II 109th CONGRESS 1st Session S. 1987 IN THE SENATE OF THE UNITED STATES November 9, 2005 Mr. Reed 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 a refundable tax credit for residential energy cost assistance and for other purposes.

1.

Short title

This Act may be cited as the Low-Income Home Energy Security Tax Act.

2.

Refundable tax credit for residential energy cost assistance

(a)

In general

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:

36.

Credit for residential energy cost assistance

(a)

General rule

In the case of an individual, there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to the lesser of— (1)33 percent of the amount paid or incurred for residential energy costs by the taxpayer for each month such individual is an individual during such taxable year, or (2)$300. (b)

Income limitation

(1)

In general

The amount allowable as a credit under subsection (a) for any taxable year (determined without regard to subsection (e)) shall be reduced (but not below zero) by an amount which bears the same ratio to the amount so allowable (determined without regard to this paragraph) as— (A)the amount (if any) by which the taxpayer's adjusted gross income exceeds $35,000 ($70,000 in the case of a joint return), bears to (B)$10,000. (2)

Determination of adjusted gross income

For purposes of paragraph (1), adjusted gross income shall be determined without regard to sections 911, 931, and 933. (c)

Definitions and special rules

For purposes of this section— (1)

Residential energy costs

The term residential energy costs means, with respect to any principal residence of the taxpayer located in the United States for any month, the sum of— (A)the cost of any energy utility, plus (B)the cost of the purchase of any home energy fuel. (2)

Reduction for grants

The amount of residential energy costs which may be taken into account with respect to any month shall be reduced by any amount received by the taxpayer for such month for any residential energy cost under the Low-Income Home Energy Assistance program under title XXVI of the Omnibus Budget Reconciliation Act of 1981 (42 U.S.C. 8621 et seq.). (3)

Principal residence

The term principal residence has the same meaning as in section 121, except that— (A)no ownership requirement shall be imposed, and (B)the principal residence must be used by the taxpayer as the taxpayer’s residence during the taxable year. (4)

Homeowners associations

The application of this section to homeowners associations (as defined in section 528(c)(1)) or members of such associations, and tenant-stockholders in cooperative housing corporations (as defined in section 216), shall be allowed by allocation, apportionment, or otherwise, to the individuals paying, directly or indirectly, for the residential energy cost so incurred. (d)

Inflation adjustment

(1)

In general

In the case of any taxable year beginning after 2005, each of the dollar amounts contained in subsections (a)(2) and (b)(1)(A) shall be increased by an amount equal to— (A)such dollar amount, multiplied by (B)in the case of— (i)the dollar amount contained in subsection (a)(2), the fuel price inflation adjustment for the calendar year in which the taxable year begins, and (ii)the dollar amounts contained in subsection (b)(1)(A), the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins by substituting calendar year 2004 for calendar year 1992 in subparagraph (B) thereof. (2)

Fuel price inflation adjustment

For purposes of paragraph (1)(B)(i)— (A)

In general

The fuel price inflation adjustment for any calendar year is the percentage (if any) by which— (i)the CPI fuel component for October of the preceding calendar year, exceeds (ii)the CPI fuel component for October of 2004. (B)

CPI fuel component

The term CPI fuel component means the fuel component of the Consumer Price Index for All Urban Consumers published by the Department of Labor. (3)

Rounding

(A)

Credit amount

If the dollar amount in subsection (a)(2) (after being increased under paragraph (1)), is not a multiple of $10, such dollar amount shall be rounded to the nearest multiple of $10. (B)

Income threshold

If any dollar amount in subsection (b)(1)(A) (after being increased under paragraph (1)), is not a multiple of $50, such dollar amount shall be rounded to the next lowest multiple of $50. (e)

Coordination with advance payments of credit

With respect to any taxable year, the amount which would (but for this subsection) be allowed as a credit to the taxpayer under subsection (a) shall be reduced (but not below zero) by the aggregate amount paid on behalf of such taxpayer under section 7529 for months beginning in such taxable year. (f)

Regulations

The Secretary may prescribe such regulations and other guidance as may be necessary or appropriate to carry out this section, section 6050U, and section 7529. (g)

Applicability of Section

This section shall apply to residential energy costs paid or incurred after the date of the enactment of this section, in taxable years ending after such date and before January 1, 2008.

