Catch Up Our Kids Act of 2022

Bill: 117-s-4726
Sponsor: full_name: Sen. Cruz, Ted [R-TX]
Introduced: 2022-08-02
Policy area: Taxation
Latest action: action_date: 2022-08-02
text: Read twice and referred to the Committee on Finance.

Summaries:
action_date: 2022-08-02
action_desc: Introduced in Senate
text: <p><strong>Catch Up Our Kids Act of 2022</strong></p> <p>This bill provides tax benefits to compensate for learning losses due to school closures during the COVID-19 pandemic. The bill </p> <ul> <li>creates a new three-year learning loss tax credit of $1,200 per child that will allow parents or legal guardians to recoup actual expenses incurred for education-related activities,</li> <li>extends the employer allowance for certain tuition and education-related expenses to include educational expenses for children of employees, </li> <li>expands education savings accounts (ESAs) to include homeschool expenses for a three-year period, </li> <li>doubles the annual contribution limit for Coverdell ESAs from $2,000 to $4,000 for a three-year period, </li> <li>Exempts contributions to an ESA and a Coverdell ESA from the annual gift tax exclusion amount, and </li> <li>allows states to use unspent Elementary and Secondary School Emergency Relief (ESSER) funds to fund scholarship granting organizations.</li> </ul>

tv_txt: II 117th CONGRESS 2d Session S. 4726 IN THE SENATE OF THE UNITED STATES August 2, 2022 Mr. Cruz introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To alleviate pandemic learning loss.

1. Short title This Act may be cited as the Catch Up Our Kids Act of 2022 . 2. Findings Congress finds the following: (1) The COVID–19 pandemic and the resulting school disruptions will have a profound and lasting impact on students across the United States. (2) While most countries of the world closed schools at the beginning of the pandemic as a precaution, the United States was an outlier by keeping schools closed to in-person instruction for unnecessarily extended periods of time and favoring remote instruction. (3) There is no scientific evidence that showed elementary or secondary schools to be vectors for community spread, nor that school-aged children were uniquely vulnerable to the COVID–19 virus. To date, schools have not been proven to be major spreaders of COVID–19. (4) According to a study done by the Harvard University Center for Education Policy Research, 30 percent of students in elementary and secondary schools during the 2020–2021 school year attended schools that conducted classes remotely for more than 16 weeks. (5) The Harvard University study showed that high-poverty districts and districts that serve predominately Black and Hispanic students were more likely to have remote instruction. The study also showed that remote instruction was a primary driver of widening academic achievement gaps. (6) The achievement gaps and learning loss have proven remote instruction to be a failure. (7) In mathematics, studies show that students who attended mostly in-person instruction during the 2020–2021 school year lost approximately 20 percent worth of a typical school year’s mathematics learning. Comparatively, students who spent most of the school year in remote instruction lost 50 percent of math instruction. (8) According to a McKinsey study, on average, students in elementary and secondary schools are 3 months behind in reading as a result of the pandemic school disruptions. (9) Pandemic school closures, and the consequent learning loss, have reversed the progress made to narrow the academic achievement gaps for historically disadvantaged groups. Low-income, Black, and Hispanic students fell further behind compared to White, Asian, and high-income students. (10) Learning loss was shown to be less significant in States and school districts that reopened in-person instruction sooner. States with the lowest rates of remote instruction in both high- and low-poverty districts, such as Texas and Florida, saw smaller rates of learning loss and gaps in achievement compared to States with the highest rates of remote instruction. (11) If pandemic learning loss is permanent, studies show that students who attend high-poverty schools may see a decline of 5 percent in average earnings over their lifetimes. Overall, elementary and secondary school learning loss could result in a $2,000,000,000,000 decline in lifetime earnings. (12) All levels of government, elected officials, and those working in education must make it a priority to pursue parent-driven and directed policies to help students catch up from pandemic-related learning loss and close achievement gaps. 3. Use of unobligated ESSER funds for learning loss scholarships (a) Definitions In this section: (1) Eligible student The term eligible student means an elementary school or secondary school student— (A) whose parent or legal guardian applied for a learning loss scholarship under this section; and (B) who is a citizen or national of the United States or an alien (as defined in section 101(a) of the Immigration and Nationality Act ( 8 U.S.C. 1101(a) ) who is lawfully present in the United States. (2) Scholarship-granting organization The term scholarship-granting organization means an organization that— (A) is described in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from taxation under section 501(a) of such Code; and (B) provides learning loss scholarships to eligible students who— (i) reside in the State in which the organization is recognized; or (ii) in the case in which the organization received a subgrant from the Bureau of