572
‘‘(3) EARNED INCOME LIMITATION.—
‘‘(A) IN GENERAL.—Except as otherwise 
provided in this paragraph, the amount of the 
employment-related expenses incurred during 
any taxable year which may be taken into ac-
count under subsection (a) shall not exceed—
‘‘(i) in the case of an individual who 
is not married at the close of such year, 
such individual’s earned income for such 
year, or 
‘‘(ii) in the case of an individual who 
is married at the close of such year, the 
lesser of such individual’s earned income or 
the earned income of his spouse for such 
year. 
‘‘(B) SPECIAL RULE FOR SPOUSE WHO IS 
A
STUDENT
OR
INCAPABLE
OF
CARING
FOR 
HIMSELF.—In the case of a spouse who is a 
student or a qualified individual described in 
subsection (d)(3), for purposes of subparagraph 
(A), such spouse shall be deemed for each 
month during which such spouse is a full-time 
student at an educational institution, or is such 
a qualifying individual, to be gainfully employed 
and to have earned income of not less than—
573
‘‘(i) $200 if paragraph (2)(A)(i) ap-
plies for the taxable year, or 
‘‘(ii) $400 if paragraph (2)(A)(ii) ap-
plies for the taxable year. 
In the case of any husband and wife, this sub-
paragraph shall apply with respect to only one 
spouse for any one month. 
‘‘(c) RESPITE CARE EXPENSES.—For purposes of 
this section—
‘‘(1) IN GENERAL.—The term ‘respite care ex-
penses’ means expenses paid (whether or not to en-
able the taxpayer to be gainfully employed) for—
‘‘(A) the care of a qualifying individual—
‘‘(i) who has attained the age of 13, 
or 
‘‘(ii) who is under the age of 13 but 
has a physical or mental impairment which 
results in the individual being incapable of 
caring for himself, 
during any period when such individual regu-
larly spends at least 8 hours each day in the 
taxpayer’s household, or 
‘‘(B) the care (for not more than 14 days 
during the calendar year) of a qualifying indi-
vidual described in subparagraph (A) during
574
any period during which the individual does not 
regularly spend at least 8 hours each day in the 
taxpayer’s household. 
‘‘(2) DOLLAR LIMIT.—The amount of the res-
pite care expenses incurred during any taxable year 
which may be taken into account under subsection 
(a) shall not exceed—
‘‘(A) $1,200 if such expenses are incurred 
with respect to only 1 qualifying individual for 
the taxable year, or
‘‘(B) $2,400 if such expenses are incurred 
for 2 or more qualifying individuals for such 
taxable year. 
‘‘(d) QUALIFYING INDIVIDUAL.—For purposes of this 
section, the term ‘qualifying individual’ means—
‘‘(1) a dependent of the taxpayer who is under 
the age of 13 and with respect to whom the taxpayer 
is entitled to a deduction under section 151(c), 
‘‘(2) a dependent of the taxpayer who is phys-
ically or mentally incapable of caring for himself, or 
‘‘(3) the spouse of the taxpayer, if he is phys-
ically or mentally incapable of caring for himself. 
‘‘(e) SPECIAL RULES.—For purposes of this sec-
tion—
575
‘‘(1) MAINTAINING
HOUSEHOLD.—An indi-
vidual shall be treated as maintaining a household 
for any period only if over half the cost of maintain-
ing the household for such period is furnished by 
such individual (or, if such individual is married 
during such period, is furnished by such individual 
and his spouse). 
‘‘(2) MARRIED COUPLES MUST FILE JOINT RE-
TURN.—If the taxpayer is married at the close of 
the taxable year, the credit shall be allowed under 
subsection (a) only if the taxpayer and his spouse 
file a joint return for the taxable year.
‘‘(3) MARITAL STATUS.—An individual legally 
separated from his spouse under a decree of divorce 
or of separate maintenance shall not be considered 
as married. 
‘‘(4) CERTAIN
MARRIED
INDIVIDUALS
LIVING 
APART.—If—
‘‘(A) an individual who is married and who 
files a separate return—
‘‘(i) maintains as his home a house-
hold that constitutes for more than one-
half of the taxable year the principal place 
of abode of a qualifying individual, and
576
‘‘(ii) furnishes over half the cost of 
maintaining such household during the 
taxable year, and
‘‘(B) during the last 6 months of such tax-
able year such individual’s spouse is not a mem-
ber of such household, 
such individual shall not be considered as married. 
