S. 2437 - Support Working Families Act

116TH CONGRESS
1ST SESSION

S. 2437

To amend the Internal Revenue Code of 1986 to establish
a refundable tax credit for parents who take leave from
employment following the birth or adoption of a child.

IN THE SENATE OF THE UNITED STATES

AUGUST 1, 2019

Mr. YOUNG introduced the following bill; which was read
twice and referred to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to establish a refundable tax credit for parents who take leave from employment following the birth or adoption of a child.

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 "Support Working Families Act".

SEC. 2. PARENTAL LEAVE TAX CREDIT.

(a) IN GENERAL. — Subpart C of part IV of subchapter A of chapter 1 of subtitle A of the Internal Revenue Code of 1986 is amended by inserting after section 36B the following new section:

"SEC. 36C. PARENTAL LEAVE CREDIT.

"(a) ALLOWANCE OF CREDIT. —

"(1) IN GENERAL. — There shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to the sum of —

"(A) the current year parental leave credit, plus

"(B) the parental leave credit carryback carried to such taxable year.

"(2) CURRENT YEAR PARENTAL LEAVE CREDIT. —

"(A) IN GENERAL. — Subject to subparagraphs (B) and (C), the amount of the current year parental leave credit for the taxable year shall be equal to the product of —

"(i) the total number of weeks of parental leave taken during the benefit period by an individual described in subsection (c)(1)(A) which are completed within such taxable year, multiplied by

"(ii) an amount equal to the replacement percentage (as determined for each week of parental leave pursuant to subsection (b)(1)) of the average weekly wage rate for such individual.

"(B) LIMITATION. — The current year parental leave credit for any taxable year shall not exceed the lesser of —

"(i) an amount equal to —

"(I) the amount determined under subparagraph (A) (determined as if the replacement percentage were 100 percent), minus

"(II) an amount equal to the sum of any paid parental or medical leave benefits which are provided to the individual for any weeks included under clause (i) of such subparagraph —

"(aa) pursuant to any law or plan of a State or a political subdivision thereof, or

"(bb) by the employer of such individual, or

"(ii) $6,000.

"(C) REDUCTION IN BENEFIT AMOUNT ON ACCOUNT OF RECEIPT OF CERTAIN BENEFITS. — The current year parental leave credit for any taxable year (after application of subparagraph (B)) shall be reduced by the amount, if any, in certain benefits as may be otherwise received by an individual for any weeks included under subparagraph (A)(i). For purposes of the preceding sentence, certain benefits include —

"(i) periodic benefits on account of such individual's total or partial disability under a workmen's compensation law or plan of the United States or a State,

"(ii) periodic benefits on account of an individual's employment status under an unemployment law or plan of the United States or a State, and

"(iii) such other benefits as determined under regulations issued by the Secretary.

"(3) PARENTAL LEAVE CREDIT CARRYBACK. — In the case of an individual who elects not to apply the current year parental leave credit to the taxable year which includes the weeks of parental leave described in subparagraph (A)(i), the amount of such credit —

"(A) shall be reduced to zero for such taxable year, and

"(B) shall be a parental leave credit carryback to the preceding taxable year.

"(b) DETERMINATION OF CREDIT AMOUNT. —

"(1) REPLACEMENT PERCENTAGE. — The replacement percentage shall be the amount, expressed as a percentage, which has been elected by the individual (in such manner and at such time as is prescribed by the Secretary) for each week of parental leave described in paragraph (2)(A)(i) of subsection (a) for purposes of determining the credit allowed under such subsection, provided that —

"(A) such amount is not less than 40 percent and not greater than 90 percent, and

"(B) for each week of parental leave described in paragraph (2)(A)(i) of subsection (a), such amount does not result in a credit allowed under such subsection that exceeds —

"(i) the average weekly wage rate for such individual, minus

"(ii) any amounts described in paragraph (2)(B)(i)(II) of such subsection which are provided to the individual for such week.

"(2) AVERAGE WEEKLY WAGE RATE. — The average weekly wage rate shall be an amount equal to the greater of —

"(A) the annual average amount of the individual's wages and self-employment income for the period of the 3 calendar years preceding the calendar year in which the parental leave is taken by the individual, prorated on a weekly basis, or

"(B) the amount of the individual's wages and self-employment income for the calendar year preceding the calendar year in which the parental leave is taken by the individual, prorated on a weekly basis.

