Renters Tax Credit Act of 2021
Bill: S.2554 | Sponsor: Sen. Brown, Sherrod (D-OH)
Policy area: Taxation

Summary:
Renters Tax Credit Act of 2021
This bill allows owners of rental buildings who provide reductions in rent to their low-income tenants a refundable tax credit for a specified percentage of the difference between market rent and 30% of the monthly family income of such tenants. The bill allocates credit amounts to states for distribution to participating taxpayers.


To amend the Internal Revenue Code of 1986 to provide a refundable tax 
  credit to taxpayers who provide reductions in rent to their tenants 
     under State rental reduction programs, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Renters Tax Credit Act of 2021''.

SEC. 2. RENTERS CREDIT.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 
section 36B the following new section:

``SEC. 36C. RENTERS CREDIT.

    ``(a) Determination of Credit Amount.--
            ``(1) In general.--There shall be allowed as a credit 
        against the tax imposed by this subtitle for any taxable year 
        an amount equal to the sum of the amounts determined under 
        paragraph (2) for all qualified buildings with a credit period 
        which includes months occurring during the taxable year.
            ``(2) Qualified building amount.--The amount determined 
        under this paragraph with respect to any qualified building for 
        any taxable year shall be an amount equal to the lesser of--
                    ``(A) the aggregate qualified rental reduction 
                amounts for all eligible units within such building for 
                months occurring during the taxable year which are 
                within the credit period for such building, or
                    ``(B) the rental reduction credit amount allocated 
                to such building for such months.
            ``(3) Qualified building.--For purposes of this section--
                    ``(A) In general.--The term `qualified building' 
                means any building which is residential rental property 
                (as defined in section 168(e)(2)(A)) of the taxpayer 
                with respect to which--
                            ``(i) a rental reduction credit amount has 
                        been allocated by a rental reduction credit 
                        agency of a State, and
                            ``(ii) a qualified rental reduction 
                        agreement is in effect.
                    ``(B) Building not disqualified by other 
                assistance.--A building shall not fail to be treated as 
                a qualified building merely because--
                            ``(i) a credit was allowed under section 42 
                        with respect to such building or there was any 
                        other Federal assistance in the construction or 
                        rehabilitation of such building,
                            ``(ii) the rehabilitation credit determined 
                        under section 47 was allowed under section 38 
                        with respect to such building, or
                            ``(iii) Federal rental assistance was 
                        provided for such building during any period 
                        preceding the credit period.
    ``(b) Qualified Rental Reduction Amount.--For purposes of this 
section--
            ``(1) In general.--The term `qualified rental reduction 
        amount' means, with respect to any eligible unit for any month, 
        an amount equal to the applicable percentage (as determined 
        under subsection (e)(1)) of the excess of--
                    ``(A) the applicable rent for such unit, over
                    ``(B) the family rental payment required for such 
                unit.
            ``(2) Applicable rent.--
                    ``(A) In general.--The term `applicable rent' 
                means, with respect to any eligible unit for any month, 
                the lesser of--
                            ``(i) the amount of rent which would be 
                        charged for a substantially similar unit with 
                        the same number of bedrooms in the same 
                        building which is not an eligible unit, or
                            ``(ii) an amount equal to the market rent 
                        standard for such unit.
                    ``(B) Market rent standard.--
                            ``(i) In general.--The market rent standard 
                        with respect to any eligible unit is--
                                    ``(I) the small area fair market 
                                rent determined by the Secretary of 
                                Housing and Urban Development for units 
                                with the same number of bedrooms in the 
                                same zip code tabulation area, or
                                    ``(II) if there is no rent 
                                described in subclause (I) for such 
                                area, the fair market rent determined 
                                by such Secretary for units with the 
                                same number of bedrooms in the same 
                                county.
                            ``(ii) State option.--A State may in its 
                        rental reduction allocation plan provide that 
                        the market rent standard for all (or any part) 
                        of a zip code tabulation area or county within 
                        the State shall be equal to a percentage (not 
                        less than 75 nor more than 125) of the amount 
                        determined under clause (i) (after application 
                        of clause (iii)) for such area or county.
                            ``(iii) Minimum amount.--Notwithstanding 
                        clause (i), the market rent standard with 
                        respect to any eligible unit for any year in 
                        the credit period after the first year in the 
                        credit period for such unit shall not be less 
                        than the market rent standard determined for 
                        such first year.
            ``(3) Family rental payment requirements.--
                    ``(A) In general.--Each qualified rental reduction 
                agreement with respect to any qualified building shall 
                require that the family rental payment for an eligible 
                unit within such building for any month shall be equal 
                to the lesser of--
                            ``(i) 30 percent of the monthly family 
                        income of the residents of the unit (as 
                        determined under subsection (e)(5)), or
                            ``(ii) the applicable rent for such unit.
                    ``(B) Utility costs.--Any utility allowance 
                (determined by the Secretary in the same manner as 
                under section 42(g)(2)(B)(ii)) paid by residents of an 
                eligible unit shall be taken into account as rent in 
                determining the family rental payment for such unit for 
                purposes of this paragraph.
