S.Amdt. 637

1. 1

   Change 1: Inserts new text on page 281, between lines 2 and 3

   InsertsPrinted page

   Inserted: SEC. . CHILD SUPPORT ENFORCEMENT.

   Inserted: (a) No Effect on Rights and Liabilities.--Nothing in this Act shall be construed to affect--

   Inserted: (1) the right of an individual or State to receive any child support payment; or

   Inserted: (2) the obligation of an individual to pay child support.

   Inserted: (b) Allowance of Bad Debt Deduction for Unpaid Child Support Payments.--

   Inserted: (1) In general.--Section 166 (relating to deduction for bad debts) is amended by redesignating subsection (f) as subsection (g) and by inserting after subsection (e) the following new subsection:

   Inserted: "(f) Unpaid Child Support.--

   Inserted: "(1) In general.--In the case of a custodial parent who, as of the close of the taxable year, is owed child support, the amount of unpaid child support shall be deemed a canceled debt as of such date, and shall be allowed as a deduction for such taxable year.

   Inserted: "(2) Presumption of worthlessness.--Subsection (a) (relating to worthless debts) shall not apply to child support.

   Inserted: "(3) Subsequent payments.--If any unpaid child support with respect to which a deduction was allowed under paragraph (1) is subsequently paid to the custodial parent, the amount of such payment shall not be included in the gross income of the custodial parent, nor shall it be allowed as a deduction to the delinquent debtor. The delinquent debtor shall be neither required nor allowed to file an amended return in any subsequent year to reflect the subsequent payment of unpaid child support.

   Inserted: "(4) Full deduction from ordinary income.--Subsection (d) (relating to the treatment of nonbusiness bad debt as a loss from the sale or exchange of a capital asset) shall not apply to the deductibility of unpaid child support.

   Inserted: "(5) Tax returns.--A custodial parent who wishes to deduct the amount of unpaid child support shall include on the return claiming the deduction the name and taxpayer identification number of each child with respect to whom child support payments to which this subsection applies are required to be paid.

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   Inserted: "(6) Information returns.--

   Inserted: "(A) In general.--A custodial parent who wishes to deduct the amount of unpaid child support shall complete Form 1099-CS (or such other form as the Secretary may prescribe) and provide such form to the Secretary, and (if the address is known) to the delinquent debtor, within 45 days following the close of the taxable year for which the deduction is claimed. Failure to so file such form with the Secretary (or, if the address is known, with the delinquent debtor) shall result in disallowance of the deduction for the taxable year.

   Inserted: "(B) Contents of form.--The Form 1099-CS (or such other form as the Secretary may prescribe) shall contain--

   Inserted: "(i) the total amount of child support owed (whether or not paid) for such taxable year,

   Inserted: "(ii) the total amount of unpaid child support as of the last day of such taxable year,

   Inserted: "(iii) the name, address (if known), and taxpayer identification number of the delinquent debtor, and

   Inserted: "(iv) notice that the delinquent debtor is required to include such total amount of unpaid child support in gross income for the delinquent debtor's taxable year which includes the last day of the custodial parent's taxable year.

   Inserted: "(C) Debtor's address unknown.--If the delinquent debtor's address is not known to the custodial parent, the Form 1099-CS (or

   Inserted: such other form as the Secretary may prescribe) shall indicate that fact. In such a case, the Secretary may send such notice if the address is available to the Secretary, and the notice from the custodial parent to the delinquent debtor under subparagraph (A) shall not be required.

   Inserted: "(7) Determination of whether child support is paid.--

   Inserted: "(A) Child support enforcement office records as conclusive evidence of payment.--Child support shall be treated as paid if such payment is recorded by the State office of child support enforcement in which the custodial parent is registered.

   Inserted: "(B) Timely mailing as timely payment.--A payment received by the State office of child support enforcement in which the custodial parent is registered after the last day of the custodial parent's taxable year shall be treated for the purpose of this subsection as paid on such day if the postmark date falls on or before such day. The rules of section 7502(f) and regulations issued thereunder shall apply for purposes of this subparagraph.

   Inserted: "(8) Definitions.--For the purposes of this subsection--

   Inserted: "(A) Child support.--The term 'child support' means--

   Inserted: "(i) any periodic payment of a fixed amount, or

   Inserted: "(ii) any payment of a medical expense, education expense, insurance premium, or other similar item, which is required to be paid to a custodial parent by an individual under a support instrument for the support of any qualifying child of such individual. 'Child support' does not include any amount which is described in section 408(a)(3) of the Social Security Act and which has been assigned to a State.

   Inserted: "(B) Custodial parent.--The term 'custodial parent' means an individual who is entitled to receive child support and who has registered with the appropriate State office of child support enforcement charged with implementing section 454 of the Social Security Act.

   Inserted: "(C) Delinquent debtor.--The term 'delinquent debtor' means a taxpayer who owes unpaid child support to a custodial parent.

   Inserted: "(D) Qualifying child.--The term 'qualifying child' means a child of a custodial parent with respect to whom a dependent deduction is allowable under section 151 for the taxable year (or would be so allowable but for paragraph (2) or (4) of section 152(e)).

   Inserted: "(E) Support instrument.--The term 'support instrument' means--

   Inserted: "(i) a decree of divorce or separate maintenance or a written instrument incident to such a decree,

   Inserted: "(ii) a written separation agreement, or

   Inserted: "(iii) a decree (not described in clause (i)) of a court or administrative agency requiring a parent to make payments for the support or maintenance of 1 or more children of such parent.

   Inserted: "(F) Unpaid child support.--The term 'unpaid child support' means child support that is payable for months during a custodial parent's taxable year and unpaid as of the last day of such taxable year, provided that such unpaid amount as of such day equals or exceeds one-half of the total amount of child support due to the custodial parent for such year.".

