I
103D CONGRESS
2D SESSION
H. R. 4470
To amend the Internal Revenue Code of 1986 to make the dependent care
tax credit refundable, to phaseout such credit for higher-income tax-
payers, and to provide for advance payments of such credit.
IN THE HOUSE OF REPRESENTATIVES
MAY 20, 1994
Ms. SHEPHERD introduced the following bill; which was referred to the
Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to make
the dependent care tax credit refundable, to phaseout
such credit for higher-income taxpayers, and to provide
for advance payments of such credit.
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 ‘‘Children and Incapaci-
tated Dependents Care Annual Refund (CIDCARE) Act’’.
SEC. 2. DEPENDENT CARE CREDIT TO BE REFUNDABLE;
ADVANCE PAYMENTS OF CREDIT.
(a) CREDIT TO BE REFUNDABLE.—
(1) IN GENERAL.—Section 21 of the Internal
Revenue Code of 1986 (relating to expenses for
household and dependent care services necessary for
gainful employment) is hereby moved to subpart C
of part IV of subchapter A of chapter 1 of such
Code (relating to refundable credits) and inserted
after section 34.
(2) TECHNICAL AMENDMENTS.—
(A) Section 35 of such Code is redesig-
nated as section 36.
(B) Section 21 of such Code is redesig-
nated as section 35.
(C) Paragraph (1) of section 35(a) of such
Code (as redesignated by subparagraph (B)) is
amended by striking ‘‘this chapter’’ and insert-
ing ‘‘this subtitle’’.
(D) Subparagraph (C) of section 129(a)(2)
of such Code is amended by striking ‘‘section
21(e)’’ and inserting ‘‘section 35(e)’’.
(E) Paragraph (2) of section 129(b) of
such Code is amended by striking ‘‘section
21(d)(2)’’ and inserting ‘‘section 35(d)(2)’’.
(F) Paragraph (1) of section 129(e) of
such Code is amended by striking ‘‘section
21(b)(2)’’ and inserting ‘‘section 35(b)(2)’’.
(G) Subsection (e) of section 213 of such
Code is amended by striking ‘‘section 21’’ and
inserting ‘‘section 35’’.
(H) Paragraph (2) of section 1324(b) of
title 31, United States Code, is amended by in-
serting before the period ‘‘or from section 35 of
such Code’’.
(I) The table of sections for subpart C of
part IV of subchapter A of chapter 1 of such
Code is amended by striking the item relating
to section 35 and inserting the following:
‘‘Sec. 35. Expenses for household and dependent care services
necessary for gainful employment.
‘‘Sec. 36. Overpayments of tax.’’
(J) The table of sections for subpart A of
such part IV is amended by striking the item
relating to section 21.
(b) HIGHER-INCOME TAXPAYERS INELIGIBLE FOR
CREDIT.—Subsection (a) of section 35 of such Code, as
redesignated by subsection (a), is amended by adding at
the end the following new paragraph:
‘‘(3) PHASEOUT
OF
CREDIT
FOR
HIGHER-IN-
COME TAXPAYERS.—The amount of the credit which
would (but for this paragraph) be allowed by this
section shall be reduced (but not below zero) by an
amount which bears the same ratio to such amount
of credit as the excess of the taxpayer’s adjusted
gross income for the taxable year over $110,000
bears to $10,000. Any reduction determined under
the preceding sentence which is not a multiple of
$10 shall be rounded to the nearest multiple of
$10.’’
(c) ADVANCE PAYMENT OF CREDIT.—
(1) IN GENERAL.—Chapter 25 of such Code
(relating to general provisions relating to employ-
ment taxes) is amended by inserting after section
3507 the following new section:
‘‘SEC. 3507A. ADVANCE PAYMENT OF DEPENDENT CARE
CREDIT.
‘‘(a) GENERAL RULE.—Except as otherwise provided
in this section, every employer making payment of wages
to an employee with respect to whom a dependent care
credit eligibility certificate is in effect shall, at the time
of paying such wages, make an additional payment equal
to such employee’s dependent care credit advance amount.
‘‘(b) DEPENDENT CARE CREDIT ELIGIBILITY CER-
TIFICATE.—For purposes of this title, a dependent care
credit eligibility certificate is a statement furnished by an
employee to the employer which—
‘‘(1) certifies that the employee will be eligible
to receive the credit provided by section 35 for the
taxable year,
‘‘(2) certifies that the employee does not have
a dependent care credit eligibility certificate in effect
for the calendar year with respect to the payment of
wages by another employer,
‘‘(3) states whether or not the employee’s
spouse has a dependent care credit eligibility certifi-
cate in effect, and
‘‘(4) estimates the amount of dependent care
credit of the employee for the calendar year.
For purposes of this section, a certificate shall be treated
as being in effect with respect to a spouse if such a certifi-
cate will be in effect on the first status determination date
following the date on which the employee furnishes the
statement in question.
‘‘(c) 
DEPENDENT
CARE
CREDIT
ADVANCE
AMOUNT.—
‘‘(1) IN GENERAL.—For purposes of this title,
the term ‘dependent care credit advance amount’
means, with respect to any payroll period, the
amount determined—
‘‘(A) on the basis of the employee’s wages
from the employer for such period,
‘‘(B) on the basis of the employee’s esti-
mated amount of dependent care credit included
in the dependent care credit eligibility certifi-
cate, and
‘‘(C) in accordance with tables provided by
the Secretary.
‘‘(2) ADVANCE AMOUNT TABLES.—The tables
referred to in paragraph (1)(C) shall be similar in
form to the tables prescribed under section 3402
and, to the maximum extent feasible, shall be coordi-
nated with such tables and the tables prescribed
under section 3507(c).
‘‘(d) OTHER RULES.—For purposes of this section,
rules similar to the rules of subsections (d) and (e) of sec-
tion 3507 shall apply.
‘‘(e) REGULATIONS.—The Secretary shall prescribe
such regulations as may be necessary to carry out the pur-
poses of this section.’’.
(2) CLERICAL AMENDMENT.—The table of sec-
tions for chapter 25 of such Code is amended by in-
serting after the item relating to section 3507 the
following new item:
‘‘Sec. 3507A. Advance payment of dependent care credit.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1994.
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