S 1309 IS
111th CONGRESS
1st Session
S. 1309
To amend title IV of the Social
Security Act to ensure funding for grants to promote responsible
fatherhood and strengthen low-income families, and for other
purposes.
IN THE SENATE OF THE UNITED STATES
June 19, 2009
Mr. BAYH (for himself, Mrs. LINCOLN, and Mr.
BURRIS) introduced the following bill; which was read twice and
referred to the Committee on Finance
A BILL
To amend title IV of the Social
Security Act to ensure funding for grants to promote responsible
fatherhood and strengthen low-income 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; TABLE OF CONTENTS.
Sec. 1. Short title; table of contents.
TITLE I--PROMOTING RESPONSIBLE FATHERHOOD AND
STRENGTHENING LOW-INCOME FAMILIES
Sec. 101. Healthy marriage promotion and
responsible fatherhood programs.
Sec. 102. Elimination of separate TANF
work participation rate for 2-parent families.
Sec. 103. Ban on recovery of medicaid
costs for births.
Sec. 104. Improved collection and
distribution of child support.
Sec. 105. Grants to States to conduct
demonstration projects to promote economic opportunity for
low-income parents.
Sec. 106. State assessments of barriers
to employment and financial support of children.
Sec. 107. Collection of child support
under the supplemental nutrition assistance program.
Sec. 108. Grants supporting healthy
family partnerships for domestic violence intervention and
prevention.
Sec. 109. Procedures to address domestic
violence prevention.
TITLE II--REVENUE PROVISIONS
Sec. 201. Modifications to the earned
income tax credit.
Sec. 202. Clarification of economic
substance doctrine.
Sec. 203. Penalty for understatements
attributable to transactions lacking economic substance,
etc.
Sec. 204. Denial of deduction for
interest on underpayments attributable to noneconomic
substance transactions.
SEC. 2. FINDINGS.
Congress makes the following findings:
(1) The most important factor in a
child's upbringing is whether the child is brought up in a
loving, healthy, supportive environment.
(2) Children who grow up with two parents
are, on average, more likely than their peers in
single-parent homes to finish high school and be
economically self-sufficient.
(3) Father-child interaction, like
mother-child interaction, has been shown to promote the
positive physical, social, emotional, and mental development
of children.
(4) Children typically live without both
parents when parents are divorced or did not marry. More
than 1/3 of all marriages end in divorce, and 60 percent of
divorcing couples have children. Almost 4 in 10 births are
to unmarried women, however, this figure varies by age. Six
in 10 births to women ages 20 to 24, nearly 1 in 10 births
to women ages 25 to 28, and 1 in 5 births to women in their
30s are to unmarried women.(5) More than 1 in 4 families with
children have only 1 parent present, and more than 1 in 5
children live with their mother only.
(6) Recent studies demonstrate that most
unwed fathers in urban areas are highly involved with the
mother of their child before and after the child's birth,
with 80 percent involved with their mother's pregnancy, with
50 percent living with the child's mother at the time of the
child's birth. When the children of these fathers were 5
years old, 50 percent had seen their fathers 10 or fewer
days in the past month, over 35 percent had not seen their
fathers at all in the past month, and nearly 23 percent had
not seen their fathers at all in the past 2 years.
(7) An estimated 30 percent of the
children who live in households without their father have
not seen their father in at least 1 year, and only 40
percent have contact once or more per month.
(8) The inability of parents to sustain a
healthy relationship with their child's other parent and
remain involved in their child's life can have severe
negative consequences for the parents, the child, their
community, and taxpayers.
(9) Early parenting has serious
consequences for young men and young women, their children,
and society. Too-early childbearing makes it harder for
young parents to finish their education. Fathers of children
born to teen mothers have lower earnings than fathers of
children born to mothers who are in their early 20s and
children born to teen parents are more likely to end up in
poverty than children born to adult parents. Children of
teen parents are at increased risk of involvement with the
child welfare system and the sons of teen mothers are more
likely to end up in prison. The daughters of teen mothers
are more likely to end up teen mothers themselves. In
addition, teen childbearing costs taxpayers at least
$9,100,000,000 annually.
(10) Single-parent families are 5 times
as likely to be poor as married-couple families.
(11) Children raised in single-parent
families are more likely than children raised in 2-parent
families to do poorly in school, have emotional and
behavioral problems, become teenage parents, commit crimes,
smoke cigarettes, abuse drugs and alcohol, and have
poverty-level incomes as adults.
(12) High rates of unemployment and low
wages are primary reasons why parents do not marry, why
2-parent families break up, and why fathers fail to remain
involved with their children.
(13) Domestic violence is also a
significant problem leading to the non-formation or break-up
of 2-parent families.
(14) According to the National Fatherhood
Initiative National Marriage Survey in 2005, 42 percent of
women and 9 percent of men cite domestic violence as the
reason for their divorces.
(15) A history of incarceration is a
major barrier to employment. Sixty percent of young
African-American men who dropped out of high school have
served time. When these men leave prison, they often have
difficulty finding a job and supporting their children.
(16) Over 1/2 of State prison inmates are
parents. When noncustodial parents go to prison, their child
support obligations continue, even though they have little
ability to pay the support. When these parents leave prison,
they typically owe more than $20,000 in child support debt.
Noncustodial parents leaving prison often re-enter the
underground economy because of financial pressures or to
avoid the child support system, making it less likely that
they will successfully rejoin society and reunite with their
families.
(17) Children should receive the child
support paid by their parents, and the government should not
keep the money to recover welfare costs. Current
pass-through limits on Federal cost-sharing have been a
barrier to States choosing to pass through child support.
Regular child support income appears to have a greater
positive impact on children dollar for dollar than other
types of income. Researchers in Wisconsin found that when
monthly child support was passed through to families
receiving assistance under the Temporary Assistance for
Needy Families program established under part A of title IV
of the Social Security Act (TANF) and disregarded 100
percent in determining assistance for the families, fathers
paid more child support, established their legal
relationship with their children more quickly, and worked
less in the underground economy. Moreover, the State costs
of a full pass-through and disregard of child support were
fully offset by increased payments by fathers and decreased
public assistance use by families.
(18) The Department of Health and Human
Services National Child Support Enforcement Strategic Plan
for fiscal years 2005 through 2009 states that `child
support is no longer a welfare reimbursement,
revenue-producing device for the Federal and State
governments; it is a family-first program, intended to
ensure families' self-sufficiency by making child support a
more reliable source of income'.
(19) Current law permits States to apply
the cost of passing through child support to families
receiving assistance under the TANF program toward their
maintenance of effort (MOE) requirements, but only to the
extent that the State disregards the child support payments
in determining the amount and type of TANF assistance.
(20) Programs that increase employment
opportunity and reduce barriers by increasing employment
opportunity and reducing recidivism will benefit children
and families.
(21) Transitional jobs programs have
shown promise in reducing unemployment among chronically
unemployed or underemployed population groups, including
formerly incarcerated individuals, the homeless, and young
African-American men.
(22) To strengthen families it is
important to improve the upward economic mobility of the
custodial and noncustodial parent wage-earners, as well as
youth at risk of early parenthood or incarceration, by
providing the skills and experience necessary to access jobs
with family-sustaining wages and benefits. In families in
which all the members do not live together, this is
important to enable the prompt and consistent payment of
adequate child support.
(23) It is important and useful to foster
local and regional economic development and job advancement
for workers, especially young custodial and noncustodial
parents, by funding local collaborations among business,
education, and the community in the development of pathways
for preparing disadvantaged citizens to meet the workforce
needs of the local and regional economy.
(24) Employers benefit from working with
and being supported by the local education, post-secondary
and workforce systems in identifying the academic and
occupational skill sets needed to fill the skilled jobs in
the changing economy. Local economic and community
development is enhanced when residents have access to higher
wage employment, thus increasing the tax base, fueling the
economy, and contributing to greater family economic
security.
(25) Public-private career pathways
partnerships are an important tool for linking employers and
workers with the workforce education services they need and
for integrating community economic development and workforce
education services. Transitional jobs programs can serve as
the first step in a career pathway by giving unemployed
individuals with multiple barriers to employment, valuable
work experience and related services.
(26) The purpose of child support is to
provide necessary income support for and increase the
well-being of children living apart from a parent. To
improve the ability of low-income noncustodial parents to
provide long-term support and care for their children
throughout their entire childhood, it is important that
child support polices support parental efforts to pursue
education and employment and to stay involved with their
children.
(27) Responsible parenthood includes
active participation in financial support and child-rearing,
as well as the formation and maintenance of a positive,
healthy, and nonviolent relationship between parent and
child and a cooperative, healthy, and nonviolent
relationship between parents.
(28) States should be encouraged to
implement voluntary programs that provide support for
responsible parenting, including by increasing the
employment and financial security of parents, and, when it
is appropriate, with appropriate safeguards related to child
abuse and domestic violence, the parental involvement of
noncustodial parents.
(29) Promoting responsible parenthood
saves the government money by reducing the need for public
assistance, increasing the educational attainment of
children, reducing juvenile delinquency and crime, reducing
substance abuse, and lowering rates of unemployment.
(30) Programs to encourage responsible
fatherhood or responsible motherhood should promote and
provide support services for--
(B) increasing responsibility of
noncustodial parents for the long-term care and
financial well-being of their children;
(D) reducing barriers to active
2-parent involvement and cooperative parenting.
(31) The promotion of healthy marriage
and responsible parenthood should not denigrate the standing
or parenting efforts of single parents or other caregivers,
lessen the protection of children from abusive parents, or
compromise the safety or health of the custodial or
noncustodial parent, but should increase the chance that
children will have 2 caring parents to help them grow up
healthy and secure.
TITLE I--PROMOTING RESPONSIBLE FATHERHOOD
AND STRENGTHENING LOW-INCOME FAMILIES
SEC. 101. HEALTHY MARRIAGE PROMOTION AND
RESPONSIBLE FATHERHOOD PROGRAMS.
(a) Ensuring Funding for Responsible
Fatherhood Programs- Section 403(a)(2)(C) of the Social Security
Act (42 U.S.C. 603(a)(2)(C)) is amended--
(1) in the subparagraph heading, by
striking `LIMITATION ON USE OF' and inserting `REQUIREMENT
TO USE CERTAIN'; and
(2) in clause (i), by striking `may not
award more than $50,000,000' and inserting `shall award at
least $100,000,000'.
(b) Assurance of Voluntary Participation-
Section 403(a)(2)(A)(ii)(II) of the Social Security Act (42
U.S.C. 603(a)(2)(A)(ii)(II)) is amended--
(1) in item (aa), by striking `and' at
the end;
(2) in item (bb), by striking the period
at the end and inserting a semicolon; and
(3) by adding at the end the following
new items:
`(cc) to not condition the receipt of
assistance under the program funded under this part, under a program
funded with qualified State expenditures (as defined in section
409(a)(7)(B)(i)), or under any other program funded under this title
on enrollment in any such programs or activities; and
`(dd) to permit any individual who has
begun to participate in a particular program or activity funded
under this paragraph, including an individual whose participation is
specified in the individual responsibility plan developed for the
individual in accordance with section 408(b), to transfer to another
such program or activity funded under this paragraph upon
notification to the entity and the State agency responsible for
administering the State program funded under this part.'.
(c) Activities Promoting Responsible
Fatherhood- Section 403(a)(2)(C)(ii) of the Social Security Act
(42 U.S.C. 603(a)(2)(C)(ii)) is amended--
(1) in subclause (I), by striking
`marriage or sustain marriage' and insert `healthy
relationships and healthy marriages or to sustain healthy
relationships or healthy marriages';
(2) in subclause (II), by inserting
`educating youth who are not yet parents about the economic,
social, and family consequences of early parenting, helping
participants in fatherhood programs work with their own
children to break the cycle of early parenthood,' after
`child support payments,'; and
(3) in subclause (III), by striking
`fathers' and inserting `low-income fathers and other
low-income noncustodial parents'.
