[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 386 Introduced in House (IH)]

111th CONGRESS
  1st Session
                                H. R. 386

To amend the Internal Revenue Code of 1986 to simplify and improve the 
                   current education tax incentives.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 9, 2009

 Mr. Doggett introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to simplify and improve the 
                   current education tax incentives.

    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 ``College Learning Access Simplicity 
and Savings Act of 2009'' or the ``CLASS Act of 2009''.

SEC. 2. CREATION OF COLLEGE AFFORDABILITY CREDIT AND SIMPLIFICATION OF 
              EDUCATION TAX BENEFITS.

    (a) College Affordability Credit.--
            (1) Paragraph (1) of section 25A(a) of the Internal Revenue 
        Code of 1986 is amended by striking ``the Hope Scholarship 
        Credit'' and inserting ``the College Affordability Credit''.
            (2) Subsection (b) of section 25A of such Code is amended 
        to read as follows:
    ``(b) College Affordability Credit.--
            ``(1) Allowance of credit.--In the case of any eligible 
        student for whom an election is in effect under this section 
        for any taxable year, there shall be allowed as a credit 
        against the tax imposed by this chapter for the taxable year an 
        amount equal to the sum of--
                    ``(A) 100 percent of so much of the qualified 
                tuition and related expenses paid by the taxpayer 
                during the taxable year (with respect to attendance of 
                the eligible student at an eligible educational 
                institution during any academic period beginning in 
                such taxable year) as does not exceed $1,200, and
                    ``(B) 50 percent of so much of such expenses as 
                exceeds $1,200, but does not exceed $4,800.
            ``(2) Lifetime credit limitation.--The amount of the credit 
        allowed under paragraph (1) for any taxable year with respect 
        to any eligible student shall not exceed the excess of--
                    ``(A) $12,000, over
                    ``(B) the aggregate credit allowed under subsection 
                (a) with respect to such eligible student for all prior 
                taxable years.
            ``(3) Credit allowed only for first 2 years of graduate 
        education.--No credit shall be allowed under subsection (a)(1) 
        for a taxable year with respect to the qualified tuition and 
        related expenses of an eligible student if the student has 
        completed (before the beginning of such taxable year) 2 years 
        of graduate education at one or more eligible educational 
        institutions.
            ``(4) Credit allowed for year only if individual is at 
        least \1/2\ time student for portion of year.--The College 
        Affordability Credit under subsection (a)(1) shall not be 
        allowed for a taxable year with respect to the qualified 
        tuition and related expenses of an individual unless such 
        individual is an eligible student for at least one academic 
        period which begins during such year.
            ``(5) Eligible student.--The term `eligible student' means, 
        with respect to any academic period, any individual who--
                    ``(A) meets the requirements of section 484(a)(1) 
                of the Higher Education Act of 1965 (20 U.S.C. 
                1091(a)(1)), as in effect on the date of the enactment 
                of the Taxpayer Relief Act of 1997, and
                    ``(B) is carrying at least \1/2\ the normal full-
                time work load for the course of study the student is 
                pursuing.''.
    (b) Qualified Tuition and Related Expenses To Include Required 
Course Materials.--Subparagraph (A) of section 25A(f)(1) of such Code 
is amended by striking ``tuition and fees'' and inserting ``tuition, 
fees, and course materials''.
    (c) Increased Income Limitation.--Subsection (d) of section 25A of 
such Code is amended to read as follows:
    ``(d) Limitation Based on Modified Adjusted Gross Income.--
            ``(1) In general.--The amount which would (but for this 
        paragraph) be taken into account under subsection (a) for the 
        taxable year shall be reduced (but not below zero) by the 
        amount determined under paragraph (2).
            ``(2) Amount of reduction.--The amount determined under 
        this subparagraph is the amount which bears the same ratio to 
        the amount which would be so taken into account as--
                    ``(A) the excess of--
                            ``(i) the taxpayer's modified adjusted 
                        gross income for such taxable year, over
                            ``(ii) the applicable amount under 
                        paragraph (4), bears to
                    ``(B) $25,000 ($50,000 in the case of a joint 
                return).
            ``(3) Modified adjusted gross income.--The term `modified 
        adjusted gross income' means the adjusted gross income of the 
        taxpayer for the taxable year increased by any amount excluded 
        from gross income under section 911, 931, or 933.
            ``(4) Applicable amount.--The applicable amount under this 
        subparagraph is--
                    ``(A) in the case of a joint return, 200 percent of 