    ``(c) Rental Reduction Credit Amount.--For purposes of this 
section--
            ``(1) Determination of amount.--
                    ``(A) In general.--The term `rental reduction 
                credit amount' means, with respect to any qualified 
                building, the dollar amount which is allocated to such 
                building (and to eligible units within such building) 
                under this subsection. Such dollar amount shall be 
                allocated to months in the credit period with respect 
                to such building (and such units) on the basis of the 
                estimates described in paragraph (2)(B).
                    ``(B) Allocation on project basis.--In the case of 
                a project which includes (or will include) more than 1 
                building, the rental reduction credit amount shall be 
                the dollar amount which is allocated to such project 
                for all buildings included in such project. Subject to 
                the limitation under subsection (e)(3)(B), such amount 
                shall be allocated among such buildings in the manner 
                specified by the taxpayer unless the qualified rental 
                reduction agreement with respect to such project 
                provides for such allocation.
            ``(2) State allocation.--
                    ``(A) In general.--Except as provided in 
                subparagraph (C), each rental reduction credit agency 
                of a State shall each calendar year allocate its 
                portion of the State rental reduction credit ceiling to 
                qualified buildings (and to eligible units within each 
                such building) in accordance with the State rental 
                reduction allocation plan.
                    ``(B) Allocations to each building.--The rental 
                reduction credit amount allocated to any qualified 
                building shall not exceed the aggregate qualified 
                rental reduction amounts which such agency estimates 
                will occur over the credit period for eligible units 
                within such building, based on reasonable estimates of 
                rents, family incomes, and vacancies in accordance with 
                procedures established by the State as part of its 
                State rental reduction allocation plan.
                    ``(C) Specific allocations.--
                            ``(i) Nonprofit organizations.--At least 25 
                        percent of the State rental reduction credit 
                        ceiling for any State for any calendar year 
                        shall be allocated to qualified buildings in 
                        which a qualified nonprofit organization (as 
                        defined in section 42(h)(5)(C)) owns (directly 
                        or through a partnership) an interest and 
                        materially participates (within the meaning of 
                        section 469(h)) in the operation of the 
                        building throughout the credit period. A State 
                        may waive or lower the requirement under this 
                        clause for any calendar year if it determines 
                        that meeting such requirement is not feasible.
                            ``(ii) Rural areas.--
                                    ``(I) In general.--The State rental 
                                reduction credit ceiling for any State 
                                for any calendar year shall be 
                                allocated to buildings in rural areas 
                                (as defined in section 520 of the 
                                Housing Act of 1949) in an amount 
                                which, as determined by the Secretary 
                                of Housing and Urban Development, bears 
                                the same ratio to such ceiling as the 
                                number of extremely low-income 
                                households with severe rent burdens in 
                                such rural areas bears to the total 
                                number of such households in the State.
                                    ``(II) Alternative 5-year testing 
                                period.--In the case of the 5-calendar 
                                year period beginning in 2021, a State 
                                shall not be treated as failing to meet 
                                the requirements of subclause (I) for 
                                any calendar year in such period if, as 
                                determined by the Secretary, the 
                                average annual amount allocated to such 
                                rural areas during such period meets 
                                such requirements.
            ``(3) Application of allocated credit amount.--
                    ``(A)  Amount available to taxpayer for all months 
                in credit period.--Any rental reduction credit amount 
                allocated to any qualified building out of the State 
                rental reduction credit ceiling for any calendar year 
                shall apply to such building for all months in the 
                credit period ending during or after such calendar 
                year.
                    ``(B) Ceiling for allocation year reduced by entire 
                credit amount.--Any rental reduction credit amount 
                allocated to any qualified building out of an 
                allocating agency's State rental reduction credit 
                ceiling for any calendar year shall reduce such ceiling 
                for such calendar year by the entire amount so 
                allocated for all months in the credit period (as 
                determined on the basis of the estimates under 
                paragraph (2)(B)) and no reduction shall be made in 
                such agency's State rental reduction credit ceiling for 
                any subsequent calendar year by reason of such 
                allocation.
            ``(4) State rental reduction credit ceiling.--
                    ``(A) In general.--The State rental reduction 
                credit ceiling applicable to any State for any calendar 
                year shall be an amount equal to the sum of--
                            ``(i) the greater of--
                                    ``(I) the per capita dollar amount 
                                multiplied by the State population, or
                                    ``(II) the minimum ceiling amount, 
                                plus
                            ``(ii) the amount of the State rental 
                        reduction credit ceiling returned in the 
                        calendar year.
                    ``(B) Return of state ceiling amounts.--For 
                purposes of subparagraph (A)(ii), except as provided in 
                subsection (d)(2), the amount of the State rental 
                reduction credit ceiling returned in a calendar year 
                equals the amount of the rental reduction credit amount 
                allocated to any building which, after the close of the 
                calendar year for which the allocation is made--
                            ``(i) is canceled by mutual consent of the 
                        rental reduction credit agency and the taxpayer 
                        because the estimates made under paragraph 
                        (2)(B) were substantially incorrect, or
                            ``(ii) is canceled by the rental reduction 
                        credit agency because the taxpayer violates the 
                        qualified rental reduction agreement and, under 
                        the terms of the agreement, the rental 
                        reduction credit agency is authorized to cancel 
                        all (or any portion) of the allocation by 
                        reason of the violation.
