[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 3079 Introduced in Senate (IS)]







110th CONGRESS
  1st Session
                                S. 3079

To amend the Internal Revenue Code of 1986 to provide income tax relief 
                 for families, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              June 4, 2008

Mr. Smith (for himself and Mrs. Lincoln) 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 income tax relief 
                 for families, and for other purposes.

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

SECTION 1. SHORT TITLE; AMENDMENTS TO 1986 CODE.

    (a) Short Title.--This Act may be cited as the ``Family Tax Relief 
Act of 2008''.
    (b) Amendments to 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.

SEC. 2. EXPANSION OF DEPENDENT CARE CREDIT.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
(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. EXPENSES FOR HOUSEHOLD AND DEPENDENT CARE SERVICES NECESSARY 
              FOR GAINFUL EMPLOYMENT.

    ``(a) Allowance of Credit.--
            ``(1) In general.--In the case of an individual for which 
        there are 1 or more qualifying individuals (as defined in 
        subsection (b)(1)) with respect to such individual, there shall 
        be allowed as a credit against the tax imposed by this subtitle 
        for the taxable year an amount equal to the applicable 
        percentage of the employment-related expenses (as defined in 
        subsection (b)(2)) paid by such individual during the taxable 
        year.
            ``(2) Applicable percentage defined.--For purposes of 
        paragraph (1), the term `applicable percentage' means 50 
        percent reduced (but not below 20 percent) by 1 percentage 
        point for each $1,000 (or fraction thereof) by which the 
        taxpayer's adjusted gross income for the taxable year exceeds 
        $30,000.
    ``(b) Definitions of Qualifying Individual and Employment-Related 
Expenses.--For purposes of this section--
            ``(1) Qualifying individual.--The term `qualifying 
        individual' means--
                    ``(A) a dependent of the taxpayer (as defined in 
                section 152(a)(1)) who has not attained age 13,
                    ``(B) a dependent of the taxpayer (as defined in 
                section 152, determined without regard to subsections 
                (b)(1), (b)(2), and (d)(1)(B)) who is physically or 
                mentally incapable of caring for himself or herself and 
                who has the same principal place of abode as the 
                taxpayer for more than one-half of such taxable year, 
                or
                    ``(C) the spouse of the taxpayer, if the spouse is 
                physically or mentally incapable of caring for himself 
                or herself and has the same principal place of abode as 
                the taxpayer for more than one-half of such taxable 
                year.
            ``(2) Employment-related expenses.--
                    ``(A) In general.--The term `employment-related 
                expenses' means amounts paid for the following 
                expenses, but only if such expenses are incurred to 
                enable the taxpayer to be gainfully employed for any 
                period for which there are 1 or more qualifying 
                individuals with respect to the taxpayer:
                            ``(i) Expenses for household services.
                            ``(ii) Expenses for the care of a 
                        qualifying individual.
                Such term shall not include any amount paid for 
                services outside the taxpayer's household at a camp 
                where the qualifying individual stays overnight.
                    ``(B) Exception.--Employment-related expenses 
                described in subparagraph (A) which are incurred for 
                services outside the taxpayer's household shall be 
                taken into account only if incurred for the care of--
                            ``(i) a qualifying individual described in 
                        paragraph (1)(A), or
                            ``(ii) a qualifying individual (not 
                        described in paragraph (1)(A)) who regularly 
                        spends at least 8 hours each day in the 
                        taxpayer's household.
                    ``(C) Dependent care centers.--Employment-related 
                expenses described in subparagraph (A) which are 
                incurred for services provided outside the taxpayer's 
                household by a dependent care center (as defined in 
                subparagraph (D)) shall be taken into account only if--
                            ``(i) such center complies with all 
                        applicable laws and regulations of a State or 
                        unit of local government, and
                            ``(ii) the requirements of subparagraph (B) 
                        are met.
                    ``(D) Dependent care center defined.--For purposes 
                of this paragraph, the term `dependent care center' 
                means any facility which--
                            ``(i) provides care for more than six 
                        individuals (other than individuals who reside 
                        at the facility), and
                            ``(ii) receives a fee, payment, or grant 
                        for providing services for any of the 
                        individuals (regardless of whether such 
                        facility is operated for profit).
    ``(c) Dollar Limit on Amount Creditable.--The amount of the 
employment-related expenses incurred during any taxable year which may 
be taken into account under subsection (a) shall not exceed--
            ``(1) $5,000 if there is 1 qualifying individual with 
        respect to the taxpayer for such taxable year, or
            ``(2) $10,000 if there are 2 or more qualifying individuals 
        with respect to the taxpayer for such taxable year.
The amount determined under paragraph (1) or (2) (whichever is 
applicable) shall be reduced by the aggregate amount excludable from 
gross income under section 129 for the taxable year.
    ``(d) Earned Income Limitation.--
            ``(1) In general.--Except as otherwise provided in this 
        subsection, the amount of the employment-related expenses 
        incurred during any taxable year which may be taken into 
        account under subsection (a) shall not exceed--
                    ``(A) in the case of an individual who is not 
                married at the close of such year, such individual's 
                earned income for such year, or
                    ``(B) in the case of an individual who is married 
                at the close of such year, the lesser of such 
                individual's earned income or the earned income of his 
                spouse for such year.
            ``(2) Special rule for spouse who is a student or incapable 
        of caring for himself.--In the case of a spouse who is a 
        student or a qualifying individual described in subsection 
        (b)(1)(C), for purposes of paragraph (1), such spouse shall be 
        deemed for each month during which such spouse is a full-time 
        student at an educational institution, or is such a qualifying 
        individual, to be gainfully employed and to have earned income 
        of not less than--
