II 

110TH CONGRESS 

1ST SESSION S. 3079 

To amend the Internal Revenue Code of 1986 to provide income tax relief 

for families, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JUNE 4, 2008 

Mr. SMITH (for himself and Mrs. LINCOLN) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

income tax relief for 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; AMENDMENTS TO 1986 CODE. 

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

5 ‘‘Family Tax Relief Act of 2008’’. 

6 (b) AMENDMENTS TO 1986 CODE.—Except as other7 wise expressly provided, whenever in this Act an amend8 ment or repeal is expressed in terms of an amendment 

9 to, or repeal of, a section or other provision, the reference 


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1 shall be considered to be made to a section or other provi2 sion of the Internal Revenue Code of 1986. 

3 SEC. 2. EXPANSION OF DEPENDENT CARE CREDIT. 

4 (a) IN GENERAL.—Subpart C of part IV of sub5 chapter A of chapter 1 (relating to refundable credits) is 

6 amended by redesignating section 36 as section 37 and 

7 by inserting after section 35 the following new section: 

8 ‘‘SEC. 36. EXPENSES FOR HOUSEHOLD AND DEPENDENT 

9 CARE SERVICES NECESSARY FOR GAINFUL 

10 EMPLOYMENT. 

11 ‘‘(a) ALLOWANCE OF CREDIT.— 

12 ‘‘(1) IN GENERAL.—In the case of an individual 

13 for which there are 1 or more qualifying individuals 

14 (as defined in subsection (b)(1)) with respect to such 

15 individual, there shall be allowed as a credit against 

16 the tax imposed by this subtitle for the taxable year 

17 an amount equal to the applicable percentage of the 

18 employment-related expenses (as defined in sub19 section (b)(2)) paid by such individual during the 

20 taxable year. 

21 ‘‘(2) APPLICABLE PERCENTAGE DEFINED.—For 

22 purposes of paragraph (1), the term ‘applicable per23 centage’ means 50 percent reduced (but not below 

24 20 percent) by 1 percentage point for each $1,000 

25 (or fraction thereof) by which the taxpayer’s adVerDate Aug 31 2005 22:00 Jun 05, 2008 Jkt 069200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S3079.IS S3079

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1 justed gross income for the taxable year exceeds 

2 $30,000. 

3 ‘‘(b) DEFINITIONS OF QUALIFYING INDIVIDUAL AND

4 EMPLOYMENT-RELATED EXPENSES.—For purposes of 

5 this section— 

6 ‘‘(1) QUALIFYING INDIVIDUAL.—The term 

7 ‘qualifying individual’ means— 

8 ‘‘(A) a dependent of the taxpayer (as de9 fined in section 152(a)(1)) who has not attained 

10 age 13, 

11 ‘‘(B) a dependent of the taxpayer (as de12 fined in section 152, determined without regard 

13 to subsections (b)(1), (b)(2), and (d)(1)(B)) 

14 who is physically or mentally incapable of car15 ing for himself or herself and who has the same 

16 principal place of abode as the taxpayer for 

17 more than one-half of such taxable year, or 

18 ‘‘(C) the spouse of the taxpayer, if the 

19 spouse is physically or mentally incapable of 

20 caring for himself or herself and has the same 

21 principal place of abode as the taxpayer for 

22 more than one-half of such taxable year. 

23 ‘‘(2) EMPLOYMENT-RELATED EXPENSES.— 

24 ‘‘(A) IN GENERAL.—The term ‘employ25 ment-related expenses’ means amounts paid for 


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1 the following expenses, but only if such ex2 penses are incurred to enable the taxpayer to be 

3 gainfully employed for any period for which 

4 there are 1 or more qualifying individuals with 

5 respect to the taxpayer: 

6 ‘‘(i) Expenses for household services. 

7 ‘‘(ii) Expenses for the care of a quali8 fying individual. 

9 Such term shall not include any amount paid 

10 for services outside the taxpayer’s household at 

11 a camp where the qualifying individual stays 

12 overnight. 

13 ‘‘(B) EXCEPTION.—Employment-related 

14 expenses described in subparagraph (A) which 

15 are incurred for services outside the taxpayer’s 

16 household shall be taken into account only if in17 curred for the care of— 

18 ‘‘(i) a qualifying individual described 

19 in paragraph (1)(A), or 

20 ‘‘(ii) a qualifying individual (not de21 scribed in paragraph (1)(A)) who regularly 

22 spends at least 8 hours each day in the 

23 taxpayer’s household. 