(d) Effective Date- The amendments made by
this section shall take effect on October 1, 2009.
SEC. 102. ELIMINATION OF SEPARATE TANF WORK
PARTICIPATION RATE FOR 2-PARENT FAMILIES.
(a) In General- Section 407 of the Social
Security Act (42 U.S.C. 607) is amended--
(A) beginning in the heading, by
striking `Participation Rate Requirements' and all that
follows through `A State' in paragraph (1) and inserting
`Participation Rate Requirements- A State'; and
(B) by striking paragraph (2);
(A) in paragraph (1)(A), by striking
`subsection (a)(1)' and inserting `subsection (a)';
(B) in paragraph (2), by striking the
paragraph heading and all that follows through `A
family' and inserting `SPECIAL RULE- A family';
(C) in paragraph (4), by striking
`paragraphs (1)(B) and (2)(B)' and inserting
`determining monthly participation rates under paragraph
(1)(B)'; and
(D) in paragraph (5), by striking
`rates' and inserting `rate'; and
(A) in paragraph (1)(B), in the
matter preceding clause (i), by striking `subsection
(b)(2)(B)' and inserting `subsection (b)(1)(B)(i)'; and
(B) in paragraph (2)(D)--
(i) by striking `paragraphs (1)(B)(i)
and (2)(B) of subsection (b)' and inserting
`subsection (b)(1)(B)(i)'; and
(ii) by striking `and in 2-parent
families, respectively,'.
(1) IN GENERAL- The amendments made by
subsection (a) shall take effect on the date of enactment of
this Act and shall apply to the determination of minimum
participation rates for months beginning on or after that
date.
(2) LIMITATION ON PENALTY IMPOSITION-
Notwithstanding section 409(a)(3) of the Social Security
Act, the Secretary of Health and Human Services shall not
impose a penalty against a State under that section on the
basis of the State's failure to satisfy the participation
rate required for fiscal year 2006, 2007, 2008, or 2009 if
the State demonstrates that the State would have met such
requirement if, with respect to those months of fiscal year
2009 that began prior to or on the date of enactment of this
Act, the State were permitted to count 2-parent families
that met the requirements of section 407(c)(1)(A) of the
Social Security Act (42 U.S.C. 607(c)(1)(A)) in the
determination of monthly participation rates under section
407(b)(1)(B)(i) of such Act (42 U.S.C. 607(b)(1)(B)(i)).
SEC. 103. BAN ON RECOVERY OF MEDICAID COSTS
FOR BIRTHS.
(1) IN GENERAL- Section 454 of the Social
Security Act (42 U.S.C. 654), as amended by section 7301 of
Public Law 109-171, is amended--
(A) by striking `and' at the end of
paragraph (33);
(B) by striking the period at the end
of paragraph (34) and inserting a semicolon; and
(C) by inserting after paragraph (34)
the following:
`(35) provide that, except as provided in
section 1902(a)(25)(F)(ii), the State shall not use the
State program operated under this part to collect any amount
owed to the State by reason of costs incurred under the
State plan approved under title XIX for the birth of a child
for whom support rights have been assigned pursuant to
section 471(a)(17) or 1912; and'.
(2) RULE OF CONSTRUCTION- Nothing in
section 454(35) of the Social Security Act (42 U.S.C.
654(34)), as added by paragraph (1), shall be construed as
affecting the application of section 1902(a)(25) of such Act
(42 U.S.C. 1396a(a)(25)) with respect to a State (relating
to the State Medicaid plan requirement for the State to take
all reasonable measures to ascertain the legal liability of
third parties to pay for care and services available under
the plan).
(b) Clarification That Ban on Recovery Does
Not Apply With Respect to Insurance of a Parent With an
Obligation To Pay Child Support- Clause (ii) of section
1902(a)(25)(F) of the Social Security Act (42 U.S.C.
1396a(a)(25)(F)) is amended by inserting `only if such
third-party liability is derived through insurance,' before
`seek'.
(1) IN GENERAL- Except as provided in
paragraph (2), the amendments made by this section take
effect on October 1, 2009.
(2) EXTENSION OF EFFECTIVE DATE FOR STATE
LAW AMENDMENT- In the case of a State plan under title XIX
of the Social Security Act (42 U.S.C. 1396 et seq.) which
the Secretary of Health and Human Services determines
requires State legislation in order for the plan to meet the
additional requirements imposed by the amendments made by
this section, the State plan shall not be regarded as
failing to comply with the requirements of such title solely
on the basis of its failure to meet these additional
requirements before the first day of the first calendar
quarter beginning after the close of the first regular
session of the State legislature that begins after the date
of enactment of this Act. For purposes of the previous
sentence, in the case of a State that has a 2-year
legislative session, each year of the session is considered
to be a separate regular session of the State legislature.
SEC. 104. IMPROVED COLLECTION AND
DISTRIBUTION OF CHILD SUPPORT.
(a) Elimination of Pass-Through Limits and
Other Changes Effective Beginning With Fiscal Year 2010-
(1) ELIMINATION OF PASS-THROUGH LIMITS ON
FEDERAL COST-SHARING- Section 457(a)(6)(B) of the Social
Security Act (42 U.S.C. 657(a)(6)(B)) (as redesignated by
clause (iii) of section 7301(b)(1)(B) of the Deficit
Reduction Act of 2005), is amended to read as follows:
`(B) FAMILIES THAT CURRENTLY RECEIVE
ASSISTANCE- Notwithstanding paragraph (1), in the case
of a family that receives assistance from the State, a
State shall not be required to pay to the Federal
Government the Federal share of any amount collected on
behalf of such family during a month to the extent
that--
`(i) the State pays the amount to
the family; and
`(ii) the amount is disregarded
in determining the amount and type of assistance
provided to the family under such program.'.
(2) CHILD SUPPORT STATE PLAN AMENDMENT-
Section 454 of the Social Security Act (42 U.S.C. 654), as
amended by section 103(a)(1), is amended by adding at the
end the following new paragraph:
`(36) provide that a State shall pay all
collected child support to the payee, except as provided in
section 457, and shall not use the State program operated
under this part to retain payments to recover the cost of
State-funded assistance or benefits.'.
(3) DISBURSEMENT OF SUPPORT PAYMENTS-
Section 454B(c) of the Social Security Act (42 U.S.C.
654B(c)) is amended by adding at the end the following new
paragraph:
`(3) DISBURSEMENT TO FAMILIES- The State
disbursement unit shall pay all collected child support to
the payee, except as otherwise provided in section 457, and
may not disburse collections to the State to reimburse the
State for assistance or benefits provided under a
State-funded program.'.
(4) STATE OPTION TO CONDITION RECEIPT OF
TANF ON ASSIGNMENT OF SUPPORT- Section 408(a)(3) of the
Social Security Act (42 U.S.C. 608(a)(3)) is amended--
(A) in the paragraph heading, by
striking `NO ASSISTANCE FOR FAMILIES NOT' and inserting
`STATE OPTION TO CONDITION ASSISTANCE FOR FAMILIES ON';
and
(B) by striking `shall' and inserting
`may'.
(5) INCLUSION OF DISTRIBUTIONS TO FORMER
TANF FAMILIES IN DETERMINATION OF TANF MAINTENANCE OF
EFFORT- Section 409(a)(7)(B)(i)(V) of the Social Security
Act (42 U.S.C. 609(a)(7)(B)(i)(V)) is amended by inserting
`, including the State share of child support distributed to
former TANF families under an election by the State under
section 454(34) (as in effect on the day before the date of
enactment of the Responsible Fatherhood and Healthy Families
Act of 2009) to apply the amendments made by subsection
(b)(1) of section 7301 of the Deficit Reduction Act of 2005
(as so in effect)' after `401(a)'.
(6) STATE OPTION TO DISCONTINUE OLDER
SUPPORT ASSIGNMENTS- Section 457(b) of the Social Security
Act (42 U.S.C. 657(b)) is amended to read as follows:
`(b) Continuation of Assignments-
`(1) IN GENERAL- Any rights to support
obligations assigned to a State as a condition of receiving
assistance from the State under parts A and E and in effect
on September 30, 2009 (or such earlier date as the State may
choose), may be discontinued after such date.
`(2) DISTRIBUTION OF AMOUNTS AFTER
ASSIGNMENT DISCONTINUATION- If a State chooses to
discontinue the assignment of a support obligation described
in paragraph (1), the State may treat amounts collected
pursuant to the assignment as if the amounts had never been
assigned and may distribute the amounts to the family in
accordance with subsections (a) and (c).'.
(7) EFFECTIVE DATE- The amendments and
repeal made by this subsection take effect on October 1,
2009, and shall apply to payments under parts A and D of
title IV of the Social Security Act for calendar quarters
beginning on or after that date, and without regard to
whether regulations to implement the amendments are
promulgated by such date.
(b) Reform of Rules for Distribution of Child
Support Collected on Behalf of Children in Foster Care Beginning
With Fiscal Year 2011-
(1) IN GENERAL- Section 457 of such Act
(42 U.S.C. 657) is amended--
(A) by striking subsections (d) and
(e);
(B) by redesignating subsection (c)
as subsection (d); and
(C) by inserting after subsection (b)
the following:
`(c) Amounts Collected for Child for Whom
Foster Care Maintenance Payments Are Made- Amounts collected by
a State as child support for months in any period on behalf of a
child for whom a public agency is making foster care maintenance
payments under part E shall be paid to the public agency
responsible for supervising the placement of the child and used
in the manner such public agency determines will serve the best
interests of the child, which may include depositing the funds
in a child asset account for the child's future needs or making
all or a part thereof available to the individual responsible
for meeting the child's day-to-day needs. A State shall not be
required to pay to the Federal Government the Federal share of
any amounts collected on behalf of a child and used by the
public agency in the best interests of the child in accordance
with this subsection.'.
(2) FOSTER CARE STATE PLAN AMENDMENT-
Section 471(a)(17) of the Social Security Act (42 U.S.C.
671(a)(17)) is amended--
(A) by inserting `and consistent with
the child's case plan' after `where appropriate'; and
(B) by striking `secure an assignment
to the State of any rights to support' and inserting
`establish paternity and establish, modify, and enforce
child support obligations'.
(3) EFFECTIVE DATE- The amendments made
by this subsection take effect on October 1, 2010, and shall
apply to collections made on behalf of children who are
receiving foster care maintenance payments under part E of
title IV of the Social Security Act for calendar quarters
beginning on or after that date, and without regard to
whether regulations to implement the amendments are
promulgated by such date.
(c) Full Distribution of Child Support
Collected and Other Changes Beginning With Fiscal Year 2015-
(1) FULL DISTRIBUTION OF CHILD SUPPORT
COLLECTED-
(A) IN GENERAL- Section 457 of the
Social Security Act (42 U.S.C. 657) is amended by
striking subsection (a) and inserting the following:
`(a) Full Distribution of Amounts Collected
on Behalf of Any Child- Subject to subsection (c), the entire
amount collected on behalf of any child as support by a State
pursuant to a plan approved under this part shall be paid by the
State to the family (or, in the case of a child receiving
assistance under part E, to the public agency responsible for
supervising the child's placement), and shall not be retained by
the State to reimburse costs of assistance provided under part
A, part E, or any State-funded assistance or benefits.'.
(B) CONFORMING AMENDMENTS-
(i) Section
409(a)(7)(B)(i)(I)(aa) of such Act (42 U.S.C.
