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[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 2437 Introduced in Senate (IS)]

<DOC>

116th CONGRESS
  1st Session
                                S. 2437

 To amend the Internal Revenue Code of 1986 to establish a refundable 
  tax credit for parents who take leave from employment following the 
                     birth or adoption of a child.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             August 1, 2019

   Mr. Young 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 establish a refundable 
  tax credit for parents who take leave from employment following the 
                     birth or adoption of a child.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Support Working Families Act''.

SEC. 2. PARENTAL LEAVE TAX CREDIT.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of subtitle A of the Internal Revenue Code of 1986 is amended by 
inserting after section 36B the following new section:

``SEC. 36C. PARENTAL LEAVE CREDIT.

    ``(a) Allowance of Credit.--
            ``(1) In general.--There shall be allowed as a credit 
        against the tax imposed by this subtitle for the taxable year 
        an amount equal to the sum of--
                    ``(A) the current year parental leave credit, plus
                    ``(B) the parental leave credit carryback carried 
                to such taxable year.
            ``(2) Current year parental leave credit.--
                    ``(A) In general.--Subject to subparagraphs (B) and 
                (C), the amount of the current year parental leave 
                credit for the taxable year shall be equal to the 
                product of--
                            ``(i) the total number of weeks of parental 
                        leave taken during the benefit period by an 
                        individual described in subsection (c)(1)(A) 
                        which are completed within such taxable year, 
                        multiplied by
                            ``(ii) an amount equal to the replacement 
                        percentage (as determined for each week of 
                        parental leave pursuant to subsection (b)(1)) 
                        of the average weekly wage rate for such 
                        individual.
                    ``(B) Limitation.--The current year parental leave 
                credit for any taxable year shall not exceed the lesser 
                of--
                            ``(i) an amount equal to--
                                    ``(I) the amount determined under 
                                subparagraph (A) (determined as if the 
                                replacement percentage were 100 
                                percent), minus
                                    ``(II) an amount equal to the sum 
                                of any paid parental or medical leave 
                                benefits which are provided to the 
                                individual for any weeks included under 
                                clause (i) of such subparagraph--
                                            ``(aa) pursuant to any law 
                                        or plan of a State or a 
                                        political subdivision thereof, 
                                        or
                                            ``(bb) by the employer of 
                                        such individual, or
                            ``(ii) $6,000.
                    ``(C) Reduction in benefit amount on account of 
                receipt of certain benefits.--The current year parental 
                leave credit for any taxable year (after application of 
                subparagraph (B)) shall be reduced by the amount, if 
                any, in certain benefits as may be otherwise received 
                by an individual for any weeks included under 
                subparagraph (A)(i). For purposes of the preceding 
                sentence, certain benefits include--
                            ``(i) periodic benefits on account of such 
                        individual's total or partial disability under 
                        a workmen's compensation law or plan of the 
                        United States or a State,
                            ``(ii) periodic benefits on account of an 
                        individual's employment status under an 
                        unemployment law or plan of the United States 
                        or a State, and
                            ``(iii) such other benefits as determined 
                        under regulations issued by the Secretary.
            ``(3) Parental leave credit carryback.--In the case of an 
        individual who elects not to apply the current year parental 
        leave credit to the taxable year which includes the weeks of 
        parental leave described in subparagraph (A)(i), the amount of 
        such credit--
                    ``(A) shall be reduced to zero for such taxable 
                year, and
                    ``(B) shall be a parental leave credit carryback to 
                the preceding taxable year.
    ``(b) Determination of Credit Amount.--
            ``(1) Replacement percentage.--The replacement percentage 
        shall be the amount, expressed as a percentage, which has been 
        elected by the individual (in such manner and at such time as 
        is prescribed by the Secretary) for each week of parental leave 
        described in paragraph (2)(A)(i) of subsection (a) for purposes 
        of determining the credit allowed under such subsection, 
        provided that--
                    ``(A) such amount is not less than 40 percent and 
                not greater than 90 percent, and
                    ``(B) for each week of parental leave described in 
                paragraph (2)(A)(i) of subsection (a), such amount does 
                not result in a credit allowed under such subsection 
                that exceeds--
                            ``(i) the average weekly wage rate for such 
                        individual, minus
                            ``(ii) any amounts described in paragraph 
                        (2)(B)(i)(II) of such subsection which are 
                        provided to the individual for such week.
            ``(2) Average weekly wage rate.--The average weekly wage 
        rate shall be an amount equal to the greater of--
                    ``(A) the annual average amount of the individual's 
                wages and self-employment income for the period of the 
                3 calendar years preceding the calendar year in which 
                the parental leave is taken by the individual, prorated 
                on a weekly basis, or
                    ``(B) the amount of the individual's wages and 
                self-employment income for the calendar year preceding 
