II

107TH CONGRESS

1ST SESSION S. 1122

To amend the Internal Revenue Code of 1986 to provide a refundable credit

against tax with respect to education and training of developmentally

disabled children.

IN THE SENATE OF THE UNITED STATES

JUNE 28, 2001

Mr. TORRICELLI 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 provide

a refundable credit against tax with respect to education

and training of developmentally disabled children.

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

3 SECTION 1. REFUNDABLE CREDIT FOR CHILD DISABILITY

4 EDUCATION AND TRAINING EXPENSES.

5 (a) IN GENERAL.—Subpart C of part IV of sub6 chapter A of chapter 1 of the Internal Revenue Code of

7 1986 (relating to refundable personal credits) is amended

8 by redesignating section 35 as section 36 and inserting

9 after section 34 the following new section:
2

•S 1122 IS

1 ‘‘SEC. 35. CHILD DISABILITY EDUCATION AND TRAINING EX2 PENSES.

3 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in4 dividual, there shall be allowed as a credit against the tax

5 imposed by this subtitle for the taxable year an amount

6 equal to the amount paid or incurred by the taxpayer dur7 ing the taxable year for qualified child disability expenses.

8 ‘‘(b) LIMITATIONS.—

9 ‘‘(1) MAXIMUM DOLLAR AMOUNT.—The amount

10 allowed as a credit under subsection (a) to the tax11 payer for the taxable year shall not exceed $3,000.

12 ‘‘(2) LIMITATION BASED ON ADJUSTED GROSS

13 INCOME.—

14 ‘‘(A) IN GENERAL.—The amount of the

15 credit allowable under subsection (a) (after ap16 plication of paragraph (1)) shall be reduced

17 (but not below zero) by $500 for each $1,000

18 (or fraction thereof) by which the taxpayer’s

19 modified adjusted gross income exceeds

20 $150,000.

21 ‘‘(B) MODIFIED ADJUSTED GROSS IN22 COME.—For purposes of subparagraph (A), the

23 term ‘modified adjusted gross income’ means

24 adjusted gross income increased by any amount

25 excluded from gross income under section 911,

26 931, or 933.
3

•S 1122 IS

1 ‘‘(C) COST-OF-LIVING ADJUSTMENT.—

2 ‘‘(i) IN GENERAL.—In the case of any

3 taxable year beginning in a calendar year

4 after 2002, the $150,000 amount under

5 subparagraph (A) shall be increased by an

6 amount equal to—

7 ‘‘(I) such dollar amount, multi8 plied by

9 ‘‘(II) the cost-of-living adjust10 ment determined under section 1(f)(3)

11 for the calendar year in which the tax12 able year begins, determined by sub13 stituting ‘calendar year 2001’ for ‘cal14 endar year 1992’ in subparagraph (B)

15 thereof.

16 ‘‘(ii) ROUNDING RULES.—If any

17 amount after adjustment under clause (i)

18 is not a multiple of $1,000, such amount

19 shall be rounded to the next lower multiple

20 of $1,000.

21 ‘‘(c) QUALIFIED CHILD DISABILITY EXPENSES.—

22 For purposes of this section—

23 ‘‘(1) IN GENERAL.—The term ‘qualified child

24 disability expenses’ means amounts paid for services

25 and equipment related to education and training of
4

•S 1122 IS

1 a qualified child of the taxpayer in connection with

2 a developmental disability of such child, including—

3 ‘‘(A) behavioral therapy,

4 ‘‘(B) speech therapy,

5 ‘‘(C) occupational therapy,

6 ‘‘(D) physical therapy,

7 ‘‘(E) auditory therapy,

8 ‘‘(F) assistive communication technology,

9 and

10 ‘‘(G) such other services as the Secretary

11 may, in consultation with the Secretary of

12 Health and Human Services and the Secretary

13 of Education, provide by regulation.

14 ‘‘(2) DEVELOPMENTAL DISABILITY.—The term

15 ‘developmental disability’ has the same meaning

16 given the term in section 102 of the Developmental

17 Disabilities Assistance and Bill of Rights Act of

18 2000 (Public Law 106-402; 114 Stat. 1682).

19 ‘‘(3) QUALIFIED CHILD.—The term ‘qualified

20 child’ means any individual if—

21 ‘‘(A) the taxpayer is allowed a deduction

22 under section 151 with respect to such indi23 vidual for the taxable year,

24 ‘‘(B) such individual has not attained the

25 age of 18 as of the close of the calendar year
5

•S 1122 IS

1 in which the taxable year of the taxpayer be2 gins, and

3 ‘‘(C) such individual bears a relationship to

4 the taxpayer described in section 32(c)(3)(B).

5 ‘‘(d) VERIFICATION REQUIREMENTS.—

6 ‘‘(1) EXPENSES MUST BE SUBSTANTIATED.—

7 Qualified child disability expenses to which sub8 section (a) applies may be taken into account under

9 this section only if the taxpayer substantiates such

10 expense in such form as the Secretary may pre11 scribe.

12 ‘‘(2) IDENTIFICATION REQUIREMENT.—No

13 credit shall be allowed under this section with re14 spect to any qualified child unless the taxpayer in15 cludes the name and taxpayer identification number

16 of such qualified child on the return of tax for the

17 taxable year.

18 ‘‘(e) SPECIAL RULES.—

19 ‘‘(1) DENIAL OF DOUBLE BENEFIT.—

20 ‘‘(A) IN GENERAL.—No credit shall be al21 lowed under subsection (a) for any expense for

22 which a deduction or credit is allowed under

23 any other provision of this chapter.

24 ‘‘(B) GRANTS.—No credit shall be allowed

25 under subsection (a) for any expense to the ex-
6

•S 1122 IS

1 tent that funds for such expense are received

2 under any Federal, State, or local program.

3 ‘‘(2) MARRIED COUPLES MUST FILE JOINT RE4 TURNS.—Rules similar to the rules of paragraphs

5 (2), (3), and (4) of section 21(e) shall apply for pur6 poses of this section.

7 ‘‘(3) BASIS ADJUSTMENT.—For purposes of

8 this subtitle, if a credit is allowed under this section

9 for any expenditure with respect to any property, the

10 increase in the basis of such property which would

11 (but for this subsection) result from such expendi12 ture shall be reduced by the amount of the credit so

13 allowed.’’.

14 (b) CONFORMING AMENDMENTS.—

15 (1) Paragraph (2) of section 1324(b) of title

16 31, United States Code, is amended by inserting be17 fore the period ‘‘, or from section 35 of such Code’’.

18 (2) The table of sections for subpart C of part

19 IV of subchapter A of chapter 1 of the Internal Rev20 enue Code of 1986 is amended by striking the last

21 item and inserting the following new items:

‘‘Sec. 35. Child disability expenses.

‘‘Sec. 36. Overpayments of tax.’’.

22 (3) Section 1016(a) of such Code is amended

23 by striking ‘‘and’’ at the end of paragraph (26), by

24 striking the period at the end of paragraph (27) and
7

•S 1122 IS

1 inserting ‘‘, and’’, and by adding at the end the fol2 lowing:

3 ‘‘(28) in the case of property with respect to

4 which a credit was allowed under section 35, to the

5 extent provided in section 35(e)(3).’’.

6 (c) EFFECTIVE DATE.—The amendments made by

7 this section shall apply to taxable years beginning after

8 December 31, 2001.

Æ