II 

116TH CONGRESS 

2D SESSION S. 3883 

To amend the Internal Revenue Code of 1986 to make the earned income 

tax credit available to residents of possessions of the United States. 

IN THE SENATE OF THE UNITED STATES 

JUNE 3, 2020 

Mr. MENENDEZ (for himself, Mr. SCHUMER, Mr. BLUMENTHAL, Ms. WARREN, Mr. SANDERS, and Mrs. GILLIBRAND) 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 make 

the earned income tax credit available to residents of 

possessions of the United States. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. APPLICATION OF EARNED INCOME TAX CREDIT 

4 IN POSSESSIONS OF UNITED STATES. 

5 (a) IN GENERAL.—Chapter 77 of the Internal Rev6 enue Code of 1986 is amended by adding at the end the 

7 following new section: 


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1 ‘‘SEC. 7530. APPLICATION OF EARNED INCOME TAX CREDIT 

2 TO POSSESSIONS OF THE UNITED STATES. 

3 ‘‘(a) PUERTO RICO.— 

4 ‘‘(1) IN GENERAL.—With respect to calendar 

5 year 2021 and each calendar year thereafter, the 

6 Secretary shall, except as otherwise provided in this 

7 subsection, make payments to Puerto Rico equal 

8 to— 

9 ‘‘(A) the specified matching amount for 

10 such calendar year, plus 

11 ‘‘(B) in the case of calendar years 2021 

12 through 2025, the lesser of— 

13 ‘‘(i) the expenditures made by Puerto 

14 Rico during such calendar year for edu15 cation efforts with respect to individual 

16 taxpayers and tax return preparers relat17 ing to the earned income tax credit, or 

18 ‘‘(ii) $1,000,000. 

19 ‘‘(2) REQUIREMENT TO REFORM EARNED IN20 COME TAX CREDIT.—The Secretary shall not make 

21 any payments under paragraph (1) with respect to 

22 any calendar year unless Puerto Rico has in effect 

23 an earned income tax credit for taxable years begin24 ning in or with such calendar year which (relative to 

25 the earned income tax credit which was in effect for 

26 taxable years beginning in or with calendar year 


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1 2019) increases the percentage of earned income 

2 which is allowed as a credit for each group of indi3 viduals with respect to which such percentage is sep4 arately stated or determined in a manner designed 

5 to substantially increase workforce participation. 

6 ‘‘(3) SPECIFIED MATCHING AMOUNT.—For pur7 poses of this subsection— 

8 ‘‘(A) IN GENERAL.—The term ‘specified 

9 matching amount’ means, with respect to any 

10 calendar year, the lesser of— 

11 ‘‘(i) the excess (if any) of— 

12 ‘‘(I) the cost to Puerto Rico of 

13 the earned income tax credit for tax14 able years beginning in or with such 

15 calendar year, over 

16 ‘‘(II) the base amount for such 

17 calendar year, or 

18 ‘‘(ii) the product of 3, multiplied by 

19 the base amount for such calendar year. 

20 ‘‘(B) BASE AMOUNT.— 

21 ‘‘(i) BASE AMOUNT FOR 2020.—In the 

22 case of calendar year 2020, the term ‘base 

23 amount’ means the greater of— 

24 ‘‘(I) the cost to Puerto Rico of 

25 the earned income tax credit for taxVerDate Sep 11 2014 17:44 Jun 20, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S3883.IS S3883

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1 able years beginning in or with cal2 endar year 2019 (rounded to the 

3 nearest multiple of $1,000,000), or 

4 ‘‘(II) $200,000,000. 

5 ‘‘(ii) INFLATION ADJUSTMENT.—In 

6 the case of any calendar year after 2021, 

7 the term ‘base amount’ means the dollar 

8 amount determined under clause (i) in9 creased by an amount equal to— 

10 ‘‘(I) such dollar amount, multi11 plied by— 

12 ‘‘(II) the cost-of-living adjust13 ment determined under section 1(f)(3) 

14 for such calendar year, determined by 

15 substituting ‘calendar year 2020’ for 

16 ‘calendar year 2016’ in subparagraph 

17 (A)(ii) thereof. 

18 Any amount determined under this clause 

19 shall be rounded to the nearest multiple of 

20 $1,000,000. 

21 ‘‘(4) RULES RELATED TO PAYMENTS AND RE22 PORTS.— 

23 ‘‘(A) TIMING OF PAYMENTS.—The Sec24 retary shall make payments under paragraph 

25 (1) for any calendar year— 


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1 ‘‘(i) after receipt of the report de2 scribed in subparagraph (B) for such cal3 endar year, and 

4 ‘‘(ii) except as provided in clause (i), 

5 within a reasonable period of time before 

6 the due date for individual income tax re7 turns (as determined under the laws of 

8 Puerto Rico) for taxable years which began 

9 on the first day of such calendar year. 

10 ‘‘(B) ANNUAL REPORTS.—With respect to 

11 calendar year 2021 and each calendar year 

12 thereafter, Puerto Rico shall provide to the Sec13 retary a report which shall include— 

14 ‘‘(i) an estimate of the costs described 

15 in paragraphs (1)(B)(i) and (3)(A)(i)(I) 

16 with respect to such calendar year, and 

17 ‘‘(ii) a statement of such costs with 

18 respect to the preceding calendar year. 