609(a)(7)(B)(i)(I)(aa)) is amended by striking
`457(a)(1)(B)' and inserting `457(a)'.
(ii) Section 454(5) of such Act
(42 U.S.C. 654(5)) is amended by striking `(A) in
any case' and all that follows through `(B)'.
(iii) Section 454 of such Act (42
U.S.C. 654) is amended by striking paragraph (34).
(iv) Section 457 of such Act (42
U.S.C. 657), as amended by subsection (b)(1)(3) of
this Act, is amended by striking subsection (d).
(C) REPEAL OF DRA AMENDMENTS- The
amendments made by subsections (a) and (b) of section
7301 the Deficit Reduction Act (Public Law 109-171; 120
Stat. 141) are repealed.
(2) REQUIREMENT TO DISREGARD PERCENTAGE
OF CHILD SUPPORT COLLECTED IN DETERMINING AMOUNT AND TYPE OF
TANF ASSISTANCE- Section 408(a) of the Social Security Act
(42 U.S.C. 608(a)) is amended by adding at the end the
following new paragraph:
`(12) REQUIREMENT TO DISREGARD PERCENTAGE
OF CHILD SUPPORT COLLECTED IN DETERMINING AMOUNT AND TYPE OF
TANF ASSISTANCE- A State to which a grant is made under
section 403 shall disregard at least the same percentage of
amounts collected as support on behalf of a family as the
percentage of earned income that the State disregards in
determining the amount or type of assistance provided to the
family under the State program funded under this part or
under a program funded with qualified State expenditures (as
defined in section 409(a)(7)(B)(i)).'.
(3) EFFECTIVE DATE- The amendments and
repeal made by this subsection take effect on October 1,
2014, and shall apply to payments under parts A and D of
title IV of the Social Security Act for calendar quarters
beginning on or after that date, and without regard to
whether regulations to implement the amendments are
promulgated by such date.
(d) Immediate Elimination of Certain Changes
Made by the Deficit Reduction Act of 2005 and Other
Improvements-
(1) IMMEDIATE RESTORATION OF CERTAIN DRA
CHANGES-
(A) RESTORATION OF FEDERAL MATCHING
OF CERTAIN STATE SPENDING-
(i) IN GENERAL- Section 2104 of
division B of the American Recovery and Reinvestment
Act of 2009 (Public Law 111-5) is amended to read as
follows:
`SEC. 2104. RESUMPTION OF PRIOR CHILD SUPPORT
LAW.
`Effective October 1, 2008, section 455(a)(1)
of the Social Security Act (42 U.S.C. 655(a)(1)) is amended by
striking `from amounts paid to the State under section 458
or'.'.
(ii) REPEAL OF DRA AMENDMENT- The
amendment made by section 7309 of the Deficit
Reduction Act of 2005 (Public Law 109-171; 120 Stat.
147) is repealed.
(B) REPEAL OF MANDATORY FEE FOR CHILD
SUPPORT COLLECTION-
(i) ELIMINATION OF DRA
AMENDMENTS- Section 454(6)(B) of such Act (42 U.S.C.
654(6)(B)) is amended--
(I) by striking clause (ii);
(II) by striking `(i)' after
`(B)'; and
(III) by redesignating
subclauses (I) and (II) as clauses (i) and (ii),
respectively, and realigning the left margins of
such clauses accordingly.
(ii) CONFORMING AMENDMENT-
Effective as if enacted on October 1, 2009, section
457(a) of the Social Security Act, as amended by
section 7301(b)(1)(A) of the Deficit Reduction Act
of 2005, is amended by striking paragraph (4).
(iii) REPEAL OF DRA AMENDMENTS-
The amendments made by section 7310 of the Deficit
Reduction Act of 2005 (Public Law 109-171, 120 Stat.
147) are repealed.
(C) CONFORMING AMENDMENT- Section
466(a)(3)(B) of such Act (42 U.S.C. 666(a)(3)(B)) is
amended by striking `in accordance with' and all that
follows through the semicolon and inserting `after
deduction of any fees imposed by the State to cover the
costs of collection, in accordance with section 457;'.
(2) OTHER IMMEDIATE IMPROVEMENTS-
(A) PROHIBITION ON CONSIDERING A
PERIOD OF INCARCERATION VOLUNTARY UNEMPLOYMENT- Section
466(a) of the Social Security Act (42 U.S.C. 666(a)) is
amended by inserting after paragraph (19) the following
new paragraph:
`(20) PROCEDURES RELATING TO PERIODS OF
INCARCERATION OF NONCUSTODIAL PARENTS-
`(A) IN GENERAL- Procedures which
require that, in determining or modifying the amount of,
or terms and conditions of, any support obligation of a
noncustodial parent, the State--
`(i) shall not consider any
period of incarceration of such parent as a period
of voluntary unemployment that disqualifies the
parent from obtaining a modification of the support
obligation consistent with the parent's ability to
pay child support; and
`(ii) subject to subparagraph (B)
in the case of an incarcerated parent, may--
`(I) temporarily suspend any
support obligation on the parent and the
enforcement of any support obligation of the
parent existing prior to the period of
incarceration; and
`(II) temporarily prohibit
the accrual of any interest on any support
obligation of the parent existing prior to the
period of incarceration during any such period.
`(B) NOTICE AND OPPORTUNITY TO
CHALLENGE SUSPENSION- Such procedures shall require the
State to provide a custodial parent with--
`(i) notice of any suspension of
review, adjustment, or enforcement of a support
obligation and of any prohibition on interest
accrual on such obligation that is imposed in
accordance with subparagraph (A)(ii); and
`(ii) an opportunity to request
that the suspension or prohibition be terminated or
modified on the basis that the noncustodial parent
has sufficient income or resources to continue
payment of the support obligation during the
noncustodial parent's period of incarceration.'.
(B) FORGIVING OR OTHER MODIFICATION
OF CHILD SUPPORT ARREARAGES ASSIGNED TO THE STATE-
Section 466(a)(9) of the Social Security Act (42 U.S.C.
666(a)(9)) is amended in the flush matter following
subparagraph (C), by inserting the following new
sentence at the end: `Nothing in this paragraph shall be
construed as prohibiting a State from forgiving,
compromising, reducing or waiving arrearages permanently
assigned to the State under part A or E or under title
XIX.'.
(C) REVIEW AND ADJUSTMENT OF CHILD
SUPPORT ARREARAGES UPON REQUEST- Section 466(a)(10) of
the Social Security Act (42 U.S.C. 666(a)(10)) is
amended by adding at the end the following new
subparagraph:
`(d) REVIEW AND ADJUSTMENT OF
ARREARAGES- Procedures which require the State to
review, and if appropriate, reduce the balance of
arrearages permanently assigned to the State under
part A or E, or under title XIX, pursuant to
standards and procedures established by the State,
in cases where the obligor lacks sufficient ability
to pay the arrears, adjustment will promote timely
payment of current support, or barriers, such as
incarceration, may have limited the ability of the
obligor to timely seek a modification of the order,
and it is in the best interests of the child to make
such reduction. Nothing in the preceding sentence
shall be construed as affecting arrearages that have
not been permanently assigned to the State under
such part or title.'.
(D) UPDATE OF TITLE IV-D PURPOSES-
Section 451 of the Social Security Act (42 U.S.C. 651)
is amended by striking `purpose of' and all that follows
through `for whom such assistance is requested,' and
inserting `purposes of enforcing the support obligations
owed by noncustodial parents to their children and the
spouse (or former spouse) with whom such children are
living, locating parents, establishing paternity,
providing assistance in obtaining child and spousal
support to all children for whom such assistance is
requested (whether or not eligible for assistance under
a State program funded under part A), obtaining health
care coverage for children participating in the State
child support program, and carrying out other activities
that improve child well-being by increasing the ability
of parents to support their children financially and
emotionally,'.
(3) EFFECTIVE DATE- Except as provided in
paragraph (1)(B)(ii), the amendments and repeals made by
this subsection shall take effect on the date of enactment
of this Act, or October 1, 2009 (whichever is earlier), and
shall apply to payments under parts A and D of title IV of
the Social Security Act for calendar quarters beginning on
or after that date, and without regard to whether
regulations to implement the amendments are promulgated by
such date.
(e) Study and Report- Not later than October
1, 2010, the Secretary of Health and Human Services shall study
and submit a report to Congress regarding the following:
(1) The effect of age eligibility
restrictions for the earned income tax credit established
under section 32 of the Internal Revenue Code of 1986 for
individuals without qualifying children on--
(A) the ability of young parents to
pay child support;
(B) compliance with child support
orders; and
(C) the relationship between young
noncustodial parents and their children.
(2) The impact of State earned income tax
credit programs, especially such programs with targeted
benefits for noncustodial parents, on--
(A) the ability of noncustodial
parents to pay child support;
(B) compliance with child support
orders; and
(C) the relationship between
noncustodial parents and their children.
(3) The challenges faced by legal
immigrants and individuals for whom English is not their
primary language in fulfilling child support and other
noncustodial parenting obligations.
SEC. 105. GRANTS TO STATES TO CONDUCT
DEMONSTRATION PROJECTS TO PROMOTE ECONOMIC OPPORTUNITY FOR
LOW-INCOME PARENTS.
(a) Court-Supervised or IV-D
Agency-Supervised Employment Programs for Noncustodial Parents-
(1) IN GENERAL- To assist States in
implementing section 466(a)(15) of the Social Security Act
(42 U.S.C. 666(a)(15)), the Secretary of Health and Human
Services shall award grants to States to establish, in
coordination with counties and other local or tribal
governments, court-supervised or IV-D agency
supervised-employment programs for noncustodial parents who
have barriers to employment and a history of nonpayment of
child support obligations, as determined by a court or the
IV-D agency, and who are determined by the court or agency
to be in need of employment services or placement in order
to pay such child support obligations. A noncustodial parent
described in the preceding sentence who is an ex-offender
shall be eligible to participate in a program established
under this subsection.
(A) OPTION TO PARTICIPATE PRIOR TO
CONTEMPT FINDING- A State shall not be eligible to
receive a grant under this subsection unless any program
established with funds made available under the grant
provides noncustodial parents described in paragraph (1)
with an option to participate in the program prior to
the court or agency entering a finding that the
noncustodial parent is in contempt for failure to pay a
child support obligation and, potentially subject to
criminal penalties.
(B) PROGRAM GOALS- An employment
program established with funds made available under a
grant awarded under this subsection shall be designed to
do the following:
(i) To assist noncustodial
parents described in paragraph (1) obtain and
maintain unsubsidized employment.
(ii) To increase the amount of
financial support received by children.
(iii) To help noncustodial
parents described in paragraph (1) improve
relationships with their children and their
children's custodial parent.
(C) 6 MONTHS OF CONTINUOUS, TIMELY
PAYMENTS- An employment program established with funds
made available under this subsection shall not permit a
noncustodial parent placed in the program to graduate
from the program and avoid penalties for failure to pay
a child support obligation until the noncustodial parent
completes at least 6 months of continuous, timely
payment of the parent's child support obligations.
(i) Services provided under an
employment program established with funds made
available under a grant made under this subsection
must include the following:
(I) Job placement, including
job development and supervised job search as
necessary.
(II) Case management,
including educational assessment and advising,
vocational assessment and career exploration
services, and court liaison services.
(III) Counseling on
responsible parenthood.
(IV) Referral for support and
educational services.
(V) Employment retention
services.
(ii) Services provided under an
employment program established with funds made
available under a grant made under this subsection
may include the following:
(I) Remedial education
services or educational referral.
