I

103D CONGRESS

1ST SESSION H. R. 2355

To require a parent who is delinquent in child support to include his unpaid

obligation in gross income, and to allow custodial parents a bad debt

deduction for unpaid child support payments.

IN THE HOUSE OF REPRESENTATIVES

JUNE 9, 1993

Mr. COX introduced the following bill; which was referred to the Committee

on Ways and Means

A BILL

To require a parent who is delinquent in child support to

include his unpaid obligation in gross income, and to

allow custodial parents a bad debt deduction for unpaid

child support payments.

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.

4 This Act may be cited as the ‘‘Child Support Enforce5 ment Act’’.

6 SEC. 2. NO EFFECT ON RIGHTS AND LIABILITIES.

7 Nothing in this Act shall be construed to affect—
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1 (1) the right of an individual or State to receive

2 any child support payment; or

3 (2) the obligation of an individual to pay child

4 support.

5 SEC. 3. INCLUSION IN INCOME OF AMOUNT OF UNPAID

6 CHILD SUPPORT PAYMENTS.

7 (a) IN GENERAL.—Section 108 of the Internal Reve8 nue Code of 1986 (relating to discharge of indebtedness

9 income) is amended by adding at the end thereof the

10 following new subsection:

11 ‘‘(h) UNPAID CHILD SUPPORT PAYMENTS.—

12 ‘‘(1) IN GENERAL.—For purposes of this chap13 ter, any taxable unpaid child support payments of a

14 taxpayer for any taxable year shall be treated as

15 amounts includible in gross income of the taxpayer

16 for the taxable year by reason of the discharge of in17 debtedness of the taxpayer.

18 ‘‘(2) TAXABLE UNPAID CHILD SUPPORT PAY19 MENTS.—For purposes of this subsection, the term

20 ‘taxable unpaid child support payments’ means pay21 ments—

22 ‘‘(A) which were applicable child support

23 payments which the taxpayer was required to

24 pay under a support instrument for the support

25 of a child of the taxpayer, and
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1 ‘‘(B) with respect to which the notice re2 quirements of paragraph (3) are met.

3 ‘‘(3) NOTICE REQUIREMENTS.—

4 ‘‘(A) IN GENERAL.—During January of

5 the second calendar year following a calendar

6 year in which there begins a taxable year for

7 which a deduction allowed under section 166(f)

8 was claimed, the eligible taxpayer shall send a

9 notice (in such form as the Secretary may pre10 scribe) to the individual who failed to make

11 payments which contains—

12 ‘‘(i) the amount of the applicable child

13 support payments for such taxable year,

14 and

15 ‘‘(ii) notice that the individual is re16 quired to include such amount in gross in17 come for the taxable year beginning in the

18 preceding calendar year.

19 ‘‘(B) NOTICE BY SECRETARY.—If notice

20 cannot be provided under subparagraph (A) be21 cause the address is not known to the eligible

22 taxpayer, the Secretary shall send such notice if

23 the address is available to the Secretary.

24 ‘‘(C) ADDRESS UNKNOWN.—If notice can25 not be provided under subparagraph (A) or (B)
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1 because there is no known address, no income

2 shall be included in gross income for any tax3 able year beginning before the calendar year

4 preceding the calendar year in which such no5 tice may be sent.

6 ‘‘(4) SUBSEQUENT PAYMENTS.—If any payment

7 required to be included in gross income under para8 graph (1) is subsequently made, the amount of such

9 payment shall be allowed as a deduction for the tax10 able year in which such payment is made.

11 ‘‘(5) DEFINITIONS.—For purposes of this sub12 section, the terms ‘applicable child support pay13 ments’ and ‘eligible taxpayer’ have the meanings

14 given such terms by section 166(f).’’

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

16 this section shall apply to taxable years beginning after

17 December 31, 1992.

18 SEC. 4. ALLOWANCE OF BAD DEBT DEDUCTION FOR UN19 PAID CHILD SUPPORT PAYMENTS.

20 (a) IN GENERAL.—Section 166 of the Internal Reve21 nue Code of 1986 (relating to deduction for bad debts)

22 is amended by redesignating subsection (f) as subsection

23 (g) and by inserting after subsection (e) the following new

24 subsection:

25 ‘‘(f) UNPAID CHILD SUPPORT PAYMENTS.—
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1 ‘‘(1) IN GENERAL.—In the case of any eligible

2 taxpayer who has any applicable child support pay3 ments remaining unpaid as of the close of the tax4 able year—

5 ‘‘(A) subsections (a) and (d) shall not

6 apply to such payments, and

7 ‘‘(B) there shall be allowed as a deduction

8 for such taxable year an amount equal to the

9 amount of such payments.

10 ‘‘(2) PER CHILD LIMITATION ON DEDUCTION.—

11 The aggregate amount allowable as a deduction for

12 any taxable year under paragraph (1) with respect

13 to any child for whom applicable child support pay14 ments are required to be paid shall not exceed

15 $5,000.

16 ‘‘(3) ELIGIBLE TAXPAYER.—For purposes of

17 this subsection, the term ‘eligible taxpayer’ means

18 an individual—

19 ‘‘(A) whose adjusted gross income for the

20 taxable year does not exceed $50,000,

21 ‘‘(B) with respect to whom the amount of

22 applicable child support payments remaining

23 unpaid as of the close of the taxable year is

24 equal to or greater than $500, and
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1 ‘‘(C) who meets the identification require2 ments of paragraph (5).

