S. 3607 (109th): Responsible Fatherhood and Healthy Families Act of 2006

109th Congress, 2005–2006. Text as of Jun 29, 2006 (Introduced).

Status & Summary | PDF | Source: GPO

II

109th CONGRESS

2d Session

S. 3607

IN THE SENATE OF THE UNITED STATES

June 29, 2006

(for himself and Mr. Obama) introduced the following bill; which was read twice and referred to the Committee on Finance

A BILL

To amend title IV of the Social Security Act to ensure funding for grants to promote responsible fatherhood and strengthen low-income families, and for other purposes.

1.

Short title; table of contents

(a)

Short title

This Act may be cited as the Responsible Fatherhood and Healthy Families Act of 2006.

(b)

Table of contents

The table of contents of this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Findings.

TITLE I—Promoting Responsible Fatherhood and Strengthening Low-Income Families

Sec. 101. Healthy marriage promotion and responsible fatherhood programs.

Sec. 102. Grants to healthy family partnerships for domestic violence prevention, for services for families and individuals affected by domestic violence, and for developing and implementing best practices.

Sec. 103. Elimination of separate TANF work participation rate for 2-PARENT families.

Sec. 104. Ban on Recovery of Medicaid Costs for Births.

Sec. 105. Improved collection and distribution of child support.

Sec. 106. Grants to States to conduct demonstration projects to promote economic opportunity for low-income parents.

Sec. 107. State assessments of barriers to employment and financial support of children.

Sec. 108. Collection of child support under the food stamp program.

TITLE II—Revenue Provisions

Sec. 201. Modifications to the earned income tax credit.

Sec. 202. Tax treatment of inverted entities.

Sec. 203. Tax treatment of controlled foreign corporations established in tax havens.

Sec. 204. Taxation of income of controlled foreign corporations attributable to imported property.

2.

Findings

Congress makes the following findings:

(1)

The most important factor in a child’s upbringing is whether the child is brought up in a loving, healthy, supportive environment.

(2)

Children who grow up with both parents are more likely to finish high school, be economically self-sufficient, and to have a healthier lifestyle than their peers who grow up in single-parent homes.

(3)

Father-child interaction has been shown to promote the positive physical, social, emotional, and mental development of children.

(4)

Children typically live without both parents when their parents are divorced or did not marry. More than 1/3 of all first marriages end in divorce, and 60 percent of divorcing couples have children. More than 1/3 of all births are to unmarried women.

(5)

More than 1 in 4 families with children have only 1 parent present, and more than 1 in 3 children live absent their biological father.

(6)

Recent studies demonstrate that most unwed fathers in urban areas are highly involved with the mother of their child before and after the child's birth, with 80 percent involved during the mother's pregnancy, and 50 percent living with the child’s mother at the time of the child's birth. However, the relationship between the parents often does not last, and fathers do not maintain contact with their children as the children grow up.

(7)

An estimated 40 percent of the children who live in households without their father have not seen their fathers in at least 1 year.

(8)

The inability of parents to sustain a healthy relationship with their child’s other parent and remain involved in their child's life can have severe negative consequences for the parents, the child, their community, and taxpayers.

(9)

Single-parent families are 5 times as likely to be poor as married-couple families.

(10)

Children raised in single-parent families are more likely than children raised in 2-parent families to do poorly in school, have emotional and behavioral problems, become teenage parents, commit crimes, smoke cigarettes, abuse drugs and alcohol, and have poverty-level incomes as adults.

(11)

Male unemployment and low wages are primary reasons why parents do not marry, why 2-parent families break up, and why fathers fail to remain involved with their children. In 2004, half of African-American young men lacked jobs.

(12)

Domestic violence is also a significant problem leading to the non-formation or break-up of 2-parent families.

(13)

A history of incarceration is a major barrier to employment. 60 percent of African-American men who dropped out of high school have served time. When these men leave prison, they often have difficulty finding a job and supporting their children.

(14)

Over ½ of State prison inmates are parents. When parents go to prison, their child support obligations continue, even though they have little ability to pay the support. When these parents leave prison, they typically owe more than $20,000 in child support debt. Parents leaving prison often re-enter the underground economy because of financial pressures or to avoid the child support system, making it less likely that they will successfully rejoin society and reunite with their families.

(15)

Children should receive the child support paid by their parents, and the government should not keep the money to recover welfare costs. Regular child support income appears to have a greater positive impact on children dollar for dollar than other types of income. Researchers in Wisconsin found that when monthly child support was passed through to families receiving assistance under the Temporary Assistance for Needy Families program established under part A of title IV of the Social Security Act (TANF) and disregarded 100 percent in determining assistance for the families, fathers paid more child support, established their legal relationship with their children more quickly, and worked less in the underground economy. Moreover, the State costs of a full pass-through and disregard of child support were fully offset by increased payments by fathers and decreased public assistance use by families.

(16)

Current law permits States to apply the cost of passing through child support to families receiving assistance under the TANF program toward their maintenance of effort (MOE) requirements, but only to the extent that the State disregards the child support payments in determining the amount and type of TANF assistance.

(17)

Programs that increase employment opportunity and reduce barriers by increasing employment opportunity and reducing recidivism will benefit children and families.

(18)

Transitional jobs programs have shown promise in reducing unemployment among chronically unemployed or underemployed population groups, including formerly incarcerated individuals, the homeless, and young African-American men.

(19)

To strengthen families it is important to improve the upward economic mobility of the custodial and noncustodial parent wage-earners, as well as youth at risk of early fatherhood or incarceration, by providing the skills and experience necessary to access jobs with family-sustaining wages and benefits. In families in which all the members do not live together, this is important to enable the prompt and consistent payment of adequate child support.

(20)

It is important and useful to foster local and regional economic development and job advancement for workers, especially young custodial and noncustodial parents, by funding local collaborations among business, education, and the community in the development of pathways for preparing disadvantaged citizens to meet the workforce needs of the local and regional economy.

(21)

Employers benefit from working with and being supported by the local education, post-secondary and workforce systems in identifying the academic and occupational skill sets needed to fill the skilled jobs in the changing economy. Local economic and community development is enhanced when residents have access to higher wage employment, thus increasing the tax base, fueling the economy, and contributing to greater family economic security.

(22)

Public-private career pathways partnerships are an important tool for linking employers and workers with the workforce education services they need and for integrating community economic development and workforce education services. Transitional jobs programs can serve as the first step in a career pathway by giving unemployed individuals with multiple barriers to employment, valuable work experience and related services.

(23)

The purpose of child support is to provide necessary income support for and increase the well-being of children living apart from a parent. To improve the ability of low-income fathers to provide long-term support and care for their children throughout their entire childhood, it is important that child support polices support parental efforts to pursue education and employment and to stay involved with their children

(24)

Responsible fatherhood includes active participation in financial support and child-rearing, as well as the formation and maintenance of a positive, healthy, and nonviolent relationship between father and child and a cooperative, healthy, and nonviolent relationship between parents.

(25)

States should be encouraged to implement voluntary programs that provide support for responsible parenting, including by increasing the employment, financial security, and parental involvement of noncustodial parents.

(26)

Promoting responsible fatherhood saves the government money by reducing the need for public assistance, increasing the educational attainment of children, juvenile delinquency and crime, reducing substance abuse, and lowering rates of unemployment.

(27)

Responsible fatherhood programs should promote and provide support services for—

(A)

fostering loving and healthy relationships between parents and children;

(B)

increasing responsibility of noncustodial parents for the long-term care and financial well-being of their children;

(C)

increasing employment of low-income, noncustodial parents and improving compliance with child support obligations; and

(D)

reducing barriers to active 2-parent involvement and cooperative parenting.

(28)

The promotion of responsible fatherhood should not denigrate the standing or parenting efforts of single mothers or other caregivers, lessen the protection of children from abusive parents, or compromise the safety or health of the custodial or noncustodial parent, but should increase the chance that children will have 2 caring parents to help them grow up healthy and secure.

I

Promoting Responsible Fatherhood and Strengthening Low-Income Families

101.

Healthy marriage promotion and responsible fatherhood programs

(a)

Ensuring funding for responsible fatherhood programs

Section 403(a)(2)(C) of the Social Security Act (42 U.S.C. 603(a)(2)(C)) is amended—

(1)

in the subparagraph heading, by striking Limitation on use of and inserting Requirement to use certain; and

(2)

in clause (i), by striking may not award more than $50,000,000 and inserting shall award at least $100,000,000.