(II) Support funds for
services such as transportation, child care, or
job readiness training.
(III) Transitional jobs
programs.
(IV) Public-private career
pathway partnerships established in accordance
with subsection (b)(2).
(V) Occupational skill
training, including college credit programs.
(VI) Curricula development.
(E) ADMINISTRATION- A State that
receives a grant under this subsection may contract with
a public or private nonprofit organization, including a
faith-based or community-based organization, to
administer (in conjunction with the court of
jurisdiction or the IV-D agency) the court-supervised or
IV-D agency-supervised employment program.
(b) Transitional Jobs and Career Pathways
Partnership Grants- The Secretary of Labor shall award grants to
States to conduct demonstration projects to carry out one or
more of the projects described in paragraphs (1) and (2).
(1) TRANSITIONAL JOBS GRANTS-
(A) IN GENERAL- The Secretary of
Labor may award grants under this subsection to
establish and expand transitional jobs programs for
eligible individuals, including such programs conducted
by local governments, State employment agencies,
nonprofit organizations, and faith-based or
community-based organizations or intermediaries, that--
(i) combine time-limited
employment in transitional jobs that may be
subsidized with public funds, with activities that
promote skill development and remove barriers to
employment, such as case management services and
education, training, child support-related services,
and other activities, pursuant to individual plans;
and
(ii) provide such individuals
with--
(I) transitional jobs
placements and job placement assistance, to help
the individuals make the transition from
subsidized employment in transitional jobs to
stable unsubsidized employment; and
(II) retention services after
the transition to unsubsidized employment.
(B) ELIGIBLE INDIVIDUALS- For
purposes of this paragraph, the term `eligible
individuals' means individuals within any of the
following categories of disproportionately chronically
unemployed individuals:
(i) Individuals who have attained
age 16, but not attained age 36, and who have
documented barriers to employment such as lack of a
high school diploma, limited English proficiency,
aging out of foster care, or offender status,
particularly such individuals who are parents or
expectant parents.
(ii) Formerly incarcerated
individuals.
(iii) Homeless or formerly
homeless individuals.
(iv) Individuals with
disabilities.
(v) Individuals designated by a
court or the IV-D agency to participate in
transitional jobs programs.
(C) LIMITATIONS ON USE OF FUNDS-
(i) ALLOWABLE ACTIVITIES- A State
that receives a grant under this paragraph (or a
subgrantee of such State) (referred to in this
paragraph as the `program operator') shall use the
funds made available under the grant to operate a
transitional jobs program for eligible individuals
consistent with the following requirements:
(I) JOBS- The program
operator shall place eligible individuals in
temporary jobs, the incomes from which may be
subsidized in whole or in part with public
funds. An eligible individual placed in such a
job (referred to in this paragraph as `a
participant') shall perform work directly for
the program operator or another public,
nonprofit, or private sector organization (which
operator or organization may be referred to in
this paragraph as a `worksite employer') within
the community involved.
(aa) IN GENERAL- Subject to item (bb),
the transitional jobs program shall provide a participant with not
less than 30, and not more than 40, hours per week of a combination
of paid employment and the services described in subclauses (III),
(IV), and (V).
(bb) ACCOMMODATION OF SPECIAL
CIRCUMSTANCES- The number of hours per week required under item (aa)
may be adjusted in the case of a participant who requires a modified
work week to accommodate special circumstances.
(III) JOB PREPARATION AND
SERVICES- The program operator shall--
(aa) develop an individual plan for
each participant, which shall contain a goal that focuses on
preparation of the participant for unsubsidized jobs in demand in
the local economy that offer the potential for advancement and
growth (including increases in wages and benefits);
(bb) develop transitional jobs
placements for participants that will best prepare them for jobs
described in item (aa) or participation in the public-private career
pathway partnerships established in accordance with paragraph (2);
and
(cc) provide case management services
and ensure that appropriate education, training, and other
activities are available to participants, consistent with each
participant's individual plan.
(IV) JOB PLACEMENT ASSISTANCE
AND RETENTION SERVICES- The program operator
shall provide job placement assistance to help
participants obtain unsubsidized employment and
shall provide retention services to the
participants for a minimum of 6 months after
entry into the unsubsidized employment.
(V) EDUCATION OR TRAINING- In
any workweek in which a participant is scheduled
to work at least 30 hours in the program, not
less than 20 percent of the scheduled hours and
not more than 50 percent of the scheduled hours
shall involve participation in--
(aa) education or training activities
designed to improve the participant's employability and potential
earnings;
(bb) other activities designed to
reduce or eliminate any barriers that may impede the participant's
ability to secure and advance in unsubsidized employment; or
(cc) activities designed to promote
financial literacy and the use of products and services that
increase personal savings and build financial assets for family
support, education, homeownership, and retirement.
(aa) IN GENERAL- Subject to item (bb),
the duration of any placement in the program shall be for a minimum
period of 3 consecutive months.
(bb) 3-month EXTENSION- A program
placement may be extended for up to 2 additional consecutive 3-month
periods upon the conclusion of the original 3-month placement period
if such extension would be consistent with the individual's plan for
transition to unsubsidized employment.
(VII) SUPERVISION- The
worksite employer or program operator shall
supervise program participants, consistent with
the goal of addressing the limited work
experience and skills of the participants.
(D) REPORTS- Not later than 120 days
after the end of the grant period, the State shall
submit a report to the Secretary of Labor that contains
information on the number of participants in the program
who have entered unsubsidized employment, the percentage
of program participants who are employed during the
second quarter after exit, the percentage of program
participants who are employed during the fourth quarter
after exit, the median earnings of program participants
during the second quarter after exit, the percentage of
program participants who obtain an education or training
credential during participation or within one year of
exit, and demographic information regarding the
participants.
(E) TECHNICAL ASSISTANCE- The
Secretary of Labor shall enter into contracts with
entities with demonstrated experience in the provision
of transitional jobs to provide technical assistance to
the program operators and worksite employers for the
programs assisted under this paragraph.
(2) PUBLIC-PRIVATE CAREER PATHWAYS
PARTNERSHIPS-
(A) IN GENERAL- To allow workforce
education providers representing career pathway
partnerships--
(i) to create or expand career
pathways, with groups of employers in specific
industry or occupational sectors, for disadvantaged
workers, which may include any mix of such
employers' existing lower wage employees, new hires
or potential hires; or
(ii) to fill in gaps in career
pathways in particular localities or regions as
needed to ensure that career pathways are accessible
to unemployed disadvantaged workers and at risk
youth who have lower skills or limited English
proficiency, including through the creation of
workforce education services, such as `bridge'
programs that contextualize basic skills, English
language, or college remedial education services to
specific career pathways, and efforts to create
opportunities for gaining work experience in a
career pathway.
(B) USE OF FUNDS- Funds made
available under a grant under this paragraph may be used
by career pathways partnerships for any expense
reasonably related to the accomplishment of the specific
objectives of the partnership and the purpose described
in this paragraph, including any of the activities
described in subsection (a)(2)(D).
(i) IN GENERAL- Of the funds made
available to a career pathway partnership to carry
out the purpose described in this paragraph--
(I) not more than 30 percent
of such funds may be used to pay or subsidize
wages during a period of work experience or
internship, not to exceed 90 days; and
(II) not more than 10 percent
of such funds may be used for administrative
purposes, but this limitation shall not apply to
activities related to building and maintaining
partnerships, including such activities as
conducting workforce needs assessments,
brokering public-private and interagency
agreements, creating customized curricula, and
developing work experience opportunities.
(ii) PROHIBITION ON SUBSIDIZING
WAGES OF CURRENT EMPLOYEES- No funds made available
to carry out this paragraph shall be used to
subsidize the wages of any individual who, as of the
date of the establishment of the career pathway
partnership, is an employee of any employer
participating in the partnership.
(D) REQUIREMENTS FOR AWARDING OF
SUBGRANTS-
(i) IN GENERAL- Funds shall be
made available to career pathway partnerships to
carry out the purpose described in this paragraph
based on a performance-based accountability system
that includes the following measures of performance:
(I) The number of individuals
to be trained.
(II) The percentage of such
individuals who complete the program.
(III) The percentage of such
individuals who enter or advance in employment.
(IV) The wage and benefit
gains of individuals who complete the program
before and within 6 months after their program
completion, including the extent to which the
individuals achieved economic self-sufficiency.
(V) The percentage of
individuals who complete the program and enter
employment who retain employment for at least 6
months.
(VI) Where applicable, the
percentage of individuals who owe child support
and complete the program who improve in their
payment of child support within 6 months after
their program completion.
In establishing goals for such
measures, due consideration shall be given to the
education, work experience, and job readiness of the
individuals expected to participate in the program;
the barriers of such individuals to employment, and
the local job market.
(ii) CONSIDERATIONS FOR FUNDING
RENEWALS- A subgrantee's level of success in
achieving employment, advancement, wage, and
employment retention goals shall be a primary
consideration for determining whether to renew a
grant made to such entity and the funding level for
such grant.
(iii) PRIORITIES FOR AWARDS OF
SUBGRANTS- In awarding subgrants under this
paragraph, a State shall give priority to
applications that--
(I) propose to serve areas of
high poverty, high youth unemployment, high drop
out rates, or high rates of low-income
single-parent families;
(II) include a substantial
cash or in-kind match by all employers,
including joint labor-management programs where
applicable, in the partnerships, such as paid
release time for employed workforce education
participants;
(III) use instructional
materials and instructors directly used in the
specific business or industry sectors of the
partnership employers;
(IV) link successful
completion of workforce education services to
wage increases, promotions or job hires;
(V) will result in attainment
of employer-recognized occupational and
educational credentials;
(VI) address career guidance
and adult basic education and English language
needs as well as job-specific skills;
(VII) demonstrate a blending
of resources from partner agencies in the
workforce system and other sectors and Federal
programs, including superior procedures for
coordinating responsible fatherhood promotion
activities, where appropriate, to support the
development of high quality pathways;
(VIII) identify how the
subgrantee will maximize services to unemployed
disadvantaged workers who also face other
barriers in the labor market, such as high
school dropout, offender status, aging out of
foster care, low basic skill level, including
limited English proficiency, learning
disabilities, physical, emotional or behavior
disabilities, or substance abuse recovery, which
may be through direct relationships with local
providers of transitional jobs programs under
which in appropriate circumstances transitional
jobs participants may access career pathways
programs upon completion of the transitional
jobs program; and
(IX) support collaboration,
as appropriate, between employers and labor
organizations and other workforce development
professionals, including joint labor management
training and education programs where
appropriate.
(E) DEFINITIONS- In this paragraph:
(i) ADULT EDUCATION- The term
`adult education' has the meaning given that term in
section 203 of the Workforce Investment Act of 1998
(20 U.S.C. 9202).
(ii) CAREER PATHWAY- The term
`career pathway' means a linked set of workforce
education and job opportunities within a specific
industry sector, or for an occupational sector that
cuts across multiple business and industry sectors,
which begins at the lowest skill and English
language levels, and extends through for-credit
college opportunities such as earning relevant
associate or bachelor's degrees, and prepares
individuals for advancement in jobs in demand in the
local or regional labor market.
(iii) COMMUNITY-BASED PROVIDER-
The term `community-based provider' means a
not-for-profit organization, with local boards of
directors, that directly provides workforce
education services.
(iv) INSTITUTION OF HIGHER
EDUCATION- The term `institution of higher
education' has the meaning given that term in
section 101 of the Higher Education Act of 1965 (20
U.S.C. 1001).
(v) CHARTER SCHOOL- The term
`charter school' has the meaning given that term in
section 5210 of the Elementary and Secondary
Education Act of 1965 (20 U.S.C. 7221i).