                    ``(C) Per capita dollar amount; minimum ceiling 
                amount.--For purposes of this paragraph--
                            ``(i) Per capita dollar amount.--The per 
                        capita dollar amount is--
                                    ``(I) for calendar year 2021, 
                                $12.30,
                                    ``(II) for calendar year 2022, 
                                $24.50, and
                                    ``(III) for calendar years 2023 and 
                                thereafter, $36.75.
                            ``(ii) Minimum ceiling amount.--The minimum 
                        ceiling amount is--
                                    ``(I) for calendar year 2021, 
                                $14,000,000,
                                    ``(II) for calendar year 2022, 
                                $28,000,000, and
                                    ``(III) for calendar years 2023 and 
                                thereafter, $42,000,000.
                            ``(iii) Cost-of-living adjustment.--In the 
                        case of a calendar year beginning after 2023, 
                        the $36.75 and $42,000,000 amounts in clauses 
                        (i)(III) and (ii)(III) shall each be increased 
                        by an amount equal to--
                                    ``(I) such dollar amount, 
                                multiplied by
                                    ``(II) the cost-of-living 
                                adjustment determined under section 
                                1(f)(3) for such calendar year by 
                                substituting `calendar year 2022' for 
                                `calendar year 2016' in subparagraph 
                                (A)(ii) thereof.
                        In the case of the $42,000,000 amount, any 
                        increase under this clause which is not a 
                        multiple of $5,000 shall be rounded to the next 
                        lowest multiple of $5,000 and in the case of 
                        the $36.75 amount, any increase under this 
                        clause which is not a multiple of 5 cents shall 
                        be rounded to the next lowest multiple of 5 
                        cents.
                    ``(D) Population.--For purposes of this paragraph, 
                population shall be determined in accordance with 
                section 146(j).
                    ``(E) Unused rental reduction credit allocated 
                among certain states.--
                            ``(i) In general.--The unused rental 
                        reduction credit of a State for any calendar 
                        year shall be assigned to the Secretary for 
                        allocation among qualified States for the 
                        succeeding calendar year.
                            ``(ii) Unused rental reduction credit.--For 
                        purposes of this subparagraph, the unused 
                        rental reduction credit of a State for any 
                        calendar year is the excess (if any) of--
                                    ``(I) the State rental reduction 
                                credit ceiling for the year preceding 
                                such year, over
                                    ``(II) the aggregate rental 
                                reduction credit amounts allocated for 
                                such year.
                            ``(iii) Formula for allocation of unused 
                        credit among qualified states.--The amount 
                        allocated under this subparagraph to a 
                        qualified State for any calendar year shall be 
                        the amount determined by the Secretary to bear 
                        the same ratio to the aggregate unused rental 
                        reduction credits of all States for the 
                        preceding calendar year as such State's 
                        population for the calendar year bears to the 
                        population of all qualified States for the 
                        calendar year. For purposes of the preceding 
                        sentence, population shall be determined in 
                        accordance with section 146(j).
                            ``(iv) Qualified state.--For purposes of 
                        this subparagraph, the term `qualified State' 
                        means, with respect to a calendar year, any 
                        State--
                                    ``(I) which allocated its entire 
                                State rental reduction credit ceiling 
                                for the preceding calendar year, and
                                    ``(II) for which a request is made 
                                (at such time and in such manner as the 
                                Secretary may prescribe) to receive an 
                                allocation under clause (iii).
            ``(5) Other definitions.--For purposes of this section--
                    ``(A) Rental reduction credit agency.--The term 
                `rental reduction credit agency' means any agency 
                authorized by a State to carry out this section. Such 
                authorization shall include the jurisdictions within 
                the State where the agency may allocate rental 
                reduction credit amounts.
                    ``(B) Possessions treated as states.--The term 
                `State' includes a possession of the United States.
                    ``(C) Family.--The term `family' has the same 
                meaning as when used in the United States Housing Act 
                of 1937.
    ``(d) Modifications To Correct Inaccurate Amounts Due to Incorrect 
Estimates.--
            ``(1) Establishment of reserves.--
                    ``(A) In general.--Each rental reduction credit 
                agency of a State shall establish a reserve for the 
                transfer and reallocation of amounts pursuant to this 
                paragraph, and notwithstanding any other provision of 
                this section, the rental reduction credit amount 
                allocated to any building by such agency shall be zero 
                unless such agency has in effect such a reserve at the 
                time of the allocation of such credit amount.
                    ``(B) Transfers to reserve.--
                            ``(i) In general.--If, for any taxable 
                        year, a taxpayer would (but for this 
                        subparagraph) not be able to use the entire 
                        rental reduction credit amount allocated to a 
                        qualified building by a rental reduction credit 
                        agency of a State for the taxable year because 
                        of a rental reduction shortfall, then the 
                        taxpayer shall for the taxable year transfer to 
                        the reserve established by such agency under 
                        subparagraph (A) an amount equal to such rental 
                        reduction shortfall.