                    ``(A) $250 if subsection (c)(1) applies for the 
                taxable year, or
                    ``(B) $500 if subsection (c)(2) applies for the 
                taxable year.
        In the case of any husband and wife, this paragraph shall apply 
        with respect to only one spouse for any one month.
    ``(e) Special Rules.--For purposes of this section--
            ``(1) Place of abode.--An individual shall not be treated 
        as having the same principal place of abode as the taxpayer if 
        at any time during the taxable year of the taxpayer the 
        relationship between the individual and the taxpayer is in 
        violation of local law.
            ``(2) Married couples must file joint return.--If the 
        taxpayer is married at the close of the taxable year, the 
        credit shall be allowed under subsection (a) only if the 
        taxpayer and his spouse file a joint return for the taxable 
        year.
            ``(3) Marital status.--An individual legally separated from 
        his spouse under a decree of divorce or of separate maintenance 
        shall not be considered as married.
            ``(4) Certain married individuals living apart.--If--
                    ``(A) an individual who is married and who files a 
                separate return--
                            ``(i) maintains as his home a household 
                        which constitutes for more than one-half of the 
                        taxable year the principal place of abode of a 
                        qualifying individual, and
                            ``(ii) furnishes over half of the cost of 
                        maintaining such household during the taxable 
                        year, and
                    ``(B) during the last 6 months of such taxable year 
                such individual's spouse is not a member of such 
                household,
        such individual shall not be considered as married.
            ``(5) Special dependency test in case of divorced parents, 
        etc.--If--
                    ``(A) section 152(e) applies to any child with 
                respect to any calendar year, and
                    ``(B) such child is under the age of 13 or is 
                physically or mentally incapable of caring for himself,
        in the case of any taxable year beginning in such calendar 
        year, such child shall be treated as a qualifying individual 
        described in subparagraph (A) or (B) of subsection (b)(1) 
        (whichever is appropriate) with respect to the custodial parent 
        (as defined in section 152(e)(3)(A)), and shall not be treated 
        as a qualifying individual with respect to the noncustodial 
        parent.
            ``(6) Payments to related individuals.--No credit shall be 
        allowed under subsection (a) for any amount paid by the 
        taxpayer to an individual--
                    ``(A) with respect to whom, for the taxable year, a 
                deduction under section 151(c) (relating to deduction 
                for personal exemptions for dependents) is allowable 
                either to the taxpayer or his spouse, or
                    ``(B) who is a child of the taxpayer (within the 
                meaning of section 152(f)(1)) who has not attained the 
                age of 19 at the close of the taxable year.
        For purposes of this paragraph, the term `taxable year' means 
        the taxable year of the taxpayer in which the service is 
        performed.
            ``(7) Student.--The term `student' means an individual who 
        during each of 5 calendar months during the taxable year is a 
        full-time student at an educational organization.
            ``(8) Educational organization.--The term `educational 
        organization' means an educational organization described in 
        section 170(b)(1)(A)(ii).
            ``(9) Identifying information required with respect to 
        service provider.--No credit shall be allowed under subsection 
        (a) for any amount paid to any person unless--
                    ``(A) the name, address, and taxpayer 
                identification number of such person are included on 
                the return claiming the credit, or
                    ``(B) if such person is an organization described 
                in section 501(c)(3) and exempt from tax under section 
                501(a), the name and address of such person are 
                included on the return claiming the credit.
        In the case of a failure to provide the information required 
        under the preceding sentence, the preceding sentence shall not 
        apply if it is shown that the taxpayer exercised due diligence 
        in attempting to provide the information so required.
            ``(10) Identifying information required with respect to 
        qualifying individuals.--No credit shall be allowed under this 
        section with respect to any qualifying individual unless the 
        TIN of such individual is included on the return claiming the 
        credit.
    ``(f) Adjustment for Inflation.--In the case of any taxable year 
beginning after December 31, 2008, the $30,000 amount under subsection 
(a)(2) and each of the dollar amounts under subsection (c) shall be 
increased by an amount equal to--
            ``(1) such dollar amount, multiplied by
            ``(2) the cost-of-living adjustment determined under 
        section 1(f)(3) for the calendar year in which the taxable year 
        begins by substituting `2007' for `1992' in subparagraph (B) 
        thereof.
If the dollar amount as adjusted under the preceding sentence is not a 
multiple of $10, such amount shall be rounded to the nearest multiple 
of $10.
    ``(g) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary to carry out the purposes of this section.''.
    (b) Conforming Amendments.--
            (1) Subpart A of part IV of subchapter A of chapter 1 of 
        the Internal Revenue Code of 1986 is amended by striking 
        section 21.
            (2) Section 23(f)(1) (relating to filing requirements) is 
        amended by striking ``section 21(e)'' and inserting ``section 
        36(e)''.
            (3) Section 35(g)(6) (relating to marital status) is 
        amended by striking ``section 21(e)'' and inserting ``section 
        36(e)''.
            (4) Section 129(a)(2) (relating to limitation of exclusion) 
        is amended by striking ``section 21(e)'' and inserting 
        ``section 36(e)''.
            (5) Section 129(b)(2) (relating to special rule for certain 
        spouses) is amended by striking ``section 21(d)(2)'' and 
        inserting ``section 36(d)(2)''.
            (6) Section 129(e)(1) (relating to dependent care 
        assistance) is amended by striking ``section 21(b)(2)'' and 
        inserting ``section 36(b)(2)''.
            (7) Section 213(e) (relating to exclusion of amounts 
        allowed for care of certain dependents) is amended by striking 
        ``section 21'' and inserting ``section 36''.
            (8) Section 6213(g)(2) (relating to mathematical or 
        clerical error) is amended--
                    (A) by striking ``section 21'' in subparagraph (H) 
                and inserting ``section 36'', and
                    (B) by striking ``section 21, 24, or 32'' in 
                subparagraph (L) and inserting ``section 24, 32, or 
                36''.
    (c) 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 36 and 
        inserting the following new items:

``Sec. 36. Expenses for household and dependent care services necessary 
                            for gainful employment.
``Sec. 37. Overpayments of tax.''.
            (2) The table of sections for subpart A 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 21.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2007.

SEC. 3. EXPANSION OF TEACHER EXPENSES DEDUCTION.

    (a) In General.--Subparagraph (D) of section 62(a)(2) (relating to 
certain expenses of elementary and secondary school teachers) is 
amended to read as follows:
                    ``(D) Certain expenses of elementary and secondary 
                school teachers.--
                            ``(i) In general.--The deductions allowed 
                        by section 162 which consist of expenses, not 
                        in excess of $450, paid or incurred by an 
                        eligible educator--
                                    ``(I) in connection with books, 
                                supplies (other than nonathletic 
                                supplies for courses of instruction in 
                                health or physical education), computer 
                                equipment (including related software 
                                services) and other equipment, and 
                                supplementary materials used by the 
                                eligible educator, and
                                    ``(II) for the professional 
                                development of the eligible educator.
                            ``(ii) Inflation adjustment.--In the case 
                        of any taxable year beginning after 2008, the 
                        $450 dollar amount under clause (i) shall be 
                        increased by an amount equal to--
                                    ``(I) such dollar amount, 
                                multiplied by
                                    ``(II) 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 2007' for 
                                `calendar year 1992' in subparagraph 
                                (B) thereof.
                        If any amount as adjusted under the preceding 
                        sentence is not a multiple of $10, such amount 
                        shall be rounded to the next lowest multiple of 
                        $10.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2007.

SEC. 4. PERMANENT EXTENSION OF ADOPTION TAX RELIEF.

    Section 901 of the Economic Growth and Tax Relief Reconciliation 
Act of 2001 is amended by adding at the end the following new 
subsection:
    ``(c) Exception.--Subsection (a) shall not apply to the amendments 
made by section 202 (relating to expansion of adoption credit and 
adoption assistance programs).''.
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