                the calendar year in which the parental leave is taken 
                by the individual, prorated on a weekly basis.
            ``(3) Benefit period.--The benefit period for an individual 
        shall be the period of weeks--
                    ``(A) beginning with the latter of--
                            ``(i) the first week in which the 
                        individual satisfies the requirements under 
                        subsection (c)(1)(A), or
                            ``(ii) the first week--
                                    ``(I) in which the individual 
                                satisfies the requirements under such 
                                subsection, and
                                    ``(II) which is not less than 1 
                                year after the completion of any 
                                previous benefit period, and
                    ``(B) ending on the date that is 1 year after the 
                date of the birth or adoption of the child.
    ``(c) Eligibility Requirements.--
            ``(1) Employment.--
                    ``(A) In general.--An individual is described in 
                this subparagraph if, on the date of the birth or 
                adoption of the child, such individual--
                            ``(i) is a parent of the child,
                            ``(ii) is employed and, during the 64-week 
                        period preceding such date, has been employed 
                        for not less than 52 weeks, and
                            ``(iii) has worked not less than a total of 
                        1,000 hours during the 52-week period described 
                        in clause (ii).
                    ``(B) Determination of employment.--The Secretary, 
                in consultation with the Secretary of Labor, shall 
                prescribe such regulations, rules, and guidance as may 
                be necessary to determine the length of employment and 
                hours of service of an individual, including rules for 
                the application of this paragraph to individuals who 
                are not compensated on an hourly basis.
            ``(2) Additional information.--
                    ``(A) In general.--No credit shall be allowed under 
                subsection (a) for any taxable year unless the 
                individual includes the following information on the 
                return of tax for such taxable year (or through the 
                program established under section 2(b) of the Support 
                Working Families Act):
                            ``(i) An attestation from the individual 
                        that such individual--
                                    ``(I) if the individual has an 
                                employer, has provided such employer 
                                with written notice of the individual's 
                                intention to take parental leave,
                                    ``(II) has satisfied the 
                                requirements under clauses (ii) and 
                                (iii) of paragraph (1)(A),
                                    ``(III) will be taking leave from 
                                employment for each week of parental 
                                leave taken during the benefit period, 
                                and
                                    ``(IV) intends to maintain the same 
                                principal place of abode as the child 
                                for more than \1/2\ of the 12-month 
                                period following the date of the birth 
                                or adoption of the child.
                            ``(ii) Any information, as determined 
                        necessary by the Secretary, regarding any paid 
                        parental or medical leave benefits described in 
                        subsection (a)(2)(B)(i)(II) which are provided 
                        to the individual.
                            ``(iii) The name of the child of the 
                        individual and the date of the birth or 
                        adoption of the child.
                            ``(iv) Subject to subparagraph (B), the 
                        weeks of parental leave taken during the 
                        benefit period.
                            ``(v) The social security number of the 
                        individual.
                            ``(vi) Subject to subparagraph (C), the 
                        social security number of the child.
                            ``(vii) Subject to subparagraph (D), a copy 
                        of the birth certificate or other documentation 
                        demonstrating that the individual is the parent 
                        or legal guardian of the child.
                    ``(B) Weeks of parental leave.--For purposes of the 
                credit allowed under subsection (a)--
                            ``(i) any weeks of parental leave taken 
                        during the benefit period for which such credit 
                        is being claimed shall be a full workweek, and
                            ``(ii) the total number of weeks of 
                        parental leave taken by an individual during 
                        the benefit period shall not be less than 4 
                        weeks or greater than 12 weeks.
                    ``(C) Social security number.--
                            ``(i) Adoption.--
                                    ``(I) In general.--In the case of 
                                an individual who legally adopts a 
                                child, if such child has not received a 
                                social security number at the time of 
                                the filing of the return of tax 
                                described in subparagraph (A), the 
                                parent of such child may be allowed the 
                                credit under subsection (a), provided 
                                that--
                                            ``(aa) the Adoption 
                                        Taxpayer Identification Number 
                                        for such child is included on 
                                        the return of tax described in 
                                        subparagraph (A), and
                                            ``(bb) the social security 
                                        number for such child is 
                                        provided to the Secretary not 
                                        later than 15 months after the 
                                        date of the adoption of such 
                                        child.
