I

103D CONGRESS

2D SESSION H. R. 4470

To amend the Internal Revenue Code of 1986 to make the dependent care

tax credit refundable, to phaseout such credit for higher-income taxpayers, and to provide for advance payments of such credit.

IN THE HOUSE OF REPRESENTATIVES

MAY 20, 1994

Ms. SHEPHERD introduced the following bill; which was referred to the

Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to make

the dependent care tax credit refundable, to phaseout

such credit for higher-income taxpayers, and to provide

for advance payments of such credit.

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

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Children and Incapaci5 tated Dependents Care Annual Refund (CIDCARE) Act’’.

6 SEC. 2. DEPENDENT CARE CREDIT TO BE REFUNDABLE;

7 ADVANCE PAYMENTS OF CREDIT.

8 (a) CREDIT TO BE REFUNDABLE.—
2

•HR 4470 IH

1 (1) IN GENERAL.—Section 21 of the Internal

2 Revenue Code of 1986 (relating to expenses for

3 household and dependent care services necessary for

4 gainful employment) is hereby moved to subpart C

5 of part IV of subchapter A of chapter 1 of such

6 Code (relating to refundable credits) and inserted

7 after section 34.

8 (2) TECHNICAL AMENDMENTS.—

9 (A) Section 35 of such Code is redesig10 nated as section 36.

11 (B) Section 21 of such Code is redesig12 nated as section 35.

13 (C) Paragraph (1) of section 35(a) of such

14 Code (as redesignated by subparagraph (B)) is

15 amended by striking ‘‘this chapter’’ and insert16 ing ‘‘this subtitle’’.

17 (D) Subparagraph (C) of section 129(a)(2)

18 of such Code is amended by striking ‘‘section

19 21(e)’’ and inserting ‘‘section 35(e)’’.

20 (E) Paragraph (2) of section 129(b) of

21 such Code is amended by striking ‘‘section

22 21(d)(2)’’ and inserting ‘‘section 35(d)(2)’’.

23 (F) Paragraph (1) of section 129(e) of

24 such Code is amended by striking ‘‘section

25 21(b)(2)’’ and inserting ‘‘section 35(b)(2)’’.
3

•HR 4470 IH

1 (G) Subsection (e) of section 213 of such

2 Code is amended by striking ‘‘section 21’’ and

3 inserting ‘‘section 35’’.

4 (H) Paragraph (2) of section 1324(b) of

5 title 31, United States Code, is amended by in6 serting before the period ‘‘or from section 35 of

7 such Code’’.

8 (I) The table of sections for subpart C of

9 part IV of subchapter A of chapter 1 of such

10 Code is amended by striking the item relating

11 to section 35 and inserting the following:

‘‘Sec. 35. Expenses for household and dependent care services

necessary for gainful employment.

‘‘Sec. 36. Overpayments of tax.’’

12 (J) The table of sections for subpart A of

13 such part IV is amended by striking the item

14 relating to section 21.

15 (b) HIGHER-INCOME TAXPAYERS INELIGIBLE FOR

16 CREDIT.—Subsection (a) of section 35 of such Code, as

17 redesignated by subsection (a), is amended by adding at

18 the end the following new paragraph:

19 ‘‘(3) PHASEOUT OF CREDIT FOR HIGHER-IN20 COME TAXPAYERS.—The amount of the credit which

21 would (but for this paragraph) be allowed by this

22 section shall be reduced (but not below zero) by an

23 amount which bears the same ratio to such amount

24 of credit as the excess of the taxpayer’s adjusted
4

•HR 4470 IH

1 gross income for the taxable year over $110,000

2 bears to $10,000. Any reduction determined under

3 the preceding sentence which is not a multiple of

4 $10 shall be rounded to the nearest multiple of

5 $10.’’

6 (c) ADVANCE PAYMENT OF CREDIT.—

7 (1) IN GENERAL.—Chapter 25 of such Code

8 (relating to general provisions relating to employ9 ment taxes) is amended by inserting after section

10 3507 the following new section:

11 ‘‘SEC. 3507A. ADVANCE PAYMENT OF DEPENDENT CARE

12 CREDIT.

13 ‘‘(a) GENERAL RULE.—Except as otherwise provided

14 in this section, every employer making payment of wages

15 to an employee with respect to whom a dependent care

16 credit eligibility certificate is in effect shall, at the time

17 of paying such wages, make an additional payment equal

18 to such employee’s dependent care credit advance amount.

19 ‘‘(b) DEPENDENT CARE CREDIT ELIGIBILITY CER20 TIFICATE.—For purposes of this title, a dependent care

21 credit eligibility certificate is a statement furnished by an

22 employee to the employer which—

23 ‘‘(1) certifies that the employee will be eligible

24 to receive the credit provided by section 35 for the

25 taxable year,
5

•HR 4470 IH

1 ‘‘(2) certifies that the employee does not have

2 a dependent care credit eligibility certificate in effect

3 for the calendar year with respect to the payment of

4 wages by another employer,

5 ‘‘(3) states whether or not the employee’s

6 spouse has a dependent care credit eligibility certifi7 cate in effect, and

8 ‘‘(4) estimates the amount of dependent care

9 credit of the employee for the calendar year.

10 For purposes of this section, a certificate shall be treated

11 as being in effect with respect to a spouse if such a certifi12 cate will be in effect on the first status determination date

13 following the date on which the employee furnishes the

14 statement in question.

15 ‘‘(c) DEPENDENT CARE CREDIT ADVANCE

16 AMOUNT.—

17 ‘‘(1) IN GENERAL.—For purposes of this title,

18 the term ‘dependent care credit advance amount’

19 means, with respect to any payroll period, the

20 amount determined—

21 ‘‘(A) on the basis of the employee’s wages

22 from the employer for such period,

23 ‘‘(B) on the basis of the employee’s esti24 mated amount of dependent care credit included
6

•HR 4470 IH

1 in the dependent care credit eligibility certifi2 cate, and

3 ‘‘(C) in accordance with tables provided by

4 the Secretary.

5 ‘‘(2) ADVANCE AMOUNT TABLES.—The tables

6 referred to in paragraph (1)(C) shall be similar in

7 form to the tables prescribed under section 3402

8 and, to the maximum extent feasible, shall be coordi9 nated with such tables and the tables prescribed

10 under section 3507(c).

11 ‘‘(d) OTHER RULES.—For purposes of this section,

12 rules similar to the rules of subsections (d) and (e) of sec13 tion 3507 shall apply.

14 ‘‘(e) REGULATIONS.—The Secretary shall prescribe

15 such regulations as may be necessary to carry out the pur16 poses of this section.’’.

17 (2) CLERICAL AMENDMENT.—The table of sec18 tions for chapter 25 of such Code is amended by in19 serting after the item relating to section 3507 the

20 following new item:

‘‘Sec. 3507A. Advance payment of dependent care credit.’’.

21 (d) EFFECTIVE DATE.—The amendments made by

22 this section shall apply to taxable years beginning after

23 December 31, 1994.

Æ