S.Amdt. 1339

SA 1339. Mr. RUBIO (for himself and Mr. Lee) submitted an amendment
intended to be proposed to amendment SA 891 proposed by Mr. Schumer
(for himself, Mr. Wyden, Mrs. Murray, Mr. Brown, Mr. Peters, Mr.
Cardin, Ms. Cantwell, Ms. Stabenow, Mr. Tester, Mr. Menendez, Mr.
Schatz, Mr. Carper, Mr. Leahy, and Mr. Sanders) to the bill H.R. 1319,
to provide for reconciliation pursuant to title II of S. Con. Res. 5;
which was ordered to lie on the table; as follows:

In subtitle G of title IX, strike part 2 and insert the
following:

PART 2--CHILD TAX CREDIT

SEC. 9611. CHILD TAX CREDIT IMPROVEMENTS FOR 2021.

(a) In General.--Section 24 of the Internal Revenue Code of
1986 is amended by adding at the end the following new
subsection:
``(i) Special Rules for 2021.--In the case of any taxable
year beginning after December 31, 2020, and before January 1,
2022--
``(1) Refundable credit.--Paragraphs (5) and (6) of
subsection (h) shall not apply, and in applying subsection
(d)--
``(A) subsection (d)(1)(A) shall be applied without regard
to subsection (h)(4), and
``(B) subsection (d)(1)(B)(i) shall be applied by
substituting `15.3 percent of the taxpayer's earned income
(within the meaning of section 32) which is taken into
account in computing taxable income' for `15 percent of so
much of the taxpayer's earned income (within the meaning of
section 32) which is taken into account in computing taxable
income for the taxable year as exceeds $3,000'.
``(2) 17-year-olds eligible for treatment as qualifying
children.--This section shall be applied--
``(A) by substituting `age 18' for `age 17' in subsection
(c)(1), and
``(B) by substituting `described in subsection (c)
(determined after the application of subsection (i)(2)(A))'
for `described in subsection (c)' in subsection (h)(4)(A).
``(3) Credit amount.--Subsection (h)(2) shall not apply and
subsection (a) shall be applied by substituting `$3,500
($4,500 in the case of a qualifying child who has not
attained age 6 as of the close of the calendar year in which
the taxable year of the taxpayer begins)' for `$1,000'.
``(4) Reduction of increased credit amount based on
modified adjusted gross income.--
``(A) In general.--The amount of the credit allowable under
subsection (a) (determined without regard to subsection (b))
shall be reduced by $50 for each $1,000 (or fraction thereof)
by which the taxpayer's modified adjusted gross income (as
defined in subsection (b)) exceeds the applicable threshold
amount.
``(B) Applicable threshold amount.--For purposes of this
paragraph, the term `applicable threshold amount' means--
``(i) $150,000, in the case of a joint return or surviving
spouse (as defined in section 2(a)) ,
``(ii) $112,500, in the case of a head of household (as
defined in section 2(b)), and
``(iii) $75,000, in any other case.
``(C) Limitation on reduction.--
``(i) In general.--The amount of the reduction under
subparagraph (A) shall not exceed the lesser of--

``(I) the applicable credit increase amount, or
``(II) 5 percent of the applicable phaseout threshold
range.

``(ii) Applicable credit increase amount.--For purposes of
this subparagraph, the term `applicable credit increase
amount' means the excess (if any) of--

``(I) the amount of the credit allowable under this section
for the taxable year determined without regard to this
paragraph and subsection (b), over
``(II) the amount of such credit as so determined and
without regard to paragraph (3).

``(iii) Applicable phaseout threshold range.--For purposes
of this subparagraph, the term `applicable phaseout threshold
range' means the excess of--

``(I) the threshold amount applicable to the taxpayer under
subsection (b) (determined after the application of
subsection (h)(3)), over
``(II) the applicable threshold amount applicable to the
taxpayer under this paragraph.

``(D) Coordination with limitation on overall credit.--
Subsection (b) shall be applied by substituting `the credit
allowable under subsection (a) (determined after the
application of subsection (i)(4)(A)' for `the credit
allowable under subsection (a)'.''.
(b) Advance Payment of Credit.--
(1) In general.--Chapter 77 of such Code is amended by
inserting after section 7527 the following new section:

``SEC. 7527A. ADVANCE PAYMENT OF CHILD TAX CREDIT.

