[House Report 107-66]
[From the U.S. Government Publishing Office]
107th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 107-66
======================================================================
FAIRNESS FOR FOSTER CARE FAMILIES ACT OF 2001
_______
May 15, 2001.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Thomas, from the Committee on Ways and Means, submitted the
following
R E P O R T
[To accompany H.R. 586]
[Including cost estimate of the Congressional Budget Office]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 586) to amend the Internal Revenue Code of 1986 to
provide that the exclusion from gross income for foster care
payments shall also apply to payments by qualified placement
agencies, and for other purposes, having considered the same,
report favorably thereon with an amendment and recommend that
the bill as amended do pass.
CONTENTS
Page
I. Summary and Background............................................2
A. Purpose and Summary..................................... 2
B. Background and Need for Legislation..................... 2
C. Legislative History..................................... 2
II. Explanation of the Bill...........................................3
A. Expansion of the Exclusion From Income of Certain Foster
Care Payments.......................................... 3
III.Vote of the Committee.............................................4
IV. Budget Effects of the Bill........................................4
A. Committee Estimates of Budgetary Effects................ 4
B. Statement Regarding New Budget Authority and Tax
Expenditures Budget Authority.......................... 4
C. Cost Estimate Prepared by the Congressional Budget
Office................................................. 4
V. Other Matters to be Discussed Under the Rules of the House........6
A. Committee Oversight Findings and Recommendations........ 6
B. Statement of General Performance Goals and Objectives... 6
C. Constitutional Authority Statement...................... 6
D. Information Relating to Unfunded Mandates............... 6
E. Applicability of House Rule XXI 5(b).................... 6
F. Tax Complexity Analysis................................. 7
VI. Changes in Existing Law Made by the Bill as Reported..............7
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Fairness for Foster Care Families Act
of 2001''.
SEC. 2. EXCLUSION FOR FOSTER CARE PAYMENTS TO APPLY TO PAYMENTS BY
QUALIFIED PLACEMENT AGENCIES.
(a) In General.--The matter preceding subparagraph (B) of section
131(b)(1) of the Internal Revenue Code of 1986 (defining qualified
foster care payment) is amended to read as follows:
``(1) In general.--The term `qualified foster care payment'
means any payment made pursuant to a foster care program of a
State or political subdivision thereof--
``(A) which is paid by--
``(i) a State or political subdivision
thereof, or
``(ii) a qualified foster care placement
agency, and''.
(b) Qualified Foster Individuals To Include Individuals Placed by
Qualified Placement Agencies.--Subparagraph (B) of section 131(b)(2) of
such Code (defining qualified foster individual) is amended to read as
follows:
``(B) a qualified foster care placement agency.''
(c) Qualified Foster Care Placement Agency Defined.--Subsection (b)
of section 131 of such Code is amended by redesignating paragraph (3)
as paragraph (4) and by inserting after paragraph (2) the following new
paragraph:
``(3) Qualified foster care placement agency.--The term
`qualified foster care placement agency' means any placement
agency which is licensed or certified by--
``(A) a State or political subdivision thereof, or
``(B) an entity designated by a State or political
subdivision thereof,
for the foster care program of such State or political
subdivision to make foster care payments to providers of foster
care.''
(d) Effective Date.--The amendments made by this section shall apply
to taxable years beginning after December 31, 2001.
I. SUMMARY AND BACKGROUND
A. Purpose and Summary
The bill, H.R. 586, as amended (the ``Fairness for Foster
Care Families Act''), provides for an expansion of the
exclusion from income for certain foster care payments.
The bill provides net tax reductions of over $181 million
over fiscal years 2001-2006. This will provide needed revision
of the tax treatment of qualified foster care payments.
B. Background and Need for Legislation
The provisions approved by the Committee reduces complexity
and provides needed revision of the tax treatment of qualified
foster care payments to reflect current practices in the State
foster care systems. The estimated revenue effects of the
provisions comply with the most recent Congressional Budget
Office revisions of budget surplus projections.
C. Legislative History
Committee Action
The Committee on Ways and Means marked up the provisions of
the bill on May 9, 2001, and reported the provisions, as
amended, on May 9, 2001, by a voice vote, with a quorum
present.
II. EXPLANATION OF THE BILL
A. Expansion of the Exclusion From Income for Qualified Foster Care
Payments
(Sec. 2 of the bill and sec. 131 of the Code)
Present Law
If certain requirements are satisfied, an exclusion from
gross income is provided for qualified foster care payments
paid to a foster care provider by either (1) a State or local
government; or (2) a tax-exempt placement agency. Qualified
foster care payments are amounts paid for caring for a
qualified foster care individual in the foster care provider's
home and difficulty of care payments.\1\ A qualified foster
care individual is an individual living in a foster care family
home in which the individual was placed by: (1) an agency of
the State or local government (regardless of the individual's
age at the time of placement); or (2) a tax-exempt placement
agency licensed by the State or local government (if such
individual was under the age of 19 at the time of placement).
