Sec. 9611. CHILD TAX CREDIT IMPROVEMENTS FOR 2021
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## SEC. 9611 CHILD TAX CREDIT IMPROVEMENTS FOR 2021 ###
(a)In General **[**[26 U.S.C. 24](/us/usc/t26/s24)**]** Section 24 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection: > > ### “(i) Special Rules for 2021 > > In the case of any taxable year beginning after December 31, 2020, and before January 1, 2022— > > > #### “(1) Refundable credit > > If the taxpayer (in the case of a joint return, either spouse) has a principal place of abode in the United States (determined as provided in section 32) for more than one-half of the taxable year or is a bona fide resident of Puerto Rico (within the meaning of section 937(a)) for such taxable year— > > > ##### “(A) > > subsection
(d)shall not apply, and > > > ##### “(B) > > so much of the credit determined under subsection
(a)(after application of subparagraph (A)) as does not exceed the amount of such credit which would be so determined without regard to subsection (h)(4) shall be allowed under subpart C (and not allowed under this subpart). > > > #### “(2) 17-year-olds eligible for treatment as qualifying children > > This section shall be applied— > > > ##### “(A) > > by substituting ‘age 18’ for ‘age 17’ in subsection (c)(1), and > > > ##### “(B) > > by substituting ‘described in subsection
(c)(determined after the application of subsection (i)(2)(A))’ for ‘described in subsection (c)’ in subsection (h)(4)(A). > > > #### “(3) Credit amount > > Subsection (h)(2) shall not apply and subsection
(a)shall be applied by substituting ‘$3,000 ($3,600 in the case of a qualifying child who has not attained age 6 as of the close of the calendar year in which the taxable year of the taxpayer begins)’ for ‘$1,000’. > > > #### “(4) Reduction of increased credit amount based on modified adjusted gross income > > > ##### “(A) In general > > The amount of the credit allowable under subsection
(a)(determined without regard to subsection (b)) shall be reduced by $50 for each $1,000 (or fraction thereof) by which the taxpayer’s modified adjusted gross income (as defined in subsection (b)) exceeds the applicable threshold amount. > > > ##### “(B) Applicable threshold amount > > For purposes of this paragraph, the term ‘applicable threshold amount’ means— > > > ###### “(i) > > $150,000, in the case of a joint return or surviving spouse (as defined in section 2(a)) , > > > ###### “(ii) > > $112,500, in the case of a head of household (as defined in section 2(b)), and > > > ###### “(iii) > > $75,000, in any other case. > > > ##### “(C) Limitation on reduction > > > ###### “(i) In general > > The amount of the reduction under subparagraph
(A)shall not exceed the lesser of— > > > ###### “(I) > > the applicable credit increase amount, or > > > ###### “(II) > > 5 percent of the applicable phaseout threshold range. > > > ###### “(ii) Applicable credit increase amount > > For purposes of this subparagraph, the term ‘applicable credit increase amount’ means the excess (if any) of— > > > ###### “(I) > > the amount of the credit allowable under this section for the taxable year determined without regard to this paragraph and subsection (b), over > > > ###### “(II) > > the amount of such credit as so determined and without regard to paragraph (3). > > > ###### “(iii) Applicable phaseout threshold range > > For purposes of this subparagraph, the term ‘applicable phaseout threshold range’ means the excess of— > > > ###### “(I) > > the threshold amount applicable to the taxpayer under subsection
(b)(determined after the application of subsection (h)(3)), over > > > ###### “(II) > > the applicable threshold amount applicable to the taxpayer under this paragraph. > > > ##### “(D) Coordination with limitation on overall credit > > Subsection
(b)shall be applied by substituting ‘the credit allowable under subsection
(a)(determined after the application of subsection (i)(4)(A)’ for ‘the credit allowable under subsection (a)’.” > . ###
(b)Advance Payment of Credit ####
(1)In general Chapter 77 of such Code is amended by inserting after section 7527 the following new section: > > ## “SEC. 7527A ADVANCE PAYMENT OF CHILD TAX CREDIT > > **[**[26 U.S.C. 7527A](/us/usc/t26/s7527A)**]** > > > ### “(a) In General > > The Secretary shall establish a program for making periodic payments to taxpayers which, in the aggregate during any calendar year, equal the annual advance amount determined with respect to such taxpayer for such calendar year. Except as provided in subsection (b)(3)(B), the periodic payments made to any taxpayer for any calendar year shall be in equal amounts. > > > ### “(b) Annual Advance Amount > > For purposes of this section— > > > #### “(1) In general > > Except as otherwise provided in this subsection, the term ‘annual advance