``(a) In General.--The Secretary shall establish a program
for making periodic payments to taxpayers which, in the
aggregate during any calendar year, equal the annual advance
amount determined with respect to such taxpayer for such
calendar year. Except as provided in subsection (b)(3)(B),
the periodic payments made to any taxpayer for any calendar
year shall be in equal amounts.
``(b) Annual Advance Amount.--For purposes of this
section--
``(1) In general.--Except as otherwise provided in this
subsection, the term `annual advance amount' means, with
respect to any taxpayer for any calendar year, the amount (if
any) which is estimated by the Secretary as being equal to 50
percent of the amount which would be treated as allowed under
subpart C of part IV of subchapter A of chapter 1 by reason
of section 24(d) (after application of subsection (i)(1)
thereof) for the taxpayer's taxable year beginning in such
calendar year if--
``(A) the taxpayer's modified adjusted gross income for
such taxable year is equal to the taxpayer's modified
adjusted gross income for the reference taxable year,
``(B) the only children of such taxpayer for such taxable
year are qualifying children properly claimed on the
taxpayer's return of tax for the reference taxable year,
``(C) the ages of such children (and the status of such
children as qualifying children) are determined for such
taxable year by taking into account the passage of time since
the reference taxable year, and
``(D) the earned income (within the meaning of section 32)
which is taken into account in computing taxable income for
the taxable year of such taxpayer for such taxable year is
equal to the earned income for the reference taxable year.
``(2) Reference taxable year.--Except as provided in
paragraph (3)(A), the term `reference taxable year' means,
with respect to any taxpayer for any calendar year, the
taxpayer's taxable year beginning in the preceding calendar
year or, in the case of taxpayer who did not file a return of
tax for such taxable year, the taxpayer's taxable year
beginning in the second preceding calendar year.
``(3) Modifications during calendar year.--
``(A) In general.--The Secretary may modify, during any
calendar year, the annual advance amount with respect to any
taxpayer for such calendar year to take into account--
``(i) a return of tax filed by such taxpayer during such
calendar year (and the taxable year to which such return
relates may be

[[Page S1374]]

