[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 690 Introduced in Senate (IS)]

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116th CONGRESS
  1st Session
                                 S. 690

To amend the Internal Revenue Code of 1986 to make the child tax credit 
  fully refundable, establish an increased child tax credit for young 
                   children, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 6, 2019

 Mr. Bennet (for himself, Mr. Brown, Ms. Baldwin, Mr. Blumenthal, Mr. 
    Booker, Mr. Cardin, Mr. Casey, Mr. Coons, Ms. Cortez Masto, Ms. 
  Duckworth, Mr. Durbin, Mrs. Gillibrand, Ms. Harris, Ms. Hassan, Mr. 
Heinrich, Ms. Hirono, Mr. Jones, Ms. Klobuchar, Mr. Leahy, Mr. Markey, 
  Mr. Menendez, Mr. Merkley, Mr. Murphy, Mrs. Murray, Mr. Peters, Mr. 
 Reed, Mr. Sanders, Mr. Schatz, Mr. Schumer, Mrs. Shaheen, Ms. Smith, 
 Ms. Stabenow, Mr. Tester, Mr. Van Hollen, Ms. Warren, Mr. Whitehouse, 
and Mr. Wyden) 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 make the child tax credit 
  fully refundable, establish an increased child tax credit for young 
                   children, 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.

    This Act may be cited as the ``American Family Act of 2019''.

SEC. 2. ESTABLISHMENT OF FULLY REFUNDABLE CHILD TAX CREDIT.

    (a) Elimination of Existing Child Tax Credit.--Subpart A of part IV 
of subchapter A of chapter 1 of subtitle A of the Internal Revenue Code 
of 1986 is amended by striking section 24.
    (b) Establishment of Fully Refundable Child Tax Credit.--Subpart C 
of part IV of subchapter A of chapter 1 of subtitle A of such Code is 
amended by inserting after section 36B the following new section:

``SEC. 36C. CHILD TAX CREDIT.