(b)

Requirements To ensure procedures To address domestic violence prevention

(1)

In general

Section 403(a)(2) of the Social Security Act (42 U.S.C. 603(a)(2)) is amended—

(A)

by redesignating subparagraph (D) as subparagraph (G); and

(B)

by inserting after subparagraph (C) the following new subparagraphs:

(D)

Requirements for receipt of funds

An entity may not be awarded a grant under this paragraph unless the entity, as a condition of receiving funds under such a grant—

(i)

consults with domestic violence organizations that have demonstrated expertise working with survivors of domestic violence in developing policies, procedures, programs and training necessary to appropriately address domestic violence in families served by programs and activities funded under such grant;

(ii)

describes in the application for a grant under this paragraph—

(I)

how the programs or activities proposed to be conducted will appropriately address issues of domestic violence; and

(II)

what the entity will do, to the extent relevant, to ensure that participation in such programs or activities is voluntary, and to inform potential participants that their involvement is voluntary;

(iii)

establishes a written protocol for providers and administrators of programs and activities relevant to the grant that—

(I)

provides for helping identify instances or risks of domestic violence; and

(II)

specifies the procedures for making service referrals and providing protections and appropriate assistance for identified individuals and families; and

(iv)

submits the annual reports required under subparagraph (E).

(E)

Annual reports to the secretary

Each entity awarded a grant under this paragraph shall submit to the Secretary an annual report on the programs and activities funded under the grant that includes the following:

(i)

A description of the written protocols developed in accordance with the requirements of subparagraph (D)(iii) for each program or activity funded under the grant and how such protocols are used, including specific policies and procedures for addressing domestic violence issues within each program or activity funded under the grant and how confidentiality issues are addressed.

(ii)

The name of each individual, organization, or entity that was consulted in the development of such protocols.

(iii)

A description of each individual, organization, or entity (if any) that provided training on domestic violence for the entity or for any subgrantees.

(iv)

A description of any implementation issues identified with respect to domestic violence and how such issues were addressed.

(F)

Domestic violence defined

In this paragraph, the term domestic violence has the meaning given that term in section 402(a)(7)(B).

.

(2)

Conforming amendments

Section 403(a)(2) of such Act (42 U.S.C. 603(a)(2)) is amended—

(A)

in subparagraph (A)(i)—

(i)

by striking (B) and (C) and inserting (B), (C), (D), and (E); and

(ii)

by striking subparagraph (D) and inserting subparagraph (G);

(B)

in subparagraphs (B)(i) and (C)(i), by striking (D) each place it appears and inserting (G); and

(C)

in subparagraph (G) (as redesignated by paragraph (1)(A)), by striking $150,000,000 for each of fiscal years 2006 through 2010 and inserting $150,000,000 for fiscal year 2006 and $200,000,000 for each of fiscal years 2007 through 2010.

(c)

Assurance of voluntary participation

Section 403(a)(2)(A)(ii)(II) of the Social Security Act (42 U.S.C. 603(a)(2)(A)(ii)(II)) is amended—

(1)

in item (aa), by striking and at the end;

(2)

in item (bb), by striking the period at the end and inserting a semicolon; and

(3)

by adding at the end the following new items:

(cc)

to not condition the receipt of assistance under the program funded under this part, under a program funded with qualified State expenditures (as defined in section 409(a)(7)(B)(i)), or under any other program funded under this title on enrollment in any such programs or activities; and

(dd)

to permit any individual who has begun to participate in a particular program or activity funded under this paragraph, including an individual whose participation is specified in the individual responsibility plan developed for the individual in accordance with section 408(b), to transfer to another such program or activity funded under this paragraph upon notification to the entity and the State agency responsible for administering the State program funded under this part.

.

(d)

Activities promoting responsible fatherhood

Section 403(a)(2)(C)(ii) of the Social Security Act (42 U.S.C. 603(a)(2)(C)(ii)) is amended—

(1)

in subclause (I), by striking marriage or sustain marriage and insert healthy relationships and marriages or to sustain healthy relationships or marriages;

(2)

in subclause (II), by inserting educating youth who are not yet parents about the economic, social, and family consequences of early parenting, helping participants in fatherhood programs work with their own children to break the cycle of early parenthood, after child support payments,; and

(3)

in subclause (III), by striking fathers and inserting low-income fathers and other low-income noncustodial parents whom are not eligible for assistance under the State program funded under this part.

(e)

Effective date

The amendments made by this section shall take effect on October 1, 2006.

102.

Grants to healthy family partnerships for domestic violence prevention, for services for families and individuals affected by domestic violence, and for developing and implementing best practices

Section 403(a) of the Social Security Act (42 U.S.C. 603(a)) is amended by adding at the end the following new paragraph:

(6)

Grants to healthy family partnerships for domestic violence prevention, for services for families and individuals affected by domestic violence, and for developing and implementing best practices

(A)

In general

The Secretary shall award grants on a competitive basis to healthy family partnerships to—

(i)

conduct programs and activities that are designed to prevent domestic violence;

(ii)

provide services for victims of domestic violence; and

(iii)

develop and implement best practices for preventing domestic violence, particularly as a barrier to economic security, and for providing services to families and individuals affected by such violence including through caseworker training and the provision of technical assistance.

(B)

Education services

In awarding grants under subparagraph (A), the Secretary shall ensure that 10 percent of the funds made available under such grants are used for high schools and other secondary educational institutions and institutions of higher education to provide education services on the value of healthy relationships, responsible parenting, and healthy marriages characterized by mutual respect and non-violence, and the importance of building relationships skills such as communication, conflict resolution, and budgeting.

(C)

Application

The respective entity and organization of a healthy family partnership entered into for purposes of receiving a grant under this paragraph shall submit a joint application to the Secretary, at such time and in such manner as the Secretary shall specify, containing—

(i)

a description of how the partnership intends to carry out the activities described in subparagraph (A);

(ii)

an assurance that funds made available under the grant shall be used to supplement, and not supplant, other funds used by the entity or organization to carry out programs, activities, or services described in subparagraph (A) or (B); and

(iii)

such other information as the Secretary may require.

(D)

General rules governing use of funds

The rules of section 404, other than subsection (b) of that section, shall not apply to a grant made under this paragraph.

(E)

Definitions

In this paragraph:

(i)

Domestic violence

The term domestic violence has the meaning given that term in section 402(a)(7)(B).

(ii)

Healthy family partnership

The term healthy family partnership means a partnership between—

(I)

an entity receiving funds under a grant made under paragraph (2) to promote healthy marriage or responsible fatherhood; and

(II)

an organization described in paragraph (2)(D)(i).

(F)

Appropriation

Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated for each of fiscal years 2007 through 2010, $25,000,000 for purposes of awarding grants to healthy family partnerships under this paragraph.

.

103.

Elimination of separate TANF work participation rate for 2-PARENT families

(a)

In General

Section 407 of the Social Security Act (42 U.S.C. 607) is amended—

(1)

in subsection (a)—

(A)

beginning in the heading, by striking Participation Rate Requirements and all that follows through A State in paragraph (1) and inserting Participation Rate Requirements.—A State; and

(B)

by striking paragraph (2);

(2)

in subsection (b)—

(A)

in paragraph (1)(A), by striking subsection (a)(1) and inserting subsection (a);

(B)

in paragraph (2), by striking the paragraph heading and all that follows through A family and inserting Special rule.—A family;

(C)

in paragraph (4), by striking paragraphs (1)(B) and (2)(B) and inserting determining monthly participation rates under paragraph (1)(B); and

(D)

in paragraph (5), by striking rates and inserting rate; and

(3)

in subsection (c)—

(A)

in paragraph (1)(B), in the matter preceding clause (i), by striking subsection (b)(2)(B) and inserting subsection (b)(1)(B)(i); and

(B)

in paragraph (2)(D)—

(i)

by striking paragraphs (1)(B)(i) and (2)(B) of subsection (b) and inserting subsection (b)(1)(B)(i); and

(ii)

by striking and in 2-parent families, respectively,.

(b)

Effective Date

(1)

In general

The amendments made by subsection (a) shall take effect on the date of enactment of this Act and shall apply to the determination of minimum participation rates for months beginning on or after that date.

(2)

Limitation on penalty imposition

Notwithstanding section 409(a)(3) of the Social Security Act, the Secretary of Health and Human Services shall not impose a penalty against a State under that section on the basis of the State's failure to satisfy the participation rate required for fiscal year 2006 if the State demonstrates that the State would have met such requirement if, with respect to those months of fiscal year 2006 that began prior to or on the date of enactment of this Act, the State were permitted to count 2-parent families that met the requirements of section 407(c)(1)(A) of the Social Security Act (42 U.S.C. 607(c)(1)(A)) in the determination of monthly participation rates under section 407(b)(1)(B)(i) of such Act (42 U.S.C. 607(b)(1)(B)(i)).

104.

Ban on Recovery of Medicaid Costs for Births

(a)

Ban on recovery

(1)

In general

Section 454 of the Social Security Act (42 U.S.C. 654), as amended by section 7301(B)(1)(C) of the Deficit Reduction Act of 2005 (Public Law 109–171), is amended—

(A)

by striking and at the end of paragraph (33);

(B)

by striking the period at the end of paragraph (34) and inserting ; and; and

(C)

by inserting after paragraph (34) the following:

(35)

provide that, except as provided in section 1902(a)(25)(F)(ii), the State shall not use the State program operated under this part to collect any amount owed to the State by reason of costs incurred under the State plan approved under title XIX for the birth of a child for whom support rights have been assigned pursuant to section 471(a)(17) or 1912.

