Short title

This Act may be cited as the

Food and Fuel Family Savings Act

Inflation rebates to individuals

(a)

In general

Subchapter B of chapter 65 of the Internal Revenue Code of 1986 is amended by inserting after section 6428B the following new section:

6428C.

Inflation rebates to individuals

(a)

In general

In the case of an eligible individual, there shall be allowed as a credit against the tax imposed by subtitle A for the first taxable year beginning in 2022 an amount equal to the inflation rebate amount determined for such taxable year.(b)

Inflation rebate amount

For purposes of this section, the term inflation rebate amount means, with respect to any taxpayer for any taxable year, the sum of— (1)$600 ($1,200 in the case of a joint return), plus(2)$600 multiplied by the number of dependents of the taxpayer for such taxable year.(c)

Eligible individual

For purposes of this section, the term eligible individual means any individual other than—(1)any nonresident alien individual,(2)any individual who is a dependent of another taxpayer for a taxable year beginning in the calendar year in which the individual’s taxable year begins, and(3)an estate or trust.(d)

Limitation based on adjusted gross income

(1)

In general

The amount of the credit allowed by subsection (a) (determined without regard to this subsection and subsection (f)) shall be reduced (but not below zero) by the amount which bears the same ratio to such credit (as so determined) as—(A)the excess of—(i)the taxpayer’s adjusted gross income for such taxable year, over(ii)$40,000, bears to(B)$5,000.(2)

Special rules

(A)

Joint return or surviving spouse

In the case of a joint return or a surviving spouse (as defined in section 2(a)), paragraph (1) shall be applied by substituting $80,000 for $40,000 and $10,000 for $5,000.(B)

Head of household

In the case of a head of household (as defined in section 2(b)), paragraph (1) shall be applied by substituting $60,000 for $40,000 and $7,500 for $5,000.(e)

Definitions and special rules

(1)

Dependent defined

For purposes of this section, the term dependent has the meaning given such term by section 152. (2)

Identification number requirement

(A)

In general

In the case of a return other than a joint return, the $600 amount in subsection (b)(1) shall be treated as being zero unless the taxpayer includes the valid identification number of the taxpayer on the return of tax for the taxable year.(B)

Joint returns

In the case of a joint return, the $1,200 amount in subsection (b)(1) shall be treated as being—(i)$600 if the valid identification number of only 1 spouse is included on the return of tax for the taxable year, and(ii)zero if the valid identification number of neither spouse is so included.(C)

Dependents

A dependent shall not be taken into account under subsection (b)(2) unless the valid identification number of such dependent is included on the return of tax for the taxable year.(D)

Valid identification number

(i)

In general

For purposes of this paragraph, the term valid identification number means a social security number issued to an individual by the Social Security Administration on or before the due date for filing the return for the taxable year.(ii)

Adoption taxpayer identification number

For purposes of subparagraph (C), in the case of a dependent who is adopted or placed for adoption, the term valid identification number shall include the adoption taxpayer identification number of such dependent.(E)

Special rule for members of the Armed Forces

Subparagraph (B) shall not apply in the case where at least 1 spouse was a member of the Armed Forces of the United States at any time during the taxable year and the valid identification number of at least 1 spouse is included on the return of tax for the taxable year.(F)

Coordination with certain advance payments

In the case of any payment determined pursuant to subsection (g)(6), a valid identification number shall be treated for purposes of this paragraph as included on the taxpayer’s return of tax if such valid identification number is available to the Secretary as described in such subsection.(G)

Mathematical or clerical error authority

Any omission of a correct valid identification number required under this paragraph shall be treated as a mathematical or clerical error for purposes of applying section 6213(g)(2) to such omission.(3)

Credit treated as refundable

The credit allowed by subsection (a) shall be treated as allowed by subpart C of part IV of subchapter A of chapter 1.(f)

Coordination with advance refunds of credit

(1)

Reduction of refundable credit

The amount of the credit which would (but for this paragraph) be allowable under subsection (a) shall be reduced (but not below zero) by the aggregate refunds and credits made or allowed to the taxpayer (or, except as otherwise provided by the Secretary, any dependent of the taxpayer) under subsection (g). Any failure to so reduce the credit shall be treated as arising out of a mathematical or clerical error and assessed according to section 6213(b)(1).(2)

