Overview
Title
To amend the Internal Revenue Code of 1986 to require taxpayers claiming the child and earned income tax credits, and their qualifying children, to have a valid social security number for employment purposes.
ELI5 AI
The bill wants to make sure that people claiming the child tax credit or earned income tax credit have a real social security number to show they are allowed to work in the U.S., starting from 2024. This means only those with the right paperwork can get these special tax benefits.
Summary AI
S. 3798 aims to change the rules in the Internal Revenue Code of 1986 so that individuals claiming the child tax credit or earned income tax credit must have a valid social security number for themselves and their children. This change would ensure that only taxpayers authorized to work in the United States can claim these tax credits. The bill provides specific details on what qualifies as a valid social security number and modifies certain sections of the tax code to reflect these new requirements. The new rules would apply to tax years starting after December 31, 2023.
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AnalysisAI
Summary of the Bill
The proposed legislation, S. 3798, seeks to amend the Internal Revenue Code of 1986. The primary focus of the bill is to impose new requirements on taxpayers claiming both the child and earned income tax credits. Specifically, it mandates that all taxpayers, along with their qualifying children, present a valid social security number (SSN) to qualify for these credits. This SSN must indicate that the individual is authorized to work in the United States. The legislation would take effect for taxable years beginning after December 31, 2023.
Significant Issues
This bill raises several noteworthy issues:
Exclusion of Certain Taxpayers: The requirement for a valid SSN could potentially exclude individuals or families in unique circumstances, such as those with certain visas that allow tax payment but not work, from receiving these credits.
Ambiguity in Definitions: The term "qualifying child" is not clearly defined within this context, which might lead to confusion and inconsistent application of the tax credit eligibility requirements.
Complex Language: The bill uses complex and technical language which may be difficult for the general public to interpret, especially for those unfamiliar with cross-references in the Social Security Act. This could lead to misunderstandings about the new obligations and requirements.
Potential Exclusion of TIN Holders: Replacing Taxpayer Identification Numbers (TINs) with SSNs might unintentionally impact individuals who currently rely on TINs for filing taxes, such as some non-citizen taxpayers.
Handling Disputes: The bill does not specify how to resolve disputes or errors related to SSNs, which could pose a problem, especially in situations involving the Social Security Administration.
Need for Clear Authorization Criteria: There is a lack of clarity regarding what it means for an SSN to indicate work authorization, which might lead to inconsistencies in the application of the requirement.
Broader Impact on the Public
The requirement for a valid SSN could have broad implications for taxpayers who claim child and earned income tax credits. Generally, individuals who are not authorized to work, even if they are legal residents, may face challenges in fulfilling these requirements. This could result in the loss of crucial financial support that these tax credits provide, particularly to low and moderate-income families.
Many taxpayers might require additional guidance and support to understand and comply with these new requirements, possibly increasing the need for tax advice and assistance during the transition period. The language and structural complexity of the bill might also contribute to increased uncertainty or errors in tax filing.
Impact on Specific Stakeholders
Positive Outcomes:
- The bill might align the benefits of certain tax credits more closely with legal work requirements, potentially ensuring that credits are only accessed by those contributing to workforce systems.
Negative Outcomes:
Families with non-citizen parents or children born outside of the United States who are not issued SSNs might be adversely impacted, losing access to significant tax benefits.
Individuals or families from immigrant communities, who may already face barriers in accessing tax credits due to documentation issues, could experience further difficulties without clear guidance and educational outreach.
Employers and social service organizations might also face increased demands for documentation assistance and support services to help individuals meet these new requirements.
Overall, while the bill aims to streamline eligibility for significant tax credits and ensure they are awarded to authorized individuals, it may also create hurdles for those already facing economic challenges. To effectively implement it, additional efforts are necessary to clarify requirements and offer support to affected populations.
Issues
The requirement for a social security number under Section 1 and Section 2 may exclude certain children and taxpayers who are in unique circumstances, such as those with visas that allow tax payment but not work. This could potentially exclude otherwise eligible individuals from claiming the child or earned income tax credits, having significant financial impacts on these taxpayers and their families.
The lack of a clear definition for the term 'qualifying child' in Section 1 can lead to ambiguity, potentially causing confusion among taxpayers in determining eligibility for the child tax credit. This could lead to inconsistent application of the bill and uncertainty for taxpayers.
The amendment in Section 1 to replace 'TIN' with 'social security number' might unintentionally exclude individuals who only have a TIN for tax purposes. This change can affect those who rely on the current system to file taxes without a social security number, thus impacting compliance with tax regulations.
The complex language used in both Section 1 and Section 2, especially in reference to parts of the Social Security Act, may make it difficult for taxpayers and tax professionals to understand and comply with the new requirements, potentially leading to errors in filing tax returns.
There is no discussion in Section 1 about how to handle errors or disputes regarding the issuance or use of social security numbers, which could lead to issues if there are delays or discrepancies with the Social Security Administration. This lack of clarity may cause difficulties for taxpayers attempting to rectify these issues.
The term 'indicate that the individual to whom the number is issued is authorized to work in the United States' in Section 2 may require further clarification to ensure consistent interpretation and application. Without clarity, there is potential for inconsistent application of the tax credit eligibility criteria, leading to unfair exclusions.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Child tax credit identification requirements Read Opens in new tab
Summary AI
The section amends the Internal Revenue Code to require taxpayers to include social security numbers for themselves and any qualifying children when claiming the child tax credit, ensuring those numbers represent individuals authorized to work in the U.S. Additionally, it updates the code to replace references to taxpayer identification numbers with social security numbers in certain contexts and removes an outdated paragraph, with changes effective for tax years starting after December 31, 2023.
2. Earned income credit identification requirements Read Opens in new tab
Summary AI
The section modifies the rules for the Earned Income Tax Credit to ensure that social security numbers used for this credit clearly show that the person is authorized to work in the United States, starting from the 2024 tax year.