(vi) AREA VOCATIONAL EDUCATION
SCHOOL- The term `area vocational and technical
education school' has the meaning given that term in
section 3 of the Carl D. Perkins Vocational and
Technical Education Act of 1998 (20 U.S.C. 2302).
(vii) DISADVANTAGED WORKERS- The
term `disadvantaged workers' means unemployed
individuals in low-income households or employed
individuals in low-income households with wages at
or below 2/3 of the median wage for the State or
region applying for the grant.
(viii) CAREER PATHWAY
PARTNERSHIP- The term `career pathway partnership'
means collaborations of 1 or more workforce
education providers, 1 or more employers, 1 or more
labor organizations, where applicable, as a result
of such organization's representation of employees
at the worksite who have skills in which the
training or employment programs are proposed, and
may include optional additional entities as needed
to provide a comprehensive range of workforce
education and ancillary support services.
(ix) WORKFORCE EDUCATION- The
term `workforce education' means a set of career
guidance and exploration services, adult education
and English language services, job training,
registered apprenticeship programs, and credit and
non-credit postsecondary education services aimed at
preparing individuals to enter and sustain
employment in specific occupations and to have the
sufficient skills to respond to shifting employment
opportunities.
(x) WORKFORCE EDUCATION PROVIDER-
The term `workforce education provider' means
community-based providers, institutions of higher
education, area vocational and technical education
schools, charter schools, and other public nonprofit
entities that have a demonstrated capacity to
provide quality workforce education services.
(c) Matching Requirement-
(1) IN GENERAL- The Secretary of Health
and Human Services and the Secretary of Labor may not award
a grant to a State under this section unless the State
agrees that, with respect to the costs to be incurred by the
State in conducting a demonstration project with funds
provided under the grant, the State will make available
non-Federal contributions in an amount equal to 10 percent
of the amount of Federal funds paid to the State under such
grant.
(2) NON-FEDERAL CONTRIBUTIONS- In this
subsection, the term `non-Federal contributions' includes
contributions by the State and by public and private
entities that may be in cash or in kind, but does not
include any amounts provided by the Federal Government, or
services assisted or subsidized to any significant extent by
the Federal Government, or any amount expended by a State
before October 1, 2009.
(d) Worker Protections and Labor Standards-
(1) RATE OF PAY; BENEFITS AND WORKING
CONDITIONS-
(A) IN GENERAL- A worksite employer
of a participant in a program or activity funded under
this section shall pay the participant at the rate paid
to employees of the worksite employer who are not
participants in such program or activity and who perform
comparable work at the worksite, including periodic
increases where appropriate. If no other employees of
the worksite employer perform comparable work at the
worksite, the worksite employer shall pay the
participant not less than the applicable Federal or
State minium wage, whichever is higher.
(B) BENEFITS AND CONDITIONS- An
individual employed through participation in a program
or activity funded under this section shall be provided
with benefits and working conditions at the same level
and to the same extent as such benefits and conditions
are provided to other employees of the employer of the
individual who have worked a similar length of time and
perform the same work.
(A) IN GENERAL- Funds provided
through a grant made under this paragraph shall be used
only for a program or activity that does not duplicate,
and is in addition to, a program or activity otherwise
available in the locality of the program or activity
funded under this section.
(B) PRIVATE, NONPROFIT ENTITY- Funds
provided through a grant made under this section shall
not be provided to a private nonprofit entity to conduct
programs or activities that are the same as or
substantially equivalent to activities provided by a
State or local government agency in the area in which
such entity is located, unless the requirements of
paragraph (3) are met.
(A) IN GENERAL- A worksite employer
shall not displace an employee or position (including
partial displacement such as reduction in hours, wages,
or employment benefits) or impair contracts for services
or collective bargaining agreements, as a result of the
use by such employer of a participant in a program or
activity funded under this section, and no participant
in the program or activity shall be assigned to fill any
established unfilled position vacancy.
(B) JOB OPPORTUNITIES- A job
opportunity shall not be created under this paragraph
that will infringe in any manner on the promotional
opportunity of an employed individual.
(C) LIMITATION ON SERVICES-
(i) SUPPLANTATION OF HIRING- A
participant in any program or activity funded under
this section shall not perform any services or
duties, or engage in activities, that will supplant
the hiring of employees that are not participants in
the program or activity.
(ii) DUTIES FORMERLY PERFORMED BY
ANOTHER EMPLOYEE- A participant in any program or
activity funded under this section shall not perform
services or duties, or engage in activities, that
are services, duties, or activities that had been
performed by or were assigned to any employee who
recently resigned or was discharged, who is subject
to a reduction in force, who has recall rights
pursuant to a collective bargaining agreement or
applicable personnel procedures, who is on leave
(such as terminal, temporary, vacation, emergency,
or sick leave), who is on strike, or who is being
locked out.
(D) CONCURRENCE OF LOCAL LABOR
ORGANIZATION- No placement shall be made under a program
or activity funded under this section until the entity
conducting the program or activity has obtained the
written concurrence of any local labor organization
representing employees who are engaged in the same or
substantially similar work as that proposed to be
carried out for the worksite employer with whom a
participant is to be placed under the program or
activity.
(4) NO IMPACT ON UNION ORGANIZING- A
State conducting a demonstration project funded under this
section and any entity conducting a program or activity
funded under this section shall provide the Secretary with a
certified assurance that none of such funds shall be used to
assist or deter union organizing.
(A) IN GENERAL- Funds provided under
this section shall not be used to subsidize training or
employment with an employer that has a demonstrable
record of noncompliance with Federal labor, civil
rights, workplace safety, or related laws.
(B) CERTIFIED SATISFACTORY RECORD-
Employers who receive training or wage subsidies under
programs or activities funded under this section shall
have a satisfactory record in labor relations and
employment practices, as certified by the Secretary of
Labor.
(C) APPLICATION OF WORKER PROTECTION
LAWS- A participant in a program or activity funded
under this section shall be considered to be an employee
of any employer that the participant is placed with for
all purposes under Federal and State law, including laws
relating to health and safety, civil rights, and
worker's compensation.
(D) OTHER JOB QUALITY STANDARDS-
Employers who receive training or wage subsidies under
programs or activities funded under this section shall
meet all applicable State or local job or employer
quality standards regarding such issues as wages,
benefits, advancement opportunities, and turnover rates
established for programs funded under the Workforce
Investment Act of 1998 (29 U.S.C. 2801 et seq.).
(6) GRIEVANCE PROCEDURE- An entity
conducting a program or activity funded under this section
shall establish and maintain a procedure for the filing and
adjudication of grievances by employees of worksite
employers who are not participants in the program, or such
employees' representatives, or by participants in such a
program or activity alleging a violation of a provision of
this subsection that is similar to the grievance procedure
established by a State for purposes of section 407(f)(3) of
the Social Security Act (42 U.S.C. 607(f)(3)).
(7) NONPREEMPTION OF STATE LAW- The
provisions of this subsection shall not be construed to
preempt any provision of State law that affords greater
protections to employees or participants than are afforded
by this subsection.
(8) TREATMENT OF AMOUNTS PAID TO
PARTICIPANTS- Amounts paid to a participant in a program or
activity funded under this section shall be--
(A) considered earned income for
purpose of determining the participant's eligibility for
the child tax credit established under section 24 of the
Internal Revenue Code of 1986, the earned income tax
credit established under section 32 of such Code, and
any other tax benefit established under such Code the
eligibility for which is based on earned income; and
(B) disregarded for purposes of
determining the participant's, the participant's
family's, or the participant's household's eligibility
for, or amount of, assistance or benefits provided under
any means-tested program funded in whole or in part with
Federal funds.
(1) REQUIREMENTS FOR ALL APPLICATIONS-
(A) IN GENERAL- A State desiring to
receive a grant to conduct a demonstration project under
this section shall submit an application--
(i) to the Secretary of Health
and Human Services, in the case of a grant under
subsection (a); or
(ii) to the Secretary of Labor,
in the case of a grant under subsection (b);
at such time, in such manner, and
containing such information or assurances as the
Secretary of Health and Human Services or the Secretary
of Labor, as appropriate, may require.
(B) COMPLIANCE WITH WORKER
PROTECTIONS AND LABOR STANDARDS- The application shall
include an assurance that the State and any entity
conducting a program or activity under the project shall
comply with the worker protections and labor standards
established in accordance with such protections under
subsection (d).
(C) NONDISCRIMINATION- The
application shall include an assurance that the State
and any entity conducting a program or activity under
the demonstration project shall comply with section
188(a)(2) of the Workforce Investment Act of 1998 (29
U.S.C. 2938(a)(2)) to the same extent that such section
would apply to the entity if the program or activity
conducted under the demonstration project was considered
to be funded or otherwise financially assisted under
that Act.
(D) ASSURANCE GRANT WILL SUPPLEMENT,
NOT SUPPLANT, OTHER STATE FUNDING- The application shall
include an assurance from the chief executive officer of
the State that funds made available under the grant will
supplement, and not supplant, other funds used by the
State to establish or support employment placements for
low-income parents.
(2) SPECIFIC DEMONSTRATION PROJECT
REQUIREMENTS-
(A) COURT-SUPERVISED OR IV-D
AGENCY-SUPERVISED EMPLOYMENT PROGRAMS FOR NONCUSTODIAL
PARENTS- In order to conduct a demonstration project
described in subsection (a), a State shall include in
the application submitted to the Secretary of Health and
Human Services the following:
(i) Evidence of an agreement
between the State and 1 or more counties to
establish an employment program that meets the
requirements of subsection (a).
(ii) The number of potential
noncustodial parents to be served by the program.
(iii) The purposes specific to
that State's program.
(iv) The median income of the
target population.
(B) PUBLIC-PRIVATE CAREER PATHWAYS
PARTNERSHIPS- In order to conduct a demonstration
project described in paragraph (2) of subsection (b), a
State shall include in the application submitted to the
Secretary of Labor a description of--
(i) the number, characteristics,
and employment and earnings status of disadvantaged
individuals in the State or applicable region where
the program is to be conducted;
(ii) which business and industry
sectors, or occupational clusters that cut across
sectors, will be targeted by the career pathways
partnership, based on overall economic benefit to
the community, the current and future demand for
workers, the advancement opportunities for workers,
the wages at each step of the career pathway, and
availability of worker benefits;
(iii) the interventions that will
be put in place to address any educational deficits,
limited English proficiency, or learning
disabilities of individuals who participate in the
program and to ensure that such individuals have the
academic, technical, communications, and other job
skills to function in the jobs targeted by the
partnership;
(iv) how the members of the
partnership will collaborate on the development of
curriculum and delivery of training that will
provide the necessary occupational, academic and
other work-related skills and credentialing needed
for the specific labor market areas;
(v) the supports that will be
used to provide counseling, mentoring or other
support to individuals while in training or to
assist them in navigating in complicated work
environments;
(vi) the set of career exposure
activities that will be put in place to provide
hands-on experience such as work experience, on the
job training, internships, or work-study;
(vii) the agreements that are in
place with employers, industry groups, and labor
organizations, where applicable, to ensure access to
jobs and advancement opportunities in the targeted
businesses, industry or occupations;
(viii) how the workforce
education providers in the partnership will assess
the employment barriers and needs of local
disadvantaged individuals who participate in the
program and will identify resources for meeting
those needs;
(ix) how the workforce education
providers will work with partnership employers,
business and industry groups, labor organizations,
where applicable, and local economic development
organizations to identify the priority workforce
needs of the local industry;
(x) how the partnerships will
ensure that the appropriate program delivery models
and formal agreements are in place to ensure maximum
benefits to the individuals receiving career pathway
partnership services and to the employers and labor
organizations, where applicable, in the partnership
and the industries or businesses they represent;
(xi) how partnership employers
and labor organizations, where applicable, will be
actively involved in identifying specific workforce
education needs, planning the curriculum, assisting
in training activities, providing job opportunities,
and coordinating job retention for individuals hired
after training through the program and follow-up
support; and
(xii) how the partnership will
build on existing career pathways programs, where
applicable, to serve the targeted population.
