Tax Equity and Prosperity for Puerto Rican Families Act of 2019

To provide for a Federal match for earned income credit expansion for Puerto Rico. 1. Short title This Act may be cited as the Tax Equity and Prosperity for Puerto Rican Families Act of 2019 2. Earned income credit expansion for puerto rico (a) In general Subsequent to an amendment of the Puerto Rico Internal Revenue Code of 2011 expanding the earned income credit added by Act 257–2018 in a manner that both reduces poverty and encourages labor force participation, the Secretary of the Treasury shall make annual payments to Puerto Rico in the amount determined under subsection (b). Such payments shall be made only if Puerto Rico provides to the Secretary of the Treasury— (1) a report prepared by the Secretary of the Treasury of Puerto Rico of the estimated cost of such expansion in the first year that the expanded earned income credit will be paid by Puerto Rico; and (2) annually thereafter, a report prepared by the Secretary of the Treasury of Puerto Rico of the estimated cost of such expansion in the year of the report and an updated estimate of the actual cost of such expansion in the preceding year. Puerto Rico shall submit to the Secretary the report in paragraph (1) or (2) on or after January 15 of the year in which the expanded earned income credit will be paid in Puerto Rico, and the Secretary shall make each annual payment within three weeks of receiving the report. (b) Annual payment (1) The payment in any year shall comprise the base payment for that year and the adjustment for any underpayment or overpayment made in the prior year. (2) The base payment for a year shall be the estimated cost for that year under subsection (a) or $612,000,000, whichever is less. (3) The adjustment for a year shall be an increase equal to any underpayment in the prior year, or a decrease equal to any overpayment in the prior year. (A) An underpayment in the prior year is the amount by which the base payment in the prior year would have been higher if the estimated cost in the prior year under subsection (a) had equaled the updated estimate of the actual cost in the prior year under subsection (a)(2). (B) An overpayment in the prior year is the amount by which the base payment in the prior year would have been lower if the estimated cost in the prior year under subsection (a) had equaled the updated estimate of the actual cost in the prior year under subsection (a)(2). (c) Cost of expansion For purposes of this section, the cost of expanding the earned income credit in Puerto Rico as described in subsection (a) for a year shall include only the cost of the amendments made as described in such subsection relative to the cost of laws in effect on the date of the enactment of this Act as if those laws had remained in effect. (d) Reporting requirements When the Secretary of the Treasury of Puerto Rico submits to the Secretary of the Treasury the report in subsection (a), then the Secretary of the Treasury of Puerto Rico shall submit at the same time a separate report on the application of the Puerto Rico earned income credit, including the number of beneficiaries and household composition, average benefits for different households, participation rates for eligible populations, error rates and other compliance matters, and the effects of the credit on labor force participation and poverty reduction. (e) Outreach grant In addition to the payments under subsection (a), the Secretary of the Treasury shall make a one-time grant in the amount of $5,000,000 to Puerto Rico immediately after the enactment by Puerto Rico of an expansion of its earned income credit as referred to in subsection (a), for the purpose of taxpayer education efforts relating to the earned income credit, including education of paid tax preparers. (f) Appropriations There are hereby appropriated to the Secretary of the Treasury such sums as are necessary to carry out the purposes of this section. (g) Adjustment for inflation (1) In general For each calendar year beginning after the year of the first payment made under subsection (b), the $612,000,000 amount in that subsection 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) 2016 (2) Rounding If any amount calculated under paragraph (1) is not a multiple of $500, such amount shall be rounded to the next lower multiple of $500.

Summary: Tax Equity and Prosperity for Puerto Rican Families Act of 2019 This bill requires the Department of the Treasury to make specified annual federal matching payments to Puerto Rico for expanding its earned income tax credit as specified in the bill. After the tax credit is expanded, Treasury must also provide a one-time grant to Puerto Rico for taxpayer education efforts relating to the earned income tax credit, including education of paid tax preparers. The bill also provides appropriations to carry out the programs established by this bill.