[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 4060 Introduced in Senate (IS)]
<DOC>
117th CONGRESS
2d Session
S. 4060
To amend the Internal Revenue Code of 1986 to provide for inflation
rebates, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
April 7, 2022
Mr. Reed (for himself, Mr. Whitehouse, Mrs. Feinstein, and Mr. Merkley)
introduced the following bill; which was read twice and referred to the
Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide for inflation
rebates, 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.
This Act may be cited as the ``Food and Fuel Family Savings Act''.
SEC. 2. INFLATION REBATES TO INDIVIDUALS.
(a) In General.--Subchapter B of chapter 65 of the Internal Revenue
Code of 1986 is amended by inserting after section 6428B the following
new section:
``SEC. 6428C. INFLATION REBATES TO INDIVIDUALS.
``(a) In General.--In the case of an eligible individual, there
shall be allowed as a credit against the tax imposed by subtitle A for
the first taxable year beginning in 2022 an amount equal to the
inflation rebate amount determined for such taxable year.
``(b) Inflation Rebate Amount.--For purposes of this section, the
term `inflation rebate amount' means, with respect to any taxpayer for
any taxable year, the sum of--
``(1) $600 ($1,200 in the case of a joint return), plus
``(2) $600 multiplied by the number of dependents of the
taxpayer for such taxable year.
``(c) Eligible Individual.--For purposes of this section, the term
`eligible individual' means any individual other than--
``(1) any nonresident alien individual,
``(2) any individual who is a dependent of another taxpayer
for a taxable year beginning in the calendar year in which the
individual's taxable year begins, and
``(3) an estate or trust.
``(d) Limitation Based on Adjusted Gross Income.--
``(1) In general.--The amount of the credit allowed by
subsection (a) (determined without regard to this subsection
and subsection (f)) shall be reduced (but not below zero) by
the amount which bears the same ratio to such credit (as so
determined) as--
``(A) the excess of--
``(i) the taxpayer's adjusted gross income
for such taxable year, over
``(ii) $40,000, bears to
``(B) $5,000.
``(2) Special rules.--
``(A) Joint return or surviving spouse.--In the
case of a joint return or a surviving spouse (as
defined in section 2(a)), paragraph (1) shall be
applied by substituting `$80,000' for `$40,000' and
`$10,000' for `$5,000'.
``(B) Head of household.--In the case of a head of
household (as defined in section 2(b)), paragraph (1)
shall be applied by substituting `$60,000' for
`$40,000' and `$7,500' for `$5,000'.
``(e) Definitions and Special Rules.--
``(1) Dependent defined.--For purposes of this section, the
term `dependent' has the meaning given such term by section
152.
``(2) Identification number requirement.--
``(A) In general.--In the case of a return other
than a joint return, the $600 amount in subsection
(b)(1) shall be treated as being zero unless the
taxpayer includes the valid identification number of
the taxpayer on the return of tax for the taxable year.
``(B) Joint returns.--In the case of a joint
return, the $1,200 amount in subsection (b)(1) shall be
treated as being--
``(i) $600 if the valid identification
number of only 1 spouse is included on the
return of tax for the taxable year, and
``(ii) zero if the valid identification
number of neither spouse is so included.
``(C) Dependents.--A dependent shall not be taken
into account under subsection (b)(2) unless the valid
identification number of such dependent is included on
the return of tax for the taxable year.
``(D) Valid identification number.--
``(i) In general.--For purposes of this
paragraph, the term `valid identification
number' means a social security number issued
to an individual by the Social Security
Administration on or before the due date for
filing the return for the taxable year.
``(ii) Adoption taxpayer identification
number.--For purposes of subparagraph (C), in
the case of a dependent who is adopted or
placed for adoption, the term `valid
identification number' shall include the
adoption taxpayer identification number of such
dependent.
``(E) Special rule for members of the armed
forces.--Subparagraph (B) shall not apply in the case
where at least 1 spouse was a member of the Armed
Forces of the United States at any time during the
taxable year and the valid identification number of at
least 1 spouse is included on the return of tax for the
taxable year.
