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Tax credit bill introduced in Senate this week; Passage would see tax credits for most

ASG Tax Office
Joyetter@samoanews.com

Pago Pago, AMERICAN SAMOA — The Earned Income Tax Credit bill was introduced in the Senate this week Tuesday.

According to the bill, the American Rescue Plan Act of 2021 was enacted by Congress on March 11, 2021, providing various sources of financial relief for individuals, families, and businesses; and individuals eligible for the Earned Income Tax Credit shall include U.S. citizens, U.S. nationals, American Samoa permanent residents, or a resident with an alien registration receipt card (ID card) and are lawful residents of American Samoa with a U.S. Social security card.

Due to the structure of the American Samoa tax code, an amendment to the code is required to enact this provision for the Territory; in order to immediately receive certain tax credits, this Act shall become effective upon passage by the Legislature and approval by the Governor.

According to the proposed section 43 (a) (b) there shall be no earned income credit or advance earned income credit except as provided in this section.

 “The Earned Income Tax Credit in Title 26 USC § 32 and the Earned Income Tax Credit rules, regulations, notices, and other applicable guidance, including Sections 9621, 9622, 9623, 9624, 9626 of the American Rescue Plan Act of 2021, in force in the United States of America, where not clearly inapplicable or incompatible with the intent of this section and as provided herein below, are adopted by American Samoa.”

The proposed bill says the refundable credit would be allowed.

 “In the case of an eligible individual, there shall be allowed as a refundable credit against the tax imposed by this subtitle for the taxable year an amount equal to the credit percentage of so much of the taxpayer’s earned income for the taxable year as does not exceed the earned income amount.

 “The amount of the credit allowable to a taxpayer under paragraph (1) for any taxable year shall not exceed the excess (if any) of the credit percentage of the earned income amount, over the phase out percentage of so much of the adjusted gross income (or, if greater, the earned income) of the taxpayer for the taxable year as exceeds the phase out amount.

According to the bill, in the case of a joint return filed by an eligible individual and such individual’s spouse, the phase out amount determined under subparagraph (A) shall be increased by $5,000.

 “The term “eligible individual” means any individual who has a qualifying child for the taxable year, or any other individual who does not have a qualifying child for the taxable year, if such individual’s principal place of abode is American Samoa for more than one-half of such taxable year, such individual (or, if the individual is married, either the individual or the individual’s spouse) has attained age 25, before the close of the taxable year, and such individual is not a dependent for whom a deduction is allowable under section 151 to another taxpayer for any taxable year beginning in the same calendar year as such taxable year.”

According to the bill if an individual is the qualifying child of a taxpayer for any taxable year of such taxpayer beginning in a calendar year, such individual shall not be treated as an eligible individual for any taxable year of such individual beginning in such calendar year.

On the gross earned income limit and maximum credit amounts provided in Section (1) of Subsection (d) of this section shall be subject to the increase provided for inflation as adjusted by the U.S. Internal Revenue Service. 

 “The Secretary of the Treasury shall issue an information bulletin notifying the earned income and maximum credit limits, after the U.S. Internal Revenue Service announces the inflation adjustments. “If the federal funding provisions of 26 USC § 7530 (ARPA Section 9625) is discontinued in any year thereafter, then subsections (b), (c), (d), (e) and (f) will no longer be in effect for such years.”