Indian Education, are members of a federally recognized Indian Tribe. (3) Secretary The term Secretary means the Secretary of Education. (4) State The term State means each of the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, the United States Virgin Islands, and the Department of the Interior (acting through the Bureau of Indian Education). (b) Transfer of unobligated funds The unobligated balance of funds made available to carry out section 18003 of division B of the CARES Act ( Public Law 116–136 ), section 313 of the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (division M of Public Law 116–260 ), and section 2001 of the American Rescue Plan Act of 2021 ( 20 U.S.C. 3401 note) are hereby transferred and shall be used by the Secretary to carry out this section. (c) Learning loss scholarships (1) Authorization The Secretary shall use amounts transferred under subsection (b) to award grants to States that submit applications under paragraph (2). (2) Applications A State that desires to receive a grant under this section shall submit an application to the Secretary at such time, in such manner, and accompanied by such information as the Secretary may require. (3) Allocations to States The amount of each grant under paragraph (1) shall be allocated by the Secretary to each State in the same proportion as each State received under part A of title I of the Elementary and Secondary Education Act of 1965 ( 20 U.S.C. 6311 et seq. ) in the most recent fiscal year. (4) Subgrants to scholarship-granting organizations (A) In general A State that receives a grant under this section shall award subgrants to scholarship-granting organizations to enable the scholarship-granting organization to award learning loss scholarships to the parents or legal guardians of eligible students. (B) Use of funds A parent or legal guardian of an eligible student who receives a learning loss scholarship may use the scholarship on behalf of the eligible student for any of the following: (i) Tuition for enrollment at an elementary school or secondary school, including at a private elementary school or secondary school. (ii) Tutoring services. (iii) Educational classes or curriculum inside or outside of the home. (iv) Books, instructional materials, or online educational materials. (v) Educational therapies, including educational therapies and services for students with disabilities. (vi) Other educational and instructional materials as the student’s parent or legal guardian determines is beneficial in-relation to at-home learning, including online or virtual schooling or home instruction. 4. Learning loss tax credit (a) In general Subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 25D the following new section: 25E. Learning loss tax credit (a) Allowance of credit In the case of a taxpayer who is an eligible individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year with respect to each qualifying child of the taxpayer an amount equal to $1,200. (b) Limitation Subsection (a) shall not apply in the case of a taxpayer with adjusted gross income for the taxable year in excess of— (1) $400,000 in the case of a joint return, and (2) $200,000 in any other case. (c) Eligible individual For purposes of this section, the term eligible individual means a citizen or national of the United States. (d) Qualifying child For purposes of this section— (1) In general The term qualifying child means a qualifying child of the taxpayer (as defined in section 152(c)) for whom the taxpayer is allowed a deduction under section 151 for the taxable year and who is eligible to attend elementary or secondary school within the State in which the taxpayer resides for all or a portion of the taxable year. (2) Exception The term qualifying child shall not include any individual who is not a citizen or national of the United States. (e) Identification requirements (1) Qualifying child identification requirement No credit shall be allowed under this section to a taxpayer with respect to any qualifying child unless the taxpayer includes the name and taxpayer identification number of such qualifying child on the return of tax for the taxable year and such taxpayer identification number was issued on or before the due date for filing such return. (2) Taxpayer identification requirement No credit shall be allowed under this section if the taxpayer identification number of the taxpayer was issued after the due date for filing the return for the taxable year. (f) Taxable year must be full taxable year Except in the case of a taxable year closed by reason of the death of the taxpayer, no credit shall be allowable under this section in the case of a taxable year covering a period of less than 12 months. (g) Termination This section shall not apply to any taxable year beginning after December 31, 2024. . (b) Clerical amendment The table of sections for subpart A 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 25D the following new item: Sec. 25E. Learning loss tax credit. . (c) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2021. 