``(F) Coordination with certain advance payments.--
In the case of any payment determined pursuant to
subsection (g)(6), a valid identification number shall
be treated for purposes of this paragraph as included
on the taxpayer's return of tax if such valid
identification number is available to the Secretary as
described in such subsection.
``(G) Mathematical or clerical error authority.--
Any omission of a correct valid identification number
required under this paragraph shall be treated as a
mathematical or clerical error for purposes of applying
section 6213(g)(2) to such omission.
``(3) Credit treated as refundable.--The credit allowed by
subsection (a) shall be treated as allowed by subpart C of part
IV of subchapter A of chapter 1.
``(f) Coordination With Advance Refunds of Credit.--
``(1) Reduction of refundable credit.--The amount of the
credit which would (but for this paragraph) be allowable under
subsection (a) shall be reduced (but not below zero) by the
aggregate refunds and credits made or allowed to the taxpayer
(or, except as otherwise provided by the Secretary, any
dependent of the taxpayer) under subsection (g). Any failure to
so reduce the credit shall be treated as arising out of a
mathematical or clerical error and assessed according to
section 6213(b)(1).
``(2) Joint returns.--Except as otherwise provided by the
Secretary, in the case of a refund or credit made or allowed
under subsection (g) with respect to a joint return, half of
such refund or credit shall be treated as having been made or
allowed to each individual filing such return.
``(3) Coordination with possessions of the united states.--
For purposes of this subsection, payments made under subsection
(g) include payments made by any jurisdiction other than the
United States under section 6428C(g) of the income tax law of
such jurisdiction, and payments made by possessions to which
section 2(b)(2) of the Food and Fuel Family Savings Act
pursuant to a plan described in such section. In carrying out
this section, the Secretary shall coordinate with each
possession of the United States to prevent any application of
this paragraph that is inconsistent with the purposes of this
subsection.
``(g) Advance Refunds and Credits.--
``(1) In general.--Subject to paragraphs (5) and (6), each
individual who was an eligible individual for such individual's
first taxable year beginning in 2020 shall be treated as having
made a payment against the tax imposed by chapter 1 for such
taxable year in an amount equal to the advance refund amount
for such taxable year.
``(2) Advance refund amount.--
``(A) In general.--For purposes of paragraph (1),
the advance refund amount is the amount that would have
been allowed as a credit under this section for such
taxable year if this section (other than subsection (f)
and this subsection) had applied to such taxable year.
``(B) Treatment of deceased individuals.--For
purposes of determining the advance refund amount with
respect to such taxable year--
``(i) any individual who was deceased
before January 1, 2022, shall be treated for
purposes of applying subsection (e)(2) in the
same manner as if the valid identification
number of such person was not included on the
return of tax for such taxable year (except
that subparagraph (E) thereof shall not apply),
``(ii) notwithstanding clause (i), in the
case of a joint return with respect to which
only 1 spouse is deceased before January 1,
2022, such deceased spouse was a member of the
Armed Forces of the United States at any time
during the taxable year, and the valid
identification number of such deceased spouse
is included on the return of tax for the
taxable year, the valid identification number
of 1 (and only 1) spouse shall be treated as
included on the return of tax for the taxable
year for purposes of applying subsection
(e)(2)(B) with respect to such joint return,
and
``(iii) no amount shall be determined under
subsection (e)(2) with respect to any dependent
of the taxpayer if the taxpayer (both spouses
in the case of a joint return) was deceased
before January 1, 2022.
``(3) Timing and manner of payments.--
``(A) Timing.--
``(i) In general.--The Secretary shall,
subject to the provisions of this title, refund
or credit any overpayment attributable to this
section as rapidly as possible.
``(ii) Deadline.--No refund or credit shall
be made or allowed under this subsection after
December 31, 2022.
``(B) Manner.--
``(i) In general.--Notwithstanding any
other provision of law (including section 913
of the Electronic Fund Transfer Act (15 U.S.C.
1693k)), the Secretary shall disburse refunds
payable under this subsection by means of a
Treasury-sponsored account (as defined in
section 208.2 of title 31, Code of Federal
Regulations) which is limited to uses at
grocery stores and for gasoline.
