II 

111TH CONGRESS 

1ST SESSION S. 1309 

To amend title IV of the Social Security Act to ensure funding for grants 

to promote responsible fatherhood and strengthen low-income families, 

and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JUNE 19, 2009 

Mr. BAYH (for himself, Mrs. LINCOLN, and Mr. BURRIS) introduced the 

following bill; which was read twice and referred to the Committee on Finance 

A BILL 

To amend title IV of the Social Security Act to ensure 

funding for grants to promote responsible fatherhood 

and strengthen low-income families, and for other purposes. 

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; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Responsible Fatherhood and Healthy Families Act of 

6 2009’’. 

7 (b) TABLE OF CONTENTS.—The table of contents of 

8 this Act is as follows: 


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Sec. 1. Short title; table of contents. 

Sec. 2. Findings. 

TITLE I—PROMOTING RESPONSIBLE FATHERHOOD AND 

STRENGTHENING LOW-INCOME FAMILIES 

Sec. 101. Healthy marriage promotion and responsible fatherhood programs. 

Sec. 102. Elimination of separate TANF work participation rate for 2-parent 

families. 

Sec. 103. Ban on recovery of medicaid costs for births. 

Sec. 104. Improved collection and distribution of child support. 

Sec. 105. Grants to States to conduct demonstration projects to promote economic opportunity for low-income parents. 

Sec. 106. State assessments of barriers to employment and financial support of 

children. 

Sec. 107. Collection of child support under the supplemental nutrition assistance program. 

Sec. 108. Grants supporting healthy family partnerships for domestic violence 

intervention and prevention. 

Sec. 109. Procedures to address domestic violence prevention. 

TITLE II—REVENUE PROVISIONS 

Sec. 201. Modifications to the earned income tax credit. 

Sec. 202. Clarification of economic substance doctrine. 

Sec. 203. Penalty for understatements attributable to transactions lacking economic substance, etc. 

Sec. 204. Denial of deduction for interest on underpayments attributable to 

noneconomic substance transactions. 

1 SEC. 2. FINDINGS. 

2 Congress makes the following findings: 

3 (1) The most important factor in a child’s up4 bringing is whether the child is brought up in a lov5 ing, healthy, supportive environment. 

6 (2) Children who grow up with two parents are, 

7 on average, more likely than their peers in single8 parent homes to finish high school and be economi9 cally self-sufficient. 

10 (3) Father-child interaction, like mother-child 

11 interaction, has been shown to promote the positive 


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1 physical, social, emotional, and mental development 

2 of children. 

3 (4) Children typically live without both parents 

4 when parents are divorced or did not marry. More 

than 1 5 ⁄3 of all marriages end in divorce, and 60 per6 cent of divorcing couples have children. Almost 4 in 

7 10 births are to unmarried women, however, this fig8 ure varies by age. Six in 10 births to women ages 

9 20 to 24, nearly 1 in 10 births to women ages 25 

10 to 28, and 1 in 5 births to women in their 30s are 

11 to unmarried women. 

12 (5) More than 1 in 4 families with children 

13 have only 1 parent present, and more than 1 in 5 

14 children live with their mother only. 

15 (6) Recent studies demonstrate that most 

16 unwed fathers in urban areas are highly involved 

17 with the mother of their child before and after the 

18 child’s birth, with 80 percent involved with their 

19 mother’s pregnancy, with 50 percent living with the 

20 child’s mother at the time of the child’s birth. When 

21 the children of these fathers were 5 years old, 50 

22 percent had seen their fathers 10 or fewer days in 

23 the past month, over 35 percent had not seen their 

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1 cent had not seen their fathers at all in the past 2 

2 years. 

3 (7) An estimated 30 percent of the children 

4 who live in households without their father have not 

5 seen their father in at least 1 year, and only 40 per6 cent have contact once or more per month. 

7 (8) The inability of parents to sustain a healthy 

8 relationship with their child’s other parent and re9 main involved in their child’s life can have severe 

10 negative consequences for the parents, the child, 

11 their community, and taxpayers. 

12 (9) Early parenting has serious consequences 

13 for young men and young women, their children, and 

14 society. Too-early childbearing makes it harder for 

15 young parents to finish their education. Fathers of 

16 children born to teen mothers have lower earnings 

17 than fathers of children born to mothers who are in 

18 their early 20s and children born to teen parents are 

19 more likely to end up in poverty than children born 

20 to adult parents. Children of teen parents are at in21 creased risk of involvement with the child welfare 

22 system and the sons of teen mothers are more likely 

23 to end up in prison. The daughters of teen mothers 

24 are more likely to end up teen mothers themselves. 


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1 In addition, teen childbearing costs taxpayers at 

2 least $9,100,000,000 annually. 

3 (10) Single-parent families are 5 times as likely 

4 to be poor as married-couple families. 

5 (11) Children raised in single-parent families 

6 are more likely than children raised in 2-parent fam7 ilies to do poorly in school, have emotional and be8 havioral problems, become teenage parents, commit 

9 crimes, smoke cigarettes, abuse drugs and alcohol, 

10 and have poverty-level incomes as adults. 

11 (12) High rates of unemployment and low 

12 wages are primary reasons why parents do not 

13 marry, why 2-parent families break up, and why fa14 thers fail to remain involved with their children. 

15 (13) Domestic violence is also a significant 

16 problem leading to the non-formation or break-up of 

17 2-parent families. 

18 (14) According to the National Fatherhood Ini19 tiative National Marriage Survey in 2005, 42 per20 cent of women and 9 percent of men cite domestic 

21 violence as the reason for their divorces. 

22 (15) A history of incarceration is a major bar23 rier to employment. Sixty percent of young African24 American men who dropped out of high school have 

25 served time. When these men leave prison, they 


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1 often have difficulty finding a job and supporting 

2 their children. 

(16) Over 1 3 ⁄2 of State prison inmates are par4 ents. When noncustodial parents go to prison, their 

5 child support obligations continue, even though they 

6 have little ability to pay the support. When these 

7 parents leave prison, they typically owe more than 

8 $20,000 in child support debt. Noncustodial parents 

9 leaving prison often re-enter the underground econ10 omy because of financial pressures or to avoid the 

11 child support system, making it less likely that they 

12 will successfully rejoin society and reunite with their 

13 families. 

14 (17) Children should receive the child support 

15 paid by their parents, and the government should 

16 not keep the money to recover welfare costs. Current 

17 pass-through limits on Federal cost-sharing have 

18 been a barrier to States choosing to pass through 

19 child support. Regular child support income appears 

20 to have a greater positive impact on children dollar 

21 for dollar than other types of income. Researchers in 

22 Wisconsin found that when monthly child support 

23 was passed through to families receiving assistance 

24 under the Temporary Assistance for Needy Families 

25 program established under part A of title IV of the 


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1 Social Security Act (TANF) and disregarded 100 

2 percent in determining assistance for the families, 

3 fathers paid more child support, established their 

4 legal relationship with their children more quickly, 

5 and worked less in the underground economy. More6 over, the State costs of a full pass-through and dis7 regard of child support were fully offset by increased 

8 payments by fathers and decreased public assistance 

9 use by families. 

10 (18) The Department of Health and Human 

11 Services National Child Support Enforcement Stra12 tegic Plan for fiscal years 2005 through 2009 states 

13 that ‘‘child support is no longer a welfare reimburse14 ment, revenue-producing device for the Federal and 

15 State governments; it is a family-first program, in16 tended to ensure families’ self-sufficiency by making 

17 child support a more reliable source of income’’. 

18 (19) Current law permits States to apply the 

19 cost of passing through child support to families re20 ceiving assistance under the TANF program toward 

21 their maintenance of effort (MOE) requirements, 

22 but only to the extent that the State disregards the 

23 child support payments in determining the amount 

24 and type of TANF assistance. 


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1 (20) Programs that increase employment oppor2 tunity and reduce barriers by increasing employment 

3 opportunity and reducing recidivism will benefit chil4 dren and families. 

5 (21) Transitional jobs programs have shown 

6 promise in reducing unemployment among chron7 ically unemployed or underemployed population 

8 groups, including formerly incarcerated individuals, 

9 the homeless, and young African-American men. 

10 (22) To strengthen families it is important to 

11 improve the upward economic mobility of the custo12 dial and noncustodial parent wage-earners, as well 

13 as youth at risk of early parenthood or incarcer14 ation, by providing the skills and experience nec15 essary to access jobs with family-sustaining wages 

16 and benefits. In families in which all the members 

17 do not live together, this is important to enable the 

18 prompt and consistent payment of adequate child 

19 support. 

20 (23) It is important and useful to foster local 

21 and regional economic development and job advance22 ment for workers, especially young custodial and 

23 noncustodial parents, by funding local collaborations 

24 among business, education, and the community in 

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1 taged citizens to meet the workforce needs of the 

2 local and regional economy. 

3 (24) Employers benefit from working with and 

4 being supported by the local education, post-sec5 ondary and workforce systems in identifying the aca6 demic and occupational skill sets needed to fill the 

7 skilled jobs in the changing economy. Local eco8 nomic and community development is enhanced 

9 when residents have access to higher wage employ10 ment, thus increasing the tax base, fueling the econ11 omy, and contributing to greater family economic se12 curity. 

13 (25) Public-private career pathways partner14 ships are an important tool for linking employers 

15 and workers with the workforce education services 

16 they need and for integrating community economic 

17 development and workforce education services. Tran18 sitional jobs programs can serve as the first step in 

19 a career pathway by giving unemployed individuals 

20 with multiple barriers to employment, valuable work 

21 experience and related services. 

22 (26) The purpose of child support is to provide 

23 necessary income support for and increase the well24 being of children living apart from a parent. To im25 prove the ability of low-income noncustodial parents 


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1 to provide long-term support and care for their chil2 dren throughout their entire childhood, it is impor3 tant that child support polices support parental ef4 forts to pursue education and employment and to 

5 stay involved with their children. 

6 (27) Responsible parenthood includes active 

7 participation in financial support and child-rearing, 

8 as well as the formation and maintenance of a posi9 tive, healthy, and nonviolent relationship between 

10 parent and child and a cooperative, healthy, and 

11 nonviolent relationship between parents. 

12 (28) States should be encouraged to implement 

13 voluntary programs that provide support for respon14 sible parenting, including by increasing the employ15 ment and financial security of parents, and, when it 

16 is appropriate, with appropriate safeguards related 

17 to child abuse and domestic violence, the parental in18 volvement of noncustodial parents. 

19 (29) Promoting responsible parenthood saves 

20 the government money by reducing the need for pub21 lic assistance, increasing the educational attainment 

22 of children, reducing juvenile delinquency and crime, 

23 reducing substance abuse, and lowering rates of un24 employment. 


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1 (30) Programs to encourage responsible father2 hood or responsible motherhood should promote and 

3 provide support services for— 

4 (A) fostering loving and healthy relation5 ships between parents and children; 

6 (B) increasing responsibility of noncusto7 dial parents for the long-term care and finan8 cial well-being of their children; 

9 (C) increasing employment of low-income, 

10 noncustodial parents and improving compliance 

11 with child support obligations; and 

12 (D) reducing barriers to active 2-parent in13 volvement and cooperative parenting. 

14 (31) The promotion of healthy marriage and re15 sponsible parenthood should not denigrate the stand16 ing or parenting efforts of single parents or other 

17 caregivers, lessen the protection of children from 

18 abusive parents, or compromise the safety or health 

19 of the custodial or noncustodial parent, but should 

20 increase the chance that children will have 2 caring 

21 parents to help them grow up healthy and secure. 


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1 TITLE I—PROMOTING RESPON2 SIBLE FATHERHOOD AND 

3 STRENGTHENING LOW-IN4 COME FAMILIES 

5 SEC. 101. HEALTHY MARRIAGE PROMOTION AND RESPON6 SIBLE FATHERHOOD PROGRAMS. 

7 (a) ENSURING FUNDING FOR RESPONSIBLE FA8 THERHOOD PROGRAMS.—Section 403(a)(2)(C) of the So9 cial Security Act (42 U.S.C. 603(a)(2)(C)) is amended— 

10 (1) in the subparagraph heading, by striking 

11 ‘‘LIMITATION ON USE OF’’ and inserting ‘‘REQUIRE12 MENT TO USE CERTAIN’’; and 

13 (2) in clause (i), by striking ‘‘may not award 

14 more than $50,000,000’’ and inserting ‘‘shall award 

15 at least $100,000,000’’. 

16 (b) ASSURANCE OF VOLUNTARY PARTICIPATION.— 

17 Section 403(a)(2)(A)(ii)(II) of the Social Security Act (42 

18 U.S.C. 603(a)(2)(A)(ii)(II)) is amended— 

19 (1) in item (aa), by striking ‘‘and’’ at the end; 

20 (2) in item (bb), by striking the period at the 

21 end and inserting a semicolon; and 

22 (3) by adding at the end the following new 

23 items: 

24 ‘‘(cc) to not condition the re25 ceipt of assistance under the proVerDate Nov 24 2008 02:30 Jun 20, 2009 Jkt 079200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S1309.IS S1309

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1 gram funded under this part, 

2 under a program funded with 

3 qualified State expenditures (as 

4 defined in section 

5 409(a)(7)(B)(i)), or under any 

6 other program funded under this 

7 title on enrollment in any such 

8 programs or activities; and 

9 ‘‘(dd) to permit any indi10 vidual who has begun to partici11 pate in a particular program or 

12 activity funded under this para13 graph, including an individual 

14 whose participation is specified in 

15 the individual responsibility plan 

16 developed for the individual in 

17 accordance with section 408(b), 

18 to transfer to another such pro19 gram or activity funded under 

20 this paragraph upon notification 

21 to the entity and the State agen22 cy responsible for administering 

23 the State program funded under 

24 this part.’’. 


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1 (c) ACTIVITIES PROMOTING RESPONSIBLE FATHER2 HOOD.—Section 403(a)(2)(C)(ii) of the Social Security 

3 Act (42 U.S.C. 603(a)(2)(C)(ii)) is amended— 

4 (1) in subclause (I), by striking ‘‘marriage or 

5 sustain marriage’’ and insert ‘‘healthy relationships 

6 and healthy marriages or to sustain healthy relation7 ships or healthy marriages’’; 

8 (2) in subclause (II), by inserting ‘‘educating 

9 youth who are not yet parents about the economic, 

10 social, and family consequences of early parenting, 

11 helping participants in fatherhood programs work 

12 with their own children to break the cycle of early 

13 parenthood,’’ after ‘‘child support payments,’’; and 

14 (3) in subclause (III), by striking ‘‘fathers’’ and 

15 inserting ‘‘low-income fathers and other low-income 

16 noncustodial parents’’. 

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

18 this section shall take effect on October 1, 2009. 

