S 467

112th CONGRESS
1st Session

S. 467

To amend the Internal Revenue Code of 1986 to strengthen the earned income tax credit.

IN THE SENATE OF THE UNITED STATES

March 3, 2011

Mr. KERRY (for himself and Mr. ROCKEFELLER) 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 strengthen the earned income tax credit.

    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 `Strengthen the Earned Income Tax Credit Act of 2011'.

SEC. 2. STRENGTHEN THE EARNED INCOME TAX CREDIT.

    (a) Permanent Extension of Marriage Penalty Relief and Increase in Credit for Certain Families-

      (1) REDUCTION IN MARRIAGE PENALTY-

        (A) IN GENERAL- Subparagraph (B) of section 32(b)(2) of the Internal Revenue Code of 1986 is amended by striking `increased by' and all that follows and inserting `increased by $5,000.'.

        (B) INFLATION ADJUSTMENT- Clause (ii) of section 32(j)(1)(B) of such Code is amended--

          (i) by striking `$3,000 amount in subsection (b)(2)(B)(iii)' and inserting `$5,000 amount in subsection (b)(2)(B)', and

          (ii) by striking `calendar year 2007' and inserting `calendar year 2008'.

      (2) INCREASE IN CREDIT PERCENTAGE FOR FAMILIES WITH 3 OR MORE CHILDREN- The table contained in section 32(b)(1)(A) of the Internal Revenue Code of 1986 (relating to percentages) is amended--

        (A) by striking `2 or more qualifying children' in the second row and inserting `2 qualifying children', and

        (B) by inserting after the second row the following new item:
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`3 or more qualifying children 45 21.06'. 
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      (3) CONFORMING AMENDMENT- Section 32(b) of such Code is amended by striking paragraph (3).

    (b) Increased Credit for Individuals With No Qualifying Children-

      (1) IN GENERAL- The table in subparagraph (A) of section 32(b)(2) of the Internal Revenue Code of 1986 is amended by striking `$5,280' in the last column and inserting `$12,690'.

      (2) INFLATION ADJUSTMENTS- Subparagraph (B) of section 32(j)(1) of the Internal Revenue Code of 1986, as amended by subsection (a), is amended--

        (A) in clause (i)--

          (i) by inserting `(except as provided in clause (iii))' after `(b)(2)(A)', and

          (ii) by striking `and' at the end, and

        (B) by adding at the end the following new clause:

          `(iii) in the case of the $12,690 amount in the table in subsection (b)(2)(A), by substituting `calendar year 2010' for `calendar year 1992' in subparagraph (B) of such section 1.'.

    (c) Credit Increase and Reduction in Phaseout for Individuals With No Children- The table contained in section 32(b)(1)(A) of the Internal Revenue Code of 1986 is amended--

      (1) by striking `7.65' in the second column of the third row and inserting `15.3', and

      (2) by striking `7.65' in the third column of the third row and inserting `15.3'.

    (d) Credit Allowed for Certain Childless Individuals Over Age 21- Subclause (II) of section 32(c)(1)(A)(ii) of the Internal Revenue Code of 1986 (relating to eligible individual) is amended by striking `age 25' and inserting `age 21'.

    (e) Modification of Abandoned Spouse Rule-

      (1) IN GENERAL- Section 32(c)(1) of the Internal Revenue Code of 1986 (relating to eligible individual) is amended by adding at the end the following new paragraph:

        `(G) CERTAIN MARRIED INDIVIDUALS LIVING APART- For purposes of this section, an individual who--

          `(i) is married (within the meaning of section 7703(a)) and files a separate return for the taxable year,

          `(ii) lives with a qualifying child of the individual for more than one-half of such taxable year, and

          `(iii) during the last 6 months of such taxable year, does not have the same principal place of abode as the individual's spouse, shall not be considered as married.'.

