108th CONGRESS
1st Session
H. R. 262
To allow a custodial parent a bad debt deduction for unpaid child
support payments, and to require a parent who is chronically delinquent in
child support to include the amount of the unpaid obligation in gross income.
IN THE HOUSE OF REPRESENTATIVES
January 8, 2003
Mr. COX (for himself, Mr. FOLEY, Ms. HART, Ms. LOFGREN, Mr. FILNER, Mr. DREIER,
Mr. SHADEGG, Mr. TOWNS, Mr. MCKEON, Mr. SENSENBRENNER, Mr. OWENS, Mr. WILSON
of South Carolina, Mr. CUNNINGHAM, Mr. OSE, Mr. SANDERS, Ms. CORRINE BROWN
of Florida, Mr. BURTON of Indiana, Mr. CALVERT, Mr. ROTHMAN, Mr. ISSA, Mr.
GARY G. MILLER of California, Mr. KUCINICH, Mr. PENCE, Mr. PITTS, Mr. PASCRELL,
Mr. POMBO, Mr. ROHRABACHER, Mr. ROYCE, Mr. TANCREDO, Mr. TIBERI, Mr. WALDEN
of Oregon, Mr. GILLMOR, Mr. DUNCAN, Mr. FOSSELLA, Ms. MILLENDER-MCDONALD,
Mr. GILCHREST, Mr. WEXLER, Mr. VISCLOSKY, Mr. ENGEL, Mr. PAYNE, Mr. PLATTS,
Mr. DOYLE, Mr. EVANS, Mr. KENNEDY of Minnesota, Mr. JONES of North Carolina,
Mr. KNOLLENBERG, Mr. KING of New York, and Mr. QUINN) introduced the following
bill; which was referred to the Committee on Ways and Means
A BILL
To allow a custodial parent a bad debt deduction for unpaid child
support payments, and to require a parent who is chronically delinquent in
child support to include the amount of the unpaid obligation in gross income.
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 `Child Support Enforcement Act'.
SEC. 2. NO EFFECT ON RIGHTS AND LIABILITIES.
Nothing in this Act shall be construed to affect--
(1) the right of an individual or State to receive any child support payment;
or
(2) the obligation of an individual to pay child support.
SEC. 3. ALLOWANCE OF BAD DEBT DEDUCTION FOR UNPAID CHILD SUPPORT PAYMENTS.
(a) IN GENERAL- Section 166 of the Internal Revenue Code of 1986 (relating
to deduction for bad debts) is amended by redesignating subsection (f) as
subsection (g) and by inserting after subsection (e) the following new subsection:
`(f) UNPAID CHILD SUPPORT-
`(1) IN GENERAL- In the case of a custodial parent who, as of the close
of the taxable year, is owed child support, the amount of unpaid child support
shall be deemed a canceled debt as of such date, and shall be allowed as
a deduction for such taxable year.
`(2) PRESUMPTION OF WORTHLESSNESS- Subsection (a) (relating to worthless
debts) shall not apply to child support.
`(3) SUBSEQUENT PAYMENTS- If any unpaid child support with respect to which
a deduction was allowed under paragraph (1) is subsequently paid to the
custodial parent, the amount of such payment shall not be included in the
gross income of the custodial parent, nor shall it be allowed as a deduction
to the delinquent debtor. The delinquent debtor shall be neither required
nor allowed to file an amended return in any subsequent year to reflect
the subsequent payment of unpaid child support.
`(4) FULL DEDUCTION FROM ORDINARY INCOME- Subsection (d) (relating to the
treatment of nonbusiness bad debt as a loss from the sale or exchange of
a capital asset) shall not apply to the deductibility of unpaid child support.
`(5) TAX RETURNS- A custodial parent who wishes to deduct the amount of
unpaid child support shall include on the return claiming the deduction
the name and taxpayer identification number of each child with respect to
whom child support payments to which this subsection applies are required
to be paid.
