c)) who has not at- 24 tained age 13 as of the close of such taxable year, 25 and 26 VerDate Sep 11 2014 01:55 Jun 02, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1426.IS S1426 pbinns on DSKJLVW7X2PROD with BILLS 3 •S 1426 IS ‘‘(2) other than— 1 ‘‘(A) any nonresident alien individual, 2 ‘‘(B) any alien (as defined in section 3 101(a) of the Immigration and Nationality Act 4 (8 U.S.C. 1101(a)) who is unlawfully present in 5 the United States (within the meaning of that 6 Act), and 7 ‘‘(C) any individual with respect to whom 8 a deduction under section 151 is allowable to 9 another taxpayer for a taxable year beginning 10 in the calendar year in which the individual’s 11 taxable year begins. 12 ‘‘(d) IDENTIFICATION NUMBER REQUIREMENT.— 13 ‘‘(1) IN GENERAL.—No credit shall be allowed 14 under subsection (a) to an eligible individual who 15 does not include on the return of tax for the taxable 16 year— 17 ‘‘(A) such individual’s valid identification 18 number, 19 ‘‘(B) in the case of a joint return, the valid 20 identification number of such individual’s 21 spouse, and 22 ‘‘(C) in the case of a qualifying child de- 23 scribed in subsection (c)(1), the valid identifica- 24 tion number of such qualifying child. 25 VerDate Sep 11 2014 01:55 Jun 02, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1426.IS S1426 pbinns on DSKJLVW7X2PROD with BILLS 4 •S 1426 IS ‘‘(2) VALID IDENTIFICATION NUMBER.— 1 ‘‘(A) IN GENERAL.—For purposes of para- 2 graph (1), the term ‘valid identification num- 3 ber’ means a social security number (as such 4 term is defined in section 24(h)(7)). 5 ‘‘(B) ADOPTION TAXPAYER IDENTIFICA- 6 TION NUMBER.—For purposes of paragraph 7 (1)(C), in the case of a qualifying child who is 8 adopted or placed for adoption, the term ‘valid 9 identification number’ shall include the adop- 10 tion taxpayer identification number of such 11 child. 12 ‘‘(3) SPECIAL RULE FOR MEMBERS OF THE 13 ARMED FORCES.—Paragraph (1)(B) shall not apply 14 in the case where at least 1 spouse was a member 15 of the Armed Forces of the United States at any 16 time during the taxable year and at least 1 spouse 17 satisfies paragraph (1)(A). 18 ‘‘(4) MATHEMATICAL OR CLERICAL ERROR AU- 19 THORITY.—Any omission of a correct valid identi- 20 fication number required under this subsection shall 21 be treated as a mathematical or clerical error for 22 purposes of applying section 6213(g)(2) to such 23 omission. 24 VerDate Sep 11 2014 01:55 Jun 02, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1426.IS S1426 pbinns on DSKJLVW7X2PROD with BILLS 5 •S 1426 IS ‘‘(e) TAXABLE YEAR MUST BE FULL TAXABLE 1 YEAR.—Except in the case of a taxable year closed by rea- 2 son of the death of the taxpayer, no credit shall be allow- 3 able under this section in the case of a taxable year cov- 4 ering a period of less than 12 months. 5 ‘‘(f) RESTRICTIONS ON TAXPAYER WHO IMPROPERLY 6 CLAIMED CREDIT IN PRIOR YEAR.—Rules similar to the 7 rules under section 24(g) shall apply for purposes of this 8 section. 9 ‘‘(g) ADJUSTMENT FOR INFLATION.— 10 ‘‘(1) IN GENERAL.—In the case of any taxable 11 year beginning after 2022, each dollar amount in 12 subsection (a) shall be increased by an amount equal 13 to— 14 ‘‘(A) such dollar amount, multiplied by 15 ‘‘(B) the cost-of-living adjustment deter- 16 mined under section 1(f)(3) for the calendar 17 year in which the taxable year begins, deter- 18 mined by substituting ‘2021’for ‘2016’ in sub- 19 paragraph (A)(ii) thereof. 20 ‘‘(2) ROUNDING.—If any increase under para- 21 graph (1) is not a multiple of $100, such increase 22 shall be rounded to the next lowest multiple of 23 $100.’’. 24 (b) ADVANCE PAYMENT OF CREDIT.— 25 VerDate Sep 11 2014 01:55 Jun 02, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1426.IS S1426 pbinns on DSKJLVW7X2PROD with BILLS 6 •S 1426 IS (1) IN GENERAL.