5. Exclusion for employee child educational assistance (a) In general Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 127 the following new section: 128. Children's educational assistance programs (a) Exclusion from gross income (1) In general Gross income of an employee does not include amounts paid or expenses incurred by the employer for educational assistance to the employee’s qualifying child if the assistance is furnished pursuant to a program which is described in subsection (b). (2) $2,000 maximum exclusion If, but for this paragraph, this section would exclude from gross income more than $2,000 of educational assistance furnished to an individual with respect to any one child of the individual during a calendar year, this section shall apply only to the first $2,000 of such assistance so furnished with respect to such child. (b) Children’s educational assistance program (1) In general For purposes of this section, a children’s educational assistance program is a separate written plan of an employer for the exclusive benefit of the employees of the employer to provide such employees' children with educational assistance. The program must meet the requirements of paragraphs (2) through (6) of this subsection. (2) Eligibility The program shall benefit employees who qualify under a classification set up by the employer and found by the Secretary not to be discriminatory in favor of employees who are highly compensated employees (within the meaning of section 414(q)) or their dependents. For purposes of this paragraph, there shall be excluded from consideration employees not included in the program who are included in a unit of employees covered by an agreement which the Secretary of Labor finds to be a collective bargaining agreement between employee representatives and one or more employers, if there is evidence that children's educational assistance benefits were the subject of good faith bargaining between such employee representatives and such employer or employers. (3) Other benefits as an alternative A program must not provide eligible employees with a choice between children's educational assistance and other remuneration includible in gross income. For purposes of this section, the business practices of the employer (as well as the written program) will be taken into account. (4) No funding required A program referred to in paragraph (1) is not required to be funded. (5) Notification of employees Reasonable notification of the availability and terms of the program must be provided to eligible employees. (c) Definitions; special rules For purposes of this section— (1) Educational assistance The term educational assistance , with respect to a qualifying child of an employee, means the payment, by an employer, of expenses incurred by or on behalf of an employee for such child for— (A) curriculum and curricular materials, (B) academic books or other instructional materials, (C) online educational materials, (D) tuition for tutoring or educational classes outside of the home, including at a tutoring facility, but only if the tutor or instructor is not related to the student and— (i) is licensed as a teacher in any State, (ii) has taught at an eligible educational institution (as defined in section 529(e)(5)), or (iii) is a subject matter expert in the relevant subject, or (E) fees for a nationally standardized norm-referenced achievement test, an advanced placement examination, or any examinations related to college or university admission. The term educational assistance does not include any payment for, or the provision of any benefits with respect to, any course or other education involving sports, games, or hobbies. (2) Employee The term employee includes, for any year, an individual who is an employee within the meaning of section 401(c)(1) (relating to self-employed individuals). (3) Employer An individual who owns the entire interest in an unincorporated trade or business shall be treated as the individual's own employer. A partnership shall be treated as the employer of each partner who is an employee within the meaning of paragraph (2). (4) Qualifying child For purposes of this section— (A) In general The term qualifying child means a qualifying child of the taxpayer (as defined in section 152(c)) for whom the taxpayer is allowed a deduction under section 151 for the taxable year and who is eligible to attend elementary or secondary school within the State in which the taxpayer resides for all or a portion of the taxable year. (B) Exception for certain noncitizens The term qualifying child shall not include any individual who would not be a dependent if subparagraph (A) of section 152(b)(3) were applied without regard to all that follows resident of the United States . (5) Attribution rules (A) Ownership of stock Ownership of stock in a corporation shall be determined in accordance with the rules provided under subsections (d) and (e) of section 1563 (without regard to section 1563(e)(3)(C)). (B) Interest in unincorporated trade or business The interest of an employee in a trade or business which is not incorporated shall be determined in accordance with regulations prescribed by the Secretary, which shall be based on principles similar to the principles which apply in the case of subparagraph (A). (6) Denial of double benefit No deduction or credit shall be allowed to the employee under any other section of this chapter for any amount excluded from income by reason of this section. (d) Termination This section shall not apply to any taxable year beginning after December 31, 2024. . (b) Clerical amendment The table of sections for part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 127 the following new item: Sec. 128. Children's educational assistance programs. . (c) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2021. 