II 

116TH CONGRESS 

1ST SESSION S. 1138 

To amend the Internal Revenue Code of 1986 to expand the earned income 

and child tax credits, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

APRIL 10, 2019 

Mr. BROWN (for himself, Mr. BENNET, Mr. DURBIN, Ms. BALDWIN, Mr. 

BLUMENTHAL, Mr. BOOKER, Ms. CANTWELL, Mr. CARDIN, Mr. CARPER, 

Mr. CASEY, Mr. COONS, Ms. CORTEZ MASTO, Ms. DUCKWORTH, Mrs. 

FEINSTEIN, Mrs. GILLIBRAND, Ms. HARRIS, Ms. HASSAN, Mr. HEINRICH, Ms. HIRONO, Mr. JONES, Mr. KAINE, Mr. KING, Ms. KLOBUCHAR, 

Mr. LEAHY, Mr. MANCHIN, Mr. MARKEY, Mr. MENENDEZ, Mr. 

MERKLEY, Mr. MURPHY, Mrs. MURRAY, Mr. PETERS, Mr. REED, Ms. 

ROSEN, Mr. SANDERS, Mr. SCHATZ, Mr. SCHUMER, Mrs. SHAHEEN, Ms. 

SMITH, Ms. STABENOW, Mr. TESTER, Mr. UDALL, Mr. VAN HOLLEN, 

Mr. WARNER, Ms. WARREN, Mr. WHITEHOUSE, and Mr. WYDEN) 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 earned income and child tax credits, 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. AMENDMENT OF 1986 CODE. 

4 Except as otherwise expressly provided, whenever in 

5 this Act an amendment or repeal is expressed in terms 


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1 of an amendment to, or repeal of, a section or other provi2 sion, the reference shall be considered to be made to a 

3 section or other provision of the Internal Revenue Code 

4 of 1986. 

5 SEC. 2. EXPANSION OF EARNED INCOME CREDIT. 

6 (a) CREDIT PERCENTAGE; PHASEOUT PERCENT7 AGE.—The table contained in paragraph (1) of section 

8 32(b) is amended to read as follows: 

‘‘In the case of an eligible individual with: 

The 

credit 

percentage is: 

The 

phaseout 

percentage is: 

1 qualifying child ............................................ 42.5 15.98

2 qualifying children ....................................... 50 21.06

3 or more qualifying children ......................... 52.5 21.06

No qualifying children .................................... 20 15.98.’’. 

9 (b) EARNED INCOME AMOUNT; PHASEOUT

10 AMOUNT.— 

11 (1) IN GENERAL.—The table contained in sub12 paragraph (A) of section 32(b)(2) is amended to 

13 read as follows: 

‘‘In the case of an eligible individual with: 

The 

earned income 

amount is: 

The 

phaseout 

amount is: 

1 qualifying child ............................................ $10,180 $18,660

2 or more qualifying children ......................... $14,290 $18,660

No qualifying children .................................... $10,180 $11,380.’’. 

14 (2) JOINT FILERS.—Subparagraph (B) of sec15 tion 32(b)(2) is amended by striking ‘‘$5,000’’ and 

16 inserting ‘‘$5,690’’. 


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1 (3) ADJUSTMENT FOR INFLATION.—Paragraph 

2 (1) of section 32(j) is amended— 

3 (A) by striking ‘‘after 2015’’ and inserting 

4 ‘‘after 2018’’; 

5 (B) by striking ‘‘subsections (b)(2)(A) 

6 and’’ in subparagraph (B)(i) and inserting 

7 ‘‘subsection’’; 

8 (C) by striking ‘‘the $5,000 amount in 

9 subsection (b)(2)(B)’’ in subparagraph (B)(ii) 

10 and inserting ‘‘amounts in subsection (b)(2)’’; 

11 and 

12 (D) by striking ‘‘calendar year 2008’’ in 

13 subparagraph (B)(ii) and inserting ‘‘calendar 

14 year 2017’’. 

15 (c) AGE OF ELIGIBLE INDIVIDUAL.—Clause (ii) of 

16 section 32(c)(1)(A) is amended— 

17 (1) by striking ‘‘age 25’’ in subclause (II) and 

18 inserting ‘‘age 19’’; 

19 (2) by striking ‘‘age 65’’ in subclause (II) and 

20 inserting ‘‘age 68’’; 

21 (3) by striking ‘‘and’’ at the end of subclause 

22 (II); 

23 (4) by striking the period at the end of sub24 clause (III) and inserting ‘‘, and’’; and 


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1 (5) by adding at the end the following new sub2 clause: 

3 ‘‘(IV) in the case of an individual 

4 who has not attained age 25 before 

5 the close of the taxable year, such in6 dividual is not a student (as defined 

7 in section 152(f)(2)).’’. 

