[Congressional Record (Bound Edition), Volume 147 (2001), Part 6]
[House]
[Pages 8082-8083]
[From the U.S. Government Publishing Office, www.gpo.gov]



             FAIRNESS FOR FOSTER CARE FAMILIES ACT OF 2001

  Mr. LEWIS of Kentucky. Mr. Speaker, I move to suspend the rules and 
pass the bill (H.R. 586) to amend the Internal Revenue Code of 1986 to 
provide that the exclusion from gross income for foster care payments 
shall also apply to payments by qualified placement agencies, and for 
other purposes, as amended.
  The Clerk read as follows:

                                H.R. 586

       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 ``Fairness for Foster Care 
     Families Act of 2001''.

     SEC. 2. EXCLUSION FOR FOSTER CARE PAYMENTS TO APPLY TO 
                   PAYMENTS BY QUALIFIED PLACEMENT AGENCIES.

       (a) In General.--The matter preceding subparagraph (B) of 
     section 131(b)(1) of the Internal Revenue Code of 1986 
     (defining qualified foster care payment) is amended to read 
     as follows:
       ``(1) In general.--The term `qualified foster care payment' 
     means any payment made pursuant to a foster care program of a 
     State or political subdivision thereof--
       ``(A) which is paid by--
       ``(i) a State or political subdivision thereof, or
       ``(ii) a qualified foster care placement agency, and''.
       (b) Qualified Foster Individuals To Include Individuals 
     Placed by Qualified Placement Agencies.--Subparagraph (B) of 
     section 131(b)(2) of such Code (defining qualified foster 
     individual) is amended to read as follows:
       ``(B) a qualified foster care placement agency.''
       (c) Qualified Foster Care Placement Agency Defined.--
     Subsection (b) of section 131 of such Code is amended by 
     redesignating paragraph (3) as paragraph (4) and by inserting 
     after paragraph (2) the following new paragraph:
       ``(3) Qualified foster care placement agency.--The term 
     `qualified foster care placement agency' means any placement 
     agency which is licensed or certified by--
       ``(A) a State or political subdivision thereof, or
       ``(B) an entity designated by a State or political 
     subdivision thereof,

     for the foster care program of such State or political 
     subdivision to make foster care payments to providers of 
     foster care.''
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Kentucky (Mr. Lewis) and the gentleman from New York (Mr. McNulty) each 
will control 20 minutes.
  The Chair recognizes the gentleman from Kentucky (Mr. Lewis).
  Mr. LEWIS of Kentucky. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, this is a straightforward bill which updates and 
simplifies the Tax Code as it relates to foster care families. Under 
current law, foster care families are given a tax exemption on the 
payments they receive through a state-run foster care program. The 
current law was enacted in 1986. The law recognizes that if you are 
willing to open your heart and home by participating in foster care, 
you should receive this exemption. It is that simple.
  Over the years, however, States have changed the way foster care 
services are delivered and many are privatizing or contracting out some 
or all of their services. When this happens, and a private organization 
participates in the State program, the tax exemption for families 
becomes confusing and, in some cases, unfair. Specifically, the 
exclusion is dependent on a complicated analysis of three factors: the 
age of the fostered individual, the type of entity that places the 
individual, and the source of payment.
  If the payments are found not excludable because a private entity is 
participating in one or all of these factors, the foster care provider 
is then required to keep extensive records of every expense made on 
behalf of the fostered individual in order to qualify for the 
exclusion. As my colleagues can imagine, these rules are extremely 
confusing. In fact, many accountants have difficulty interpreting these 
rules for families; and as a result, families are discouraged from 
participating in foster care. This problem is created simply because 
current law is outdated and no longer reflects the changes States are 
making in their business practices.
  Mr. Speaker, States should be encouraged to be innovative and 
responsible in their business practices; but more important, foster 
care families should not be penalized as a result. My bill, H.R. 586, 
simplifies current law to ensure that the exemption is there for all 
foster care families regardless of how their State foster care 
practices change and regardless of the age of the individual.
  My bill recognizes the increasing role of private agencies in State 
foster care plans and also requires these agencies to be licensed and 
certified by the State in order to participate in a State foster care 
program.
  Again, Mr. Speaker, my bill simplifies and provides fairness for the 
Tax Code for all foster care families, and I urge my colleagues' 
support.
  Mr. Speaker, I reserve the balance of my time.
  Mr. McNULTY. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise today to join with my friend, the gentleman from 
Kentucky (Mr. Lewis), in supporting H.R. 586, the Fairness to Foster 
Care Families Act. H.R. 586 would expand the types of foster care 
payments that are excludable from a foster family's taxable income. The 
bill recognizes that payments received by foster families, regardless 
of the type of agency providing those payments, are needed to care for 
the foster child and, therefore, should not be taxed.
  We have over 560,000 abused, abandoned, and neglected children in our 
Nation's foster care system who need caring homes as they wait to 
return to their birth parents or to be adopted. H.R. 586 removes one 
barrier to at least some families taking a foster child into their 
homes. Under current law, foster care payments are excluded from 
taxable income only if the placement and payment is made by a State 
agency or, in the case of an individual under the age of 19, by a 
nonprofit agency.
  This bill would extend this favorable tax treatment to any foster 
care payment made by an agency licensed or certified by the State. This 
would remove restrictions currently imposed on foster families whose 
payments are