``(ii) Application to possessions.--In the
case of a possession described in section
2(b)(1) of the Food and Fuel Family Savings
Act, refunds payable under this subsection
shall be disbursed in a manner determined by
the Secretary, in consultation with the chief
executive officer of such possession, to be
best suited to meet the purposes of this
section and, to the extent possible, subject to
the same limitations applicable to refunds made
under clause (i).
``(4) No interest.--No interest shall be allowed on any
overpayment attributable to this subsection.
``(5) Application to individuals who have filed a return of
tax for 2021.--
``(A) Application to 2021 returns filed at time of
initial determination.--If, at the time of any
determination made pursuant to paragraph (3), the
individual referred to in paragraph (1) has filed a
return of tax for the individual's first taxable year
beginning in 2021, paragraph (1) shall be applied with
respect to such individual by substituting `2021' for
`2020'.
``(B) Additional payment.--
``(i) In general.--In the case of any
individual who files, before the additional
payment determination date, a return of tax for
such individual's first taxable year beginning
in 2021, the Secretary shall make a payment (in
addition to any payment made under paragraph
(1)) to such individual equal to the excess (if
any) of--
``(I) the amount which would be
determined under paragraph (1) (after
the application of subparagraph (A)) by
applying paragraph (1) as of the
additional payment determination date,
over
``(II) the amount of any payment
made with respect to such individual
under paragraph (1).
``(ii) Additional payment determination
date.--The term `additional payment
determination date' means the earlier of--
``(I) the date which is 90 days
after the 2021 calendar year filing
deadline, or
``(II) September 1, 2022.
``(iii) 2021 calendar year filing
deadline.--The term `2021 calendar year filing
deadline' means the date specified in section
6072(a) with respect to returns for calendar
year 2021.
``(6) Application to certain individuals who have not filed
a return of tax for 2020 or 2021 at time of determination.--In
the case of any individual who, at the time of any
determination made pursuant to paragraph (3), has filed a tax
return for neither the year described in paragraph (1) nor for
the year described in paragraph (5)(A), the Secretary shall,
consistent with rules similar to the rules of section
6428A(f)(5), apply paragraph (1) on the basis of information
available to the Secretary and shall, on the basis of such
information, determine the advance refund amount with respect
to such individual without regard to subsection (d) unless the
Secretary has reason to know that such amount would otherwise
be reduced by reason of such subsection.
``(7) Special rule related to time of filing return.--
Solely for purposes of this subsection, a return of tax shall
not be treated as filed until such return has been processed by
the Internal Revenue Service.
``(h) Regulations.--The Secretary shall prescribe such regulations
or other guidance as may be necessary or appropriate to carry out the
purposes of this section, including--
``(1) regulations or other guidance providing taxpayers the
opportunity to provide the Secretary information sufficient to
allow the Secretary to make payments to such taxpayers under
subsection (g) (including the determination of the amount of
such payment) if such information is not otherwise available to
the Secretary, and
``(2) regulations or other guidance to ensure to the
maximum extent administratively practicable that, in
determining the amount of any credit under subsection (a) and
any credit or refund under subsection (g), an individual is not
taken into account more than once, including by different
taxpayers and including by reason of a change in joint return
status or dependent status between the taxable year for which
an advance refund amount is determined and the taxable year for
which a credit under subsection (a) is determined.
``(i) Outreach.--The Secretary shall carry out a robust and
comprehensive outreach program to ensure that all taxpayers described
in subsection (h)(1) learn of their eligibility for the advance refunds
and credits under subsection (g); are advised of the opportunity to
receive such advance refunds and credits as provided under subsection
(h)(1); and are provided assistance in applying for such advance
refunds and credits.''.
(b) Treatment of Certain Possessions.--
(1) Payments to possessions with mirror code tax systems.--
The Secretary of the Treasury shall pay to each possession of
the United States which has a mirror code tax system amounts
equal to the loss (if any) to that possession by reason of the
amendments made by this section. Such amounts shall be
determined by the Secretary of the Treasury based on
information provided by the government of the respective
possession.
(2) Payments to other possessions.--The Secretary of the
Treasury shall pay to each possession of the United States
which does not have a mirror code tax system amounts estimated
by the Secretary of the Treasury as being equal to the
aggregate benefits (if any) that would have been provided to
residents of such possession by reason of the amendments made
by this section if a mirror code tax system had been in effect
in such possession. The preceding sentence shall not apply
unless the respective possession has a plan, which has been
approved by the Secretary of the Treasury, under which such
possession will promptly distribute such payments to its
residents.