Joint returns

Except as otherwise provided by the Secretary, in the case of a refund or credit made or allowed under subsection (g) with respect to a joint return, half of such refund or credit shall be treated as having been made or allowed to each individual filing such return.(3)

Coordination with possessions of the United States

For purposes of this subsection, payments made under subsection (g) include payments made by any jurisdiction other than the United States under section 6428C(g) of the income tax law of such jurisdiction, and payments made by possessions to which section 2(b)(2) of the Food and Fuel Family Savings Act pursuant to a plan described in such section. In carrying out this section, the Secretary shall coordinate with each possession of the United States to prevent any application of this paragraph that is inconsistent with the purposes of this subsection. (g)

Advance refunds and credits

(1)

In general

Subject to paragraphs (5) and (6), each individual who was an eligible individual for such individual’s first taxable year beginning in 2020 shall be treated as having made a payment against the tax imposed by chapter 1 for such taxable year in an amount equal to the advance refund amount for such taxable year.(2)

Advance refund amount

(A)

In general

For purposes of paragraph (1), the advance refund amount is the amount that would have been allowed as a credit under this section for such taxable year if this section (other than subsection (f) and this subsection) had applied to such taxable year.(B)

Treatment of deceased individuals

For purposes of determining the advance refund amount with respect to such taxable year—(i)any individual who was deceased before January 1, 2022, shall be treated for purposes of applying subsection (e)(2) in the same manner as if the valid identification number of such person was not included on the return of tax for such taxable year (except that subparagraph (E) thereof shall not apply), (ii)notwithstanding clause (i), in the case of a joint return with respect to which only 1 spouse is deceased before January 1, 2022, such deceased spouse was a member of the Armed Forces of the United States at any time during the taxable year, and the valid identification number of such deceased spouse is included on the return of tax for the taxable year, the valid identification number of 1 (and only 1) spouse shall be treated as included on the return of tax for the taxable year for purposes of applying subsection (e)(2)(B) with respect to such joint return, and(iii)no amount shall be determined under subsection (e)(2) with respect to any dependent of the taxpayer if the taxpayer (both spouses in the case of a joint return) was deceased before January 1, 2022.(3)

Timing and manner of payments

(A)

Timing

(i)

In general

The Secretary shall, subject to the provisions of this title, refund or credit any overpayment attributable to this section as rapidly as possible.(ii)

Deadline

No refund or credit shall be made or allowed under this subsection after December 31, 2022. (B)

Manner

(i)

In general

Notwithstanding any other provision of law (including section 913 of the Electronic Fund Transfer Act (15 U.S.C. 1693k)), the Secretary shall disburse refunds payable under this subsection by means of a Treasury-sponsored account (as defined in section 208.2 of title 31, Code of Federal Regulations) which is limited to uses at grocery stores and for gasoline.(ii)

Application to possessions

In the case of a possession described in section 2(b)(1) of the Food and Fuel Family Savings Act, refunds payable under this subsection shall be disbursed in a manner determined by the Secretary, in consultation with the chief executive officer of such possession, to be best suited to meet the purposes of this section and, to the extent possible, subject to the same limitations applicable to refunds made under clause (i).(4)

No interest

No interest shall be allowed on any overpayment attributable to this subsection.(5)

Application to individuals who have filed a return of tax for 2021

(A)

Application to 2021 returns filed at time of initial determination

If, at the time of any determination made pursuant to paragraph (3), the individual referred to in paragraph (1) has filed a return of tax for the individual’s first taxable year beginning in 2021, paragraph (1) shall be applied with respect to such individual by substituting 2021 for 2020. (B)

Additional payment

(i)

In general

In the case of any individual who files, before the additional payment determination date, a return of tax for such individual’s first taxable year beginning in 2021, the Secretary shall make a payment (in addition to any payment made under paragraph (1)) to such individual equal to the excess (if any) of—(I)the amount which would be determined under paragraph (1) (after the application of subparagraph (A)) by applying paragraph (1) as of the additional payment determination date, over(II)the amount of any payment made with respect to such individual under paragraph (1).(ii)