8 (d) ADVANCE PAYMENT OF EARNED INCOME CRED9 IT.— 

10 (1) IN GENERAL.—Chapter 25 of subtitle C is 

11 amended by inserting after section 3506 the fol12 lowing new section: 

13 ‘‘SEC. 3507. ADVANCE PAYMENT OF EARNED INCOME CRED14 IT. 

15 ‘‘(a) ADVANCE PAYMENT.— 

16 ‘‘(1) IN GENERAL.—An employer making pay17 ment of wages to an employee with respect to whom 

18 an eligibility certificate is in effect shall, at the time 

19 of paying such wages for the payroll period elected 

20 by the employee under paragraph (2), make an addi21 tional lump sum payment to such employee equal to 

22 the earned income advance amount (except as pro23 vided in subsection (b)(1)(C)(ii)) of such employee. 

24 ‘‘(2) PAYMENTS AVAILABLE AFTER 6 MONTHS

25 OF EMPLOYMENT DURING CALENDAR YEAR.—For 


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1 purposes of paragraph (1), an employee with respect 

2 to whom an eligibility certificate is in effect for the 

3 calendar year may elect to receive the earned income 

4 advance amount at the same time as wages for any 

5 payroll period which begins after the employee has 

6 been paid wages by the employer for a period of not 

7 less than 6 months during such calendar year. 

8 ‘‘(b) ELIGIBILITY CERTIFICATE.— 

9 ‘‘(1) IN GENERAL.—For purposes of this sec10 tion, an eligibility certificate is a statement sub11 mitted by an employee to the employer which— 

12 ‘‘(A) certifies that the employee is eligible 

13 to receive the credit provided by section 32 for 

14 the taxable year, 

15 ‘‘(B) certifies that the employee does not 

16 have an eligibility certificate in effect for the 

17 calendar year with respect to the payment of 

18 wages by another employer, and 

19 ‘‘(C) certifies that— 

20 ‘‘(i) an eligibility certificate has not 

21 been in effect for the spouse of the em22 ployee on any date during the calendar 

23 year, or 

24 ‘‘(ii) such a certificate is in effect for 

25 the spouse of the employee, and the emVerDate Sep 11 2014 20:07 Apr 19, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1138.IS S1138

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ployee is eligible to receive only 1 1 ⁄2 the 

2 earned income advance amount otherwise 

3 determined with respect to the employee. 

4 ‘‘(2) EMPLOYER NOT RESPONSIBLE FOR

5 VERIFICATION.—For purposes of this section, an 

6 employer shall not— 

7 ‘‘(A) be required to verify any certification 

8 made by an employee in the statement de9 scribed in paragraph (1), or 

10 ‘‘(B) be held liable for any false claims or 

11 statements made by an employee in regards to 

12 such statement. 

13 ‘‘(c) EARNED INCOME ADVANCE AMOUNT.— 

14 ‘‘(1) DETERMINATION OF AMOUNT.— 

15 ‘‘(A) IN GENERAL.—Subject to subpara16 graph (B), the term ‘earned income advance 

17 amount’ means, with respect to any payroll pe18 riod, the amount of the credit provided under 

19 section 32 as determined— 

20 ‘‘(i) on the basis of the wages of the 

21 employee from the employer during such 

22 calendar year through such payroll period, 

23 and 

24 ‘‘(ii) in accordance with tables issued 

25 by the Secretary. 


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1 ‘‘(B) LIMITATION.—For each calendar 

2 year, except as provided in subparagraph (C), 

3 the earned income advance amount shall not ex4 ceed $500. 

5 ‘‘(C) ADJUSTMENT FOR INFLATION.— 

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

7 taxable year beginning after 2019, the 

8 $500 amount in subparagraph (B) shall be 

9 increased by an amount equal to— 

10 ‘‘(I) such dollar amount, multi11 plied by 

12 ‘‘(II) the cost-of-living adjust13 ment determined under section 1(f)(3) 

14 for the calendar year in which the tax15 able year begins determined by sub16 stituting ‘calendar year 2018’ for ‘cal17 endar year 2016’ in subparagraph 

18 (A)(ii) thereof. 

19 ‘‘(ii) ROUNDING.—If any increase de20 termined under paragraph (1) is not a 

21 multiple of $10, such increase shall be 

22 rounded to the nearest multiple of $10. 

23 ‘‘(2) ARMED FORCES.—In the case of an em24 ployee who is a member of the Armed Forces of the 

25 United States, the earned income advance amount 


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1 shall be determined by taking into account the total 

2 wages of such employee, as determined for purposes 

3 of section 32. 

4 ‘‘(3) ADVANCE AMOUNT TABLES.—For pur5 poses of paragraph (1)(A)(ii), the tables issued by 

6 the Secretary shall be similar in form to the tables 

7 issued under section 3402 and, to the extent fea8 sible, coordinated with such tables. 