3 ‘‘(4) APPLICABLE CHILD SUPPORT PAYMENT.—

4 ‘‘(A) IN GENERAL.—The term ‘applicable

5 child support payment’ means, with respect to

6 any taxable year of the eligible taxpayer—

7 ‘‘(i) any periodic payment of a fixed

8 amount, or

9 ‘‘(ii) any payment of a medical or

10 educational expense, insurance premium,

11 or other similar item,

12 which is required to be paid to such taxpayer

13 during such taxable year by an individual under

14 a support instrument meeting the requirements

15 of paragraph (8) for the support of any qualify16 ing child of such individual.

17 ‘‘(B) QUALIFYING CHILD.—For purposes

18 of this paragraph, the term ‘qualifying child’

19 means a child of an eligible individual with re20 spect to whom a deduction is allowable under

21 section 151 for the taxable year (or would be so

22 allowable but for paragraph (2) or (4) of sec23 tion 152(e)) or, while eligible for such deduc24 tion, was determined to be disabled under sub25 titles 2 or 16 of chapter 42.
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1 ‘‘(C) PAYMENTS MUST BE DELINQUENT

2 FOR AT LEAST ENTIRE YEAR.—Any payment

3 described in subparagraph (A) which is required

4 to be made by an individual to an eligible tax5 payer shall not be treated as an applicable un6 paid child support payment if at least half of

7 the payments which are required to be paid to

8 the eligible taxpayer during the 12-month pe9 riod ending on the last day of the taxable year

10 are paid. In the case of the 1st taxable year to

11 which this subsection applies to payments from

12 any individual, the preceding sentence shall be

13 applied by substituting ‘24-month’ for ‘12-

14 month’.

15 ‘‘(D) COORDINATION WITH AFDC.—The

16 term ‘applicable child support payment’ shall

17 not include any payment the right to which has

18 been assigned to a State under section

19 402(a)(26) of the Social Security Act (42

20 U.S.C. 602(a)(26)).

21 ‘‘(5) IDENTIFICATION REQUIREMENTS.—The

22 requirements of this paragraph are met if the eligi23 ble taxpayer includes on the return claiming the de24 duction under this subsection the name, address,

25 and taxpayer identification number of—
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1 ‘‘(A) each child with respect to whom child

2 support payments to which this subsection ap3 plies are required to be paid, and

4 ‘‘(B) the individual who was required to

5 make such child support payments.

6 In the case of a failure to provide the information

7 under subparagraph (B), the preceding sentence

8 shall not apply if the eligible taxpayer certifies that

9 any such information is not known.

10 ‘‘(6) COST-OF-LIVING ADJUSTMENTS.—In the

11 case of any taxable year beginning after 1993, the

12 $5,000 amount under paragraph (2), the $50,000

13 amount under paragraph (3)(A), and the $500

14 amount under paragraph (3)(B) shall each be in15 creased by an amount equal to—

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

17 ‘‘(B) the cost-of-living adjustment deter18 mined under section 1(f)(3) for the calendar

19 year in which the taxable year begins, except

20 that section 1(f)(3)(B) shall be applied by sub21 stituting ‘1992’ for ‘1989’.

22 ‘‘(7) SUBSEQUENT PAYMENTS.—If any payment

23 with respect to which a deduction was allowed under

24 paragraph (1) is subsequently made, such payment

25 shall be included in gross income of the eligible tax-
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1 payer for the taxable year in which paid. This para2 graph shall not apply to any amount if an individual

3 has assigned the right to receive such amount to a

4 State (and the State does not pay such amount to

5 such individual).

6 ‘‘(8) SUPPORT INSTRUMENT.—For purposes of

7 this subsection, a support instrument meets the re8 quirements of this paragraph if it is—

9 ‘‘(A) a decree of divorce or separate main10 tenance or a written instrument incident to

11 such a decree,

12 ‘‘(B) a written separation agreement, or

13 ‘‘(C) a decree (not described in subpara14 graph (A)) of a court or administrative agency

15 requiring a parent to make payments for the

16 support or maintenance of 1 or more children

17 of such parent.’’

18 (b) DEDUCTION FOR NONITEMIZERS.—Section 62(a)

19 of such Code is amended by adding at the end thereof

20 the following new paragraph:

21 ‘‘(15) UNPAID CHILD SUPPORT PAYMENTS.—

22 The deduction allowed by section 166(f).’’

23 (c) CONFORMING AMENDMENT.—Section 166(d)(2)

24 of such Code is amended by striking ‘‘or’’ at the end of

25 subparagraph (A), by striking the period at the end of
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1 subparagraph (B) and inserting ‘‘, or’’ and by adding at

2 the end thereof the following new subparagraph:

3 ‘‘(C) a debt which is an applicable child

4 support payment under subsection (f).’’

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

6 this section shall apply to taxable years beginning after

7 December 31, 1992.

8 SEC. 5. REDUCTION OF FEDERAL DEBT.

9 Net revenues received in the Treasury pursuant to

10 this Act shall be applied, as provided in appropriation

11 Acts, solely to the retirement of outstanding public debt

12 obligations of the United States and may not be obligated

13 or expended for any other purpose, notwithstanding any

14 other provision of law that does not specifically refer to

15 this section.

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