                                    ``(II) Notice.--In the case of a 
                                child described in subclause (I), the 
                                Secretary shall provide notice of the 
                                requirement under item (bb) of such 
                                subclause to the parent of such child--
                                            ``(aa) at the time that the 
                                        credit allowed under subsection 
                                        (a) is refunded or otherwise 
                                        provided to such parent, and
                                            ``(bb) on the date that is 
                                        12 months after the date of the 
                                        adoption of such child.
                                    ``(III) Rescission.--
                                            ``(aa) In general.--In the 
                                        case of an individual who is 
                                        the parent of a child described 
                                        in subclause (I) and 
                                        subsequently fails to provide a 
                                        social security number for such 
                                        child to the Secretary during 
                                        the period described in 
                                        subclause (II)(bb), the tax 
                                        imposed by this chapter for the 
                                        applicable taxable year shall 
                                        be increased by 100 percent of 
                                        the amount of the credit 
                                        allowed under subsection (a) to 
                                        such individual for any 
                                        parental leave claimed with 
                                        respect to such child.
                                            ``(bb) Applicable taxable 
                                        year.--The term `applicable 
                                        taxable year' means the taxable 
                                        year which includes the date 
                                        that is 15 months after the 
                                        date of the adoption of the 
                                        child.
                            ``(ii) Religious objections.--The 
                        Secretary, in coordination with the 
                        Commissioner of Social Security, shall 
                        prescribe such regulations, rules, and guidance 
                        as may be necessary to apply the requirements 
                        under this paragraph relating to social 
                        security numbers for individuals who have 
                        religious objections to obtaining a social 
                        security number for themselves or their 
                        children.
                    ``(D) Birth certificate or other documentation.--
                            ``(i) In general.--In the case of a parent 
                        who has not received the certificate or 
                        documentation described in clause (vii) of 
                        subparagraph (A) for their child at the time of 
                        the filing of the return of tax described in 
                        such subparagraph, the parent may be allowed 
                        the credit under subsection (a), provided that 
                        such certificate or documentation is provided 
                        to the Secretary not later than 15 months after 
                        the date of the birth or adoption of such 
                        child.
                            ``(ii) Notice and rescission.--Rules 
                        similar to the rules of subclauses (II) and 
                        (III) of subparagraph (C)(i) shall apply for 
                        purposes of this subparagraph.
            ``(3) Ineligibility; disqualification.--
                    ``(A) Ineligibility for benefit.--No credit shall 
                be allowed under subsection (a) for any taxable year 
                during which the individual is entitled to--
                            ``(i) disability insurance benefits under 
                        section 223 of the Social Security Act (42 
                        U.S.C. 423) or a similar permanent disability 
                        program under any law or plan of a State or 
                        political subdivision or instrumentality of a 
                        State (as such terms are used in section 218 of 
                        the Social Security Act (42 U.S.C. 418)),
                            ``(ii) monthly insurance benefits under 
                        section 202 of such Act (42 U.S.C. 402) based 
                        on such individual's disability (as defined in 
                        section 223(d) of such Act (42 U.S.C. 423(d))), 
                        or
                            ``(iii) benefits under title XVI of such 
                        Act (42 U.S.C. 1381 et seq.) based on such 
                        individual's status as a disabled individual 
                        (as determined under section 1614 of such Act 
                        (42 U.S.C. 1382c)).
                    ``(B) Restrictions on individuals who improperly 
                claimed credit in prior year.--
                            ``(i) Prior fraudulent or reckless 
                        claims.--
                                    ``(I) In general.--No credit shall 
                                be allowed under subsection (a) for any 
                                taxable year in the disallowance 
                                period.
                                    ``(II) Disallowance period.--For 
                                purposes of subclause (I), the 
                                disallowance period is--
                                            ``(aa) the period of 10 
                                        taxable years after the most 
                                        recent taxable year for which 
                                        there was a final determination 
                                        that the individual's claim of 
                                        credit under this section was 
                                        due to fraud, and
                                            ``(bb) the period of 2 
                                        taxable years after the most 
                                        recent taxable year for which 
                                        there was a final determination 
                                        that--

