The Internal Revenue Code (IRC) allows an individual responsible
for the support of a child living with him a credit against income
taxes due equal to a certain percentage of so much of earned income
as does not exceed a specified amount. If the credit exceeds tax
liability, the excess is considered "an overpayment" of tax under
IRC § 6401(b). Section 6402(a) provides for a refund of "any
overpayment" to the person who made it. Section 6402(c) requires
the amount of "any overpayment" to be reduced by the amount of any
past-due child support payments assigned to a State. Section 464 of
the Social Security Act (SSA) directs the Secretary of the Treasury
to "intercept" tax refunds payable to persons who have failed to
meet child support obligations that have been assigned to a State.
When petitioner's husband fell behind in support payments for a
child of a previous marriage who was in the custody of his former
wife, the latter, upon applying for welfare benefits from the State
of Washington, assigned to the State, as required by the Aid to
Families with Dependent Children program, her right to collect the
unpaid child support payments. Petitioner and her husband, who had
their own dependent child living with them, filed a joint federal
income tax return for 1981 in which all income was attributable to
petitioner's wages and unemployment compensation benefits and in
which they anticipated a refund based in part on an earned-income
credit. The Internal Revenue Service, however, notified them that a
certain amount of the anticipated refund was being retained, under
the authority of the tax-intercept law, and would be paid over to
the State of Washington. Petitioner then filed a class action in
Federal District Court, seeking a declaration that § 464 of the SSA
did not reach a refund attributable to an excess earned-income
credit. The District Court granted summary judgment for the
Government, and the Court of Appeals affirmed.
Held: An excess earned-income credit can properly be
intercepted under the applicable statutes. Pp.
475 U. S.
859-865.
(a) The IRC's treatment of earned-income credits supports the
Government's position. The refundability of that credit is
inseparable from its classification as an overpayment of tax. It is
an "overpayment" not only for purposes of § 6402(a), but also for
purposes of § 6402(c). Eligibility
Page 475 U. S. 852
for an earned-income credit does not depend upon an individual's
actually having paid any tax. The IRC's classification of the
credit as an "overpayment" to be refunded is similarly independent
of the individual's actually having made any payment. To the extent
an excess credit is "payable" to an individual, it is payable as if
it were a refund of tax paid. Pp.
475 U. S.
859-863.
(b) There is no support for petitioner's claim that Congress did
not intend the tax-intercept program to reach excess earned-income
credits. Although Congress never mentioned the earned-income credit
in enacting the Omnibus Budget Reconciliation Act of 1981, which
added § 6902(c) to the IRC, it must have been aware, when it
provided in § 6402(c) that "
any overpayment" to be
refunded shall be reduced by the amount of any past-due child
support, that this would include refunds attributable to excess
earned-income credits. And, although the goals of the earned-income
credit -- to reduce the disincentive to work caused by Social
Security taxes on earned income, to stimulate the economy by
funneling funds to persons likely to spend the money immediately,
and to provide for relief for low-income families hurt by rising
food and energy prices -- are important, it cannot be said that
Congress concluded that they outweigh the goals served by the
subsequently enacted tax-intercept program -- securing child
support from absent parents and reducing the number of families on
welfare. Pp. 863-865.
752 F.2d 1433, affirmed.
BLACKMUN, J., delivered the opinion of the Court, in which
BURGER, C.J., and BRENNAN, WHITE, MARSHALL, POWELL, REHNQUIST, and
O'CONNOR, JJ., joined. STEVENS, J., filed a dissenting opinion,
post, p. 866.
JUSTICE BLACKMUN delivered the opinion of the Court.
The Internal Revenue Code and the Social Security Act direct the
Secretary of the Treasury to "intercept" certain
Page 475 U. S. 853
tax refunds payable to persons who have failed to meet child
support obligations. In this case, the United States Court of
Appeals for the Ninth Circuit ruled that payments involving
earned-income credits could be intercepted. 752 F.2d 1433 (1985).
We granted certiorari, 472 U.S. 1016 (1985), because this ruling
was in conflict with decisions of the Courts of Appeals for the
Second and Tenth Circuits.
See Rucker v. Secretary of
Treasury, 751 F.2d 351 (CA10 1984);
Nelson v. Regan,
731 F.2d 105 (CA2),
cert. denied sub nom. Manning v.