‘‘(5) SPECIAL DEPENDENCY TEST IN CASE OF 
DIVORCED PARENTS, ETC.—If—
‘‘(A) section 152(e) applies to any child 
with respect to any calendar year, and 
‘‘(B) such child is under the age of 13 or 
is physically or mentally incapable of caring for 
himself, 
in the case of any taxable year beginning in such 
calendar year, such child shall be treated as a quali-
fying individual with respect to the custodial parent 
(within the meaning of section 152(e)(1) as in effect 
on the day before the date of the enactment of the 
Tax Relief for Working Families Act), and shall not 
be treated as a qualifying individual with respect to 
the noncustodial parent. 
‘‘(6) PAYMENTS TO RELATED INDIVIDUALS.—
No credit shall be allowed under subsection (a) for 
any amount paid by the taxpayer to an individual—
577
‘‘(A) with respect to whom, for the taxable 
year, a deduction under section 151(c) (relating 
to deduction for personal exemptions for de-
pendents) is allowable either to the taxpayer or 
his spouse, or 
‘‘(B) who is a child of the taxpayer (within 
the meaning of section 151(c)(3)) who has not 
attained the age of 19 at the close of the tax-
able year.
For purposes of this paragraph, the term ‘taxable 
year’ means the taxable year of the taxpayer in 
which the service is performed. 
‘‘(7) STUDENT.—The term ‘student’ means an 
individual who during each of 5 calendar months 
during the taxable year is a full-time student at an 
educational organization. 
‘‘(8) EDUCATIONAL ORGANIZATION.—The term 
‘educational organization’ means an educational or-
ganization described in section 170(b)(1)(A)(ii). 
‘‘(9) IDENTIFYING
INFORMATION
REQUIRED 
WITH RESPECT TO SERVICE PROVIDER.—No credit 
shall be allowed under subsection (a) for any amount 
paid to any person unless—
578
‘‘(A) the name, address, and taxpayer 
identification number of such person are in-
cluded on the return claiming the credit, or 
‘‘(B) if such person is an organization de-
scribed in section 501(c)(3) and exempt from 
tax under section 501(a), the name and address 
of such person are included on the return 
claiming the credit. 
In the case of a failure to provide the information 
required under the preceding sentence, the preceding 
sentence shall not apply if it is shown that the tax-
payer exercised due diligence in attempting to pro-
vide the information so required. 
‘‘(f) REGULATIONS.—The Secretary shall prescribe 
such regulations as may be necessary to carry out the pur-
poses of this section.’’. 
(b) CONFORMING AMENDMENTS.—
(1) Section 21 of such Code is repealed. 
(2) Section 23(f)(1) of such Code, section 
129(a)(2)(C) of such Code, and section 35(g)(6) are 
each amended by striking ‘‘section 21(e)’’ and in-
serting ‘‘section 36(e)’’. 
(3) Section 129(b)(2) of such Code is amended 
by striking ‘‘section 21(d)(2)’’ and inserting ‘‘section 
36(b)(3)(B)’’.
579
(4) Section 129(e)(1) of such Code is amended 
by striking ‘‘under section 21(b)(2) (relating to ex-
penses for household and dependent care services 
necessary for gainful employment)’’ and inserting 
‘‘or respite care services under section 36 (relating 
to dependent care services)’’. 
(5) Section 213(e) of such Code is amended by 
striking ‘‘section 21’’ and inserting ‘‘section 36’’. 
(6) Section 6213(g)(2)(H) of such Code is 
amended by striking ‘‘section 21 (related to expenses 
for household and dependent care services necessary 
for gainful employment)’’ and inserting ‘‘section 36 
(relating to dependent care services)’’. 
(7) Section 6213(g)(2)(L) of such Code is 
amended by striking ‘‘21, 24 or 32’’ and inserting 
‘‘24, 32, or 36’’. 
(c) TECHNICAL AMENDMENTS.—(1) The table of sec-
tions 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. Dependent care services. 