9 ‘‘(d) PAYMENTS TO BE TREATED AS PAYMENTS OF

10 WITHHOLDING AND FICA TAXES.— 

11 ‘‘(1) IN GENERAL.—Payments made by an em12 ployer under subsection (a) to an employee— 

13 ‘‘(A) shall not be treated as payment of 

14 compensation, and 

15 ‘‘(B) shall be treated as made out of— 

16 ‘‘(i) amounts required to be deducted 

17 and withheld for the payroll period under 

18 section 3401, 

19 ‘‘(ii) amounts required to be deducted 

20 for the payroll period under section 3102, 

21 and 

22 ‘‘(iii) amounts of the taxes imposed 

23 for the payroll period under section 3111, 


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1 as if the employer had paid to the Secretary, on 

2 the day on which the wages are paid to the em3 ployee, an amount equal to such payments. 

4 ‘‘(2) ADVANCE PAYMENTS EXCEED TAXES

5 DUE.—In the case of any employer, if for any pay6 roll period the aggregate amount of earned income 

7 advance payments exceeds the sum of the amounts 

8 referred to in paragraph (1)(B), the employer shall 

9 pay only so much of such earned income advance 

10 payment as does not exceed such sum, and shall not 

11 make any further advance payments to the employee 

12 for the calendar year. 

13 ‘‘(3) FAILURE TO MAKE ADVANCE PAY14 MENTS.—Failure to make any payment of an earned 

15 income advance amount as required under this sec16 tion shall be treated as the failure at such time to 

17 deduct and withhold under chapter 24 an amount 

18 equal to the earned income advance amount. 

19 ‘‘(e) SUBMISSION OF CERTIFICATE.— 

20 ‘‘(1) EFFECTIVE PERIOD.—An eligibility certifi21 cate submitted to an employer at any time during 

22 the calendar year shall continue in effect with re23 spect to the employee during such calendar year 

24 until revoked by the employee or until another such 

25 certificate takes effect under this section. 


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1 ‘‘(2) REQUIREMENT TO REVOKE CERTIFI2 CATE.—In the case of an employee who has sub3 mitted an eligibility certificate under this section and 

4 subsequently becomes ineligible for the credit pro5 vided under section 32 for the taxable year, the em6 ployee shall, not later than 10 days after becoming 

7 ineligible for such credit, submit to the employer a 

8 revocation of such certificate. 

9 ‘‘(3) FORM AND CONTENTS OF CERTIFICATE.— 

10 Eligibility certificates shall be in such form and con11 tain such other information as the Secretary may by 

12 regulations prescribe. 

13 ‘‘(f) TAXPAYERS MAKING PRIOR FRAUDULENT OR

14 RECKLESS CLAIMS.— 

15 ‘‘(1) IN GENERAL.—No earned income advance 

16 amount shall be paid under this section for any tax17 able year in the disallowance period. 

18 ‘‘(2) DISALLOWANCE PERIOD.—For purposes of 

19 paragraph (1), the disallowance period is— 

20 ‘‘(A) the period of 10 taxable years after 

21 the most recent taxable year for which there 

22 was a final determination that the taxpayer’s 

23 claim of an earned income advance amount 

24 under this section was due to fraud, and 


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1 ‘‘(B) the period of 2 taxable years after 

2 the most recent taxable year for which there 

3 was a final determination that the taxpayer’s 

4 claim of an earned income advance amount 

5 under this section was due to reckless or inten6 tional disregard of rules and regulations (but 

7 not due to fraud). 

8 ‘‘(g) TAXABLE YEAR.—The term ‘taxable year’ 

9 means the last taxable year of the employee under subtitle 

10 A beginning in the calendar year in which the wages are 

11 paid. 

12 ‘‘(h) IRS NOTIFICATION.—The Internal Revenue 

13 Service shall take such steps as may be appropriate to en14 sure that taxpayers who receive a refund of the credit 

15 under section 32 are aware of the availability of earned 

16 income advance amounts under this section.’’. 

17 (2) COORDINATION WITH ADVANCE PAY18 MENTS.—Section 32 is amended by inserting after 

19 subsection (f) the following new subsection: 

20 ‘‘(g) COORDINATION WITH ADVANCE PAYMENTS OF

21 EARNED INCOME CREDIT.— 

22 ‘‘(1) RECAPTURE OF ADVANCE PAYMENTS.—If 

23 any payment is made to the individual by an em24 ployer under section 3507 during any calendar year, 

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1 ual’s last taxable year beginning in such calendar 

2 year shall be increased by the aggregate amount of 

3 such payments. 

4 ‘‘(2) RECONCILIATION OF PAYMENTS AD5 VANCED AND CREDIT ALLOWED.—Any increase in 

6 tax under paragraph (1) shall not be treated as tax 

7 imposed by this chapter for purposes of determining 

8 the amount of any credit (other than the credit al9 lowed by subsection (a)) allowable under this part.’’. 