(3) Inclusion of administrative expenses.--The Secretary of
the Treasury shall pay to each possession of the United States
to which the Secretary makes a payment under paragraph (1) or
(2) an amount equal to the lesser of--
(A) the increase (if any) of the administrative
expenses of such possession--
(i) in the case of a possession described
in paragraph (1), by reason of the amendments
made by this section, and
(ii) in the case of a possession described
in paragraph (2), by reason of carrying out the
plan described in such paragraph, or
(B) $500,000 ($10,000,000 in the case of Puerto
Rico).
The amount described in subparagraph (A) shall be determined by
the Secretary of the Treasury based on information provided by
the government of the respective possession.
(4) Coordination with credit allowed against united states
income taxes.--No credit shall be allowed against United States
income taxes under section 6428C of the Internal Revenue Code
of 1986 (as added by this section), nor shall any credit or
refund be made or allowed under subsection (g) of such section,
to any person--
(A) to whom a credit is allowed against taxes
imposed by the possession by reason of the amendments
made by this section, or
(B) who is eligible for a payment under a plan
described in paragraph (2).
(5) Mirror code tax system.--For purposes of this
subsection, the term ``mirror code tax system'' means, with
respect to any possession of the United States, the income tax
system of such possession if the income tax liability of the
residents of such possession under such system is determined by
reference to the income tax laws of the United States as if
such possession were the United States.
(6) Treatment of payments.--For purposes of section 1324 of
title 31, United States Code, the payments under this
subsection shall be treated in the same manner as a refund due
from a credit provision referred to in subsection (b)(2) of
such section.
(c) Administrative Provisions.--
(1) Definition of deficiency.--Section 6211(b)(4)(A) of the
Internal Revenue Code of 1986 is amended by inserting
``6428C,'' after ``6428B,''.
(2) Exception from reduction or offset.--Any refund payable
by reason of section 6428C(g) of the Internal Revenue Code of
1986 (as added by this section), or any such refund payable by
reason of subsection (b) of this section, shall not be--
(A) subject to reduction or offset pursuant to
subsection (c), (d), (e), or (f) of section 6402 of the
Internal Revenue Code of 1986 or any similar authority
permitting offset, or
(B) reduced or offset by other assessed Federal
taxes that would otherwise be subject to levy or
collection.
(3) Conforming amendments.--
(A) Paragraph (2) of section 1324(b) of title 31,
United States Code, is amended by inserting ``6428C,''
after ``6428B,''.
(B) The table of sections for subchapter B of
chapter 65 of the Internal Revenue Code of 1986 is
amended by inserting after the item relating to section
6428B the following new item:
``Sec. 6428C. Inflation rebates to individuals.''.
(d) Other Provisions.--
(1) Exception from reduction or offset.--
(A) In general.--The right of any person to any
applicable payment under this section shall not be
transferable or assignable, at law or in equity, and no
applicable payment shall be subject to, execution,
levy, attachment, garnishment, or other legal process,
or the operation of any bankruptcy or insolvency law.
(B) Applicable payment.-- For purposes of this
subsection, the term ``applicable payment''means--
(i) any advance refund amount paid pursuant
to section 6428C(g) of Internal Revenue Code of
1986 (as added by this section),
(ii) any payment made by a possession of
the United States with a mirror code tax system
(as defined in subsection (b) of this section)
pursuant to such subsection which corresponds
to a payment described in clause (i), and
(iii) any payment made by a possession of
the United States without a mirror code tax
system (as so defined) pursuant to subsection
(b) of this section.
(2) Agency information sharing and assistance.--
(A) In general.--The Commissioner of Social
Security, the Railroad Retirement Board, and the
Secretary of Veterans Affairs shall each provide the
Secretary of the Treasury (or the Secretary's delegate)
such information and assistance as the Secretary of the
Treasury (or the Secretary's delegate) may require for
purposes of--
(i) making payments under section 6428C(g)
of the Internal Revenue Code of 1986 to
individuals described in section 6428A(f)(5)(A)
thereof, or
(ii) providing administrative assistance to
a possession of the United States to allow such
possession to promptly distribute payments
under subsection (b) to its residents.