                            ``(ii) Rental reduction shortfall.--For 
                        purposes of this subparagraph, the rental 
                        reduction shortfall for any qualified building 
                        for any taxable year is the amount by which the 
                        aggregate amount of the excesses determined 
                        under subsection (b)(1) for all eligible units 
                        within such building are less than such 
                        aggregate amount estimated under subsection 
                        (c)(2)(B) for the taxable year.
                            ``(iii) Treatment of transferred amount.--
                        For purposes of subsection (a)(2)(A), the 
                        aggregate qualified rental reduction amounts 
                        for all eligible units within a qualified 
                        building with respect to which clause (i) 
                        applies for any taxable year shall be increased 
                        by an amount equal to the applicable percentage 
                        (determined under subsection (e)(1) for the 
                        building) of the amount of the transfer to the 
                        reserve under clause (i) with respect to such 
                        building for such taxable year.
                    ``(C) Reallocation of amounts transferred.--
                            ``(i) In general.--If, for any taxable 
                        year--
                                    ``(I) the aggregate qualified 
                                rental reduction amounts for all 
                                eligible units within a qualified 
                                building for the taxable year exceed
                                    ``(II) the rental reduction credit 
                                amount allocated to such building by a 
                                rental reduction credit agency of a 
                                State for the taxable year (determined 
                                after any increase under paragraph 
                                (2)),
                        the rental reduction credit agency shall, upon 
                        application of the taxpayer, pay to the 
                        taxpayer from the reserve established by such 
                        agency under subparagraph (A) the amount which, 
                        when multiplied by the applicable percentage 
                        (determined under subsection (e)(1) for the 
                        building), equals such excess. If the amount in 
                        the reserve is less than the amounts requested 
                        by all taxpayers for taxable years ending 
                        within the same calendar year, the agency shall 
                        ratably reduce the amount of each payment 
                        otherwise required to be made.
                            ``(ii) Excess reserve amounts.--If a rental 
                        reduction credit agency of a State determines 
                        that the balance in its reserve is in excess of 
                        the amounts reasonably needed over the 
                        following 5 calendar years to make payments 
                        under clause (i), the agency may withdraw such 
                        excess but only to--
                                    ``(I) reduce the rental payments of 
                                eligible tenants in a qualified 
                                building in units other than eligible 
                                units, or of eligible tenants in units 
                                in a building other than a qualified 
                                building, to amounts no higher than the 
                                sum of rental payments required for 
                                eligible tenants in qualified buildings 
                                under subsection (b)(3) and any rental 
                                charges to such tenants in excess of 
                                the market rent standard; or
                                    ``(II) address maintenance and 
                                repair needs in qualified buildings 
                                that cannot reasonably be met using 
                                other resources available to the owners 
                                of such buildings.
                    ``(D) Administration.--Each rental reduction credit 
                agency of a State shall establish procedures for the 
                timing and manner of transfers and payments made under 
                this paragraph.
                    ``(E) Special rule for projects.--In the case of a 
                rental reduction credit allocated to a project 
                consisting of more than 1 qualified building, a 
                taxpayer may elect to have this paragraph apply as if 
                all such buildings were 1 qualified building if the 
                applicable percentage for each such building is the 
                same.
                    ``(F) Alternative methods of transfer and 
                reallocation.--Upon request to, and approval by, the 
                Secretary, a State may establish an alternative method 
                for the transfer and reallocation of amounts otherwise 
                required to be transferred to, and allocated from, a 
                reserve under this paragraph. Any State adopting an 
                alternative method under this subparagraph shall, at 
                such time and in such manner as the Secretary 
                prescribes, provide to the Secretary and the Secretary 
                of Housing and Urban Development detailed reports on 
                the operation of such method, including providing such 
                information as such Secretaries may require.
            ``(2) Allocation of returned state ceiling amounts.--In the 
        case of any rental reduction credit amount allocated to a 
        qualified building which is canceled as provided in subsection 
        (c)(4)(B)(i), the rental reduction credit agency may, in lieu 
        of treating such allocation as a returned credit amount under 
        subsection (c)(4)(A)(ii), elect to allocate, upon the request 
        of the taxpayer, such amount to any other qualified building 
        for which the credit amount allocated in any preceding calendar 
        year was too small because the estimates made under subsection 
        (c)(2)(B) were substantially incorrect.
            ``(3) Renting to noneligible tenants.--If, after the 
        application of paragraphs (1)(C) (or any similar reallocation 
        under paragraph (1)(F)) and (2), a rental reduction credit 
        agency of a State determines that, because of the incorrect 
        estimates under subsection (c)(2)(B), the aggregate qualified 
        rental reduction amounts for all eligible units within a 
        qualified building will (on an ongoing basis) exceed the rental 
        reduction credit amount allocated to such building, a taxpayer 
        may elect, subject to subsection (g)(2) and only to the extent 
        necessary to eliminate such excess, rent vacant eligible units 
        without regard to the requirements that such units be rented 
        only to eligible tenants and at the rental rate determined 
        under subsection (b)(3).