19 SEC. 102. ELIMINATION OF SEPARATE TANF WORK PAR20 TICIPATION RATE FOR 2-PARENT FAMILIES. 

21 (a) IN GENERAL.—Section 407 of the Social Security 

22 Act (42 U.S.C. 607) is amended— 

23 (1) in subsection (a)— 

24 (A) beginning in the heading, by striking 

25 ‘‘PARTICIPATION RATE REQUIREMENTS’’ and 


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1 all that follows through ‘‘A State’’ in paragraph 

2 (1) and inserting ‘‘PARTICIPATION RATE RE3 QUIREMENTS.—A State’’; and 

4 (B) by striking paragraph (2); 

5 (2) in subsection (b)— 

6 (A) in paragraph (1)(A), by striking ‘‘sub7 section (a)(1)’’ and inserting ‘‘subsection (a)’’; 

8 (B) in paragraph (2), by striking the para9 graph heading and all that follows through ‘‘A 

10 family’’ and inserting ‘‘SPECIAL RULE.—A fam11 ily’’; 

12 (C) in paragraph (4), by striking ‘‘para13 graphs (1)(B) and (2)(B)’’ and inserting ‘‘de14 termining monthly participation rates under 

15 paragraph (1)(B)’’; and 

16 (D) in paragraph (5), by striking ‘‘rates’’ 

17 and inserting ‘‘rate’’; and 

18 (3) in subsection (c)— 

19 (A) in paragraph (1)(B), in the matter 

20 preceding clause (i), by striking ‘‘subsection 

21 (b)(2)(B)’’ and inserting ‘‘subsection 

22 (b)(1)(B)(i)’’; and 

23 (B) in paragraph (2)(D)— 


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1 (i) by striking ‘‘paragraphs (1)(B)(i) 

2 and (2)(B) of subsection (b)’’ and insert3 ing ‘‘subsection (b)(1)(B)(i)’’; and 

4 (ii) by striking ‘‘and in 2-parent fami5 lies, respectively,’’. 

6 (b) EFFECTIVE DATE.— 

7 (1) IN GENERAL.—The amendments made by 

8 subsection (a) shall take effect on the date of enact9 ment of this Act and shall apply to the determina10 tion of minimum participation rates for months be11 ginning on or after that date. 

12 (2) LIMITATION ON PENALTY IMPOSITION.— 

13 Notwithstanding section 409(a)(3) of the Social Se14 curity Act, the Secretary of Health and Human 

15 Services shall not impose a penalty against a State 

16 under that section on the basis of the State’s failure 

17 to satisfy the participation rate required for fiscal 

18 year 2006, 2007, 2008, or 2009 if the State dem19 onstrates that the State would have met such re20 quirement if, with respect to those months of fiscal 

21 year 2009 that began prior to or on the date of en22 actment of this Act, the State were permitted to 

23 count 2-parent families that met the requirements of 

24 section 407(c)(1)(A) of the Social Security Act (42 

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1 ly participation rates under section 407(b)(1)(B)(i) 

2 of such Act (42 U.S.C. 607(b)(1)(B)(i)). 

3 SEC. 103. BAN ON RECOVERY OF MEDICAID COSTS FOR 

4 BIRTHS. 

5 (a) BAN ON RECOVERY.— 

6 (1) IN GENERAL.—Section 454 of the Social 

7 Security Act (42 U.S.C. 654), as amended by sec8 tion 7301 of Public Law 109–171, is amended— 

9 (A) by striking ‘‘and’’ at the end of para10 graph (33); 

11 (B) by striking the period at the end of 

12 paragraph (34) and inserting a semicolon; and 

13 (C) by inserting after paragraph (34) the 

14 following: 

15 ‘‘(35) provide that, except as provided in sec16 tion 1902(a)(25)(F)(ii), the State shall not use the 

17 State program operated under this part to collect 

18 any amount owed to the State by reason of costs in19 curred under the State plan approved under title 

20 XIX for the birth of a child for whom support rights 

21 have been assigned pursuant to section 471(a)(17) 

22 or 1912; and’’. 

23 (2) RULE OF CONSTRUCTION.—Nothing in sec24 tion 454(35) of the Social Security Act (42 U.S.C. 

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1 strued as affecting the application of section 

2 1902(a)(25) of such Act (42 U.S.C. 1396a(a)(25)) 

3 with respect to a State (relating to the State Med4 icaid plan requirement for the State to take all rea5 sonable measures to ascertain the legal liability of 

6 third parties to pay for care and services available 

7 under the plan). 

8 (b) CLARIFICATION THAT BAN ON RECOVERY DOES

9 NOT APPLY WITH RESPECT TO INSURANCE OF A PARENT

10 WITH AN OBLIGATION TO PAY CHILD SUPPORT.—Clause 

11 (ii) of section 1902(a)(25)(F) of the Social Security Act 

12 (42 U.S.C. 1396a(a)(25)(F)) is amended by inserting 

13 ‘‘only if such third-party liability is derived through insur14 ance,’’ before ‘‘seek’’. 

15 (c) EFFECTIVE DATE.— 

16 (1) IN GENERAL.—Except as provided in para17 graph (2), the amendments made by this section 

18 take effect on October 1, 2009. 

19 (2) EXTENSION OF EFFECTIVE DATE FOR

20 STATE LAW AMENDMENT.—In the case of a State 

21 plan under title XIX of the Social Security Act (42 

22 U.S.C. 1396 et seq.) which the Secretary of Health 

23 and Human Services determines requires State legis24 lation in order for the plan to meet the additional 

25 requirements imposed by the amendments made by 


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1 this section, the State plan shall not be regarded as 

2 failing to comply with the requirements of such title 

3 solely on the basis of its failure to meet these addi4 tional requirements before the first day of the first 

5 calendar quarter beginning after the close of the 

6 first regular session of the State legislature that be7 gins after the date of enactment of this Act. For 

8 purposes of the previous sentence, in the case of a 

9 State that has a 2-year legislative session, each year 

10 of the session is considered to be a separate regular 

11 session of the State legislature. 

12 SEC. 104. IMPROVED COLLECTION AND DISTRIBUTION OF 

13 CHILD SUPPORT. 

14 (a) ELIMINATION OF PASS-THROUGH LIMITS AND

15 OTHER CHANGES EFFECTIVE BEGINNING WITH FISCAL

16 YEAR 2010.— 

17 (1) ELIMINATION OF PASS-THROUGH LIMITS ON

18 FEDERAL COST-SHARING.—Section 457(a)(6)(B) of 

19 the Social Security Act (42 U.S.C. 657(a)(6)(B)) (as 

20 redesignated by clause (iii) of section 7301(b)(1)(B) 

21 of the Deficit Reduction Act of 2005), is amended 

22 to read as follows: 

23 ‘‘(B) FAMILIES THAT CURRENTLY RE24 CEIVE ASSISTANCE.—Notwithstanding para25 graph (1), in the case of a family that receives 


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1 assistance from the State, a State shall not be 

2 required to pay to the Federal Government the 

3 Federal share of any amount collected on behalf 

4 of such family during a month to the extent 

5 that— 

6 ‘‘(i) the State pays the amount to the 

7 family; and 

8 ‘‘(ii) the amount is disregarded in de9 termining the amount and type of assist10 ance provided to the family under such 

11 program.’’. 

12 (2) CHILD SUPPORT STATE PLAN AMEND13 MENT.—Section 454 of the Social Security Act (42 

14 U.S.C. 654), as amended by section 103(a)(1), is 

15 amended by adding at the end the following new 

16 paragraph: 

17 ‘‘(36) provide that a State shall pay all col18 lected child support to the payee, except as provided 

19 in section 457, and shall not use the State program 

20 operated under this part to retain payments to re21 cover the cost of State-funded assistance or bene22 fits.’’. 

23 (3) DISBURSEMENT OF SUPPORT PAYMENTS.— 

24 Section 454B(c) of the Social Security Act (42 


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1 U.S.C. 654B(c)) is amended by adding at the end 

2 the following new paragraph: 

3 ‘‘(3) DISBURSEMENT TO FAMILIES.—The State 

4 disbursement unit shall pay all collected child sup5 port to the payee, except as otherwise provided in 

6 section 457, and may not disburse collections to the 

7 State to reimburse the State for assistance or bene8 fits provided under a State-funded program.’’. 

9 (4) STATE OPTION TO CONDITION RECEIPT OF

10 TANF ON ASSIGNMENT OF SUPPORT.—Section 

11 408(a)(3) of the Social Security Act (42 U.S.C. 

12 608(a)(3)) is amended— 

13 (A) in the paragraph heading, by striking 

14 ‘‘NO ASSISTANCE FOR FAMILIES NOT’’ and in15 serting ‘‘STATE OPTION TO CONDITION ASSIST16 ANCE FOR FAMILIES ON’’; and 

17 (B) by striking ‘‘shall’’ and inserting 

18 ‘‘may’’. 

19 (5) INCLUSION OF DISTRIBUTIONS TO FORMER

20 TANF FAMILIES IN DETERMINATION OF TANF MAIN21 TENANCE OF EFFORT.—Section 409(a)(7)(B)(i)(V) 

22 of the Social Security Act (42 U.S.C. 

23 609(a)(7)(B)(i)(V)) is amended by inserting ‘‘, in24 cluding the State share of child support distributed 

25 to former TANF families under an election by the 


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1 State under section 454(34) (as in effect on the day 

2 before the date of enactment of the Responsible Fa3 therhood and Healthy Families Act of 2009) to 

4 apply the amendments made by subsection (b)(1) of 

5 section 7301 of the Deficit Reduction Act of 2005 

6 (as so in effect)’’ after ‘‘401(a)’’. 

7 (6) STATE OPTION TO DISCONTINUE OLDER

8 SUPPORT ASSIGNMENTS.—Section 457(b) of the So9 cial Security Act (42 U.S.C. 657(b)) is amended to 

10 read as follows: 

11 ‘‘(b) CONTINUATION OF ASSIGNMENTS.— 

12 ‘‘(1) IN GENERAL.—Any rights to support obli13 gations assigned to a State as a condition of receiv14 ing assistance from the State under parts A and E 

15 and in effect on September 30, 2009 (or such earlier 

16 date as the State may choose), may be discontinued 

17 after such date. 

18 ‘‘(2) DISTRIBUTION OF AMOUNTS AFTER AS19 SIGNMENT DISCONTINUATION.—If a State chooses to 

20 discontinue the assignment of a support obligation 

21 described in paragraph (1), the State may treat 

22 amounts collected pursuant to the assignment as if 

23 the amounts had never been assigned and may dis24 tribute the amounts to the family in accordance with 

25 subsections (a) and (c).’’. 


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1 (7) EFFECTIVE DATE.—The amendments and 

2 repeal made by this subsection take effect on Octo3 ber 1, 2009, and shall apply to payments under 

4 parts A and D of title IV of the Social Security Act 

5 for calendar quarters beginning on or after that 

6 date, and without regard to whether regulations to 

7 implement the amendments are promulgated by such 

8 date. 

9 (b) REFORM OF RULES FOR DISTRIBUTION OF

10 CHILD SUPPORT COLLECTED ON BEHALF OF CHILDREN

11 IN FOSTER CARE BEGINNING WITH FISCAL YEAR

12 2011.— 

13 (1) IN GENERAL.—Section 457 of such Act (42 

14 U.S.C. 657) is amended— 

15 (A) by striking subsections (d) and (e); 

16 (B) by redesignating subsection (c) as sub17 section (d); and 

18 (C) by inserting after subsection (b) the 

19 following: 

20 ‘‘(c) AMOUNTS COLLECTED FOR CHILD FOR WHOM

21 FOSTER CARE MAINTENANCE PAYMENTS ARE MADE.— 

22 Amounts collected by a State as child support for months 

23 in any period on behalf of a child for whom a public agen24 cy is making foster care maintenance payments under part 

25 E shall be paid to the public agency responsible for superVerDate Nov 24 2008 02:30 Jun 20, 2009 Jkt 079200 PO 00000 Frm 00023 Fmt 6652 Sfmt 6201 E:\BILLS\S1309.IS S1309

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1 vising the placement of the child and used in the manner 

2 such public agency determines will serve the best interests 

3 of the child, which may include depositing the funds in 

4 a child asset account for the child’s future needs or mak5 ing all or a part thereof available to the individual respon6 sible for meeting the child’s day-to-day needs. A State 

7 shall not be required to pay to the Federal Government 

8 the Federal share of any amounts collected on behalf of 

9 a child and used by the public agency in the best interests 

10 of the child in accordance with this subsection.’’. 

11 (2) FOSTER CARE STATE PLAN AMENDMENT.— 

12 Section 471(a)(17) of the Social Security Act (42 

13 U.S.C. 671(a)(17)) is amended— 

14 (A) by inserting ‘‘and consistent with the 

15 child’s case plan’’ after ‘‘where appropriate’’; 

16 and 

17 (B) by striking ‘‘secure an assignment to 

18 the State of any rights to support’’ and insert19 ing ‘‘establish paternity and establish, modify, 

20 and enforce child support obligations’’. 

21 (3) EFFECTIVE DATE.—The amendments made 

22 by this subsection take effect on October 1, 2010, 

23 and shall apply to collections made on behalf of chil24 dren who are receiving foster care maintenance pay25 ments under part E of title IV of the Social Security 


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1 Act for calendar quarters beginning on or after that 

2 date, and without regard to whether regulations to 

3 implement the amendments are promulgated by such 

4 date. 

5 (c) FULL DISTRIBUTION OF CHILD SUPPORT COL6 LECTED AND OTHER CHANGES BEGINNING WITH FISCAL

7 YEAR 2015.— 

8 (1) FULL DISTRIBUTION OF CHILD SUPPORT

9 COLLECTED.— 

10 (A) IN GENERAL.—Section 457 of the So11 cial Security Act (42 U.S.C. 657) is amended 

12 by striking subsection (a) and inserting the fol13 lowing: 

14 ‘‘(a) FULL DISTRIBUTION OF AMOUNTS COLLECTED

15 ON BEHALF OF ANY CHILD.—Subject to subsection (c), 

16 the entire amount collected on behalf of any child as sup17 port by a State pursuant to a plan approved under this 

18 part shall be paid by the State to the family (or, in the 

19 case of a child receiving assistance under part E, to the 

20 public agency responsible for supervising the child’s place21 ment), and shall not be retained by the State to reimburse 

22 costs of assistance provided under part A, part E, or any 

23 State-funded assistance or benefits.’’. 

24 (B) CONFORMING AMENDMENTS.— 


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1 (i) Section 409(a)(7)(B)(i)(I)(aa) of 

2 such Act (42 U.S.C. 

3 609(a)(7)(B)(i)(I)(aa)) is amended by 

4 striking ‘‘457(a)(1)(B)’’ and inserting 

5 ‘‘457(a)’’. 