10 (3) FILING REQUIREMENT.—Section 6012(a) is 

11 amended— 

12 (A) in paragraph (7), by striking ‘‘and’’ at 

13 the end; 

14 (B) in paragraph (8), by adding ‘‘and’’ at 

15 the end; and 

16 (C) by inserting after paragraph (8) the 

17 following new paragraph: 

18 ‘‘(9) every individual who receives payments 

19 during the calendar year in which the taxable year 

20 begins under section 3507.’’. 

21 (4) RECEIPTS FOR EMPLOYEES.—Section 

22 6051(a) is amended by inserting after paragraph (6) 

23 the following new paragraph: 


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1 ‘‘(7) the total amount paid to the employee 

2 under section 3507 (relating to advance payment of 

3 earned income credit),’’. 

4 (5) CLERICAL AMENDMENT.—The table of sec5 tions for chapter 25 of subtitle C is amended by in6 serting after the item relating to section 3506 the 

7 following new item: 

‘‘Sec. 3507. Advance payment of earned income credit.’’. 

8 (e) EFFECTIVE DATE.—The amendments made by 

9 this section shall apply to taxable years beginning after 

10 December 31, 2018. 

11 SEC. 3. PERMANENT EXPANSION AND MODIFICATION OF 

12 CHILD TAX CREDIT. 

13 (a) PERMANENCE OF CERTAIN SPECIAL RULES.— 

14 (1) CREDIT AMOUNT.—Subsection (a) of section 

15 24 is amended by striking ‘‘$1,000’’ and inserting 

16 ‘‘$2,000’’. 

17 (2) THRESHOLD AMOUNT.—Paragraph (2) of 

18 section 24(b) is amended— 

19 (A) by striking ‘‘$110,000’’ in subpara20 graph (A) and inserting ‘‘$200,000’’; 

21 (B) by striking ‘‘$75,000’’ in subpara22 graph (B) and inserting ‘‘$150,000’’; and 

23 (C) by striking ‘‘$55,000’’ in subparagraph 

24 (C) and inserting ‘‘$100,000’’. 


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1 (3) PARTIAL CREDIT ALLOWED FOR CERTAIN

2 OTHER DEPENDENTS; ELIMINATION OF MAXIMUM

3 AMOUNT OF REFUNDABLE CREDIT.—Subsection (h) 

4 of section 24 is amended— 

5 (A) by striking paragraphs (1), (2), (3), 

6 (5), and (6) and by redesignating paragraphs 

7 (4) and (7) as paragraphs (1) and (2), respec8 tively; 

9 (B) by striking ‘‘(after the application of 

10 paragraph (2))’’ in subparagraph (A) of para11 graph (1), as so redesignated; 

12 (C) by striking ‘‘paragraph (7)’’ in sub13 paragraph (C) of paragraph (1), as so redesig14 nated, and inserting ‘‘paragraph (2)’’; 

15 (D) by inserting ‘‘for a taxable year begin16 ning after December 31, 2017, and before Jan17 uary 1, 2026,’’ after ‘‘under this section’’ in 

18 paragraph (2), as so redesignated; and 

19 (E) by striking ‘‘FOR TAXABLE YEARS

20 2018 THROUGH 2025’’ in the heading. 

21 (b) INCREASE IN CREDIT FOR YOUNG CHILDREN.— 

22 Subsection (a) of section 24, as amended by subsection 

23 (a)(1), is amended by striking ‘‘$2,000’’ and inserting 

24 ‘‘$2,000 ($3,000 in the case of a qualifying child who has 

25 not attained age 6)’’. 


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1 (c) ADJUSTMENT FOR INFLATION.—Section 24 is 

2 amended by redesignating subsection (h), as amended by 

3 subsection (a)(3) of this section, as subsection (i) and by 

4 inserting after subsection (g) the following new subsection: 

5 ‘‘(h) ADJUSTMENT FOR INFLATION.— 

6 ‘‘(1) IN GENERAL.—In the case of any taxable 

7 year beginning after 2019, each of the dollar 

8 amounts in subsection (a) shall be increased by an 

9 amount equal to— 

10 ‘‘(A) such dollar amount, multiplied by 

11 ‘‘(B) the cost-of-living adjustment deter12 mined under section 1(f)(3) for the calendar 

13 year in which the taxable year begins, deter14 mined by substituting ‘calendar year 2018’ for 

15 ‘calendar year 2016’ in subparagraph (A)(ii) 

16 thereof. 

17 ‘‘(2) ROUNDING.—If any amount as adjusted 

18 under paragraph (1) is not a multiple of $50, such 

19 amount shall be rounded to the next lowest multiple 

20 of $50.’’. 

21 (d) MODIFICATION OF QUALIFYING CHILD DEFINI22 TION.—Paragraph (1) of section 24(c) is amended by in23 serting ‘‘, determined without regard to paragraph (1)(D) 

24 thereof’’ after ‘‘section 152(c)’’. 