.

(2)

Rule of construction

Nothing in section 454(35) of the Social Security Act (42 U.S.C. 654(35)), as added by paragraph (1), shall be construed as affecting the application of section 1902(a)(25) of such Act (42 U.S.C. 1396a(a)(25)) with respect to a State (relating to the State Medicaid plan requirement for the State to take all reasonable measures to ascertain the legal liability of third parties to pay for care and services available under the plan).

(b)

Clarification that ban on recovery does not apply with respect to insurance of a parent with an obligation To pay child support

Section 1902(a)(25)(F) of the Social Security Act (42 U.S.C. 1396a(a)(25)(F)) is amended—

(1)

in clause (i), by adding add after the semicolon; and

(2)

in clause (ii), by inserting only if such third-party liability is derived through insurance, before seek.

(c)

Effective date

(1)

In general

Except as provided in paragraph (2), the amendments made by this section take effect on October 1, 2006.

(2)

Extension of effective date for state law amendment

In the case of a State plan under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.) which the Secretary of Health and Human Services determines requires State legislation in order for the plan to meet the additional requirements imposed by the amendments made by this section, the State plan shall not be regarded as failing to comply with the requirements of such title solely on the basis of its failure to meet these additional requirements before the first day of the first calendar quarter beginning after the close of the first regular session of the State legislature that begins after the date of enactment of this Act. For purposes of the previous sentence, in the case of a State that has a 2-year legislative session, each year of the session is considered to be a separate regular session of the State legislature.

105.

Improved collection and distribution of child support

(a)

Distribution of child support

(1)

Full distribution of child support collected; reform of rules for distribution of child support collected on behalf of children in foster care

(A)

In general

Section 457 of the Social Security Act (42 U.S.C. 657) is amended—

(i)

by striking subsection (a) and inserting the following:

(a)

Full distribution of amounts collected on behalf of any family

Subject to subsection (c), the entire amount collected on behalf of any family as support by a State pursuant to a plan approved under this part shall be paid by the State to the family.

; and

(ii)

by striking subsections (c) through (e) and inserting the following:

(c)

Amounts collected for child for whom foster care maintenance payments are made

Notwithstanding the preceding provisions of this section, amounts collected by a State as child support for months in any period on behalf of a child for whom a public agency is making foster care maintenance payments under part E shall be paid to the public agency responsible for supervising the placement of the child, which may use the payments in the manner it determines will serve the best interests of the child, including setting such payments aside for the child’s future needs, depositing the funds in a child asset account, or making all or a part thereof available to the person responsible for meeting the child’s day-to-day needs.

.

(B)

Foster care state plan amendment

Section 471(a)(17) of the Social Security Act (42 U.S.C. 671(a)(17)) is amended—

(i)

by inserting and consistent with the child's case plan after where appropriate; and

(ii)

by striking secure an assignment to the State of any rights to support and inserting establish and enforce child support obligations.

(2)

Conforming amendments

(A)

Section 409(a)(7)(B)(i)(I)(aa) of such Act (42 U.S.C. 609(a)(7)(B)(i)(I)(aa)) is amended by striking 457(a)(1)(B) and inserting 457(a).

(B)

Section 454(5) of such Act (42 U.S.C. 654(5)) is amended by striking (A) in any case and all that follows through (B).

(C)

Paragraphs (1)(B) and (2)(B) of section 457(b) of such Act (42 U.S.C. 657(b)), as amended by section 7301(c) of the Deficit Reduction Act of 2005 (Public Law 109–171; 120 Stat. 141), is amended by striking in accordance with subsection (a)(4) each place it appears.

(D)

Section 466(a)(3)(B) of such Act (42 U.S.C. 666(a)(3)(B)) is amended by striking 408(a)(3) or.

(3)

Repeal of certain dra amendments

Effective on the date of enactment of this Act, subsections (a) and (b) of section 7301 of the Deficit Reduction Act of 2005 (Public Law 109–171; 120 Stat. 141) are repealed and parts A and D of title IV of the Social Security Act shall be applied as if the amendments made by such subsections had not been enacted.

(b)

Prohibition on conditioning receipt of TANF on assignment of support

Section 408(a)(3) of the Social Security Act (42 U.S.C. 608(a)(3)) is amended—

(1)

in the paragraph heading, by striking No assistance for families not and inserting Prohibition on conditioning assistance for families on;

(2)

by inserting not after shall;

(3)

by inserting or under a program funded with qualified State expenditures (as defined in section 409(a)(7)(B)(i)) after this part; and

(4)

by striking , not exceeding the total amount of assistance so paid to the family,.

(c)

Requirement To disregard percentage of child support collected in determining amount and type of TANF assistance

Section 408(a) of the Social Security Act (42 U.S.C. 608(a)) is amended by adding at the end the following new paragraph:

(12)

Requirement to disregard percentage of child support collected in determining amount and type of TANF assistance

A State to which a grant is made under section 403 shall disregard at least the same percentage of amounts collected as support on behalf of a family as the percentage of earned income that the State disregards in determining the amount or type of assistance provided to the family under the State program funded under this part or under a program funded with qualified State expenditures (as defined in section 409(a)(7)(B)(i)).

.

(d)

Restoration of Federal funding

Effective on the date of enactment of this Act, section 7309 of the Deficit Reduction Act of 2005 (Public Law 109–171; 120 Stat. 147) is repealed and part D of title IV of the Social Security Act shall be applied as if the amendment made by subsection (a) of that section had not been enacted.

(e)

Repeal of mandatory fee for child support collection

Effective on the date of enactment of this Act, section 7310 of the Deficit Reduction Act of 2005 (Public Law 109–171; 120 Stat. 147) is repealed and part D of title IV of the Social Security Act shall be applied as if the amendments made by that section had not been enacted.

(f)

Prohibition on considering a period of incarceration voluntary unemployment

Section 466(a) of the Social Security Act (42 U.S.C. 666(a)) is amended by inserting after paragraph (19) the following new paragraph:

(20)

Procedures relating to periods of incarceration of noncustodial parents

(A)

In general

Procedures which require that, in determining or modifying the amount of, or terms and conditions of, any support obligation of a noncustodial parent, the State—

(i)

shall not consider any period of incarceration of such parent as a period of voluntary employment that disqualifies the parent from obtaining a review and adjustment, if appropriate, of the support obligation; and

(ii)

subject to subparagraph (B) in the case of an incarcerated parent, shall—

(I)

temporarily suspend any support obligation on the parent and the enforcement of any support obligation of the parent existing prior to the period of incarceration; and

(II)

temporarily prohibit the accrual of any interest on any support obligation of the parent existing prior to the period of incarceration during any such period.

(B)

Notice and opportunity to challenge suspension

Such procedures shall require the State to provide a custodial parent with—

(i)

notice of any suspension of review, adjustment, or enforcement of a support obligation and of any prohibition on interest accrual on such obligation that is imposed in accordance with subparagraph (A)(ii); and

(ii)

an opportunity to request that the suspension or prohibition be terminated or modified on the basis that the noncustodial parent has sufficient income or resources to continue payment of the support obligation during the noncustodial parent's period of incarceration.

.

(g)

Forgiving or other modification of child support arrearages assigned to the State

Section 466(a)(9) of the Social Security Act (42 U.S.C. 666(a)(9)) is amended in the flush matter following subparagraph (C), by inserting the following new sentence at the end: Nothing in this paragraph shall be construed as prohibiting a State from forgiving, compromising, reducing or waiving arrearages permanently assigned to the State under part A or E of this title or under title XIX..

(h)

Review and adjustment of child support arrearages upon request

Section 466(a)(10) of the Social Security Act (42 U.S.C. 666(a)(10)) is amended by adding at the end the following new subparagraph:

(D)

Review and adjustment of arrearages

Procedures which require the State to review, and if appropriate, reduce the balance of arrearages permanently assigned to the State under part A or E of this title, or under title XIX , pursuant to standards and procedures established by the State, in cases where the obligor lacks sufficient ability to pay the arrears, adjustment will promote timely payment of current support, or barriers, such as incarceration, may have limited the ability of the obligor to timely seek a modification of the order, and it is in the best interests of the child to make such reduction. Nothing in the preceding sentence shall be construed as affecting arrearages that have not been permanently assigned to the State under such part or title.

.

(i)

Study and report

Not later than October 1, 2007, the Secretary of Health and Human Services shall study and submit a report to Congress regarding the following:

(1)

The effect of age eligibility restrictions for the earned income tax credit established under section 32 of the Internal Revenue Code of 1986 for individuals without qualifying children on—

(A)

the ability of young parents to pay child support;

(B)

compliance with child support orders; and

(C)

the relationship between young noncustodial parents and their children.