6 (ii) Section 454(5) of such Act (42 

7 U.S.C. 654(5)) is amended by striking 

8 ‘‘(A) in any case’’ and all that follows 

9 through ‘‘(B)’’. 

10 (iii) Section 454 of such Act (42 

11 U.S.C. 654) is amended by striking para12 graph (34). 

13 (iv) Section 457 of such Act (42 

14 U.S.C. 657), as amended by subsection 

15 (b)(1)(3) of this Act, is amended by strik16 ing subsection (d). 

17 (C) REPEAL OF DRA AMENDMENTS.—The 

18 amendments made by subsections (a) and (b) of 

19 section 7301 the Deficit Reduction Act (Public 

20 Law 109–171; 120 Stat. 141) are repealed. 

21 (2) REQUIREMENT TO DISREGARD PERCENTAGE

22 OF CHILD SUPPORT COLLECTED IN DETERMINING

23 AMOUNT AND TYPE OF TANF ASSISTANCE.—Section 

24 408(a) of the Social Security Act (42 U.S.C. 608(a)) 


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1 is amended by adding at the end the following new 

2 paragraph: 

3 ‘‘(12) REQUIREMENT TO DISREGARD PERCENT4 AGE OF CHILD SUPPORT COLLECTED IN DETER5 MINING AMOUNT AND TYPE OF TANF ASSISTANCE.— 

6 A State to which a grant is made under section 403 

7 shall disregard at least the same percentage of 

8 amounts collected as support on behalf of a family 

9 as the percentage of earned income that the State 

10 disregards in determining the amount or type of as11 sistance provided to the family under the State pro12 gram funded under this part or under a program 

13 funded with qualified State expenditures (as defined 

14 in section 409(a)(7)(B)(i)).’’. 

15 (3) EFFECTIVE DATE.—The amendments and 

16 repeal made by this subsection take effect on Octo17 ber 1, 2014, and shall apply to payments under 

18 parts A and D of title IV of the Social Security Act 

19 for calendar quarters beginning on or after that 

20 date, and without regard to whether regulations to 

21 implement the amendments are promulgated by such 

22 date. 

23 (d) IMMEDIATE ELIMINATION OF CERTAIN CHANGES

24 MADE BY THE DEFICIT REDUCTION ACT OF 2005 AND

25 OTHER IMPROVEMENTS.— 


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1 (1) IMMEDIATE RESTORATION OF CERTAIN DRA

2 CHANGES.— 

3 (A) RESTORATION OF FEDERAL MATCHING

4 OF CERTAIN STATE SPENDING.— 

5 (i) IN GENERAL.—Section 2104 of di6 vision B of the American Recovery and Re7 investment Act of 2009 (Public Law 111– 

8 5) is amended to read as follows: 

9 ‘‘SEC. 2104. RESUMPTION OF PRIOR CHILD SUPPORT LAW. 

10 ‘‘Effective October 1, 2008, section 455(a)(1) of the 

11 Social Security Act (42 U.S.C. 655(a)(1)) is amended by 

12 striking ‘from amounts paid to the State under section 

13 458 or’.’’. 

14 (ii) REPEAL OF DRA AMENDMENT.— 

15 The amendment made by section 7309 of 

16 the Deficit Reduction Act of 2005 (Public 

17 Law 109–171; 120 Stat. 147) is repealed. 

18 (B) REPEAL OF MANDATORY FEE FOR

19 CHILD SUPPORT COLLECTION.— 

20 (i) ELIMINATION OF DRA AMEND21 MENTS.—Section 454(6)(B) of such Act 

22 (42 U.S.C. 654(6)(B)) is amended— 

23 (I) by striking clause (ii); 

24 (II) by striking ‘‘(i)’’ after ‘‘(B)’’; 

25 and 


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1 (III) by redesignating subclauses 

2 (I) and (II) as clauses (i) and (ii), re3 spectively, and realigning the left mar4 gins of such clauses accordingly. 

5 (ii) CONFORMING AMENDMENT.—Ef6 fective as if enacted on October 1, 2009, 

7 section 457(a) of the Social Security Act, 

8 as amended by section 7301(b)(1)(A) of 

9 the Deficit Reduction Act of 2005, is 

10 amended by striking paragraph (4). 

11 (iii) REPEAL OF DRA AMENDMENTS.— 

12 The amendments made by section 7310 of 

13 the Deficit Reduction Act of 2005 (Public 

14 Law 109–171, 120 Stat. 147) are re15 pealed. 

16 (C) CONFORMING AMENDMENT.—Section 

17 466(a)(3)(B) of such Act (42 U.S.C. 

18 666(a)(3)(B)) is amended by striking ‘‘in ac19 cordance with’’ and all that follows through the 

20 semicolon and inserting ‘‘after deduction of any 

21 fees imposed by the State to cover the costs of 

22 collection, in accordance with section 457;’’. 

23 (2) OTHER IMMEDIATE IMPROVEMENTS.— 

24 (A) PROHIBITION ON CONSIDERING A PE25 RIOD OF INCARCERATION VOLUNTARY UNEMVerDate Nov 24 2008 02:30 Jun 20, 2009 Jkt 079200 PO 00000 Frm 00029 Fmt 6652 Sfmt 6201 E:\BILLS\S1309.IS S1309

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1 PLOYMENT.—Section 466(a) of the Social Secu2 rity Act (42 U.S.C. 666(a)) is amended by in3 serting after paragraph (19) the following new 

4 paragraph: 

5 ‘‘(20) PROCEDURES RELATING TO PERIODS OF

6 INCARCERATION OF NONCUSTODIAL PARENTS.— 

7 ‘‘(A) IN GENERAL.—Procedures which re8 quire that, in determining or modifying the 

9 amount of, or terms and conditions of, any sup10 port obligation of a noncustodial parent, the 

11 State— 

12 ‘‘(i) shall not consider any period of 

13 incarceration of such parent as a period of 

14 voluntary unemployment that disqualifies 

15 the parent from obtaining a modification 

16 of the support obligation consistent with 

17 the parent’s ability to pay child support; 

18 and 

19 ‘‘(ii) subject to subparagraph (B) in 

20 the case of an incarcerated parent, may— 

21 ‘‘(I) temporarily suspend any 

22 support obligation on the parent and 

23 the enforcement of any support obli24 gation of the parent existing prior to 

25 the period of incarceration; and 


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1 ‘‘(II) temporarily prohibit the ac2 crual of any interest on any support 

3 obligation of the parent existing prior 

4 to the period of incarceration during 

5 any such period. 

6 ‘‘(B) NOTICE AND OPPORTUNITY TO CHAL7 LENGE SUSPENSION.—Such procedures shall re8 quire the State to provide a custodial parent 

9 with— 

10 ‘‘(i) notice of any suspension of re11 view, adjustment, or enforcement of a sup12 port obligation and of any prohibition on 

13 interest accrual on such obligation that is 

14 imposed in accordance with subparagraph 

15 (A)(ii); and 

16 ‘‘(ii) an opportunity to request that 

17 the suspension or prohibition be termi18 nated or modified on the basis that the 

19 noncustodial parent has sufficient income 

20 or resources to continue payment of the 

21 support obligation during the noncustodial 

22 parent’s period of incarceration.’’. 

23 (B) FORGIVING OR OTHER MODIFICATION

24 OF CHILD SUPPORT ARREARAGES ASSIGNED TO

25 THE STATE.—Section 466(a)(9) of the Social 


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1 Security Act (42 U.S.C. 666(a)(9)) is amended 

2 in the flush matter following subparagraph (C), 

3 by inserting the following new sentence at the 

4 end: ‘‘Nothing in this paragraph shall be con5 strued as prohibiting a State from forgiving, 

6 compromising, reducing or waiving arrearages 

7 permanently assigned to the State under part A 

8 or E or under title XIX.’’. 

9 (C) REVIEW AND ADJUSTMENT OF CHILD

10 SUPPORT ARREARAGES UPON REQUEST.—Sec11 tion 466(a)(10) of the Social Security Act (42 

12 U.S.C. 666(a)(10)) is amended by adding at 

13 the end the following new subparagraph: 

14 ‘‘(d) REVIEW AND ADJUSTMENT OF

15 ARREARAGES.—Procedures which require 

16 the State to review, and if appropriate, re17 duce the balance of arrearages perma18 nently assigned to the State under part A 

19 or E, or under title XIX, pursuant to 

20 standards and procedures established by 

21 the State, in cases where the obligor lacks 

22 sufficient ability to pay the arrears, adjust23 ment will promote timely payment of cur24 rent support, or barriers, such as incarcer25 ation, may have limited the ability of the 


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1 obligor to timely seek a modification of the 

2 order, and it is in the best interests of the 

3 child to make such reduction. Nothing in 

4 the preceding sentence shall be construed 

5 as affecting arrearages that have not been 

6 permanently assigned to the State under 

7 such part or title.’’. 

8 (D) UPDATE OF TITLE IV–D PURPOSES.— 

9 Section 451 of the Social Security Act (42 

10 U.S.C. 651) is amended by striking ‘‘purpose 

11 of’’ and all that follows through ‘‘for whom 

12 such assistance is requested,’’ and inserting 

13 ‘‘purposes of enforcing the support obligations 

14 owed by noncustodial parents to their children 

15 and the spouse (or former spouse) with whom 

16 such children are living, locating parents, estab17 lishing paternity, providing assistance in obtain18 ing child and spousal support to all children for 

19 whom such assistance is requested (whether or 

20 not eligible for assistance under a State pro21 gram funded under part A), obtaining health 

22 care coverage for children participating in the 

23 State child support program, and carrying out 

24 other activities that improve child well-being by 


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1 increasing the ability of parents to support 

2 their children financially and emotionally,’’. 

3 (3) EFFECTIVE DATE.—Except as provided in 

4 paragraph (1)(B)(ii), the amendments and repeals 

5 made by this subsection shall take effect on the date 

6 of enactment of this Act, or October 1, 2009 (which7 ever is earlier), and shall apply to payments under 

8 parts A and D of title IV of the Social Security Act 

9 for calendar quarters beginning on or after that 

10 date, and without regard to whether regulations to 

11 implement the amendments are promulgated by such 

12 date. 

13 (e) STUDY AND REPORT.—Not later than October 1, 

14 2010, the Secretary of Health and Human Services shall 

15 study and submit a report to Congress regarding the fol16 lowing: 

17 (1) The effect of age eligibility restrictions for 

18 the earned income tax credit established under sec19 tion 32 of the Internal Revenue Code of 1986 for in20 dividuals without qualifying children on— 

21 (A) the ability of young parents to pay 

22 child support; 

23 (B) compliance with child support orders; 

24 and 


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1 (C) the relationship between young non2 custodial parents and their children. 

3 (2) The impact of State earned income tax 

4 credit programs, especially such programs with tar5 geted benefits for noncustodial parents, on— 

6 (A) the ability of noncustodial parents to 

7 pay child support; 

8 (B) compliance with child support orders; 

9 and 

10 (C) the relationship between noncustodial 

11 parents and their children. 

12 (3) The challenges faced by legal immigrants 

13 and individuals for whom English is not their pri14 mary language in fulfilling child support and other 

15 noncustodial parenting obligations. 

16 SEC. 105. GRANTS TO STATES TO CONDUCT DEMONSTRA17 TION PROJECTS TO PROMOTE ECONOMIC OP18 PORTUNITY FOR LOW-INCOME PARENTS. 

19 (a) COURT-SUPERVISED OR IV–D AGENCY-SUPER20 VISED EMPLOYMENT PROGRAMS FOR NONCUSTODIAL

21 PARENTS.— 

22 (1) IN GENERAL.—To assist States in imple23 menting section 466(a)(15) of the Social Security 

24 Act (42 U.S.C. 666(a)(15)), the Secretary of Health 

25 and Human Services shall award grants to States to 


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1 establish, in coordination with counties and other 

2 local or tribal governments, court-supervised or IV– 

3 D agency supervised-employment programs for non4 custodial parents who have barriers to employment 

5 and a history of nonpayment of child support obliga6 tions, as determined by a court or the IV–D agency, 

7 and who are determined by the court or agency to 

8 be in need of employment services or placement in 

9 order to pay such child support obligations. A non10 custodial parent described in the preceding sentence 

11 who is an ex-offender shall be eligible to participate 

12 in a program established under this subsection. 

13 (2) REQUIREMENTS.— 

14 (A) OPTION TO PARTICIPATE PRIOR TO

15 CONTEMPT FINDING.—A State shall not be eli16 gible to receive a grant under this subsection 

17 unless any program established with funds 

18 made available under the grant provides non19 custodial parents described in paragraph (1) 

20 with an option to participate in the program 

21 prior to the court or agency entering a finding 

22 that the noncustodial parent is in contempt for 

23 failure to pay a child support obligation and, 

24 potentially subject to criminal penalties. 


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1 (B) PROGRAM GOALS.—An employment 

2 program established with funds made available 

3 under a grant awarded under this subsection 

4 shall be designed to do the following: 

5 (i) To assist noncustodial parents de6 scribed in paragraph (1) obtain and main7 tain unsubsidized employment. 

8 (ii) To increase the amount of finan9 cial support received by children. 

10 (iii) To help noncustodial parents de11 scribed in paragraph (1) improve relation12 ships with their children and their chil13 dren’s custodial parent. 

14 (C) 6 MONTHS OF CONTINUOUS, TIMELY

15 PAYMENTS.—An employment program estab16 lished with funds made available under this 

17 subsection shall not permit a noncustodial par18 ent placed in the program to graduate from the 

19 program and avoid penalties for failure to pay 

20 a child support obligation until the noncustodial 

21 parent completes at least 6 months of contin22 uous, timely payment of the parent’s child sup23 port obligations. 

24 (D) USE OF FUNDS.— 


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1 (i) Services provided under an employ2 ment program established with funds made 

3 available under a grant made under this 

4 subsection must include the following: 

5 (I) Job placement, including job 

6 development and supervised job search 

7 as necessary. 

8 (II) Case management, including 

9 educational assessment and advising, 

10 vocational assessment and career ex11 ploration services, and court liaison 

12 services. 

13 (III) Counseling on responsible 

14 parenthood. 

15 (IV) Referral for support and 

16 educational services. 

17 (V) Employment retention serv18 ices. 

19 (ii) Services provided under an em20 ployment program established with funds 

21 made available under a grant made under 

22 this subsection may include the following: 

23 (I) Remedial education services 

24 or educational referral. 


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1 (II) Support funds for services 

2 such as transportation, child care, or 

3 job readiness training. 

4 (III) Transitional jobs programs. 

5 (IV) Public-private career path6 way partnerships established in ac7 cordance with subsection (b)(2). 

8 (V) Occupational skill training, 

9 including college credit programs. 

10 (VI) Curricula development. 