    ``(a) Allowance of Credit.--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--
            ``(1) with respect to each qualifying child of the taxpayer 
        who has attained 6 years of age before the close of such 
        taxable year and for which the taxpayer is allowed a deduction 
        under section 151, an amount equal to $3,000, and
            ``(2) with respect to each qualifying child of the taxpayer 
        who has not attained 6 years of age before the close of such 
        taxable year and for which the taxpayer is allowed a deduction 
        under section 151, an amount equal to 120 percent of the dollar 
        amount in paragraph (1).
    ``(b) Limitation.--
            ``(1) In general.--The amount of the credit allowable under 
        subsection (a) shall be reduced (but not below zero) by the 
        applicable amount for each $1,000 (or fraction thereof) by 
        which the taxpayer's modified adjusted gross income exceeds the 
        threshold amount. For purposes of the preceding sentence, the 
        term `modified adjusted gross income' means adjusted gross 
        income increased by any amount excluded from gross income under 
        section 911, 931, or 933.
            ``(2) Threshold amount.--
                    ``(A) In general.--For purposes of paragraph (1), 
                the term `threshold amount' means--
                            ``(i) $180,000 in the case of a joint 
                        return,
                            ``(ii) $130,000 in the case of an 
                        individual who is not married, and
                            ``(iii) $90,000 in the case of a married 
                        individual filing a separate return.
                    ``(B) Marital status.--For purposes of this 
                paragraph, marital status shall be determined under 
                section 7703.
            ``(3) Applicable amount.--For purposes of paragraph (1), 
        the term `applicable amount' means an amount equal to the 
        quotient of--
                    ``(A) the amount of the credit allowable under 
                subsection (a), as determined without regard to this 
                subsection, divided by
                    ``(B) an amount equal to the product of--
                            ``(i) $20, multiplied by
                            ``(ii) the total number of qualifying 
                        children of the taxpayer.
    ``(c) Qualifying Child.--
            ``(1) In general.--In this section, the term `qualifying 
        child' means a qualifying child of the taxpayer (as defined in 
        section 152(c)) who has not attained 17 years of age.
            ``(2) Exception for certain non-citizens.--The term 
        `qualifying child' shall not include any individual who would 
        not be a dependent if subparagraph (A) of section 152(b)(3) 
        were applied without regard to all that follows `resident of 
        the United States'.
    ``(d) Inflation Adjustment.--
            ``(1) In general.--In the case of any taxable year 
        beginning after 2020, the $3,000 amount in subsection (a)(1) 
        shall be increased by an amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under paragraph (2) for the calendar year in which the 
                taxable year begins.
            ``(2) Cost-of-living adjustment.--For purposes of paragraph 
        (1), the cost-of-living adjustment for any calendar year is the 
        percentage (if any) by which--
                    ``(A) the CPI for the preceding calendar year (as 
                determined pursuant to section 1(f)(4)), exceeds
                    ``(B) the CPI for calendar year 2019.
            ``(3) Rounding.--If any increase determined under paragraph 
        (1) is not a multiple of $50, such increase shall be rounded to 
        the nearest multiple of $50.
    ``(e) Partial Non-Refundable Credit Allowed for Certain Other 
Dependents.--
            ``(1) In general.--In the case of a taxable year beginning 
        after December 31, 2019, and before January 1, 2026, the 
        aggregate credits allowed to a taxpayer under subpart A shall 
        be increased by $500 for each dependent of the taxpayer (as 
        defined in section 152) other than a qualifying child described 
        in subsection (c). The amount of the credit allowed under this 
        subsection shall not be treated as a credit allowed under this 
        subpart.
            ``(2) Exception for certain noncitizens.--Paragraph (1) 
        shall not apply with respect to any individual who would not be 
        a dependent if subparagraph (A) of section 152(b)(3) were 
        applied without regard to all that follows `resident of the 
        United States'.
            ``(3) Limitation.--
                    ``(A) In general.--The amount of the credit 
                allowable under paragraph (1) shall be reduced (but not 
                below zero) by $50 for each $1,000 (or fraction 
                thereof) by which the taxpayer's modified adjusted 
                gross income exceeds the threshold amount.
                    ``(B) Modified adjusted gross income.--For purposes 
                of subparagraph (A), the term `modified adjusted gross 
                income' means adjusted gross income increased by any 
                amount excluded from gross income under section 911, 
                931, or 933.
                    ``(C) Threshold amount.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A), the term `threshold amount' 
                        means--
                                    ``(I) $200,000 in the case of a 
                                joint return,
                                    ``(II) $150,000 in the case of an 
                                individual who is not married, and
                                    ``(III) $100,000 in the case of a 
                                married individual filing a separate 
                                return.
                            ``(ii) Martial status.--For purposes of 
                        this subparagraph, marital status shall be 
                        determined under section 7703.
    ``(f) Identification Requirements.--
            ``(1) Qualifying child and dependent identification 
        requirement.--No credit shall be allowed under this section to 
        a taxpayer with respect to any qualifying child or dependent 
        unless the taxpayer includes the name and taxpayer 
        identification number of such qualifying child or dependent on 
        the return of tax for the taxable year and such taxpayer 
        identification number was issued on or before the due date for 
        filing such return.
            ``(2) Taxpayer identification requirement.--No credit shall 
        be allowed under this section if the taxpayer identification 
        number of the taxpayer was issued after the due date for filing 
        the return for the taxable year.
    ``(g) Taxable Year Must Be Full Taxable Year.--Except in the case 
of a taxable year closed by reason of the death of the taxpayer, no 
credit shall be allowable under this section in the case of a taxable 
year covering a period of less than 12 months.
    ``(h) Restrictions on Taxpayers Who Improperly Claimed Credit in 
Prior Year.--
            ``(1) Taxpayers making prior fraudulent or reckless 
        claims.--
                    ``(A) In general.--No credit shall be allowed under 
                this section for any taxable year in the disallowance 
                period.
                    ``(B) Disallowance period.--For purposes of 
                subparagraph (A), the disallowance period is--
                            ``(i) the period of 10 taxable years after 
                        the most recent taxable year for which there 
                        was a final determination that the taxpayer's 
                        claim of credit under this section was due to 
                        fraud, and
                            ``(ii) the period of 2 taxable years after 
                        the most recent taxable year for which there 
                        was a final determination that the taxpayer's 
                        claim of credit under this section was due to 
                        reckless or intentional disregard of rules and 
                        regulations (but not due to fraud).
            ``(2) Taxpayers making improper prior claims.--In the case 
        of a taxpayer who is denied credit under this section for any 
        taxable year as a result of the deficiency procedures under 
        subchapter B of chapter 63, no credit shall be allowed under 
        this section for any subsequent taxable year unless the 
        taxpayer provides such information as the Secretary may require 
        to demonstrate eligibility for such credit.
    ``(i) Reconciliation of Credit and Advance Credit.--
            ``(1) In general.--The amount of the credit allowed under 
        this section for any taxable year shall be reduced (but not 
        below zero) by the aggregate amount of any advance payments of 
        such credit under section 7527A for such taxable year.
            ``(2) Excess advance payments.--If the aggregate amount of 
        advance payments under section 7527A for the taxable year 
        exceed the amount of the credit allowed under this section for 
        such taxable year (determined without regard to paragraph (1)), 
        the tax imposed by this chapter for such taxable year shall be 
        increased by the amount of such excess''.
    (c) Advance Payment of Credit.--Chapter 77 of the Internal Revenue 
Code of 1986 is amended by inserting after section 7527 the following 
new section:

``SEC. 7527A. ADVANCE PAYMENT OF CHILD TAX CREDIT.