---------------------------------------------------------------------------
\1\ A difficulty of care payment is a payment designated by the
person making such payment as compensation for providing the additional
care of a qualified foster care individual in the home of the foster
care provider which is required by reason of a physical, mental, or
emotional handicap of such individual and with respect to which the
State has determined that there is a need for additional compensation.
---------------------------------------------------------------------------
Reasons for Change
The Committee is aware that States, in their continuing
efforts to improve the foster care system, have realized the
utility of both tax-exempt and for-profit private placement
agencies. In some instances, the States have utilized for-
profit private placement agencies to perform the functions
previously reserved for State or local government or tax-exempt
entities. This bill is intended to modernize the exclusion to
reflect these changes at the State level by equalizing the tax
treatment of payments to qualified foster care providers
regardless of the source of the payment. Also, the Committee
believes that allowing placement by any qualified foster care
agency (regardless of the individual's age at placement) will
improve older children's chances for adoption. Finally, the
Committee believes that these simpler rules may encourage more
families to provide foster care.
Explanation of Provision
The bill makes two modifications to the present-law
exclusion for qualified foster care payments. First, the bill
expands the definition of qualified foster care payments to
include payments by any placement agency that is licensed or
certified by a State or local government, or an entity
designated by a State or local government to make payments to
providers of foster care. Second, the bill expands the
definition of a qualified foster care individual by including
foster care individuals placed by a qualified foster care
placement agency (regardless of the individual's age at the
time of placement).
Effective Date
The provision is effective for taxable years beginning
after December 31, 2001.
III. VOTE OF THE COMMITTEE
Ordered reported by voice vote, with quorum present.
IV. BUDGET EFFECTS OF THE BILL
A. Committee Estimate of Budgetary Effects
In compliance with clause 3(d)(2) of the rule XIII of the
Rules of the House of Representatives, the following statement
is made concerning the effects on the budget of the revenue
provisions of the bill, H.R. 586 as reported.
The bill is estimated to have the following effects on
budget receipts for fiscal years 2001-2006:
ESTIMATED BUDGET EFFECTS OF H.R. 586, A BILL TO EXPAND THE EXCLUSION FROM INCOME FOR CERTAIN FOSTER CARE
PAYMENTS, AS REPORTED BY THE COMMITTEE ON WAYS AND MEANS; FISCAL YEARS 2002-2006
[In millions of dollars]
----------------------------------------------------------------------------------------------------------------
Provision Effective 2002 2003 2004 2005 2006 2002-06
----------------------------------------------------------------------------------------------------------------
Exclusion for Qualified Foster Care tyba 12/31/01 -18 -29 -37 -45 -53 -181
Payments--expand qualified foster
care payments to include those made
by any State-licensed or State-
certified agency; eliminate the age
restriction for certain placements
of qualified foster individuals.
----------------------------------------------------------------------------------------------------------------
Note. Details may not add to totals due to rounding.
Legend for ``Effective'' column: tyba = taxable years beginning after.
B. Statement Regarding New Budget Authority and Tax Expenditures Budget
Authority
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee states that the
bill involves no new or increased budget authority. The
Committee further states that the revenue reducing income tax
provision involves increased tax expenditures. (See amounts in
table in Part IV.A., above.)
C. Cost Estimate Prepared by the Congressional Budget Office
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, requiring a cost estimate
prepared by the CBO, the following statement by CBO is
provided.
U.S. Congress,
Congressional Budget Office,
Washington, DC, May 11, 2001.
Hon. William ``Bill'' M. Thomas,
Chairman, Committee on Ways and Means,
U.S. House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 586, the Fairness
for Foster Care Families Act of 2001.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Erin
Whitaker.
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.
H.R. 586--Fairness for Foster Care Families Act of 2001
Summary: H.R. 586 would modify the exclusion from gross
income allowed for qualified foster care payments paid to a
foster care provider by either a state or local government or
by a tax-exempt placement agency. The bill would expand the
definition of qualified foster care payments to include
payments by any placement agency that is licensed or certified
by a state or local government, or an entity designated by such
governments to make payments to foster care providers.
The Congressional Budget Office and the Joint Committee on
Taxation (JCT) estimate that enacting the bill would reduce
revenues by $18 million in fiscal year 2002, by $181 million
over the 2002-2006 period, and by $586 million over the 2002-
2011 period. Because the bill would affect receipts, pay-as-
you-go procedures would apply.
H.R. 586 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would not affect the budgets of state, local, or tribal
governments.
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 586 is shown in the following table.
All estimates of the revenue effects of the bill were provided
by JCT.
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-------------------------------------------------
2002 2003 2004 2005 2006
----------------------------------------------------------------------------------------------------------------
CHANGES IN REVENUES
Estimated Revenues............................................ -18 -29 -37 -45 -53
----------------------------------------------------------------------------------------------------------------
Pay-as-you-go-considerations: The Balanced Budget and
Emergency Deficit Control Act sets up pay-as-you-go procedures
for legislation affecting direct spending or receipts. The net
changes in governmental receipts that are subject to pay-as-
you-go procedures are shown in the following table. For the
purposes of enforcing pay-as-you-go procedures, only the
effects in the current year, the budget year, and the
succeeding four years are counted.
