113 S2162 IS: 21st Century Worker Tax Cut Act U.S. Senate 2014-03-26 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.

II 113th CONGRESS2d Session S. 2162 IN THE SENATE OF THE UNITED STATES March 26, 2014 Mrs. Murray (for herself, Mr. Reed, and Mr. Brown) 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 establish a deduction for married couples who are both employed and have young children and to increase the earned income tax credit for childless workers, and to provide for budget offsets.

1.

Short title

This Act may be cited as the 21st Century Worker Tax Cut Act.

2.

Deduction for dual-earner families

(a)

In general

Part VII of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by redesignating section 224 as section 225 and by inserting after section 223 the following new section:

224.

Dual-earner families

(a)

Deduction allowed

In the case of an eligible taxpayer, there shall be allowed as a deduction for the taxable year an amount equal to 20 percent of the lesser of—(1)$60,000, or(2)the earned income of the spouse with the lower amount of earned income for such taxable year.(b)

Limitation

The amount of the deduction allowable under subsection (a) shall be reduced (but not below zero) by an amount which bears the same ratio to the amount determined under subsection (a) (as determined without regard to this subsection) as the amount of the taxpayer's excess adjusted gross income bears to $20,000.(c)

Definitions

In this section:(1)

Earned income

The term earned income has the same meaning given such term in section 32(c)(2).(2)

Eligible taxpayer

(A)

In general

The term eligible taxpayer means a taxpayer who—(i)files a joint return for the taxable year under section 6013, and(ii)has at least 1 qualifying child (as defined in section 152(c)) who has not attained 12 years of age before the close of the taxable year.(3)

Excess adjusted gross income

The term excess adjusted gross income means the amount of the eligible taxpayer's adjusted gross income (as defined in section 62, determined without regard to this section) that exceeds $110,000 for the taxable year.(d)

Inflation adjustment

(1)

In general

In the case of any taxable year beginning after 2015, each of the dollar amounts in subsections (a)(1) and (c)(3) 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 2014 for calendar year 1992 in subparagraph (B) thereof.(2)

Rounding

If any dollar amount in subsection (a)(1) or (c)(3), after being increased under paragraph (1), is not a multiple of $1,000, such dollar amount shall be rounded to the nearest multiple of $1,000.(e)

Additional eligibility requirements

(1)

Individual claiming benefits under section 911

No deduction shall be allowed under this section if an individual (or the individual's spouse) claims the benefits of section 911 for the taxable year.(2)

Non-resident aliens

No deduction shall be allowed under this section if an individual (or the individual's spouse) is a nonresident alien individual for any portion of the taxable year unless such individual is treated for such taxable year as a resident of the United States for purposes of this chapter by reason of an election under subsection (g) or (h) of section 6013.(3)

Identification number requirement

(A)

In general

No deduction shall be allowed under this section if the eligible taxpayer does not include on the joint return of tax for the taxable year—(i)the taxpayer identification number of the individual and the individual's spouse, and(ii)the name, age, and taxpayer identification number of any qualifying children.(B)

Social security numbers

For purposes of this paragraph, the term taxpayer identification number means a social security number issued to an individual by the Social Security Administration (other than a social security number issued pursuant to clause (II) (or that portion of clause (III) that relates to clause (II)) of section 205(c)(2)(B)(i) of the Social Security Act).(f)

Taxable year must be full taxable year

Except in the case of a taxable year closed by reason of the death of an individual, no deduction shall be allowable under this section in the case of a taxable year covering a period of less than 12 months.

.(b)

Deduction allowed in computing adjusted gross income

Section 62(a) of such Code is amended by inserting after paragraph (21) the following new paragraph:(22)

Dual-earner families

The deduction allowed by section 224..(c)

Enhancement of earned income tax credit

Section 32 of such Code is amended—(1)in subsection (a)(2)(B), by striking earned income and inserting modified earned income (as defined in subsection (c)(5)), and(2)in subsection (c), by adding at the end the following new paragraph:(5)

Modified earned income

The term modified earned income means an amount equal to the earned income of the taxpayer minus the amount of any deduction allowed to the taxpayer under section 224 for the taxable year..(d)

Conforming amendment

The table of sections for part VII of subchapter B of chapter 1 of such Code is amended by redesignating the item relating to section 224 as relating to section 225 and by inserting after the item relating to section 223 the following:Sec. 224. Dual-earner families..(e)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

3.