(2)

The impact of State earned income tax credit programs, especially such programs with targeted benefits for noncustodial parents, on—

(A)

the ability of noncustodial parents to pay child support;

(B)

compliance with child support orders; and

(C)

the relationship between noncustodial parents and their children.

(3)

The challenges faced by legal immigrants and individuals for whom English is not their primary language in fulfilling child support and other noncustodial parenting obligations.

(j)

Effective date

(1)

In general

Except as otherwise provided in this section, the amendments made by this section shall take effect on October 1, 2009, and shall apply to payments under parts A and D of title IV of the Social Security Act for calendar quarters beginning on or after that date, and without regard to whether regulations to implement the amendments are promulgated by such date.

(2)

State option to accelerate effective date

Notwithstanding paragraph (1), a State may elect to have the amendments made by the preceding provisions of this section apply to the State and to amounts collected by the State (and to payments under parts A and D of title IV of such Act), on and after such date as the State may select that is not earlier than October 1, 2006, and not later than September 30, 2009.

106.

Grants to States to conduct demonstration projects to promote economic opportunity for low-income parents

(a)

Authority To award grants

The Secretary of Health and Human Services, in consultation with the Secretary of Labor, shall award grants to States to conduct demonstration projects to carry out one or more of the purposes described in subsection (b).

(b)

Purposes described

For purposes of subsection (a), the purposes described in this subsection are the following:

(1)

Court-supervised or IV–D agency-supervised employment programs for noncustodial parents

(A)

In general

To establish, in coordination with counties and other local or tribal governments, court-supervised or IV–D agency supervised-employment programs for noncustodial parents who have barriers to employment and a history of nonpayment of child support obligations, as determined by a court or the IV–D agency, and who are determined by the court or agency to be in need of employment services or placement in order to pay such child support obligations. A noncustodial parent described in the preceding sentence who is an ex-offender shall be eligible to participate in a program established to carry out this purpose.

(B)

Requirements

(i)

Option to participate prior to contempt finding

A State shall not be eligible to receive a grant under this section to carry out this purpose unless any program established with funds made available under the grant provides noncustodial parents described in subparagraph (A) with an option to participate in the program prior to the court or agency entering a finding that the noncustodial parent is in contempt for failure to pay a child support obligation and, potentially subject to criminal penalties.

(ii)

Program goals

An employment program established with funds made available under a grant awarded under this section to carry out this purpose shall be designed to do the following:

(I)

To assist noncustodial parents described in subparagraph (A) obtain and maintain unsubsidized employment.

(II)

To increase the amount of financial support received by children.

(III)

To help noncustodial parents described in subparagraph (A) improve relationships with their children and their children's custodial parent.

(iii)

6 months of continuous, timely payments

An employment program established with funds made available under this section to carry out this purpose shall not permit a noncustodial parent placed in the program to graduate from the program and avoid penalties for failure to pay a child support obligation until the noncustodial parent completes at least 6 months of continuous, timely payment of the parent’s child support obligations.

(iv)

Use of funds

Services provided under an employment program established with funds made available under a grant made to carry out this purpose may include one or more of the following:

(I)

Job development.

(II)

Supervised job search.

(III)

Job placement.

(IV)

Case management.

(V)

Court liaison services.

(VI)

Educational assessment.

(VII)

Remedial education services or educational referral.

(VIII)

Vocational assessment or services.

(IX)

Counseling on responsible fatherhood.

(X)

Support funds for services such as transportation or short-term training.

(XI)

Referral for support services.

(XII)

Employment retention services.

(XIII)

Transitional jobs programs.

(XIV)

Public-private career pathway partnerships established in accordance with paragraph (3).

(v)

Administration

A State that receives a grant under this section to carry out this purpose may contract with a public or private nonprofit organization, including a faith-based or community-based organization, to administer (in conjunction with the court of jurisdiction or the IV–D agency) the court-supervised or IV–D agency-supervised employment program.

(2)

Transitional jobs grants

(A)

In general

To establish and expand transitional jobs programs for eligible individuals, including such programs conducted by local governments, State employment agencies, nonprofit organizations, and faith-based or community-based organizations or intermediaries, that—

(i)

combine time-limited employment in transitional jobs that may be subsidized with public funds, with activities that promote skill development and remove barriers to employment, such as case management services and education, training, child support-related services, and other activities, pursuant to individual plans; and

(ii)

provide such individuals with—

(I)

transitional jobs placements and job placement assistance, to help the individuals make the transition from subsidized employment in transitional jobs to stable unsubsidized employment; and

(II)

retention services after the transition to unsubsidized employment.

(B)

Eligible individuals

For purposes of this paragraph, the term eligible individuals means individuals within any of the following categories of disproportionately chronically unemployed individuals:

(i)

Individuals who have attained age 16, but not attained age 36, and who have documented barriers to employment, particularly such individuals who are parents or expectant parents.

(ii)

Formerly incarcerated individuals.

(iii)

Homeless or formerly homeless individuals.

(iv)

Individuals with disabilities.

(v)

Individuals designated by a court or the IV–D agency to participate in transitional jobs programs.

(C)

Limitations on use of funds

(i)

Allowable activities

A State that receives a grant to carry out this purpose (or a subgrantee of such State) (referred to in this paragraph as the program operator) shall use the funds made available under the grant to operate a transitional jobs program for eligible individuals consistent with the following requirements:

(I)

Jobs

The program operator shall place eligible individuals in temporary jobs, the incomes from which may be subsidized in whole or in part with public funds. An eligible individual placed in such a job (referred to in this paragraph as a participant) shall perform work directly for the program operator or another public, nonprofit, or private sector organization (which operator or organization may be referred to in this paragraph as a worksite employer) within the community involved.

(II)

Hours

(aa)

In general

Subject to item (bb), the transitional jobs program shall provide a participant with not less than 30, and not more than 40, hours per week of a combination of paid employment and the services described in subclauses (III), (IV), and (V).

(bb)

Accommodation of special circumstances

The number of hours per week required under item (aa) may be adjusted in the case of a participant who requires a modified work week to accommodate special circumstances.

(III)

Job preparation and services

The program operator shall—

(aa)

develop an individual plan for each participant, which shall contain a goal that focuses on preparation of the participant for unsubsidized jobs in demand in the local economy that offer the potential for advancement and growth (including increases in wages and benefits);

(bb)

develop transitional jobs placements for participants that will best prepare them for jobs described in item (aa) or participation in the public-private career pathway partnerships established in accordance with paragraph (3); and

(cc)

provide case management services and ensure that appropriate education, training, and other activities are available to participants, consistent with each participant’s individual plan.

(IV)

Job placement assistance and retention services

The program operator shall provide job placement assistance to help participants obtain unsubsidized employment and shall provide retention services to the participants for a minimum of 6 months after entry into the unsubsidized employment.

(V)

Education or training

In any workweek in which a participant is scheduled to work at least 30 hours in the program, not less than 20 percent of the scheduled hours and not more than 50 percent of the scheduled hours shall involve participation in—

(aa)

education or training activities designed to improve the participant’s employability and potential earnings;

(bb)

other activities designed to reduce or eliminate any barriers that may impede the participant’s ability to secure and advance in unsubsidized employment; or

(cc)

activities designed to promote financial literacy and the use of products and services that increase personal savings and build financial assets for family support, education, homeownership, and retirement.

(VI)

Duration

(aa)

In general

Subject to item (bb), the duration of any placement in the program shall be for a period of 6 consecutive months.

(bb)

3 month extension

A program placement may be extended on a one-time basis for an additional period of 3 consecutive months upon the conclusion of the original 6-month placement period if such extension would be consistent with the individual’s plan for transition to unsubsidized employment.

(VII)

Supervision

The worksite employer or program operator shall supervise program participants, consistent with the goal of addressing the limited work experience and skills of the participants.

(D)

Reports

Not later than 120 days after the end of the grant period, the program operator shall submit a report to the Secretary of Health and Human Services and the Secretary of Labor that contains information on the number of participants in the program who have entered unsubsidized employment, rates of retention in such employment for those participants, demographic information regarding the participants, and information regarding the wages and benefits received by the participants.

(E)

Technical assistance

The Secretary of Health and Human Services, in consultation with the Secretary of Labor, shall enter into contracts with entities with demonstrated experience in the provision of transitional jobs to provide technical assistance to the program operators and worksite employers for the programs assisted under this paragraph.

(3)

Public-private career pathways partnerships

(A)

In general

To allow workforce education providers representing career pathway partnerships—

(i)

to create or expand career pathways with specific employers for disadvantaged workers, which may include any mix of such employers’ existing lower wage employees, new hires or potential hires; or

(ii)

to fill in gaps in career pathways in particular localities or regions as needed to ensure that career pathways are accessible to unemployed disadvantaged workers and at risk youth who have lower skills or limited English proficiency, including through the creation of workforce education services, such as bridge programs that contextualize basic skills, English language, or college remedial education services to specific career pathways, and efforts to create opportunities for gaining work experience in a career pathway.

