Application of earned income tax credit to possessions of the United States

26 U.S.C. § 7530

• Title: 26 — Internal Revenue Code
• Chapter: 77 — MISCELLANEOUS PROVISIONS

Text

(a) Puerto Rico
With respect to calendar year 2021 and each calendar year thereafter, the Secretary shall, except as otherwise provided in this subsection, make payments to Puerto Rico equal to—
(A) the specified matching amount for such calendar year, plus
(B) in the case of calendar years 2021 through 2025, the lesser of—
(i) the expenditures made by Puerto Rico during such calendar year for education efforts with respect to individual taxpayers and tax return preparers relating to the earned income tax credit, or
(ii) $1,000,000.
The Secretary shall not make any payments under paragraph (1) with respect to any calendar year unless Puerto Rico has in effect an earned income tax credit for taxable years beginning in or with such calendar year which (relative to the earned income tax credit which was in effect for taxable years beginning in or with calendar year 2019) increases the percentage of earned income which is allowed as a credit for each group of individuals with respect to which such percentage is separately stated or determined in a manner designed to substantially increase workforce participation.
For purposes of this subsection—
The term "specified matching amount" means, with respect to any calendar year, the lesser of—
(i) the excess (if any) of—
(I) the cost to Puerto Rico of the earned income tax credit for taxable years beginning in or with such calendar year, over
(II) the base amount for such calendar year, or
(ii) the product of 3, multiplied by the base amount for such calendar year.
In the case of calendar year 2021, the term "base amount" means the greater of—
(I) the cost to Puerto Rico of the earned income tax credit for taxable years beginning in or with calendar year 2019 (rounded to the nearest multiple of $1,000,000), or
(II) $200,000,000.
In the case of any calendar year after 2021, the term "base amount" means the dollar amount determined under clause (i) increased by an amount equal to—
(I) such dollar amount, multiplied by—
(II) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year, determined by substituting "calendar year 2020" for "calendar year 2016" in subparagraph (A)(ii) thereof.
Any amount determined under this clause shall be rounded to the nearest multiple of $1,000,000.
The Secretary shall make payments under paragraph (1) for any calendar year—
(i) after receipt of such information as the Secretary may require to determine such payments, and
(ii) except as provided in clause (i), within a reasonable period of time before the due date for individual income tax returns (as determined under the laws of Puerto Rico) for taxable years which began on the first day of such calendar year.
The Secretary may require the reporting of such information as the Secretary may require to carry out this subsection.
For purposes of this subsection, the cost to Puerto Rico of the earned income tax credit shall be determined by the Secretary on the basis of the laws of Puerto Rico and shall include reductions in revenues received by Puerto Rico by reason of such credit and refunds attributable to such credit, but shall not include any administrative costs with respect to such credit.
(b) Possessions with mirror code tax systems
With respect to calendar year 2021 and each calendar year thereafter, the Secretary shall, except as otherwise provided in this subsection, make payments to the Virgin Islands, Guam, and the Commonwealth of the Northern Mariana Islands equal to—
(A) the cost to such possession of the earned income tax credit for taxable years beginning in or with such calendar year, plus
(B) in the case of calendar years 2021 through 2025, the lesser of—
(i) the expenditures made by such possession during such calendar year for education efforts with respect to individual taxpayers and tax return preparers relating to such earned income tax credit, or
(ii) $50,000.
Rules similar to the rules of subparagraphs (A), (B), and (C) of subsection (a)(4) shall apply for purposes of this subsection.
(c) American Samoa
With respect to calendar year 2021 and each calendar year thereafter, the Secretary shall, except as otherwise provided in this subsection, make payments to American Samoa equal to—
(A) the lesser of—
(i) the cost to American Samoa of the earned income tax credit for taxable years beginning in or with such calendar year, or
(ii) $16,000,000, plus
(B) in the case of calendar years 2021 through 2025, the lesser of—
(i) the expenditures made by American Samoa during such calendar year for education efforts with respect to individual taxpayers and tax return preparers relating to such earned income tax credit, or
(ii) $50,000.
The Secretary shall not make any payments under paragraph (1) with respect to any calendar year unless American Samoa has in effect an earned income tax credit for taxable years beginning in or with such calendar year which allows a refundable tax credit to individuals on the basis of the taxpayer's earned income which is designed to substantially increase workforce participation.
In the case of any calendar year after 2021, the $16,000,000 amount in paragraph (1)(A)(ii) shall be increased by an amount equal to—
(A) such dollar amount, multiplied by—
(B) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year, determined by substituting "calendar year 2020" for "calendar year 2016" in subparagraph (A)(ii) thereof.
Any increase determined under this clause shall be rounded to the nearest multiple of $100,000.
Rules similar to the rules of subparagraphs (A), (B), and (C) of subsection (a)(4) shall apply for purposes of this subsection.
(d) Treatment of payments
For purposes of section 1324 of title 31, United States Code, the payments under this section shall be treated in the same manner as a refund due from a credit provision referred to in subsection (b)(2) of such section.

History

(Added Pub. L. 117–2, title IX, §9625(a), Mar. 11, 2021, 135 Stat. 155.)

Editorial Notes

Editorial Notes

Amendments
Pub. L. 94–455, title XIX, §1906(b)(13), Oct. 4, 1976, 90 Stat. 1834, struck out subchapter C relating to supervision of operations of certain manufacturers.

Editorial Notes

Amendments
1998—Pub. L. 105–206, title III, §3413(d), July 22, 1998, 112 Stat. 754, added items 7612 and 7613 and struck out former item 7612 "Cross references".
1984—Pub. L. 98–573, title II, §213(b)(2), Oct. 30, 1984, 98 Stat. 2988, struck out item 7607 "Additional authority for Bureau of Customs".
Pub. L. 98–369, div. A, title X, §1033(c)(2), July 18, 1984, 98 Stat. 1039, added item 7611 and redesignated former item 7611 as 7612.
1976—Pub. L. 94–455, title XII, §1205(b), Oct. 4, 1976, 90 Stat. 1702, substituted "Special procedures for third-party summonses" for "Cross references" in item 7609 and added items 7610 and 7611.
1970—Pub. L. 91–513, title III, §1102(g)(2), Oct. 27, 1970, 84 Stat. 1293, struck out "Bureau of Narcotics and" before "Bureau of Customs" in item 7607.
1958—Pub. L. 85–859, title II, §204(16), Sept. 2, 1958, 72 Stat. 1430, added item 7608 and redesignated former item 7608 as 7609.
1956—Act July 18, 1956, ch. 629, §104(b), 70 Stat. 570, added item 7607 and redesignated former item 7607 as 7608.