amount’ means, with respect to any taxpayer for any calendar year, the amount (if any) which is estimated by the Secretary as being equal to 50 percent of the amount which would be treated as allowed under subpart C of part IV of subchapter A of chapter 1 by reason of section 24(i)(1) for the taxpayer’s taxable year beginning in such calendar year if— > > > ##### “(A) > > the status of the taxpayer as a taxpayer described in section 24(i)(1) is determined with respect to the reference taxable year, > > > ##### “(B) > > the taxpayer’s modified adjusted gross income for such taxable year is equal to the taxpayer’s modified adjusted gross income for the reference taxable year, > > > ##### “(C) > > the only children of such taxpayer for such taxable year are qualifying children properly claimed on the taxpayer’s return of tax for the reference taxable year, and > > > ##### “(D) > > the ages of such children (and the status of such children as qualifying children) are determined for such taxable year by taking into account the passage of time since the reference taxable year. > > > #### “(2) Reference taxable year > > Except as provided in paragraph (3)(A), the term ‘reference taxable year’ means, with respect to any taxpayer for any calendar year, the taxpayer’s taxable year beginning in the preceding calendar year or, in the case of taxpayer who did not file a return of tax for such taxable year, the taxpayer’s taxable year beginning in the second preceding calendar year. > > > #### “(3) Modifications during calendar year > > > ##### “(A) In general > > The Secretary may modify, during any calendar year, the annual advance amount with respect to any taxpayer for such calendar year to take into account— > > > ###### “(i) > > a return of tax filed by such taxpayer during such calendar year (and the taxable year to which such return relates may be taken into account as the reference taxable year), and > > > ###### “(ii) > > any other information provided by the taxpayer to the Secretary which allows the Secretary to determine payments under subsection
(a)which, in the aggregate during any taxable year of the taxpayer, more closely total the Secretary’s estimate of the amount treated as allowed under subpart C of part IV of subchapter A of chapter 1 by reason of section 24(i)(1) for such taxable year of such taxpayer. > > > ##### “(B) Adjustment to reflect excess or deficit in prior payments > > In the case of any modification of the annual advance amount under subparagraph (A), the Secretary may adjust the amount of any periodic payment made after the date of such modification to properly take into account the amount by which any periodic payment made before such date was greater than or less than the amount that such payment would have been on the basis of the annual advance amount as so modified. > > > #### “(4) Determination of status > > If information contained in the taxpayer’s return of tax for the reference taxable year does not establish the status of the taxpayer as being described in section 24(i)(1), the Secretary shall, for purposes of paragraph (1)(A), determine such status based on information known to the Secretary. > > > #### “(5) Treatment of certain deaths > > A child shall not be taken into account in determining the annual advance amount under paragraph
(1)if the death of such child is known to the Secretary as of the beginning of the calendar year for which the estimate under such paragraph is made. > > > ### “(c) On-line Information Portal > > The Secretary shall establish an on-line portal which allows taxpayers to— > > > #### “(1) > > elect not to receive payments under this section, and > > > #### “(2) > > provide information to the Secretary which would be relevant to a modification under subsection (b)(3)(B) of the annual advance amount, including information regarding— > > > ##### “(A) > > a change in the number of the taxpayer’s qualifying children, including by reason of the birth of a child, > > > ##### “(B) > > a change in the taxpayer’s marital status, > > > ##### “(C) > > a significant change in the taxpayer’s income, and > > > ##### “(D) > > any other factor which the Secretary may provide. > > > ### “(d) Notice of Payments > > Not later than January 31 of the calendar year following any calendar year during which the Secretary makes one or more payments to any taxpayer under this section, the Secretary shall provide such taxpayer with a written notice which includes the taxpayer’s taxpayer identity (as defined in section 6103(b)(6)), the aggregate amount of such payments made to such taxpayer during such calendar year, and such other information as the Secretary determines appropriate. > > > ### “(e) Administrative Provisions > > > #### “(1) Application of electronic funds payment requirement > > The payments made by the Secretary under subsection