24 ‘‘(C) DEPENDENT CARE CENTERS.—Em25 ployment-related expenses described in subparaVerDate Aug 31 2005 22:00 Jun 05, 2008 Jkt 069200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S3079.IS S3079

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1 graph (A) which are incurred for services pro2 vided outside the taxpayer’s household by a de3 pendent care center (as defined in subpara4 graph (D)) shall be taken into account only if— 

5 ‘‘(i) such center complies with all ap6 plicable laws and regulations of a State or 

7 unit of local government, and 

8 ‘‘(ii) the requirements of subpara9 graph (B) are met. 

10 ‘‘(D) DEPENDENT CARE CENTER DE11 FINED.—For purposes of this paragraph, the 

12 term ‘dependent care center’ means any facility 

13 which— 

14 ‘‘(i) provides care for more than six 

15 individuals (other than individuals who re16 side at the facility), and 

17 ‘‘(ii) receives a fee, payment, or grant 

18 for providing services for any of the indi19 viduals (regardless of whether such facility 

20 is operated for profit). 

21 ‘‘(c) DOLLAR LIMIT ON AMOUNT CREDITABLE.—The 

22 amount of the employment-related expenses incurred dur23 ing any taxable year which may be taken into account 

24 under subsection (a) shall not exceed— 


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1 ‘‘(1) $5,000 if there is 1 qualifying individual 

2 with respect to the taxpayer for such taxable year, 

3 or 

4 ‘‘(2) $10,000 if there are 2 or more qualifying 

5 individuals with respect to the taxpayer for such tax6 able year. 

7 The amount determined under paragraph (1) or (2) 

8 (whichever is applicable) shall be reduced by the aggregate 

9 amount excludable from gross income under section 129 

10 for the taxable year. 

11 ‘‘(d) EARNED INCOME LIMITATION.— 

12 ‘‘(1) IN GENERAL.—Except as otherwise pro13 vided in this subsection, the amount of the employ14 ment-related expenses incurred during any taxable 

15 year which may be taken into account under sub16 section (a) shall not exceed— 

17 ‘‘(A) in the case of an individual who is 

18 not married at the close of such year, such indi19 vidual’s earned income for such year, or 

20 ‘‘(B) in the case of an individual who is 

21 married at the close of such year, the lesser of 

22 such individual’s earned income or the earned 

23 income of his spouse for such year. 

24 ‘‘(2) SPECIAL RULE FOR SPOUSE WHO IS A

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1 SELF.—In the case of a spouse who is a student or 

2 a qualifying individual described in subsection 

3 (b)(1)(C), for purposes of paragraph (1), such 

4 spouse shall be deemed for each month during which 

5 such spouse is a full-time student at an educational 

6 institution, or is such a qualifying individual, to be 

7 gainfully employed and to have earned income of not 

8 less than— 

9 ‘‘(A) $250 if subsection (c)(1) applies for 

10 the taxable year, or 

11 ‘‘(B) $500 if subsection (c)(2) applies for 

12 the taxable year. 

13 In the case of any husband and wife, this paragraph 

14 shall apply with respect to only one spouse for any 

15 one month. 

16 ‘‘(e) SPECIAL RULES.—For purposes of this sec17 tion— 

18 ‘‘(1) PLACE OF ABODE.—An individual shall 

19 not be treated as having the same principal place of 

20 abode as the taxpayer if at any time during the tax21 able year of the taxpayer the relationship between 

22 the individual and the taxpayer is in violation of 

23 local law. 

24 ‘‘(2) MARRIED COUPLES MUST FILE JOINT RE25 TURN.—If the taxpayer is married at the close of 


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1 the taxable year, the credit shall be allowed under 

2 subsection (a) only if the taxpayer and his spouse 

3 file a joint return for the taxable year. 

4 ‘‘(3) MARITAL STATUS.—An individual legally 

5 separated from his spouse under a decree of divorce 

6 or of separate maintenance shall not be considered 

7 as married. 

8 ‘‘(4) CERTAIN MARRIED INDIVIDUALS LIVING

9 APART.—If— 

10 ‘‘(A) an individual who is married and who 

11 files a separate return— 

12 ‘‘(i) maintains as his home a house13 hold which constitutes for more than one14 half of the taxable year the principal place 

15 of abode of a qualifying individual, and 

16 ‘‘(ii) furnishes over half of the cost of 

17 maintaining such household during the 

18 taxable year, and 

19 ‘‘(B) during the last 6 months of such tax20 able year such individual’s spouse is not a mem21 ber of such household, 

22 such individual shall not be considered as married. 