Additional payment determination date

The term additional payment determination date means the earlier of—(I)the date which is 90 days after the 2021 calendar year filing deadline, or(II)September 1, 2022.(iii)

2021 calendar year filing deadline

The term 2021 calendar year filing deadline means the date specified in section 6072(a) with respect to returns for calendar year 2021. (6)

Application to certain individuals who have not filed a return of tax for 2020 or 2021 at time of determination

In the case of any individual who, at the time of any determination made pursuant to paragraph (3), has filed a tax return for neither the year described in paragraph (1) nor for the year described in paragraph (5)(A), the Secretary shall, consistent with rules similar to the rules of section 6428A(f)(5), apply paragraph (1) on the basis of information available to the Secretary and shall, on the basis of such information, determine the advance refund amount with respect to such individual without regard to subsection (d) unless the Secretary has reason to know that such amount would otherwise be reduced by reason of such subsection. (7)

Special rule related to time of filing return

Solely for purposes of this subsection, a return of tax shall not be treated as filed until such return has been processed by the Internal Revenue Service.(h)

Regulations

The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section, including—(1)regulations or other guidance providing taxpayers the opportunity to provide the Secretary information sufficient to allow the Secretary to make payments to such taxpayers under subsection (g) (including the determination of the amount of such payment) if such information is not otherwise available to the Secretary, and(2)regulations or other guidance to ensure to the maximum extent administratively practicable that, in determining the amount of any credit under subsection (a) and any credit or refund under subsection (g), an individual is not taken into account more than once, including by different taxpayers and including by reason of a change in joint return status or dependent status between the taxable year for which an advance refund amount is determined and the taxable year for which a credit under subsection (a) is determined. (i)

Outreach

The Secretary shall carry out a robust and comprehensive outreach program to ensure that all taxpayers described in subsection (h)(1) learn of their eligibility for the advance refunds and credits under subsection (g); are advised of the opportunity to receive such advance refunds and credits as provided under subsection (h)(1); and are provided assistance in applying for such advance refunds and credits.

(b)

Treatment of certain possessions

(1)

Payments to possessions with mirror code tax systems

The Secretary of the Treasury shall pay to each possession of the United States which has a mirror code tax system amounts equal to the loss (if any) to that possession by reason of the amendments made by this section. Such amounts shall be determined by the Secretary of the Treasury based on information provided by the government of the respective possession.(2)

Payments to 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 (if any) that would have been provided to residents of such possession by reason of the amendments made by this section if a mirror code tax system had been in effect in such possession. The preceding sentence shall not apply unless the respective possession has a plan, which has been approved by the Secretary of the Treasury, under which such possession will promptly distribute such payments to its residents.(3)

Inclusion of administrative expenses

The Secretary of the Treasury shall pay to each possession of the United States to which the Secretary makes a payment under paragraph (1) or (2) an amount equal to the lesser of—(A)the increase (if any) of the administrative expenses of such possession—(i)in the case of a possession described in paragraph (1), by reason of the amendments made by this section, and(ii)in the case of a possession described in paragraph (2), by reason of carrying out the plan described in such paragraph, or(B)$500,000 ($10,000,000 in the case of Puerto Rico).

The amount described in subparagraph (A) shall be determined by the Secretary of the Treasury based on information provided by the government of the respective possession.

(4)

Coordination with credit allowed against united states income taxes

No credit shall be allowed against United States income taxes under section 6428C of the Internal Revenue Code of 1986 (as added by this section), nor shall any credit or refund be made or allowed under subsection (g) of such section, to any person—(A)to whom a credit is allowed against taxes imposed by the possession by reason of the amendments made by this section, or(B)who is eligible for a payment under a plan described in paragraph (2).(5)

Mirror code tax system

For purposes of this subsection, 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.(6)

Treatment of payments

For purposes of section 1324 of title 31, United States Code, the payments under this subsection shall be treated in the same manner as a refund due from a credit provision referred to in subsection (b)(2) of such section.(c)

Administrative provisions

(1)

Definition of deficiency

Section 6211(b)(4)(A) of the Internal Revenue Code of 1986 is amended by inserting 6428C, after 6428B,. (2)

