Earned Income Tax Credit for U.S. Possessions

§ 7530. Application of earned income tax credit to possessions of the United States(a) Puerto Rico(1) In generalWith 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 creditThe Secretary shall not make any payments under paragraph (1) with respect to any calendar year unless Puerto Rico has in effect an earned income tax credit for taxable years beginning in or with such calendar year which (relative to the earned income tax credit which was in effect for taxable years beginning in or with calendar year 2019) increases the percentage of earned income which is allowed as a credit for each group of individuals with respect to which such percentage is separately stated or determined in a manner designed to substantially increase workforce participation. (3) Specified matching amountFor purposes of this subsection—(A) In generalThe 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 2021In 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 adjustmentIn 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 paymentsThe 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