25 (e) TREATMENT AS FULLY REFUNDABLE.— 


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1 (1) CREDIT MOVED TO SUBPART RELATING TO

2 REFUNDABLE CREDITS.— 

3 (A) IN GENERAL.—The Internal Revenue 

4 Code of 1986 is amended— 

5 (i) by redesignating section 24, as 

6 amended by this section, as section 36C; 

7 and 

8 (ii) by moving such section, as so re9 designated, from subpart A of part IV of 

10 subchapter A of chapter 1 to the location 

11 immediately after section 36B in subpart 

12 C of part IV of subchapter A of chapter 1. 

13 (B) TECHNICAL AMENDMENTS.— 

14 (i) Subsection (a) of section 36C, as 

15 moved and redesignated by subparagraph 

16 (A), is amended by striking ‘‘this chapter’’ 

17 and inserting ‘‘this subtitle’’. 

18 (ii) Section 36C, as so moved and re19 designated, is amended— 

20 (I) by striking subsection (d); 

21 and 

22 (II) by redesignating subsection 

23 (i) as subsection (d), and by moving 

24 such subsection to the location imme25 diately after subsection (c). 


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1 (C) PARTIAL CREDIT FOR OTHER DEPEND2 ENTS NONREFUNDABLE.—Paragraph (1) of 

3 subsection (d) of section 36C, as moved and re4 designated by subparagraph (B)(ii), is amended 

5 by adding at the end the following new sub6 paragraph: 

7 ‘‘(D) PORTION OF CREDIT NONREFUND8 ABLE.—The amount of the credit allowed under 

9 this paragraph— 

10 ‘‘(i) shall not be treated as a credit al11 lowed under this subpart, and 

12 ‘‘(ii) shall not be taken into account in 

13 determining the amount of the credit 

14 under this section for purposes of section 

15 7527A.’’. 

16 (D) CLERICAL AMENDMENTS.— 

17 (i) The table of sections for subpart A 

18 of part IV of subchapter A of chapter 1 is 

19 amended by striking the item relating to 

20 section 24. 

21 (ii) The table of sections for subpart 

22 C of part IV of subchapter A of chapter 1 

23 is amended by adding at the end the fol24 lowing new item: 

‘‘Sec. 36C. Child tax credit.’’. 

25 (2) ADVANCE PAYMENT OF CREDIT.— 


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1 (A) IN GENERAL.—Section 36C, as amend2 ed by the preceding provisions of this section, 

3 is amended by adding at the end the following 

4 new subsection: 

5 ‘‘(i) RECONCILIATION OF CREDIT AND ADVANCE

6 CREDIT.— 

7 ‘‘(1) IN GENERAL.—The amount of the credit 

8 allowed under this section for any taxable year shall 

9 be reduced (but not below zero) by the aggregate 

10 amount of any advance payments of such credit 

11 under section 7527A for such taxable year. 

12 ‘‘(2) EXCESS ADVANCE PAYMENTS.—If the ag13 gregate amount of advance payments under section 

14 7527A for the taxable year exceed the amount of the 

15 credit allowed under this section for such taxable 

16 year (determined without regard to paragraph (1)), 

17 the tax imposed by this chapter for such taxable 

18 year shall be increased by the amount of such ex19 cess.’’. 

20 (B) ADVANCE PAYMENT.—Chapter 77 is 

21 amended by inserting after section 7527 the fol22 lowing new section: 

23 ‘‘SEC. 7527A. ADVANCE PAYMENT OF CHILD TAX CREDIT. 

24 ‘‘(a) IN GENERAL.—As soon as practicable and not 

25 later than 1 year after the date of the enactment of this 


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1 section, the Secretary shall establish a program for mak2 ing advance payments of the credit allowed under section 

3 36C (determined without regard to subsection (i)(1) of 

4 such section) on a monthly basis, or as frequently as the 

5 Secretary determines to be administratively feasible, to 

6 taxpayers allowed such credit. 

7 ‘‘(b) LIMITATION.— 

8 ‘‘(1) IN GENERAL.—The Secretary may make 

9 payments under subsection (a) only to the extent 

10 that the total amount of such payments made to any 

11 taxpayer during the taxable year does not exceed an 

12 amount equal to the excess, if any, of— 

13 ‘‘(A) subject to paragraph (2), the amount 

14 determined under section 36C with respect to 

15 such taxpayer (determined without regard to 

16 subsection (i) of such section) for such taxable 

17 year, over 

18 ‘‘(B) the estimated tax imposed by subtitle 

19 A, as reduced by the credits allowable under 

20 subparts A and C (with the exception of section 

21 36C) of such part IV, with respect to such tax22 payer for such taxable year, as determined in 

23 such manner as the Secretary deems appro24 priate. 


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1 ‘‘(2) APPLICATION OF THRESHOLD AMOUNT

2 LIMITATION.—The program described in subsection 

3 (a) shall make reasonable efforts to apply the limita4 tion of section 36C(b) with respect to payments 

5 made under such program.’’. 