(B) Exchange of information with possessions.--Any
information provided to the Secretary of the Treasury
(or the Secretary's delegate) pursuant to subparagraph
may be exchanged with a possession of the United States
in accordance with the applicable tax coordination
agreement for information exchange and administrative
assistance that the Internal Revenue Service has agreed
to with such possession.
(e) Appropriations.--
(1) In general.--Immediately upon the enactment of this
Act, in addition to amounts otherwise available, there are
appropriated for fiscal year 2022, out of any money in the
Treasury not otherwise appropriated:
(A) $1,464,500,000 to remain available until
September 30, 2024 for necessary expenses for the
Internal Revenue Service for the administration of the
advance payments, the provision of taxpayer assistance,
and the furtherance of integrated, modernized, and
secure Internal Revenue Service systems, of which up to
$20,000,000 is available for premium pay for services
related to the development of information technology as
determined by the Commissioner of the Internal Revenue
occurring between January 1, 2022 and December 31,
2023, and all of which shall supplement and not
supplant any other appropriations that may be available
for this purpose.
(B) $7,000,000 to remain available without fiscal
year limitation, for necessary expenses for the Bureau
of the Fiscal Service to carry out this section (and
the amendments made by this section), which shall
supplement and not supplant any other appropriations
that may be available for this purpose, and
(C) $8,000,000 to remain available until September
30, 2024, for the Treasury Inspector General for Tax
Administration for the purposes of overseeing
activities related to the administration of this
section (and the amendments made by this section),
which shall supplement and not supplant any other
appropriations that may be available for this purpose.
(2) Social security administration.--For an additional
amount for ``Social Security Administration-- Limitation on
Administrative Expenses'', $38,000,000, to remain available
until September 30, 2023.
(3) Railroad retirement board.--For an additional amount
for ``Railroad Retirement Board--Limitation on
Administration'', $8,300, to remain available until September
30, 2023.
SEC. 3. SURCHARGE ON HIGH INCOME INDIVIDUALS, ESTATES, AND TRUSTS.
(a) In General.--Part I of subchapter A of chapter 1 of the
Internal Revenue Code of 1986 is amended by inserting after section 1
the following new section:
``SEC. 1A. SURCHARGE ON HIGH INCOME INDIVIDUALS, ESTATES, AND TRUSTS.
``(a) General Rule.--In the case of a taxpayer other than a
corporation, there is hereby imposed (in addition to any other tax
imposed by this subtitle) a tax equal to the sum of--
``(1) 5 percent of so much of the modified adjusted gross
income of the taxpayer as exceeds--
``(A) $10,000,000, in the case of any taxpayer not
described in subparagraph (B) or (C),
``(B) $5,000,000, in the case of a married
individual filing a separate return, and
``(C) $200,000, in the case of an estate or trust,
plus
``(2) 3 percent of so much of the modified adjusted gross
income of the taxpayer as exceeds--
``(A) $25,000,000, in the case of any taxpayer not
described in subparagraph (B) or (C),
``(B) $12,500,000, in the case of a married
individual filing a separate return, and
``(C) $500,000, in the case of an estate or trust.
``(b) Modified Adjusted Gross Income.--For purposes of this
section, the term `modified adjusted gross income' means adjusted gross
income reduced by any deduction (not taken into account in determining
adjusted gross income) allowed for investment interest (as defined in
section 163(d)) or business interest (as defined in section 163(j)). In
the case of an estate or trust, adjusted gross income shall be
determined as provided in section 67(e), and reduced by the amount
allowed as a deduction under section 642(c).
``(c) Special Rules.--
``(1) Nonresident aliens and foreign trusts.--In the case
of a nonresident alien individual (other than an individual
described in section 876(a) or 877(a)) or a foreign trust, only
amounts taken into account in connection with the tax imposed
under section 871(b) shall be taken into account under this
section.