                the dollar amount in effect under subparagraph (B) for 
                the taxable year, and
                    ``(B) in any other case, $50,000.''.
    (d) Modified Inflation Adjustment.--Paragraph (2) of section 25A(h) 
of such Code is amended to read as follows:
            ``(2) Income limits.--
                    ``(A) In general.--In the case of a taxable year 
                beginning after 2009, the $50,000 amount in subsection 
                (d)(4)(B) shall each 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 2008' 
                        for `calendar year 1992' in subparagraph (B) 
                        thereof.
                    ``(B) Rounding.--If any amount as adjusted under 
                subparagraph (A) is not a multiple of $1,000, such 
                amount shall be rounded to the next lowest multiple of 
                $1,000.''.
    (e) Portion of Credit Refundable.--Section 25A of such Code is 
amended by redesignating subsection (i) as subsection (j) and by 
inserting after subsection (h) the following new subsection:
    ``(i) Portion of Credit Refundable.--
            ``(1) In general.--The aggregate credits allowed to a 
        taxpayer under subpart C shall be increased by an amount equal 
        to 50 percent of the portion of the amount of the credit which 
        would have been allowed to the taxpayer under this section by 
        reason of subsection (b) (without regard to this subsection and 
        the limitation under section 26(a)(2)). The amount of the 
        credit allowed under this subsection shall not be treated as a 
        credit allowed under this subpart and shall reduce the amount 
        of credit otherwise allowable under subsection (a) (without 
        regard to section 26(a)(2)).
            ``(2) Reduction of credit.--In the case of a taxable year 
        to which 26(a)(2) does not apply, the credit determined under 
        paragraph (1) for the taxable year shall be reduced by the 
        amount of tax imposed by section 55 (relating to alternative 
        minimum tax) with respect to such taxpayer for such taxable 
        year.''.
    (f) Repeal of Deduction for Qualified Tuition and Related 
Expenses.--
            (1) In general.--Part VII of subchapter B of chapter 1 of 
        such Code (relating to additional itemized deductions for 
        individuals) is amended by striking section 222.
            (2) Clerical amendment.--The table of sections for part VII 
        of subchapter B of chapter 1 of such Code is amended by 
        striking the item relating to section 222.
    (g) Conforming Amendments.--
            (1) The heading for Section 25A of such Code is amended by 
        striking ``hope'' and inserting ``college affordability''.
            (2) Section 25A(c)(2)(A) of such Code is amended--
                    (A) by striking ``Hope Scholarship Credit'' and 
                inserting ``College Affordability Credit'', and
                    (B) by striking ``Hope'' in the heading thereof and 
                inserting ``College affordability''.
            (3) Section 62(a) of such Code is amended by striking 
        paragraph (18).
            (4) Subparagraph (A) of section 86(b)(2) of such Code is 
        amended by striking ``, 222''.
            (5) Subparagraph (A) of section 135(c)(4) of such Code is 
        amended by striking ``, 222''.
            (6) Subparagraph (A) of section 137(b)(3) of such Code is 
        amended by striking ``, 222''.
            (7) Subparagraph (A) of section 199(d)(2) of such Code is 
        amended by striking ``, 222''.
            (8) Clause (ii) of section 219(g)(3)(A) of such Code is 
        amended by striking ``, 222''.
            (9) Clause (i) of section 221(b)(2)(C) of such Code is 
        amended by striking ``, 222''.
            (10) Clause (iii) of section 469(i)(3)(F) of such Code is 
        amended by striking ``221, and 222'' and inserting ``and 221''.
            (11) Paragraph (3) of section 221(d) of such Code is 
        amended by striking ``25A(b)(3)'' and inserting ``25A(b)(5)''.
            (12) Clause (i) of section 529(e)(3)(B) of such Code is 
        amended by striking ``section 25A(b)(3)'' and inserting 
        ``section 221(d)(3)''.
            (13) The heading for clause (v) of section 529(c)(3)(B) of 
        such Code is amended by striking ``Hope'' and inserting 
        ``College affordability''.
            (14) The heading for Subparagraph (C) of section 530(d)(2) 
        of such Code is amended by striking ``Hope'' and inserting 
        ``College affordability''.
            (15) Section 1400O of such Code is amended by adding at the 
        end the following flush sentence:
``For purposes of this section, any reference to section 25A shall be 
treated as a reference to such section as in effect on the day before 
the date of the enactment of this sentence.''.
            (16) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting ``, 25A,'' after ``section 
        35''.
    (h) Clerical Amendment.--The table of sections for subpart A of 
part IV of subchapter A of chapter 1 of such Code is amended by 
striking the item relating to section 25A and inserting the following 
new item:

``Sec. 25A. College Affordability and Lifetime Learning credits.''.
    (i) Effective Date.--The amendments made by this section shall 
apply to expenses paid after December 31, 2008, for education furnished 
in academic periods beginning after such date.
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