Strengthening the earned income tax credit for individuals with no qualifying children

(a)

Credit for certain individuals over age 21

(1)

In general

Paragraph (1) of section 32(c) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph: (G)

Special rule for working individuals over age 20 and without qualifying child

(i)

In general

In the case of an individual (or, if the individual is married, either the individual or the individual’s spouse) who— (I)has attained the age of 21 but not attained age 25 before the close of the taxable year, and (II)is not a full-time student at any time during the taxable year, paragraph (1)(A)(ii)(II) shall not apply for purposes of determining whether such individual is an eligible individual.(ii)

Student

For purposes of this subparagraph, an individual shall be considered a full-time student if such individual is carrying more than 1/2 the normal full-time work load for the course of study the individual is pursuing. . (2)

Information return matching

Not later than 1 year after the date of the enactment of this Act, the Secretary of the Treasury shall develop and implement procedures for checking an individual’s claim for a credit under section 32 of the Internal Revenue Code of 1986, by reason of subsection (c)(1)(G) thereof, against any information return made with respect to such individual under section 6050S. (b)

Increased credit

(1)

Credit percentage and phaseout percentage

The table contained in section 32(b)(1)(A) of such Code is amended by striking 7.65 each place it appears and inserting 15.3. (2)

Earned income amount and phaseout amount

(A)

In general

The table contained in section 32(b)(2)(A) of such Code is amended— (i)by striking $4,220 and inserting $8,820, and (ii)by striking $5,280 and inserting $10,425. (B)

Inflation adjustments

Subparagraph (B) of section 32(j)(1) of such Code is amended— (i)by inserting except as provided in clause (iii) in clause (i) before in the case of amounts, (ii)by striking and at the end of clause (i), by striking the period at the end of clause (ii) and inserting , and, and by adding at the end the following new clause: (iii)in the case of the $8,820 and $10,425 amounts in subsection (b)(2)(A), by substituting calendar year 2014 for calendar year 1992 in subparagraph (B) of such section 1. . (c)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

4.

Increased penalty for tax return preparers who fail to comply with due diligence requirements for the earned income tax credit

(a)

In general

Section 6695(g) of the Internal Revenue Code of 1986 is amended by striking $500 and inserting $1,000.(b)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

5.

Expansion of denial of deduction for certain excessive employee remuneration

(a)

Application to all current and former employees

(1)

In general

Section 162(m) of the Internal Revenue Code of 1986 is amended— (A)by striking covered employee each place it appears in paragraphs (1) and (4) and inserting covered individual, and (B)by striking such employee each place it appears in subparagraphs (A) and (G) of paragraph (4) and inserting such individual. (2)

Covered individual

Paragraph (3) of section 162(m) of such Code is amended to read as follows: (3)

Covered individual

For purposes of this subsection, the term covered individual means any individual who is an officer, director, or employee of the taxpayer or a former officer, director, or employee of the taxpayer. . (3)

Conforming amendments

(A)Section 48D(b)(3)(A) of such Code is amended by inserting (as in effect for taxable years beginning before January 1, 2015) after section 162(m)(3). (B)Section 409A(b)(3)(D)(ii) of such Code is amended by inserting (as in effect for taxable years beginning before January 1, 2015) after section 162(m)(3). (b)

Expansion of applicable employee remuneration

(1)

Elimination of exception for commission-based pay

(A)

In general

Paragraph (4) of section 162(m) of such Code, as amended by subsection (a), is amended by striking subparagraph (B) and by redesignating subparagraphs (C) through (G) as subparagraphs (B) through (F), respectively. (B)

Conforming amendments

(i)Section 162(m)(5) of such Code is amended— (I)by striking subparagraphs (B), (C), and (D) thereof in subparagraph (E) and inserting subparagraphs (B) and (C) thereof, and (II)by striking subparagraphs (F) and (G) in subparagraph (G) and inserting subparagraphs (E) and (F). (ii)Section 162(m)(6) of such Code is amended— (I)by striking subparagraphs (B), (C), and (D) thereof in subparagraph (D) and inserting subparagraphs (B) and (C) thereof, and (II)by striking subparagraphs (F) and (G) in subparagraph (G) and inserting subparagraphs (E) and (F). (2)