``(2) Citizens and residents living abroad and certain bona
fide residents of possessions.--Each dollar amount which is
applicable to any taxpayer under subsection (a) shall be
decreased (but not below zero) by the excess (if any) of--
``(A) the sum of--
``(i) amounts excluded from the taxpayer's
gross income under section 911,
``(ii) amounts excluded from the taxpayer's
gross income under section 931, and
``(iii) amounts excluded from the
taxpayer's gross income under section 933, over
``(B) the sum of--
``(i) amounts of any deductions or
exclusions disallowed under section 911(d)(6)
with respect to the amounts described in
subparagraph (A)(i),
``(ii) amounts of any deductions or
exclusions disallowed under section 931(b) with
respect to the amounts described in
subparagraph (A)(ii), and
``(iii) amounts of any deductions or
exclusions disallowed under section 933 with
respect to the amounts described in
subparagraph (A)(iii).
``(3) Certain trusts.--Subsection (a) shall not apply to--
``(A) a trust all the unexpired interests in which
are devoted to one or more of the purposes described in
section 170(c)(2)(B),
``(B) an electing settlement trust (as defined in
section 646(h)), or
``(C) a cemetery perpetual care fund described in
section 642(i).
``(4) Not treated as tax imposed by this chapter for
certain purposes.--The tax imposed under this section shall not
be treated as tax imposed by this chapter for purposes of
determining the amount of any credit under this chapter (other
than sections 27 and 901).
``(5) Electing small business trusts.--For purposes of the
determination of adjusted gross income, section 641(c)(1)(A)
shall not apply and all portions of any electing small business
trust shall be treated as a single trust.
``(d) Regulations.--The Secretary shall issue such regulations or
other guidance as may be necessary or appropriate to carry out the
purposes of this section, including regulations or other guidance to
prevent the avoidance of the purposes of this section.''.
(b) Coordination With Certain Provisions.--
(1) Interest on certain deferred tax liability.--Section
453A(c) of the Internal Revenue Code of 1986 is amended by
redesignating paragraph (6) as paragraph (7) and by inserting
after paragraph (5) the following new paragraph:
``(6) Surcharge on high income individuals taken into
account in determining maximum rate of tax.--For purposes of
paragraph (3)(B), the maximum rate of tax in effect under
section 1 shall be treated as being equal to the sum of such
rate and the rates in effect under paragraphs (1) and (2) of
section 1A(a).''.
(2) Alien residents of puerto rico, guam, american samoa,
or the northern mariana islands.--Section 876(a) of such Code
is amended by striking section 1 and inserting ``sections 1 and
1A''.
(3) Expatriation to avoid tax.--Section 877(b) of such Code
is amended by inserting ``and section 1A'' after ``section 1 or
55''.
(4) Limitation on foreign tax credit.--Section 904(b)(3)(E)
of such Code is amended--
(A) in clause (i)(I), by inserting ``increased by
the sum of the rates set forth in paragraphs (1) and
(2) of section 1A(a)'' after ``(whichever applies)'',
(B) in clause (i)(II) by inserting ``increased by
the sum of the rates set forth in paragraphs (1) and
(2) of section 1A(a)'' after ``section 1(h)'', and
(C) in clause (ii), by striking ``referred to in''
and inserting ``determined under''.
(5) Election by individuals to be subject to tax at
corporate rates.--Section 962(a)(1) of such Code is amended by
inserting ``, 1A,'' after ``sections 1''.
(6) Interest on certain tax deferral.--Section 1291(c)(2)
of such Code is amended by adding at the end the following:
``For purposes of the preceding sentence, the highest rate of
tax in effect under section 1 shall be treated as being equal
to the sum of such rate and the rates in effect under
paragraphs (1) and (2) of section 1A(a).''.
(7) Averaging of farm income.--Section 1301(a) of such Code
is amended by striking ``section 1'' both places it appears and
inserting ``sections 1 and 1A''.
(8) Title 11 cases.--Section 1398(c)(2) of such Code is
amended by inserting ``and tax shall be imposed under section
1A by treating the estate as a married individual filing a
separate return'' before the period at the end.
(9) Withholding of tax on foreign partners' share of
effectively connected income.--Section 1446(b)(2) of such Code
is amended by adding at the end the following flush sentence:
``For purposes of subparagraph (A), the highest rate of tax in
effect under section 1 shall be treated as being equal to the
sum of such rate and the rates in effect under paragraphs (1)
and (2) of section 1A(a).''.