—Chapter 77 of the Internal 1 Revenue Code of 1986, as amended by section 2 9611(b) of the American Rescue Plan Act of 2021 3 (Public Law 117-2), is amended by inserting after 4 section 7527A the following new section: 5 ‘‘SEC. 7527B. ADVANCE PAYMENT OF PARENT TAX CREDIT. 6 ‘‘(a) IN GENERAL.—As soon as practicable after the 7 date of the enactment of this section, the Secretary shall 8 establish a program for making advance payments of the 9 credit allowed under section 36C (determined without re- 10 gard to subsection (h) of such section), on a monthly basis, 11 to taxpayers (with the exception of any taxpayer who 12 elects not to receive such payments pursuant to subsection 13 (c)(1)). 14 ‘‘(b) LIMITATION.—With respect to any taxable year, 15 the Secretary may make payments under subsection (a) 16 only to the extent that— 17 ‘‘(1) the total amount of such payments made 18 to any taxpayer during such taxable year does not 19 exceed the amount estimated by the Secretary as 20 would be allowable under section 36C for such tax- 21 able year, as estimated based on— 22 ‘‘(A) any information provided by the tax- 23 payer under subsection (c)(2), or 24 VerDate Sep 11 2014 01:55 Jun 02, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1426.IS S1426 pbinns on DSKJLVW7X2PROD with BILLS 7 •S 1426 IS ‘‘(B) if no information described in sub- 1 paragraph (A) has been provided, any informa- 2 tion with respect to such taxpayer for the most 3 recent taxable year for which a return has been 4 filed by the taxpayer, and 5 ‘‘(2) for each monthly payment, such payment 6 does not exceed an amount equal to the quotient 7 of— 8 ‘‘(A) the amount of the credit estimated 9 under paragraph (1) for such taxable year, di- 10 vided by 11 ‘‘(B) 12. 12 ‘‘(c) ON-LINE INFORMATION PORTAL.—The Sec- 13 retary shall establish an on-line portal which allows tax- 14 payers to— 15 ‘‘(1) elect not to receive payments under this 16 section, and 17 ‘‘(2) provide information to the Secretary which 18 would be relevant to the determination under sub- 19 section (b)(1), including information regarding— 20 ‘‘(A) for purposes of section 36C(c)(1), 21 whether the taxpayer has any qualifying chil- 22 dren, including by reason of the birth of a child, 23 ‘‘(B) a change in the taxpayer’s marital 24 status, 25 VerDate Sep 11 2014 01:55 Jun 02, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1426.IS S1426 pbinns on DSKJLVW7X2PROD with BILLS 8 •S 1426 IS ‘‘(C) a significant change in the taxpayer’s 1 earned income, and 2 ‘‘(D) any other factor which the Secretary 3 may provide. 4 ‘‘(d) NOTICE OF PAYMENTS.—Not later than Janu- 5 ary 31 of the calendar year following any calendar year 6 during which the Secretary makes one or more payments 7 to any taxpayer under this section, the Secretary shall pro- 8 vide such taxpayer with a written notice which includes 9 the taxpayer’s taxpayer identity (as defined in section 10 6103(b)(6)), the aggregate amount of such payments 11 made to such taxpayer during such calendar year, and 12 such other information as the Secretary determines appro- 13 priate. 14 ‘‘(e) ADMINISTRATIVE PROVISIONS.— 15 ‘‘(1) APPLICATION OF ELECTRONIC FUNDS PAY- 16 MENT REQUIREMENT.—The payments made by the 17 Secretary under subsection (a) shall be made by 18 electronic funds transfer to the same extent and in 19 the same manner as if such payments were Federal 20 payments not made under this title. 21 ‘‘(2) APPLICATION OF CERTAIN RULES.—Rules 22 similar to the rules of subparagraphs (B) and (C) of 23 section 6428A(f)(3) shall apply for purposes of this 24 section.’’. 25 VerDate Sep 11 2014 01:55 Jun 02, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1426.IS S1426 pbinns on DSKJLVW7X2PROD with BILLS 9 •S 1426 IS (2) RECONCILIATION OF CREDIT AND ADVANCE 1 CREDIT.