                                                    ``(AA) the 
                                                individual's claim of 
                                                credit under this 
                                                section was due to 
                                                reckless or intentional 
                                                disregard of rules and 
                                                regulations (but not 
                                                due to fraud), or

                                                    ``(BB) the 
                                                individual claimed the 
                                                credit under this 
                                                section and 
                                                subsequently failed to 
                                                provide the Secretary 
                                                with the social 
                                                security number or 
                                                documentation described 
                                                in clause (vi) or (vii) 
                                                of paragraph (3)(A) 
                                                during the 15-month 
                                                period following the 
                                                date of the brith or 
                                                adoption of their 
                                                child, as required 
                                                under subparagraphs (C) 
                                                and (D) of paragraph 
                                                (3).

                            ``(ii) Improper prior claims.--In the case 
                        of an individual who is denied the credit under 
                        this section for any taxable year as a result 
                        of the deficiency procedures under subchapter B 
                        of chapter 63, no credit shall be allowed under 
                        this section for any subsequent taxable year 
                        unless the individual provides such information 
                        as the Secretary may require to demonstrate 
                        eligibility for such credit.
    ``(d) Relationship With State Law; Employer Benefits; Prohibited 
Acts.--
            ``(1) In general.--This section does not preempt or 
        supercede any provision of State or local law that authorizes a 
        State or local municipality to provide benefits or payments to 
        any individual for parental leave taken by such individual.
            ``(2) Greater benefits allowed.--Nothing in this Act shall 
        be construed to diminish the obligation of an employer to 
        comply with any contract, collective bargaining agreement, or 
        any employment benefit program or plan that provides greater 
        paid parental leave rights to employees than the credit allowed 
        under this section.
            ``(3) Prohibited acts.--It shall be unlawful for any person 
        to discharge or in any other manner discriminate against an 
        individual because the individual has claimed, indicated an 
        intent to claim, or received the credit allowed under this 
        section.
    ``(e) Inflation Adjustment.--
            ``(1) In general.--In the case of any taxable year 
        beginning after 2020, the dollar amount in subsection 
        (a)(2)(B)(ii) shall be increased by an amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for such calendar year by 
                substituting `calendar year 2019' for `calendar year 
                2016' in subparagraph (A)(ii) thereof.
            ``(2) Rounding.--If any increase determined under paragraph 
        (1) is not a multiple of $50, such increase shall be rounded to 
        the nearest multiple of $50.
    ``(f) Recapture of Credit.--
            ``(1) In general.--If a credit under subsection (a) is 
        allowed to a taxpayer, the tax imposed by this chapter shall be 
        increased by 20 percent of the applicable amount for each 
        taxable year in the recapture period.
            ``(2) Applicable amount.--
                    ``(A) In general.--For purposes of this subsection, 
                the applicable amount shall be equal to--
                            ``(i) the amount of the credit allowed 
                        under subsection (a), minus
                            ``(ii) the amount of payments made by the 
                        taxpayer during the prepayment period.
                    ``(B) Prepayment period.--
                            ``(i) In general.--For purposes of this 
                        paragraph, the term `prepayment period' means 
                        the period of 3 taxable years subsequent to the 
                        taxable year in which the credit under 
                        subsection (a) is allowed.
                            ``(ii) Development of prepayment 
                        mechanism.--For purposes of subparagraph 
                        (A)(ii), the Secretary shall establish 
                        appropriate procedures and mechanisms to allow 
                        taxpayers to reduce the amount of the tax 
                        imposed under paragraph (1) by making payments 