(10) Relief from joint and several liability on joint
return.--Section 6015(d)(2)(B) of such Code is amended by
inserting ``, 1A,'' after ``section 1''.
(11) Partnership adjustments.--
(A) Section 6225(b)(1) of such Code is amended by
adding at the end the following flush sentence:
``For purposes of subparagraph (B), the highest rate of tax in
effect under section 1 shall be treated as being equal to the
sum of such rate and the rates in effect under paragraphs (1)
and (2) of section 1A(a).''.
(B) Section 6225(c)(4)(A) of such Code is amended--
(i) by striking ``subsection (b)(1)(A)''
and inserting ``subsection (b)(1)(B)'', and
(ii) by striking ``or'' at the end of
clause (i), by adding ``or'' at the end of
clause (ii), and by inserting after clause (ii)
the following new clause:
``(iii) is not an individual subject to one
or both of the rates of tax in effect under
paragraphs (1) and (2) of section 1A(a),''.
(12) Required payments for entities electing not to have
required taxable year.--Section 7519(b) of such Code is amended
by inserting ``and increased by the sum of the rates in effect
under paragraphs (1) and (2) of section 1A(a)'' before the
period at the end.
(c) Clerical Amendment.--The table of sections for part I of
subchapter A of chapter 1 of such Code is amended by inserting after
the item relating to section 1 the following new item:
``Sec. 1A. Surcharge on high income individuals.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2021.
SEC. 4. MODIFICATION OF CORPORATE TAX RATE.
(a) In General.--Section 11(b) of the Internal Revenue Code of 1986
is amended to read as follows:
``(b) Amount of Tax.--
``(1) In general.--The amount of the tax imposed by
subsection (a) shall be the sum of--
``(A) 18 percent of so much of the taxable income
as does not exceed $400,000,
``(B) 21 percent of so much of the taxable income
as exceeds $400,000 but does not exceed $5,000,000, and
``(C) 26.5 percent of so much of the taxable income
as exceeds $5,000,000.
In the case of a corporation which has taxable income in excess
of $10,000,000 for any taxable year, the amount of tax
determined under the preceding sentence for such taxable year
shall be increased by the lesser of (i) 3 percent of such
excess, or (ii) $287,000.
``(2) Certain personal service corporation not eligible for
graduated rates.--Notwithstanding paragraph (1), the amount of
the tax imposed by subsection (a) on the taxable income of a
qualified personal service corporation (as defined in section
448(d)(2)) shall be equal to 26.5 percent of the taxable
income.''.
(b) Conforming Amendments.--
(1) Section 1561 of the Internal Revenue Code of 1986 is
amended to read as follows:
``SEC. 1561. LIMITATION ON CERTAIN MULTIPLE TAX BENEFITS IN THE CASE OF
CERTAIN CONTROLLED CORPORATIONS.
``(a) In General.--The component members of a controlled group of
corporations on a December 31 shall, for their taxable years which
include such December 31, be limited for purposes of this subtitle to--
``(1) amounts in each taxable income bracket in the
subparagraphs of section 11(b)(1) which do not aggregate more
than the maximum amount in each such bracket to which a
corporation which is not a component member of a controlled
group is entitled, and
``(2) one $250,000 ($150,000 if any component member is a
corporation described in section 535(c)(2)(B)) amount for
purposes of computing the accumulated earnings credit under
section 535(c)(2) and (3).
The amounts specified in paragraph (1) shall be divided equally among
the component members of such group on such December 31 unless all of
such component members consent (at such time and in such manner as the
Secretary shall by regulations prescribe) to an apportionment plan
providing for an unequal allocation of such amounts. The amounts
specified in paragraph (2) shall be divided equally among the component
members of such group on such December 31 unless the Secretary
prescribes regulations permitting an unequal allocation of such
amounts. Notwithstanding paragraph (1), in applying the last sentence
of section 11(b)(1) to such component members, the taxable income of
all such component members shall be taken into account and any increase
in tax under such last sentence shall be divided among such component
members in the same manner as amounts under paragraph (1).