Exception from reduction or offset

Any refund payable by reason of section 6428C(g) of the Internal Revenue Code of 1986 (as added by this section), or any such refund payable by reason of subsection (b) of this section, shall not be—(A)subject to reduction or offset pursuant to subsection (c), (d), (e), or (f) of section 6402 of the Internal Revenue Code of 1986 or any similar authority permitting offset, or (B)reduced or offset by other assessed Federal taxes that would otherwise be subject to levy or collection.(3)

Conforming amendments

(A)Paragraph (2) of section 1324(b) of title 31, United States Code, is amended by inserting 6428C, after 6428B,.(B)The table of sections for subchapter B of chapter 65 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 6428B the following new item:

Sec. 6428C. Inflation rebates to individuals.

(d)

Other provisions

(1)

Exception from reduction or offset

(A)

In general

The right of any person to any applicable payment under this section shall not be transferable or assignable, at law or in equity, and no applicable payment shall be subject to, execution, levy, attachment, garnishment, or other legal process, or the operation of any bankruptcy or insolvency law.(B)

Applicable payment

For purposes of this subsection, the term applicable paymentmeans—(i)any advance refund amount paid pursuant to section 6428C(g) of Internal Revenue Code of 1986 (as added by this section), (ii)any payment made by a possession of the United States with a mirror code tax system (as defined in subsection (b) of this section) pursuant to such subsection which corresponds to a payment described in clause (i), and (iii)any payment made by a possession of the United States without a mirror code tax system (as so defined) pursuant to subsection (b) of this section. (2)

Agency information sharing and assistance

(A)

In general

The Commissioner of Social Security, the Railroad Retirement Board, and the Secretary of Veterans Affairs shall each provide the Secretary of the Treasury (or the Secretary's delegate) such information and assistance as the Secretary of the Treasury (or the Secretary's delegate) may require for purposes of— (i)making payments under section 6428C(g) of the Internal Revenue Code of 1986 to individuals described in section 6428A(f)(5)(A) thereof, or (ii)providing administrative assistance to a possession of the United States to allow such possession to promptly distribute payments under subsection (b) to its residents. (B)

Exchange of information with possessions

Any information provided to the Secretary of the Treasury (or the Secretary's delegate) pursuant to subparagraph may be exchanged with a possession of the United States in accordance with the applicable tax coordination agreement for information exchange and administrative assistance that the Internal Revenue Service has agreed to with such possession. (e)

Appropriations

(1)

In general

Immediately upon the enactment of this Act, in addition to amounts otherwise available, there are appropriated for fiscal year 2022, out of any money in the Treasury not otherwise appropriated:(A)$1,464,500,000 to remain available until September 30, 2024 for necessary expenses for the Internal Revenue Service for the administration of the advance payments, the provision of taxpayer assistance, and the furtherance of integrated, modernized, and secure Internal Revenue Service systems, of which up to $20,000,000 is available for premium pay for services related to the development of information technology as determined by the Commissioner of the Internal Revenue occurring between January 1, 2022 and December 31, 2023, and all of which shall supplement and not supplant any other appropriations that may be available for this purpose.(B)$7,000,000 to remain available without fiscal year limitation, for necessary expenses for the Bureau of the Fiscal Service to carry out this section (and the amendments made by this section), which shall supplement and not supplant any other appropriations that may be available for this purpose, and(C)$8,000,000 to remain available until September 30, 2024, for the Treasury Inspector General for Tax Administration for the purposes of overseeing activities related to the administration of this section (and the amendments made by this section), which shall supplement and not supplant any other appropriations that may be available for this purpose.(2)

Social security administration

For an additional amount for Social Security Administration— Limitation on Administrative Expenses, $38,000,000, to remain available until September 30, 2023. (3)

Railroad retirement board

For an additional amount for “Railroad Retirement Board—Limitation on Administration”, $8,300, to remain available until September 30, 2023.

Surcharge on high income individuals, estates, and trusts

(a)

In general

Part I of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 1 the following new section:

1A.