(B)

Use of funds

Funds made available under a grant under this section to carry out this purpose may be used by career pathways partnerships for any expense reasonably related to the accomplishment of the specific objectives of the partnership and the purpose described in this paragraph, including any of the activities described in paragraph (1)(B)(iv).

(C)

Limitations

(i)

In general

Of the funds made available to a career pathway partnership to carry out the purpose described in this paragraph—

(I)

not more than 30 percent of such funds may be used to pay or subsidize wages during a period of work experience or internship, not to exceed 90 days; and

(II)

not more than 10 percent of such funds may be used for administrative purposes.

(ii)

Prohibition on subsidizing wages of current employees

No funds made available to carry out this paragraph shall be used to subsidize the wages of any individual who, as of the date of the establishment of the career pathway partnership, is an employee of any employer participating in the partnership.

(D)

Requirements for awarding of subgrants

(i)

In general

Funds shall be made available to career pathway partnerships to carry out the purpose described in this paragraph based on a performance-based accountability system that includes the following measures of performance:

(I)

The number of individuals to be trained.

(II)

The percentage of such individuals who complete the program.

(III)

The percentage of such individuals who enter or advance in employment.

(IV)

The wage and benefit gains of individuals who complete the program before and within 6 months after their program completion, including the extent to which the individuals achieved economic self-sufficiency.

(V)

The percentage of individuals who complete the program and are placed in jobs who retain employment for at least 6 months.

(VI)

The percentage of individuals who owe child support and complete the program who improve in their payment of child support within 6 months after their program completion.

In establishing goals for such measures, due consideration shall be given to the education, work experience, and job readiness of the individuals expected to participate in the program; the barriers of such individuals to employment, and the local job market.
(ii)

Considerations for funding renewals

A subgrantee's level of success in achieving employment, advancement, wage, and employment retention goals shall be a primary consideration for determining whether to renew a grant made to such entity and the funding level for such grant.

(iii)

Priorities for awards of subgrants

In awarding subgrants to carry out this purpose, a State shall give priority to applications that—

(I)

propose to serve areas of high poverty, high youth unemployment, high drop out rates, or high rates of low-income single-parent families;

(II)

include a substantial cash or in-kind match by all employers, including joint labor-management programs where applicable, in the partnerships, such as paid release time for employed workforce education participants;

(III)

use instructional materials and instructors directly used in the specific business or industry sectors of the partnership employers;

(IV)

link successful completion of workforce education services to wage increases, promotions or job hires;

(V)

will result in attainment of employer-recognized occupational and educational credentials;

(VI)

address career guidance and adult basic education and English language needs as well as job-specific skills;

(VII)

demonstrate a blending of resources from partner agencies in the workforce system and other sectors and Federal programs, including superior procedures for coordinating responsible fatherhood promotion activities, where appropriate, to support the development of high quality pathways;

(VIII)

identify how the subgrantee will maximize services to unemployed disadvantaged workers who also face other barriers in the labor market, such as high school dropout, offender status, aging out of foster care, low basic skill level, including limited English proficiency, learning disabilities, physical, emotional or behavior disabilities, or substance abuse recovery, which may be through direct relationships with local providers of transitional jobs programs under which in appropriate circumstances transitional jobs participants may access career pathways programs upon completion of the transitional jobs program; and

(IX)

support collaboration, as appropriate, between employers and labor organizations and other workforce development professionals, including joint labor management training and education programs where appropriate.

(E)

Definitions

In this paragraph:

(i)

Adult education

The term adult education has the meaning given that term in section 203 of the Workforce Investment Act of 1998 (20 U.S.C. 9202).

(ii)

Career pathway

The term career pathway means a linked set of workforce education and job opportunities within a specific business or industry sector, or for an occupational sector that cuts across multiple business and industry sectors, which begins at the lowest skill and English language levels, and extends through for-credit college opportunities such as earning relevant associate or bachelor’s degrees, and prepares individuals for advancement in jobs in demand in the local or regional labor market.

(iii)

Community-based provider

The term community-based provider means a not-for-profit organization, with local boards of directors, that directly provides workforce education services.

(iv)

Institution of higher education

The term institution of higher education has the meaning given that term in section 101 of the Higher Education Act of 1965 (20 U.S.C. 1001).

(v)

Charter school

The term charter school has the meaning given that term in section 5210 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7221i).

(vi)

Area vocational education school

The term area vocational and technical education school has the meaning given that term in section 3 of the Carl D. Perkins Vocational and Technical Education Act of 1998 (20 U.S.C. 2302).

(vii)

Disadvantaged workers

The term disadvantaged workers means unemployed individuals in households whose income is at or below the lower living standard or employed individuals with wages at or below 2/3 of the median wage for the State or region applying for the grant or the partnership applying for a subgrant.

(viii)

Career pathway partnership

The term career pathway partnership means collaborations of 1 or more workforce education providers, 1 or more employers, 1 or more labor organizations, where applicable, as a result of such organization's representation of employees at the worksite who have skills in which the training or employment programs are proposed, and may include optional additional entities as needed to provide a comprehensive range of workforce education and ancillary support services.

(ix)

Workforce education

The term workforce education means a set of career guidance and exploration, adult education, job training, registered apprenticeship programs, and for-credit postsecondary education services aimed at preparing individuals to enter and sustain employment in specific occupations and to have the sufficient skills to respond to shifting employment opportunities.

(x)

Workforce education provider

The term workforce education provider means community-based providers, institutions of higher education, area vocational and technical education schools, charter schools, and other public nonprofit entities that provide workforce education.

(c)

Matching requirement

(1)

In general

The Secretary of Health and Human Services may not award a grant to a State under this section unless the State agrees that, with respect to the costs to be incurred by the State in conducting a demonstration project with funds provided under the grant, the State will make available non-Federal contributions in an amount equal to 10 percent of the amount of Federal funds paid to the State under such grant.

(2)

Non-federal contributions

In this subsection, the term non-Federal contributions includes contributions by the State and by public and private entities that may be in cash or in kind, but does not include any amounts provided by the Federal Government, or services assisted or subsidized to any significant extent by the Federal Government, or any amount expended by a State before October 1, 2006.

(d)

Worker protections and labor standards

(1)

Rate of pay; benefits and working conditions

(A)

In general

A worksite employer of a participant in a program or activity funded under this section shall pay the participant at the rate paid to employees of the worksite employer who are not participants in such program or activity and who perform comparable work at the worksite, including periodic increases where appropriate. If no other employees of the worksite employer perform comparable work at the worksite, the worksite employer shall pay the participant not less than the applicable Federal or State minium wage, whichever is higher.

(B)

Benefits and conditions

An individual employed through participation in a program or activity funded under this section shall be provided with benefits and working conditions at the same level and to the same extent as such benefits and conditions are provided to other employees of the employer of the individual who have worked a similar length of time and perform the same work

(2)

Nonduplication

(A)

In general

Funds provided through a grant made under this paragraph shall be used only for a program or activity that does not duplicate, and is in addition to, a program or activity otherwise available in the locality of the program or activity funded under this section.

(B)

Private, nonprofit entity

Funds provided through a grant made under this section shall not be provided to a private nonprofit entity to conduct programs or activities that are the same as or substantially equivalent to activities provided by a State or local government agency in the area in which such entity is located, unless the requirements of paragraph (3) are met.

(3)

Nondisplacement

(A)

In general

A worksite employer shall not displace an employee or position (including partial displacement such as reduction in hours, wages, or employment benefits) or impair contracts for services or collective bargaining agreements, as a result of the use by such employer of a participant in a program or activity funded under this section, and no participant in the program or activity shall be assigned to fill any established unfilled position vacancy.

(B)

Job opportunities

A job opportunity shall not be created under this paragraph that will infringe in any manner on the promotional opportunity of an employed individual.

(C)

Limitation on services

(i)

Supplantation of hiring

A participant in any program or activity funded under this section shall not perform any services or duties, or engage in activities, that will supplant the hiring of employees that are not participants in the program or activity.

(ii)

Duties formerly performed by another employee

A participant in any program or activity funded under this section shall not perform services or duties, or engage in activities, that are services, duties, or activities that had been performed by or were assigned to any employee who recently resigned or was discharged, who is subject to a reduction in force, who has recall rights pursuant to a collective bargaining agreement or applicable personnel procedures, who is on leave (such as terminal, temporary, vacation, emergency, or sick leave), who is on strike, or who is being locked out.

(D)

Concurrence of local labor organization

No placement shall be made under a program or activity funded under this section until the entity conducting the program or activity has obtained the written concurrence of any local labor organization representing employees who are engaged in the same or substantially similar work as that proposed to be carried out for the worksite employer with whom a participant is to be placed under the program or activity.

(4)

No impact on union organizing

A State conducting a demonstration project funded under this section and any entity conducting a program or activity funded under this section shall provide the Secretary with a certified assurance that none of such funds shall be used to assist or deter union organizing.

