26 U.S.C. § 7530 — Application of earned income tax credit to possessions of the United States
submitted 5 years ago by Pub. L. 117-2 to r/title-26-INTERNAL-REVENUE-CODE · 1,047 words · no verdicts yet
The Secretary must pay several U.S. possessions for their earned income tax credit programs. These possessions include Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa. Puerto Rico and American Samoa must run their own qualifying credit to receive payment.
(a) Starting with calendar year 2021, the Secretary* must pay Puerto Rico an amount each year. This amount has two parts. The first part is the "specified matching amount." The second part applies only for 2021 through 2025. It is Puerto Rico's education spending on the earned income tax credit, up to $1,000,000. The Secretary will not make these payments unless Puerto Rico has its own earned income tax credit. That credit must increase the credit percentage compared to what was in effect in 2019. It must be designed to boost work. The "specified matching amount" is the smaller of two figures. The first figure is the extra cost of Puerto Rico's credit above a "base amount." The second figure is three times that base amount. For 2021, the "base amount" is the greater of two numbers: Puerto Rico's 2019 credit cost, or $200,000,000. In later years, this base amount rises with inflation. The Secretary must make these payments after getting needed information. Payments must come within a reasonable time before Puerto Rico's tax-filing deadline.
(b) Starting with 2021, the Secretary must pay the Virgin Islands, Guam, and the Commonwealth of the Northern Mariana Islands. The payment equals the full cost of each possession's earned income tax credit. Through 2025, the Secretary also pays limited education-spending reimbursement to these possessions. Rules similar to those for Puerto Rico apply here.
(c) Starting with 2021, the Secretary must pay American Samoa the smaller of its credit cost or $16,000,000. Through 2025, the Secretary also pays limited education-spending reimbursement, up to $50,000 a year. After 2021, the $16,000,000 figure rises with inflation. American Samoa must have its own earned income tax credit designed to boost work. Without that credit, American Samoa gets no payment under this subsection.
(d) These payments are treated the same as a tax refund for purposes of a separate funding law.
facts
With respect to calendar year 2021 and each calendar year thereafter, the Secretary* shall, except as otherwise provided in this subsection, make payments to Puerto Rico equal to—
the specified matching amount for such calendar year, plus
in the case of calendar years 2021 through 2025, the lesser of—
the expenditures made by Puerto Rico during such calendar year for education efforts with respect to individual taxpayers and tax return preparers relating to the earned income tax credit, or
$1,000,000.
The Secretary shall not make any payments under paragraph (1) with respect to any calendar year unless Puerto Rico has in effect an earned income tax credit for taxable years beginning in or with such calendar year which (relative to the earned income tax credit which was in effect for taxable years beginning in or with calendar year 2019) increases the percentage of earned income which is allowed as a credit for each group of individuals with respect to which such percentage is separately stated or determined in a manner designed to substantially increase workforce participation.
For purposes of this subsection—
The term “specified matching amount” means, with respect to any calendar year, the lesser of—
the excess (if any) of—
the cost to Puerto Rico of the earned income tax credit for taxable years beginning in or with such calendar year, over
the base amount for such calendar year, or
the product of 3, multiplied by the base amount for such calendar year.
In the case of calendar year 2021, the term “base amount” means the greater of—
the cost to Puerto Rico of the earned income tax credit for taxable years beginning in or with calendar year 2019 (rounded to the nearest multiple of $1,000,000), or
$200,000,000.
In the case of any calendar year after 2021, the term “base amount” means the dollar amount determined under clause (i) increased by an amount equal to—
such dollar amount, multiplied by—
the cost-of-living adjustment determined under section 1(f)(3) for such calendar year, determined by substituting “calendar year 2020” for “calendar year 2016” in subparagraph (A)(ii) thereof.
Any amount determined under this clause shall be rounded to the nearest multiple of $1,000,000.
The Secretary shall make payments under paragraph (1) for any calendar year—
after receipt of such information as the Secretary may require to determine such payments, and
except as provided in clause (i), within a reasonable period of time before the due date for individual income tax returns (as determined under the laws of Puerto Rico) for taxable years which began on the first day of such calendar year.
The Secretary may require the reporting of such information as the Secretary may require to carry out this subsection.
For purposes of this subsection, the cost to Puerto Rico of the earned income tax credit shall be determined by the Secretary on the basis of the laws of Puerto Rico and shall include reductions in revenues received by Puerto Rico by reason of such credit and refunds attributable to such credit, but shall not include any administrative costs with respect to such credit.
With respect to calendar year 2021 and each calendar year thereafter, the Secretary shall, except as otherwise provided in this subsection, make payments to the Virgin Islands, Guam, and the Commonwealth of the Northern Mariana Islands equal to—
the cost to such possession of the earned income tax credit for taxable years beginning in or with such calendar year, plus
in the case of calendar years 2021 through 2025, the lesser of—
the expenditures made by such possession during such calendar year for education efforts with respect to individual taxpayers and tax return preparers relating to such earned income tax credit, or
$50,000.
Rules similar to the rules of subparagraphs (A), (B), and (C) of subsection (a)(4) shall apply for purposes of this subsection.
With respect to calendar year 2021 and each calendar year thereafter, the Secretary shall, except as otherwise provided in this subsection, make payments to American Samoa equal to—
the lesser of—
the cost to American Samoa of the earned income tax credit for taxable years beginning in or with such calendar year, or
$16,000,000, plus
in the case of calendar years 2021 through 2025, the lesser of—
the expenditures made by American Samoa during such calendar year for education efforts with respect to individual taxpayers and tax return preparers relating to such earned income tax credit, or
$50,000.
The Secretary shall not make any payments under paragraph (1) with respect to any calendar year unless American Samoa has in effect an earned income tax credit for taxable years beginning in or with such calendar year which allows a refundable tax credit to individuals on the basis of the taxpayer’s earned income which is designed to substantially increase workforce participation.
In the case of any calendar year after 2021, the $16,000,000 amount in paragraph (1)(A)(ii) shall be increased by an amount equal to—
such dollar amount, multiplied by—
the cost-of-living adjustment determined under section 1(f)(3) for such calendar year, determined by substituting “calendar year 2020” for “calendar year 2016” in subparagraph (A)(ii) thereof.
Any increase determined under this clause shall be rounded to the nearest multiple of $100,000.
Rules similar to the rules of subparagraphs (A), (B), and (C) of subsection (a)(4) shall apply for purposes of this subsection.
For purposes of section 1324 of title 31, United States Code, the payments under this section shall be treated in the same manner as a refund due from a credit provision referred to in subsection (b)(2) of such section.
Source credit: (Added Pub. L. 117–2, title IX, § 9625(a), Mar. 11, 2021, 135 Stat. 155.)
- 2021Enacted · Pub. L. 117-2 · 135 Stat. 155
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