    ``(e) Terms Relating to Rental Reduction Credit and Requirements.--
For purposes of this section--
            ``(1) Applicable percentage.--
                    ``(A) In general.--The term `applicable percentage' 
                means, with respect to any qualified building, the 
                percentage (not greater than 110 percent) set by the 
                rental reduction credit agency at the time it allocates 
                the rental reduction dollar amount to such building.
                    ``(B) Higher percentage for high-opportunity 
                areas.--The rental reduction credit agency may set a 
                percentage under subparagraph (A) up to 120 percent for 
                any qualified building which--
                            ``(i) targets its eligible units for rental 
                        to families with children, and
                            ``(ii) is located in a neighborhood which 
                        has a poverty rate of no more than 10 percent.
            ``(2) Credit period.--
                    ``(A) In general.--The term `credit period' means, 
                with respect to any qualified building, the 15-year 
                period beginning with the first month for which the 
                qualified rental reduction agreement is in effect with 
                respect to such building.
                    ``(B) State option to reduce period.--A rental 
                reduction credit agency may provide a credit period for 
                any qualified building which is less than 15 years.
            ``(3) Eligible unit.--
                    ``(A) In general.--The term `eligible unit' means, 
                with respect to any qualified building, a unit--
                            ``(i) which is occupied by an eligible 
                        tenant,
                            ``(ii) the rent of which for any month 
                        equals 30 percent of the monthly family income 
                        of the residents of such unit (as determined 
                        under paragraph (5)),
                            ``(iii) with respect to which the tenant is 
                        not concurrently receiving rental assistance 
                        under any other Federal program, and
                            ``(iv) which is certified to the rental 
                        reduction credit agency as an eligible unit for 
                        purposes of this section and the qualified 
                        rental reduction agreement.
                Notwithstanding clause (iii), a State may provide in 
                its State rental reduction allocation plan that an 
                eligible unit shall also not include a unit with 
                respect to which any resident is receiving rental 
                assistance under a State or local program.
                    ``(B) Limitation on number of units.--
                            ``(i) In general.--The number of units 
                        which may be certified as eligible units with 
                        respect to any qualified building under 
                        subparagraph (A)(iv) at any time shall not 
                        exceed the greater of--
                                    ``(I) 40 percent of the total units 
                                in such building, or
                                    ``(II) 25 units.
                        In the case of an allocation to a project under 
                        subsection (c)(1)(B), the limitation under the 
                        preceding sentence shall be applied on a 
                        project basis and the certification of such 
                        eligible units shall be allocated to each 
                        building in the project, except that if 
                        buildings in such project are on non-contiguous 
                        tracts of land, buildings on each such tract 
                        shall be treated as a separate project for 
                        purposes of applying this sentence.
                            ``(ii) Buildings receiving previous federal 
                        rental assistance.--If, at any time prior to 
                        the entering into of a qualified rental 
                        reduction agreement with respect to a qualified 
                        building, tenants in units within such building 
                        had been receiving project-based rental 
                        assistance under any other Federal program, 
                        then, notwithstanding clause (i), the maximum 
                        number of units which may be certified as 
                        eligible units with respect to the building 
                        under subparagraph (A)(iv) shall not be less 
                        than the sum of--
                                    ``(I) the maximum number of units 
                                in the building previously receiving 
                                such assistance at any time before the 
                                agreement takes effect, plus
                                    ``(II) the amount determined under 
                                clause (i) without taking into account 
                                the units described in subclause (I).
            ``(4) Eligible tenant.--
                    ``(A) In general.--The term `eligible tenant' means 
                any individual if the individual's family income does 
                not exceed the greater of--
                            ``(i) 30 percent of the area median gross 
                        income (as determined under section 42(g)(1)), 
                        or
                            ``(ii) the applicable poverty line for a 
                        family of the size involved.
                    ``(B) Treatment of individuals whose incomes rise 
                above limit.--
                            ``(i) In general.--Notwithstanding an 
                        increase in the family income of residents of a 
                        unit above the income limitation applicable 
                        under subparagraph (A), such residents shall 
                        continue to be treated as eligible tenants if 
                        the family income of such residents initially 
                        met such income limitation and such unit 
                        continues to be certified as an eligible unit 
                        under this section.
                            ``(ii) No rental reduction for at least 2 
                        years.--A qualified rental reduction agreement 
                        with respect to a qualified building shall 
                        provide that if, by reason of an increase in 
                        family income described in clause (i), there is 
                        no qualified rental reduction amount with 
                        respect to the dwelling unit for 2 consecutive 
                        years, the taxpayer shall rent the next 
                        available unit to an eligible tenant (without 
                        regard to whether such unit is an eligible unit 
                        under this section).
                    ``(C) Applicable poverty line.--The term 
                `applicable poverty line' means the most recently 
                published poverty line (within the meaning of section 
                2110(c)(5) of the Social Security Act (42 U.S.C. 