(a)shall be made by electronic funds transfer to the same extent and in the same manner as if such payments were Federal payments not made under this title. > > > #### “(2) Application of certain rules > > Rules similar to the rules of subparagraphs
(B)and
(C)of section 6428A(f)(3) shall apply for purposes of this section. > > > #### “(3) Exception from reduction or offset > > Any payment made to any individual under this section shall not be— > > > ##### “(A) > > subject to reduction or offset pursuant to subsection (c), (d), (e), or
(f)of section 6402 or any similar authority permitting offset, or > > > ##### “(B) > > reduced or offset by other assessed Federal taxes that would otherwise be subject to levy or collection. > > > #### “(4) Application of advance payments in the possessions of the united states > > > ##### “(A) In general > > The advance payment amount determined under this section shall be determined— > > > ###### “(i) > > by applying section 24(i)(1) without regard to the phrase ‘or is a bona fide resident of Puerto Rico (within the meaning of section 937(a))’, and > > > ###### “(ii) > > without regard to section 24(k)(3)(C)(ii)(I). > > > ##### “(B) Mirror code possessions > > In the case of any possession of the United States with a mirror code tax system (as defined in section 24(k)), this section shall not be treated as part of the income tax laws of the United States for purposes of determining the income tax law of such possession unless such possession elects to have this section be so treated. > > > ##### “(C) Administrative expenses of advance payments > > > ###### “(i) Mirror code possessions > > In the case of any possession described in subparagraph
(B)which makes the election described in such subparagraph, the amount otherwise paid by the Secretary to such possession under section 24(k)(1)(A) with respect to taxable years beginning in 2021 shall be increased by $300,000 if such possession has a plan, which has been approved by the Secretary, for making advance payments consistent with such election. > > > ###### “(ii) American samoa > > The amount otherwise paid by the Secretary to American Samoa under subparagraph
(A)of section 24(k)(3) with respect to taxable years beginning in 2021 shall be increased by $300,000 if the plan described in subparagraph
(B)of such section includes a program, which has been approved by the Secretary, for making advance payments under rules similar to the rules of this section. > > > ###### “(iii) Timing of payment > > The Secretary may pay, upon the request of the possession of the United States to which the payment is to be made, the amount of the increase determined under clause
(i)or
(ii)immediately upon approval of the plan referred to in such clause, respectively. > > > ### “(f) Application > > No payments shall be made under the program established under subsection
(a)with respect to— > > > #### “(1) > > any period before July 1, 2021, or > > > #### “(2) > > any period after December 31, 2021. > > > ### “(g) Regulations > > The Secretary shall issue such regulations or other guidance as the Secretary determines necessary or appropriate to carry out the purposes of this section and subsections (i)(1) and
(j)of section 24, including regulations or other guidance which provides for the application of such provisions where the filing status of the taxpayer for a taxable year is different from the status used for determining the annual advance amount.” > . ####
(2)Reconciliation of credit and advance credit **[**[26 U.S.C. 24](/us/usc/t26/s24)**]** Section 24 of such Code, as amended by the preceding provision of this Act, is amended by adding at the end the following new subsection: > > ### “(j) Reconciliation of Credit and Advance Credit > > > #### “(1) In general > > The amount of the credit allowed under this section to any taxpayer for any taxable year shall be reduced (but not below zero) by the aggregate amount of payments made under section 7527A to such taxpayer during such taxable year. Any failure to so reduce the credit shall be treated as arising out of a mathematical or clerical error and assessed according to section 6213(b)(1). > > > #### “(2) Excess advance payments > > > ##### “(A) In general > > If the aggregate amount of payments under section 7527A to the taxpayer during the taxable year exceeds the amount of the credit allowed under this section to such taxpayer for such taxable year (determined without regard to paragraph (1)), the tax imposed by this chapter for such taxable year shall be increased by the amount of such excess. Any failure to so increase the tax shall be treated as arising out of a mathematical or clerical error and assessed according to section 6213(b)(1). > > > ##### “(B) Safe harbor based on modified adjusted gross income > > > ###### “(i) In general > > In the case of a taxpayer whose modified adjusted gross income (as defined in subsection (b)) for the taxable year does not exceed 200 percent of the applicable income threshold, the amount of the increase determined under subparagraph