11 (E) ADMINISTRATION.—A State that re12 ceives a grant under this subsection may con13 tract with a public or private nonprofit organi14 zation, including a faith-based or community15 based organization, to administer (in conjunc16 tion with the court of jurisdiction or the IV–D 

17 agency) the court-supervised or IV–D agency18 supervised employment program. 

19 (b) TRANSITIONAL JOBS AND CAREER PATHWAYS

20 PARTNERSHIP GRANTS.—The Secretary of Labor shall 

21 award grants to States to conduct demonstration projects 

22 to carry out one or more of the projects described in para23 graphs (1) and (2). 

24 (1) TRANSITIONAL JOBS GRANTS.— 


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1 (A) IN GENERAL.—The Secretary of Labor 

2 may award grants under this subsection to es3 tablish and expand transitional jobs programs 

4 for eligible individuals, including such programs 

5 conducted by local governments, State employ6 ment agencies, nonprofit organizations, and 

7 faith-based or community-based organizations 

8 or intermediaries, that— 

9 (i) combine time-limited employment 

10 in transitional jobs that may be subsidized 

11 with public funds, with activities that pro12 mote skill development and remove barriers 

13 to employment, such as case management 

14 services and education, training, child sup15 port-related services, and other activities, 

16 pursuant to individual plans; and 

17 (ii) provide such individuals with— 

18 (I) transitional jobs placements 

19 and job placement assistance, to help 

20 the individuals make the transition 

21 from subsidized employment in transi22 tional jobs to stable unsubsidized em23 ployment; and 


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•S 1309 IS

1 (II) retention services after the 

2 transition to unsubsidized employ3 ment. 

4 (B) ELIGIBLE INDIVIDUALS.—For pur5 poses of this paragraph, the term ‘‘eligible indi6 viduals’’ means individuals within any of the 

7 following categories of disproportionately chron8 ically unemployed individuals: 

9 (i) Individuals who have attained age 

10 16, but not attained age 36, and who have 

11 documented barriers to employment such 

12 as lack of a high school diploma, limited 

13 English proficiency, aging out of foster 

14 care, or offender status, particularly such 

15 individuals who are parents or expectant 

16 parents. 

17 (ii) Formerly incarcerated individuals. 

18 (iii) Homeless or formerly homeless 

19 individuals. 

20 (iv) Individuals with disabilities. 

21 (v) Individuals designated by a court 

22 or the IV–D agency to participate in tran23 sitional jobs programs. 

24 (C) LIMITATIONS ON USE OF FUNDS.— 


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1 (i) ALLOWABLE ACTIVITIES.—A State 

2 that receives a grant under this paragraph 

3 (or a subgrantee of such State) (referred 

4 to in this paragraph as the ‘‘program oper5 ator’’) shall use the funds made available 

6 under the grant to operate a transitional 

7 jobs program for eligible individuals con8 sistent with the following requirements: 

9 (I) JOBS.—The program oper10 ator shall place eligible individuals in 

11 temporary jobs, the incomes from 

12 which may be subsidized in whole or 

13 in part with public funds. An eligible 

14 individual placed in such a job (re15 ferred to in this paragraph as ‘‘a par16 ticipant’’) shall perform work directly 

17 for the program operator or another 

18 public, nonprofit, or private sector or19 ganization (which operator or organi20 zation may be referred to in this para21 graph as a ‘‘worksite employer’’) with22 in the community involved. 

23 (II) HOURS.— 

24 (aa) IN GENERAL.—Subject 

25 to item (bb), the transitional jobs 


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•S 1309 IS

1 program shall provide a partici2 pant with not less than 30, and 

3 not more than 40, hours per 

4 week of a combination of paid 

5 employment and the services de6 scribed in subclauses (III), (IV), 

7 and (V). 

8 (bb) ACCOMMODATION OF

9 SPECIAL CIRCUMSTANCES.—The 

10 number of hours per week re11 quired under item (aa) may be 

12 adjusted in the case of a partici13 pant who requires a modified 

14 work week to accommodate spe15 cial circumstances. 

16 (III) JOB PREPARATION AND

17 SERVICES.—The program operator 

18 shall— 

19 (aa) develop an individual 

20 plan for each participant, which 

21 shall contain a goal that focuses 

22 on preparation of the participant 

23 for unsubsidized jobs in demand 

24 in the local economy that offer 

25 the potential for advancement 


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1 and growth (including increases 

2 in wages and benefits); 

3 (bb) develop transitional 

4 jobs placements for participants 

5 that will best prepare them for 

6 jobs described in item (aa) or 

7 participation in the public-private 

8 career pathway partnerships es9 tablished in accordance with 

10 paragraph (2); and 

11 (cc) provide case manage12 ment services and ensure that 

13 appropriate education, training, 

14 and other activities are available 

15 to participants, consistent with 

16 each participant’s individual 

17 plan. 

18 (IV) JOB PLACEMENT ASSIST19 ANCE AND RETENTION SERVICES.— 

20 The program operator shall provide 

21 job placement assistance to help par22 ticipants obtain unsubsidized employ23 ment and shall provide retention serv24 ices to the participants for a minimum 


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1 of 6 months after entry into the un2 subsidized employment. 

3 (V) EDUCATION OR TRAINING.— 

4 In any workweek in which a partici5 pant is scheduled to work at least 30 

6 hours in the program, not less than 

7 20 percent of the scheduled hours and 

8 not more than 50 percent of the 

9 scheduled hours shall involve partici10 pation in— 

11 (aa) education or training 

12 activities designed to improve the 

13 participant’s employability and 

14 potential earnings; 

15 (bb) other activities designed 

16 to reduce or eliminate any bar17 riers that may impede the par18 ticipant’s ability to secure and 

19 advance in unsubsidized employ20 ment; or 

21 (cc) activities designed to 

22 promote financial literacy and the 

23 use of products and services that 

24 increase personal savings and 

25 build financial assets for family 


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1 support, education, homeowner2 ship, and retirement. 

3 (VI) DURATION.— 

4 (aa) IN GENERAL.—Subject 

5 to item (bb), the duration of any 

6 placement in the program shall 

7 be for a minimum period of 3 

8 consecutive months. 

9 (bb) 3-MONTH EXTEN10 SION.—A program placement 

11 may be extended for up to 2 ad12 ditional consecutive 3-month pe13 riods upon the conclusion of the 

14 original 3-month placement pe15 riod if such extension would be 

16 consistent with the individual’s 

17 plan for transition to unsub18 sidized employment. 

19 (VII) SUPERVISION.—The work20 site employer or program operator 

21 shall supervise program participants, 

22 consistent with the goal of addressing 

23 the limited work experience and skills 

24 of the participants. 


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1 (D) REPORTS.—Not later than 120 days 

2 after the end of the grant period, the State 

3 shall submit a report to the Secretary of Labor 

4 that contains information on the number of 

5 participants in the program who have entered 

6 unsubsidized employment, the percentage of 

7 program participants who are employed during 

8 the second quarter after exit, the percentage of 

9 program participants who are employed during 

10 the fourth quarter after exit, the median earn11 ings of program participants during the second 

12 quarter after exit, the percentage of program 

13 participants who obtain an education or train14 ing credential during participation or within one 

15 year of exit, and demographic information re16 garding the participants. 

17 (E) TECHNICAL ASSISTANCE.—The Sec18 retary of Labor shall enter into contracts with 

19 entities with demonstrated experience in the 

20 provision of transitional jobs to provide tech21 nical assistance to the program operators and 

22 worksite employers for the programs assisted 

23 under this paragraph. 

24 (2) PUBLIC-PRIVATE CAREER PATHWAYS PART25 NERSHIPS.— 


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1 (A) IN GENERAL.—To allow workforce 

2 education providers representing career path3 way partnerships— 

4 (i) to create or expand career path5 ways, with groups of employers in specific 

6 industry or occupational sectors, for dis7 advantaged workers, which may include 

8 any mix of such employers’ existing lower 

9 wage employees, new hires or potential 

10 hires; or 

11 (ii) to fill in gaps in career pathways 

12 in particular localities or regions as needed 

13 to ensure that career pathways are acces14 sible to unemployed disadvantaged workers 

15 and at risk youth who have lower skills or 

16 limited English proficiency, including 

17 through the creation of workforce edu18 cation services, such as ‘‘bridge’’ programs 

19 that contextualize basic skills, English lan20 guage, or college remedial education serv21 ices to specific career pathways, and ef22 forts to create opportunities for gaining 

23 work experience in a career pathway. 

24 (B) USE OF FUNDS.—Funds made avail25 able under a grant under this paragraph may 


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•S 1309 IS

1 be used by career pathways partnerships for 

2 any expense reasonably related to the accom3 plishment of the specific objectives of the part4 nership and the purpose described in this para5 graph, including any of the activities described 

6 in subsection (a)(2)(D). 

7 (C) LIMITATIONS.— 

8 (i) IN GENERAL.—Of the funds made 

9 available to a career pathway partnership 

10 to carry out the purpose described in this 

11 paragraph— 

12 (I) not more than 30 percent of 

13 such funds may be used to pay or 

14 subsidize wages during a period of 

15 work experience or internship, not to 

16 exceed 90 days; and 

17 (II) not more than 10 percent of 

18 such funds may be used for adminis19 trative purposes, but this limitation 

20 shall not apply to activities related to 

21 building and maintaining partner22 ships, including such activities as con23 ducting workforce needs assessments, 

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1 tomized curricula, and developing 

2 work experience opportunities. 

3 (ii) PROHIBITION ON SUBSIDIZING

4 WAGES OF CURRENT EMPLOYEES.—No 

5 funds made available to carry out this 

6 paragraph shall be used to subsidize the 

7 wages of any individual who, as of the date 

8 of the establishment of the career pathway 

9 partnership, is an employee of any em10 ployer participating in the partnership. 

11 (D) REQUIREMENTS FOR AWARDING OF

12 SUBGRANTS.— 

13 (i) IN GENERAL.—Funds shall be 

14 made available to career pathway partner15 ships to carry out the purpose described in 

16 this paragraph based on a performance17 based accountability system that includes 

18 the following measures of performance: 

19 (I) The number of individuals to 

20 be trained. 

21 (II) The percentage of such indi22 viduals who complete the program. 

23 (III) The percentage of such in24 dividuals who enter or advance in em25 ployment. 


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1 (IV) The wage and benefit gains 

2 of individuals who complete the pro3 gram before and within 6 months 

4 after their program completion, in5 cluding the extent to which the indi6 viduals achieved economic self-suffi7 ciency. 

8 (V) The percentage of individuals 

9 who complete the program and enter 

10 employment who retain employment 

11 for at least 6 months. 

12 (VI) Where applicable, the per13 centage of individuals who owe child 

14 support and complete the program 

15 who improve in their payment of child 

16 support within 6 months after their 

17 program completion. 

18 In establishing goals for such measures, 

19 due consideration shall be given to the edu20 cation, work experience, and job readiness 

21 of the individuals expected to participate in 

22 the program; the barriers of such individ23 uals to employment, and the local job mar24 ket. 


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1 (ii) CONSIDERATIONS FOR FUNDING

2 RENEWALS.—A subgrantee’s level of suc3 cess in achieving employment, advance4 ment, wage, and employment retention 

5 goals shall be a primary consideration for 

6 determining whether to renew a grant 

7 made to such entity and the funding level 

8 for such grant. 

9 (iii) PRIORITIES FOR AWARDS OF SUB10 GRANTS.—In awarding subgrants under 

11 this paragraph, a State shall give priority 

12 to applications that— 

13 (I) propose to serve areas of high 

14 poverty, high youth unemployment, 

15 high drop out rates, or high rates of 

16 low-income single-parent families; 

17 (II) include a substantial cash or 

18 in-kind match by all employers, in19 cluding joint labor-management pro20 grams where applicable, in the part21 nerships, such as paid release time for 

22 employed workforce education partici23 pants; 

24 (III) use instructional materials 

25 and instructors directly used in the 


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1 specific business or industry sectors of 

2 the partnership employers; 

3 (IV) link successful completion of 

4 workforce education services to wage 

5 increases, promotions or job hires; 

6 (V) will result in attainment of 

7 employer-recognized occupational and 

8 educational credentials; 

9 (VI) address career guidance and 

10 adult basic education and English lan11 guage needs as well as job-specific 

12 skills; 

13 (VII) demonstrate a blending of 

14 resources from partner agencies in the 

15 workforce system and other sectors 

16 and Federal programs, including su17 perior procedures for coordinating re18 sponsible fatherhood promotion activi19 ties, where appropriate, to support the 

20 development of high quality pathways; 

21 (VIII) identify how the sub22 grantee will maximize services to un23 employed disadvantaged workers who 

24 also face other barriers in the labor 

25 market, such as high school dropout, 


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1 offender status, aging out of foster 

2 care, low basic skill level, including 

3 limited English proficiency, learning 

4 disabilities, physical, emotional or be5 havior disabilities, or substance abuse 

6 recovery, which may be through direct 

7 relationships with local providers of 

8 transitional jobs programs under 

9 which in appropriate circumstances 

10 transitional jobs participants may ac11 cess career pathways programs upon 

12 completion of the transitional jobs 

13 program; and 

14 (IX) support collaboration, as ap15 propriate, between employers and 

16 labor organizations and other work17 force development professionals, in18 cluding joint labor management train19 ing and education programs where ap20 propriate. 

21 (E) DEFINITIONS.—In this paragraph: 

22 (i) ADULT EDUCATION.—The term 

23 ‘‘adult education’’ has the meaning given 

24 that term in section 203 of the Workforce 

25 Investment Act of 1998 (20 U.S.C. 9202). 


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1 (ii) CAREER PATHWAY.—The term 

2 ‘‘career pathway’’ means a linked set of 

3 workforce education and job opportunities 

4 within a specific industry sector, or for an 

5 occupational sector that cuts across mul6 tiple business and industry sectors, which 

7 begins at the lowest skill and English lan8 guage levels, and extends through for-cred9 it college opportunities such as earning rel10 evant associate or bachelor’s degrees, and 

11 prepares individuals for advancement in 

12 jobs in demand in the local or regional 

13 labor market. 

14 (iii) COMMUNITY-BASED PROVIDER.— 

15 The term ‘‘community-based provider’’ 

16 means a not-for-profit organization, with 

17 local boards of directors, that directly pro18 vides workforce education services. 

19 (iv) INSTITUTION OF HIGHER EDU20 CATION.—The term ‘‘institution of higher 

21 education’’ has the meaning given that 

22 term in section 101 of the Higher Edu23 cation Act of 1965 (20 U.S.C. 1001). 

24 (v) CHARTER SCHOOL.—The term 

25 ‘‘charter school’’ has the meaning given 


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1 that term in section 5210 of the Elemen2 tary and Secondary Education Act of 1965 

3 (20 U.S.C. 7221i). 