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-----------------------------------------------------------------------------------------
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in outlays............................................ Not applicable
Changes in receipts........................................... 0 -18 -29 -37 -45 -53 -61 -71 -80 -91 -102
--------------------------------------------------------------------------------------------------------------------------------------------------------
Intergovernmental and private-sector impact: H.R. 586
contains no intergovernmental or private-sector mandates as
defined in UMRA and would not affect the budgets of state,
local, or tribal governments.
Estimate prepared by: Erin Whitaker.
Estimate approved by: G. Thomas Woodward, Assistant
Director for Tax Analysis.
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE
A. Committee Oversight Findings and Recommendations
With respect to clause 3(c)(1) of rule XIII of the Rules of
the House of Representatives (relating to oversight findings),
the Committee advises that it was a result of the Committee's
oversight review concerning the tax burden on individual
taxpayers that the Committee concluded that it is appropriate
and timely to enact the revenue provision included in the bill
as reported.
B. Statement of General Performance Goals and Objectives
With respect to clause 3(c)(4) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
bill contains no measure that authorizes funding, so no
statement of general performance goals and objectives for which
any measure authorizes funding is required.
C. Constitutional Authority Statement
With respect to clause 3(d)(1) of the rule XIII of the
Rules of the House of Representatives (relating to
Constitutional Authority), the Committee states that the
Committee's action in reporting this bill is derived from
Article I of the Constitution, Section 8 (``The Congress shall
have Power To lay and collect Taxes, Duties, Imposts and
Excises . . .''), and from the 16th Amendment to the
Constitution.
D. Information Relating to Unfunded Mandates
This information is provided in accordance with section 423
of the Unfunded Mandates Act of 1995 (P.L. 104-4).
The Committee has determined that the bill does not contain
Federal mandates on the private sector. The Committee has
determined that the bill does not impose a Federal
intergovernmental mandate on State, local, or tribal
governments.
E. Applicability of House Rule XXI 5(b)
Rule XXI 5(b) of the Rules of the House of Representatives
provides, in part, that ``A bill or joint resolution,
amendment, or conference report carrying a Federal income tax
rate increase may not be considered as passed or agreed to
unless so determined by a vote of not less than three-fifths of
the Members voting, a quorum being present.'' The Committee has
carefully reviewed the provisions of the bill, and states that
the provisions of the bill do not involve any Federal income
tax rate increases within the meaning of the rule.
F. Tax Complexity Analysis
Section 4022(b) of the Internal Revenue Service Reform and
Restructuring Act of 1998 (the ``IRS Reform Act'') requires the
Joint Committee on Taxation (in consultation with the Internal
Revenue Service and the Department of the Treasury) to provide
a tax complexity analysis. The complexity analysis is required
for all legislation reported by the House Committee on Ways and
Means, the Senate Committee on Finance, or any committee of
conference if the legislation includes a provision that
directly or indirectly amends the Internal Revenue Code and has
widespread applicability to individuals or small businesses.
The staff of the Joint Committee on Taxation has determined
that a complexity analysis is not required under section
4022(b) of the IRS Reform Act because the bill contains no
provisions that amend the Internal Revenue Code and that have
``widespread applicability'' to individuals or small
businesses.
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
SECTION 131 OF THE INTERNAL REVENUE CODE OF 1986
SEC. 131. CERTAIN FOSTER CARE PAYMENTS
(a) * * *
(b) Qualified Foster Care Payment Defined.--For purposes of
this section--
[(1) In general.--The term ``qualified foster care
payment'' means any amount--
[(A) which is paid by a State or political
subdivision thereof or by a placement agency
which is described in section 501(c)(3) and
exempt from tax under section 501(a), and]
(1) In general.--The term ``qualified foster care
payment'' means any payment made pursuant to a foster
care program of a State or political subdivision
thereof--
(A) which is paid by--
(i) a State or political subdivision
thereof, or
(ii) a qualified foster care
placement agency, and
* * * * * * *
(2) Qualified foster individual.--The term
``qualified foster individual'' means any individual
who is living in a foster family home in which such
individual was placed by--
(A) an agency of a State or political
subdivision thereof, or
[(B) in the case of an individual who has not
attained age 19, an organization which is
licensed by a State (or political subdivision
thereof) as a placement agency and which is
described in section 501(c)(3) and exempt from
tax under section 501(a).]
(B) a qualified foster care placement agency.
(3) Qualified foster care placement agency.--The term
``qualified foster care placement agency'' means any
placement agency which is licensed or certified by--
(A) a State or political subdivision thereof,
or
(B) an entity designated by a State or
political subdivision thereof,
for the foster care program of such State or political
subdivision to make foster care payments to providers
of foster care.
[(3)] (4) Limitation based on number of individuals
over the age of 18.--In the case of any foster home in
which there is a qualified foster care individual who
has attained age 19, foster care payments (other than
difficulty of care payments) for any period to which
such payments relate shall not be excludable from gross
income under subsection (a) to the extent such payments
are made for more than 5 such qualified foster
individuals.
* * * * * * *