Adoption Assistance Act

Summary: TABLE OF CONTENTS: 
     Title I:  General Adoption Assistance 
     Title II:  Adoption Assistance for Federal Employees 
     Title III:  Exclusion of Adoption Assistance 
Adoption Assistance Act - 
Title I:  General Adoption Assistance
 - Amends the Internal Revenue Code to allow an individual a refundable tax credit of up to $5,000 for qualified adoption expenses paid or incurred during the taxable year.  Provides a limitation based on modified adjusted gross income. 
Title II:  Adoption Assistance for Federal Employees
 - Requires the head of each agency to establish a program under which any employee of such agency (including a Postal Service employee) who adopts a child shall be provided a limited reimbursement for adoption expenses.  Prohibits denial of an application for reimbursement on the basis of the marital status of the individual. 
Title III:  Exclusion of Adoption Assistance
 - Amends the Internal Revenue Code to exclude from gross income employee or military adoption assistance benefits received by an employee for adoption assistance.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Adoption Assistance Act''.

                  TITLE I--GENERAL ADOPTION ASSISTANCE

SEC. 101. REFUNDABLE CREDIT FOR ADOPTION EXPENSES.

    (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 35 as section 36 and by inserting 
after section 34 the following new section:

``SEC. 35. ADOPTION EXPENSES.

    ``(a) Allowance of Credit.--In the case of an individual, there 
shall be allowed as a credit against the tax imposed by this subtitle 
for the taxable year the amount of the qualified adoption expenses paid 
or incurred by the taxpayer during such taxable year.
    ``(b) Limitations.--
            ``(1) Dollar limitation.--The aggregate amount of qualified 
        adoption expenses which may be taken into account under 
        subsection (a) with respect to the adoption of a child shall 
        not exceed $5,000.
            ``(2) Income limitation.--The amount allowable as a credit 
        under subsection (a) for any taxable year shall be reduced (but 
        not below zero) by an amount which bears the same ratio to the 
        amount so allowable (determined without regard to this 
        paragraph but with regard to paragraph (1)) as--
                    ``(A) the amount (if any) by which the taxpayer's 
                adjusted gross income (determined without regard to 
                sections 911, 931, and 933) exceeds $60,000, bears to
                    ``(B) $40,000.
            ``(3) Denial of double benefit.--
                    ``(A) In general.--No credit shall be allowed under 
                subsection (a) for any expense for which a deduction or 
                credit is allowable under any other provision of this 
                chapter.
                    ``(B) Grants.--No credit shall be allowed under 
                subsection (a) for any expense to the extent that funds 
                for such expense are received under any Federal, State, 
                or local program.
    ``(c) Qualified Adoption Expenses.--
            ``(1) In general.--For purposes of this section, the term 
        `qualified adoption expenses' means reasonable and necessary 
        adoption fees, court costs, attorney fees, and other expenses--
                    ``(A) which are directly related to, and the 
                principal purpose of which is for, the legal and final 
                adoption of a child by the taxpayer, and
                    ``(B) which are not incurred in violation of State 
                or Federal law or in carrying out any surrogate 
                parenting arrangement.
            ``(2) Expenses for adoption of spouse's child not 
        eligible.--The term `qualified adoption expenses' shall not 
        include any expenses in connection with the adoption by an 
        individual of a child who is the child of such individual's 
        spouse.
    ``(d) Married Couples Must File Joint Returns, Etc.--Rules similar 
to the rules of paragraphs (2), (3), and (4) of section 21(e) shall 
apply for purposes of this section.''
    (b) Conforming Amendments.--
            (1) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting before the period ``, or 
        from section 35 of such Code''.
            (2) 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 striking the last item and inserting the 
        following:

                              ``Sec. 35. Adoption expenses.
                              ``Sec. 36. Overpayments of tax.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1995.

          TITLE II--ADOPTION ASSISTANCE FOR FEDERAL EMPLOYEES

SEC. 201. REIMBURSEMENT FOR ADOPTION EXPENSES.

    (a) In General.--Subpart G of part III of title 5, United States 
Code, is amended by adding at the end the following:

             ``CHAPTER 90--MISCELLANEOUS EMPLOYEE BENEFITS
``9001. Adoption benefits.
``Sec. 9001. Adoption benefits
    ``(a) For the purpose of this section--
            ``(1) the term `agency' means--
                    ``(A) an Executive agency;
                    ``(B) an agency in the judicial branch; and
                    ``(C) an agency in the legislative branch (other 
                than any included under subparagraph (A));
            ``(2) the term `employee' does not include any individual 
        who, pursuant to the exercise of any authority under section 
        8913(b), is excluded from participating in the health insurance 
        program under chapter 89; and
            ``(3) the term `adoption expenses', as used with respect to 
        a child, means any reasonable and necessary expenses directly 
        relating to the adoption of such child, including--
                    ``(A) fees charged by an adoption agency;
                    ``(B) placement fees;
                    ``(C) legal fees;
                    ``(D) counseling fees;
                    ``(E) medical expenses, including those relating to 
                obstetrical care for the biological mother, medical 
                care for the child, and physical examinations for the 
                adopting parent or parents;
                    ``(F) foster-care charges; and
                    ``(G) transportation expenses.
    ``(b) The head of each agency shall by regulation establish a 
program under which any employee of such agency who adopts a child 
shall be reimbursed for any adoption expenses incurred by such employee 
in the adoption of such child.
    ``(c) Under the regulations, reimbursement may be provided only--
                    ``(1) after the adoption becomes final, as 
                determined under the laws of the jurisdiction governing 
                the adoption;
                    ``(2) if, at the time the adoption becomes final, 
                the child is under 18 years of age and unmarried; and
                    ``(3) if appropriate written application is filed 
                within such time, complete with such information, and 
                otherwise in accordance with such procedures as may be 
                required.
    ``(d)(1) Reimbursement for an employee under this section with 
respect to any particular child--
            ``(A) shall be payable only if, or to the extent that, 
        similar benefits paid (or payable) under one or more programs 
        established under State law or another Federal statute have not 
        met (or would not meet) the full amount of the adoption 
        expenses incurred; and
            ``(B) may not exceed $2,000.
    ``(2)(A) In any case in which both adopting parents are employees 
eligible for reimbursement under this section, each parent shall be 
eligible for an amount determined in accordance with paragraph (1), 
except as provided in subparagraph (B).
    ``(B) No amount shall be payable under this section if, or to the 
extent that, payment of such amount would cause the sum of the total 
amount payable to the adoptive parents under this section, and the 
total amount paid (or payable) to them under any program or programs 
referred to in paragraph (1)(A), to exceed the lesser of--
            ``(i) the total adoption expenses incurred; or
            ``(ii) $4,000.
    ``(3) The guidelines issued under subsection (g) shall include 
provisions relating to interagency cooperation and other appropriate 
measures to carry out this subsection.
    ``(e) Any amount payable under this section shall be paid from the 
appropriation or fund used to pay the employee involved.
    ``(f) An application for reimbursement under this section may not 
be denied based on the marital status of the individual applying.
    ``(g)(1) The Office of Personnel Management may issue any general 
guidelines which the Office considers necessary to promote the uniform 
administration of this section.
    ``(2) The regulations prescribed by the head of each Executive 
agency under this section shall be consistent with any guidelines 
issued under paragraph (1).
    ``(3) Upon the request of any agency, the Office may provide 
consulting, technical, and any other similar assistance necessary to 
carry out this section.''.
    (b) Conforming Amendments.--(1) The heading of subpart G of part 
III of title 5, United States Code, is amended to read as follows:

    ``SUBPART G--ANNUITIES, INSURANCE, AND MISCELLANEOUS BENEFITS''.
    (2) The analysis for part III of title 5, United States Code, is 
amended--
            (A) by striking the item relating to subpart G and 
        inserting in lieu thereof the following:

  ``SUBPART G--ANNUITIES, INSURANCE, AND MISCELLANEOUS BENEFITS''; and
            (B) by adding after the item relating to chapter 89 the 
        following:

``90. Miscellaneous Employee Benefits.......................    9001''.
SEC. 202. APPLICABILITY TO POSTAL EMPLOYEES.

    Section 1005 of title 39, United States Code, is amended by adding 
at the end the following:
    ``(g) Section 9001 of title 5 shall apply to the Postal Service. 
Regulations prescribed by the Postal Service to carry out this 
subsection shall be consistent with any guidelines issued under 
subsection (g)(1) of such section.''.
SEC. 203. EFFECTIVE DATE.

    This title shall take effect on October 1, 1995, and shall apply 
with respect to any adoption which becomes final (determined in the 
manner described in section
 9001(c)(1) of title 5, United States Code, as added by this title) on 
or after that date.

              TITLE III--EXCLUSION OF ADOPTION ASSISTANCE

SEC. 301. EXCLUSION OF ADOPTION ASSISTANCE.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by redesignating section 137 
as section 138 and by inserting after section 136 the following new 
section:

``SEC. 137. ADOPTION ASSISTANCE.

    ``(a) In General.--Gross income of an employee does not include 
employee adoption assistance benefits, or military adoption assistance 
benefits, received by the employee with respect to the employee's 
adoption of a child.
    ``(b) Definitions.--For purposes of this section--
            ``(1) Employee adoption assistance benefits.--The term 
        `employee adoption assistance benefits' means payment by an 
        employer of qualified adoption expenses with respect to an 
        employee's adoption of a child, or reimbursement by the 
        employer of such qualified adoption expenses paid or incurred 
        by the employee in the taxable year.
            ``(2) Employer and employee.--The terms `employer' and 
        `employee' have the respective meanings given such terms by 
        section 127(c).
            ``(3) Military adoption assistance benefits.--The term 
        `military adoption assistance benefits' means benefits provided 
        under section 1052 of title 10, United States Code, or section 
        514 of title 14, United States Code.
            ``(4) Qualified adoption expenses.--
                    ``(A) In general.--The term `qualified adoption 
                expenses' means reasonable and necessary adoption fees, 
                court costs, attorney fees, and other expenses--
                            ``(i) which are directly related to, and 
                        the principal purpose of which is for, the 
                        legal adoption of an eligible child by the 
                        taxpayer, and
                            ``(ii) which are not incurred in violation 
                        of State or Federal law or in carrying out any 
                        surrogate parenting arrangement.
                    ``(B) Eligible child.--The term `eligible child' 
                means any individual--
                            ``(i) who has not attained age 18 as of the 
                        time of the adoption, or
                            ``(ii) who is physically or mentally 
                        incapable of caring for himself.
    ``(c) Coordination With Other Provisions.--The Secretary shall 
issue regulations to coordinate the application of this section with 
the application of any other provision of this title which allows a 
credit or deduction with respect to qualified adoption expenses.''
    (b) Clerical Amendment.--The table of sections for part III of 
subchapter B of chapter 1 of such Code is amended by striking the item 
relating to section 137 and inserting the following new items:

                              ``Sec. 137. Adoption assistance.
                              ``Sec. 138. Cross references to other 
                                        Acts.''
    (c) Effective Date.--The amendments made this section shall apply 
to taxable years beginning after December 31, 1995.