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[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 2087 Introduced in Senate (IS)]

  2d Session
                                S. 2087

     To amend the Internal Revenue Code of 1986 to expand the Hope 
               Scholarship and Lifetime Learning Credits.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                           February 12, 2004

  Mr. Graham of Florida 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 expand the Hope 
               Scholarship and Lifetime Learning Credits.

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

SECTION 1. HOPE SCHOLARSHIP CREDIT.

    (a) Expansion of Credit.--
            (1) In general.--Section 25A(b) of the Internal Revenue 
        Code of 1986 (relating to Hope Scholarship Credit) is amended--
                    (A) in paragraph (1), by striking ``the sum of'' 
                and all that follows and inserting ``100 percent of so 
                much of the qualified tuition and related expenses paid 
                by the taxpayer during the taxable year (for education 
                furnished to the eligible student during any academic 
                period beginning in such taxable year) as does not 
                exceed $2,500.'',
                    (B) in paragraph (2)(A), by striking ``2'' in the 
                text and in the heading and inserting ``4'',
                    (C) in paragraph (2)(C), by striking ``2'' in the 
                text and in the heading and inserting ``4'', and
                    (D) by striking paragraph (4).
            (2) Conforming amendments.--Section 25A(h)(1)(A) of such 
        Code (relating to inflation adjustments) is amended--
                    (A) by striking ``2001'' and inserting ``2004'',
                    (B) by striking ``each of the $1,000 amounts'' and 
                inserting ``the $2,500 amount'', and
                    (C) by striking ``2000'' and inserting ``2003''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2003.

SEC. 2. REFUNDABILITY OF HOPE AND LIFETIME LEARNING CREDIT.

    (a) Refundable Credit.--
            (1) In general.--Section 25A of the Internal Revenue Code 
        of 1986 is hereby moved to subpart C of part IV of subchapter A 
        of chapter 1 of such Code (relating to refundable credits) and 
        inserted after section 35.
            (2) Technical amendments.--
                    (A) Section 36 of such Code is redesignated as 
                section 37.
                    (B) Section 25A of such Code (as moved by 
                subsection (a)) is redesignated as section 36.
                    (C) Paragraph (1) of section 36(a) of such Code (as 
                redesignated by paragraph (2)) is amended by striking 
                ``this chapter'' and inserting ``this subtitle''.
                    (D) Section 36 of such Code (as so redesignated) is 
                amended by redesignating subsection (i) as subsection 
                (j) and by inserting after subsection (h) the following 
                new subsection:
    ``(i) Coordination With Advance Payment.--With respect to any 
taxable year, the amount which would (but for this subsection) be 
allowed as a credit to the taxpayer under subsection (a) shall be 
reduced (but not below zero) by the aggregate amount paid on behalf of 
such taxpayer under section 7528 for such taxable year.''.
                    (E) Subparagraph (B) of section 72(t)(7) of such 
                Code is amended by striking ``section 25A(g)(2)'' and 
                inserting ``section 36(g)(2)''.
                    (F) Subparagraph (A) of section 135(d)(2) of such 
                Code is amended by striking ``section 25A'' and 
                inserting ``section 36''.
                    (G) Section 221(d) of such Code is amended--
                            (i) by striking ``section 25A(g)(2)'' in 
                        paragraph (2)(B) and inserting ``section 
                        36(g)(2)'',
                            (ii) by striking ``section 25A(f)(2)'' in 
                        paragraph (2)(B) and inserting ``section 
                        36(f)(2)'', and
                            (iii) by striking ``section 25A(b)(3)'' in 
                        paragraph (3) and inserting ``section 
                        36(b)(3)''.
                    (H) Section 222 of such Code is amended--
                            (i) by striking ``section 25A'' in 
                        subparagraph (A) of subsection (c)(2) and 
                        inserting ``section 36'',
                            (ii) by striking ``section 25A(f)'' in 
                        subsection (d)(1) and inserting ``section 
                        36(f)'', and
                            (iii) by striking ``section 25A(g)(2)'' in 
                        subsection (d)(1) and inserting ``section 
                        36(g)(2)''.
                    (I) Section 529 of such Code is amended--
                            (i) by striking ``section 25A(g)(2)'' in 
                        subclause (I) of subsection (c)(3)(B)(v) and 
                        inserting ``section 36(g)(2)'',
                            (ii) by striking ``section 25A'' in 
                        subclause (II) of subsection (c)(3)(B)(v) and 
                        inserting ``section 36'', and
                            (iii) by striking ``section 25A(b)(3)'' in 
                        clause (i) of subsection (e)(3)(B) and 
                        inserting ``section 36(b)(3)''.
                    (J) Section 530 of such Code is amended--
                            (i) by striking ``section 25A(g)(2)'' in 
                        subclause (I) of subsection (d)(2)(C)(i) and 
                        inserting ``section 36(g)(2)'',
                            (ii) by striking ``section 25A'' in 
                        subclause (II) of subsection (d)(2)(C)(i) and 
                        inserting ``section 36'', and
                            (iii) by striking ``section 25A(g)(2)'' in 
                        clause (iii) of subsection (d)(4)(B) and 
                        inserting ``section 36(g)(2)''.
                    (K) Subsection (e) of section 6050S of such Code is 
                amended by striking ``section 25A'' and inserting 
                ``section 36''.
                    (L) Subparagraph (J) of section 6213(g)(2) of such 
                Code is amended by striking ``section 25A(g)(1)'' and 
                inserting ``section 36(g)(1)''.
                    (M) Paragraph (2) of section 1324(b) of title 31, 
                United States Code, is amended by inserting before the 
                period ``or from section 36 of such Code''.
                    (N) The table of sections for subpart C of part IV 
                of subchapter A of chapter 1 of such Code is amended by 
                striking the item relating to section 36 and inserting 
                the following:

                              ``Sec. 36. Hope and Lifetime Learning 
                                        credits.
                              ``Sec. 37. Overpayments of tax.''.
                    (O) The table of sections for subpart A of part IV 
                of such Code is amended by striking the item relating 
                to section 25A.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2003.

SEC. 3. ADVANCE PAYMENT OF CREDIT FOR HOPE SCHOLARSHIP AND LIFETIME 
              LEARNING.

    (a) In General.--Chapter 77 of the Internal Revenue Code of 1986 
(relating to miscellaneous provisions) is amended by redesignating 
section 7528 as section 7529 and inserting after section 7527 the 
following new section:

``SEC. 7528. ADVANCE PAYMENT OF CREDIT FOR HOPE SCHOLARSHIP AND 
              LIFETIME LEARNING.

    ``(a) General Rule.--Not later than August 1, 2004, the Secretary 
shall establish a program for making payments on behalf of certified 
individuals to eligible educational institutions (as defined in section 
36(f)(2)) for such individuals.
    ``(b) Limitation on Advance Payments During Any Taxable Year.--The 
Secretary may make payments under subsection (a) only to the extent 
that the total amount of such payments made on behalf of any individual 
during the taxable year does not exceed the qualified tuition and 
related expenses (within the meaning of section 36(f)(1)) incurred by 
such individual at such eligible educational institution during the 
taxable year.
    ``(c) Certified Individual.--For purposes of this section, the term 
`certified individual' means any individual for whom a qualified 
education costs credit eligibility certificate is in effect.
    ``(d) Qualified Education Costs Credit Eligibility Certificate.--
For purposes of this section, the term `qualified education costs 
credit eligibility certificate' means any written statement that an 
individual has incurred costs which are qualified tuition and related 
expenses (within the meaning of section 36(f)(1)) if such statement 
provides such information as the Secretary may require for purposes of 
this section.''.
    (b) Disclosure of Return Information for Purposes of Carrying Out a 
Program for Advance Payment of Credit for Hope Scholarship and Lifetime 
Learning.--
            (1) In general.--Subsection (l) of section 6103 of such 
        Code (relating to disclosure of returns and return information 
        for purposes other than tax administration) is amended by 
        adding at the end the following new paragraph:
            ``(21) Disclosure of return information for purposes of 
        carrying out a program for advance payment of credit for hope 
        scholarship and lifetime learning.--The Secretary may disclose 
        to educational institutions for any certified individual (as 
        defined in section 7528(c)) return information with respect to 
        such certified individual only to the extent necessary to carry 
        out the program established by section 7528 (relating to 
        advance payment of credit for hope scholarship and lifetime 
        learning).''.
            (2) Procedures and recordkeeping related to disclosures.--
        Subsection (p) of such section is amended--
                    (A) in paragraph (3)(A) by striking ``or (18)'' and 
                inserting ``(18), or (21)'', and
                    (B) in paragraph (4) by striking ``or (20)'' and 
                inserting ``(20), or (21)'' each place it appears.
            (3) Unauthorized inspection of returns or return 
        information.--Section 7213A(a)(1)(B) of such Code is amended by 
        striking ``(l)(18) or (n)'' and inserting ``(l)(18), (l)(19), 
        or (n)''.
    (c) Information Reporting.--
            (1) In general.--Subpart B of part III of subchapter A of 
        chapter 61 of the Internal Revenue Code of 1986 (relating to 
        information concerning transactions with other persons) is 
        amended by inserting after section 6050S the following new 
        section:

``SEC. 6050U. RETURNS RELATING TO CREDIT FOR HOPE SCHOLARSHIP AND 
              LIFETIME LEARNING.

    ``(a) Requirement of Reporting.--Every person who is entitled to 
receive payments for any month of any calendar year under section 7528 
(relating to advance payment of credit for hope scholarship and 
lifetime learning) with respect to any certified individual (as defined 
in section 7528(c)) shall, at such time as the Secretary may prescribe, 
make the return described in subsection (b) with respect to each such 
individual.
    ``(b) Form and Manner of Returns.--A return is described in this 
subsection if such return--
            ``(1) is in such form as the Secretary may prescribe, and
            ``(2) contains--
                    ``(A) the name, address, and TIN of each individual 
                referred to in subsection (a),
                    ``(B) the number of months for which amounts were 
                entitled to be received with respect to such individual 
                under section 7528 (relating to advance payment of 
                credit for hope scholarship and lifetime learning),
                    ``(C) the amount entitled to be received for each 
                such year, and
                    ``(D) such other information as the Secretary may 
                prescribe.
    ``(c) Statements To Be Furnished to Individuals With Respect to 
Whom Information Is Required.--Every person required to make a return 
under subsection (a) shall furnish to each individual whose name is 
required to be set forth in such return a written statement showing--
            ``(1) the name and address of the person required to make 
        such return and the phone number of the information contact for 
        such person, and
            ``(2) the information required to be shown on the return 
        with respect to such individual.
The written statement required under the preceding sentence shall be 
furnished on or before January 31 of the year following the calendar 
year for which the return under subsection (a) is required to be 
made.''.
            (2) Assessable penalties.--
                    (A) Subparagraph (B) of section 6724(d)(1) of such 
                Code (relating to definitions) is amended by 
                redesignating clauses (xii) through (xviii) as clauses 
                (xiii) through (xiv), respectively, and by inserting 
                after clause (xi) the following new clause:
                            ``(xii) section 6050U (relating to returns 
                        relating to credit for hope scholarship and 
                        lifetime learning),''.
                    (B) Paragraph (2) of section 6724(d) of such Code 
                is amended by striking ``or'' at the end of 
                subparagraph (AA), by striking the period at the end of 
                subparagraph (BB) and inserting ``, or'', and by adding 
                after subparagraph (BB) the following new subparagraph:
                    ``(CC) section 6050U (relating to returns relating 
                to credit for hope scholarship and lifetime 
                learning).''.
    (d) Clerical Amendments.--
            (1) Advance payment.--The table of sections for chapter 77 
        of the Internal Revenue Code of 1986 is amended by adding at 
        the end the following new item:

                              ``Sec. 7528. Advance payment of credit 
                                        for hope scholarship and 
                                        lifetime learning.''.
            (2) Information reporting.--The table of sections for 
        subpart B of part III of subchapter A of chapter 61 of such 
        Code is amended by inserting after the item relating to section 
        6050S the following new item:

                              ``Sec. 6050U. Returns relating to credit 
                                        for hope scholarship and 
                                        lifetime learning.''.
    (e) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.
                                 <all>
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