6 (C) CLERICAL AMENDMENT.—The table of 

7 sections for chapter 77 is amended by inserting 

8 after the item relating to section 7527 the fol9 lowing new item: 

‘‘Sec. 7527A. Advance payment of child tax credit.’’. 

10 (3) CONFORMING AMENDMENTS.— 

11 (A) Subparagraph (B) of section 45R(f)(3) 

12 is amended to read as follows: 

13 ‘‘(B) SPECIAL RULE.—Any amounts paid 

14 pursuant to an agreement under section 3121(l) 

15 (relating to agreements entered into by Amer16 ican employers with respect to foreign affiliates) 

17 which are equivalent to the taxes referred to in 

18 subparagraph (A) shall be treated as taxes re19 ferred to in such subparagraph.’’. 

20 (B) Section 152(f)(6)(B)(ii) is amended by 

21 striking ‘‘section 24’’ and inserting ‘‘section 

22 36C’’. 

23 (C) Paragraph (26) of section 501(c) is 

24 amended in the flush matter at the end by 


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1 striking ‘‘section 24(c))’’ and inserting ‘‘section 

2 36C(c))’’. 

3 (D) Section 6211(b)(4)(A) is amended— 

4 (i) by striking ‘‘24(d),’’; and 

5 (ii) by striking ‘‘and 36B, 168(k)(4)’’ 

6 and inserting ‘‘36B, and 36C’’. 

7 (E) Section 6213(g)(2) is amended— 

8 (i) in subparagraph (I), by striking 

9 ‘‘section 24(e)’’ and inserting ‘‘section 

10 36C(e)’’; 

11 (ii) in subparagraph (L), by striking 

12 ‘‘24, or 32’’ and inserting ‘‘32, or 36C’’; 

13 and 

14 (iii) in subparagraph (P)— 

15 (I) by striking ‘‘24(g)(2)’’ and in16 serting ‘‘36C(g)(2)’’; and 

17 (II) by striking ‘‘section 24’’ and 

18 inserting ‘‘section 36C’’. 

19 (F) Section 6402(m) is amended by strik20 ing ‘‘section 24 (by reason of subsection (d) 

21 thereof) or 32’’ and inserting ‘‘section 32 or 

22 36C’’. 

23 (G) Section 6695(g)(2) is amended by 

24 striking ‘‘24, 25A(a)(1), or 32’’ and inserting 

25 ‘‘25A(a)(1), 32, or 36C’’. 


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1 (H) Paragraph (2) of section 1324(b) of 

2 title 31, United States Code, is amended by in3 serting ‘‘, 36C(a)’’ after ‘‘36B’’. 

4 (I) Section 1613(a)(11) of the Social Secu5 rity Act (42 U.S.C. 1382b(a)(11)) is amended 

6 by striking ‘‘section 24 of the Internal Revenue 

7 Code of 1986 (relating to child tax credit) by 

8 reason of subsection (d) thereof’’ and inserting 

9 ‘‘section 36C of the Internal Revenue Code of 

10 1986 (relating to child tax credit), and any pay11 ment made to such individual (or such spouse) 

12 under section 7527A of such Code (relating to 

13 advance payment of child tax credit)’’. 

14 (f) EFFECTIVE DATE.—The amendments made by 

15 this section shall apply to taxable years beginning after 

16 December 31, 2018. 

17 SEC. 4. EARNED INCOME CREDIT EXPANSION FOR PUERTO 

18 RICO. 

19 (a) IN GENERAL.—Subsequent to an amendment of 

20 the Puerto Rico Internal Revenue Code of 2011 expanding 

21 the earned income credit added by Act 257 in a similar 

22 manner as the amendments made by section 2 of this Act, 

23 the Secretary of the Treasury shall make annual payments 

24 to Puerto Rico in the amount determined under subsection 

25 (b). Such payments shall be made within a reasonable peVerDate Sep 11 2014 20:07 Apr 19, 2019 Jkt 089200 PO 00000 Frm 00022 Fmt 6652 Sfmt 6201 E:\BILLS\S1138.IS S1138

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1 riod of time before the due date for the income tax in 

2 Puerto Rico each year, and shall be made only if Puerto 

3 Rico provides to the Secretary of the Treasury— 

4 (1) an estimate, certified by the Financial Over5 sight and Management Board for Puerto Rico, of 

6 the cost of such expansion in the first year; and 

7 (2) annually thereafter, a report of the actual 

8 cost of such expansion in the preceding year and an 

9 estimate, certified by such Board, of the cost of such 

10 expansion in the year of the report. 

11 (b) AMOUNT DETERMINED.—For purposes of sub12 section (a), the amount determined with respect to any 

13 year is so much of the estimated cost (as reported under 

14 subsection (a)) of the expansion of the earned income 

15 credit in Puerto Rico for such year as does not exceed 

16 $204,000,000, as applicable— 

17 (1) reduced by the excess, if any, of— 

18 (A) the amount of the payments made to 

19 Puerto Rico under this section for the preceding 

20 year; over 

21 (B) the actual cost (as reported under sub22 section (a)) of the expansion of the earned in23 come credit in Puerto Rico for such preceding 

24 year; or 


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•S 1138 IS

1 (2) increased by the excess, if any, of the 

2 amount described in paragraph (1)(B) over the 

3 amount described in paragraph (1)(A). 