"(3) BENEFIT PERIOD. — The benefit period for an individual shall be the period of weeks —

"(A) beginning with the latter of —

"(i) the first week in which the individual satisfies the requirements under subsection (c)(1)(A), or

"(ii) the first week —

"(I) in which the individual satisfies the requirements under such subsection, and

"(II) which is not less than 1 year after the completion of any previous benefit period, and

"(B) ending on the date that is 1 year after the date of the birth or adoption of the child.

"(c) ELIGIBILITY REQUIREMENTS. —

"(1) EMPLOYMENT. —

"(A) IN GENERAL. — An individual is described in this subparagraph if, on the date of the birth or adoption of the child, such individual —

"(i) is a parent of the child,

"(ii) is employed and, during the 64-week period preceding such date, has been employed for not less than 52 weeks, and

"(iii) has worked not less than a total of 1,000 hours during the 52-week period described in clause (ii).

"(B) DETERMINATION OF EMPLOYMENT. — The Secretary, in consultation with the Secretary of Labor, shall prescribe such regulations, rules, and guidance as may be necessary to determine the length of employment and hours of service of an individual, including rules for the application of this paragraph to individuals who are not compensated on an hourly basis.

"(2) ADDITIONAL INFORMATION. —

"(A) IN GENERAL. — No credit shall be allowed under subsection (a) for any taxable year unless the individual includes the following information on the return of tax for such taxable year (or through the program established under section 2(b) of the Support Working Families Act):

"(i) An attestation from the individual that such individual —

"(I) if the individual has an employer, has provided such employer with written notice of the individual's intention to take parental leave,

"(II) has satisfied the requirements under clauses (ii) and (iii) of paragraph (1)(A),

"(III) will be taking leave from employment for each week of parental leave taken during the benefit period, and

"(IV) intends to maintain the same principal place of abode as the child for more than 1⁄2 of the 12-month period following the date of the birth or adoption of the child.

"(ii) Any information, as determined necessary by the Secretary, regarding any paid parental or medical leave benefits described in subsection (a)(2)(B)(i)(II) which are provided to the individual.

"(iii) The name of the child of the individual and the date of the birth or adoption of the child.

"(iv) Subject to subparagraph (B), the weeks of parental leave taken during the benefit period.

"(v) The social security number of the individual.

"(vi) Subject to subparagraph (C), the social security number of the child.

"(vii) Subject to subparagraph (D), a copy of the birth certificate or other documentation demonstrating that the individual is the parent or legal guardian of the child.

"(B) WEEKS OF PARENTAL LEAVE. — For purposes of the credit allowed under subsection (a) —

"(i) any weeks of parental leave taken during the benefit period for which such credit is being claimed shall be a full workweek, and

"(ii) the total number of weeks of parental leave taken by an individual during the benefit period shall not be less than 4 weeks or greater than 12 weeks.

"(C) SOCIAL SECURITY NUMBER. —

"(i) ADOPTION. —

"(I) IN GENERAL. — In the case of an individual who legally adopts a child, if such child has not received a social security number at the time of the filing of the return of tax described in subparagraph (A), the parent of such child may be allowed the credit under subsection (a), provided that —

"(aa) the Adoption Taxpayer Identification Number for such child is included on the return of tax described in subparagraph (A), and

"(bb) the social security number for such child is provided to the Secretary not later than 15 months after the date of the adoption of such child.

"(II) NOTICE. — In the case of a child described in subclause (I), the Secretary shall provide notice of the requirement under item (bb) of such subclause to the parent of such child —

"(aa) at the time that the credit allowed under subsection (a) is refunded or otherwise provided to such parent, and

"(bb) on the date that is 12 months after the date of the adoption of such child.

"(III) RESCISSION. —

"(aa) IN GENERAL. — In the case of an individual who is the parent of a child described in subclause (I) and subsequently fails to provide a social security number for such child to the Secretary during the period described in subclause (II)(bb), the tax imposed by this chapter for the applicable taxable year shall be increased by 100 percent of the amount of the credit allowed under subsection (a) to such individual for any parental leave claimed with respect to such child.

"(bb) APPLICABLE TAXABLE YEAR. — The term 'applicable taxable year' means the taxable year which includes the date that is 15 months after the date of the adoption of the child.

"(ii) RELIGIOUS OBJECTIONS. — The Secretary, in coordination with the Commissioner of Social Security, shall prescribe such regulations, rules, and guidance as may be necessary to apply the requirements under this paragraph relating to social security numbers for individuals who have religious objections to obtaining a social security number for themselves or their children.

