Title: Foster Care Tax Credit Act
Policy area: Taxation

Summary:
Foster Care Tax Credit Act
This bill allows eligible taxpayers an income-based tax credit equal to $850 in a taxable year for the care of a qualifying foster child. An eligible taxpayer is a taxpayer with whom a foster child was placed for not less than one month in the taxable year and for whom a child tax credit is not allowed for such taxable year. A qualifying foster child is a foster child who is under age 17 and is a citizen, national, or resident of the United States.
The bill requires certain information reporting for foster child placements and a study and report on emergency and short-term foster placements.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 1599 Introduced in Senate (IS)]

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116th CONGRESS
  1st Session
                                S. 1599

 To amend the Internal Revenue Code of 1986 to create a refundable tax 
          credit for foster families, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 22, 2019

 Mr. Kaine (for himself and Mr. Jones) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to create a refundable tax 
          credit for foster families, 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 ``Foster Care Tax Credit Act''.

SEC. 2. FOSTER CARE TAX CREDIT.

    (a) Allowance of Credit.--
            (1) 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. FOSTER CARE TAX CREDIT.

    ``(a) Allowance of Credit.--In the case of an eligible taxpayer, 
there shall be allowed as a credit against the tax imposed by this 
chapter for the taxable year an amount equal to $850.
    ``(b) Limitation.--
            ``(1) In general.--The amount of the credit allowable under 
        subsection (a) (determined without regard to this subsection) 
        shall be reduced (but not below zero) by the amount which bears 
        the same ratio to such credit (as so determined) as--
                    ``(A) the excess of--
                            ``(i) the taxpayer's modified adjusted 
                        gross income for such taxable year, over
                            ``(ii) the threshold amount, bears to
                    ``(B) $17,000.
            ``(2) Threshold amount.--For purposes of paragraph (1), the 
        term `threshold amount' means--
                    ``(A) $250,000, in the case of a joint return,
                    ``(B) $150,000, in the case of an individual who is 
                not married, and
                    ``(C) $125,000, in the case of a married individual 
                filing a separate return.
        For purposes of this paragraph, marital status shall be 
        determined under section 7703.
            ``(3) Modified adjusted gross income.--For purposes of this 
        subsection, the term `modified adjusted gross income' means the 
        adjusted gross income of the taxpayer for the taxable year 
        increased by any amount excluded from gross income under 
        section 911, 931, or 933.
    ``(c) Eligible Taxpayer.--For purposes of this section--
            ``(1) In general.--The term `eligible taxpayer' means, with 
        respect to any taxable year, any taxpayer--
                    ``(A) with whom a qualifying foster child was 
                placed for a period of not less than 1 month during 
                such taxable year, and
                    ``(B) for whom a credit under section 24 with 
                respect to such eligible foster child is not allowed 
                for such taxable year.
            ``(2) Qualifying foster child.--The term `qualifying foster 
        child' means an eligible foster child (within the meaning of 
        section 152(f)(1)(C))--
                    ``(A) who has not attained age 17, and
                    ``(B) who is a citizen, national, or resident of 
                the United States.
            ``(3) Calendar month.--For purposes of this paragraph 
        (1)(A), if a foster child resides in the home of the taxpayer 
        for more than 15 consecutive days of a calendar month but fewer 
        than the total number of days in such calendar month, such 
        foster child shall be treated as residing in the home of the 
        taxpayer for the full calendar month.
    ``(d) Restrictions on Taxpayers Who Improperly Claimed Credit in 
Prior Year.--
            ``(1) Taxpayers making prior fraudulent or reckless 
        claims.--
                    ``(A) In general.--No credit shall be allowed under 
                this section for any taxable year in the disallowance 
                period.
                    ``(B) Disallowance period.--For purposes of 
                subparagraph (A), the disallowance period is--
                            ``(i) the period of 10 taxable years after 
                        the most recent taxable year for which there 
                        was a final determination that the taxpayer's 
                        claim of credit under this section was due to 
                        fraud, and
                            ``(ii) the period of 2 taxable years after 
                        the most recent taxable year for which there 
                        was a final determination that the taxpayer's 
                        claim of credit under this section was due to 
                        reckless or intentional disregard of rules and 
                        regulations (but not due to fraud).
            ``(2) Taxpayers making improper prior claims.--In the case 
        of a taxpayer who is denied credit under this section for any 
        taxable year as a result of the deficiency procedures under 
        subchapter B of chapter 63, no credit shall be allowed under 
        this section for any subsequent taxable year unless the 
        taxpayer provides such information as the Secretary may require 
        to demonstrate eligibility for such credit.''.
            (2) Conforming amendments.--
                    (A) Section 6211(b)(4) of the Internal Revenue Code 
                of 1986 is amended by inserting ``36C,'' after 
                ``36B,''.
                    (B) Section 1324(b)(2) of title 31, United States 
                Code, is amended by inserting ``25E,'' after ``25A,''.
                    (C) 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. Foster care tax credit.''.
    (b) Information Returns Relating to Foster Child Placement.--
            (1) In general.--Subpart A of part III of subchapter A of 
        chapter 61 of the Internal Revenue Code of 1986 is amended by 
        inserting after section 6039J the following new section:

``SEC. 6039K. INFORMATION REPORTING WITH RESPECT TO FOSTER CHILD 
              PLACEMENT.