``(b) Certain Short Taxable Years.--If a corporation has a short
taxable year which does not include a December 31 and is a component
member of a controlled group of corporations with respect to such
taxable year, then for purposes of this subtitle--
``(1) the amount in each taxable income bracket in the tax
table in section 11(b) of such corporation for such taxable
year, and
``(2) the amount to be used in computing the accumulated
earnings credit under section 535(c)(2) and (3) of such
corporation for such taxable year,
shall be the amount specified in subsection (a)(1) or (2), as the case
may be, divided by the number of corporations which are component
members of such group on the last day of such taxable year. For
purposes of the preceding sentence, section 1563(b) shall be applied as
if such last day were substituted for `December 31'.''.
(2) The table of sections for part II of subchapter B of
chapter 6 of such Code is amended by striking the item relating
to section 1561 and inserting the following:
``Sec. 1561. Limitation on certain multiple tax benefits in the case of
certain controlled corporations.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2021.
(d) Normalization Requirements.--
(1) In general.--A normalization method of accounting shall
not be treated as being used with respect to any public utility
property for purposes of section 167 or 168 of the Internal
Revenue Code of 1986 if the taxpayer, in computing its cost of
service for ratemaking purposes and reflecting operating
results in its regulated books of account, reduces the tax
reserve deficit less rapidly or to a lesser extent than such
reserve would be reduced under the average rate assumption
method.
(2) Alternative method for certain taxpayers.--If, as of
the first day of the taxable year that includes the date of
enactment of this Act--
(A) the taxpayer was required by a regulatory
agency to compute depreciation for public utility
property on the basis of an average life or composite
rate method, and
(B) the taxpayer's books and underlying records did
not contain the vintage account data necessary to apply
the average rate assumption method,
the taxpayer will be treated as using a normalization method of
accounting if, with respect to such jurisdiction, the taxpayer
uses the alternative method for public utility property that is
subject to the regulatory authority of that jurisdiction.
(3) Definitions.--For purposes of this subsection--
(A) Tax reserve deficit.--The term ``tax reserve
deficit'' means the excess of--
(i) the amount which would be the balance
in the reserve for deferred taxes (as described
in section 168(i)(9)(A)(ii) of the Internal
Revenue Code of 1986, or section
167(l)(3)(G)(ii) or 168(3)(3)(B)(ii) of such
Code as in effect on the day before the date of
the enactment of the Tax Reform Act of 1986) if
the amount of such reserve were determined by
assuming that the corporate rate increases
provided in the amendments made by this section
were in effect for all prior periods, over
(ii) the balance in such reserve as of the
day before such corporate rate increases take
effect.
(B) Average rate assumption method.--The average
rate assumption method is the method under which the
tax reserve deficit is reduced over the remaining lives
of the property as used in its regulated books of
account which gave rise to the reserve for deferred
taxes. Under such method, if timing differences for the
property reverse, the amount of the adjustment to the
reserve for the deferred taxes is calculated by
multiplying--
(i) the ratio of the aggregate deferred
taxes for the property to the aggregate timing
differences for the property as of the
beginning of the period in question, by
(ii) the amount of the timing differences
which reverse during such period.
(C) Alternative method.--The ``alternative method''
is the method in which the taxpayer--
(i) computes the tax reserve deficit on all
public utility property included in the plant
account on the basis of the weighted average
life or composite rate used to compute
depreciation for regulatory purposes, and
(ii) reduces the tax reserve deficit
ratably over the remaining regulatory life of
the property.
(4) Treatment of normalization violation.--If, for any
taxable year ending after the date of the enactment of this
Act, the taxpayer does not use a normalization method of
accounting for the corporate rate increases provided in the
amendments made by this section , such taxpayer shall not be
treated as using a normalization method of accounting for
purposes of subsections (f)(2) and (i)(9)(C) of section 168 of
the Internal Revenue Code of 1986.
(5) Regulations.--The Secretary of the Treasury, or the
Secretary's designee, shall issue such regulations or other
guidance as may be necessary or appropriate to carry out the
purposes of this subsection, including regulations or other
guidance to provide appropriate coordination between this
subsection, section 13001(d) of Public Law 115-97, and section
203(e) of the Tax Reform Act of 1986.
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