I
106TH CONGRESS
1ST SESSION
H. R. 816
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
FEBRUARY 24, 1999
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.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Child Support Enforce-
ment Act’’.
SEC. 2. NO EFFECT ON RIGHTS AND LIABILITIES.
Nothing in this Act shall be construed to affect—
(1) the right of an individual or State to receive
any child support payment; or
(2) the obligation of an individual to pay child
support.
SEC. 3. INCLUSION IN INCOME OF AMOUNT OF UNPAID
CHILD SUPPORT PAYMENTS.
(a) IN GENERAL.—Section 108 of the Internal Reve-
nue Code of 1986 (relating to discharge of indebtedness
income) is amended by adding at the end the following
new subsection:
‘‘(h) UNPAID CHILD SUPPORT PAYMENTS.—
‘‘(1) IN GENERAL.—For purposes of this chap-
ter, any taxable unpaid child support payments of a
taxpayer for any taxable year shall be treated as
amounts includible in gross income of the taxpayer
for the taxable year by reason of the discharge of in-
debtedness of the taxpayer.
‘‘(2) TAXABLE UNPAID CHILD SUPPORT PAY-
MENTS.—For purposes of this subsection, the term
‘taxable unpaid child support payments’ means
payments—
‘‘(A) which were applicable child support
payments which the taxpayer was required to
pay under a support instrument for the support
of a child of the taxpayer, and
‘‘(B) with respect to which the notice re-
quirements of paragraph (3) are met.
‘‘(3) NOTICE REQUIREMENTS.—
‘‘(A) IN
GENERAL.—During January of
the second calendar year following a calendar
year in which there begins a taxable year for
which a deduction allowed under section 166(f)
was claimed, the eligible taxpayer shall send a
notice (in such form as the Secretary may pre-
scribe) to the individual who failed to make
payments which contains—
‘‘(i) the amount of the applicable child
support payments for such taxable year,
and
‘‘(ii) notice that the individual is re-
quired to include such amount in gross in-
come for the taxable year beginning in the
preceding calendar year.
‘‘(B) NOTICE
BY
SECRETARY.—If notice
cannot be provided under subparagraph (A) be-
cause the address is not known to the eligible
taxpayer, the Secretary shall send such notice if
the address is available to the Secretary.
‘‘(C) ADDRESS UNKNOWN.—If notice can-
not be provided under subparagraph (A) or (B)
because there is no known address, no income
shall be included in gross income for any tax-
able year beginning before the calendar year
preceding the calendar year in which such no-
tice may be sent.
‘‘(4) SUBSEQUENT PAYMENTS.—If any payment
required to be included in gross income under para-
graph (1) is subsequently made, the amount of such
payment shall be allowed as a deduction for the tax-
able year in which such payment is made.
‘‘(5) DEFINITIONS.—For purposes of this sub-
section, the terms ‘applicable child support pay-
ments’ and ‘eligible taxpayer’ have the meanings
given such terms by section 166(f).’’
(b) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
SEC. 4. ALLOWANCE OF BAD DEBT DEDUCTION FOR UN-
PAID CHILD SUPPORT PAYMENTS.
(a) IN GENERAL.—Section 166 of the Internal Reve-
nue Code of 1986 (relating to deduction for bad debts)
is amended by redesignating subsection (f) as subsection
(g) and by inserting after subsection (e) the following new
subsection:
‘‘(f) UNPAID CHILD SUPPORT PAYMENTS.—
‘‘(1) IN GENERAL.—In the case of any eligible
taxpayer who has any applicable child support pay-
ments remaining unpaid as of the close of the tax-
able year—
‘‘(A) subsections (a) and (d) shall not
apply to such payments, and
‘‘(B) there shall be allowed as a deduction
for such taxable year an amount equal to the
amount of such payments.
‘‘(2) PER CHILD LIMITATION ON DEDUCTION.—
The aggregate amount allowable as a deduction for
any taxable year under paragraph (1) with respect
to any child for whom applicable child support pay-
ments are required to be paid shall not exceed
$10,000.
‘‘(3) ELIGIBLE
TAXPAYER.—For purposes of
this subsection, the term ‘eligible taxpayer’ means
an individual—
‘‘(A) whose adjusted gross income for the
taxable year does not exceed $50,000,
‘‘(B) with respect to whom the amount of
applicable child support payments remaining
unpaid as of the close of the taxable year is
equal to or greater than $500, and
‘‘(C) who meets the identification require-
ments of paragraph (5).