(A)with respect to such taxpayer for such taxable year shall be reduced (but not below zero) by the safe harbor amount. > > > ###### “(ii) Phase out of safe harbor amount > > In the case of a taxpayer whose modified adjusted gross income (as defined in subsection (b)) for the taxable year exceeds the applicable income threshold, the safe harbor amount otherwise in effect under clause
(i)shall be reduced by the amount which bears the same ratio to such amount as such excess bears to the applicable income threshold. > > > ###### “(iii) Applicable income threshold > > For purposes of this subparagraph, the term ‘applicable income threshold’ means— > > > ###### “(I) > > $60,000 in the case of a joint return or surviving spouse (as defined in section 2(a)), > > > ###### “(II) > > $50,000 in the case of a head of household, and > > > ###### “(III) > > $40,000 in any other case. > > > ###### “(iv) Safe harbor amount > > For purposes of this subparagraph, the term ‘safe harbor amount’ means, with respect to any taxable year, the product of— > > > ###### “(I) > > $2,000, multiplied by > > > ###### “(II) > > the excess (if any) of the number of qualified children taken into account in determining the annual advance amount with respect to the taxpayer under section 7527A with respect to months beginning in such taxable year, over the number of qualified children taken into account in determining the credit allowed under this section for such taxable year.” > . ####
(3)Coordination with wage withholding **[**[26 U.S.C. 3402](/us/usc/t26/s3402)**]** Section 3402(f)(1)(C) of such Code is amended by striking “section 24(a)” and inserting “section 24 (determined after application of subsection
(j)thereof)”. ####
(4)Conforming amendments #####
(A)**[**[26 U.S.C. 26](/us/usc/t26/s26)**]** Section 26(b)(2) of such Code is amended by striking “ and ” at the end of subparagraph (X), by striking the period at the end of subparagraph
(Y)and inserting “ , and ”, and by adding at the end the following new subparagraph: > > ##### “(Z) > > section 24(j)(2) (relating to excess advance payments).” > . #####
(B)Section 6211(b)(4)(A) of such Code, as amended by the preceding provisions of this subtitle, is amended— ######
(i)by striking “24(d)” and inserting “24 by reason of subsections
(d)and (i)(1) thereof”, and ######
(ii)by striking “and 6428B” and inserting “6428B, and 7527A”. #####
(C)Paragraph
(2)of section 1324(b) of title 31, United States Code, is amended— ######
(i)by inserting “24,” before “25A”, and ######
(ii)by striking “ or 6431” and inserting “6431, or 7527A”. #####
(D)**[**[26 U.S.C. 7501](/us/usc/t26/s7501)**]** The table of sections for chapter 77 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 7527 the following new item:" “Sec. 7527A. Advance payment of child tax credit.” ". ####
(5)Appropriations to carry out advance payments Immediately upon the enactment of this Act, in addition to amounts otherwise available, there are appropriated for fiscal year 2021, out of any money in the Treasury not otherwise appropriated: #####
(A)$397,200,000 to remain available until September 30, 2022, for necessary expenses for the Internal Revenue Service to carry out this section (and the amendments made by this section), which shall supplement and not supplant any other appropriations that may be available for this purpose, and #####
(B)$16,200,000 to remain available until September 30, 2022, for necessary expenses for the Bureau of the Fiscal Service to carry out this section (and the amendments made by this section), which shall supplement and not supplant any other appropriations that may be available for this purpose. ###
(c)Effective Date ####
(1)In general **[**[26 U.S.C. 24 note](/us/usc/t26/s24)**]** The amendments made by this section shall apply to taxable years beginning after December 31, 2020. ####
(2)Establishment of advance payment program **[**[26 U.S.C. 7527A note](/us/usc/t26/s7527A)**]** The Secretary of the Treasury (or the Secretary’s designee) shall establish the program described in section 7527A of the Internal Revenue Code of 1986 as soon as practicable after the date of the enactment of this Act, except that the Secretary shall ensure that the timing of the establishment of such program does not interfere with carrying out section 6428B(g) as rapidly as possible.
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- 26 USC 7527A
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Sec. 9611
CHILD TAX CREDIT IMPROVEMENTS FOR 2021
Cite26 USC 7527A
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