(3) APPLICATIONS BY INDIAN TRIBES OR
TRIBAL ORGANIZATIONS- The Secretary of Health and Human
Services and the Secretary of Labor may exempt an Indian
tribe or tribal organization from any requirement of this
section that the Secretary of Health and Human Services or
the Secretary of Labor determines would be inappropriate to
apply to the Indian tribe or tribal organization, taking
into account the resources, needs, and other circumstances
of the Indian tribe or tribal organization.
(f) Priorities and Requirements for Awarding
Grants-
(1) IN GENERAL- Subject to paragraphs (2)
and (3), the Secretary of Health and Human Services (in the
case of a grant under subsection (a)) and the Secretary of
Labor (in the case of a grant under subsection (b)) shall
give priority to making grants under this section to
entities that--
(A) demonstrate success with respect
to meeting the goals of quality job placement, long-term
unsubsidized job retention, and, where applicable,
increasing child support payments, decreasing unpaid
child support arrearages, and increasing the involvement
of low-income noncustodial parents with their children
through their participation in responsible fatherhood
activities, including participation in programs that
provide culturally relevant curricula in core subjects
including--
(i) conducting activities with
children;
(ii) improving communication
skills;
(iii) child support management;
(iv) providing financially for
the family's security and well-being;
(v) managing stress and anger, as
well as domestic violence intervention services when
appropriate;
(vi) maintaining physical and
mental health;
(vii) parenting and relationship
skills;
(viii) child development; and
(ix) barriers to responsible
parenthood, including substance abuse, unemployment,
criminal justice system involvement, and inadequate
housing; and
(B) coordinate with, and link
individuals as applicable to, other public and private
benefits and employment services for low-income adults
among the different systems or programs in which such
adults are involved, including the criminal justice
system, the State programs funded under each part of
title IV of the Social Security Act (42 U.S.C. 601 et
seq.) (including programs and activities funded under
section 403(a)(2) of the Social Security Act (42 U.S.C.
603(a)(2))), educational assistance and student aid
programs, and job training or employment programs,
including State employment agencies.
(2) PERFORMANCE MEASURES- In making
grants under this section, the Secretary of Health and Human
Services (in the case of a grant under subsection (a)) and
the Secretary of Labor (in the case of a grant under
subsection (b)) shall ensure that grantees demonstrate a
plan for implementing measures to track their performance
with respect to meeting the goals of quality job placement,
long-term unsubsidized job retention, and, where applicable,
increasing child support payments, decreasing child support
arrearages, and increasing the involvement of low-income
noncustodial parents with their children when determined to
be appropriate.
(3) REFLECTIVE OF TARGET POPULATIONS- In
making grants under this section, the Secretary of Health
and Human Services (in the case of a grant under subsection
(a)) and the Secretary of Labor (in the case of a grant
under subsection (b)) shall give priority to States with
proposed demonstration projects that are designed to target
low-income adults, including custodial and noncustodial
parents, and low-income married couples.
(4) SUBSTANTIAL FUNDING FOR EACH OF THE
PURPOSES- In making grants under subsection (b), the
Secretary of Labor shall ensure that a substantial share of
the amount appropriated under subsection (j) for a fiscal
year is used for carrying out each of the projects described
in paragraphs (1) and (2) of subsection (b).
(g) Regulatory and Policy Flexibility- The
Secretary of Labor and the Secretary of Health and Human
Services, in coordination with the Secretary of Education and
the Attorney General, shall work with grantees under this
section to resolve policy barriers that may impede blending of
federal resources to support these demonstration projects.
(h) Evaluation- The Secretary of Health and
Human Services (in the case of a grant under subsection (a)) and
the Secretary of Labor (in the case of a grant under subsection
(b)) shall provide for an independent and rigorous evaluation of
the demonstration projects conducted under this section that
includes, to the maximum extent feasible, random assignment or
other appropriate statistical techniques, in order to assess the
effectiveness of the projects.
(i) General Definitions- In this section:
(1) STATE- The term `State' means each of
the 50 States, the District of Columbia, the Commonwealth of
Puerto Rico, the United States Virgin Islands, Guam,
American Samoa, and includes an Indian tribe or tribal
organization.
(2) IV-D AGENCY- The term `IV-D agency'
means the State or local agency responsible for
administering the State program established under part D of
title IV of the Social Security Act (42 U.S.C. 651 et seq.).
(3) INDIAN TRIBE; TRIBAL ORGANIZATION-
The terms `Indian tribe' and `tribal organization' have the
meaning given such terms in section 4 of the Indian
Self-Determination and Education Assistance Act (25 U.S.C.
450b).
(j) Appropriation- Out of any money in the
Treasury of the United States not otherwise appropriated, there
are appropriated to carry out this section--
(1) for programs administered by the
Secretary of Health and Human Services under subsection (a),
$15,000,000 for each of fiscal years 2010 through 2013; and
(2) for programs administered by the
Secretary of Labor under subsection (b), $35,000,000 for
each of fiscal years 2010 through 2013.
SEC. 106. STATE ASSESSMENTS OF BARRIERS TO
EMPLOYMENT AND FINANCIAL SUPPORT OF CHILDREN.
(a) State Assessments and Reports- As a
condition of the continued approval of a State plan under part D
of title IV of the Social Security Act (42 U.S.C. 651 et seq.),
each State with an approved such plan, acting through the
appropriate State agencies, shall assess the State policies with
respect to the issues described in subsection (b) and submit a
report to the Secretary of Health and Human Services on the
results of such assessment not later than March 15, 2010.
(b) Issues Described- For purposes of
subsection (a), the issues described in this subsection are the
following:
(1) The process of setting and modifying
child support obligations, particularly with respect to
low-income parents, including--
(A) the role and criteria for using
imputed income in determining child support obligations;
(B) the process of modifying
obligations;
(C) the consideration of income and
employment status, including efforts to identify
unreported income;
(D) the consideration of
incarceration;
(E) the consideration of disability;
(F) the treatment of arrearages,
including interest charged, and laws or procedures that
interfere with forgiveness, adjustment, waiver, or
compromise of arrears owed to the State by low-income
noncustodial parents who lack sufficient ability to pay
such arrearages;
(G) the procedures related to
retroactive support; and
(H) State pass-through and disregard
policies for recipients of means tested public benefits.
(2) The impact of state criminal laws and
law enforcement practices on the employment acquisition,
retention, and advancement prospects of individuals
following arrest, conviction, or incarceration, including--
(A) any efforts, including counseling
or employment support, to assist ex-prisoners with
reentry to a community and successful reunification with
their families; and
(B) an assessment of any efforts to
seal or expunge arrest and conviction records and any
efforts to grant certificates or other acknowledgments
of rehabilitation to ex-prisoners, and to examine State
occupational licensing and certification procedures.
(3) An assessment of the impact of debt
on employment retention, including child support and
non-child support debts imposed to recover costs related to
welfare and criminal justice.
(4) An assessment of State practices
related to providing prisoners and ex-prisoners with valid
identification documents upon release from prison.
(5) Identification of any other barriers
to healthy family formation or sustainable economic
opportunity for custodial and noncustodial parents that are
created or exacerbated by Federal or State laws, policies,
or procedures, including an examination of the rules of
Federal and State means-tested programs, the operation of
the State workforce system, the availability of financial
education services, and the availability of domestic
violence services and child support procedures to help
victims of domestic violence stay safe and obtain the child
support they are owed.
(c) Grants to States for Commissions on State
Law Improvements in the Best Interest of Children and Families-
The Secretary of Health and Human Services shall award grants to
States to establish or support commissions to review the State
assessment conducted in accordance with subsection (a) and to
make recommendations on ways to improve State law in the best
interest of children and families.
(d) Appropriations- Out of any money in the
Treasury of the United States not otherwise appropriated, there
are appropriated to the Secretary of Health and Human Services
for the period of fiscal years 2010 through 2011, $3,000,000, to
remain available until expended, for the purpose of making--
(1) payments to States to offset all or a
portion of the costs of conducting the State assessments and
reports required under subsection (a); and
(2) grants to States under subsection
(c).
SEC. 107. COLLECTION OF CHILD SUPPORT UNDER
THE SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM.
(a) Encouragement of Collection of Child
Support- Section 5 of the Food and Nutrition Act of 2008 (7
U.S.C. 2014) is amended--
(A) by redesignating paragraphs (5)
and (6) as paragraphs (6) and (7), respectively;
(B) in paragraph (4)(B), by striking
`paragraph (6)' and inserting `paragraph (7)'; and
(C) by inserting after paragraph (4)
the following:
`(5) DEDUCTION FOR CHILD SUPPORT
RECEIVED-
`(A) IN GENERAL- A household shall be
allowed a deduction of 20 percent of all legally
obligated child support payments received from an
identified or putative parent of a child in the
household if that parent is not a household member.
`(B) ORDER OF DETERMINING DEDUCTIONS-
A deduction under this paragraph shall be determined
before the computation of the excess shelter deduction
under paragraph (7).'; and
(2) in subsection (k)(4)(B), by striking
`subsection (e)(6)' and inserting `subsection (e)(7)'.
(b) Simplified Verification of Child Support
Payments- Section 5(n) of the Food and Nutrition Act of 2008 (7
U.S.C. 2014(n)) is amended--
(1) in the subsection heading, by
striking `State Options to Simplify', and inserting
`Simplified'; and
(2) by striking `Regardless of whether'
and inserting the following:
`(1) IN GENERAL- A household that is
paying legally obligated child support through the program
under part D of title IV of the Social Security Act (42
U.S.C. 651 et seq.) shall receive--
`(A) a deduction under subsection
(e)(4); or
`(B) an exclusion for paid child
support under subsection (d)(6).
`(2) STATE OPTIONS- Regardless of
whether'.
(c) Inclusion of Economic Opportunities
Programs in Definition of Work Program- Section 6(o)(2) of the
Food and Nutrition Act of 2008 (7 U.S.C. 2015(o)(2)) is
amended--
(1) in subparagraph (C), by striking `or'
at the end;
(2) in subparagraph (D), by striking the
period at the end and inserting `; or'; and
(3) by adding at the end the following:
`(E) participate in and comply with
the requirements of a demonstration project under
section 106 of the Responsible Fatherhood and Healthy
Families Act of 2009;'.
(1) IN GENERAL- This section and the
amendments made by this section take effect on October 1,
2009.
(2) STATE OPTION- A State may implement
the amendments made by subsections (a) and (b) for
participating households at the first recertification of the
households that occurs on or after October 1, 2009.
SEC. 108. GRANTS SUPPORTING HEALTHY FAMILY
PARTNERSHIPS FOR DOMESTIC VIOLENCE INTERVENTION AND PREVENTION.
Section 403(a) of the Social Security Act (42
U.S.C. 603(a)) is amended by adding at the end the following new
paragraph:
`(6) GRANTS SUPPORTING HEALTHY FAMILY
PARTNERSHIPS FOR DOMESTIC VIOLENCE INTERVENTION AND
PREVENTION-
`(A) IN GENERAL- The Secretary shall
award grants on a competitive basis to healthy family
partnerships to--
`(i) develop and implement
promising practices for assessing and providing
services to individuals and families affected by
domestic violence, including through caseworker
training, the provision of technical assistance to
community partners, and the implementation of safe
visitation and exchange programs; or
`(ii) develop and implement
promising practices for preventing domestic
violence, particularly as a barrier to economic
security, and fostering healthy relationships.