"(D) BIRTH CERTIFICATE OR OTHER DOCUMENTATION. —

"(i) IN GENERAL. — In the case of a parent who has not received the certificate or documentation described in clause (vii) of subparagraph (A) for their child at the time of the filing of the return of tax described in such subparagraph, the parent may be allowed the credit under subsection (a), provided that such certificate or documentation is provided to the Secretary not later than 15 months after the date of the birth or adoption of such child.

"(ii) NOTICE AND RESCISSION. — Rules similar to the rules of subclauses (II) and (III) of subparagraph (C)(i) shall apply for purposes of this subparagraph.

"(3) INELIGIBILITY; DISQUALIFICATION. —

"(A) INELIGIBILITY FOR BENEFIT. — No credit shall be allowed under subsection (a) for any taxable year during which the individual is entitled to —

"(i) disability insurance benefits under section 223 of the Social Security Act (42 U.S.C. 423) or a similar permanent disability program under any law or plan of a State or political subdivision or instrumentality of a State (as such terms are used in section 218 of the Social Security Act (42 U.S.C. 418)),

"(ii) monthly insurance benefits under section 202 of such Act (42 U.S.C. 402) based on such individual's disability (as defined in section 223(d) of such Act (42 U.S.C. 423(d))), or

"(iii) benefits under title XVI of such Act (42 U.S.C. 1381 et seq.) based on such individual's status as a disabled individual (as determined under section 1614 of such Act (42 U.S.C. 1382c)).

"(B) RESTRICTIONS ON INDIVIDUALS WHO IMPROPERLY CLAIMED CREDIT IN PRIOR YEAR. —

"(i) PRIOR FRAUDULENT OR RECKLESS CLAIMS. —

"(I) IN GENERAL. — No credit shall be allowed under subsection (a) for any taxable year in the disallowance period.

"(II) DISALLOWANCE PERIOD. — For purposes of subclause (I), the disallowance period is —

"(aa) the period of 10 taxable years after the most recent taxable year for which there was a final determination that the individual's claim of credit under this section was due to fraud, and

"(bb) the period of 2 taxable years after the most recent taxable year for which there was a final determination that —

"(AA) the individual's claim of credit under this section was due to reckless or intentional disregard of rules and regulations (but not due to fraud), or

"(BB) the individual claimed the credit under this section and subsequently failed to provide the Secretary with the social security number or documentation described in clause (vi) or (vii) of paragraph (3)(A) during the 15-month period following the date of the brith or adoption of their child, as required under subparagraphs (C) and (D) of paragraph (3).

"(ii) IMPROPER PRIOR CLAIMS. — In the case of an individual who is denied the credit under this section for any taxable year as a result of the deficiency procedures under subchapter B of chapter 63, no credit shall be allowed under this section for any subsequent taxable year unless the individual provides such information as the Secretary may require to demonstrate eligibility for such credit.

"(d) RELATIONSHIP WITH STATE LAW; EMPLOYER BENEFITS; PROHIBITED ACTS. —

"(1) IN GENERAL. — This section does not preempt or supercede any provision of State or local law that authorizes a State or local municipality to provide benefits or payments to any individual for parental leave taken by such individual.

"(2) GREATER BENEFITS ALLOWED. — Nothing in this Act shall be construed to diminish the obligation of an employer to comply with any contract, collective bargaining agreement, or any employment benefit program or plan that provides greater paid parental leave rights to employees than the credit allowed under this section.

"(3) PROHIBITED ACTS. — It shall be unlawful for any person to discharge or in any other manner discriminate against an individual because the individual has claimed, indicated an intent to claim, or received the credit allowed under this section.

"(e) INFLATION ADJUSTMENT. —

"(1) IN GENERAL. — In the case of any taxable year beginning after 2020, the dollar amount in subsection (a)(2)(B)(ii) shall be increased by an amount equal to —

"(A) such dollar amount, multiplied by

"(B) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by substituting 'calendar year 2019' for 'calendar year 2016' in subparagraph (A)(ii) thereof.

"(2) ROUNDING. — If any increase determined under paragraph (1) is not a multiple of $50, such increase shall be rounded to the nearest multiple of $50.

"(f) RECAPTURE OF CREDIT. —

"(1) IN GENERAL. — If a credit under subsection (a) is allowed to a taxpayer, the tax imposed by this chapter shall be increased by 20 percent of the applicable amount for each taxable year in the recapture period.

"(2) APPLICABLE AMOUNT. —

"(A) IN GENERAL. — For purposes of this subsection, the applicable amount shall be equal to —

"(i) the amount of the credit allowed under subsection (a), minus

"(ii) the amount of payments made by the taxpayer during the prepayment period.