      (2) CONFORMING AMENDMENTS-

        (A) The last sentence of section 32(c)(1)(A) of the Internal Revenue Code of 1986 is amended by striking `section 7703' and inserting `section 7703(a)'.

        (B) Section 32(d) of such Code is amended by striking `In the case of an individual who is married (within the meaning of section 7703)' and inserting `In the case of an individual who is married (within the meaning of section 7703(a)) and is not described in subsection (c)(1)(G)'.

    (f) Elimination of Disqualified Investment Income Test-

      (1) IN GENERAL- Section 32 of the Internal Revenue Code of 1986 is amended by striking subsection (i).

      (2) CONFORMING AMENDMENTS-

        (A) Section 32(j)(1)(B)(i) of such Code, as amended by this Act, is amended--

          (i) by striking `subsections' and inserting `subsection', and

          (ii) by striking `and (i)(1)'.

        (B) Section 32(j)(2) of such Code is amended to read as follows:

      `(2) ROUNDING- If any dollar amount in subsection (b)(2)(A) (after being increased under subparagraph (B) thereof), after being increased under paragraph (1), is not a multiple of $10, such amount shall be rounded to the next nearest multiple of $10.'.

    (g) Simplification of Rules Regarding Presence of Qualifying Child-

      (1) TAXPAYER ELIGIBLE FOR CREDIT FOR WORKER WITHOUT QUALIFYING CHILD IF QUALIFYING CHILD CLAIMED BY ANOTHER MEMBER OF FAMILY- Section 32(c)(1) of the Internal Revenue Code of 1986 (relating to eligible individual), as amended by this Act, is amended by adding at the end the following new paragraph:

        `(H) TAXPAYER ELIGIBLE FOR CREDIT FOR WORKER WITHOUT QUALIFYING CHILD IF QUALIFYING CHILD CLAIMED BY ANOTHER MEMBER OF FAMILY-

          `(i) GENERAL RULE- Except as provided in clause (ii), in the case of 2 or more eligible individuals who may claim for such taxable year the same individual as a qualifying child, if such individual is claimed as a qualifying child by such an eligible individual, then any other such eligible individual who does not make such a claim of such child or of any other qualifying child may be considered an eligible individual without a qualifying child for purposes of the credit allowed under this section for such taxable year.

          `(ii) EXCEPTION IF QUALIFYING CHILD CLAIMED BY PARENT- If an individual is claimed as a qualifying child for any taxable year by an eligible individual who is a parent of such child, then no other parent of such child who does not make such a claim of such child or of any other qualifying child may be considered an eligible individual without a qualifying child for purposes of the credit allowed under this section for such taxable year.'.

      (2) TAXPAYER ELIGIBLE FOR CREDIT FOR WORKER WITHOUT QUALIFYING CHILD IF QUALIFYING CHILDREN DO NOT HAVE VALID SOCIAL SECURITY NUMBER- Subparagraph (F) of section 32(c)(1) of the Internal Revenue Code of 1986 is amended to read as follows:

        `(F) INDIVIDUALS WHO DO NOT INCLUDE TIN, ETC., OF ANY QUALIFYING CHILD- In the case of any eligible individual who has one or more qualifying children, if no qualifying child of such individual is taken into account under subsection (b) by reason of paragraph (3)(D), for purposes of the credit allowed under this section, such individual may be considered an eligible individual without a qualifying child.'.

    (h) Increased Penalty for Failure To Be Diligent in Determining Eligibility for Earned Income Credit- Section 6695(g) of the Internal Revenue Code of 1986 is amended by striking `$100' and inserting `$500'.

    (i) Effective Dates-

      (1) IN GENERAL- Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after December 31, 2010.

      (2) INCREASED PENALTY- The amendment made by subsection (h) shall apply to returns required to be filed after December 31, 2011.

    (j) Repeal of EGTRRA Sunset- Title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001 (relating to sunset provisions of such Act) shall not apply to section 303 of such Act.

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