II
110th CONGRESS
1st Session
S. 2421
IN THE SENATE OF THE UNITED STATES
December 6, 2007
Mr. Schumer (for himself and Mr. Brownback) introduced the following bill; which was read twice and referred to the Committee on Finance
A BILL
To amend the Internal Revenue Code of 1986 to provide tax benefits to individuals who have been wrongfully incarcerated.
Short title
This Act may be cited as
the Wrongful Convictions Tax Relief
Act of 2007
.
Exclusion for wrongfully incarcerated individuals
In general
Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 139A the following new section:
Certain amounts received by wrongfully incarcerated individuals
Exclusion from gross income
Gross income shall not include—
in the case of any wrongfully incarcerated individual, any civil damages, restitution, or other monetary award (including compensatory or statutory damages and restitution imposed in a criminal matter) relating to the incarceration of such individual for the covered offense for which such individual was convicted, and
in the case of a qualified wrongfully incarcerated individual, the first $50,000 ($75,000 in the case of a joint return) of income received by such individual in any taxable year beginning after December 31, 2007.
Limitation relating to income exclusion
In general
The exclusion under subsection (a)(2) shall not apply to any qualified wrongfully incarcerated individual in any taxable year if an exclusion has been allowed for such individual under this section for the number of preceding taxable years equal to the lesser of—
15 years, or
the number of years during which the qualified wrongfully incarcerated individual served a sentence of imprisonment for the covered offense for which such individual was convicted.
Rounding
For purposes of paragraph (1)(B), if the number of years for which a qualified wrongfully incarcerated individual served a sentence of imprisonment is not a multiple of 1, the number of years shall be rounded to the next lowest multiple of 1.
Wrongfully incarcerated individual
For purposes of this section—
In general
The term wrongfully incarcerated individual means an individual—
who was convicted of a covered offense,
who served all or part of a sentence of imprisonment relating to that covered offense, and
who was pardoned, granted clemency, or granted amnesty for that covered offense because that individual was innocent of that covered offense, or
for whom the judgment of conviction for that covered offense was reversed or vacated, and
for whom the indictment, information, or other accusatory instrument for that covered offense was dismissed or who was found not guilty at a new trial after the judgment of conviction for that covered offense was reversed or vacated.
Covered offense
The term covered offense means any criminal offense under Federal or State law, and includes any criminal offense arising from the same course of conduct as that criminal offense.
Qualified wrongfully incarcerated individual
For purposes of this section, the term qualified wrongfully incarcerated individual means a wrongfully incarcerated individual who, except for the covered offense described in subsection (c)(1)(A), has never been convicted of a criminal offense under Federal or State law that is punishable by more than 1 year imprisonment.
.
Conforming amendment
The table of sections for part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 139A the following new item:
.
Effective date
The amendments made by this section shall apply to taxable years beginning before, on, or after the date of the enactment of this Act.
Refundable credit for employment taxes paid by wrongfully incarcerated individuals
Allowance of refundable credit
Subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to refundable credits) is amended by redesignating section 36 as section 37 and by inserting after section 35 the following new section:
Employment taxes of wrongfully incarcerated individuals
In general
In the case of a qualified wrongfully incarcerated individual, there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to the sum of—
50 percent of the taxes imposed on the self-employment income of such individual under subsections (a) and (b) of section 1401 during the taxable year, plus
the taxes imposed on the wages received by such individual with respect to employment under subsections (a) and (b) of section 3101 during the taxable year.
Limitations
Dollar limitation
The total amount of wages and self-employment income taken into account under subsection (a) with respect to any individual shall not exceed $50,000.
Taxable year limitation
In general
The credit under subsection (a) shall not be allowed with respect to any qualified wrongfully incarcerated individual in any taxable year if a credit has been allowed to such individual under this section for the number of preceding taxable years equal to the lesser of—
15 years, or
the number of years during which the qualified wrongfully incarcerated individual served a sentence of imprisonment for the covered offense for which such individual was convicted.
Rounding
For purposes of subparagraph (A)(ii), if the number of years for which a qualified wrongfully incarcerated individual served a sentence of imprisonment is not a multiple of 1, the number of years shall be rounded to the next lowest multiple of 1.
Qualified wrongfully incarcerated individual
For purposes of this section, the term qualified wrongfully incarcerated individual has the meaning given to such term under section 139B(d).
.
Conforming amendments
Section
1324(b)(2) of title 31, United States Code, is amended by inserting before the
period at the end , or enacted by the Wrongful Convictions Tax Relief Act of
2007
.
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 striking the item relating to section 36 and inserting the following:
Sec. 36. Employment taxes of wrongfully incarcerated individuals.
Sec. 37. Overpayments of tax.
.
Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2007.
Reporting with respect to wrongfully incarcerated individuals
Federal courts
In general
The Director of the Administrative Office of United States Courts shall report annually to the Secretary of the Treasury such information with respect to individuals described in paragraph (2) as the Secretary of the Treasury, in consultation with the Administrator, determines is necessary for the administration of sections 36 and 139B of the Internal Revenue Code of 1986.
Individuals described
An individual is described in this paragraph if such individual is a wrongfully incarcerated individual (as defined under section 139B of the Internal Revenue Code of 1986)—
for whom the judgment of conviction for that covered offense was reversed or vacated; and
for whom the indictment, information, or other accusatory instrument for that covered offense was dismissed or who was found not guilty at a new trial after the judgment of conviction for that covered offense was reversed or vacated.
Agreements with States
The Secretary of the Treasury shall enter into agreements with States under which a State will report to the Secretary not less frequently than annually such information with respect to wrongfully incarcerated individuals (as defined under section 139B of the Internal Revenue Code of 1986) as the Secretary determines is necessary for the administration of sections 36 and 139B of the Internal Revenue Code of 1986.