(5)

Accountability

(A)

In general

Funds provided under this section shall not be used to subsidize training or employment with an employer that has a demonstrable record of noncompliance with Federal labor, civil rights, workplace safety, or related laws.

(B)

Certified satisfactory record

Employers who receive training or wage subsidies under programs or activities funded under this section shall have a satisfactory record in labor relations and employment practices, as certified by the Secretary of Labor.

(C)

Application of worker protection laws

A participant in a program or activity funded under this section shall be considered to be an employee of any employer that the participant is placed with for all purposes under Federal and State law, including laws relating to health and safety, civil rights, and worker’s compensation.

(6)

Grievance procedure

An entity conducting a program or activity funded under this section shall establish and maintain a procedure for the filing and adjudication of grievances by employees of worksite employers who are not participants in the program, or such employees’ representatives, or by participants in such a program or activity alleging a violation of a provision of this subsection that is similar to the grievance procedure established by a State for purposes of section 407(f)(3) of the Social Security Act (42 U.S.C. 607(f)(3)).

(7)

Nonpreemption of state law

The provisions of this subsection shall not be construed to preempt any provision of State law that affords greater protections to employees or participants than are afforded by this subsection.

(8)

Treatment of amounts paid to participants

Amounts paid to a participant in a program or activity funded under this section shall be—

(A)

considered earned income for purpose of determining the participant's eligibility for the child tax credit established under section 24 of the Internal Revenue Code of 1986, the earned income tax credit established under section 32 of such Code, and any other tax benefit established under such Code the eligibility for which is based on earned income; and

(B)

disregarded for purposes of determining the participant's, the participant's family's, or the participant's household's eligibility for, or amount of, assistance or benefits provided under any means-tested program funded in whole or in part with Federal funds.

(e)

Application

(1)

Requirements for all applications

(A)

In general

A State desiring to receive a grant to conduct a demonstration project under this section to carry out one or more of the purposes described in subsection (b) shall submit an application to the Secretary of Health and Human Services at such time, in such manner, and containing such information or assurances as the Secretary may require.

(B)

Compliance with worker protections and labor standards

The application shall include an assurance that the State and any entity conducting a program or activity under the project shall comply with the worker protections and labor standards established in accordance with such protections under subsection (d),

(C)

Nondiscrimination

The application shall include an assurance that the State and any entity conducting a program or activity under the demonstration project shall comply with section 188(a)(2) of the Workforce Investment Act of 1998 (29 U.S.C. 2938(a)(2)) to the same extent that such section would apply to the entity if the program or activity conducted under the demonstration project was considered to be funded or otherwise financially assisted under that Act.

(D)

Assurance grant will supplement, not supplant, other State funding

The application shall include an assurance from the chief executive officer of the State that funds made available under the grant will supplement, and not supplant, other funds used by the State to establish or support employment placements for low-income parents.

(2)

Specific demonstration project requirements

(A)

Court-supervised or IV–D agency-supervised employment programs for noncustodial parents

In order to conduct a demonstration project described in paragraph (1) of subsection (b), a State shall include in the application submitted to the Secretary of Health and Human Services, the following:

(i)

Evidence of an agreement between the State and 1 or more counties to establish an employment program that meets the requirements of subsection (b)(2).

(ii)

The number of potential noncustodial parents to be served by the program.

(iii)

The purposes specific to that State’s program.

(iv)

The median income of the target population.

(B)

Public-private career pathways partnerships

In order to conduct a demonstration project described in paragraph (3) of subsection (b), a State shall include in the application submitted to the Secretary of Health and Human Services a description of—

(i)

the number, characteristics, and employment and earnings status of disadvantaged individuals in the State or applicable region where the program is to be conducted;

(ii)

which business and industry sectors, or occupational clusters that cut across sectors, will be targeted by the career pathways partnership, based on overall economic benefit to the community, the current and future demand for workers, the advancement opportunities for workers, the wages at each step of the career pathway, and availability of worker benefits;

(iii)

the interventions that will be put in place to address any educational deficits or learning disabilities of individuals who participate in the program and to ensure that such individuals have the academic, technical, communications, and other job skills to function in the jobs targeted by the partnership;

(iv)

how the members of the partnership will collaborate on the development of curriculum and delivery of training that will provide the necessary occupational, academic and other work-related skills and credentialing needed for the specific labor market areas;

(v)

the supports that will be used to provide counseling, mentoring or other support to individuals while in training or to assist them in navigating in complicated work environments;

(vi)

the set of career exposure activities that will be put in place to provide hands-on experience such as work experience, on the job training, internships, or work-study;

(vii)

the agreements that are in place with employers, industry groups, and labor organizations, where applicable, to ensure access to jobs and advancement opportunities in the targeted businesses, industry or occupations;

(viii)

how the workforce education providers in the partnership will assess the employment barriers and needs of local disadvantaged individuals who participate in the program and will identify resources for meeting those needs;

(ix)

how the workforce education providers will work with partnership employers, business and industry groups, labor organizations, where applicable, and local economic development organizations to identify the priority workforce needs of the local industry;

(x)

how the partnerships will ensure that the appropriate program delivery models and formal agreements are in place to ensure maximum benefits to the individuals receiving career pathway partnership services and to the employers and labor organizations, where applicable, in the partnership and the industries or businesses they represent; and

(xi)

how partnership employers and labor organizations, where applicable, will be actively involved in identifying specific workforce education needs, planning the curriculum, assisting in training activities, providing job opportunities, and coordinating job retention for individuals hired after training through the program and follow-up support.

(3)

Applications by indian tribes or tribal organizations

The Secretary of Health and Human Services may exempt an Indian tribe or tribal organization from any requirement of this section that the Secretary determines would be inappropriate to apply to the Indian tribe or tribal organization, taking into account the resources, needs, and other circumstances of the Indian tribe or tribal organization.

(f)

Priorities and requirements for awarding grants

(1)

In general

Subject to paragraphs (2) and (3), the Secretary of Health and Human Services, in consultation with the Secretary of Labor, shall give priority to making grants to carry out the purposes described in subsection (b) to entities that—

(A)

demonstrate a plan for implementing measures to track their performance with respect to meeting the goals of quality job placement, long-term unsubsidized job retention, increasing child support payments, decreasing unpaid child support arrearages, and increasing the involvement of low-income noncustodial parents with their children; and

(B)

coordinate with, and link individuals to, other public and private benefits and employment services for low-income, noncustodial parents among the different systems or programs in which such parents are involved, including the criminal justice system, the State programs funded under each part of title IV of the Social Security Act (42 U.S.C. 601 et seq.) (including programs and activities funded under section 403(a)(2) of the Social Security Act (42 U.S.C. 603(a)(2)), educational assistance programs, and job training or employment programs, including State employment agencies.

(2)

Reflective of target populations

In making grants to carry out these purposes, the Secretary of Health and Human Services, in consultation with the Secretary of Labor, shall give priority to States with proposed demonstration projects that are designed to target low-income parents, including custodial and noncustodial parents, and low-income married couples.

(3)

Substantial funding for each of the purposes

In making grants under this section, the Secretary of Health and Human Services, in consultation with the Secretary of Labor, shall ensure that a substantial share of the amount appropriated under subsection (i) for a fiscal year is used for carrying out each of the purposes described in subsection (b).

(g)

Evaluation

The Secretary of Health and Human Services, in consultation with the Secretary of Labor, shall provide for an independent and rigorous evaluation of the demonstration projects conducted under this section that includes, to the maximum extent feasible, random assignment or other appropriate statistical techniques, in order to assess the effectiveness of the projects.

(h)

General Definitions

In this section:

(1)

State

The term State means each of the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, American Samoa, and includes an Indian tribe or tribal organization.

(2)

IV-D agency

The term IV–D agency means the State or local agency responsible for administering the State program established under part D of title IV of the Social Security Act (42 U.S.C. 651 et seq.).

(3)

Indian tribe; tribal organization

The terms Indian tribe and tribal organization have the meaning given such terms in section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b).

(i)

Appropriation

Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated to carry out this section, $50,000,000 for each of fiscal years 2007 through 2009.

107.

State assessments of barriers to employment and financial support of children

(a)

State assessments and reports

As a condition of the continued approval of a State plan under part D of title IV of the Social Security Act (42 U.S.C. 651 et. seq.), each State with an approved such plan, acting through the appropriate State agencies, shall assess the State policies with respect to the issues described in subsection (b) and submit a report to the Secretary of Health and Human Services on the results of such assessment not later than March 15, 2008.