‘‘(4) APPLICABLE CHILD SUPPORT PAYMENT.—
‘‘(A) IN GENERAL.—The term ‘applicable
child support payment’ means, with respect to
any taxable year of the eligible taxpayer—
‘‘(i) any periodic payment of a fixed
amount, or
‘‘(ii) any payment of a medical or
educational expense, insurance premium,
or other similar item,
which is required to be paid to such taxpayer
during such taxable year by an individual under
a support instrument meeting the requirements
of paragraph (8) for the support of any qualify-
ing child of such individual.
‘‘(B) QUALIFYING
CHILD.—For purposes
of this paragraph, the term ‘qualifying child’
means a child of an eligible individual with re-
spect to whom a deduction is allowable under
section 151 for the taxable year (or would be so
allowable but for paragraph (2) or (4) of sec-
tion 152(e)).
‘‘(C) PAYMENTS
MUST
BE
DELINQUENT
FOR AT LEAST ENTIRE YEAR.—Any payment
described in subparagraph (A) which is required
to be made by an individual to an eligible tax-
payer shall not be treated as an applicable un-
paid child support payment if at least half of
the payments which are required to be paid to
the eligible taxpayer during the 12-month pe-
riod ending on the last day of the taxable year
are paid. In the case of the 1st taxable year to
which this subsection applies to payments from
any individual, the preceding sentence shall be
applied by substituting ‘24-month’ for ‘12-
month’.
‘‘(D) COORDINATION
WITH
TANF.—The
term ‘applicable child support payment’ shall
not include any amount the right to which is
described in section 408(a)(3) of the Social Se-
curity Act and which has been assigned to a
State.
‘‘(5) IDENTIFICATION
REQUIREMENTS.—The
requirements of this paragraph are met if the eligi-
ble taxpayer includes on the return claiming the de-
duction under this subsection the name, address,
and taxpayer identification number of—
‘‘(A) each child with respect to whom child
support payments to which this subsection ap-
plies are required to be paid, and
‘‘(B) the individual who was required to
make such child support payments.
In the case of a failure to provide the information
under subparagraph (B), the preceding sentence
shall not apply if the eligible taxpayer certifies that
any such information is not known.
‘‘(6) COST-OF-LIVING
ADJUSTMENTS.—In the
case of any taxable year beginning after 2000, the
$10,000 amount in paragraph (2), the $50,000
amount in paragraph (3)(A), and the $500 amount
in paragraph (3)(B) shall each be increased by an
amount equal to—
‘‘(A) such dollar amount, multiplied by
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar
year in which the taxable year begins by sub-
stituting ‘calendar year 1999’ for ‘calendar year
1992’ in subparagraph (B) thereof.
‘‘(7) SUBSEQUENT PAYMENTS.—If any payment
with respect to which a deduction was allowed under
paragraph (1) is subsequently made, such payment
shall be included in gross income of the eligible tax-
payer for the taxable year in which paid. This para-
graph shall not apply to any amount if an individual
has assigned the right to receive such amount to a
State (and the State does not pay such amount to
such individual).
‘‘(8) SUPPORT INSTRUMENT.—For purposes of
this subsection, a support instrument meets the re-
quirements of this paragraph if it is—
‘‘(A) a decree of divorce or separate main-
tenance or a written instrument incident to
such a decree,
‘‘(B) a written separation agreement, or
‘‘(C) a decree (not described in subpara-
graph (A)) of a court or administrative agency
requiring a parent to make payments for the
support or maintenance of 1 or more children
of such parent.’’
(b) DEDUCTION FOR NONITEMIZERS.—Section 62(a)
of such Code is amended by inserting after paragraph (17)
the following new paragraph:
‘‘(18) UNPAID
CHILD
SUPPORT
PAYMENTS.—
The deduction allowed by section 166(f).’’
(c) CONFORMING AMENDMENT.—Section 166(d)(2)
of such Code is amended by striking ‘‘or’’ at the end of
subparagraph (A), by striking the period at the end of
subparagraph (B) and inserting ‘‘, or’’ and by adding at
the end thereof the following new subparagraph:
‘‘(C) a debt which is an applicable child
support payment under subsection (f).’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
SEC. 5. REDUCTION OF FEDERAL DEBT.
Net revenues received in the Treasury pursuant to
this Act shall be applied, as provided in appropriation
Acts, solely to the retirement of outstanding public debt
obligations of the United States and may not be obligated
or expended for any other purpose, notwithstanding any
other provision of law that does not specifically refer to
this section.
Æ