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Bill
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Young Child Tax Credit Act

S. 3451 · 114th Congress · Sep 28, 2016 · Lineage

A BILL

To amend the Internal Revenue Code of 1986 to provide a refundable and advanceable tax credit for individuals with young children.

Section 1 Short title; findings

(a)
Short title— This Act may be cited as the “Young Child Tax Credit Act”.
(b)
Findings— Congress finds the following:
(1)
Economists have found similar effects of the importance of income in the earliest years with returns to school achievement.
(2)
Pediatricians and other child development experts have long talked about the critical importance of the earliest years of life.
(3)
Young children, including babies and toddlers, are the poorest people in the country by age.
(4)
With the recent improvements signed into law in December, together, the Child Tax Credit and Earned Income Tax Credit now lift more children out of poverty than any other Federal policies.
(5)
Families with young children receive the smallest child tax credits, despite the fact that the economic literature suggests that these credits have particularly beneficial effects for families with young children.
(6)
Economists have found that large fluctuations in a family’s income can be detrimental to the development of young children. Research on scarcity have found it is hard for parents to focus on children if they are worrying about having sufficient income to meet their family’s needs.

Sec. 2 Young child tax credit

(a)
In general— 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 new section:

“36C. Young child tax credit

“(a) In general—In the case of an individual, there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to the product of—

“(1) the applicable dollar amount, multiplied by

“(2) the number of qualifying children of the taxpayer for which the taxpayer is allowed a deduction under section 151 and who (as of the close of such taxable year) have not attained age 3.

“(b) Applicable dollar amount—For purposes of this section, the term “applicable dollar amount” means with respect to any taxable year, the product of—

“(1) 1.5, multiplied by

“(2) the dollar amount in effect under section 24(a) for the taxable year.

“(c) Limitation based on adjusted gross income

“(1) In general—The amount of the credit allowable under subsection (a) shall be reduced (but not below zero) by the phaseout amount for each $1,000 (or fraction thereof) by which the taxpayer’s modified adjusted gross income (as defined in section 24(b)(1)) exceeds the threshold amount (as defined in section 24(b)(2)).

“(2) Phaseout amount—For purposes of this subsection, the term “phaseout amount” means 1.5 multiplied by the first dollar amount in section 24(b)(1).

“(d) Qualifying child—For purposes of this section, the term “qualifying child” has the meaning given such term by section 24(c).

“(e) Identification requirement—No credit shall be allowed under this section to a taxpayer with respect to any qualifying child unless the taxpayer includes the name and taxpayer identification number of such qualifying child on the return of tax for the taxable year.

“(f) 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.”

(b)
Advance payment of credit— Chapter 77 of such Code is amended by inserting after section 7527 the following new section:

“7527A. Advance payment of young child tax credit

“(a) In general—As soon as practicable and not later than 1 year after the date of the enactment of this Act, the Secretary shall establish a program for making advance payments of the credit allowed under section 36C on a monthly basis, or as frequently as the Secretary determines to be administratively feasible, to taxpayers allowed such credit (determined without regard to section 36C(f)(1)).

“(b) Limitation—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 the amount determined under subsection (a) of section 36C with respect to such taxpayer (determined without regard to subsections (c) and (f) of such section). Such program shall make reasonable efforts to apply the limitation of section 36C(c) with respect to payments made under such program.”

(c)
Conforming amendments—
(1)
Section 152(f)(6)(B) of such Code is amended by striking “and” at the end of clause (iii), by striking the period at the end of clause (iv) and inserting “, and”, and by adding at the end the following new clause:

“(v) the credit under section 36C (relating to young child tax credit).”

(2)
Section 6211(b)(4)(A) of such Code is amended by inserting “36C,” after “36B,”.
(3)
Section 6213(g)(2) of such Code is amended by striking “and” at the end of subparagraph (P), by striking the period at the end of subparagraph (Q) and inserting “, and”, and by inserting after subparagraph (Q) the following new subparagraph:

“(R) an omission of a correct TIN required under section 36C(e) (relating to young child tax credit) to be included on a return.”

(4)
Section 6402(m) of such Code is amended by striking “or 32” and inserting “, 32 or 36C”.
(5)
Section 6695(g) of such Code is amended by striking “or 32” and inserting “32, or 36C”.
(6)
Section 1324(b)(2) of title 31, United States Code, is amended by inserting “36C,” after “36B,”.
(7)
The table of sections for subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 36B the following new item:
(8)
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:
(d)
Effective date—
(1)
In general— The amendments made by this section shall apply to taxable years beginning after December 31, 2016.
(2)
Advance payment program— The Secretary of the Treasury, or his designee, shall establish the program described in section 7527A of the Internal Revenue Code of 1986 (as added by this section) not later than such date.