23 ‘‘(5) SPECIAL DEPENDENCY TEST IN CASE OF

24 DIVORCED PARENTS, ETC.—If— 


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1 ‘‘(A) section 152(e) applies to any child 

2 with respect to any calendar year, and 

3 ‘‘(B) such child is under the age of 13 or 

4 is physically or mentally incapable of caring for 

5 himself, 

6 in the case of any taxable year beginning in such 

7 calendar year, such child shall be treated as a quali8 fying individual described in subparagraph (A) or 

9 (B) of subsection (b)(1) (whichever is appropriate) 

10 with respect to the custodial parent (as defined in 

11 section 152(e)(3)(A)), and shall not be treated as a 

12 qualifying individual with respect to the noncustodial 

13 parent. 

14 ‘‘(6) PAYMENTS TO RELATED INDIVIDUALS.— 

15 No credit shall be allowed under subsection (a) for 

16 any amount paid by the taxpayer to an individual— 

17 ‘‘(A) with respect to whom, for the taxable 

18 year, a deduction under section 151(c) (relating 

19 to deduction for personal exemptions for de20 pendents) is allowable either to the taxpayer or 

21 his spouse, or 

22 ‘‘(B) who is a child of the taxpayer (within 

23 the meaning of section 152(f)(1)) who has not 

24 attained the age of 19 at the close of the tax25 able year. 


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1 For purposes of this paragraph, the term ‘taxable 

2 year’ means the taxable year of the taxpayer in 

3 which the service is performed. 

4 ‘‘(7) STUDENT.—The term ‘student’ means an 

5 individual who during each of 5 calendar months 

6 during the taxable year is a full-time student at an 

7 educational organization. 

8 ‘‘(8) EDUCATIONAL ORGANIZATION.—The term 

9 ‘educational organization’ means an educational or10 ganization described in section 170(b)(1)(A)(ii). 

11 ‘‘(9) IDENTIFYING INFORMATION REQUIRED

12 WITH RESPECT TO SERVICE PROVIDER.—No credit 

13 shall be allowed under subsection (a) for any amount 

14 paid to any person unless— 

15 ‘‘(A) the name, address, and taxpayer 

16 identification number of such person are in17 cluded on the return claiming the credit, or 

18 ‘‘(B) if such person is an organization de19 scribed in section 501(c)(3) and exempt from 

20 tax under section 501(a), the name and address 

21 of such person are included on the return 

22 claiming the credit. 

23 In the case of a failure to provide the information 

24 required under the preceding sentence, the preceding 

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1 payer exercised due diligence in attempting to pro2 vide the information so required. 

3 ‘‘(10) IDENTIFYING INFORMATION REQUIRED

4 WITH RESPECT TO QUALIFYING INDIVIDUALS.—No 

5 credit shall be allowed under this section with re6 spect to any qualifying individual unless the TIN of 

7 such individual is included on the return claiming 

8 the credit. 

9 ‘‘(f) ADJUSTMENT FOR INFLATION.—In the case of 

10 any taxable year beginning after December 31, 2008, the 

11 $30,000 amount under subsection (a)(2) and each of the 

12 dollar amounts under subsection (c) shall be increased by 

13 an amount equal to— 

14 ‘‘(1) such dollar amount, multiplied by 

15 ‘‘(2) the cost-of-living adjustment determined 

16 under section 1(f)(3) for the calendar year in which 

17 the taxable year begins by substituting ‘2007’ for 

18 ‘1992’ in subparagraph (B) thereof. 

19 If the dollar amount as adjusted under the preceding sen20 tence is not a multiple of $10, such amount shall be 

21 rounded to the nearest multiple of $10. 

22 ‘‘(g) REGULATIONS.—The Secretary shall prescribe 

23 such regulations as may be necessary to carry out the pur24 poses of this section.’’. 

25 (b) CONFORMING AMENDMENTS.— 


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1 (1) Subpart A of part IV of subchapter A of 

2 chapter 1 of the Internal Revenue Code of 1986 is 

3 amended by striking section 21. 

4 (2) Section 23(f)(1) (relating to filing require5 ments) is amended by striking ‘‘section 21(e)’’ and 

6 inserting ‘‘section 36(e)’’. 