—Section 36C of such Code, as added by 2 subsection (a), is amended by adding at the end the 3 following: 4 ‘‘(h) RECONCILIATION OF CREDIT AND ADVANCE 5 CREDIT.— 6 ‘‘(1) IN GENERAL.—The amount of the credit 7 allowed under this section for any taxable year shall 8 be reduced (but not below zero) by the aggregate 9 amount of any advance payments of such credit 10 under section 7527B for such taxable year. 11 ‘‘(2) FAILURE TO SATISFY EARNED INCOME RE- 12 QUIREMENT.—In the case of any taxpayer who re- 13 ceived any advance payment under section 7527B 14 for the taxable year and whose earned income for 15 such taxable year was not equal to or greater than 16 the minimum income level (as determined under sub- 17 section (b)(2)), for the period of 2 taxable years sub- 18 sequent to such taxable year— 19 ‘‘(A) no advance payment may be provided 20 under section 7527B to such taxpayer in either 21 taxable year during such period, and 22 ‘‘(B) the amount of the credit which would 23 (but for this paragraph) otherwise be allowable 24 to such taxpayer under subsection (a) in either 25 VerDate Sep 11 2014 01:55 Jun 02, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1426.IS S1426 pbinns on DSKJLVW7X2PROD with BILLS 10 •S 1426 IS taxable year during such period shall be re- 1 duced by one-half of such amount.’’. 2 (c) EXCEPTION FROM REDUCTION OR OFFSET.— 3 Any credit allowed to any individual under section 36C 4 of the Internal Revenue Code of 1986 (as added by sub- 5 section (a)) or any advance payment of such credit under 6 section 7527B of such Code (as added under subsection 7 (b)) shall not be— 8 (1) subject to reduction or offset pursuant to 9 section 3716 or 3720A of title 31, United States 10 Code, 11 (2) subject to reduction or offset pursuant to 12 subsection (d), (e), or (f) of section 6402 of the In- 13 ternal Revenue Code of 1986, or 14 (3) reduced or offset by other assessed Federal 15 taxes that would otherwise be subject to levy or col- 16 lection. 17 (d) CONFORMING AMENDMENTS.— 18 (1) Section 6211(b)(4)(A) of the Internal Rev- 19 enue Code of 1986 is amended— 20 (A) by inserting ‘‘36C,’’ after ‘‘36B,’’, and 21 (B) by striking ‘‘and 7527A’’ and inserting 22 ‘‘7527A, and 7527B’’. 23 (2) Section 6213(g)(2)(L) of such Code is 24 amended by inserting ‘‘36C,’’ after ‘‘32,’’. 25 VerDate Sep 11 2014 01:55 Jun 02, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S1426.IS S1426 pbinns on DSKJLVW7X2PROD with BILLS 11 •S 1426 IS (3) Paragraph (2) of section 1324(b) of title 1 31, United States Code, is amended— 2 (A) by inserting ‘‘36C,’’ after ‘‘36B,’’, and 3 (B) by striking ‘‘or 7527A’’ and inserting 4 ‘‘7527A, or 7527B’’. 5 (4) The table of sections for subpart C of part 6 IV of subchapter A of chapter 1 of the Internal Rev- 7 enue Code of 1986 is amended by inserting after the 8 item relating to section 36B the following new item: 9 ‘‘Sec. 36C. Parent Tax Credit.’’. (5) The table of sections for chapter 77 of such 10 Code is amended by inserting after the item relating 11 to section 7527A the following new item: 12 ‘‘Sec. 7527B. Advance payment of Parent Tax Credit.’’. (e) TERMINATION OF CHILD AND DEPENDENT CARE 13 CREDIT.—Section 21 of the Internal Revenue Code of 14 1986 is amended by adding at the end the following: 15 ‘‘(i) TERMINATION.—This section shall not apply to 16 any taxable year beginning after December 31, 2021.’’. 17 (f) EFFECTIVE DATE.—The amendments made by 18 this section shall apply to taxable years beginning after 19 December 31, 2021. 20 Æ VerDate Sep 11 2014 01:55 Jun 02, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6301 E:\BILLS\S1426.IS S1426 pbinns on DSKJLVW7X2PROD with BILLS