Blue collar bonus tax credit

(a)

In general

(1)

Allowance of credit

Subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 36B the following:

36C.

Credit for wages paid at a rate less than the median wage

(a)

Credit allowed

(1)

In general

In the case of an individual, there shall be allowed as a credit against the tax imposed by this subtitle for any taxable year an amount equal to the sum of the amounts determined under paragraph (2) for each individual included on the taxpayer's return of tax for the taxable year. (2)

Amount per individual

The amount determined under this paragraph with respect to any individual shall be the product of— (A)the blue collar bonus amount of such individual for the taxable year, and (B)the number of hours for which the individual performed services for which wages were paid during such taxable year. (b)

Blue collar bonus amount

For purposes of this section— (1)

In general

The term blue collar bonus amount means, with respect to any individual for any taxable year, 50 percent of the excess (if any) of— (A)the median wage rate for such taxable year, over (B)the average hourly wages received by the individual during the taxable year. (2)

Non-hourly wage rate

For purposes of paragraph (1)(A), in the case of any individual who is not paid on an hourly wage rate, the wages of such employee shall be prorated to an hourly wage rate under regulations established by the Secretary. (3)

Median wage rate

(A)

In general

The median wage rate is $16.50 per hour. (B)

Adjustment

(i)

In general

In the case of any taxable year beginning in a calendar year after 2021, the $16.50 amount under subparagraph (A) 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 in subparagraph (A)(ii) thereof calendar year 2020 for calendar year 2016. (ii)

Rounding

If any amount as adjusted under paragraph (1) is not a multiple of $0.10, such dollar amount shall be rounded to the next lowest multiple of $0.10. (c)

Number of hours taken into account

For purposes of subsection (a)(2)(B) and for purposes of determining the average hourly wages of an individual under subsection (b)(1)(B), the number of hours taken into account shall not exceed— (1)for any week, 40, and (2)for any taxable year, 2080. (d)

Other definitions and special rules

(1)

Wages

The term wages has the meaning given such term by subsection (b) of section 3306 (determined without regard to any dollar limitation contained in such section). (2)

Treatment of dependents

If a deduction under section 151 with respect to an individual is allowed to another taxpayer for a taxable year beginning in the calendar year in which such individual's taxable year begins, no credit shall be allowed under subsection (a) to such individual for such individual's taxable year. (3)

Nonresident aliens

This section shall not apply to any taxpayer that is a nonresident alien for the taxable year. (e)

Identification requirement

No credit shall be allowed under this section to a taxpayer with respect to any individual unless the taxpayer includes the social security number of such individual on the return of tax for the taxable year. For purposes of the preceding sentence, the term social security number means a social security number issued to an individual by the Social Security Administration, but only if the social security number is issued— (1)to a citizen of the United States or pursuant to subclause (I) (or that portion of subclause (III) that relates to subclause (I)) of section 205(c)(2)(B)(i) of the Social Security Act, and (2)before the due date for such return. (f)

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 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 fraud or to reckless or intentional disregard of rules and regulations. (g)

Reconciliation of credit and advance credit

(1)

In general

The amount of the credit allowed under this section to any taxpayer for any taxable year shall be reduced (but not below zero) by the aggregate amount of payments made under section 7527A to such taxpayer during such taxable year. 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)

Excess advance payments

(A)

In general

If the aggregate amount of payments under section 7527A to the taxpayer during the taxable year exceeds the amount of the credit allowed under this section to such taxpayer 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. Any failure to so increase the tax shall be treated as arising out of a mathematical or clerical error and assessed according to section 6213(b)(1). (B)

Safe harbor based on modified adjusted gross income

(i)

In general

Subparagraph (A) shall not apply to any taxpayer whose adjusted gross income for the taxable year does not exceed $50,000 ($100,000, in the case of a joint return). (ii)

Limitation on increase

In the case of a taxpayer whose adjusted gross income exceeds $50,000 ($100,000, in the case of a joint return), the amount of the increase under subparagraph (A) shall not exceed the excess of— (I)the adjusted gross income of the taxpayer for the taxable year, over (II)$50,000 ($100,000, in the case of a joint return). (h)

Regulations

The Secretary may prescribe such rules or other guidance as may be necessary to carry out the purposes of this section and section 7527A, including— (1)rules or guidance related to the treatment of tipped workers, (2)rules or guidance related to minimizing compliance and record-keeping burdens, (3)rules or guidance related to individuals who receive wages from multiple employers, and (4)in consultation with the Secretary of Labor, rules or guidance related to the prevention of reduced wages or hours worked on account of the benefit provided under this section. (i)

Termination

This section shall not apply to any taxable year beginning after December 31, 2023.