(b)

Issues described

For purposes of subsection (a), the issues described in this subsection are the following:

(1)

The process of setting and modifying child support obligations, particularly with respect to low-income parents, including—

(A)

the role and criteria for using imputed income in determining child support obligations;

(B)

the process of modifying obligations;

(C)

the consideration of income and employment status, including efforts to identify unreported income;

(D)

the consideration of incarceration;

(E)

the consideration of disability;

(F)

the treatment of arrearages, including interest charged, and laws or procedures that interfere with forgiveness, adjustment, waiver, or compromise of arrears owed to the State by low-income noncustodial parents who lack sufficient ability to pay such arrearages;

(G)

the procedures related to retroactive support; and

(H)

State pass-through and disregard policies for recipients of means tested public benefits.

(2)

The impact of state criminal laws and law enforcement practices on the employment acquisition, retention, and advancement prospects of individuals following arrest, conviction, or incarceration, including—

(A)

any efforts, including counseling or employment support, to assist ex-prisoners with reentry to a community and successful reunification with their families; and

(B)

an assessment of any efforts to seal or expunge arrest and conviction records and any efforts to grant certificates or other acknowledgments of rehabilitation to ex-prisoners, and to examine State occupational licensing and certification procedures.

(3)

Identification of any other barriers to healthy family formation or sustainable economic opportunity for custodial and noncustodial parents that are created or exacerbated by Federal or State laws, policies, or procedures, including an examination of the rules of Federal and State means-tested programs, the operation of the State workforce system, the availability of financial education services, and the availability of domestic violence services and child support procedures to help victims of domestic violence stay safe and obtain the child support they are owed.

(c)

Grants to states for commissions on state law improvements in the best interest of children and families

The Secretary of Health and Human Services shall award grants to States to establish or support commissions to review the State assessment conducted in accordance with subsection (a) and to make recommendations on ways to improve State law in the best interest of children and families.

(d)

Appropriations

Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated to the Secretary of Health and Human Services for the period of fiscal years 2007 through 2008, $3,000,000, to remain available until expended, for the purpose of making—

(1)

payments to States to offset all or a portion of the costs of conducting the State assessments and reports required under subsection (a); and

(2)

grants to States under subsection (c).

108.

Collection of child support under the food stamp program

(a)

Encouragement of collection of child support

Section 5 of the Food Stamp Act of 1977 (7 U.S.C. 2014) is amended—

(1)

in subsection (e)—

(A)

by redesignating paragraphs (5) and (6) as paragraphs (6) and (7), respectively;

(B)

in paragraph (4)(B), by striking paragraph (6) and inserting paragraph (7); and

(C)

by inserting after paragraph (4) the following:

(5)

Deduction for child support received

(A)

In general

A household shall be allowed a deduction of 20 percent of all legally obligated child support payments received from an identified or putative parent of a child in the household if that parent is not a household member.

(B)

Order of determining deductions

A deduction under this paragraph shall be determined before the computation of the excess shelter deduction under paragraph (7).

; and

(2)

in subsection (k)(4)(B), by striking subsection (e)(6) and inserting subsection (e)(7);

(b)

Simplified verification of child support payments

Section 5(n) of the Food Stamp Act of 1977 (7 U.S.C. 2014(n)) is amended—

(1)

in the subsection heading, by striking State options to simplify, and inserting Simplified; and

(2)

by striking Regardless of whether and inserting the following:

(1)

In general

A household that is paying legally obligated child support through the program under part D of title IV of the Social Security Act (42 U.S.C. 651 et seq.) shall receive—

(A)

a deduction under subsection (e)(4); or

(B)

an exclusion for paid child support under subsection (d)(3).

(2)

State options

Regardless of whether

.

(c)

Inclusion of economic opportunities programs in definition of work program

Section 6(o)(2) of the Food Stamp Act of 1977 (7 U.S.C. 2015(o)(2)) is amended—

(1)

in subparagraph (C), by striking or at the end;

(2)

in subparagraph (D), by striking the period at the end and inserting ; or; and

(3)

by adding at the end the following:

(E)

participate in and comply with the requirements of a demonstration project under section 106 of the Responsible Fatherhood and Healthy Families Act of 2006;

.

(d)

Effective date

(1)

In general

This section and the amendments made by this section take effect on October 1, 2007.

(2)

State option

A State may implement the amendments made by subsections (a) and (b) for participating households at the first recertification of the households that occurs on or after October 1, 2007.

II

Revenue Provisions

201.

Modifications to the earned income tax credit

(a)

Increase in phaseout amount for workers with no qualifying children

(1)

In general

The table under section 32(b)(2)(A) of the Internal Revenue Code of 1986 is amended by striking $5,280 and inserting $10,712.

(2)

Inflation adjustment

(A)

In general

Subsection (j) of section 32 of such Code is amended by redesignating paragraph (2) as paragraph (3) and by inserting after paragraph (1) the following new paragraph:

(2)

Phaseout amount for individuals with no qualifying children

In the case of any taxable year beginning after calendar year 2007, the $10,712 dollar amount in section (b)(2)(A) shall be increased by an amount equal to—

(A)

such dollar amount, multiplied by

(B)

the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2006 for calendar year 1992 in subparagraph (B) thereof.

.

(B)

Conforming amendment

Clause (i) of section 32(j)(1)(B) of such Code is amended by inserting (other than the amount described in paragraph (2)) after subsections (b)(2)(A).

(3)

Effective date

The amendments made by this subsection shall apply to taxable years ending after December 31, 2005.

(b)

Enhanced credit for certain workers with no qualifying children

(1)

In general

Section 32 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

(n)

Additional credit for certain workers

(1)

In general

In the case of a qualified individual, the credit allowed under subsection (a) shall be increased by an amount equal to 100 percent of the amount of the credit allowed under this section (without regard to this subsection).

(2)

Qualified individual

For purposes of this subsection, the term qualified individual means an eligible individual who—

(A)

is described in clause (ii) of subsection (c)(1)(A),

(B)

is the parent of a child who meets the age requirements of section 152(c)(3) before the end of the taxable year of the eligible individual,

(C)

is required to make child support payments with respect to such child—

(i)

pursuant to an order which is in effect for not less than one-half of the taxable year of such individual, and

(ii)

through a State agency responsible for administering the State plan under part D of title IV of the Social Security Act, and

(D)

has paid child support during the taxable year in an amount not less than the amount of child support due during the taxable year for every order requiring the individual to make child support payments.

(3)

Regulations

The Secretary shall establish regulations to carry out the purposes of this subsection, including regulations which provide for the verification of the payment of child support in accordance with paragraph (2)(D).

.

(2)

Verification of payment

(A)

In general

The Secretary of Health and Human Services, in consultation with the Secretary of the Treasury, shall include in the Federal Case Registry of Child Support Orders established under section 453(h) of the Social Security Act (42 U.S.C. 653(h)) such information as the Secretary of the Treasury determines necessary to allow for verification of the status of individuals as qualified individuals (as defined under section 32(n) of the Internal Revenue Code of 1986, as added by paragraph (1)).

(B)

Additional federal procedures

In addition to the authority provided under subparagraph (A), the Secretary of Health and Human Services and the Secretary of the Treasury may establish such additional procedures as are appropriate to ensure that the Secretary of the Treasury has the information that the Secretary of the Treasury needs to verify payment of child support obligations in a timely fashion.

(C)

State procedures

The Secretary of Health and Human States, in consultation with the States, shall establish procedures for informing a noncustodial parent in a timely fashion when the parent has paid the amount of child support owed by the parent for a taxable year so that the parent may determine the extent to which the parent is a qualified individual for purposes of qualifying for the additional credit established under section 32(n) of the Internal Revenue Code of 1986, as added by paragraph (1).

(3)

Effective date

The amendment made by paragraph (1) shall apply to taxable years beginning after December 31, 2007.

(c)

Marriage penalty relief

(1)

In general

Subparagraph (B) of section 32(b)(2) of the Internal Revenue Code of 1986 is amended—

(A)

in clause (ii), by striking , 2006, and 2007, and and inserting and 2006,

(B)

in clause (iii) by striking after 2007. and inserting in 2007, and, and

(C)

by adding at the end the following new clause:

(iv)

$4,000 in the case of taxable years beginning after 2007.

.

(2)

Inflation adjustment

Clause (ii) of section 32(j)(1)(B) of such Code is amended—

(A)

by striking $3,000 and inserting $4,000, and

(B)

by striking subsection (b)(2)(B)(iii) and inserting subsection (b)(2)(B)(iv).

(3)

Effective date

The amendments made by this subsection shall apply to taxable years beginning after December 31, 2005.

202.