4 (c) COST OF EXPANSION.—For purposes of this sec5 tion, the cost of expanding the earned income credit in 

6 Puerto Rico as described in subsection (a) shall include 

7 only the cost of the amendments made as described in 

8 such subsection, and shall not include the cost of laws in 

9 effect as of the date of the enactment of this Act. 

10 (d) REPORTING REQUIREMENTS.—The Treasury of 

11 Puerto Rico shall submit to the Secretary of the Treasury 

12 an annual report on the earned income credit of Puerto 

13 Rico, including the number of beneficiaries, average bene14 fits for different households, participation rates for eligible 

15 populations, error rates and other compliance matters, 

16 and the effects of the credit on labor force participation 

17 and poverty reduction. 

18 (e) OUTREACH GRANT.—In addition to the payments 

19 under subsection (a), the Secretary of the Treasury shall 

20 make a one-time grant in the amount of $5,000,000 to 

21 Puerto Rico for the purpose of taxpayer education efforts 

22 relating to the earned income credit, including education 

23 of paid preparers. 

24 (f) APPROPRIATIONS.—Such sums as are necessary, 

25 not to exceed— 


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•S 1138 IS

1 (1) $209,000,000 in the first year after enact2 ment of the amendment described in subsection (a); 

3 and 

4 (2) except as provided in subsection (g), 

5 $204,000,000 in each year thereafter (as long as 

6 Puerto Rico maintains an earned income credit as 

7 described in subsection (a)), 

8 are hereby appropriated to the Secretary of the Treasury 

9 to carry out the purposes of this section. 

10 (g) ADJUSTMENT FOR INFLATION.— 

11 (1) IN GENERAL.—For each calendar year be12 ginning after the year described in subsection (f)(1), 

13 the $204,000,000 amount under subsections (b) and 

14 (f)(2) shall be increased by an amount equal to— 

15 (A) such dollar amount; multiplied by 

16 (B) the cost-of-living adjustment deter17 mined under section 1(f)(3) of the Internal 

18 Revenue Code of 1986, determined by sub19 stituting the calendar year preceding the year 

20 described in subsection (f)(1) for calendar year 

21 2016 in subparagraph (A)(ii) thereof. 

22 (2) ROUNDING.—If any amount adjusted under 

23 paragraph (1) is not a multiple of $500, such 

24 amount shall be rounded to the next lowest multiple 

25 of $500. 


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1 SEC. 5. REGULATION OF TAX RETURN PREPARERS. 

2 (a) IN GENERAL.—Subsection (a) of section 330 of 

3 title 31, United States Code, is amended— 

4 (1) by striking paragraph (1) and inserting the 

5 following: 

6 ‘‘(1) regulate— 

7 ‘‘(A) the practice of representatives of per8 sons before the Department of the Treasury; 

9 and 

10 ‘‘(B) the practice of tax return preparers; 

11 and’’; and 

12 (2) in paragraph (2)— 

13 (A) by inserting ‘‘or a tax return preparer 

14 to prepare tax returns’’ after ‘‘practice’’; 

15 (B) by inserting ‘‘or tax return preparer’’ 

16 before ‘‘demonstrate’’; and 

17 (C) by inserting ‘‘or in preparing their tax 

18 returns, claims for refund, or documents in con19 nection with tax returns or claims for refund’’ 

20 after ‘‘cases’’ in subparagraph (D). 

21 (b) AUTHORITY TO SANCTION REGULATED TAX RE22 TURN PREPARERS.—Subsection (c) of section 330 of title 

23 31, United States Code, is amended— 

24 (1) by striking ‘‘before the Department’’; 

25 (2) by inserting ‘‘or tax return preparer’’ after 

26 ‘‘representative’’ each place it appears; and 


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1 (3) in paragraph (4), by striking ‘‘misleads or 

2 threatens’’ and all that follows and inserting ‘‘mis3 leads or threatens— 

4 ‘‘(A) any person being represented or any 

5 prospective person being represented; or 

6 ‘‘(B) any person or prospective person 

7 whose tax return, claim for refund, or document 

8 in connection with a tax return or claim for re9 fund, is being or may be prepared.’’. 

10 (c) MINIMUM COMPETENCY STANDARDS FOR TAX

11 RETURN PREPARERS.—Section 330 of title 31, United 

12 States Code, is amended by adding at the end the fol13 lowing new subsection: 

14 ‘‘(f) TAX RETURN PREPARERS.— 

15 ‘‘(1) IN GENERAL.—Any tax return preparer 

16 shall demonstrate minimum competency standards 

17 under this subsection by— 

18 ‘‘(A) obtaining an identifying number for 

19 securing proper identification of such preparer 

20 as described in section 6109(a)(4) of the Inter21 nal Revenue Code of 1986; 

22 ‘‘(B) satisfying any examination and an23 nual continuing education requirements as pre24 scribed by the Secretary; and 


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•S 1138 IS

1 ‘‘(C) completing a background check ad2 ministered by the Secretary. 