"(B) PREPAYMENT PERIOD. —

"(i) IN GENERAL. — For purposes of this paragraph, the term 'prepayment period' means the period of 3 taxable years subsequent to the taxable year in which the credit under subsection (a) is allowed.

"(ii) DEVELOPMENT OF PREPAYMENT MECHANISM. — For purposes of subparagraph (A)(ii), the Secretary shall establish appropriate procedures and mechanisms to allow taxpayers to reduce the amount of the tax imposed under paragraph (1) by making payments during the prepayment period.

"(3) RECAPTURE PERIOD. — For purposes of this subsection, the term 'recapture period' means the period of 5 taxable years subsequent to the prepayment period.

"(4) RETURN REQUIREMENT. — If the tax imposed by this chapter for the taxable year is increased under this subsection, the taxpayer shall, notwithstanding section 6012, be required to file a return with respect to the taxes imposed under this subtitle.

"(5) JOINT RETURNS. — In the case of a credit allowed under subsection (a) with respect to a joint return, half of such credit shall be treated as having been allowed to each individual filing such return for purposes of this subsection.

"(6) EXCEPTION. — This subsection shall not apply to any taxable year ending after the date of the death of the individual allowed the credit under subsection (a).

"(g) DEFINITIONS. — In this section:

"(1) CHILD. — The term 'child' means a biological or legally adopted child who has not attained 18 years of age.

"(2) PARENT. — The term 'parent' means —

"(A) the biological mother or father of a child, or

"(B) an individual who legally adopts a child,

who is the legal guardian of the child and who intends to maintain the same principal place of abode as the child for more than 1⁄2 of the 12-month period following the date of the birth or adoption of the child.

"(3) PARENTAL LEAVE. — The term 'parental leave' means any period of leave from employment which is taken by a parent to provide care for a child.".

(b) PRE-CALCULATION OF PARENTAL LEAVE CREDIT. — Not later than January 1, 2020, the Secretary of the Treasury or the Secretary's delegate (referred to in this subsection and subsection (c) as the "Secretary") shall establish a program, to be made available online and through such other methods as is determined appropriate by the Secretary, to allow individuals who intend to take parental leave to —

(1) determine their average weekly wage rate (as defined in subsection (b)(2) of section 36C of the Internal Revenue Code of 1986);

(2) determine whether they satisfy the requirements under clauses (ii) and (iii) of section 36C(c)(1)(A) of such Code and, if such requirements are not satisfied, determine the number of hours or weeks needed to satisfy such requirements prior to the expected date of the birth or adoption of a child;

(3) calculate —

(A) the amount of the parental leave credit under section 36C of such Code based on different replacement percentages (as described in subsection (b)(1) of such section); and

(B) the amount of any increase in taxes pursuant to subsection (f) of such section based on different amounts of payments made by the individual during the prepayment period (as defined in paragraph (2)(B) of such subsection); and

(4) provide the Secretary with any information required under subsection (c)(2)(A) of section 36C of the Internal Revenue Code of 1986 which is available to such individual at that time.

(c) EXPEDITED AMENDED RETURN PROCESS. — For any individual who has —

(1) taken parental leave during a taxable year;

(2) elected to receive a parental leave credit carryback (as described in subsection (a)(3) of section 36C of the Internal Revenue Code of 1986) for such parental leave; and

(3) has timely filed an amendment to the income tax return for such individual for the preceding taxable year for the sole purpose of claiming the credit allowed under subsection (a) of such section,

the Secretary shall establish a separate and expedited process for reviewing and processing such amended returns.

(d) CONFORMING AMENDMENTS. —

(1) The table of sections for subpart C of part IV of subchapter A of chapter 1 of subtitle A of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 36B the following:

"Sec. 36C. Parental leave credit.".

(2) Section 6211(b)(4)(A) of such Code is amended by striking "and 36B, 168(k)(4)" and inserting "36B, and 36C".

(3) Section 6213(g)(2) of such Code is amended —

(A) in subparagraph (P), by striking "and" at the end;

(B) in subparagraph (Q), by striking the period at the end and inserting ", and"; and

(C) by inserting after subparagraph (Q) the following:

"(R) an omission of information required by subsection (c) of section 36C or an entry on the return claiming the credit under such section for a taxable year for which such credit is disallowed pursuant to section 36C(c)(4).".

(4) Paragraph (2) of section 1324(b) of title 31, United States Code, is amended by inserting "36C," after "36B,".

(e) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years beginning after December 31, 2019.