[Congressional Record Volume 144, Number 128 (Wednesday, September 23, 1998)]
[Extensions of Remarks]
[Page E1778]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 INTRODUCTION OF LEGISLATION TO PROVIDE A TEMPORARY SOLUTION TO ENABLE 
   FAMILIES TO RECEIVE THE FULL BENEFITS OF THE CHILD TAX CREDIT AND 
                       EDUCATION CREDITS FOR 1998

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                          HON. RICHARD E. NEAL

                            of massachusetts

                    in the house of representatives

                     Wednesday, September 23, 1998

  Mr. NEAL of Massachusetts. Mr. Speaker, today I am introducing 
legislation which provides a temporary waiver for taxable year 1998 of 
the minimum tax rules that deny many families the full benefit of 
nonrefundable personal credits, pending enactment of permanent 
legislation to address this inequity.
  Recently, I introduced H.R. 4489, legislation which would allow 
nonrefundable personal tax credits (i.e., the child tax credit, the 
HOPE and lifetime learning credits, and the dependent care credit) to 
offset both the individual's regular income tax liability and the 
minimum tax liability and repeal the rule that reduces the additional 
child credit for families with three or more children by the amount of 
the minimum tax liability. Last week, the Committee on Ways and Means 
reported out the ``Taxpayer Relief Act of 1998'' which included a 
substantially identical provision to address the interaction between 
the minimum tax and nonrefundable personal credits.
  H.R. 4489 and the ``Taxpayer Relief Act of 1998'' provide a permanent 
solution to ensure that families receive the full benefits of the child 
credit and the education credits. However, the ``Taxpayer Relief Act of 
1998'' will almost certainly receive a Presidential veto and even if it 
were signed, I recently learned that Internal Revenue Service (IRS) 
would not be capable of implementing these changes in time for the 1998 
tax year. For these reasons, I am introducing this new legislation that 
would provide a one year solution for 1998 to enable substantially all 
families to receive their full credits.
  Under current law, the total allowable amount of nonrefundable 
personal credits may not exceed the amount by which the individual's 
regular income tax liability exceeds the individual's tentative minimum 
tax. For families with three or more children, an additional child 
credit is provided and this is reduced by the amount of the 
individual's minimum tax liability.
  Under current law, all taxpayers who claim the child credit with 
incomes above $45,000 for joint filers and $33,750 for single filers 
will have to make at least a rudimentary minimum tax calculation. Many 
of these taxpayers will also have to fill out the full alternative 
minimum tax (AMT) form. Not only is the AMT complicated, it can 
penalize middle-income taxpayers who claim some of the new tax credits 
such as the child credit and the Hope Scholarship credit. The 
Department of Treasury estimates that in 1998, the alternative minimum 
tax will cause 800,000 taxpayers to fail to receive the full benefits 
of the child credit (Hope Scholarship credit and lifetime learning 
credit).
  My new legislation makes nonrefundable personal credits allowable 
against the entire amount of an individual's regular tax liability for 
1998 and it would repeal the rule that reduces the additional child 
credit for families with three or more children by the amount of the 
minimum tax liability. This is a one year solution for 1998 and the IRS 
is capable of making this change in time for the 1998 filing season.
  Without enactment of this legislation, taxpayers who are planning to 
claim the child tax credit should be warned that the computation of 
their taxes will be difficult, time consuming, and unnecessarily 
complex. Without simplifying the child tax credit, the child tax credit 
form that will be required on next year's tax return is a nightmare. In 
a recent Wall Street Journal article, a tax expert stated that many 
people ``will be totally overwhelmed'' by required forms. The 
instructions and required forms total eight pages. The Internal Revenue 
Service has completed a time analysis for completing the AMT form which 
will be required for many taxpayers claiming the child credit and it 
takes approximately 5 hours to complete this form.
  This legislation makes claiming the new credits, especially the child 
credit, simple compared to the draft forms that have been released by 
the IRS. Not only is this solution simplification for the 1998 tax 
year, it enables substantially all families to receive credits that 
they are entitled to for 1998. We need to enact this legislation to 
prevent the average family from having to pay a tax return preparer to 
receive the benefits that were promised.
  I urge you to join me in cosponsoring this important legislative fix 
which should be enacted before Congress adjourns. This solution should 
be added to revenue neutral legislation to extend the expiring 
provisions. Also, we should continue to work on a permanent solution to 
ensure taxpayers receive their full credits.

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