3 ‘‘(2) EXEMPTION.—The Secretary shall exempt 

4 tax return preparers who have been subject to com5 parable examination, continuing education require6 ments, and background checks administered by the 

7 Secretary or any comparable State licensing pro8 gram. Such exemption shall extend directly to indi9 viduals who are supervised by such preparers and 

10 are not required to secure an identification number 

11 under section 6109(a)(4).’’. 

12 (d) TAX RETURN PREPARER DEFINED.—Section 

13 330 of title 31, United States Code, as amended by sub14 section (c), is amended by adding at the end the following 

15 new subsection: 

16 ‘‘(g) TAX RETURN PREPARER.—For purposes of this 

17 section— 

18 ‘‘(1) IN GENERAL.—The term ‘tax return pre19 parer’ has the meaning given such term under sec20 tion 7701(a)(36) of the Internal Revenue Code of 

21 1986. 

22 ‘‘(2) TAX RETURN.—The term ‘tax return’ has 

23 the meaning given to the term ‘return’ under section 

24 6696(e)(1) of the Internal Revenue Code of 1986. 


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1 ‘‘(3) CLAIM FOR REFUND.—The term ‘claim for 

2 refund’ has the meaning given such term under sec3 tion 6696(e)(2) of such Code.’’. 

4 (e) AMENDMENTS WITH RESPECT TO IDENTIFYING

5 NUMBER.— 

6 (1) IN GENERAL.—Section 6109(a) is amended 

7 by striking paragraph (4) and inserting the fol8 lowing: 

9 ‘‘(4) FURNISHING IDENTIFYING NUMBER OF

10 TAX RETURN PREPARER.— 

11 ‘‘(A) IN GENERAL.—Any return or claim 

12 for refund prepared by a tax return preparer 

13 shall bear such identifying number for securing 

14 proper identification of such preparer, his em15 ployer, or both, as may be prescribed. For pur16 poses of this paragraph, the terms ‘return’ and 

17 ‘claim for refund’ have the respective meanings 

18 given to such terms by section 6696(e). 

19 ‘‘(B) EXCEPTION.—Subparagraph (A) 

20 shall not apply to any tax return preparer who 

21 prepares a return or claim for refund under the 

22 supervision and direction of a tax return pre23 parer who signs the return or claim for refund 

24 and is a certified public accountant, an attorney 

25 or enrolled agent.’’. 


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1 (2) CLARIFICATION OF RESCISSION AUTHOR2 ITY.—Section 6109 is amended by inserting after 

3 subsection (d) the following new subsection: 

4 ‘‘(e) AUTHORITY TO RESCIND IDENTIFYING NUM5 BER OF TAX RETURN PREPARER.— 

6 ‘‘(1) IN GENERAL.—The Secretary may rescind 

7 an identifying number issued under subsection 

8 (a)(4) if— 

9 ‘‘(A) after notice and opportunity for a 

10 hearing, the preparer is shown to be incom11 petent or disreputable (as such terms are used 

12 in subsection (c) of section 330 of title 31, 

13 United States Code), and 

14 ‘‘(B) rescinding the identifying number 

15 would promote compliance with the require16 ments of this title and effective tax administra17 tion. 

18 ‘‘(2) RECORDS.—If an identifying number is re19 scinded under paragraph (1), the Secretary shall 

20 place in the file in the Office of the Director of Pro21 fessional Responsibility the opinion of the Secretary 

22 with respect to the determination, including— 

23 ‘‘(A) a statement of the facts and cir24 cumstances relating to the determination, and 

25 ‘‘(B) the reasons for the rescission.’’. 


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1 (f) GAO STUDY AND REPORT ON THE EXCHANGE

2 OF INFORMATION BETWEEN THE IRS AND STATE TAX3 ATION AUTHORITIES.— 

4 (1) IN GENERAL.—Not later than 18 months 

5 after the date of the enactment of this Act, the 

6 Comptroller General shall conduct a study and sub7 mit to Congress a report on the sharing of informa8 tion between the Secretary of the Treasury and 

9 State authorities, as authorized under section 

10 6103(d) of the Internal Revenue Code of 1986, re11 garding identification numbers issued to paid tax re12 turn preparers and return preparer minimum stand13 ards. 

14 (2) INCREASED INFORMATION SHARING.—The 

15 study and report described in paragraph (1) shall in16 clude an analysis of the impact that increased infor17 mation sharing between Federal and State authori18 ties would have on efforts to enforce minimum 

19 standards on paid tax return preparers. 

Æ 


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