`(6) INFORMATION RETURNS-
`(A) IN GENERAL- A custodial parent who wishes to deduct the amount of
unpaid child support shall complete Form 1099-CS (or such other form as
the Secretary may prescribe) and provide such form to the Secretary, and
(if the address is known) to the delinquent debtor, within 45 days following
the close of the taxable year for which the deduction is claimed. Failure
to so file such form with the Secretary (or, if the address is known,
with the delinquent debtor) shall result in disallowance of the deduction
for the taxable year.
`(B) CONTENTS OF FORM- The Form 1099-CS (or such other form as the Secretary
may prescribe) shall contain--
`(i) the total amount of child support owed (whether or not paid) for
such taxable year,
`(ii) the total amount of unpaid child support as of the last day of
such taxable year,
`(iii) the name, address (if known), and taxpayer identification number
of the delinquent debtor, and
`(iv) notice that the delinquent debtor is required to include such
total amount of unpaid child support in gross income for the delinquent
debtor's taxable year which includes the last day of the custodial parent's
taxable year.
`(C) DEBTOR'S ADDRESS UNKNOWN- If the delinquent debtor's address is not
known to the custodial parent, the Form 1099-CS (or such other form as
the Secretary may prescribe) shall indicate that fact. In such a case,
the Secretary may send such notice if the address is available to the
Secretary, and the notice from the custodial parent to the delinquent
debtor under subparagraph (A) shall not be required.
`(7) DETERMINATION OF WHETHER CHILD SUPPORT IS PAID-
`(A) CHILD SUPPORT ENFORCEMENT OFFICE RECORDS AS CONCLUSIVE EVIDENCE OF
PAYMENT- Child support shall be treated as paid if such payment is recorded
by the State office of child support enforcement in which the custodial
parent is registered.
`(B) TIMELY MAILING AS TIMELY PAYMENT- A payment received by the State
office of child support enforcement in which the custodial parent is registered
after the last day of the custodial parent's taxable year shall be treated
for the purpose of this subsection as paid on such day if the postmark
date falls on or before such day. The rules of section 7502(f) and regulations
issued thereunder shall apply for purposes of this subparagraph.
`(8) DEFINITIONS- For the purposes of this subsection--
`(A) CHILD SUPPORT- The term `child support' means--
`(i) any periodic payment of a fixed amount, or
`(ii) any payment of a medical education expense, insurance premium,
or other similar item,
which is required to be paid to a custodial parent by an individual under
a support instrument for the support of any qualifying child of such individual.
`Child support' does not include any amount which is described in section
408(a)(3) of the Social Security Act and which has been assigned to a
State.
`(B) CUSTODIAL PARENT- The term `custodial parent' means an individual
who is entitled to receive child support and who has registered with the
appropriate State office of child support enforcement charged with implementing
section 454 of the Social Security Act.
`(C) DELINQUENT DEBTOR- The term `delinquent debtor' means a taxpayer
who owes unpaid child support to a custodial parent.
`(D) QUALIFYING CHILD- The term `qualifying child' means a child of a
custodial parent with respect to whom a dependent deduction is allowable
under section 151 for the taxable year (or would be so allowable but for
paragraph (2) or (4) of section 152(e)).
`(E) SUPPORT INSTRUMENT- The term `support instrument' means--
`(i) a decree of divorce or separate maintenance or a written instrument
incident to such a decree,
`(ii) a written separation agreement, or
`(iii) a decree (not described in clause (i)) of a court or administrative
agency requiring a parent to make payments for the support or maintenance
of 1 or more children of such parent.
`(F) UNPAID CHILD SUPPORT- The term `unpaid child support' means child
support that is payable for months during a custodial parent's taxable
year and unpaid as of the last day of such taxable year, provided that
such unpaid amount as of such day equals or exceeds one-half of the total
amount of child support due to the custodial parent for such year.'
(b) DEDUCTION FOR NONITEMIZERS- Section 62(a) of such Code is amended by inserting
after paragraph (18) the following new paragraph:
`(19) UNPAID CHILD SUPPORT PAYMENTS- The deduction allowed by section 166(f).'