                1397jj(c)(5))) as of the time of the determination as 
                to whether an individual is an eligible tenant.
            ``(5) Family income.--
                    ``(A) In general.--Family income shall be 
                determined in the same manner as under section 8 of the 
                United States Housing Act of 1937.
                    ``(B) Time for determining income.--
                            ``(i) In general.--Except as provided in 
                        this subparagraph, family income shall be 
                        determined at least annually on the basis of 
                        income for the preceding calendar year.
                            ``(ii) Families on fixed income.--If at 
                        least 90 percent of the family income of the 
                        residents of a unit at the time of any 
                        determination under clause (i) is derived from 
                        payments under title II or XVI of the Social 
                        Security Act (or any similar fixed income 
                        amounts specified by the Secretary), the 
                        taxpayer may elect to treat such payments (or 
                        amounts) as the family income of such residents 
                        for the year of the determination and the 2 
                        succeeding years, except that the taxpayer 
                        shall, in such manner as the Secretary may 
                        prescribe, adjust such amount for increases in 
                        the cost of living.
                            ``(iii) Initial income.--The Secretary may 
                        allow a State to provide that the family income 
                        of residents at the time such residents first 
                        rent a unit in a qualified building may be 
                        determined on the basis of current or 
                        anticipated income.
                            ``(iv) Special rules where family income is 
                        reduced.-- If residents of a unit establish (in 
                        such manner as the rental reduction credit 
                        agency provides) that their family income has 
                        been reduced by at least 10 percent below such 
                        income for the determination year--
                                    ``(I) such residents may elect, at 
                                such time and in such manner as such 
                                agency may prescribe, to have their 
                                family income redetermined, and
                                    ``(II) clause (ii) shall not apply 
                                to any of the 2 succeeding years 
                                described in such clause which are 
                                specified in the election.
    ``(f) State Rental Reduction Allocation Plan.--
            ``(1) Adoption of plan required.--
                    ``(A) In general.--For purposes of this section--
                            ``(i) each State shall, before the 
                        allocation of its State rental reduction credit 
                        ceiling, establish and have in effect a State 
                        rental reduction allocation plan, and
                            ``(ii) notwithstanding any other provision 
                        of this section, the rental reduction credit 
                        amount allocated to any building shall be zero 
                        unless such amount was allocated pursuant to a 
                        State rental reduction allocation plan.
                Such plan shall only be adopted after such plan is made 
                public and at least 60 days has been allowed for public 
                comment.
                    ``(B) State rental reduction allocation plan.--For 
                purposes of this section, the term `State rental 
                reduction allocation plan' means, with respect to any 
                State, any plan of the State meeting the requirements 
                of paragraphs (2) and (3).
            ``(2) General plan requirements.--A plan shall meet the 
        requirements of this paragraph only if--
                    ``(A) the plan sets forth the criteria and 
                priorities which a rental reduction credit agency of 
                the State shall use in allocating the State rental 
                reduction credit ceiling to eligible units within a 
                building,
                    ``(B) the plan provides that no credit allocation 
                shall be made which is not in accordance with the 
                criteria and priorities set forth under subparagraph 
                (A) unless such agency provides a written explanation 
                to the general public for any credit allocation which 
                is not so made and the reasons why such allocation is 
                necessary, and
                    ``(C) the plan provides that such agency is 
                required to prioritize the renewal of existing credit 
                allocations at the time of the expiration of the 
                qualified rental reduction agreement with respect to 
                the allocation, including, where appropriate, a 
                commitment within a qualified rental reduction 
                agreement that the credit allocation will be renewed if 
                the terms of the agreement have been met and sufficient 
                new credit authority is available.
            ``(3) Specific requirements.--A plan shall meet the 
        requirements of this paragraph only if--
                    ``(A) the plan provides methods for determining--
                            ``(i) the amount of rent which would be 
                        charged for a substantially similar unit in the 
                        same building which is not an eligible unit for 
                        purposes of subsection (b)(2)(A)(i), including 
                        whether such determination may be made by self-
                        certification or by undertaking rent 
                        reasonableness assessments similar to 
                        assessments required under section 8(o)(10) of 
                        the United States Housing Act of 1937 (42 
                        U.S.C. 1437f(o)(10)),
                            ``(ii) the qualified rental reduction 
                        amounts under subsection (c)(2)(B), and
                            ``(iii) the applicable percentage under 
                        subsection (e)(1),
                    ``(B) the plan provides a procedure that the rental 
                reduction credit agency (or an agent or other private 
                contractor of such agency) will follow in monitoring 
                for--
                            ``(i) noncompliance with the provisions of 
                        this section and the qualified rental reduction 
                        agreement and in notifying the Internal Revenue 
                        Service of any such noncompliance of which such 
                        agency becomes aware, and
                            ``(ii) noncompliance with habitability 
                        standards through regular site visits,
                    ``(C) the plan requires a person receiving a credit 
                allocation to report to the rental reduction credit 
                agency such information as is necessary to ensure 
                compliance with the provisions of this section and the 
                qualified rental reduction agreement, and
                    ``(D) the plan provides methods by which any excess 
                reserve amounts which become available under subsection 
                (d)(1)(C)(ii) will be used to reduce rental payments of 
                eligible tenants or to address maintenance and repair 
                needs in qualified buildings, including how such 
                assistance will be allocated among eligible tenants and 
                qualified buildings.