4 (vi) AREA VOCATIONAL EDUCATION

5 SCHOOL.—The term ‘‘area vocational and 

6 technical education school’’ has the mean7 ing given that term in section 3 of the Carl 

8 D. Perkins Vocational and Technical Edu9 cation Act of 1998 (20 U.S.C. 2302). 

10 (vii) DISADVANTAGED WORKERS.— 

11 The term ‘‘disadvantaged workers’’ means 

12 unemployed individuals in low-income 

13 households or employed individuals in low14 income households with wages at or below 

2 15 ⁄3 of the median wage for the State or re16 gion applying for the grant. 

17 (viii) CAREER PATHWAY PARTNER18 SHIP.—The term ‘‘career pathway partner19 ship’’ means collaborations of 1 or more 

20 workforce education providers, 1 or more 

21 employers, 1 or more labor organizations, 

22 where applicable, as a result of such orga23 nization’s representation of employees at 

24 the worksite who have skills in which the 

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1 posed, and may include optional additional 

2 entities as needed to provide a comprehen3 sive range of workforce education and an4 cillary support services. 

5 (ix) WORKFORCE EDUCATION.—The 

6 term ‘‘workforce education’’ means a set of 

7 career guidance and exploration services, 

8 adult education and English language serv9 ices, job training, registered apprenticeship 

10 programs, and credit and non-credit post11 secondary education services aimed at pre12 paring individuals to enter and sustain em13 ployment in specific occupations and to 

14 have the sufficient skills to respond to 

15 shifting employment opportunities. 

16 (x) WORKFORCE EDUCATION PRO17 VIDER.—The term ‘‘workforce education 

18 provider’’ means community-based pro19 viders, institutions of higher education, 

20 area vocational and technical education 

21 schools, charter schools, and other public 

22 nonprofit entities that have a demonstrated 

23 capacity to provide quality workforce edu24 cation services. 

25 (c) MATCHING REQUIREMENT.— 


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1 (1) IN GENERAL.—The Secretary of Health and 

2 Human Services and the Secretary of Labor may 

3 not award a grant to a State under this section un4 less the State agrees that, with respect to the costs 

5 to be incurred by the State in conducting a dem6 onstration project with funds provided under the 

7 grant, the State will make available non-Federal 

8 contributions in an amount equal to 10 percent of 

9 the amount of Federal funds paid to the State under 

10 such grant. 

11 (2) NON-FEDERAL CONTRIBUTIONS.—In this 

12 subsection, the term ‘‘non-Federal contributions’’ in13 cludes contributions by the State and by public and 

14 private entities that may be in cash or in kind, but 

15 does not include any amounts provided by the Fed16 eral Government, or services assisted or subsidized 

17 to any significant extent by the Federal Government, 

18 or any amount expended by a State before October 

19 1, 2009. 

20 (d) WORKER PROTECTIONS AND LABOR STAND21 ARDS.— 

22 (1) RATE OF PAY; BENEFITS AND WORKING

23 CONDITIONS.— 

24 (A) IN GENERAL.—A worksite employer of 

25 a participant in a program or activity funded 


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1 under this section shall pay the participant at 

2 the rate paid to employees of the worksite em3 ployer who are not participants in such pro4 gram or activity and who perform comparable 

5 work at the worksite, including periodic in6 creases where appropriate. If no other employ7 ees of the worksite employer perform com8 parable work at the worksite, the worksite em9 ployer shall pay the participant not less than 

10 the applicable Federal or State minium wage, 

11 whichever is higher. 

12 (B) BENEFITS AND CONDITIONS.—An in13 dividual employed through participation in a 

14 program or activity funded under this section 

15 shall be provided with benefits and working 

16 conditions at the same level and to the same ex17 tent as such benefits and conditions are pro18 vided to other employees of the employer of the 

19 individual who have worked a similar length of 

20 time and perform the same work. 

21 (2) NONDUPLICATION.— 

22 (A) IN GENERAL.—Funds provided 

23 through a grant made under this paragraph 

24 shall be used only for a program or activity that 

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1 gram or activity otherwise available in the local2 ity of the program or activity funded under this 

3 section. 

4 (B) PRIVATE, NONPROFIT ENTITY.—Funds 

5 provided through a grant made under this sec6 tion shall not be provided to a private nonprofit 

7 entity to conduct programs or activities that are 

8 the same as or substantially equivalent to ac9 tivities provided by a State or local government 

10 agency in the area in which such entity is lo11 cated, unless the requirements of paragraph (3) 

12 are met. 

13 (3) NONDISPLACEMENT.— 

14 (A) IN GENERAL.—A worksite employer 

15 shall not displace an employee or position (in16 cluding partial displacement such as reduction 

17 in hours, wages, or employment benefits) or im18 pair contracts for services or collective bar19 gaining agreements, as a result of the use by 

20 such employer of a participant in a program or 

21 activity funded under this section, and no par22 ticipant in the program or activity shall be as23 signed to fill any established unfilled position 

24 vacancy. 


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1 (B) JOB OPPORTUNITIES.—A job oppor2 tunity shall not be created under this paragraph 

3 that will infringe in any manner on the pro4 motional opportunity of an employed individual. 

5 (C) LIMITATION ON SERVICES.— 

6 (i) SUPPLANTATION OF HIRING.—A 

7 participant in any program or activity 

8 funded under this section shall not perform 

9 any services or duties, or engage in activi10 ties, that will supplant the hiring of em11 ployees that are not participants in the 

12 program or activity. 

13 (ii) DUTIES FORMERLY PERFORMED

14 BY ANOTHER EMPLOYEE.—A participant 

15 in any program or activity funded under 

16 this section shall not perform services or 

17 duties, or engage in activities, that are 

18 services, duties, or activities that had been 

19 performed by or were assigned to any em20 ployee who recently resigned or was dis21 charged, who is subject to a reduction in 

22 force, who has recall rights pursuant to a 

23 collective bargaining agreement or applica24 ble personnel procedures, who is on leave 

25 (such as terminal, temporary, vacation, 


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1 emergency, or sick leave), who is on strike, 

2 or who is being locked out. 

3 (D) CONCURRENCE OF LOCAL LABOR OR4 GANIZATION.—No placement shall be made 

5 under a program or activity funded under this 

6 section until the entity conducting the program 

7 or activity has obtained the written concurrence 

8 of any local labor organization representing em9 ployees who are engaged in the same or sub10 stantially similar work as that proposed to be 

11 carried out for the worksite employer with 

12 whom a participant is to be placed under the 

13 program or activity. 

14 (4) NO IMPACT ON UNION ORGANIZING.—A 

15 State conducting a demonstration project funded 

16 under this section and any entity conducting a pro17 gram or activity funded under this section shall pro18 vide the Secretary with a certified assurance that 

19 none of such funds shall be used to assist or deter 

20 union organizing. 

21 (5) ACCOUNTABILITY.— 

22 (A) IN GENERAL.—Funds provided under 

23 this section shall not be used to subsidize train24 ing or employment with an employer that has 

25 a demonstrable record of noncompliance with 


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1 Federal labor, civil rights, workplace safety, or 

2 related laws. 

3 (B) CERTIFIED SATISFACTORY RECORD.— 

4 Employers who receive training or wage sub5 sidies under programs or activities funded 

6 under this section shall have a satisfactory 

7 record in labor relations and employment prac8 tices, as certified by the Secretary of Labor. 

9 (C) APPLICATION OF WORKER PROTEC10 TION LAWS.—A participant in a program or ac11 tivity funded under this section shall be consid12 ered to be an employee of any employer that 

13 the participant is placed with for all purposes 

14 under Federal and State law, including laws re15 lating to health and safety, civil rights, and 

16 worker’s compensation. 

17 (D) OTHER JOB QUALITY STANDARDS.— 

18 Employers who receive training or wage sub19 sidies under programs or activities funded 

20 under this section shall meet all applicable 

21 State or local job or employer quality standards 

22 regarding such issues as wages, benefits, ad23 vancement opportunities, and turnover rates es24 tablished for programs funded under the WorkVerDate Nov 24 2008 02:30 Jun 20, 2009 Jkt 079200 PO 00000 Frm 00063 Fmt 6652 Sfmt 6201 E:\BILLS\S1309.IS S1309

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1 force Investment Act of 1998 (29 U.S.C. 2801 

2 et seq.). 

3 (6) GRIEVANCE PROCEDURE.—An entity con4 ducting a program or activity funded under this sec5 tion shall establish and maintain a procedure for the 

6 filing and adjudication of grievances by employees of 

7 worksite employers who are not participants in the 

8 program, or such employees’ representatives, or by 

9 participants in such a program or activity alleging a 

10 violation of a provision of this subsection that is 

11 similar to the grievance procedure established by a 

12 State for purposes of section 407(f)(3) of the Social 

13 Security Act (42 U.S.C. 607(f)(3)). 

14 (7) NONPREEMPTION OF STATE LAW.—The 

15 provisions of this subsection shall not be construed 

16 to preempt any provision of State law that affords 

17 greater protections to employees or participants than 

18 are afforded by this subsection. 

19 (8) TREATMENT OF AMOUNTS PAID TO PAR20 TICIPANTS.—Amounts paid to a participant in a 

21 program or activity funded under this section shall 

22 be— 

23 (A) considered earned income for purpose 

24 of determining the participant’s eligibility for 

25 the child tax credit established under section 24 


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1 of the Internal Revenue Code of 1986, the 

2 earned income tax credit established under sec3 tion 32 of such Code, and any other tax benefit 

4 established under such Code the eligibility for 

5 which is based on earned income; and 

6 (B) disregarded for purposes of deter7 mining the participant’s, the participant’s fam8 ily’s, or the participant’s household’s eligibility 

9 for, or amount of, assistance or benefits pro10 vided under any means-tested program funded 

11 in whole or in part with Federal funds. 

12 (e) APPLICATION.— 

13 (1) REQUIREMENTS FOR ALL APPLICATIONS.— 

14 (A) IN GENERAL.—A State desiring to re15 ceive a grant to conduct a demonstration 

16 project under this section shall submit an appli17 cation— 

18 (i) to the Secretary of Health and 

19 Human Services, in the case of a grant 

20 under subsection (a); or 

21 (ii) to the Secretary of Labor, in the 

22 case of a grant under subsection (b); 

23 at such time, in such manner, and containing 

24 such information or assurances as the Secretary 


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1 of Health and Human Services or the Secretary 

2 of Labor, as appropriate, may require. 

3 (B) COMPLIANCE WITH WORKER PROTEC4 TIONS AND LABOR STANDARDS.—The applica5 tion shall include an assurance that the State 

6 and any entity conducting a program or activity 

7 under the project shall comply with the worker 

8 protections and labor standards established in 

9 accordance with such protections under sub10 section (d). 

11 (C) NONDISCRIMINATION.—The applica12 tion shall include an assurance that the State 

13 and any entity conducting a program or activity 

14 under the demonstration project shall comply 

15 with section 188(a)(2) of the Workforce Invest16 ment Act of 1998 (29 U.S.C. 2938(a)(2)) to 

17 the same extent that such section would apply 

18 to the entity if the program or activity con19 ducted under the demonstration project was 

20 considered to be funded or otherwise financially 

21 assisted under that Act. 

22 (D) ASSURANCE GRANT WILL SUPPLE23 MENT, NOT SUPPLANT, OTHER STATE FUND24 ING.—The application shall include an assur25 ance from the chief executive officer of the 


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1 State that funds made available under the 

2 grant will supplement, and not supplant, other 

3 funds used by the State to establish or support 

4 employment placements for low-income parents. 

5 (2) SPECIFIC DEMONSTRATION PROJECT RE6 QUIREMENTS.— 

7 (A) COURT-SUPERVISED OR IV–D AGENCY8 SUPERVISED EMPLOYMENT PROGRAMS FOR

9 NONCUSTODIAL PARENTS.—In order to conduct 

10 a demonstration project described in subsection 

11 (a), a State shall include in the application sub12 mitted to the Secretary of Health and Human 

13 Services the following: 

14 (i) Evidence of an agreement between 

15 the State and 1 or more counties to estab16 lish an employment program that meets 

17 the requirements of subsection (a). 

18 (ii) The number of potential noncusto19 dial parents to be served by the program. 

20 (iii) The purposes specific to that 

21 State’s program. 

22 (iv) The median income of the target 

23 population. 

24 (B) PUBLIC-PRIVATE CAREER PATHWAYS

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1 onstration project described in paragraph (2) of 

2 subsection (b), a State shall include in the ap3 plication submitted to the Secretary of Labor a 

4 description of— 

5 (i) the number, characteristics, and 

6 employment and earnings status of dis7 advantaged individuals in the State or ap8 plicable region where the program is to be 

9 conducted; 

10 (ii) which business and industry sec11 tors, or occupational clusters that cut 

12 across sectors, will be targeted by the ca13 reer pathways partnership, based on over14 all economic benefit to the community, the 

15 current and future demand for workers, 

16 the advancement opportunities for workers, 

17 the wages at each step of the career path18 way, and availability of worker benefits; 

19 (iii) the interventions that will be put 

20 in place to address any educational defi21 cits, limited English proficiency, or learn22 ing disabilities of individuals who partici23 pate in the program and to ensure that 

24 such individuals have the academic, tech25 nical, communications, and other job skills 


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1 to function in the jobs targeted by the 

2 partnership; 

3 (iv) how the members of the partner4 ship will collaborate on the development of 

5 curriculum and delivery of training that 

6 will provide the necessary occupational, 

7 academic and other work-related skills and 

8 credentialing needed for the specific labor 

9 market areas; 

10 (v) the supports that will be used to 

11 provide counseling, mentoring or other 

12 support to individuals while in training or 

13 to assist them in navigating in complicated 

14 work environments; 

15 (vi) the set of career exposure activi16 ties that will be put in place to provide 

17 hands-on experience such as work experi18 ence, on the job training, internships, or 

19 work-study; 

20 (vii) the agreements that are in place 

21 with employers, industry groups, and labor 

22 organizations, where applicable, to ensure 

23 access to jobs and advancement opportuni24 ties in the targeted businesses, industry or 

25 occupations; 


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1 (viii) how the workforce education 

2 providers in the partnership will assess the 

3 employment barriers and needs of local 

4 disadvantaged individuals who participate 

5 in the program and will identify resources 

6 for meeting those needs; 

7 (ix) how the workforce education pro8 viders will work with partnership employ9 ers, business and industry groups, labor 

10 organizations, where applicable, and local 

11 economic development organizations to 

12 identify the priority workforce needs of the 

13 local industry; 

14 (x) how the partnerships will ensure 

15 that the appropriate program delivery 

16 models and formal agreements are in place 

17 to ensure maximum benefits to the individ18 uals receiving career pathway partnership 

19 services and to the employers and labor or20 ganizations, where applicable, in the part21 nership and the industries or businesses 

22 they represent; 

23 (xi) how partnership employers and 

24 labor organizations, where applicable, will 

25 be actively involved in identifying specific 


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1 workforce education needs, planning the 

2 curriculum, assisting in training activities, 

3 providing job opportunities, and coordi4 nating job retention for individuals hired 

5 after training through the program and 

6 follow-up support; and 

7 (xii) how the partnership will build on 

8 existing career pathways programs, where 

9 applicable, to serve the targeted popu10 lation. 