19 ‘‘(C) ADJUSTMENTS.— 

20 ‘‘(i) IN GENERAL.—In the event that 

21 any estimate of an amount is more or less 

22 than the actual amount as later deter23 mined and any payment under paragraph 

24 (1) was determined on the basis of such 

25 estimate, proper payment shall be made 


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1 by, or to, the Secretary (as the case may 

2 be) as soon as practicable after the deter3 mination that such estimate was inac4 curate. Proper adjustment shall be made in 

5 the amount of any subsequent payments 

6 made under paragraph (1) to the extent 

7 that proper payment is not made under the 

8 preceding sentence before such subsequent 

9 payments. 

10 ‘‘(ii) ADDITIONAL REPORTS.—The 

11 Secretary may require such additional peri12 odic reports of the information described in 

13 subparagraph (B) as the Secretary deter14 mines appropriate to facilitate timely ad15 justments under clause (i). 

16 ‘‘(D) DETERMINATION OF COST OF

17 EARNED INCOME TAX CREDIT.—For purposes 

18 of this subsection, the cost to Puerto Rico of 

19 the earned income tax credit shall be deter20 mined by the Secretary on the basis of the laws 

21 of Puerto Rico and shall include reductions in 

22 revenues received by Puerto Rico by reason of 

23 such credit and refunds attributable to such 

24 credit, but shall not include any administrative 

25 costs with respect to such credit. 


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1 ‘‘(E) PREVENTION OF MANIPULATION OF

2 BASE AMOUNT.—No payments shall be made 

3 under paragraph (1) if the earned income tax 

4 credit as in effect in Puerto Rico for taxable 

5 years beginning in or with calendar year 2019 

6 is modified after the date of the enactment of 

7 this subsection. 

8 ‘‘(b) POSSESSIONS WITH MIRROR CODE TAX SYS9 TEMS.— 

10 ‘‘(1) IN GENERAL.—With respect to calendar 

11 year 2020 and each calendar year thereafter, the 

12 Secretary shall, except as otherwise provided in this 

13 subsection, make payments to the Virgin Islands, 

14 Guam, and the Commonwealth of the Northern Mar15 iana Islands equal to— 

16 ‘‘(A) 75 percent of the cost to such posses17 sion of the earned income tax credit for taxable 

18 years beginning in or with such calendar year, 

19 plus 

20 ‘‘(B) in the case of calendar years 2020 

21 through 2024, the lesser of— 

22 ‘‘(i) the expenditures made by such 

23 possession during such calendar year for 

24 education efforts with respect to individual 


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1 taxpayers and tax return preparers relat2 ing to such earned income tax credit, or 

3 ‘‘(ii) $50,000. 

4 ‘‘(2) APPLICATION OF CERTAIN RULES.—Rules 

5 similar to the rules of subparagraphs (A), (B), (C), 

6 and (D) of subsection (a)(4) shall apply for purposes 

7 of this subsection. 

8 ‘‘(c) AMERICAN SAMOA.— 

9 ‘‘(1) IN GENERAL.—With respect to calendar 

10 year 2020 and each calendar year thereafter, the 

11 Secretary shall, except as otherwise provided in this 

12 subsection, make payments to American Samoa 

13 equal to— 

14 ‘‘(A) the lesser of— 

15 ‘‘(i) 75 percent of the cost to Amer16 ican Samoa of the earned income tax cred17 it for taxable years beginning in or with 

18 such calendar year, or 

19 ‘‘(ii) $12,000,000, plus 

20 ‘‘(B) in the case of calendar years 2020 

21 through 2024, the lesser of— 

22 ‘‘(i) the expenditures made by Amer23 ican Samoa during such calendar year for 

24 education efforts with respect to individual 


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1 taxpayers and tax return preparers relat2 ing to such earned income tax credit, or 

3 ‘‘(ii) $50,000. 

4 ‘‘(2) REQUIREMENT TO ENACT AND MAINTAIN

5 AN EARNED INCOME TAX CREDIT.—The Secretary 

6 shall not make any payments under paragraph (1) 

7 with respect to any calendar year unless American 

8 Samoa has in effect an earned income tax credit for 

9 taxable years beginning in or with such calendar 

10 year which allows a refundable tax credit to individ11 uals on the basis of the taxpayer’s earned income 

12 which is designed to substantially increase workforce 

13 participation. 

14 ‘‘(3) INFLATION ADJUSTMENT.—In the case of 

15 any calendar year after 2020, the $12,000,000 

16 amount in paragraph (1)(A)(ii) shall be increased by 

17 an amount equal to— 

18 ‘‘(A) such dollar amount, multiplied by— 

19 ‘‘(B) the cost-of-living adjustment deter20 mined under section 1(f)(3) for such calendar 

21 year, determined by substituting ‘calendar year 

22 2019’ for ‘calendar year 2016’ in subparagraph 

23 (A)(ii) thereof. 

24 Any increase determined under this clause shall be 

25 rounded to the nearest multiple of $100,000. 


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1 ‘‘(4) APPLICATION OF CERTAIN RULES.—Rules 

2 similar to the rules of subparagraphs (A), (B), (C), 

3 and (D) of subsection (a)(4) shall apply for purposes 

4 of this subsection. 

5 ‘‘(d) TREATMENT OF PAYMENTS.—For purposes of 

6 section 1324 of title 31, United States Code, the payments 

7 under this section shall be treated in the same manner 

8 as a refund due from a credit provision referred to in sub9 section (b)(2) of such section.’’. 

10 (b) CLERICAL AMENDMENT.—The table of sections 

11 for chapter 77 of the Internal Revenue Code of 1986 is 

12 amended by adding at the end the following new item: 

‘‘Sec. 7530. Application of earned income tax credit to possessions of the 

United States.’’. 

Æ 


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