    ``(g) Qualified Rental Reduction Agreement.--For purposes of this 
section--
            ``(1) In general.--The term `qualified rental reduction 
        agreement' means, with respect to any building which is 
        residential rental property (as defined in section 
        168(e)(2)(A)), a written, binding agreement between a rental 
        reduction credit agency and the taxpayer which specifies--
                    ``(A) the number of eligible units within such 
                building for which a rental reduction credit amount is 
                being allocated,
                    ``(B) the credit period for such building,
                    ``(C) the rental reduction credit amount allocated 
                to such building (and dwelling units within such 
                building) and the portion of such amount allocated to 
                each month within the credit period under subsection 
                (c)(2)(B),
                    ``(D) the applicable percentage to be used in 
                computing the qualified rental reduction amounts with 
                respect to the building,
                    ``(E) the method for determining the amount of rent 
                which may be charged for eligible units within the 
                building, and
                    ``(F) whether--
                            ``(i) the agency commits to entering into a 
                        new agreement with the taxpayer if the terms of 
                        the agreement have been met and sufficient new 
                        credit authority is available for such new 
                        agreement, and
                            ``(ii) the taxpayer is required to accept 
                        such new agreement.
            ``(2) Tenant protections.--A qualified rental reduction 
        agreement shall provide the following:
                    ``(A) Non-displacement of non-eligible tenants.--A 
                taxpayer receiving a rental reduction credit amount may 
                not refuse to renew the lease of or evict (other than 
                for good cause) a tenant of a unit who is not an 
                eligible tenant at any time during the credit period 
                and such unit shall not be treated as an eligible unit 
                while such tenant resides there.
                    ``(B) Only good cause evictions of eligible 
                tenants.--A taxpayer receiving a rental reduction 
                credit amount may not refuse to renew the lease of or 
                evict (other than for good cause) an eligible tenant of 
                an eligible unit.
                    ``(C) Mobility.--A taxpayer receiving a rental 
                reduction credit amount shall--
                            ``(i) give priority to rent any available 
                        unit of suitable size to tenants who are 
                        eligible tenants who are moving from another 
                        qualified building where such tenants had lived 
                        at least 1 year and were in good standing, and
                            ``(ii) inform eligible tenants within the 
                        building of their right to move after 1 year 
                        and provide a list maintained by the State of 
                        qualified buildings where such tenants might 
                        move.
                            ``(iii) Fair housing and civil rights.--If 
                        a taxpayer receives a rental reduction credit 
                        amount--
                                    ``(I) such taxpayer shall comply 
                                with the Fair Housing Act with respect 
                                to the building, and
                                    ``(II) the receipt of such amount 
                                shall be treated as the receipt of 
                                Federal financial assistance for 
                                purposes of applying any Federal civil 
                                rights laws.
                            ``(iv) Admissions preferences.--A taxpayer 
                        receiving a rental reduction credit amount 
                        shall comply with any admissions preferences 
                        established by the State for tenants within 
                        particular demographic groups eligible for 
                        health or social services.
            ``(3) Compliance requirements.--A qualified rental 
        reduction agreement shall provide that a taxpayer receiving a 
        rental reduction credit amount shall comply with all reporting 
        and other procedures established by the State to ensure 
        compliance with this section and such agreement.
            ``(4) Projects.--In the case of a rental reduction credit 
        allocated to a project consisting of more than 1 building, the 
        rental reduction credit agency may provide for a single 
        qualified rental reduction agreement which applies to all 
        buildings which are part of such project.
    ``(h) Certifications and Other Reports to Secretary.--
            ``(1) Certification with respect to 1st year of credit 
        period.--Following the close of the 1st taxable year in the 
        credit period with respect to any qualified building, the 
        taxpayer shall certify to the Secretary (at such time and in 
        such form and in such manner as the Secretary prescribes)--
                    ``(A) the information described in subsection 
                (g)(1) required to be contained in the qualified rental 
                reduction agreement with respect to the building, and
                    ``(B) such other information as the Secretary may 
                require.
        In the case of a failure to make the certification required by 
        the preceding sentence on the date prescribed therefor, unless 
        it is shown that such failure is due to reasonable cause and 
        not to willful neglect, no credit shall be allowable by reason 
        of subsection (a) with respect to such building for any taxable 
        year ending before such certification is made.
            ``(2) Annual reports to the secretary.--The Secretary may 
        require taxpayers to submit an information return (at such time 
        and in such form and manner as the Secretary prescribes) for 
        each taxable year setting forth--
                    ``(A) the information described in paragraph (1)(A) 
                for the taxable year, and
                    ``(B) such other information as the Secretary may 
                require.
        The penalty under section 6652(j) shall apply to any failure to 
        submit the return required by the Secretary under the preceding 
        sentence on the date prescribed therefor.