11 (3) APPLICATIONS BY INDIAN TRIBES OR TRIB12 AL ORGANIZATIONS.—The Secretary of Health and 

13 Human Services and the Secretary of Labor may ex14 empt an Indian tribe or tribal organization from any 

15 requirement of this section that the Secretary of 

16 Health and Human Services or the Secretary of 

17 Labor determines would be inappropriate to apply to 

18 the Indian tribe or tribal organization, taking into 

19 account the resources, needs, and other cir20 cumstances of the Indian tribe or tribal organiza21 tion. 

22 (f) PRIORITIES AND REQUIREMENTS FOR AWARDING

23 GRANTS.— 

24 (1) IN GENERAL.—Subject to paragraphs (2) 

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1 ices (in the case of a grant under subsection (a)) 

2 and the Secretary of Labor (in the case of a grant 

3 under subsection (b)) shall give priority to making 

4 grants under this section to entities that— 

5 (A) demonstrate success with respect to 

6 meeting the goals of quality job placement, 

7 long-term unsubsidized job retention, and, 

8 where applicable, increasing child support pay9 ments, decreasing unpaid child support arrear10 ages, and increasing the involvement of low-in11 come noncustodial parents with their children 

12 through their participation in responsible fa13 therhood activities, including participation in 

14 programs that provide culturally relevant cur15 ricula in core subjects including— 

16 (i) conducting activities with children; 

17 (ii) improving communication skills; 

18 (iii) child support management; 

19 (iv) providing financially for the fam20 ily’s security and well-being; 

21 (v) managing stress and anger, as 

22 well as domestic violence intervention serv23 ices when appropriate; 

24 (vi) maintaining physical and mental 

25 health; 


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1 (vii) parenting and relationship skills; 

2 (viii) child development; and 

3 (ix) barriers to responsible parent4 hood, including substance abuse, unem5 ployment, criminal justice system involve6 ment, and inadequate housing; and 

7 (B) coordinate with, and link individuals 

8 as applicable to, other public and private bene9 fits and employment services for low-income 

10 adults among the different systems or programs 

11 in which such adults are involved, including the 

12 criminal justice system, the State programs 

13 funded under each part of title IV of the Social 

14 Security Act (42 U.S.C. 601 et seq.) (including 

15 programs and activities funded under section 

16 403(a)(2) of the Social Security Act (42 U.S.C. 

17 603(a)(2))), educational assistance and student 

18 aid programs, and job training or employment 

19 programs, including State employment agencies. 

20 (2) PERFORMANCE MEASURES.—In making 

21 grants under this section, the Secretary of Health 

22 and Human Services (in the case of a grant under 

23 subsection (a)) and the Secretary of Labor (in the 

24 case of a grant under subsection (b)) shall ensure 

25 that grantees demonstrate a plan for implementing 


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1 measures to track their performance with respect to 

2 meeting the goals of quality job placement, long3 term unsubsidized job retention, and, where applica4 ble, increasing child support payments, decreasing 

5 child support arrearages, and increasing the involve6 ment of low-income noncustodial parents with their 

7 children when determined to be appropriate. 

8 (3) REFLECTIVE OF TARGET POPULATIONS.— 

9 In making grants under this section, the Secretary 

10 of Health and Human Services (in the case of a 

11 grant under subsection (a)) and the Secretary of 

12 Labor (in the case of a grant under subsection (b)) 

13 shall give priority to States with proposed dem14 onstration projects that are designed to target low15 income adults, including custodial and noncustodial 

16 parents, and low-income married couples. 

17 (4) SUBSTANTIAL FUNDING FOR EACH OF THE

18 PURPOSES.—In making grants under subsection (b), 

19 the Secretary of Labor shall ensure that a substan20 tial share of the amount appropriated under sub21 section (j) for a fiscal year is used for carrying out 

22 each of the projects described in paragraphs (1) and 

23 (2) of subsection (b). 

24 (g) REGULATORY AND POLICY FLEXIBILITY.—The 

25 Secretary of Labor and the Secretary of Health and 


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1 Human Services, in coordination with the Secretary of 

2 Education and the Attorney General, shall work with 

3 grantees under this section to resolve policy barriers that 

4 may impede blending of federal resources to support these 

5 demonstration projects. 

6 (h) EVALUATION.—The Secretary of Health and 

7 Human Services (in the case of a grant under subsection 

8 (a)) and the Secretary of Labor (in the case of a grant 

9 under subsection (b)) shall provide for an independent and 

10 rigorous evaluation of the demonstration projects con11 ducted under this section that includes, to the maximum 

12 extent feasible, random assignment or other appropriate 

13 statistical techniques, in order to assess the effectiveness 

14 of the projects. 

15 (i) GENERAL DEFINITIONS.—In this section: 

16 (1) STATE.—The term ‘‘State’’ means each of 

17 the 50 States, the District of Columbia, the Com18 monwealth of Puerto Rico, the United States Virgin 

19 Islands, Guam, American Samoa, and includes an 

20 Indian tribe or tribal organization. 

21 (2) IV–D AGENCY.—The term ‘‘IV–D agency’’ 

22 means the State or local agency responsible for ad23 ministering the State program established under 

24 part D of title IV of the Social Security Act (42 

25 U.S.C. 651 et seq.). 


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1 (3) INDIAN TRIBE; TRIBAL ORGANIZATION.— 

2 The terms ‘‘Indian tribe’’ and ‘‘tribal organization’’ 

3 have the meaning given such terms in section 4 of 

4 the Indian Self-Determination and Education Assist5 ance Act (25 U.S.C. 450b). 

6 (j) APPROPRIATION.—Out of any money in the 

7 Treasury of the United States not otherwise appropriated, 

8 there are appropriated to carry out this section— 

9 (1) for programs administered by the Secretary 

10 of Health and Human Services under subsection (a), 

11 $15,000,000 for each of fiscal years 2010 through 

12 2013; and 

13 (2) for programs administered by the Secretary 

14 of Labor under subsection (b), $35,000,000 for each 

15 of fiscal years 2010 through 2013. 

16 SEC. 106. STATE ASSESSMENTS OF BARRIERS TO EMPLOY17 MENT AND FINANCIAL SUPPORT OF CHIL18 DREN. 

19 (a) STATE ASSESSMENTS AND REPORTS.—As a con20 dition of the continued approval of a State plan under part 

21 D of title IV of the Social Security Act (42 U.S.C. 651 

22 et seq.), each State with an approved such plan, acting 

23 through the appropriate State agencies, shall assess the 

24 State policies with respect to the issues described in sub25 section (b) and submit a report to the Secretary of Health 


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1 and Human Services on the results of such assessment 

2 not later than March 15, 2010. 

3 (b) ISSUES DESCRIBED.—For purposes of subsection 

4 (a), the issues described in this subsection are the fol5 lowing: 

6 (1) The process of setting and modifying child 

7 support obligations, particularly with respect to low8 income parents, including— 

9 (A) the role and criteria for using imputed 

10 income in determining child support obligations; 

11 (B) the process of modifying obligations; 

12 (C) the consideration of income and em13 ployment status, including efforts to identify 

14 unreported income; 

15 (D) the consideration of incarceration; 

16 (E) the consideration of disability; 

17 (F) the treatment of arrearages, including 

18 interest charged, and laws or procedures that 

19 interfere with forgiveness, adjustment, waiver, 

20 or compromise of arrears owed to the State by 

21 low-income noncustodial parents who lack suffi22 cient ability to pay such arrearages; 

23 (G) the procedures related to retroactive 

24 support; and 


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1 (H) State pass-through and disregard poli2 cies for recipients of means tested public bene3 fits. 

4 (2) The impact of state criminal laws and law 

5 enforcement practices on the employment acquisi6 tion, retention, and advancement prospects of indi7 viduals following arrest, conviction, or incarceration, 

8 including— 

9 (A) any efforts, including counseling or 

10 employment support, to assist ex-prisoners with 

11 reentry to a community and successful reunifi12 cation with their families; and 

13 (B) an assessment of any efforts to seal or 

14 expunge arrest and conviction records and any 

15 efforts to grant certificates or other acknowl16 edgments of rehabilitation to ex-prisoners, and 

17 to examine State occupational licensing and cer18 tification procedures. 

19 (3) An assessment of the impact of debt on em20 ployment retention, including child support and non21 child support debts imposed to recover costs related 

22 to welfare and criminal justice. 

23 (4) An assessment of State practices related to 

24 providing prisoners and ex-prisoners with valid iden25 tification documents upon release from prison. 


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1 (5) Identification of any other barriers to 

2 healthy family formation or sustainable economic op3 portunity for custodial and noncustodial parents that 

4 are created or exacerbated by Federal or State laws, 

5 policies, or procedures, including an examination of 

6 the rules of Federal and State means-tested pro7 grams, the operation of the State workforce system, 

8 the availability of financial education services, and 

9 the availability of domestic violence services and 

10 child support procedures to help victims of domestic 

11 violence stay safe and obtain the child support they 

12 are owed. 

13 (c) GRANTS TO STATES FOR COMMISSIONS ON STATE

14 LAW IMPROVEMENTS IN THE BEST INTEREST OF CHIL15 DREN AND FAMILIES.—The Secretary of Health and 

16 Human Services shall award grants to States to establish 

17 or support commissions to review the State assessment 

18 conducted in accordance with subsection (a) and to make 

19 recommendations on ways to improve State law in the best 

20 interest of children and families. 

21 (d) APPROPRIATIONS.—Out of any money in the 

22 Treasury of the United States not otherwise appropriated, 

23 there are appropriated to the Secretary of Health and 

24 Human Services for the period of fiscal years 2010 


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1 through 2011, $3,000,000, to remain available until ex2 pended, for the purpose of making— 

3 (1) payments to States to offset all or a portion 

4 of the costs of conducting the State assessments and 

5 reports required under subsection (a); and 

6 (2) grants to States under subsection (c). 

7 SEC. 107. COLLECTION OF CHILD SUPPORT UNDER THE 

8 SUPPLEMENTAL NUTRITION ASSISTANCE 

9 PROGRAM. 

10 (a) ENCOURAGEMENT OF COLLECTION OF CHILD

11 SUPPORT.—Section 5 of the Food and Nutrition Act of 

12 2008 (7 U.S.C. 2014) is amended— 

13 (1) in subsection (e)— 

14 (A) by redesignating paragraphs (5) and 

15 (6) as paragraphs (6) and (7), respectively; 

16 (B) in paragraph (4)(B), by striking 

17 ‘‘paragraph (6)’’ and inserting ‘‘paragraph 

18 (7)’’; and 

19 (C) by inserting after paragraph (4) the 

20 following: 

21 ‘‘(5) DEDUCTION FOR CHILD SUPPORT RE22 CEIVED.— 

23 ‘‘(A) IN GENERAL.—A household shall be 

24 allowed a deduction of 20 percent of all legally 

25 obligated child support payments received from 


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1 an identified or putative parent of a child in the 

2 household if that parent is not a household 

3 member. 

4 ‘‘(B) ORDER OF DETERMINING DEDUC5 TIONS.—A deduction under this paragraph shall 

6 be determined before the computation of the ex7 cess shelter deduction under paragraph (7).’’; 

8 and 

9 (2) in subsection (k)(4)(B), by striking ‘‘sub10 section (e)(6)’’ and inserting ‘‘subsection (e)(7)’’. 

11 (b) SIMPLIFIED VERIFICATION OF CHILD SUPPORT

12 PAYMENTS.—Section 5(n) of the Food and Nutrition Act 

13 of 2008 (7 U.S.C. 2014(n)) is amended— 

14 (1) in the subsection heading, by striking 

15 ‘‘STATE OPTIONS TO SIMPLIFY’’, and inserting 

16 ‘‘SIMPLIFIED’’; and 

17 (2) by striking ‘‘Regardless of whether’’ and in18 serting the following: 

19 ‘‘(1) IN GENERAL.—A household that is paying 

20 legally obligated child support through the program 

21 under part D of title IV of the Social Security Act 

22 (42 U.S.C. 651 et seq.) shall receive— 

23 ‘‘(A) a deduction under subsection (e)(4); 

24 or 


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1 ‘‘(B) an exclusion for paid child support 

2 under subsection (d)(6). 

3 ‘‘(2) STATE OPTIONS.—Regardless of whether’’. 

4 (c) INCLUSION OF ECONOMIC OPPORTUNITIES PRO5 GRAMS IN DEFINITION OF WORK PROGRAM.—Section 

6 6(o)(2) of the Food and Nutrition Act of 2008 (7 U.S.C. 

7 2015(o)(2)) is amended— 

8 (1) in subparagraph (C), by striking ‘‘or’’ at 

9 the end; 

10 (2) in subparagraph (D), by striking the period 

11 at the end and inserting ‘‘; or’’; and 

12 (3) by adding at the end the following: 

13 ‘‘(E) participate in and comply with the re14 quirements of a demonstration project under 

15 section 106 of the Responsible Fatherhood and 

16 Healthy Families Act of 2009;’’. 

17 (d) EFFECTIVE DATE.— 

18 (1) IN GENERAL.—This section and the amend19 ments made by this section take effect on October 

20 1, 2009. 

21 (2) STATE OPTION.—A State may implement 

22 the amendments made by subsections (a) and (b) for 

23 participating households at the first recertification of 

24 the households that occurs on or after October 1, 

25 2009. 


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1 SEC. 108. GRANTS SUPPORTING HEALTHY FAMILY PART2 NERSHIPS FOR DOMESTIC VIOLENCE INTER3 VENTION AND PREVENTION. 

4 Section 403(a) of the Social Security Act (42 U.S.C. 

5 603(a)) is amended by adding at the end the following 

6 new paragraph: 

7 ‘‘(6) GRANTS SUPPORTING HEALTHY FAMILY

8 PARTNERSHIPS FOR DOMESTIC VIOLENCE INTER9 VENTION AND PREVENTION.— 

10 ‘‘(A) IN GENERAL.—The Secretary shall 

11 award grants on a competitive basis to healthy 

12 family partnerships to— 

13 ‘‘(i) develop and implement promising 

14 practices for assessing and providing serv15 ices to individuals and families affected by 

16 domestic violence, including through case17 worker training, the provision of technical 

18 assistance to community partners, and the 

19 implementation of safe visitation and ex20 change programs; or 

21 ‘‘(ii) develop and implement promising 

22 practices for preventing domestic violence, 

23 particularly as a barrier to economic secu24 rity, and fostering healthy relationships. 