(c) CONFORMING AMENDMENT- Section 166(d)(2) of such Code is amended by striking
`or' at the end of subparagraph (A), by striking the period at the end of
the subparagraph (B) and by inserting `, or' and by adding at the end the
following new subparagraph:
`(C) a debt which constitutes unpaid child support payment under subsection
(f).'
SEC. 4. INCLUSION IN INCOME OF AMOUNT OF UNPAID CHILD SUPPORT.
(a) IN GENERAL- Section 108 of the Internal Revenue Code of 1986 (relating
to discharge of indebtedness income) is amended by adding at the end the following
new subsection:
`(h) UNPAID CHILD SUPPORT-
`(1) IN GENERAL- For purposes of this chapter, any unpaid child support
of a delinquent debtor for any taxable year shall be treated as amounts
includible in gross income of the delinquent debtor for the taxable year.
`(2) DETERMINATION OF WHETHER CHILD SUPPORT IS UNPAID-
`(A) IN GENERAL- Child support shall be treated as paid if such payment
is recorded by the State office of child support enforcement in which
the custodial parent is registered.
`(B) TIMELY MAILING AS TIMELY PAYMENT- A payment received by the State
office of child support enforcement in which the custodial parent is registered
after the last day of the custodial parent's taxable year shall be treated
for the purpose of this subsection as paid on such day if the postmark
date falls on or before such day. The rules of section 7502(f) and regulations
issued thereunder shall apply for purposes of this subparagraph.
`(3) DEFINITIONS- For the purposes of this subsection--
`(A) CHILD SUPPORT- The term `child support' means--
`(i) any periodic payment of a fixed amount, or
`(ii) any payment of a medical education expense, insurance premium,
or other similar item,
which is required to be paid to a custodial parent by an individual under
a support instrument for the support of any qualifying child of such individual.
`Child support' does not include any amount which is described in section
408(a)(3) of the Social Security Act and which has been assigned to a
State.
`(B) CUSTODIAL PARENT- The term `custodial parent' means an individual
who is entitled to receive child support and who has registered with the
appropriate State office of child support enforcement charged with implementing
section 454 of the Social Security Act.
`(C) DELINQUENT DEBTOR- The term `delinquent debtor' means a taxpayer
who owes unpaid child support to a custodial parent.
`(D) QUALIFYING CHILD- The term `qualifying child' means a child of a
custodial parent with respect to whom a dependent deduction is allowable
under section 151 for the taxable year (or would be so allowable but for
paragraph (2) or (4) of section 152(e)).
`(E) SUPPORT INSTRUMENT- The term `support instrument' means--
`(i) a decree of divorce or separate maintenance or a written instrument
incident to such a decree,
`(ii) a written separation agreement, or
`(iii) a decree (not described in clause (i)) of a court or administrative
agency requiring a parent to make payments for the support or maintenance
of 1 or more children of such parent.
`(F) UNPAID CHILD SUPPORT- The term `unpaid child support' means child
support that is payable for months during a custodial parent's taxable
year and unpaid as of the last day of such taxable year, provided that
such unpaid amount as of such day equals or exceeds one-half of the total
amount of child support due to the custodial parent for such year.
`(4) COORDINATION WITH OTHER LAWS- Amounts treated as income by paragraph
(1) shall not be treated as income by reason of paragraph (1) for the purposes
of any provision of law which is not an internal revenue law.'
SEC. 5. TAXPAYER INFORMATION REGARDING CHILD SUPPORT NOT BASIS FOR AUDIT.
A discrepancy between the tax returns of a custodial parent and a delinquent
debtor concerning whether a payment of child support has been made may not
be used or relied upon by the Internal Revenue Service in any way in selecting
an individual's tax return for a general audit.
SEC. 6. EFFECTIVE DATE; IMPLEMENTATION.
(a) The amendments made by the Act shall apply to taxable years beginning
after December 31, 2002. The Secretary of the Treasury shall publish Form
1099-CS (or such other form that may be prescribed to comply with section
3(a)(6) of this Act) regulations, if any, that may be deemed necessary to
carry out the purposes of this Act, not later than 90 days after the date
of enactment of this Act.
END