            ``(3) Annual reports from rental reduction credit agency.--
                    ``(A) Reports.--Each rental reduction credit agency 
                which allocates any rental reduction credit amount to 1 
                or more buildings for any calendar year shall submit to 
                the Secretary (at such time and in such manner as the 
                Secretary shall prescribe) an annual report 
                specifying--
                            ``(i) the amount of rental reduction credit 
                        amounts allocated to each such building for 
                        such year,
                            ``(ii) sufficient information to identify 
                        each such building and the taxpayer with 
                        respect thereto,
                            ``(iii) information as to the demographic 
                        and income characteristics of eligible tenants 
                        of all such buildings to which such amounts 
                        were allocated, and
                            ``(iv) such other information as the 
                        Secretary may require.
                    ``(B) Penalty.--The penalty under section 6652(j) 
                shall apply to any failure to submit the report 
                required by subparagraph (A) on the date prescribed 
                therefor.
                    ``(C) Information made public.--The Secretary 
                shall, in consultation with Secretary of Housing and 
                Urban Development, make information reported under this 
                paragraph for each qualified building available to the 
                public annually to the greatest degree possible without 
                disclosing personal information about individual 
                tenants.
    ``(i) Special Rule for Payments to Partnerships and S 
Corporations.--For purposes of this subtitle, in the case of any 
qualified building directly held by any partnership or S corporation, 
the payment under section 6433 shall be made in lieu of the credit 
determined under this section with respect to such building.
    ``(j) Regulations and Guidance.--The Secretary shall prescribe such 
regulations or guidance as may be necessary to carry out the purposes 
of this section, including--
            ``(1) providing necessary forms and instructions, and
            ``(2) providing for proper treatment of projects for which 
        a credit is allowed both under this section and section 42.''.
    (b) Payment to Partnerships and S Corporations in Lieu of Credit.--
            (1) In general.-- Subchapter B of chapter 65 of the 
        Internal Revenue Code of 1986 is amended by adding at the end 
        the following new section:

``SEC. 6433. PAYMENTS IN LIEU OF RENTERS CREDIT FOR PARTNERSHIPS AND S 
              CORPORATIONS.

    ``(a) In General.--In the case of any qualified building (as 
defined in section 36C(a)(3)) directly held by any partnership or S 
corporation, the Secretary shall pay to such partnership or S 
corporation for any taxable year an amount equal to the amount of the 
credit which, but for section 36C(i), would be allowed under section 
36C with respect to such building.
    ``(b) Regulatory Authority.--The Secretary shall prescribe such 
regulations, rules, and guidance as may be necessary to carry out 
section 36C(i), section 92, and this section, including regulations, 
rules, and guidance providing for--
            ``(1) the application of the rules under section 36C with 
        respect to payments under this section in the same manner as 
        such rules apply for purposes of the credit under section 36C,
            ``(2) the time and manner of payments under subsection (a), 
        and
            ``(3) the determination of a partner's distributive share, 
        or an S corporation shareholder's pro rata share, of any 
        payment under subsection (a).''.
            (2) Conforming amendment.--The table of sections for 
        subchapter B of chapter 65 of the Internal Revenue Code of 1986 
        is amended by adding at the end the following new item:

``Sec. 6433. Payments in lieu of renters credit for partnerships and S 
                            corporations.''.
    (c) Credit Includible in Gross Income.--
            (1) In general.--Part II of subchapter B of chapter 1 of 
        the Internal Revenue Code of 1986 is amended by adding at the 
        end the following new section:

``SEC. 92. INCLUSION IN INCOME OF RENTERS CREDIT AND PAYMENTS.

    ``Gross income includes the amount of the credit allowed to the 
taxpayer under section 36C for the taxable year and the amount of any 
payment in lieu of such credit under section 6433.''.
            (2) Income disregarded for alternative minimum taxable 
        income.--Section 56(a) of such Code is amended by adding at the 
        end the following:
            ``(8) Section 92 not applicable.--Section 92 (relating to 
        inclusion in income of renters credit) shall not apply.''.
            (3) Conforming amendment.--The table of sections for part 
        II of subchapter B of chapter 1 of such Code is amended by 
        adding at the end the following new item:

``Sec. 92. Inclusion in income of renters credit and payments.''.
    (d) Administrative Fees.-- No provision of, or amendment made by, 
this Act shall be construed to prevent a rental reduction credit agency 
of a State from imposing fees to cover its costs or from levying any 
such fee on a taxpayer applying for or receiving a rental reduction 
credit amount.
    (e) Other Conforming Amendments.--
            (1) Section 6211(b)(4) of the Internal Revenue Code of 1986 
        is amended by inserting ``36C (including any related payment 
        under section 6433),'' after ``36B,''.
            (2) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting ``36C (including any 
        related payment under section 6433),'' after ``36B,''.
            (3) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of the Internal Revenue Code of 1986 
        is amended by inserting after the item relating to section 36B 
        the following new item:

``Sec. 36C. Renters credit.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2020.
                                 <all>