7 (3) Section 35(g)(6) (relating to marital status) 

8 is amended by striking ‘‘section 21(e)’’ and inserting 

9 ‘‘section 36(e)’’. 

10 (4) Section 129(a)(2) (relating to limitation of 

11 exclusion) is amended by striking ‘‘section 21(e)’’ 

12 and inserting ‘‘section 36(e)’’. 

13 (5) Section 129(b)(2) (relating to special rule 

14 for certain spouses) is amended by striking ‘‘section 

15 21(d)(2)’’ and inserting ‘‘section 36(d)(2)’’. 

16 (6) Section 129(e)(1) (relating to dependent 

17 care assistance) is amended by striking ‘‘section 

18 21(b)(2)’’ and inserting ‘‘section 36(b)(2)’’. 

19 (7) Section 213(e) (relating to exclusion of 

20 amounts allowed for care of certain dependents) is 

21 amended by striking ‘‘section 21’’ and inserting 

22 ‘‘section 36’’. 

23 (8) Section 6213(g)(2) (relating to mathe24 matical or clerical error) is amended— 


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1 (A) by striking ‘‘section 21’’ in subpara2 graph (H) and inserting ‘‘section 36’’, and 

3 (B) by striking ‘‘section 21, 24, or 32’’ in 

4 subparagraph (L) and inserting ‘‘section 24, 

5 32, or 36’’. 

6 (c) CLERICAL AMENDMENTS.— 

7 (1) The table of sections for subpart C of part 

8 IV of subchapter A of chapter 1 of the Internal Rev9 enue Code of 1986 is amended by striking the item 

10 relating to section 36 and inserting the following 

11 new items: 

‘‘Sec. 36. Expenses for household and dependent care services necessary for 

gainful employment. 

‘‘Sec. 37. Overpayments of tax.’’. 

12 (2) The table of sections for subpart A of part 

13 IV of subchapter A of chapter 1 of the Internal Rev14 enue Code of 1986 is amended by striking the item 

15 relating to section 21. 

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

17 this section shall apply to taxable years beginning after 

18 December 31, 2007. 

19 SEC. 3. EXPANSION OF TEACHER EXPENSES DEDUCTION. 

20 (a) IN GENERAL.—Subparagraph (D) of section 

21 62(a)(2) (relating to certain expenses of elementary and 

22 secondary school teachers) is amended to read as follows: 

23 ‘‘(D) CERTAIN EXPENSES OF ELEMENTARY

24 AND SECONDARY SCHOOL TEACHERS.— 


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1 ‘‘(i) IN GENERAL.—The deductions al2 lowed by section 162 which consist of ex3 penses, not in excess of $450, paid or in4 curred by an eligible educator— 

5 ‘‘(I) in connection with books, 

6 supplies (other than nonathletic sup7 plies for courses of instruction in 

8 health or physical education), com9 puter equipment (including related 

10 software services) and other equip11 ment, and supplementary materials 

12 used by the eligible educator, and 

13 ‘‘(II) for the professional develop14 ment of the eligible educator. 

15 ‘‘(ii) INFLATION ADJUSTMENT.—In 

16 the case of any taxable year beginning 

17 after 2008, the $450 dollar amount under 

18 clause (i) shall be increased by an amount 

19 equal to— 

20 ‘‘(I) such dollar amount, multi21 plied by 

22 ‘‘(II) the cost-of-living adjust23 ment determined under section 1(f)(3) 

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1 stituting ‘calendar year 2007’ for ‘cal2 endar year 1992’ in subparagraph (B) 

3 thereof. 

4 If any amount as adjusted under the pre5 ceding sentence is not a multiple of $10, 

6 such amount shall be rounded to the next 

7 lowest multiple of $10.’’. 

8 (b) EFFECTIVE DATE.—The amendment made by 

9 this section shall apply to taxable years beginning after 

10 December 31, 2007. 

11 SEC. 4. PERMANENT EXTENSION OF ADOPTION TAX RE12 LIEF. 

13 Section 901 of the Economic Growth and Tax Relief 

14 Reconciliation Act of 2001 is amended by adding at the 

15 end the following new subsection: 

16 ‘‘(c) EXCEPTION.—Subsection (a) shall not apply to 

17 the amendments made by section 202 (relating to expan18 sion of adoption credit and adoption assistance pro19 grams).’’. 

Æ 


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