Surcharge on high income individuals, estates, and trusts

(a)

General rule

In the case of a taxpayer other than a corporation, there is hereby imposed (in addition to any other tax imposed by this subtitle) a tax equal to the sum of—(1)5 percent of so much of the modified adjusted gross income of the taxpayer as exceeds—(A)$10,000,000, in the case of any taxpayer not described in subparagraph (B) or (C),(B)$5,000,000, in the case of a married individual filing a separate return, and(C)$200,000, in the case of an estate or trust, plus(2)3 percent of so much of the modified adjusted gross income of the taxpayer as exceeds—(A)$25,000,000, in the case of any taxpayer not described in subparagraph (B) or (C),(B)$12,500,000, in the case of a married individual filing a separate return, and(C)$500,000, in the case of an estate or trust.(b)

Modified adjusted gross income

For purposes of this section, the term modified adjusted gross income means adjusted gross income reduced by any deduction (not taken into account in determining adjusted gross income) allowed for investment interest (as defined in section 163(d)) or business interest (as defined in section 163(j)). In the case of an estate or trust, adjusted gross income shall be determined as provided in section 67(e), and reduced by the amount allowed as a deduction under section 642(c).(c)

Special rules

(1)

Nonresident aliens and foreign trusts

In the case of a nonresident alien individual (other than an individual described in section 876(a) or 877(a)) or a foreign trust, only amounts taken into account in connection with the tax imposed under section 871(b) shall be taken into account under this section.(2)

Citizens and residents living abroad and certain bona fide residents of possessions

Each dollar amount which is applicable to any taxpayer under subsection (a) shall be decreased (but not below zero) by the excess (if any) of—(A)the sum of—(i)amounts excluded from the taxpayer’s gross income under section 911,(ii)amounts excluded from the taxpayer’s gross income under section 931, and(iii)amounts excluded from the taxpayer’s gross income under section 933, over(B)the sum of—(i)amounts of any deductions or exclusions disallowed under section 911(d)(6) with respect to the amounts described in subparagraph (A)(i),(ii)amounts of any deductions or exclusions disallowed under section 931(b) with respect to the amounts described in subparagraph (A)(ii), and(iii)amounts of any deductions or exclusions disallowed under section 933 with respect to the amounts described in subparagraph (A)(iii). (3)

Certain trusts

Subsection (a) shall not apply to—(A)a trust all the unexpired interests in which are devoted to one or more of the purposes described in section 170(c)(2)(B),(B)an electing settlement trust (as defined in section 646(h)), or(C)a cemetery perpetual care fund described in section 642(i).(4)

Not treated as tax imposed by this chapter for certain purposes

The tax imposed under this section shall not be treated as tax imposed by this chapter for purposes of determining the amount of any credit under this chapter (other than sections 27 and 901).(5)

Electing small business trusts

For purposes of the determination of adjusted gross income, section 641(c)(1)(A) shall not apply and all portions of any electing small business trust shall be treated as a single trust.(d)

Regulations

The Secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section, including regulations or other guidance to prevent the avoidance of the purposes of this section.

(b)

Coordination with certain provisions

(1)

Interest on certain deferred tax liability

Section 453A(c) of the Internal Revenue Code of 1986 is amended by redesignating paragraph (6) as paragraph (7) and by inserting after paragraph (5) the following new paragraph:

(6)

Surcharge on high income individuals taken into account in determining maximum rate of tax

For purposes of paragraph (3)(B), the maximum rate of tax in effect under section 1 shall be treated as being equal to the sum of such rate and the rates in effect under paragraphs (1) and (2) of section 1A(a).

(2)

Alien residents of Puerto Rico, Guam, American Samoa, or the Northern Mariana Islands

Section 876(a) of such Code is amended by striking section 1 and inserting sections 1 and 1A.(3)

Expatriation to avoid tax

Section 877(b) of such Code is amended by inserting and section 1A after section 1 or 55.(4)

Limitation on foreign tax credit

Section 904(b)(3)(E) of such Code is amended—(A)in clause (i)(I), by inserting increased by the sum of the rates set forth in paragraphs (1) and (2) of section 1A(a) after (whichever applies), (B)in clause (i)(II) by inserting increased by the sum of the rates set forth in paragraphs (1) and (2) of section 1A(a) after section 1(h), and(C)in clause (ii), by striking referred to in and inserting determined under.(5)

Election by individuals to be subject to tax at corporate rates

Section 962(a)(1) of such Code is amended by inserting , 1A, after sections 1.(6)

