Lawmakers are proposing legislation to revive monthly payments of the Child Tax Credit, as well as provide relief for taxpayers in states experiencing natural disasters, relieve small businesses of the burden of filing the mailing paper copies of 1095-C forms to employees with health insurance, and increase the standard deduction for working families.
A trio of House Democrats — Rep. Suzan DelBene, D-Washington, Rosa DeLauro, D-Connecticut, and Ritchie Torres, D-New York — introduced the American Family Act on Wednesday to make permanent the expanded and monthly Child Tax Credit offered under the American Rescue Plan Act of 2021, which expired at the end of that year.
The expanded CTC reached over 61 million children nationwide, and is estimated to have lifted nearly 4 million children out of poverty in 2021 before it expired. The Biden administration tried to revive it last year as part of its Build Back Better Act, but failed to win enough support, even among Democrats.
"The enhanced Child Tax Credit was one of the most transformational policies from the American Rescue Plan, cutting child poverty in half, boosting our economy, and helping parents pay rent, put food on the table, and afford other essentials for their kids," said DelBene in a statement. "This is a proven program that will help grow our economy by rebuilding and strengthening the middle class. We must build on this progress by permanently reinstating this monthly benefit to ensure that every child has a fair chance at success."
Democrats still hope to revive the legislation, and DeLauro pointed out that the monthly payments helped parents pay bills, keep food on the table, pay for school clothes and supplies, and manage a mortgage or rent payment.
"An investment in our children and their families is an investment in the future of our country," Torres stated.
The American Family Act was cosponsored by 204 members of the House, including over 90% of the House Democratic Caucus. The bill also attracted support from a wide range of social service groups, charities and other nonprofits.
State-declared natural disasters
While that bill is likely to attract support only from Democrats, some other bills got support from Republicans. Rep. Judy Chu, D-California, and David Kustoff, R-Tennessee, introduced the bipartisan Filing Relief for Natural Disasters Act on Tuesday, to provide relief for affected taxpayers in states that have issued state-level disaster declarations, but that haven't yet been declared disasters by the federal government. While the Internal Revenue Service has the authority to postpone filing deadlines after a presidentially-declared federal disaster, that authority does not extend to state-level emergencies.
In the Senate, Sen. Catherine Cortez Masto, D-Nevada, Chris Van Hollen, D-Maryland, Marsha Blackburn, R-Tennessee, and John Kennedy, R-Louisiana, introduced a companion bill.
"When a natural disaster strikes, ruining homes, communities, and lives, the last thing a survivor should be worried about is filing their taxes," Chu said in a statement. "Unfortunately, the IRS can only grant deadline extensions to federally declared emergencies, which are often declared days or weeks after a governor declares a state-level emergency. In California, where wildfires or earthquakes can strike without warning, taxpayers must waste their valuable time and resources filing for penalty waivers and extensions. The Filing Relief for Natural Disasters Act is a common-sense, reasonable solution to this problem by extending that IRS authority to state-declared disasters and states of emergency."
"Over the years, West Tennessee families and businesses have been impacted by natural disasters," Kustoff stated. "The Filing Relief for Natural Disasters Act will provide relief to taxpayers affected by such crises so that they can focus on what matters most: caring for loved ones and rebuilding their communities. This legislation will give Americans impacted by natural disasters the flexibility they need in order to recover."
The Filing Relief for Natural Disasters Act would allow the governor of a state or territory to extend a federal tax filing deadline in the event of a state-declared emergency or disaster, which happens automatically for federally declared disasters. Extending the authority to states would give them the ability to provide relief independent of the federal government's involvement in an emergency or natural disaster. The bill would also expand the mandatory federal filing extension from 60 days to 120 days.
Mailing health insurance forms
Republicans also introduced their own tax legislation. House Ways and Means Committee chairman Jason Smith, R-Missouri, and Rep. Jimmy Panetta, R-California, introduced the Paperwork Burden Reduction Act on Wednesday to relieve employers and workers from burdensome rules requiring them to mail unneeded tax paperwork to employees. The legislation would end the requirement that employers continue to mail both forms 1095-B and 1095-C to employees to prove compliance with the Affordable Care Act's no longer existent individual mandate. The bill would allow employees instead to request 1095-B and 1095-C health insurance tax forms online, rather than be mailed a paper copy, while ensuring the form is still available to employees who need it.
The bill's backers noted that only 1.4% of Americans decline their offer of employer-sponsored health insurance and will need to use the form. Meanwhile, more than 154 million Americans receive the form in the mail.
"The Paperwork Burden Reduction Act, which I am happy to have introduced along with Representative Panetta, puts an end to having the useless forms show up at the homes of millions of Americans which confirm health care coverage for compliance with a mandate no longer in effect," Smith said in a statement. "The legislation instead gives employers the option to supply the information online to employees, instead of mailing useless paperwork to their homes. Only 1.4% of American workers and their families need to use this form, but it gets mailed to millions each year. This bill saves small business owners time and money by relieving them of mailing outdated paperwork that only exists because Congress mandates it."
The bill would codify a Treasury rule allowing for 1095-B forms available to be requested online, as well as extend that flexibility to employers providing 1095-C forms.
Expanding standard deduction
Another Republican-sponsored bill, the Working Families Tax Cut Act, was introduced Tuesday by Rep. Nicole Malliotakis, R-New York, and Michelle Steel, Republican, members of the tax-writing House Ways and Means Committees, introduced the Working Families Tax Cut Act, The bill would increase the amount of the standard deduction, building on the doubled deduction ushered in by the GOP's Tax Cuts and Jobs Act of 2017, for another two years. The bill would provide a bonus guaranteed deduction of $4,000 for working families and $2,000 for single filers on 2024 and 2025 returns.
"Americans can no longer keep up with price increases, which is why we've introduced this legislation to increase the standard deduction and allow millions of families to keep more of their hard-earned money, including more than 350,000 households across Staten Island and Southern Brooklyn," Malliotakis said in a statement. "Considering Congress just passed the largest spending cut in history, it's appropriate to pass these savings directly on to taxpayers."
The bill would help taxpayers cope with inflation pressures. "Our constituents are facing record inflation due to progressive policies and high taxes," Steel said in a statement. "The enhanced standard deduction created under the TCJA has cut taxes for hard-working Americans. For more than 305,000 households in my Southern California District who claim the Guaranteed Deduction — covering 82% of all tax filers — this bonus will drive their federal tax bill lower and they will receive a significant increase in their 2024 and 2025 tax returns. This bonus will help ease the burden of inflation and allow families to spend their hard-earned wages the way they see fit."