                        during the prepayment period.
            ``(3) Recapture period.--For purposes of this subsection, 
        the term `recapture period' means the period of 5 taxable years 
        subsequent to the prepayment period.
            ``(4) Return requirement.--If the tax imposed by this 
        chapter for the taxable year is increased under this 
        subsection, the taxpayer shall, notwithstanding section 6012, 
        be required to file a return with respect to the taxes imposed 
        under this subtitle.
            ``(5) Joint returns.--In the case of a credit allowed under 
        subsection (a) with respect to a joint return, half of such 
        credit shall be treated as having been allowed to each 
        individual filing such return for purposes of this subsection.
            ``(6) Exception.--This subsection shall not apply to any 
        taxable year ending after the date of the death of the 
        individual allowed the credit under subsection (a).
    ``(g) Definitions.--In this section:
            ``(1) Child.--The term `child' means a biological or 
        legally adopted child who has not attained 18 years of age.
            ``(2) Parent.--The term `parent' means--
                    ``(A) the biological mother or father of a child, 
                or
                    ``(B) an individual who legally adopts a child,
        who is the legal guardian of the child and who intends to 
        maintain the same principal place of abode as the child for 
        more than \1/2\ of the 12-month period following the date of 
        the birth or adoption of the child.
            ``(3) Parental leave.--The term `parental leave' means any 
        period of leave from employment which is taken by a parent to 
        provide care for a child.''.
    (b) Pre-Calculation of Parental Leave Credit.--Not later than 
January 1, 2020, the Secretary of the Treasury or the Secretary's 
delegate (referred to in this subsection and subsection (c) as the 
``Secretary'') shall establish a program, to be made available online 
and through such other methods as is determined appropriate by the 
Secretary, to allow individuals who intend to take parental leave to--
            (1) determine their average weekly wage rate (as defined in 
        subsection (b)(2) of section 36C of the Internal Revenue Code 
        of 1986);
            (2) determine whether they satisfy the requirements under 
        clauses (ii) and (iii) of section 36C(c)(1)(A) of such Code 
        and, if such requirements are not satisfied, determine the 
        number of hours or weeks needed to satisfy such requirements 
        prior to the expected date of the birth or adoption of a child;
            (3) calculate--
                    (A) the amount of the parental leave credit under 
                section 36C of such Code based on different replacement 
                percentages (as described in subsection (b)(1) of such 
                section); and
                    (B) the amount of any increase in taxes pursuant to 
                subsection (f) of such section based on different 
                amounts of payments made by the individual during the 
                prepayment period (as defined in paragraph (2)(B) of 
                such subsection); and
            (4) provide the Secretary with any information required 
        under subsection (c)(2)(A) of section 36C of the Internal 
        Revenue Code of 1986 which is available to such individual at 
        that time.
    (c) Expedited Amended Return Process.--For any individual who has--
            (1) taken parental leave during a taxable year;
            (2) elected to receive a parental leave credit carryback 
        (as described in subsection (a)(3) of section 36C of the 
        Internal Revenue Code of 1986) for such parental leave; and
            (3) has timely filed an amendment to the income tax return 
        for such individual for the preceding taxable year for the sole 
        purpose of claiming the credit allowed under subsection (a) of 
        such section,
the Secretary shall establish a separate and expedited process for 
reviewing and processing such amended returns.
    (d) Conforming Amendments.--
            (1) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of subtitle A of the Internal Revenue 
        Code of 1986 is amended by inserting after the item relating to 
        section 36B the following:

``Sec. 36C. Parental leave credit.''.
            (2) Section 6211(b)(4)(A) of such Code is amended by 
        striking ``and 36B, 168(k)(4)'' and inserting ``36B, and 36C''.
            (3) Section 6213(g)(2) of such Code is amended--
                    (A) in subparagraph (P), by striking ``and'' at the 
                end;
                    (B) in subparagraph (Q), by striking the period at 
                the end and inserting ``, and''; and
                    (C) by inserting after subparagraph (Q) the 
                following:
                    ``(R) an omission of information required by 
                subsection (c) of section 36C or an entry on the return 
                claiming the credit under such section for a taxable 
                year for which such credit is disallowed pursuant to 
                section 36C(c)(4).''.
            (4) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting ``36C,'' after ``36B,''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2019.
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