‘‘Sec. 37. Overpayments of tax.’’.
(2) The table of sections for subpart A of such part 
IV is amended by striking the item relating to section 21.
580
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2002.
TITLE V—FAIR START—SUPPORT 
TO PROMOTE WORK AND RE-
DUCE POVERTY 
Subtitle A—Gateways Grant 
Program 
SEC. 5001. GATEWAYS GRANT PROGRAM. 
(a) PURPOSES.—The purposes of this section are 
to—
(1) inform low-income families with children 
about programs available to families leaving welfare 
and other programs to support low-income families 
with children; 
(2) provide incentives to States and counties to 
improve and coordinate application and renewal pro-
cedures for low-income family with children support 
programs; and 
(3) track the extent to which low-income fami-
lies with children receive the benefits and services 
for which they are eligible. 
(b) DEFINITIONS.—In this section: 
(1) LOCALITY.—The term locality means a mu-
nicipality that does not administer a temporary as-
581
sistance for needy families program funded under 
part A of title IV of the Social Security Act (42 
U.S.C. 601 et seq.) (in this section referred to as 
‘‘TANF’’). 
(2) LOW-INCOME FAMILY WITH CHILDREN SUP-
PORT PROGRAM.—The term ‘‘low-income family with 
children support program’’ means a program de-
signed to provide low-income families with assistance 
or benefits to enable the family to become self-suffi-
cient and includes—
(A) TANF; 
(B) the food stamp program established 
under the Food Stamp Act of 1977 (7 U.S.C. 
2011 et seq.) (in this section referred to as 
‘‘food stamps’’); 
(C) the medicaid program funded under 
title XIX of the Social Security Act (42 U.S.C. 
1396 et seq.); 
(D) the State children’s health insurance 
program (SCHIP) funded under title XXI of 
the Social Security Act (42 U.S.C. 1397aa et 
seq.); 
(E) the child care program funded under 
the Child Care Development Block Grant Act of 
1990 (42 U.S.C. 9858 et seq.);
582
(F) the child support program funded 
under part D of title IV of the Social Security 
Act (42 U.S.C. 651 et seq.); 
(G) the earned income tax credit under 
section 32 of the Internal Revenue Code of 
1986; 
(H) the low-income home energy assistance 
program (LIHEAP) established under the Low-
Income Home Energy Assistance Act of 1981 
(42 U.S.C 8621 et seq.); 
(I) the special supplemental nutrition pro-
gram for women, infants, and children (WIC) 
established under section 17 of the Child Nutri-
tion Act of 1966 (42 U.S.C. 1786); 
(J) programs under the Workforce Invest-
ment Act of 1998 (29 U.S.C. 2801 et seq.); and 
(K) any other Federal or State funded pro-
gram designed to provide family and work sup-
port to low-income families with children. 
(3) NONPROFIT.—The term ‘‘nonprofit’’, as ap-
plied to a school, agency, organization, or institution 
means a school, agency, organization, or institution 
owned and operated by 1 or more nonprofit corpora-
tions or associations, no part of the net earnings of
583
which inures, or may lawfully inure, to the benefit 
of any private shareholder or individual. 
(4) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Health and Human Services. 
(5) STATE.—The term ‘‘State’’ means each of 
the several States of the United States, the District 
of Columbia, the Commonwealth of Puerto Rico, 
American Samoa, Guam, and the United States Vir-
gin Islands. 
(c) AUTHORIZATION OF GRANTS.—
(1) STATES AND COUNTIES.—
(A) IN GENERAL.—The Secretary is au-
thorized to award grants to States and counties 
to pay the Federal share of the costs involved 
in improving the administration of low-income 
family with children support programs, includ-
ing simplifying application, recertification, re-
porting, and verification rules. 
(B) FEDERAL SHARE.—The Federal share 
shall be 80 percent. 
(2) NONPROFITS AND LOCALITIES.—The Sec-
retary is authorized to award grants to nonprofits 
and localities to distribute information about and de-
velop service centers for low-income family with chil-
dren support programs.