    ``(a) In General.--Every authorized placement agency and court 
which places a qualifying foster child with a person during a calendar 
year shall, at such time as the Secretary shall prescribe, make a 
return described in subsection (b).
    ``(b) Form and Manner of Return.--A return is described in this 
subsection if such return--
            ``(1) is in such form as the Secretary may prescribe, and
            ``(2) contains, with respect to each qualifying foster 
        child placed during the calendar year--
                    ``(A) the name, address, and TIN of each individual 
                with whom such qualifying foster child was placed,
                    ``(B) the name of the qualifying foster child, and
                    ``(C) the dates during which such placement 
                occurred.
    ``(c) Statements To Be Furnished to Foster Parents.--
            ``(1) In general.--Every person required to make a return 
        under subsection (a) shall furnish to each individual whose 
        name is required to be set forth under subsection (b)(2)(A) a 
        written statement showing--
                    ``(A) the name and address of the person required 
                to make such return and the phone number of the 
                information contact for such person, and
                    ``(B) the information required to be shown on the 
                return with respect to such individual.
            ``(2) Time for furnishing statements.--The written 
        statement required under paragraph (1) shall be furnished on or 
        before January 31 of the year following the calendar year for 
        which the return under subsection (a) was required to be made.
    ``(d) Qualifying Foster Child.--For purposes of this section, the 
term `qualifying foster child' has the meaning given such term under 
section 36C(c)(2).''.
            (2) Assessable penalties.--
                    (A) Section 6724(d)(1)(B) of such Code is amended 
                by striking ``or'' at the end of clause (xxv), by 
                striking ``and'' at the end of clause (xxvi) and 
                inserting ``or'', and by inserting after clause (xxvi) 
                the following new clause:
                            ``(xxvii) section 6039K (relating to 
                        information returns with respect to foster 
                        child placement),''.
                    (B) Section 6724(d)(2) of such Code is amended by 
                redesignating the second subparagraph (JJ) as 
                subparagraph (KK), by striking ``or'' at the end of 
                subparagraph (II), by striking the period at the end of 
                the first subparagraph (JJ), by striking the period at 
                the end of subparagraph (KK) (as so redesignated) and 
                inserting a comma, and by inserting after such 
                subparagraph (KK) the following new subparagraph:
                    ``(LL) section 6039K(c) (relating to statements 
                with respect to foster child placement).''.
            (3) Clerical amendment.--The table of sections of subpart A 
        of part III of subchapter A of chapter 61 of such Code is 
        amended by inserting after the item relating to section 6039J 
        the following new item:

``Sec. 6039K. Information reporting with respect to foster child 
                            placement.''.
    (c) Election Not To Take Child Tax Credit.--Section 24(h)(4) of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new subparagraph:
                    ``(D) Election not to take credit.--A taxpayer may 
                elect not to have this paragraph apply with respect to 
                any dependent of the taxpayer to whom a credit would 
                otherwise be allowed by reason of subparagraph (A). In 
                any case in which a taxpayer makes an election under 
                this subparagraph, the credit allowed under this 
                section shall be treated as not allowed with respect to 
                such dependent.''.
    (d) Application of Tax Return Preparer Due Diligence Penalty.--
Section 6695(g) of the Internal Revenue Code of 1986 is amended by 
striking ``or 32'' and inserting ``32, or 36C''.
    (e) Effective Date.--The amendments made by this section shall 
apply to calendar months beginning after December 31, 2019, in taxable 
years beginning after such date.
    (f) Education.--
            (1) In general.--The Secretary of Health and Human Services 
        (or the Secretary's delegate), in coordination with the 
        Secretary of the Treasury or such Secretary's delegate, shall 
        identify provisions in the Internal Revenue Code of 1986 that 
        can be used by or can benefit foster families, and shall 
        increase outreach efforts to provide information and 
        educational materials regarding such provisions to State and 
        Indian tribal foster care agencies and to foster families.
            (2) Authorization of appropriations.--There are authorized 
        to be appropriated such sums as necessary for the purposes of 
        carrying out paragraph (1).

SEC. 3. STUDY AND REPORT ON EMERGENCY AND SHORT-TERM FOSTER PLACEMENTS.

    (a) Study.--The Secretary of Health and Human services, in 
coordination with the Secretary of the Treasury (or the Secretary's 
delegate), shall conduct a study on--
            (1) the costs and financial burdens on foster families who 
        experience multiple emergency and short-term foster placements 
        annually; and
            (2) challenges to verifying and documenting the placement 
        of children in emergency and short-term placement.
For purposes of this subsection, a short-term placement is a placement 
that lasts less than 1 week.
    (b) Report.--Not later than 1 year after the date of the enactment 
of this Act, the Secretary of Health and Human Services shall submit to 
Congress a report on the study conducted under subsection (a).
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