Tax treatment of inverted entities

(a)

In general

Section 7874 of the Internal Revenue Code of 1986 is amended—

(1)

by striking March 4, 2003 in subsection (a)(2)(B)(i) and in the matter following subsection (a)(2)(B)(iii) and inserting March 20, 2002,

(2)

by striking at least 60 percent in subsection (a)(2)(B)(ii) and inserting more than 50 percent,

(3)

by striking 80 percent in subsection (b) and inserting at least 80 percent,

(4)

by striking 60 percent in subsection (b) and inserting more than 50 percent,

(5)

by adding at the end of subsection (a)(2) the following new sentence: Except as provided in regulations, an acquisition of properties of a domestic corporation shall not be treated as described in subparagraph (B) if none of the corporation’s stock was readily tradeable on an established securities market at any time during the 4-year period ending on the date of the acquisition., and

(6)

by redesignating subsection (g) as subsection (h) and by inserting after subsection (f) the following new subsection:

(g)

Special rules applicable to expatriated entities

(1)

Increases in accuracy-related penalties

In the case of any underpayment of tax of an expatriated entity—

(A)

section 6662(a) shall be applied with respect to such underpayment by substituting 30 percent for 20 percent, and

(B)

if such underpayment is attributable to one or more gross valuation understatements, the increase in the rate of penalty under section 6662(h) shall be to 50 percent rather than 40 percent.

(2)

Modifications of limitation on interest deduction

In the case of an expatriated entity, section 163(j) shall be applied—

(A)

without regard to paragraph (2)(A)(ii) thereof, and

(B)

by substituting 25 percent for 50 percent each place it appears in paragraph (2)(B) thereof.

.

(b)

Effective date

The amendments made by this section shall apply to taxable years ending after March 20, 2002.

203.

Tax treatment of controlled foreign corporations established in tax havens

(a)

In general

Subchapter C of chapter 80 of the Internal Revenue Code of 1986 (relating to provisions affecting more than one subtitle) is amended by adding at the end the following new section:

7875.

Controlled foreign corporations in tax havens treated as domestic corporations

(a)

General rule

If a controlled foreign corporation is a tax-haven CFC, then, notwithstanding section 7701(a)(4), such corporation shall be treated for purposes of this title as a domestic corporation.

(b)

Tax-Haven CFC

For purposes of this section—

(1)

In general

The term tax-haven CFC means, with respect to any taxable year, a foreign corporation which—

(A)

was created or organized under the laws of a tax-haven country, and

(B)

is a controlled foreign corporation (determined without regard to this section) for an uninterrupted period of 30 days or more during the taxable year.

(2)

Exception

The term tax-haven CFC does not include a foreign corporation for any taxable year if substantially all of its income for the taxable year is derived from the active conduct of trades or businesses within the country under the laws of which the corporation was created or organized.

(c)

Tax-Haven country

For purposes of this section—

(1)

In general

The term tax-haven country means any of the following:

AndorraGuernseyPanama
AnguillaIsle of ManSamoa
Antigua and BarbudaJerseySan Marino
ArubaLiberiaFederation of
Commonwealth of thePrincipality of  Saint Christ-
 Bahamas Liechtenstein opher 
BahrainRepublic of the  and Nevis
Barbados MaldivesSaint Lucia
BelizeMaltaSaint Vincent
BermudaRepublic of the  and the
British Virgin Islands Marshall Islands Grenadines
Cayman IslandsMauritiusRepublic of the
Cook IslandsPrincipality of Monaco Seychelles
CyprusMontserratTonga
Commonwealth of theRepublic of NauruTurks and Caicos
 DominicaNetherlands Republic of
GibraltarAntilles Vanuatu
GrenadaNiue
(2)

Secretarial authority

The Secretary may remove or add a foreign jurisdiction from the list of tax-haven countries under paragraph (1) if the Secretary determines such removal or addition is consistent with the purposes of this section.

.

(b)

Conforming amendment

The table of sections for subchapter C of chapter 80 of such Code is amended by adding at the end the following new item:

Sec. 7875. Controlled foreign corporations in tax havens treated as domestic corporations.

.

(c)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2007.

204.

Taxation of income of controlled foreign corporations attributable to imported property

(a)

General rule

Subsection (a) of section 954 of the Internal Revenue Code of 1986 (defining foreign base company income) is amended by striking and at the end of paragraph (4), by striking the period at the end of paragraph (5) and inserting , and, and by adding at the end the following new paragraph:

(6)

imported property income for the taxable year (determined under subsection (j) and reduced as provided in subsection (b)(5)).

.

(b)

Definition of imported property income

Section 954 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

(j)

Imported property income

(1)

In general

For purposes of subsection (a)(6), the term imported property income means income (whether in the form of profits, commissions, fees, or otherwise) derived in connection with—

(A)

manufacturing, producing, growing, or extracting imported property;

(B)

the sale, exchange, or other disposition of imported property; or

(C)

the lease, rental, or licensing of imported property.

Such term shall not include any foreign oil and gas extraction income (within the meaning of section 907(c)) or any foreign oil related income (within the meaning of section 907(c)).
(2)

Imported property

For purposes of this subsection—

(A)

In general

Except as otherwise provided in this paragraph, the term imported property means property which is imported into the United States by the controlled foreign corporation or a related person.

(B)

Imported property includes certain property imported by unrelated persons

The term imported property includes any property imported into the United States by an unrelated person if, when such property was sold to the unrelated person by the controlled foreign corporation (or a related person), it was reasonable to expect that—

(i)

such property would be imported into the United States; or

(ii)

such property would be used as a component in other property which would be imported into the United States.

(C)

Exception for property subsequently exported

The term imported property does not include any property which is imported into the United States and which—

(i)

before substantial use in the United States, is sold, leased, or rented by the controlled foreign corporation or a related person for direct use, consumption, or disposition outside the United States; or

(ii)

is used by the controlled foreign corporation or a related person as a component in other property which is so sold, leased, or rented.

(3)

Definitions and special rules

(A)

Import

For purposes of this subsection, the term import means entering, or withdrawal from warehouse, for consumption or use. Such term includes any grant of the right to use intangible property (as defined in section 936(h)(3)(B)) in the United States.

(B)

United States

For purposes of this subsection, the term United States includes the Commonwealth of Puerto Rico, the Virgin Islands of the United States, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands.

(C)

Unrelated person

For purposes of this subsection, the term unrelated person means any person who is not a related person with respect to the controlled foreign corporation.

(D)

Coordination with foreign base company sales income

For purposes of this section, the term foreign base company sales income shall not include any imported property income.

.

(c)

Separate application of limitations on foreign tax credit for imported property income

(1)

Before 2007

(A)

In general

Paragraph (1) of section 904(d) of the Internal Revenue Code of 1986 (relating to separate application of section with respect to certain categories of income), as in effect for taxable years beginning before January 1, 2007, is amended by striking and at the end of subparagraph (H), by redesignating subparagraph (I) as subparagraph (J), and by inserting after subparagraph (H) the following new subparagraph:

(I)

imported property income, and

.

(B)

Imported property income defined

Paragraph (2) of section 904(d) of such Code, as so in effect, is amended by redesignating subparagraphs (H) and (I) as subparagraphs (I) and (J), respectively, and by inserting after subparagraph (G) the following new subparagraph:

(H)

Imported property income

The term imported property income means any income received or accrued by any person which is of a kind which would be imported property income (as defined in section 954(j)).

.

(C)

Look-thru rules to apply

Subparagraph (F) of section 904(d)(3) of such Code, as so in effect, is amended by striking or (D) and inserting (D), or (I).

(2)

After 2006

(A)

In general

Paragraph (1) of section 904(d) of the Internal Revenue Code of 1986 (relating to separate application of section with respect to certain categories of income), as in effect for taxable years beginning after December 31, 2006, is amended by striking and at the end of subparagraph (A), by redesignating subparagraph (B) as subparagraph (C), and by inserting after subparagraph (A) the following new subparagraph:

(B)

imported property income, and

.

(B)

Imported property income defined

Paragraph (2) of section 904(d) of such Code, as so in effect, is amended by redesignating subparagraphs (J) and (K) as subparagraphs (K) and (L), respectively, and by inserting after subparagraph (I) the following new subparagraph:

(J)

Imported property income

The term imported property income means any income received or accrued by any person which is of a kind which would be imported property income (as defined in section 954(j)).

.

(C)

Conforming amendment

Clause (ii) of section 904(d)(2)(A) of such Code, as so in effect, is amended by inserting or imported property income after passive category income.

(d)

Technical amendments

(1)

Clause (iii) of section 952(c)(1)(B) of such Code (relating to certain prior year deficits may be taken into account) is amended—

(A)

by redesignating subclauses (II), (III), (IV), and (V) as subclauses (III), (IV), (V), and (VI), and

(B)

by inserting after subclause (I) the following new subclause:

(II)

imported property income,

.

(2)

Paragraph (5) of section 954(b) of such Code (relating to deductions to be taken into account) is amended by striking and the foreign base company oil related income and inserting the foreign base company oil related income, and the imported property income.

(e)

Effective dates

(1)

In general

Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years of foreign corporations beginning after the date of the enactment of this Act, and to taxable years of United States shareholders within which or with which such taxable years of such foreign corporations end.

(2)

Subsection (c)

The amendments made by subsection (c)(1) shall apply to taxable years beginning after the date of the enactment of this Act and before January 1, 2007, and the amendments made by subsection (c)(2) shall apply to taxable years beginning after December 31, 2006.