    ``(a) In General.--As soon as practicable and not later than 1 year 
after the date of the enactment of this section, the Secretary shall 
establish a program for making advance payments of the credit allowed 
under subsection (a) of section 36C on a monthly basis (determined 
without regard to subsection (i)(1) of such section), or as frequently 
as the Secretary determines to be administratively feasible, to 
taxpayers allowed such credit.
    ``(b) Limitation.--
            ``(1) In general.--The Secretary may make payments under 
        subsection (a) only to the extent that the total amount of such 
        payments made to any taxpayer during the taxable year does not 
        exceed an amount equal to the excess, if any, of--
                    ``(A) subject to paragraph (2), the amount 
                determined under subsection (a) of section 36C with 
                respect to such taxpayer (determined without regard to 
                subsection (i) of such section) for such taxable year, 
                over
                    ``(B) the estimated tax imposed by subtitle A, as 
                reduced by the credits allowable under subparts A and C 
                (with the exception of section 36C) of such part IV, 
                with respect to such taxpayer for such taxable year, as 
                determined in such manner as the Secretary deems 
                appropriate.
            ``(2) Application of threshold amount limitation.--The 
        program described in subsection (a) shall make reasonable 
        efforts to apply the limitation of section 36C(b) with respect 
        to payments made under such program.''.
    (d) Conforming Amendments.--
            (1) The table of sections for subpart A of part IV of 
        subchapter A of chapter 1 of subtitle A of the Internal Revenue 
        Code of 1986 is amended by striking the item relating to 
        section 24.
            (2) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of subtitle A of such Code is amended 
        by inserting after the item relating to section 36B the 
        following:

``Sec. 36C. Child tax credit.''.
            (3) The table of sections for chapter 77 of such Code is 
        amended by inserting after the item relating to section 7527 
        the following new item:

``Sec. 7527A. Advance payment of child tax credit.''.
            (4) Subparagraph (B) of section 45R(f)(3) of such Code is 
        amended to read as follows:
                    ``(B) Special rule.--Any amounts paid pursuant to 
                an agreement under section 3121(l) (relating to 
                agreements entered into by American employers with 
                respect to foreign affiliates) which are equivalent to 
                the taxes referred to in subparagraph (A) shall be 
                treated as taxes referred to in such subparagraph.''.
            (5) Section 152(f)(6)(B)(ii) of such Code is amended by 
        striking ``section 24'' and inserting ``section 36C''.
            (6) Paragraph (26) of section 501(c) of such Code is 
        amended in the flush matter at the end by striking ``section 
        24(c))'' and inserting ``section 36C(c))''.
            (7) Section 6211(b)(4)(A) of such Code is amended--
                    (A) by striking ``24(d),'', and
                    (B) by inserting ``36C(a),'' after ``36B,''.
            (8) Section 6213(g)(2) of such Code is amended--
                    (A) in subparagraph (I), by striking ``section 
                24(e)'' and inserting ``section 36C(f)'', and
                    (B) in subparagraph (L), by striking ``24, or 32'' 
                and inserting ``32, or 36C''.
            (9) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting ``36C(a),'' after 
        ``36B,''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2019.

SEC. 3. PAYMENTS TO POSSESSIONS.

    (a) Mirror Code Possession.--The Secretary of the Treasury shall 
pay to each possession of the United States with a mirror code tax 
system amounts equal to the loss to that possession by reason of the 
application of section 36C of the Internal Revenue Code of 1986 (as 
added by section 2) with respect to taxable years beginning after 2019. 
Such amounts shall be determined by the Secretary of the Treasury based 
on information provided by the government of the respective possession.
    (b) Other Possessions.--The Secretary of the Treasury shall pay to 
each possession of the United States which does not have a mirror code 
tax system amounts estimated by the Secretary of the Treasury as being 
equal to the aggregate benefits that would have been provided to 
residents of such possession by reason of the application of section 
36C of such Code (as so added) for taxable years beginning after 2019 
if a mirror code tax system had been in effect in such possession. The 
preceding sentence shall not apply with respect to any possession of 
the United States unless such possession has a plan, which has been 
approved by the Secretary of the Treasury, under which such possession 
will promptly distribute such payments to the residents of such 
possession.
    (c) Coordination With Credit Allowed Against United States Income 
Taxes.--No credit shall be allowed against United States income taxes 
for any taxable year under section 36C of the Internal Revenue Code of 
1986 (as so added) to any person--
            (1) to whom a credit is allowed against taxes imposed by 
        the possession by reason of the amendments made by this section 
        for such taxable year, or
            (2) who is eligible for a payment under a plan described in 
        subsection (b) with respect to such taxable year.
    (d) Definitions and Special Rules.--
            (1) Possession of the united states.--For purposes of this 
        section, the term ``possession of the United States'' includes 
        the Commonwealth of Puerto Rico and the Commonwealth of the 
        Northern Mariana Islands.
            (2) Mirror code tax system.--For purposes of this section, 
        the term ``mirror code tax system'' means, with respect to any 
        possession of the United States, the income tax system of such 
        possession if the income tax liability of the residents of such 
        possession under such system is determined by reference to the 
        income tax laws of the United States as if such possession were 
        the United States.
            (3) Treatment of payments.--For purposes of section 
        1324(b)(2) of title 31, United States Code, the payments under 
        this section shall be treated in the same manner as a refund 
        due from the credit allowed under section 36C of the Internal 
        Revenue Code of 1986.
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