Interest on certain tax deferral

Section 1291(c)(2) of such Code is amended by adding at the end the following: For purposes of the preceding sentence, the highest rate of tax in effect under section 1 shall be treated as being equal to the sum of such rate and the rates in effect under paragraphs (1) and (2) of section 1A(a)..(7)

Averaging of farm income

Section 1301(a) of such Code is amended by striking section 1 both places it appears and inserting sections 1 and 1A.(8)

Title 11 cases

Section 1398(c)(2) of such Code is amended by inserting and tax shall be imposed under section 1A by treating the estate as a married individual filing a separate return before the period at the end.(9)

Withholding of tax on foreign partners’ share of effectively connected income

Section 1446(b)(2) of such Code is amended by adding at the end the following flush sentence:

For purposes of subparagraph (A), the highest rate of tax in effect under section 1 shall be treated as being equal to the sum of such rate and the rates in effect under paragraphs (1) and (2) of section 1A(a).

(10)

Relief from joint and several liability on joint return

Section 6015(d)(2)(B) of such Code is amended by inserting , 1A, after section 1.(11)

Partnership adjustments

(A)Section 6225(b)(1) of such Code is amended by adding at the end the following flush sentence:

For purposes of subparagraph (B), the highest rate of tax in effect under section 1 shall be treated as being equal to the sum of such rate and the rates in effect under paragraphs (1) and (2) of section 1A(a).

(B)Section 6225(c)(4)(A) of such Code is amended—(i)by striking subsection (b)(1)(A) and inserting subsection (b)(1)(B), and(ii)by striking or at the end of clause (i), by adding or at the end of clause (ii), and by inserting after clause (ii) the following new clause:

(iii)is not an individual subject to one or both of the rates of tax in effect under paragraphs (1) and (2) of section 1A(a),

(12)

Required payments for entities electing not to have required taxable year

Section 7519(b) of such Code is amended by inserting and increased by the sum of the rates in effect under paragraphs (1) and (2) of section 1A(a) before the period at the end.(c)

Clerical amendment

The table of sections for part I of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 1 the following new item:

Sec. 1A. Surcharge on high income individuals.

(d)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2021.

Modification of corporate tax rate

(a)

In general

Section 11(b) of the Internal Revenue Code of 1986 is amended to read as follows:

(b)

Amount of tax

(1)

In general

The amount of the tax imposed by subsection (a) shall be the sum of—(A)18 percent of so much of the taxable income as does not exceed $400,000,(B)21 percent of so much of the taxable income as exceeds $400,000 but does not exceed $5,000,000, and(C)26.5 percent of so much of the taxable income as exceeds $5,000,000.

In the case of a corporation which has taxable income in excess of $10,000,000 for any taxable year, the amount of tax determined under the preceding sentence for such taxable year shall be increased by the lesser of (i) 3 percent of such excess, or (ii) $287,000.

(2)

Certain personal service corporation not eligible for graduated rates

Notwithstanding paragraph (1), the amount of the tax imposed by subsection (a) on the taxable income of a qualified personal service corporation (as defined in section 448(d)(2)) shall be equal to 26.5 percent of the taxable income.

(b)

Conforming amendments

(1)Section 1561 of the Internal Revenue Code of 1986 is amended to read as follows:

1561.

Limitation on certain multiple tax benefits in the case of certain controlled corporations

(a)

In general

The component members of a controlled group of corporations on a December 31 shall, for their taxable years which include such December 31, be limited for purposes of this subtitle to—(1)amounts in each taxable income bracket in the subparagraphs of section 11(b)(1) which do not aggregate more than the maximum amount in each such bracket to which a corporation which is not a component member of a controlled group is entitled, and (2)one $250,000 ($150,000 if any component member is a corporation described in section 535(c)(2)(B)) amount for purposes of computing the accumulated earnings credit under section 535(c)(2) and (3).

The amounts specified in paragraph (1) shall be divided equally among the component members of such group on such December 31 unless all of such component members consent (at such time and in such manner as the Secretary shall by regulations prescribe) to an apportionment plan providing for an unequal allocation of such amounts. The amounts specified in paragraph (2) shall be divided equally among the component members of such group on such December 31 unless the Secretary prescribes regulations permitting an unequal allocation of such amounts. Notwithstanding paragraph (1), in applying the last sentence of section 11(b)(1) to such component members, the taxable income of all such component members shall be taken into account and any increase in tax under such last sentence shall be divided among such component members in the same manner as amounts under paragraph (1).