   Inserted: (2) Deduction for nonitemizers.--Section 62(a) of such Code is amended by inserting after paragraph (18) the following new paragraph:

   Inserted: "(19) Unpaid child support payments.--The deduction allowed by section 166(f).".

   Inserted: (3) Conforming amendment.--Section 166(d)(2) of such Code is amended by striking "or" at the end of subparagraph (A), by striking the period at the end of the subparagraph (B) and by inserting ", or" and by adding at the end the following new subparagraph:

   Inserted: "(C) a debt which constitutes unpaid child support payment under subsection (f).".

   Inserted: (c) Inclusion in Income of Amount of Unpaid Child Support.--Section 108 (relating to discharge of indebtedness income) is amended by adding at the end the following new subsection:

   Inserted: "(h) Unpaid Child Support.--

   Inserted: "(1) In general.--For purposes of this chapter, any unpaid child support of a delinquent debtor for any taxable year shall be treated as amounts includible in gross income of the delinquent debtor for the taxable year.

   Inserted: "(2) Determination of whether child support is unpaid.--

   Inserted: "(A) In general.--Child support shall be treated as paid if such payment is recorded by the State office of child support enforcement in which the custodial parent is registered.

   Inserted: "(B) Timely mailing as timely payment.--A payment received by the State office of child support enforcement in which the custodial parent is registered after the last day of the custodial parent's taxable year shall be treated for the purpose of this subsection as paid on such day if the postmark date falls on or before such day. The rules of section 7502(f) and regulations issued thereunder shall apply for purposes of this subparagraph.

   Inserted: "(3) Definitions.--For the purposes of this subsection--

   Inserted: "(A) Child support.--The term 'child support' means--

   Inserted: "(i) any periodic payment of a fixed amount, or

   Inserted: "(ii) any payment of a medical expense, education expense, insurance premium, or other similar item, which is required to be paid to a custodial parent by an individual under a support instrument for the support of any qualifying child of such individual. 'Child support' does not include any amount which is described in section 408(a)(3) of the Social Security Act and which has been assigned to a State.

   Inserted: "(B) Custodial parent.--The term 'custodial parent' means an individual who is entitled to receive child support and who has registered with the appropriate State office of child support enforcement charged with implementing section 454 of the Social Security Act.

   Inserted: "(C) Delinquent debtor.--The term 'delinquent debtor' means a taxpayer who owes unpaid child support to a custodial parent.

   Inserted: "(D) Qualifying child.--The term 'qualifying child' means a child of a custodial parent with respect to whom a dependent deduction is allowable under section 151 for the taxable year (or would be so allowable but for paragraph (2) or (4) of section 152(e)).

   Inserted: "(E) Support instrument.--The term 'support instrument' means--

   Inserted: "(i) a decree of divorce or separate maintenance or a written instrument incident to such a decree,

   Inserted: "(ii) a written separation agreement, or

   Inserted: "(iii) a decree (not described in clause (i)) of a court or administrative agency requiring a parent to make payments for the support or maintenance of 1 or more children of such parent.

   Inserted: "(F) Unpaid child support.--The term 'unpaid child support' means child support that is payable for months during a custodial parent's taxable year and unpaid as of the last day of such taxable year, provided that such unpaid amount as of such day equals or exceeds one-half of the total amount of child support due to the custodial parent for such year.

   Inserted: "(4) Coordination with other laws.--Amounts treated as income by paragraph (1) shall not be treated as income by reason of paragraph (1) for the purposes of any provision of law which is not an internal revenue law.".

   Inserted: (d) Taxpayer Information Regarding Child Support Not Basis for Audit.--A discrepancy between the tax returns of a custodial parent and a delinquent debtor concerning whether a payment of child support has been made may not be used or relied upon by the Internal Revenue Service in any way in selecting an individual's tax return for a general audit.

   Inserted: (e) Effective Date; Implementation.--The amendments made by is section shall apply to taxable years beginning after December 31, 2002. The Secretary of the Treasury shall publish Form 1099-CS (or such other form that may be prescribed to comply with the amendment made by subsection (b)(1)) and regulations, if any, that may be deemed necessary to carry out the purposes of this Act, not later than 90 days after the date of enactment of this Act.

   Original wording

   On page 281, between lines 2 and 3, insert the following:

2. 2

   Change 2: Strikes “(20 percent in the case of taxable years beginning after 2007)”

   StrikesPage 19, lines 12–13Printed page

   In S. 1054 · Placed on Calendar Senate

   "(2) Limitation.--Paragraph (1) shall apply to qualified dividend income of a taxpayer only to the extent such income does not exceed the sum of--

   "(A) $500 ($250 in the case of a married individual filing a separate return), plus "(B) 10 percent [struck: (20 percent in the case ]of [struck: taxable years beginning after 2007) of ]such income in excess of the amount applicable under subparagraph (A).

   "(b) Qualified Dividend Income.--For purposes of this subsection--

   Original wording

   On page 19, lines 12 and 13, strike “(20 percent in the case of taxable years beginning after 2007)”.

3. 3

   Change 3: Strikes “(80 percent in the case of taxable years beginning after 2007)”

   StrikesPage 26, lines 18–19Printed page

   Struck: (80 percent in the case of taxable years beginning after 2007)

   Original wording

   On page 26, lines 18 and 19, strike “(80 percent in the case of taxable years beginning after 2007)”.

4. 4

   Change 4: Strikes “(80 percent in the case of taxable years beginning after 2007)”

   StrikesPage 26, lines 21–22Printed page

   Struck: (80 percent in the case of taxable years beginning after 2007)

   Original wording

   On page 26, lines 21 and 22, strike “(80 percent in the case of taxable years beginning after 2007)”.

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As printed