II 109th CONGRESS 1st Session S. 1770 IN THE SENATE OF THE UNITED STATES September 26, 2005 Mr. Obama (for himself, Mrs. Murray, Mr. Corzine, Mr. Kerry, and Mr. Levin) 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 for advance payment of the earned income tax credit and the child tax credit for 2005 in order to provide needed funds to victims of Hurricane Katrina and to stimulate local economies.

1.

Short title

This Act may be cited as the Hurricane Katrina Fast-Track Refunds for Working Families Act of 2005.

2.

Findings

(1)An estimated 1.3 million households were affected by Hurricane Katrina, many of which were working families left with no material belongings and minimal assets following the storm. (2)It will be difficult for these working families to immediately find new employment opportunities and to restore lost wages, thus depleting their resources for food, housing, clothing, and other necessities. (3)These working families can be expected to spend their fast-tracked tax refunds on immediate necessities which will stimulate local economic activity. (4)These families have worked hard, earned their Child Tax Credit and Earned Income Tax Credit refunds and should receive them now rather than later.

3.

Advance payment of earned income tax credit and child tax credit for 2005 for victims of Hurricane Katrina

(a)

In general

Subchapter B of chapter 61 of the Internal Revenue Code of 1986 (relating to rules of special application) is amended by adding at the end the following new section:

6430.

Advance payment of earned income tax credit and child tax credit for 2005 for victims of Hurricane Katrina

(a)

In general

Each eligible taxpayer shall be treated as having made a payment against the tax imposed by chapter 1 for the taxpayer’s last taxable year ending in 2004 in an amount equal to— (1)the child tax credit refund amount (if any) for such taxable year, and (2)the earned income credit refund amount (if any) for such taxable year. (b)

Definitions

For purposes of this section— (1)

Eligible taxpayer

The term eligible taxpayer means any taxpayer— (A)who was allowed a credit under section 24 (relating to child tax credit) or section 32 (relating to earned income credit) for the taxpayer’s last taxable year ending in 2004, and (B)whose address on such taxpayer’s return for such last taxable year was within an area determined by the President to warrant individual or individual and public assistance from the Federal Government under the Robert T. Stafford Disaster Relief and Emergency Assistance Act by reason of Hurricane Katrina. (2)

Child tax credit refund amount

The child tax credit refund amount is the amount of the credit which would have been allowed under section 24 for such last taxable year if only qualifying children (as defined in section 24(c)) of the taxpayer for such year who had not attained age 17 as of December 31, 2005, were taken into account. (3)

Earned income credit refund amount

The earned income credit refund amount is the amount of the credit which would have been allowed under section 32 for such last taxable year if— (A)the amount in section 32(b)(2)(B) were $2,000, and (B)an individual is treated as meeting the age requirements under section 32 only if such requirements are met as of December 31, 2005. (c)

Timing of payments

In the case of any overpayment attributable to this section, the Secretary shall, subject to the provisions of this title, refund or credit such overpayment as rapidly as possible and shall ensure that adequate systems and delivery mechanisms are in place for the prompt delivery of refunds to eligible recepients. (d)

Coordination with credits

(1)

In general

The amount of credit which would (but for this subsection and section 26) be allowed under sections 24 and 32, as the case may be, for the taxpayer's first taxable year beginning in 2005 shall be reduced (but not below zero) by so much of the payment made to the taxpayer under this section as is attributable to such section 24 or 32. 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)

Joint returns

In the case of a payment under this section with respect to a joint return, half of such payment shall be treated as having been made to each individual filing such return. (e)

No interest

No interest shall be allowed on any overpayment attributable to this section.

. (b)

Clerical amendment

The table of sections for such subchapter B is amended by adding at the end the following new item: Sec. 6430. Advance payment of earned income tax credit and child tax credit for 2005 for victims of Hurricane Katrina.. (c)

Effective date

The amendments made by this section shall take effect on the date of the enactment of this Act.