25 ‘‘(B) EDUCATION SERVICES.—In awarding 

26 grants under subparagraph (A), the Secretary 


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1 shall ensure that 10 percent of the funds made 

2 available under such grants are used for high 

3 schools and other secondary educational institu4 tions and institutions of higher education to 

5 provide education services on the value of 

6 healthy relationships, responsible parenting, 

7 and healthy marriages characterized by mutual 

8 respect and non-violence, and the importance of 

9 building relationships skills such as communica10 tion, conflict resolution, and budgeting. 

11 ‘‘(C) APPLICATION.—The respective entity 

12 and organization of a healthy family partner13 ship entered into for purposes of receiving a 

14 grant under this paragraph shall submit a joint 

15 application to the Secretary, at such time and 

16 in such manner as the Secretary shall specify, 

17 containing— 

18 ‘‘(i) a description of how the partner19 ship intends to carry out the activities de20 scribed in subparagraph (A); 

21 ‘‘(ii) an assurance that funds made 

22 available under the grant shall be used to 

23 supplement, and not supplant, other funds 

24 used by the entity or organization to carry 


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1 out programs, activities, or services de2 scribed in subparagraph (A) or (B); and 

3 ‘‘(iii) such other information as the 

4 Secretary may require. 

5 ‘‘(D) GENERAL RULES GOVERNING USE OF

6 FUNDS.—The rules of section 404, other than 

7 subsection (b) of that section, shall not apply to 

8 a grant made under this paragraph. 

9 ‘‘(E) DEFINITIONS.—In this paragraph: 

10 ‘‘(i) DOMESTIC VIOLENCE.—The term 

11 ‘domestic violence’ has the meaning given 

12 that term in section 402(a)(7)(B). 

13 ‘‘(ii) HEALTHY FAMILY PARTNER14 SHIP.—The term ‘healthy family partner15 ship’ means a partnership between— 

16 ‘‘(I) an entity receiving funds 

17 under a grant made under paragraph 

18 (2) to promote healthy marriage or re19 sponsible fatherhood; and 

20 ‘‘(II) an organization or organi21 zations with demonstrated expertise 

22 working with survivors of domestic vi23 olence. 

24 ‘‘(F) APPROPRIATION.—Out of any money 

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1 wise appropriated, there are appropriated for 

2 each of fiscal years 2010 through 2012, 

3 $25,000,000 for purposes of awarding grants to 

4 healthy family partnerships under this para5 graph.’’. 

6 SEC. 109. PROCEDURES TO ADDRESS DOMESTIC VIOLENCE 

7 PREVENTION. 

8 (a) REQUIREMENTS TO ENSURE PROCEDURES TO

9 ADDRESS DOMESTIC VIOLENCE PREVENTION.—Section 

10 403(a)(2) of the Social Security Act (42 U.S.C. 

11 603(a)(2)), as amended by section 101, is amended— 

12 (1) by redesignating subparagraph (D) as sub13 paragraph (F); and 

14 (2) by inserting after subparagraph (C) the fol15 lowing new subparagraphs: 

16 ‘‘(D) REQUIREMENTS FOR RECEIPT OF

17 FUNDS.—An entity may not be awarded a grant 

18 under this paragraph unless the entity, as a 

19 condition of receiving funds under such a 

20 grant— 

21 ‘‘(i) identifies in its application the 

22 domestic violence experts at the local, 

23 State, or national level with whom it will 

24 consult in the development and implemen25 tation of its programs and activities; 


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1 ‘‘(ii) upon an award of funds, and in 

2 consultation with such domestic violence 

3 experts, develops a written protocol which 

4 describes— 

5 ‘‘(I) how the entity will identify 

6 instances or risks of domestic violence; 

7 ‘‘(II) the procedures for respond8 ing to such instances or risk, includ9 ing making service referrals and pro10 viding protections and appropriate as11 sistance for identified individuals and 

12 families; 

13 ‘‘(III) how confidentiality issues 

14 will be addressed; and 

15 ‘‘(IV) the domestic violence train16 ing that will be provided to ensure ef17 fective and consistent implementation 

18 of the protocol; and 

19 ‘‘(iii) in its annual report to the Sec20 retary, includes a description such domes21 tic violence protocols and a description of 

22 any implementation issues identified with 

23 respect to domestic violence and how such 

24 issues were addressed. 


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1 ‘‘(E) DOMESTIC VIOLENCE DEFINED.—In 

2 this paragraph, the term ‘domestic violence’ has 

3 the meaning given that term in section 

4 402(a)(7)(B).’’. 

5 (b) CONFORMING AMENDMENTS.—Section 403(a)(2) 

6 of such Act (42 U.S.C. 603(a)(2)), as so amended, is 

7 amended— 

8 (1) in subparagraph (A)(i)— 

9 (A) by striking ‘‘(B) and (C)’’ and insert10 ing ‘‘(B), (C), and (D)’’; and 

11 (B) by striking ‘‘subparagraph (D)’’ and 

12 inserting ‘‘subparagraph (F)’’; 

13 (2) in subparagraphs (B)(i) and (C)(i), by 

14 striking ‘‘(D)’’ each place it appears and inserting 

15 ‘‘(F)’’; and 

16 (3) in subparagraph (F) (as redesignated by 

17 subsection (a)(1)), by striking ‘‘$150,000,000 for 

18 each of fiscal years 2006 through 2010’’ and insert19 ing ‘‘$150,000,000 for each of fiscal years 2006 

20 through 2008 and $200,000,000 for each of fiscal 

21 years 2009 through 2014’’. 


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1 TITLE II—REVENUE PROVISIONS 

2 SEC. 201. MODIFICATIONS TO THE EARNED INCOME TAX 

3 CREDIT. 

4 (a) INCREASE IN EARNED INCOME CREDIT FOR

5 WORKERS WITH NO QUALIFYING CHILDREN.— 

6 (1) EARNED INCOME AMOUNT.— 

7 (A) IN GENERAL.—The table under section 

8 32(b)(2)(A) of the Internal Revenue Code of 

9 1986 is amended by striking ‘‘$4,220’’ and in10 serting ‘‘$7,250’’. 

11 (B) TRANSITION FOR EARNED INCOME

12 AMOUNT.—Section 32(b)(2) of such Code is 

13 amended by adding at the end the following 

14 new subparagraph: 

15 ‘‘(C) TRANSITION FOR EARNED INCOME

16 AMOUNT.—For purposes of subparagraph (A), 

17 in lieu of the earned income amount specified 

18 for eligible individuals with no qualifying chil19 dren, the earned income amount for such indi20 viduals for 2010 is $5,900, for 2011 is $6,200, 

21 for 2012 is $6,500, and for 2013 is $6,900.’’. 

22 (2) PHASEOUT AMOUNT.— 

23 (A) IN GENERAL.—The table under section 

24 32(b)(2)(A) of the Internal Revenue Code of 

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1 serting ‘‘phaseout amount % of annual min2 imum wage’’. 

3 (B) PHASEOUT AMOUNT PERCENTAGE.— 

4 Section 32(b)(2) of such Code, as amended by 

5 this Act, is amended by adding at the end the 

6 following new subparagraph: 

7 ‘‘(D) PHASEOUT AMOUNT PERCENTAGE.— 

8 For purposes of subparagraph (A), the phase9 out amount percentage is 70 percent for 2010, 

10 72 percent for 2011, 75 percent for 2012, 85 

11 percent in 2013, and 100 percent in 2014 and 

12 thereafter.’’. 

13 (3) ANNUAL MINIMUM WAGE.—Section 32(b)(2) 

14 of such Code, as amended by this Act, is amended 

15 by adding at the end the following new subpara16 graph: 

17 ‘‘(E) ANNUAL MINIMUM WAGE.—For pur18 poses of subparagraph (A), the annual min19 imum wage for any calendar year is an amount 

20 equal to the product of 2,000 and the minimum 

21 hourly wage effective on January 1 of such year 

22 under section 6(a)(1) of the Fair Labor Stand23 ards Act of 1938.’’. 

24 (4) INFLATION ADJUSTMENT.— 


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1 (A) IN GENERAL.—Section 32(j) of such 

2 Code is amended by redesignating paragraph 

3 (2) as paragraph (3) and by inserting after 

4 paragraph (1) the following new paragraph: 

5 ‘‘(2) EARNED INCOME AMOUNT AND PHASEOUT

6 AMOUNT FOR INDIVIDUALS WITH NO QUALIFYING

7 CHILDREN.—In the case of any taxable year begin8 ning after calendar year 2014, the earned income 

9 amount and the phaseout amount in effect for an el10 igible individual with no qualifying children in sub11 section (b)(2)(A) shall be increased by an amount 

12 equal to— 

13 ‘‘(A) such amount, multiplied by 

14 ‘‘(B) the cost-of-living adjustment deter15 mined under section 1(f)(3) for the calendar 

16 year in which the taxable year begins, deter17 mined by substituting ‘calendar year 2013’ for 

18 ‘calendar year 1992’ in subparagraph (B) 

19 thereof.’’. 

20 (B) CONFORMING AMENDMENTS.— 

21 (i) Section 32(j)(1)(B)(i) of such Code 

22 is amended by inserting ‘‘(other than the 

23 amount described in paragraph (2))’’ after 

24 ‘‘subsections (b)(2)(A)’’. 


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1 (ii) Section 32(b)(3)(B)(iii) of such 

2 Code is amended by striking ‘‘subsection 

3 (j)(2)’’ and inserting ‘‘subsection (j)(3)’’. 

4 (5) CONFORMING AMENDMENT.—Section 

5 32(b)(2)(A) of such Code is amended by striking 

6 ‘‘Subject to subparagraph (B)’’ and inserting ‘‘Ex7 cept as otherwise provided in this paragraph’’. 

8 (6) EFFECTIVE DATE.—The amendments made 

9 by this subsection shall apply to taxable years begin10 ning after December 31, 2009. 

11 (b) ENHANCED CREDIT FOR CERTAIN WORKERS

12 WITH NO QUALIFYING CHILDREN.— 

13 (1) IN GENERAL.—Section 32 of the Internal 

14 Revenue Code of 1986 is amended by adding at the 

15 end the following new subsection: 

16 ‘‘(n) ADDITIONAL CREDIT FOR CERTAIN WORK17 ERS.— 

18 ‘‘(1) IN GENERAL.—In the case of a qualified 

19 individual, the credit allowed under subsection (a) 

20 shall be increased by an amount equal to 100 per21 cent of the amount of the credit allowed under this 

22 section (without regard to this subsection). 

23 ‘‘(2) QUALIFIED INDIVIDUAL.—For purposes of 

24 this subsection, the term ‘qualified individual’ means 

25 an eligible individual who— 


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1 ‘‘(A) is described in clause (ii) of sub2 section (c)(1)(A), 

3 ‘‘(B) is the parent of a child and is re4 quired to make child support payments with re5 spect to such child pursuant to an order 

6 which— 

7 ‘‘(i) is in effect during the taxable 

8 year of such individual, and 

9 ‘‘(ii) is enforced during such taxable 

10 year by a State agency responsible for ad11 ministering the State plan under part D of 

12 title IV of the Social Security Act, and 

13 ‘‘(C) has paid child support during the tax14 able year in an amount not less than the 

15 amount of current child support for such tax16 able year for every order requiring the indi17 vidual to make child support payments. 

18 For purposes of subparagraph (C), a child support 

19 payment will be considered to have been made dur20 ing the taxable year if such payment is withheld 

21 from or attributable to a pay period beginning in 

22 such taxable year and is made no later than 30 days 

23 after the date on which such taxable year ends. 

24 ‘‘(3) REGULATIONS.—The Secretary shall es25 tablish regulations to carry out the purposes of this 


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1 subsection, including regulations which provide for 

2 the verification of the payment of child support in 

3 accordance with paragraph (2)(D).’’. 

4 (2) VERIFICATION OF PAYMENT.— 

5 (A) IN GENERAL.—The Secretary of 

6 Health and Human Services, in consultation 

7 with the Secretary of the Treasury and the 

8 States, shall establish such procedures as are 

9 appropriate to ensure that the Secretary of the 

10 Treasury has the information that the Sec11 retary of the Treasury determines necessary to 

12 allow for verification of the status of individuals 

13 as qualified individuals (as defined under sec14 tion 32(n) of the Internal Revenue Code of 

15 1986, as added by paragraph (1)) and of pay16 ment of child support obligations in a timely 

17 fashion. 

18 (B) AUTHORITY TO USE FEDERAL CASE

19 REGISTRY.—The Secretary of Health and 

20 Human Services may include in the Federal 

21 Case Registry of Child Support Orders estab22 lished under section 453(h) of the Social Secu23 rity Act (42 U.S.C. 653(h)) such information as 

24 the Secretary determines appropriate to allow 


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1 for the verification described in subparagraph 

2 (A). 

3 (C) STATE PROCEDURES.—The Secretary 

4 of Health and Human Services, in consultation 

5 with the States, shall establish procedures for 

6 informing a noncustodial parent in a timely 

7 fashion when the parent has paid the amount of 

8 child support owed by the parent for a taxable 

9 year so that the parent may determine the ex10 tent to which the parent is a qualified indi11 vidual for purposes of qualifying for the addi12 tional credit established under section 32(n) of 

13 the Internal Revenue Code of 1986, as added 

14 by paragraph (1). 

15 (3) INFORMATION SHARING.—Subsection (j) of 

16 section 453 of the Social Security Act (42 U.S.C. 

17 653(j)) is amended by adding at the end the fol18 lowing new paragraph: 

19 ‘‘(12) ADMINISTRATION OF FEDERAL TAX

20 LAWS.—In addition to the access provided under 

21 subsections (h)(3) and (i)(3), the Secretary of the 

22 Treasury shall have access to such information 

23 maintained under this chapter as the Secretary of 

24 the Treasury determines is necessary to verify eligi25 bility for the credit allowed under section 32(n) of 


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1 the Internal Revenue Code of 1986, under proce2 dures established pursuant to such section.’’. 

3 (4) EFFECTIVE DATE.—The amendments made 

4 by paragraphs (1) and (3) shall apply to taxable 

5 years beginning after December 31, 2009. 

6 (c) MARRIAGE PENALTY RELIEF.— 

7 (1) IN GENERAL.—Section 32(b)(2)(B) of the 

8 Internal Revenue Code of 1986 is amended— 

9 (A) by striking ‘‘after 2007’’ in clause (iii) 

10 and inserting ‘‘in 2008’’, 

11 (B) by striking ‘‘and’’ at the end of clause 

12 (ii), 

13 (C) by striking the period at the end of 

14 clause (iii) and inserting ‘‘, and’’, and 

15 (D) by adding at the end the following new 

16 clauses: 

17 ‘‘(iv) the amount determined under 

18 paragraph (3)(B) in the case of taxable 

19 years beginning in 2009 and 2010, and 

20 ‘‘(v) $4,000 in the case of taxable 

21 years beginning after 2010.’’. 

