[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 2421 Introduced in Senate (IS)]







110th CONGRESS
  1st Session
                                S. 2421

 To amend the Internal Revenue Code of 1986 to provide tax benefits to 
           individuals who have been wrongfully incarcerated.


_______________________________________________________________________


                   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.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Wrongful Convictions Tax Relief Act 
of 2007''.

SEC. 2. EXCLUSION FOR WRONGFULLY INCARCERATED INDIVIDUALS.

    (a) 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:

``SEC. 139B. CERTAIN AMOUNTS RECEIVED BY WRONGFULLY INCARCERATED 
              INDIVIDUALS.

    ``(a) Exclusion From Gross Income.--Gross income shall not 
include--
            ``(1) 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
            ``(2) 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.
    ``(b) Limitation Relating to Income Exclusion.--
            ``(1) 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--
                    ``(A) 15 years, or
                    ``(B) 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.
            ``(2) 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.
    ``(c) Wrongfully Incarcerated Individual.--For purposes of this 
section--
            ``(1) In general.--The term `wrongfully incarcerated 
        individual' means an individual--
                    ``(A) who was convicted of a covered offense,
                    ``(B) who served all or part of a sentence of 
                imprisonment relating to that covered offense, and
                    ``(C)(i) who was pardoned, granted clemency, or 
                granted amnesty for that covered offense because that 
                individual was innocent of that covered offense, or
                    ``(ii)(I) for whom the judgment of conviction for 
                that covered offense was reversed or vacated, and
                    ``(II) 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.
            ``(2) 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.
    ``(d) 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.''.
    (b) 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:

``Sec. 139B. Certain amounts received by wrongfully incarcerated 
                            individuals.''.
    (c) 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.

SEC. 3. REFUNDABLE CREDIT FOR EMPLOYMENT TAXES PAID BY WRONGFULLY 
              INCARCERATED INDIVIDUALS.

    (a) 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:

``SEC. 36. EMPLOYMENT TAXES OF WRONGFULLY INCARCERATED INDIVIDUALS.

    ``(a) 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--
            ``(1) 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
            ``(2) 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.
    ``(b) Limitations.--
            ``(1) 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.
            ``(2) Taxable year limitation.--
                    ``(A) 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--
                            ``(i) 15 years, or
                            ``(ii) 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.
                    ``(B) 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.
    ``(c) 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).''.
    (b) Conforming Amendments.--
            (1) 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''.
            (2) 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.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2007.

SEC. 4. REPORTING WITH RESPECT TO WRONGFULLY INCARCERATED INDIVIDUALS.

    (a) Federal Courts.--
            (1) 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.
            (2) 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)--
                    (A) for whom the judgment of conviction for that 
                covered offense was reversed or vacated; and
                    (B) 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.
    (b) 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.
                                 <all>