To allow a custodial parent a refundable credit 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.

Summary: Child Support Enforcement Act of 2005 - Amends the Internal Revenue Code to: (1) allow a custodial parent (a parent entitled to receive child support) a refundable tax credit for unpaid child support; and (2) include in the gross income of any taxpayer who is delinquent in the payment of child support the amount of such unpaid child support.

Prohibits the Internal Revenue Service from selecting a tax return for audit based upon any discrepancy between the tax returns of a custodial parent and a taxpayer delinquent in the payment of child support.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Child Support Enforcement Act of 
2005''.

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. REFUNDABLE CREDIT FOR UNPAID CHILD SUPPORT PAYMENTS.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to refundable credits) 
is amended by redesignating section 36 as section 37 and inserting 
after section 35 the following new section:

``SEC. 36. UNPAID CHILD SUPPORT.

    ``(a) In General.--In the case of a custodial parent who, as of the 
close of the taxable year, is owed child support, there shall be 
allowed as a credit against the tax imposed by this subtitle for the 
taxable year an amount equal to the unpaid child support as of the 
close of the taxable year.
    ``(b) Subsequent Payments.--If any unpaid child support with 
respect to which a credit was allowed under subsection (a) 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.
    ``(c) Identication Requirements.--
            ``(1) In general.--A qualifying child shall not be taken 
        into account under subsection (a) unless the taxpayer includes 
        the name, age, and TIN of the qualifying child on the return of 
        tax for the taxable year.
            ``(2) Other methods.--The Secretary may prescribe other 
        methods for providing the information described in paragraph 
        (1).
    ``(d) Information Returns.--
            ``(1) In general.--No amount shall be allowed as a credit 
        under subsection (a) for a taxable year unless the custodial 
        parent completes Form 1099-CS (or such other form as the 
        Secretary may prescribe) and provides 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 credit is claimed.
            ``(2) Contents of form.--The Form 1099-CS (or such other 
        form as the Secretary may prescribe) shall contain--
                    ``(A) the total amount of child support owed 
                (whether or not paid) for such taxable year,
                    ``(B) the total amount of unpaid child support as 
                of the last day of such taxable year,
                    ``(C) the name, address (if known), and taxpayer 
                identification number of the delinquent debtor, and
                    ``(D) 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.
            ``(3) 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.
    ``(e) Determination of Whether Child Support Is Paid.--
            ``(1) 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.
            ``(2) 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 section 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 paragraph.
    ``(f) Definitions.--For the purposes of this section--
            ``(1) 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, but only if 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.
            ``(2) Child support.--The term `child support' means--
                    ``(A) any periodic payment of a fixed amount, or
                    ``(B) 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. The term `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.
            ``(3) 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.
            ``(4) Delinquent debtor.--The term `delinquent debtor' 
        means a taxpayer who owes unpaid child support to a custodial 
        parent.
            ``(5) 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 section 152(e)(4)).
            ``(6) Support instrument.--The term `support instrument' 
        means--
                    ``(A) a decree of divorce or separate maintenance 
                or a written instrument incident to such a decree,
                    ``(B) a written separation agreement, or
                    ``(C) 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.''.
    (b) Conforming and Clerical Amendments.--
            (1) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting before the period ``, or 
        from section 36 of such Code''.
            (2) The table of sections for subpart C of part IV of 
        chapter 1 of the Internal Revenue Code of 1986 is amended by 
        redesignating the item relating to section 36 as an item 
        relating to section 37 and by inserting after the item relating 
        to section 35 the following new item:

``Sec. 36. Unpaid child support.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2005.

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 section 152(e)(4)).
                    ``(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.

    The amendments made by the Act shall apply to taxable years 
beginning after December 31, 2004. The Secretary of the Treasury shall 
publish Form 1099-CS (or such other form that may be prescribed to 
comply with section 36(d) of the Internal Revenue Code of 1986 (as 
added by 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.