22 (2) INFLATION ADJUSTMENT.—Section 

23 32(j)(1)(B)(ii) of such Code is amended— 

24 (A) by striking ‘‘and’’ at the end of clause 

25 (i), 


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1 (B) by striking the period at the end of 

2 clause (ii) and inserting ‘‘, and’’, and 

3 (C) by adding at the end the following new 

4 clause: 

5 ‘‘(iii) in the case of the $4,000 

6 amount in subsection (b)(2)(B)(v), by sub7 stituting ‘calendar year 2010’ for ‘calendar 

8 year 1992’ in subparagraph (B) of such 

9 section 1.’’. 

10 (3) EFFECTIVE DATE.—The amendments made 

11 by this subsection shall apply to taxable years begin12 ning after December 31, 2009. 

13 SEC. 202. CLARIFICATION OF ECONOMIC SUBSTANCE DOC14 TRINE. 

15 (a) IN GENERAL.—Section 7701 of the Internal Rev16 enue Code of 1986 is amended by redesignating subsection 

17 (o) as subsection (p) and by inserting after subsection (n) 

18 the following new subsection: 

19 ‘‘(o) CLARIFICATION OF ECONOMIC SUBSTANCE

20 DOCTRINE; ETC.— 

21 ‘‘(1) GENERAL RULES.— 

22 ‘‘(A) IN GENERAL.—In any case in which 

23 a court determines that the economic substance 

24 doctrine is relevant for purposes of this title to 

25 a transaction (or series of transactions), such 


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1 transaction (or series of transactions) shall have 

2 economic substance only if the requirements of 

3 this paragraph are met. 

4 ‘‘(B) DEFINITION OF ECONOMIC SUB5 STANCE.—For purposes of subparagraph (A)— 

6 ‘‘(i) IN GENERAL.—A transaction has 

7 economic substance only if— 

8 ‘‘(I) the transaction changes in a 

9 meaningful way (apart from Federal 

10 tax effects) the taxpayer’s economic 

11 position, and 

12 ‘‘(II) subject to clause (iii), the 

13 taxpayer has a substantial purpose 

14 (other than a Federal tax purpose) for 

15 entering into such transaction. 

16 ‘‘(ii) SPECIAL RULE WHERE TAX17 PAYER RELIES ON PROFIT POTENTIAL.—A 

18 transaction shall not be treated as having 

19 economic substance solely by reason of 

20 having a potential for profit unless the 

21 present value of the reasonably expected 

22 pre-Federal tax profit from the transaction 

23 is substantial in relation to the present 

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1 action were respected. In determining pre2 Federal tax profit, there shall be taken 

3 into account fees and other transaction ex4 penses and to the extent provided by the 

5 Secretary, foreign taxes. 

6 ‘‘(iii) SPECIAL RULES FOR DETER7 MINING WHETHER NON-FEDERAL TAX

8 PURPOSE.—For purposes of clause 

9 (i)(II)— 

10 ‘‘(I) a purpose of achieving a fi11 nancial accounting benefit shall not be 

12 taken into account in determining 

13 whether a transaction has a substan14 tial purpose (other than a Federal tax 

15 purpose) if the origin of such financial 

16 accounting benefit is a reduction of 

17 Federal tax, and 

18 ‘‘(II) the taxpayer shall not be 

19 treated as having a substantial pur20 pose (other than a Federal tax pur21 pose) with respect to a transaction if 

22 the only such purpose is the reduction 

23 of non-Federal taxes and the trans24 action will result in a reduction of 

25 Federal taxes substantially equal to, 


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1 or greater than, the reduction in non2 Federal taxes because of similarities 

3 between the laws imposing the taxes. 

4 ‘‘(2) DEFINITIONS AND SPECIAL RULES.—For 

5 purposes of this subsection— 

6 ‘‘(A) ECONOMIC SUBSTANCE DOCTRINE.— 

7 The term ‘economic substance doctrine’ means 

8 the common law doctrine under which tax bene9 fits under subtitle A with respect to a trans10 action are not allowable if the transaction does 

11 not have economic substance or lacks a business 

12 purpose. 

13 ‘‘(B) EXCEPTION FOR PERSONAL TRANS14 ACTIONS OF INDIVIDUALS.—In the case of an 

15 individual, this subsection shall apply only to 

16 transactions entered into in connection with a 

17 trade or business or an activity engaged in for 

18 the production of income. 

19 ‘‘(3) OTHER PROVISIONS NOT AFFECTED.—Ex20 cept as specifically provided in this subsection, the 

21 provisions of this subsection shall not be construed 

22 as altering or supplanting any other rule of law or 

23 provision of this title, and the requirements of this 

24 subsection shall be construed as being in addition to 

25 any such other rule of law or provision of this title. 


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1 ‘‘(4) REGULATIONS.—The Secretary shall pre2 scribe such regulations as may be necessary or ap3 propriate to carry out the purposes of this sub4 section. Such regulations may include exemptions 

5 from the application of this subsection.’’. 

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

7 this section shall apply to transactions entered into after 

8 the date of the enactment of this Act. 

9 SEC. 203. PENALTY FOR UNDERSTATEMENTS ATTRIB10 UTABLE TO TRANSACTIONS LACKING ECO11 NOMIC SUBSTANCE, ETC. 

12 (a) IN GENERAL.—Subchapter A of chapter 68 of the 

13 Internal Revenue Code of 1986 is amended by inserting 

14 after section 6662A the following new section: 

15 ‘‘SEC. 6662B. PENALTY FOR UNDERSTATEMENTS ATTRIB16 UTABLE TO TRANSACTIONS LACKING ECO17 NOMIC SUBSTANCE, ETC. 

18 ‘‘(a) IMPOSITION OF PENALTY.—If a taxpayer has an 

19 noneconomic substance transaction understatement for 

20 any taxable year, there shall be added to the tax an 

21 amount equal to 30 percent of the amount of such under22 statement. 

23 ‘‘(b) REDUCTION OF PENALTY FOR DISCLOSED

24 TRANSACTIONS.—Subsection (a) shall be applied by sub25 stituting ‘20 percent’ for ‘30 percent’ with respect to the 


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1 portion of any noneconomic substance transaction under2 statement with respect to which the relevant facts affect3 ing the tax treatment of the item are adequately disclosed 

4 in the return or a statement attached to the return. 

5 ‘‘(c) NONECONOMIC SUBSTANCE TRANSACTION UN6 DERSTATEMENT.—For purposes of this section— 

7 ‘‘(1) IN GENERAL.—The term ‘noneconomic 

8 substance transaction understatement’ means any 

9 amount which would be an understatement under 

10 section 6662A(b)(1) if section 6662A were applied 

11 by taking into account items attributable to non12 economic substance transactions rather than items 

13 to which section 6662A would apply without regard 

14 to this paragraph. 

15 ‘‘(2) NONECONOMIC SUBSTANCE TRANS16 ACTION.—The term ‘noneconomic substance trans17 action’ means any transaction if there is a lack of 

18 economic substance (within the meaning of section 

19 7701(o)(1)(B)) for the transaction giving rise to the 

20 claimed benefit. 

21 ‘‘(d) RULES APPLICABLE TO ASSERTION, COM22 PROMISE, AND COLLECTION OF PENALTY.— 

23 ‘‘(1) IN GENERAL.—Only the Chief Counsel for 

24 the Internal Revenue Service may assert a penalty 

25 imposed under this section or may compromise all or 


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1 any portion of such penalty. The Chief Counsel may 

2 delegate the authority under this paragraph only to 

3 an individual holding the position of chief of a 

4 branch within the Office of the Chief Counsel for the 

5 Internal Revenue Service. 

6 ‘‘(2) SPECIFIC REQUIREMENTS.— 

7 ‘‘(A) ASSERTION OF PENALTY.—The Chief 

8 Counsel for the Internal Revenue Service (or 

9 the Chief Counsel’s delegate under paragraph 

10 (1)) shall not assert a penalty imposed under 

11 this section unless, before the assertion of the 

12 penalty, the taxpayer is provided— 

13 ‘‘(i) a notice of intent to assert the 

14 penalty, and 

15 ‘‘(ii) an opportunity to provide to the 

16 Commissioner (or the Chief Counsel’s dele17 gate under paragraph (1)) a written re18 sponse to the proposed penalty within a 

19 reasonable period of time after such notice. 

20 ‘‘(B) COMPROMISE OF PENALTY.—A com21 promise shall not result in a reduction in the 

22 penalty imposed by this section in an amount 

23 greater than the amount which bears the same 

24 ratio to the amount of the penalty determined 

25 without regard to the compromise as— 


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1 ‘‘(i) the reduction under the com2 promise in the noneconomic substance 

3 transaction understatement to which the 

4 penalty relates, bears to 

5 ‘‘(ii) the amount of the noneconomic 

6 substance transaction understatement de7 termined without regard to the com8 promise. 

9 ‘‘(3) RULES RELATING TO RELEVANCY RE10 QUIREMENT.— 

11 ‘‘(A) DETERMINATION OF RELEVANCE BY

12 CHIEF COUNSEL.—The Chief Counsel for the 

13 Internal Revenue Service (or the Chief Coun14 sel’s delegate under paragraph (1)) may assert, 

15 compromise, or collect a penalty imposed by 

16 this section with respect to a noneconomic sub17 stance transaction even if there has not been a 

18 court determination that the economic sub19 stance doctrine was relevant for purposes of 

20 this title to the transaction if the Chief Counsel 

21 (or delegate) determines that either was so rel22 evant. 

23 ‘‘(B) FINAL ORDER OF COURT.—If there is 

24 a final order of a court that determines that the 

25 economic substance doctrine was not relevant 


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1 for purposes of this title to a transaction (or se2 ries of transactions), any penalty imposed under 

3 this section with respect to the transaction (or 

4 series of transactions) shall be rescinded. 

5 ‘‘(4) APPLICABLE RULES.—The rules of para6 graphs (2) and (3) of section 6707A(d) shall apply 

7 to a compromise under paragraph (1). 

8 ‘‘(e) COORDINATION WITH OTHER PENALTIES.—Ex9 cept as otherwise provided in this part, the penalty im10 posed by this section shall be in addition to any other pen11 alty imposed by this title. 

12 ‘‘(f) CROSS REFERENCES.— 

13 ‘‘(1) For coordination of penalty with under14 statements under section 6662 and other special 

15 rules, see section 6662A(e). 

16 ‘‘(2) For reporting of penalty imposed under 

17 this section to the Securities and Exchange Commis18 sion, see section 6707A(e).’’. 

19 (b) COORDINATION WITH OTHER UNDERSTATE20 MENTS AND PENALTIES.— 

21 (1) The second sentence of section 

22 6662(d)(2)(A) of the Internal Revenue Code of 1986 

23 is amended by inserting ‘‘and without regard to 

24 items with respect to which a penalty is imposed by 

25 section 6662B’’ before the period at the end. 


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1 (2) Subsection (e) of section 6662A of such 

2 Code is amended— 

3 (A) in paragraph (1), by inserting ‘‘and 

4 noneconomic substance transaction understate5 ments’’ after ‘‘reportable transaction under6 statements’’ both places it appears, 

7 (B) in paragraph (2)(A)— 

8 (i) by inserting ‘‘6662B or’’ before 

9 ‘‘6663’’ in the text, and 

10 (ii) by striking ‘‘PENALTY’’ in the 

11 heading and inserting ‘‘AND ECONOMIC

12 SUBSTANCE PENALTIES’’, 

13 (C) in paragraph (2)(B)— 

14 (i) by inserting ‘‘and section 6662B’’ 

15 after ‘‘This section’’, and 

16 (ii) by striking ‘‘PENALTY’’ in the 

17 heading and inserting ‘‘AND ECONOMIC

18 SUBSTANCE PENALTIES’’, 

19 (D) in paragraph (3), by inserting ‘‘or 

20 noneconomic substance transaction understate21 ment’’ after ‘‘reportable transaction understate22 ment’’, and 

23 (E) by adding at the end the following new 

24 paragraph: 


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1 ‘‘(4) NONECONOMIC SUBSTANCE TRANSACTION

2 UNDERSTATEMENT.—For purposes of this sub3 section, the term ‘noneconomic substance trans4 action understatement’ has the meaning given such 

5 term by section 6662B(c).’’. 

6 (3) Subsection (e) of section 6707A of such 

7 Code is amended— 

8 (A) by striking ‘‘or’’ at the end of subpara9 graph (B), and 

10 (B) by striking subparagraph (C) and in11 serting the following new subparagraphs: 

12 ‘‘(C) is required to pay a penalty under 

13 section 6662B with respect to any noneconomic 

14 substance transaction, or 

15 ‘‘(D) is required to pay a penalty under 

16 section 6662(h) with respect to any transaction 

17 and would (but for section 6662A(e)(2)(B)) 

18 have been subject to penalty under section 

19 6662A at a rate prescribed under section 

20 6662A(c) or to penalty under section 6662B,’’. 

21 (c) CLERICAL AMENDMENT.—The table of sections 

22 for part II of subchapter A of chapter 68 of the Internal 

23 Revenue Code of 1986 is amended by inserting after the 

24 item relating to section 6662A the following new item: 

‘‘Sec. 6662B. Penalty for understatements attributable to transactions lacking 

economic substance, etc.’’. 


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

2 this section shall apply to transactions entered into after 

3 the date of the enactment of this Act. 

4 SEC. 204. DENIAL OF DEDUCTION FOR INTEREST ON UN5 DERPAYMENTS ATTRIBUTABLE TO NON6 ECONOMIC SUBSTANCE TRANSACTIONS. 

7 (a) IN GENERAL.—Section 163(m) of the Internal 

8 Revenue Code of 1986 (relating to interest on unpaid 

9 taxes attributable to nondisclosed reportable transactions) 

10 is amended— 

11 (1) by striking ‘‘attributable’’ and all that fol12 lows and inserting the following: ‘‘attributable to— 

13 ‘‘(1) the portion of any reportable transaction 

14 understatement (as defined in section 6662A(b)) 

15 with respect to which the requirement of section 

16 6664(d)(2)(A) is not met, or 

17 ‘‘(2) any noneconomic substance transaction 

18 understatement (as defined in section 6662B(c)).’’, 

19 and 

20 (2) by inserting ‘‘AND NONECONOMIC SUB21 STANCE TRANSACTIONS’’ in the heading thereof 

22 after ‘‘TRANSACTIONS’’. 

23 (b) EFFECTIVE DATE.—The amendments made by 

24 this section shall apply to transactions after the date of 


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1 the enactment of this Act in taxable years ending after 

2 such date. 

Æ 


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