. (b)

Advance payment of credit

Chapter 77 of the Internal Revenue Code of 1986 (relating to miscellaneous provisions) is amended by adding at the end the following new section:

7529.

Advance payment of credit for residential energy costs

(a)

General rule

The Secretary shall establish a program for making payments on behalf of certified individuals to providers of residential energy (within the meaning of section 36(c)(1)) for such individuals. (b)

Limitation on advance payments during any taxable year

The Secretary may make payments under subsection (a) only to the extent that the total amount of such payments made on behalf of any individual during the taxable year does not exceed the amount of the credit allowable to such individual under section 36 for the taxable year. (c)

Certified individual

For purposes of this section, the term certified individual means any individual for whom a qualified residential energy costs credit eligibility certificate is in effect. (d)

Qualified residential energy costs credit eligibility certificate

For purposes of this section, the term qualified residential energy costs credit eligibility certificate means any written statement if such statement provides such information as the Secretary may require for purposes of this section and is certified by the Low-Income Home Energy Assistance program official of the State in which such individual resides.

. (c)

Information returns

Subpart B of part III of subchapter A of chapter 61 of the Internal Revenue Code of 1986 (relating to information concerning transactions with other persons) is amended by adding at the end the following new section:

6050U.

Returns relating to credit for residential energy costs

(a)

Requirement of reporting

Every person who is entitled to receive payments for any month of any calendar year under section 7529 (relating to advance payment of credit for residential energy costs) with respect to any certified individual (as defined in section 7529(c)) shall, at such time as the Secretary may prescribe, make the return described in subsection (b) with respect to each such individual. (b)

Form and manner of returns

A return is described in this subsection if such return— (1)is in such form as the Secretary may prescribe, and (2)contains— (A)the name, address, and TIN of each individual referred to in subsection (a), (B)the number of months for which amounts were entitled to be received with respect to such individual under section 7529 (relating to advance payment of credit for residential energy costs), (3)the amount entitled to be received for each such month, and (4)such other information as the Secretary may prescribe. (c)

Statements to be furnished to individuals with respect to whom information is required

Every person required to make a return under subsection (a) shall furnish to each individual whose name is required to be set forth in such return a written statement showing— (1)the name and address of the person required to make such return and the phone number of the information contact for such person, and (2)the information required to be shown on the return with respect to such individual. The written statement required under the preceding sentence shall be furnished on or before January 31 of the year following the calendar year for which the return under subsection (a) is required to be made.

. (d)

Conforming amendments

(1)Section 1324(b)(2) of title 31, United States Code, is amended by striking or before enacted and by inserting before the period at the end , or from section 36 of such Code. (2)Section 6103(l) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: (21)

Disclosure of return information for purposes of carrying out a program for advance payment of credit for residential energy costs

The Secretary may disclose to providers of residential energy for any certified individual (as defined in section 7529(c)) return information with respect to such certified individual only to the extent necessary to carry out the program established by section 7529 (relating to advance payment of credit for residential energy costs). . (e)

Clerical amendments

(1)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 35 and by adding at the end the following new items: Sec. 36. Credit for residential energy cost assistance. Sec. 37. Overpayments of tax. . (2)The table of sections for chapter 77 of such Code is amended by adding at the end the following new item: Sec. 7529. Advance payment of credit for residential energy costs. . (3)The table of sections for subpart B of part III of subchapter A of chapter 61 of such Code is amended by adding at the end the following new item: Sec. 6050U. Returns relating to credit for residential energy costs. .