Inclusion of performance-based compensation

(A)

In general

Paragraph (4) of section 162(m) of the Internal Revenue Code of 1986, as amended by subsection (a) and paragraph (1) of this subsection, is amended by striking subparagraph (B) and redesignating subparagraphs (C) through (F) as subparagraphs (B) through (E), respectively. (B)

Conforming amendments

(i)Section 162(m)(5) of such Code, as amended by paragraph (1), is amended— (I)by striking subparagraphs (B) and (C) thereof in subparagraph (E) and inserting subparagraph (B) thereof, and (II)by striking subparagraphs (E) and (F) in subparagraph (G) and inserting subparagraphs (D) and (E). (ii)Section 162(m)(6) of such Code, as amended by paragraph (1), is amended— (I)by striking subparagraphs (B) and (C) thereof in subparagraph (D) and inserting subparagraph (B) thereof, and (II)by striking subparagraphs (E) and (F) in subparagraph (G) and inserting subparagraphs (D) and (E). (c)

Expansion of applicable employer

Paragraph (2) of section 162(m) of the Internal Revenue Code of 1986 is amended to read as follows: (2)

Publicly held corporation

For purposes of this subsection, the term publicly held corporation means any corporation which is an issuer (as defined in section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c)) that— (A)has a class of securities registered under section 12 of such Act (15 U.S.C. 78l), or (B)is required to file reports under section 15(d) of such Act (15 U.S.C. 780(d)). . (d)

Regulatory authority

(1)

In general

Section 162(m) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: (7)

Regulations

The Secretary may prescribe such guidance, rules, or regulations, including with respect to reporting, as are necessary to carry out the purposes of this subsection. . (2)

Conforming amendment

Paragraph (6) of section 162(m) of such Code is amended by striking subparagraph (H). (e)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2014.

6.

Low-taxed cross-border foreign income treated as subpart F income

(a)

In general

Subsection (a) of section 952 of the Internal Revenue Code of 1986 is amended by redesignating paragraphs (3), (4), and (5) as paragraphs (4), (5), and (6), respectively, and by inserting after paragraph (2) the following new paragraph: (3)low-taxed cross-border income (as defined under subsection (e)), . (b)

Low-Taxed cross-Border income

Section 952 of such Code is amended by adding at the end the following new subsection: (e)

Low-Taxed cross-Border income

(1)

In general

For purposes of subsection (a), the term low-taxed cross-border income means the gross income of the controlled foreign corporation unless the taxpayer establishes to the satisfaction of the Secretary that— (A)such income was derived in the home country of the controlled foreign corporation, or (B)such income was subject to an effective rate of income tax imposed by a foreign country in excess of 15 percent. (2)

Rules related to income derived in home country

For purposes of paragraph (1)(A), income shall be treated as derived in the home country of a controlled foreign corporation only if— (A)such income is derived in the conduct of a trade or business of such corporation in the country in which such corporation is created or organized, (B)such corporation maintains an office or other fixed place of business in such country, and (C)such income is derived in connection with— (i)property which is sold for use, consumption, or disposition in such country, or (ii)services provided with respect to persons or property located in such country. (3)

Rules related to determination of effective rate of foreign income tax

(A)

Country-by-country determination

Paragraph (1)(B) shall be applied— (i)separately with respect to each foreign country in which a controlled foreign corporation conducts any trade or business, and (ii)with respect to the aggregate gross income derived with respect to such country. (B)

Treatment of losses

For purposes of determining the effective rate of income tax imposed by any foreign country under paragraph (1)(B)— (i)such effective rate shall be determined without regard to any losses carried to the relevant taxable year, and (ii)to the extent the income of the controlled foreign corporation reduces losses in the relevant taxable year, such effective rate shall be treated as being the effective rate which would have been imposed on such income without regard to such losses. (4)

Deductions to be taken into account

The gross income of a controlled foreign corporation taken into account under this subsection shall be reduced, under regulations prescribed by the Secretary, so as to take into account deductions (including taxes) properly allocable to such income. . (c)

Effective date

The amendments made by this section shall apply to taxable years of foreign corporations beginning after December 31, 2014, and to taxable years of United States shareholders in which or with which such taxable years of foreign corporations end.