[[Page 8083]]

made by for-profit agencies or, in the case of fostered individuals 
older than the age of 18, by non-profit agencies.
  The impact of for-profit agencies in the child welfare system is 
uncertain. We need more information on how these for-profit agencies 
affect child well-being and on how common it is for States to contract 
with them to undertake certain functions, including the placement and 
oversight of children in foster care. However, it does seem appropriate 
that we not penalize foster families when they receive foster care 
payments from private agencies with which a State has entered into a 
contract to administer parts of their foster care system. Furthermore, 
H.R. 586 recognizes that States also may contract with private agencies 
to place older, often disabled individuals with foster families.
  This bill is not a single simple answer to the problems faced by our 
foster care system, but it does take a small step to help some foster 
families. I strongly support H.R. 586, and I urge support from all my 
colleagues.
  Mr. Speaker, I reserve the balance of my time.
  Mr. LEWIS of Kentucky. Mr. Speaker, I yield 3 minutes to the 
gentlewoman from Kentucky (Mrs. Northup), a good friend and colleague.
  Mrs. NORTHUP. Mr. Speaker, I rise to speak in support of House bill 
586 and to remind ourselves that it would be easy, considering the 
system of government, to think of this bill as a tax bill; but it is 
really a bill about children and families.
  So often youngsters in the classroom ask me where I got the best 
insight to serve as a Member of Congress. They expect me to talk about 
my economics classes or different classes I had in school. And I always 
answer that it is being the mother of six children. What I have learned 
is that families are the most enduring, important part of a child's 
life. It is the security that they begin life with and that they carry 
throughout life.
  Some of our children in this country have not been blessed with a 
consistent family life. To our good fortune, we have agencies that are 
becoming partners with our States to provide more children with better 
services and an even better chance of growing up in a foster family. 
Some of these children come from the most difficult circumstances, and 
it is not surprising that sometimes support systems have to be in place 
for these families. It is to our good fortune and to this country's 
good fortune and to our children's good fortune that we have so many of 
these agencies that are able to provide the comprehensive support 
services that families need. It is only reasonable that we make sure 
that our tax laws support these new evolving, important systems that 
allow children to have what is the most important thing in their life: 
a family.
  And so this bill is not about taxes. It is about families, 
specifically foster families, and expanding the number and the 
opportunity and the differing looks that foster families often have as 
they serve each one of our unique children. God bless our children. How 
lucky we are to have the services of our foster services, and this bill 
will help make sure that those services exist and expand for every 
child.
  Mr. McNULTY. Mr. Speaker, I yield myself such time as I may consume; 
and in support of all of the foster children across this country and 
the families who care for them, I urge support for this bill.
  Mr. LANGEVIN. Mr. Speaker, I rise today in support of H.R. 586, the 
Foster Care Promotion Act. As the son of parents who welcomed 25 foster 
children into their family, I know firsthand the worth of the foster 
care system.
  This bill would allow foster parents to exclude payments for foster 
children of any age placed by a non-governmental foster care agency 
from their taxable income. By subsidizing the cost of foster children, 
regardless of their age or the method in which they were placed, we 
will properly value the incredible work of foster parents everywhere.
  Foster parenting is an act of true selflessness, as each child 
requires a significant financial and emotional investment. Many foster 
children have been abused or neglected. Such treatment leaves indelible 
scars, which foster parents lovingly attempt to heal. We should not ask 
such generous individuals to give of their pocketbooks as well as their 
hearts.
  All children need love and support. This bill takes an important step 
toward ensuring that some of the most needy children will received it.
  Mr. McNULTY. Mr. Speaker, I have no further requests for time, and I 
yield back the balance of my time.
  Mr. LEWIS of Kentucky. Mr. Speaker, I yield back the balance of my 
time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Kentucky (Mr. Lewis) that the House suspend the rules 
and pass the bill, H.R. 586, as amended.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds of 
those present have voted in the affirmative.
  Mr. LEWIS of Kentucky. Mr. Speaker, on that I demand the yeas and 
nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the 
Chair's prior announcement, further proceedings on this motion will be 
postponed.

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