(2)

Conforming amendments

(A)Paragraph (2) of section 1324(b) of title 31, United States Code, is amended by inserting 36C, after 36B,. (B)The table of sections for subpart C of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item related to section 36B the following new item:

Sec. 36C. Credit for wages paid at a rate less than the median wage.

(b)

Advance payment of credit

(1)

In general

Chapter 77 of such Code is amended by inserting after section 7527 the following new section:

7527A.

Advance payment of wage tax credit

(a)

In general

As soon as practical but not later than 90 days after the date of the enactment of this section, the Secretary shall establish a program for making periodic payments to taxpayers in an amount equal to the amount of the credit the taxpayer would receive under section 36C if the last day of the taxable year were the last day of the applicable period for which the payment is made. (b)

Length of period

Payments under the program established under subsection (a) shall be made not less than quarterly. (c)

Adjustments

The Secretary may adjust the amount of any payment to properly take into account the amount by which any payment made before such date was greater than or less than the amount that such payment would have been on the basis of data for any subsequent period. (d)

Information reporting

The Secretary shall require the submission of additional information concerning the wages paid by employers for purposes of providing advance payments under this section. Such information may be provided as part of existing reporting requirements. (e)

On-Line information portal

The Secretary shall establish an on-line portal which allows taxpayers to— (1)elect not to receive payments under this section, and (2)provide such information as the Secretary may require to facilitate an advance payment of the credit to the eligible individual. (f)

Notice of payments

Not later than January 31 of the calendar year following any calendar year during which the Secretary makes one or more payments to any taxpayer under this section, the Secretary shall provide such taxpayer with a written notice which includes the taxpayer’s taxpayer identity (as defined in section 6103(b)(6)), the aggregate amount of such payments made to such taxpayer during such calendar year, and such other information as the Secretary determines appropriate. (g)

Administrative provisions

(1)

Application of direct deposit requirement

Solely for purposes of section 3332 of title 31, United States Code (and notwithstanding the last sentence of subsection (j)(3) thereof), the payments made by the Secretary under subsection (a) shall be treated as Federal payments. (2)

Delivery of payments

Notwithstanding any other provision of law, the Secretary may certify and disburse refunds payable under this section electronically to— (A)any account to which the payee received or authorized, on or after January 1, 2019, a refund of taxes under this title or a Federal payment (as defined in section 3332 of title 31, United States Code), (B)any account belonging to a payee from which that individual, on or after January 1, 2019, made a payment of taxes under this title, or (C)any Treasury-sponsored account (as defined in section 208.2 of title 31, Code of Federal Regulations). (3)

Waiver of certain rules

Notwithstanding section 3325 of title 31, United States Code, or any other provision of law, with respect to any payment of a refund under this section, a disbursing official in the executive branch of the United States Government may modify payment information received from an officer or employee described in section 3325(a)(1)(B) of such title for the purpose of facilitating the accurate and efficient delivery of such payment. Except in cases of fraud or reckless neglect, no liability under section 3325, 3527, 3528, or 3529 of title 31, United States Code, shall be imposed with respect to payments made under this paragraph. (4)

Exception from reduction or offset

Any payment made to any individual under this section shall not be— (A)subject to reduction or offset pursuant to section 3716 or 3720A of title 31, United States Code, (B)subject to reduction or offset pursuant to subsection (d), (e), or (f) of section 6402, or (C)reduced or offset by other assessed Federal taxes that would otherwise be subject to levy or collection.

(2)

Conforming amendments

(A)Section 26(b)(2) of such Code is amended by striking and at the end of subparagraph (X), by striking the period at the end of subparagraph (Y) and inserting , and, and by adding at the end the following new subparagraph:

(Z)section 36C(g)(2) (relating to excess advance payments).

(B)Section 6211(b)(4)(A) of such Code, as amended by the preceding provisions of this subtitle, is amended— (i)by inserting 36C after 36B, and (ii)by striking and 6428A and inserting 6428A, and 7527A. (C)Paragraph (2) of section 1324(b) of title 31, United States Code, is amended by striking or 6431 and inserting 6431, or 7527A. (D)The table of sections for chapter 77 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 7527 the following new item:

Sec. 7527A. Advance payment of wage tax credit.

(c)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2020.