`(B) EDUCATION SERVICES- In awarding
grants under subparagraph (A), the Secretary shall
ensure that 10 percent of the funds made available under
such grants are used for high schools and other
secondary educational institutions and institutions of
higher education to provide education services on the
value of healthy relationships, responsible parenting,
and healthy marriages characterized by mutual respect
and non-violence, and the importance of building
relationships skills such as communication, conflict
resolution, and budgeting.
`(C) APPLICATION- The respective
entity and organization of a healthy family partnership
entered into for purposes of receiving a grant under
this paragraph shall submit a joint application to the
Secretary, at such time and in such manner as the
Secretary shall specify, containing--
`(i) a description of how the
partnership intends to carry out the activities
described in subparagraph (A);
`(ii) an assurance that funds
made available under the grant shall be used to
supplement, and not supplant, other funds used by
the entity or organization to carry out programs,
activities, or services described in subparagraph
(A) or (B); and
`(iii) such other information as
the Secretary may require.
`(D) GENERAL RULES GOVERNING USE OF
FUNDS- The rules of section 404, other than subsection
(b) of that section, shall not apply to a grant made
under this paragraph.
`(E) DEFINITIONS- In this paragraph:
`(i) DOMESTIC VIOLENCE- The term
`domestic violence' has the meaning given that term
in section 402(a)(7)(B).
`(ii) HEALTHY FAMILY PARTNERSHIP-
The term `healthy family partnership' means a
partnership between--
`(I) an entity receiving
funds under a grant made under paragraph (2) to
promote healthy marriage or responsible
fatherhood; and
`(II) an organization or
organizations with demonstrated expertise
working with survivors of domestic violence.
`(F) APPROPRIATION- Out of any money
in the Treasury of the United States not otherwise
appropriated, there are appropriated for each of fiscal
years 2010 through 2012, $25,000,000 for purposes of
awarding grants to healthy family partnerships under
this paragraph.'.
SEC. 109. PROCEDURES TO ADDRESS DOMESTIC
VIOLENCE PREVENTION.
(a) Requirements To Ensure Procedures To
Address Domestic Violence Prevention- Section 403(a)(2) of the
Social Security Act (42 U.S.C. 603(a)(2)), as amended by section
101, is amended--
(1) by redesignating subparagraph (D) as
subparagraph (F); and
(2) by inserting after subparagraph (C)
the following new subparagraphs:
`(D) REQUIREMENTS FOR RECEIPT OF
FUNDS- An entity may not be awarded a grant under this
paragraph unless the entity, as a condition of receiving
funds under such a grant--
`(i) identifies in its
application the domestic violence experts at the
local, State, or national level with whom it will
consult in the development and implementation of its
programs and activities;
`(ii) upon an award of funds, and
in consultation with such domestic violence experts,
develops a written protocol which describes--
`(I) how the entity will
identify instances or risks of domestic
violence;
`(II) the procedures for
responding to such instances or risk, including
making service referrals and providing
protections and appropriate assistance for
identified individuals and families;
`(III) how confidentiality
issues will be addressed; and
`(IV) the domestic violence
training that will be provided to ensure
effective and consistent implementation of the
protocol; and
`(iii) in its annual report to
the Secretary, includes a description such domestic
violence protocols and a description of any
implementation issues identified with respect to
domestic violence and how such issues were
addressed.
`(E) DOMESTIC VIOLENCE DEFINED- In
this paragraph, the term `domestic violence' has the
meaning given that term in section 402(a)(7)(B).'.
(b) Conforming Amendments- Section 403(a)(2)
of such Act (42 U.S.C. 603(a)(2)), as so amended, is amended--
(1) in subparagraph (A)(i)--
(A) by striking `(B) and (C)' and
inserting `(B), (C), and (D)'; and
(B) by striking `subparagraph (D)'
and inserting `subparagraph (F)';
(2) in subparagraphs (B)(i) and (C)(i),
by striking `(D)' each place it appears and inserting `(F)';
and
(3) in subparagraph (F) (as redesignated
by subsection (a)(1)), by striking `$150,000,000 for each of
fiscal years 2006 through 2010' and inserting `$150,000,000
for each of fiscal years 2006 through 2008 and $200,000,000
for each of fiscal years 2009 through 2014'.
TITLE II--REVENUE PROVISIONS
SEC. 201. MODIFICATIONS TO THE EARNED INCOME
TAX CREDIT.
(a) Increase in Earned Income Credit for
Workers With No Qualifying Children-
(1) EARNED INCOME AMOUNT-
(A) IN GENERAL- The table under
section 32(b)(2)(A) of the Internal Revenue Code of 1986
is amended by striking `$4,220' and inserting `$7,250'.
(B) TRANSITION FOR EARNED INCOME
AMOUNT- Section 32(b)(2) of such Code is amended by
adding at the end the following new subparagraph:
`(C) TRANSITION FOR EARNED INCOME
AMOUNT- For purposes of subparagraph (A), in lieu of the
earned income amount specified for eligible individuals
with no qualifying children, the earned income amount
for such individuals for 2010 is $5,900, for 2011 is
$6,200, for 2012 is $6,500, and for 2013 is $6,900.'.
(A) IN GENERAL- The table under
section 32(b)(2)(A) of the Internal Revenue Code of 1986
is amended by striking `$5,280' and inserting `phaseout
amount % of annual minimum wage'.
(B) PHASEOUT AMOUNT PERCENTAGE-
Section 32(b)(2) of such Code, as amended by this Act,
is amended by adding at the end the following new
subparagraph:
`(D) PHASEOUT AMOUNT PERCENTAGE- For
purposes of subparagraph (A), the phaseout amount
percentage is 70 percent for 2010, 72 percent for 2011,
75 percent for 2012, 85 percent in 2013, and 100 percent
in 2014 and thereafter.'.
(3) ANNUAL MINIMUM WAGE- Section 32(b)(2)
of such Code, as amended by this Act, is amended by adding
at the end the following new subparagraph:
`(E) ANNUAL MINIMUM WAGE- For
purposes of subparagraph (A), the annual minimum wage
for any calendar year is an amount equal to the product
of 2,000 and the minimum hourly wage effective on
January 1 of such year under section 6(a)(1) of the Fair
Labor Standards Act of 1938.'.
(4) INFLATION ADJUSTMENT-
(A) IN GENERAL- Section 32(j) of such
Code is amended by redesignating paragraph (2) as
paragraph (3) and by inserting after paragraph (1) the
following new paragraph:
`(2) EARNED INCOME AMOUNT AND PHASEOUT
AMOUNT FOR INDIVIDUALS WITH NO QUALIFYING CHILDREN- In the
case of any taxable year beginning after calendar year 2014,
the earned income amount and the phaseout amount in effect
for an eligible individual with no qualifying children in
subsection (b)(2)(A) shall be increased by an amount equal
to--
`(A) such amount, multiplied by
`(B) the cost-of-living adjustment
determined under section 1(f)(3) for the calendar year
in which the taxable year begins, determined by
substituting `calendar year 2013' for `calendar year
1992' in subparagraph (B) thereof.'.
(B) CONFORMING AMENDMENTS-
(i) Section 32(j)(1)(B)(i) of
such Code is amended by inserting `(other than the
amount described in paragraph (2))' after
`subsections (b)(2)(A)'.
(ii) Section 32(b)(3)(B)(iii) of
such Code is amended by striking `subsection (j)(2)'
and inserting `subsection (j)(3)'.
(5) CONFORMING AMENDMENT- Section
32(b)(2)(A) of such Code is amended by striking `Subject to
subparagraph (B)' and inserting `Except as otherwise
provided in this paragraph'.
(6) EFFECTIVE DATE- The amendments made
by this subsection shall apply to taxable years beginning
after December 31, 2009.
(b) Enhanced Credit for Certain Workers With
No Qualifying Children-
(1) IN GENERAL- Section 32 of the
Internal Revenue Code of 1986 is amended by adding at the
end the following new subsection:
`(n) Additional Credit for Certain Workers-
`(1) IN GENERAL- In the case of a
qualified individual, the credit allowed under subsection
(a) shall be increased by an amount equal to 100 percent of
the amount of the credit allowed under this section (without
regard to this subsection).
`(2) QUALIFIED INDIVIDUAL- For purposes
of this subsection, the term `qualified individual' means an
eligible individual who--
`(A) is described in clause (ii) of
subsection (c)(1)(A),
`(B) is the parent of a child and is
required to make child support payments with respect to
such child pursuant to an order which--
`(i) is in effect during the
taxable year of such individual, and
`(ii) is enforced during such
taxable year by a State agency responsible for
administering the State plan under part D of title
IV of the Social Security Act, and
`(C) has paid child support during
the taxable year in an amount not less than the amount
of current child support for such taxable year for every
order requiring the individual to make child support
payments.
For purposes of subparagraph (C), a child
support payment will be considered to have been made during
the taxable year if such payment is withheld from or
attributable to a pay period beginning in such taxable year
and is made no later than 30 days after the date on which
such taxable year ends.
`(3) REGULATIONS- The Secretary shall
establish regulations to carry out the purposes of this
subsection, including regulations which provide for the
verification of the payment of child support in accordance
with paragraph (2)(D).'.
(2) VERIFICATION OF PAYMENT-
(A) IN GENERAL- The Secretary of
Health and Human Services, in consultation with the
Secretary of the Treasury and the States, shall
establish such procedures as are appropriate to ensure
that the Secretary of the Treasury has the information
that the Secretary of the Treasury determines necessary
to allow for verification of the status of individuals
as qualified individuals (as defined under section 32(n)
of the Internal Revenue Code of 1986, as added by
paragraph (1)) and of payment of child support
obligations in a timely fashion.
(B) AUTHORITY TO USE FEDERAL CASE
REGISTRY- The Secretary of Health and Human Services may
include in the Federal Case Registry of Child Support
Orders established under section 453(h) of the Social
Security Act (42 U.S.C. 653(h)) such information as the
Secretary determines appropriate to allow for the
verification described in subparagraph (A).
(C) STATE PROCEDURES- The Secretary
of Health and Human Services, in consultation with the
States, shall establish procedures for informing a
noncustodial parent in a timely fashion when the parent
has paid the amount of child support owed by the parent
for a taxable year so that the parent may determine the
extent to which the parent is a qualified individual for
purposes of qualifying for the additional credit
established under section 32(n) of the Internal Revenue
Code of 1986, as added by paragraph (1).
(3) INFORMATION SHARING- Subsection (j)
of section 453 of the Social Security Act (42 U.S.C. 653(j))
is amended by adding at the end the following new paragraph:
`(12) ADMINISTRATION OF FEDERAL TAX LAWS-
In addition to the access provided under subsections (h)(3)
and (i)(3), the Secretary of the Treasury shall have access
to such information maintained under this chapter as the
Secretary of the Treasury determines is necessary to verify
eligibility for the credit allowed under section 32(n) of
the Internal Revenue Code of 1986, under procedures
established pursuant to such section.'.
(4) EFFECTIVE DATE- The amendments made
by paragraphs (1) and (3) shall apply to taxable years
beginning after December 31, 2009.
(c) Marriage Penalty Relief-
(1) IN GENERAL- Section 32(b)(2)(B) of
the Internal Revenue Code of 1986 is amended--
(A) by striking `after 2007' in
clause (iii) and inserting `in 2008',
(B) by striking `and' at the end of
clause (ii),
(C) by striking the period at the end
of clause (iii) and inserting `, and', and
(D) by adding at the end the
following new clauses:
`(iv) the amount determined under
paragraph (3)(B) in the case of taxable years
beginning in 2009 and 2010, and
`(v) $4,000 in the case of
taxable years beginning after 2010.'.