(b)

Certain short taxable years

If a corporation has a short taxable year which does not include a December 31 and is a component member of a controlled group of corporations with respect to such taxable year, then for purposes of this subtitle—(1)the amount in each taxable income bracket in the tax table in section 11(b) of such corporation for such taxable year, and(2)the amount to be used in computing the accumulated earnings credit under section 535(c)(2) and (3) of such corporation for such taxable year,

shall be the amount specified in subsection (a)(1) or (2), as the case may be, divided by the number of corporations which are component members of such group on the last day of such taxable year. For purposes of the preceding sentence, section 1563(b) shall be applied as if such last day were substituted for December 31.

(2)The table of sections for part II of subchapter B of chapter 6 of such Code is amended by striking the item relating to section 1561 and inserting the following:

Sec. 1561. Limitation on certain multiple tax benefits in the case of certain controlled corporations.

(c)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2021.(d)

Normalization requirements

(1)

In general

A normalization method of accounting shall not be treated as being used with respect to any public utility property for purposes of section 167 or 168 of the Internal Revenue Code of 1986 if the taxpayer, in computing its cost of service for ratemaking purposes and reflecting operating results in its regulated books of account, reduces the tax reserve deficit less rapidly or to a lesser extent than such reserve would be reduced under the average rate assumption method.(2)

Alternative Method for Certain Taxpayers

If, as of the first day of the taxable year that includes the date of enactment of this Act—(A)the taxpayer was required by a regulatory agency to compute depreciation for public utility property on the basis of an average life or composite rate method, and(B)the taxpayer’s books and underlying records did not contain the vintage account data necessary to apply the average rate assumption method,

the taxpayer will be treated as using a normalization method of accounting if, with respect to such jurisdiction, the taxpayer uses the alternative method for public utility property that is subject to the regulatory authority of that jurisdiction.

(3)

Definitions

For purposes of this subsection—(A)

Tax reserve deficit

The term tax reserve deficit means the excess of—(i)the amount which would be the balance in the reserve for deferred taxes (as described in section 168(i)(9)(A)(ii) of the Internal Revenue Code of 1986, or section 167(l)(3)(G)(ii) or 168(3)(3)(B)(ii) of such Code as in effect on the day before the date of the enactment of the Tax Reform Act of 1986) if the amount of such reserve were determined by assuming that the corporate rate increases provided in the amendments made by this section were in effect for all prior periods, over (ii)the balance in such reserve as of the day before such corporate rate increases take effect.(B)

Average rate assumption method

The average rate assumption method is the method under which the tax reserve deficit is reduced over the remaining lives of the property as used in its regulated books of account which gave rise to the reserve for deferred taxes. Under such method, if timing differences for the property reverse, the amount of the adjustment to the reserve for the deferred taxes is calculated by multiplying—(i)the ratio of the aggregate deferred taxes for the property to the aggregate timing differences for the property as of the beginning of the period in question, by(ii)the amount of the timing differences which reverse during such period.(C)

Alternative method

The alternative method is the method in which the taxpayer—(i)computes the tax reserve deficit on all public utility property included in the plant account on the basis of the weighted average life or composite rate used to compute depreciation for regulatory purposes, and(ii)reduces the tax reserve deficit ratably over the remaining regulatory life of the property.(4)

Treatment of normalization violation

If, for any taxable year ending after the date of the enactment of this Act, the taxpayer does not use a normalization method of accounting for the corporate rate increases provided in the amendments made by this section , such taxpayer shall not be treated as using a normalization method of accounting for purposes of subsections (f)(2) and (i)(9)(C) of section 168 of the Internal Revenue Code of 1986. (5)

Regulations

The Secretary of the Treasury, or the Secretary’s designee, shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this subsection, including regulations or other guidance to provide appropriate coordination between this subsection, section 13001(d) of Public Law 115–97, and section 203(e) of the Tax Reform Act of 1986.