6. Temporary increase in contribution limit for Coverdell education savings accounts (a) In general Section 530 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection: (g) Increased contribution limit To combat pandemic-Induced learning loss In the case of any taxable year beginning in 2022, 2023, or 2024, subsection (b)(1)(A)(iii) shall be applied by substituting $4,000 for $2,000 . . (b) Effective date The amendment made by this section shall apply to taxable years ending after December 31, 2021. 7. Special rules for qualified tuition programs (a) In general Section 529 of the Internal Revenue Code of 1986 is amended by redesignating subsection (f) as subsection (g) and by inserting after subsection (e) the following new subsection: (f) Special temporary rules To combat pandemic-Induced learning loss (1) In general In the case of any taxable year beginning in 2022, 2023, or 2024— (A) subsection (c)(7) shall be applied— (i) by substituting qualified expenses for tuition , and (ii) by treating qualified expenses in connection with a homeschool (whether treated as a homeschool or a private school for purposes of applicable State law) in the same manner as expenses in connection with enrollment or attendance at an elementary or secondary public, private, or religious school, and (B) the last sentence of subsection (e)(3) shall not apply. (2) Qualified expenses For purposes of apply paragraph (1)(A), the term qualified expenses means the following: (A) Tuition. (B) Curriculum and curricular materials. (C) Books or other instructional materials. (D) Online educational materials. (E) Tuition for tutoring or educational classes outside of the home, including at a tutoring facility, but only if the tutor or instructor is not related to the student and— (i) is licensed as a teacher in any State, (ii) has taught at an eligible educational institution, or (iii) is a subject matter expert in the relevant subject. (F) Fees for a nationally standardized norm-referenced achievement test, an advanced placement examination, or any examinations related to college or university admission. (G) Fees for dual enrollment in an institution of higher education. (H) Educational therapies for students with disabilities provided by a licensed or accredited practitioner or provider, including occupational, behavioral, physical, and speech-language therapies. . (b) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2021. 8. Special temporary gift tax rules for Coverdell education savings accounts and qualified tuition programs (a) Coverdell education savings accounts Section 530 of the Internal Revenue Code of 1986, as amended by section 7, is amended by adding at the end the following new subsection: (h) Special temporary rules To combat pandemic-Induced learning loss Notwithstanding subsection (d)(3), in the case of any taxable year beginning in 2022, 2023, or 2024, any contribution to a Coverdell education savings account during such taxable year on behalf of any designated beneficiary shall not be treated as a gift for purposes of chapters 12 and 13. . (b) Qualified tuition programs Section 529 of the Internal Revenue Code of 1986, as amended by section 8, is amended by redesignating subsection (g) as subsection (h) and by inserting after subsection (f) the following new subsection: (g) Special temporary rules To combat pandemic-Induced learning loss Notwithstanding paragraphs (2) and (5)(B) of subsection (c), in the case of any taxable year beginning in 2022, 2023, or 2024, any contribution to a qualified tuition program during such taxable year on behalf of any designated beneficiary shall not be treated as a gift for purposes of chapters 12 and 13. . (c) Effective date The amendments made by this section shall apply to taxable years ending after December 31, 2021. 9. Prohibition of control over nonpublic education providers; parental rights; state and local authority (a) No federal control Nothing in this Act, or an amendment made by this Act, shall be construed to permit, allow, encourage, or authorize any Federal control over any aspect of any private, religious, or home education provider, whether or not a home education provider is treated as a private school or home school under State law. This Act, and any amendment made by this Act, shall not be construed to exclude private, religious, or home education providers from participation in programs or services under this Act, or an amendment made by this Act. (b) No control by entities submitting lists Nothing in this Act, or an amendment made by this Act, shall be construed to permit, allow, encourage, or authorize an entity submitting a list of eligible scholarship-granting organizations on behalf of a State to mandate, direct, or control any aspect of a private or home education provider, regardless of whether or not a home education provider is treated as a private school under State law. (c) No exclusion or discrimination No participating State or entity acting on behalf of a State shall exclude, discriminate against, or otherwise disadvantage any education provider with respect to programs or services under this Act, or an amendment made by this Act, based in whole or in part on the provider’s religious education character or affiliation, including religiously or mission-based policies or practices. (d) Parental rights To use scholarships No participating State or entity acting on behalf of a State shall disfavor or discourage the use of learning loss scholarships for the uses described in section 3(c)(4)(B), including those services provided by private or nonprofit entities, such as faith-based providers. (e) State and local authority Nothing in this Act, or an amendment made by this Act, shall be construed to modify a State or local government’s authority and responsibility to fund education.