HR2438-119

1. Short title This Act may be cited as the Foster Care Tax Credit Act.

2. Foster care tax credit 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: 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. 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— the excess of— the taxpayer's modified adjusted gross income for such taxable year, over the threshold amount, bears to $17,000. For purposes of paragraph (1), the term threshold amount means— $250,000, in the case of a joint return, $150,000, in the case of an individual who is not married, and $125,000, in the case of a married individual filing a separate return. 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. For purposes of this section— The term eligible taxpayer means, with respect to any taxable year, any taxpayer— with whom a qualifying foster child was placed for a period of not less than 1 month during such taxable year, and for whom a credit under section 24 with respect to such eligible foster child is not allowed for such taxable year. The term qualifying foster child means an eligible foster child (within the meaning of section 152(f)(1)(C))— who has not attained age 17, and who is a citizen, national, or resident of the United States. 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. No credit shall be allowed under this section for any taxable year in the disallowance period. For purposes of subparagraph (A), the disallowance period is— 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 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). 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. Section 6211(b)(4) of the Internal Revenue Code of 1986 is amended by inserting 36C, after 36B,. Section 1324(b)(2) of title 31, United States Code, is amended by inserting 25E, after 25A,. 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: 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: 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). A return is described in this subsection if such return— is in such form as the Secretary may prescribe, and contains, with respect to each qualifying foster child placed during the calendar year— the name, address, and TIN of each individual with whom such qualifying foster child was placed, the name of the qualifying foster child, and the dates during which such placement occurred. 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— the name and address of the person required to make such return and the phone number of the information contact for such person, and the information required to be shown on the return with respect to such individual. 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. For purposes of this section, the term qualifying foster child has the meaning given such term under section 36C(c)(2). 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: section 6039K (relating to information returns with respect to foster child placement), 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: section 6039K(c) (relating to statements with respect to foster child placement). 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: Section 24(h)(4) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph: 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. Section 6695(g) of the Internal Revenue Code of 1986 is amended by striking or 32 and inserting 32, or 36C. The amendments made by this section shall apply to calendar months beginning after December 31, 2024, in taxable years beginning after such date. 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. There are authorized to be appropriated such sums as necessary for the purposes of carrying out paragraph (1). 36C.Foster care tax credit (a)Allowance of creditIn 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 generalThe 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 amountFor 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 incomeFor 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 taxpayerFor purposes of this section— (1)In generalThe 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 childThe 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 monthFor 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 generalNo credit shall be allowed under this section for any taxable year in the disallowance period. (B)Disallowance periodFor 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 claimsIn 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.. Sec. 36C. Foster care tax credit.. 6039K.Information reporting with respect to foster child placement (a)In generalEvery 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 returnA 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 generalEvery 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 statementsThe 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 childFor purposes of this section, the term qualifying foster child has the meaning given such term under section 36C(c)(2).. (xxvii)section 6039K (relating to information returns with respect to foster child placement),. (LL)section 6039K(c) (relating to statements with respect to foster child placement).. Sec. 6039K. Information reporting with respect to foster child placement.. (D)Election not to take creditA 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..

6039K. Information reporting with respect to foster child placement 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). A return is described in this subsection if such return— is in such form as the Secretary may prescribe, and contains, with respect to each qualifying foster child placed during the calendar year— the name, address, and TIN of each individual with whom such qualifying foster child was placed, the name of the qualifying foster child, and the dates during which such placement occurred. 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— the name and address of the person required to make such return and the phone number of the information contact for such person, and the information required to be shown on the return with respect to such individual. 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. For purposes of this section, the term qualifying foster child has the meaning given such term under section 36C(c)(2).

3. Study and report on emergency and short-term foster placements 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— the costs and financial burdens on foster families who experience multiple emergency and short-term foster placements annually; and challenges to verifying and documenting the placement of children in emergency and short-term placement. 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).