taken into account as the reference taxable year), and
``(ii) any other information provided by the taxpayer to
the Secretary which allows the Secretary to determine
payments under subsection (a) which, in the aggregate during
any taxable year of the taxpayer, more closely total the
Secretary's estimate of the amount treated as allowed under
subpart C of part IV of subchapter A of chapter 1 by reason
of section 24(i)(1) for such taxable year of such taxpayer.
``(B) Adjustment to reflect excess or deficit in prior
payments.--In the case of any modification of the annual
advance amount under subparagraph (A), the Secretary may
adjust the amount of any periodic payment made after the date
of such modification to properly take into account the amount
by which any periodic payment made before such date was
greater than or less than the amount that such payment would
have been on the basis of the annual advance amount as so
modified.
``(4) Treatment of certain deaths.--A child shall not be
taken into account in determining the annual advance amount
under paragraph (1) if the death of such child is known to
the Secretary as of the beginning of the calendar year for
which the estimate under such paragraph is made.
``(c) On-line Information Portal.--The Secretary shall
establish an on-line portal which allows taxpayers to--
``(1) elect not to receive payments under this section, and
``(2) provide information to the Secretary which would be
relevant to a modification under subsection (b)(3)(B) of the
annual advance amount, including information regarding--
``(A) a change in the number of the taxpayer's qualifying
children, including by reason of the birth of a child,
``(B) a change in the taxpayer's marital status,
``(C) a significant change in the taxpayer's income, and
``(D) any other factor which the Secretary may provide.
``(d) 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.
``(e) Administrative Provisions.--
``(1) 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.
``(2) 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.
``(3) Exception from reduction or offset.--Any payment made
to any individual under this section shall not be--
``(A) subject to reduction or offset pursuant to subsection
(c), (d), (e), or (f) of section 6402, or
``(B) reduced or offset by other assessed Federal taxes
that would otherwise be subject to levy or collection.
``(4) Application of advance payments in the possessions of
the united states.--
``(5) Advance payments not applicable to possessions of the
united states.--
``(A) In general.--In the case of any possession of the
United States with a mirror code tax system (as defined in
section 24(k)), this section shall not be treated as part of
the income tax laws of the United States for purposes of
determining the income tax law of such possession.
``(B) Administrative expenses of advance payments.--
``(i) Mirror code possessions.--In the case of any
possession described in subparagraph (B) which makes the
election described in such subparagraph, the amount otherwise
paid by the Secretary to such possession under section
24(k)(1)(A) with respect to taxable years beginning in 2021
shall be increased by $300,000 if such possession has a plan,
which has been approved by the Secretary, for making advance
payments consistent with such election.
``(ii) American samoa.--The amount otherwise paid by the
Secretary to American Samoa under subparagraph (A) of section
24(k)(3) with respect to taxable years beginning in 2021
shall be increased by $300,000 if the plan described in
subparagraph (B) of such section includes a program, which
has been approved by the Secretary, for making advance
payments under rules similar to the rules of this section.
``(iii) Timing of payment.--The Secretary may pay, upon the
request of the possession of the United States to which the
payment is to be made, the amount of the increase determined
under clause (i) or (ii) immediately upon approval of the
plan referred to in such clause, respectively.
``(f) Application.--No payments shall be made under the
program established under subsection (a) with respect to--
``(1) any period before July 1, 2021, or
``(2) any period after December 31, 2021.
``(g) Regulations.--The Secretary shall issue such
regulations or other guidance as the Secretary determines
necessary or appropriate to carry out the purposes of this
section and subsections (i)(1) and (j) of section 24,
including regulations or other guidance which provides for
the application of such provisions where the filing status of
the taxpayer for a taxable year is different from the status
used for determining the annual advance amount.''.
(2) Reconciliation of credit and advance credit.--Section
24 of such Code, as amended by the preceding provision of
this Act, is amended by adding at the end the following new
subsection:
``(j) Reconciliation of Credit and Advance Credit.--
``(1) In general.--The amount of the credit allowed under
this section to any taxpayer for any taxable year shall be
reduced (but not below zero) by the aggregate amount of
payments made under section 7527A to such taxpayer during
such taxable year. Any failure to so reduce the credit shall
be treated as arising out of a mathematical or clerical error
and assessed according to section 6213(b)(1).
``(2) Excess advance payments.--
``(A) In general.--If the aggregate amount of payments
under section 7527A to the taxpayer during the taxable year
exceeds the amount of the credit allowed under this section
to such taxpayer for such taxable year (determined without
regard to paragraph (1)), the tax imposed by this chapter for
such taxable year shall be increased by the amount of such
excess. Any failure to so increase the tax shall be treated
as arising out of a mathematical or clerical error and
assessed according to section 6213(b)(1).
``(B) Safe harbor based on modified adjusted gross
income.--
``(i) In general.--In the case of a taxpayer whose modified
adjusted gross income (as defined in subsection (b)) for the
taxable year does not exceed 200 percent of the applicable
income threshold, the amount of the increase determined under
subparagraph (A) with respect to such taxpayer for such
taxable year shall be reduced (but not below zero) by the
safe harbor amount.
``(ii) Phase out of safe harbor amount.--In the case of a
taxpayer whose modified adjusted gross income (as defined in
subsection (b)) for the taxable year exceeds the applicable
income threshold, the safe harbor amount otherwise in effect
under clause (i) shall be reduced by the amount which bears
the same ratio to such amount as such excess bears to the
applicable income threshold.
``(iii) Applicable income threshold.--For purposes of this
subparagraph, the term `applicable income threshold' means--

``(I) $60,000 in the case of a joint return or surviving
spouse (as defined in section 2(a)),
``(II) $50,000 in the case of a head of household, and
``(III) $40,000 in any other case.

``(iv) Safe harbor amount.--For purposes of this
subparagraph, the term `safe harbor amount' means, with
respect to any taxable year, the product of--

``(I) $2,000, multiplied by
``(II) the excess (if any) of the number of qualified
children taken into account in determining the annual advance
amount with respect to the taxpayer under section 7527A with
respect to months beginning in such taxable year, over the
number of qualified children taken into account in
determining the credit allowed under this section for such
taxable year.''.

(3) Coordination with wage withholding.--Section
3402(f)(1)(C) of such Code is amended by striking ``section
24(a)'' and inserting ``section 24 (determined after
application of subsection (j) thereof)''.
(4) Conforming amendments.--
(A) Section 26(b)(2) of such Code is amended by striking
``and'' at the end of subparagraph (X), by striking the
period at the end of subparagraph (Y) and inserting ``,
and'', and by adding at the end the following new
subparagraph:
``(Z) section 24(j)(2) (relating to excess advance
payments).''.
(B) Section 6211(b)(4)(A) of such Code, as amended by the
preceding provisions of this subtitle, is amended by striking
``and 6428B'' and inserting ``6428B, and 7527A''.
(C) Paragraph (2) of section 1324(b) of title 31, United
States Code, is amended--
(i) by inserting ``24,'' before ``25A'', and
(ii) by striking `` or 6431'' and inserting ``6431, or
7527A''.
(D) The table of sections for chapter 77 of the Internal
Revenue Code of 1986 is amended by inserting after the item
relating to section 7527 the following new item:

``Sec. 7527A. Advance payment of child tax credit.''.
(5) Appropriations to carry out advance payments.--
Immediately upon the enactment of this Act, in addition to
amounts otherwise available, there are appropriated for
fiscal year 2021, out of any money in the Treasury not
otherwise appropriated:
(A) $397,200,000 to remain available until September 30,
2022, for necessary expenses for the Internal Revenue Service
to carry out this section (and the amendments made by this
section), which shall supplement and not supplant any other
appropriations that may be available for this purpose, and
(B) $16,200,000 to remain available until September 30,
2022, for necessary expenses for the Bureau of the Fiscal
Service to carry out this section (and the amendments made by
this section), which shall supplement and not supplant any
other appropriations that may be available for this purpose.

[[Page S1375]]

(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2020.
(2) Establishment of advance payment program.--The
Secretary of the Treasury (or the Secretary's designee) shall
establish the program described in section 7527A of the
Internal Revenue Code of 1986 as soon as practicable after
the date of the enactment of this Act, except that the
Secretary shall ensure that the timing of the establishment
of such program does not interfere with carrying out section
6428B(g) as rapidly as possible.

SEC. 9612. APPLICATION OF CHILD TAX CREDIT IN POSSESSIONS.

(a) In General.--Section 24 of the Internal Revenue Code of
1986, as amended by the preceding provisions of this Act, is
amended by adding at the end the following new subsection:
``(k) Application of Credit in Possessions.--
``(1) Mirror code possessions.--
``(A) In general.--The Secretary shall pay to each
possession of the United States with a mirror code tax system
amounts equal to the loss (if any) to that possession by
reason of the application of this section (determined without
regard to this subsection) with respect to taxable years
beginning after 2020. Such amounts shall be determined by the
Secretary based on information provided by the government of
the respective possession.
``(B) Coordination with credit allowed against united
states income taxes.--No credit shall be allowed under this
section for any taxable year to any individual to whom a
credit is allowable against taxes imposed by a possession of
the United States with a mirror code tax system by reason of
the application of this section in such possession for such
taxable year.
``(C) Mirror code tax system.--For purposes of this
paragraph, the term `mirror code tax system' means, with
respect to any possession of the United States, the income
tax system of such possession if the income tax liability of
the residents of such possession under such system is
determined by reference to the income tax laws of the United
States as if such possession were the United States.
``(2) Puerto rico.--In the case of any bona fide resident
of Puerto Rico (within the meaning of section 937(a)) for any
taxable year beginning after December 31, 2020--
``(A) the credit determined under this section shall be
allowable to such resident, and
``(B) subsection (d)(1)(B)(ii) shall be applied without
regard to the phrase `in the case of a taxpayer with 3 or
more qualifying children'.
``(3) American samoa.--
``(A) In general.--The Secretary shall pay to American
Samoa amounts estimated by the Secretary as being equal to
the aggregate benefits that would have been provided to
residents of American Samoa by reason of the application of
this section for taxable years beginning after 2020 if the
provisions of this section had been in effect in American
Samoa (applied as if American Samoa were the United States
and without regard to the application of this section to bona
fide residents of Puerto Rico under subsection (i)(1)).
``(B) Distribution requirement.--Subparagraph (A) shall not
apply unless American Samoa has a plan, which has been
approved by the Secretary, under which American Samoa will
promptly distribute such payments to its residents.
``(C) Coordination with credit allowed against united
states income taxes.--
``(i) In general.--In the case of a taxable year with
respect to which a plan is approved under subparagraph (B),
this section (other than this subsection) shall not apply to
any individual eligible for a distribution under such plan.
``(ii) Application of section in event of absence of
approved plan.--In the case of a taxable year with respect to
which a plan is not approved under subparagraph (B), rules
similar to the rules of paragraph (2) shall apply with
respect to bona fide residents of American Samoa (within the
meaning of section 937(a)).
``(4) Treatment of payments.--For purposes of section 1324
of title 31, United States Code, the payments under this
subsection shall be treated in the same manner as a refund
due from a credit provision referred to in subsection (b)(2)
of such section.''.
(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2020.
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