584
(d) GRANT APPROVAL CRITERIA.—
(1) IN GENERAL.—The Secretary, in consulta-
tion with the Secretary of Agriculture, shall establish 
criteria for approval of an application for a grant 
under this section that include consideration of— 
(A) an applicant’s record of serving low-in-
come populations; 
(B) an applicant’s ability to reach hard-to-
serve populations; 
(C) the level of innovation in the appli-
cant’s grant proposal; and 
(D) any partnerships between the public 
and private sector in the applicant’s grant pro-
posal. 
(2) SEPARATE
CRITERIA.—Separate criteria 
shall be established for the grants authorized under 
paragraphs (1) and (2) of subsection (c). 
(e) USES OF FUNDS.—
(1) STATES AND COUNTIES.—
(A) 
IMPROVEMENTS
IN
PROGRAMS.—
Grants awarded to States and counties under 
subsection (c)(1) shall be used to—
(i) simplify low-income family with 
children support program application, re-
585
certification, reporting, and verification 
rules; 
(ii) create uniformity in eligibility cri-
teria for low-income family with children 
support programs; 
(iii) develop options for families to 
apply for low-income family with children 
support programs through the telephone, 
mail, facsimile, Internet, or electronic mail, 
and submit any recertifications or reports 
required for such families through these 
options; 
(iv) co-locate eligibility workers for 
various low-income family with children 
support programs at strategically located 
sites; and 
(v) develop or enhance one-stop serv-
ice centers for low-income family with chil-
dren support programs, including estab-
lishing evening and weekend hours at these 
centers. 
(B) CUSTOMER SURVEYS.—
(i) IN GENERAL.—A grant awarded to 
a State or county under subsection (c)(1)
586
shall be used to carry out a customer sur-
vey. 
(ii) MODEL SURVEYS.—The customer 
survey under clause (i) shall be modeled 
after a form developed by the Secretary 
under subsection (g). 
(iii) REPORTS
TO
SECRETARY.—Not 
later than 1 year after a State or county 
is awarded a grant under subsection (c)(1), 
and annually thereafter, the State or coun-
ty shall submit a report to the Secretary 
detailing the results of the customer survey 
carried out under clause (i). 
(iv) REPORTS TO PUBLIC.—A State or 
county receiving a grant under subsection 
(c)(1) and the Secretary shall make the re-
port required under clause (iii) available to 
the public. 
(v) PUBLIC
COMMENT.—A State or 
county receiving a grant under subsection 
(c)(1) shall accept public comments and 
hold public hearings on the report made 
available under clause (iv). 
(C) TRACKING SYSTEMS.—
587
(i) IN GENERAL.—A grant awarded to 
a State or county under subsection (c)(1) 
shall be used to implement a tracking sys-
tem to determine the level of participation 
in low-income family with children support 
programs of the eligible population. 
(ii) REPORTS.—Not later than 1 year 
after a State or county is awarded a grant 
under subsection (c)(1), and annually 
thereafter, the State or county shall submit 
a report to the Secretary detailing the ef-
fectiveness of the tracking system imple-
mented under clause (i). 
(D) REPORTING.—A State or county 
awarded a grant under subsection (c)(1) shall 
adopt the most favorable options available 
under Federal law to reduce or eliminate re-
quirements for low-income families receiving as-
sistance under TANF or food stamps to report 
changes in income, residence, or employment, 
including such requirements as they relate to 
the determination of State expenditures to meet 
TANF maintenance of effort requirements.
588
(E) IN-PERSON INTERVIEWS.—A State or 
county awarded a grant under subsection 
(c)(1)—
(i) may expend funds made available 
under the grant to provide for reporting 
and recertification procedures through the 
telephone, mail, facsimile, Internet, or elec-
tronic mail; and 
(ii) shall adopt the most favorable op-
tions available under Federal law to reduce 
or eliminate requirements for in-person 
interviews for redeterminations of eligi-
bility for TANF or food stamps. 
(F) 
SHARING
DOCUMENTATION
AND 
VERIFICATION INFORMATION.—A grant award-
ed to a State or county under subsection (c)(1) 
shall be used to develop procedures by which—
(i) a low-income family is relieved of 
the requirement to present documentation 
to establish eligibility for various low-in-
come family with children support pro-
grams where information concerning the 
family’s income exists in State databases 
and the family is provided adequate oppor-