IN THE SENATE OF THE UNITED STATES
April 28, 2021
Mr. Hawley introduced the following bill; which was read twice and referred to the Committee on Finance
To amend the Internal Revenue Code of 1986 to establish a refundable tax credit for parents.
This Act may be cited as the
Parent Tax Credit Act.
Establishment of Parent Tax Credit
Subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 36B the following new section:
Parent Tax Credit
In the case of an eligible individual, there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to $6,000 ($12,000 in the case of a joint return).
Limitation based on earned income
No credit shall be allowed under this section to any taxpayer for any taxable year in which the earned income (as defined in section 32(c)(2)) of such taxpayer during such taxable year is not equal to or greater than the minimum income level.
Minimum income level
For purposes of this subsection, the minimum income level shall be an amount equal to the product of—
the minimum wage rate in effect under section 6(a)(1) of the Fair Labor Standards Act of 1938 (29 U.S.C. 206(a)(1)), multiplied by
The term eligible individual means any individual—
who, for the taxable year, has a qualifying child (as defined in section 152(c)) who has not attained age 13 as of the close of such taxable year, and
any nonresident alien individual,
any alien (as defined in section 101(a) of the Immigration and Nationality Act (8 U.S.C. 1101(a)) who is unlawfully present in the United States (within the meaning of that Act), and
any individual with respect to whom a deduction under section 151 is allowable to another taxpayer for a taxable year beginning in the calendar year in which the individual’s taxable year begins.
Identification number requirement
No credit shall be allowed under subsection (a) to an eligible individual who does not include on the return of tax for the taxable year—
such individual's valid identification number,
in the case of a joint return, the valid identification number of such individual's spouse, and
in the case of a qualifying child described in subsection (c)(1), the valid identification number of such qualifying child.
Valid identification number
For purposes of paragraph (1), the term valid identification number means a social security number (as such term is defined in section 24(h)(7)).
Adoption taxpayer identification number
For purposes of paragraph (1)(C), in the case of a qualifying child who is adopted or placed for adoption, the term valid identification number shall include the adoption taxpayer identification number of such child.
Special rule for members of the Armed Forces
Paragraph (1)(B) shall not apply in the case where at least 1 spouse was a member of the Armed Forces of the United States at any time during the taxable year and at least 1 spouse satisfies paragraph (1)(A).
Mathematical or clerical error authority
Any omission of a correct valid identification number required under this subsection shall be treated as a mathematical or clerical error for purposes of applying section 6213(g)(2) to such omission.
Taxable year must be full taxable year
Except in the case of a taxable year closed by reason of the death of the taxpayer, no credit shall be allowable under this section in the case of a taxable year covering a period of less than 12 months.
Restrictions on taxpayer who improperly claimed credit in prior year
Rules similar to the rules under section 24(g) shall apply for purposes of this section.
Adjustment for inflation
In the case of any taxable year beginning after 2022, each dollar amount in subsection (a) shall be increased by an amount equal to—
such dollar amount, multiplied by
the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting
2016 in subparagraph (A)(ii) thereof.
If any increase under paragraph (1) is not a multiple of $100, such increase shall be rounded to the next lowest multiple of $100.
Advance payment of credit
Chapter 77 of the Internal Revenue Code of 1986, as amended by section 9611(b) of the American Rescue Plan Act of 2021 (Public Law 117–2), is amended by inserting after section 7527A the following new section:
Advance payment of Parent Tax Credit
As soon as practicable after the date of the enactment of this section, the Secretary shall establish a program for making advance payments of the credit allowed under section 36C (determined without regard to subsection (h) of such section), on a monthly basis, to taxpayers (with the exception of any taxpayer who elects not to receive such payments pursuant to subsection (c)(1)).
With respect to any taxable year, the Secretary may make payments under subsection (a) only to the extent that—
the total amount of such payments made to any taxpayer during such taxable year does not exceed the amount estimated by the Secretary as would be allowable under section 36C for such taxable year, as estimated based on—
any information provided by the taxpayer under subsection (c)(2), or
if no information described in subparagraph (A) has been provided, any information with respect to such taxpayer for the most recent taxable year for which a return has been filed by the taxpayer, and
for each monthly payment, such payment does not exceed an amount equal to the quotient of—
the amount of the credit estimated under paragraph (1) for such taxable year, divided by
On-Line information portal
The Secretary shall establish an on-line portal which allows taxpayers to—
elect not to receive payments under this section, and
provide information to the Secretary which would be relevant to the determination under subsection (b)(1), including information regarding—
for purposes of section 36C(c)(1), whether the taxpayer has any qualifying children, including by reason of the birth of a child,
a change in the taxpayer's marital status,
a significant change in the taxpayer's earned income, and
any other factor which the Secretary may provide.
Notice of payments
Not later than January 31 of the calendar year following any calendar year during which the Secretary makes one or more payments to any taxpayer under this section, the Secretary shall provide such taxpayer with a written notice which includes the taxpayer's taxpayer identity (as defined in section 6103(b)(6)), the aggregate amount of such payments made to such taxpayer during such calendar year, and such other information as the Secretary determines appropriate.
Application of electronic funds payment requirement
The payments made by the Secretary under subsection (a) shall be made by electronic funds transfer to the same extent and in the same manner as if such payments were Federal payments not made under this title.
Application of certain rules
Rules similar to the rules of subparagraphs (B) and (C) of section 6428A(f)(3) shall apply for purposes of this section.
Reconciliation of credit and advance credit
Section 36C of such Code, as added by subsection (a), is amended by adding at the end the following:
Reconciliation of credit and advance credit
The amount of the credit allowed under this section for any taxable year shall be reduced (but not below zero) by the aggregate amount of any advance payments of such credit under section 7527B for such taxable year.
Failure to satisfy earned income requirement
In the case of any taxpayer who received any advance payment under section 7527B for the taxable year and whose earned income for such taxable year was not equal to or greater than the minimum income level (as determined under subsection (b)(2)), for the period of 2 taxable years subsequent to such taxable year—
no advance payment may be provided under section 7527B to such taxpayer in either taxable year during such period, and
the amount of the credit which would (but for this paragraph) otherwise be allowable to such taxpayer under subsection (a) in either taxable year during such period shall be reduced by one-half of such amount.
Exception from reduction or offset
Any credit allowed to any individual under section 36C of the Internal Revenue Code of 1986 (as added by subsection (a)) or any advance payment of such credit under section 7527B of such Code (as added under subsection (b)) shall not be—
subject to reduction or offset pursuant to section 3716 or 3720A of title 31, United States Code,
subject to reduction or offset pursuant to subsection (d), (e), or (f) of section 6402 of the Internal Revenue Code of 1986, or
reduced or offset by other assessed Federal taxes that would otherwise be subject to levy or collection.
Section 6211(b)(4)(A) of the Internal Revenue Code of 1986 is amended—
by inserting “36C,” after
and 7527A and inserting
7527A, and 7527B.
Section 6213(g)(2)(L) of such Code is amended by inserting
Paragraph (2) of section 1324(b) of title 31, United States Code, is amended—
or 7527A and inserting
7527A, or 7527B.
The table of sections for subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 36B the following new item:
Sec. 36C. Parent Tax Credit.
The table of sections for chapter 77 of such Code is amended by inserting after the item relating to section 7527A the following new item:
Sec. 7527B. Advance payment of Parent Tax Credit.
Termination of Child and Dependent Care Credit
Section 21 of the Internal Revenue Code of 1986 is amended by adding at the end the following:
This section shall not apply to any taxable year beginning after December 31, 2021.
The amendments made by this section shall apply to taxable years beginning after December 31, 2021.