26 USC 7530 - Application of earned income tax credit to possessions of the United States

U.S Code last checked for updates: Nov 22, 2024

§ 7530.

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

(a)

Puerto Rico

(1)

In general

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.

(2)

Requirement to reform earned income tax credit

(3)

Specified matching amount

For purposes of this subsection—

(A)

In general

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.

(B)

Base amount

(i)

Base amount for 2021

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.

(ii)

Inflation adjustment

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.

(4)

Rules related to payments

(A)

Timing of payments

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.

(B)

Information

(C)

Determination of cost of earned income tax credit

(b)

Possessions with mirror code tax systems

(1)

In general

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.

(2)

Application of certain rules

(c)

American Samoa

(1)

In general

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.

(2)

Requirement to enact and maintain an earned income tax credit

(3)

Inflation adjustment

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)

Any increase determined under this clause shall be rounded to the nearest multiple of $100,000.

(4)

Application of certain rules

(d)

Treatment of payments

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

cite as: 26 USC 7530