(2) INFLATION ADJUSTMENT- Section
32(j)(1)(B)(ii) of such Code is amended--
(A) by striking `and' at the end of
clause (i),
(B) by striking the period at the end
of clause (ii) and inserting `, and', and
(C) by adding at the end the
following new clause:
`(iii) in the case of the $4,000
amount in subsection (b)(2)(B)(v), by substituting
`calendar year 2010' for `calendar year 1992' in
subparagraph (B) of such section 1.'.
(3) EFFECTIVE DATE- The amendments made
by this subsection shall apply to taxable years beginning
after December 31, 2009.
SEC. 202. CLARIFICATION OF ECONOMIC SUBSTANCE
DOCTRINE.
(a) In General- Section 7701 of the Internal
Revenue Code of 1986 is amended by redesignating subsection (o)
as subsection (p) and by inserting after subsection (n) the
following new subsection:
`(o) Clarification of Economic Substance
Doctrine; etc-
`(A) IN GENERAL- In any case in which
a court determines that the economic substance doctrine
is relevant for purposes of this title to a transaction
(or series of transactions), such transaction (or series
of transactions) shall have economic substance only if
the requirements of this paragraph are met.
`(B) DEFINITION OF ECONOMIC
SUBSTANCE- For purposes of subparagraph (A)--
`(i) IN GENERAL- A transaction
has economic substance only if--
`(I) the transaction changes
in a meaningful way (apart from Federal tax
effects) the taxpayer's economic position, and
`(II) subject to clause
(iii), the taxpayer has a substantial purpose
(other than a Federal tax purpose) for entering
into such transaction.
`(ii) SPECIAL RULE WHERE TAXPAYER
RELIES ON PROFIT POTENTIAL- A transaction shall not
be treated as having economic substance solely by
reason of having a potential for profit unless the
present value of the reasonably expected pre-Federal
tax profit from the transaction is substantial in
relation to the present value of the expected net
Federal tax benefits that would be allowed if the
transaction were respected. In determining
pre-Federal tax profit, there shall be taken into
account fees and other transaction expenses and to
the extent provided by the Secretary, foreign taxes.
`(iii) SPECIAL RULES FOR
DETERMINING WHETHER NON-FEDERAL TAX PURPOSE- For
purposes of clause (i)(II)--
`(I) a purpose of achieving a
financial accounting benefit shall not be taken
into account in determining whether a
transaction has a substantial purpose (other
than a Federal tax purpose) if the origin of
such financial accounting benefit is a reduction
of Federal tax, and
`(II) the taxpayer shall not
be treated as having a substantial purpose
(other than a Federal tax purpose) with respect
to a transaction if the only such purpose is the
reduction of non-Federal taxes and the
transaction will result in a reduction of
Federal taxes substantially equal to, or greater
than, the reduction in non-Federal taxes because
of similarities between the laws imposing the
taxes.
`(2) DEFINITIONS AND SPECIAL RULES- For
purposes of this subsection--
`(A) ECONOMIC SUBSTANCE DOCTRINE- The
term `economic substance doctrine' means the common law
doctrine under which tax benefits under subtitle A with
respect to a transaction are not allowable if the
transaction does not have economic substance or lacks a
business purpose.
`(B) EXCEPTION FOR PERSONAL
TRANSACTIONS OF INDIVIDUALS- In the case of an
individual, this subsection shall apply only to
transactions entered into in connection with a trade or
business or an activity engaged in for the production of
income.
`(3) OTHER PROVISIONS NOT AFFECTED-
Except as specifically provided in this subsection, the
provisions of this subsection shall not be construed as
altering or supplanting any other rule of law or provision
of this title, and the requirements of this subsection shall
be construed as being in addition to any such other rule of
law or provision of this title.
`(4) REGULATIONS- The Secretary shall
prescribe such regulations as may be necessary or
appropriate to carry out the purposes of this subsection.
Such regulations may include exemptions from the application
of this subsection.'.
(b) Effective Date- The amendments made by
this section shall apply to transactions entered into after the
date of the enactment of this Act.
SEC. 203. PENALTY FOR UNDERSTATEMENTS
ATTRIBUTABLE TO TRANSACTIONS LACKING ECONOMIC SUBSTANCE, ETC.
(a) In General- Subchapter A of chapter 68 of
the Internal Revenue Code of 1986 is amended by inserting after
section 6662A the following new section:
`SEC. 6662B. PENALTY FOR UNDERSTATEMENTS
ATTRIBUTABLE TO TRANSACTIONS LACKING ECONOMIC SUBSTANCE, ETC.
`(a) Imposition of Penalty- If a taxpayer has
an noneconomic substance transaction understatement for any
taxable year, there shall be added to the tax an amount equal to
30 percent of the amount of such understatement.
`(b) Reduction of Penalty for Disclosed
Transactions- Subsection (a) shall be applied by substituting
`20 percent' for `30 percent' with respect to the portion of any
noneconomic substance transaction understatement with respect to
which the relevant facts affecting the tax treatment of the item
are adequately disclosed in the return or a statement attached
to the return.
`(c) Noneconomic Substance Transaction
Understatement- For purposes of this section--
`(1) IN GENERAL- The term `noneconomic
substance transaction understatement' means any amount which
would be an understatement under section 6662A(b)(1) if
section 6662A were applied by taking into account items
attributable to noneconomic substance transactions rather
than items to which section 6662A would apply without regard
to this paragraph.
`(2) NONECONOMIC SUBSTANCE TRANSACTION-
The term `noneconomic substance transaction' means any
transaction if there is a lack of economic substance (within
the meaning of section 7701(o)(1)(B)) for the transaction
giving rise to the claimed benefit.
`(d) Rules Applicable To Assertion,
Compromise, and Collection of Penalty-
`(1) IN GENERAL- Only the Chief Counsel
for the Internal Revenue Service may assert a penalty
imposed under this section or may compromise all or any
portion of such penalty. The Chief Counsel may delegate the
authority under this paragraph only to an individual holding
the position of chief of a branch within the Office of the
Chief Counsel for the Internal Revenue Service.
`(2) SPECIFIC REQUIREMENTS-
`(A) ASSERTION OF PENALTY- The Chief
Counsel for the Internal Revenue Service (or the Chief
Counsel's delegate under paragraph (1)) shall not assert
a penalty imposed under this section unless, before the
assertion of the penalty, the taxpayer is provided--
`(i) a notice of intent to assert
the penalty, and
`(ii) an opportunity to provide
to the Commissioner (or the Chief Counsel's delegate
under paragraph (1)) a written response to the
proposed penalty within a reasonable period of time
after such notice.
`(B) COMPROMISE OF PENALTY- A
compromise shall not result in a reduction in the
penalty imposed by this section in an amount greater
than the amount which bears the same ratio to the amount
of the penalty determined without regard to the
compromise as--
`(i) the reduction under the
compromise in the noneconomic substance transaction
understatement to which the penalty relates, bears
to
`(ii) the amount of the
noneconomic substance transaction understatement
determined without regard to the compromise.
`(3) RULES RELATING TO RELEVANCY
REQUIREMENT-
`(A) DETERMINATION OF RELEVANCE BY
CHIEF COUNSEL- The Chief Counsel for the Internal
Revenue Service (or the Chief Counsel's delegate under
paragraph (1)) may assert, compromise, or collect a
penalty imposed by this section with respect to a
noneconomic substance transaction even if there has not
been a court determination that the economic substance
doctrine was relevant for purposes of this title to the
transaction if the Chief Counsel (or delegate)
determines that either was so relevant.
`(B) FINAL ORDER OF COURT- If there
is a final order of a court that determines that the
economic substance doctrine was not relevant for
purposes of this title to a transaction (or series of
transactions), any penalty imposed under this section
with respect to the transaction (or series of
transactions) shall be rescinded.
`(4) APPLICABLE RULES- The rules of
paragraphs (2) and (3) of section 6707A(d) shall apply to a
compromise under paragraph (1).
`(e) Coordination With Other Penalties-
Except as otherwise provided in this part, the penalty imposed
by this section shall be in addition to any other penalty
imposed by this title.
`(1) For coordination of penalty with
understatements under section 6662 and other special rules,
see section 6662A(e).
`(2) For reporting of penalty imposed
under this section to the Securities and Exchange
Commission, see section 6707A(e).'.
(b) Coordination With Other Understatements
and Penalties-
(1) The second sentence of section
6662(d)(2)(A) of the Internal Revenue Code of 1986 is
amended by inserting `and without regard to items with
respect to which a penalty is imposed by section 6662B'
before the period at the end.
(2) Subsection (e) of section 6662A of
such Code is amended--
(A) in paragraph (1), by inserting
`and noneconomic substance transaction understatements'
after `reportable transaction understatements' both
places it appears,
(B) in paragraph (2)(A)--
(i) by inserting `6662B or'
before `6663' in the text, and
(ii) by striking `PENALTY' in the
heading and inserting `AND ECONOMIC SUBSTANCE
PENALTIES',
(C) in paragraph (2)(B)--
(i) by inserting `and section
6662B' after `This section', and
(ii) by striking `PENALTY' in the
heading and inserting `AND ECONOMIC SUBSTANCE
PENALTIES',
(D) in paragraph (3), by inserting
`or noneconomic substance transaction understatement'
after `reportable transaction understatement', and
(E) by adding at the end the
following new paragraph:
`(4) NONECONOMIC SUBSTANCE TRANSACTION
UNDERSTATEMENT- For purposes of this subsection, the term
`noneconomic substance transaction understatement' has the
meaning given such term by section 6662B(c).'.
(3) Subsection (e) of section 6707A of
such Code is amended--
(A) by striking `or' at the end of
subparagraph (B), and
(B) by striking subparagraph (C) and
inserting the following new subparagraphs:
`(C) is required to pay a penalty
under section 6662B with respect to any noneconomic
substance transaction, or
`(D) is required to pay a penalty
under section 6662(h) with respect to any transaction
and would (but for section 6662A(e)(2)(B)) have been
subject to penalty under section 6662A at a rate
prescribed under section 6662A(c) or to penalty under
section 6662B,'.
(c) Clerical Amendment- The table of sections
for part II of subchapter A of chapter 68 of the Internal
Revenue Code of 1986 is amended by inserting after the item
relating to section 6662A the following new item:
`Sec. 6662B. Penalty for understatements
attributable to transactions lacking economic substance,
etc.'.
(d) Effective Date- The amendments made by
this section shall apply to transactions entered into after the
date of the enactment of this Act.
SEC. 204. DENIAL OF DEDUCTION FOR INTEREST ON
UNDERPAYMENTS ATTRIBUTABLE TO NONECONOMIC SUBSTANCE TRANSACTIONS.
(a) In General- Section 163(m) of the
Internal Revenue Code of 1986 (relating to interest on unpaid
taxes attributable to nondisclosed reportable transactions) is
amended--
(1) by striking `attributable' and all
that follows and inserting the following: `attributable to--
`(1) the portion of any reportable
transaction understatement (as defined in section 6662A(b))
with respect to which the requirement of section
6664(d)(2)(A) is not met, or
`(2) any noneconomic substance
transaction understatement (as defined in section
6662B(c)).', and
(2) by inserting `and Noneconomic
Substance Transactions' in the heading thereof after
`Transactions'.
(b) Effective Date- The amendments made by
this section shall apply to transactions after the date of the
enactment of this Act in taxable years ending after such date.
END
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