Nelson, 469 U.S. 853 (1984).
I
A
Stanley Sorenson, the husband of petitioner Marie Sorenson, was
legally obligated to make child support payments for a child of his
previous marriage who was in the custody of his former wife. Mr.
Sorenson was unemployed because of a disability, and fell behind on
those support payments. His former wife applied for welfare
benefits from the State of Washington. Since 1975, the program for
Aid to Families with Dependent Children (AFDC) has required, as a
condition of eligibility, that applicants for welfare assign to the
State concerned any right to child support payments that has
accrued at the time of assignment. Pub.L. 93-647, § 101(c)(5)(C),
88 Stat. 2359, 42 U.S.C. § 602(a)(26)(A). [
Footnote 1] Thus, Stanley Sorenson's former wife turned
over to the State her right to collect the payments Mr. Sorenson
had failed to make.
Stanley and Marie Sorenson also had their own dependent child
living with them. They thus were potentially eligible
Page 475 U. S. 854
to receive an earned-income credit. For the calendar year 1981,
the time relevant to this lawsuit, § 43 of the Internal Revenue
Code of 1954, as amended, provided that an individual responsible
for the support of a child living with him was allowed
"as a credit against the tax imposed . . . for the taxable year
an amount equal to 10 percent of so much of the earned income for
the taxable year as does not exceed $5,000."
As the amount of the taxpayer's earned income increased, the
amount of the credit decreased, reaching zero when the taxpayer's
adjusted gross income reached $10,000. [
Footnote 2]
Unlike certain other credits, which can be used only to offset
tax that would otherwise be owed, the earned-income credit is
"refundable." Thus, if an individual's earned-income credit exceeds
his tax liability, the excess amount is "considered an overpayment"
of tax under § 6401(b), as it then read, of the 1954 Code.
[
Footnote 3] Subject to
specified setoffs,
Page 475 U. S. 855
§ 6402(a) directs the Secretary to credit or refund "any
overpayment" to the person who made it. [
Footnote 4] An individual who is entitled to an
earned-income credit that exceeds the amount of tax he owes thereby
receives the difference as if he had overpaid his tax in that
amount.
B
In February, 1982, petitioner and her husband timely filed a
joint federal income tax return for the calendar year 1981.
Petitioner had worked during part of that year, and all the
Sorenson family income for the year was attributable to her wages
and unemployment compensation benefits. By the return so filed, the
Sorensons anticipated a refund of $1,408.90, consisting in part of
excess withholding on petitioner's wages and in part of an
earned-income credit. The Internal Revenue Service, however,
notified the Sorensons that $1,132 of the anticipated refund was
being retained, under the authority granted it by the tax-intercept
law, and
Page 475 U. S. 856
would be paid over to the State of Washington because that State
had been assigned the right to collect Mr. Sorenson's unpaid child
support obligations.
See Second Declaration of Peter
Greenfield, Exh. B,
Sorenson v. Secretary of Treasury, No.
C82-441C (WD Wash.).
The tax-intercept law essentially directs the Secretary to give
priority to a State's claim for recoupment of welfare payments made
to a family who failed to receive child support,
see §
402(a)(26)(A) of the Social Security Act, as amended, 42 U.S.C. §
602(a)(26)(A), over an individual's claim for refund of tax
overpayment.
See § 6402(a), as amended, of the 1954 Code.
The intercept law originally was enacted as part of the Omnibus
Budget Reconciliation Act of 1981 (OBRA), Pub.L. 97-35, § 2331, 95
Stat. 860. First, OBRA § 2331(a) added § 464 to the Social Security
Act, 42 U.S.C. § 664. That section directs the Secretaries of the
Treasury and of Health and Human Services to establish a scheme by
which a State is to notify the Secretary of the Treasury of persons
who owe past-due child support payments that have been assigned to
it, and directs the Secretary of the Treasury to intercept
tax-refund payments that would otherwise be paid to those
persons:
"Upon receiving notice from a State agency administering [an
AFDC plan] . . . that a named individual owes past-due support
which has been assigned to such State pursuant to section
402(a)(26), the Secretary of the Treasury shall determine whether
any amounts, as refunds of Federal taxes paid, are payable to such
individual (regardless of whether such individual filed a tax
return as a married or unmarried individual). If the Secretary of
the Treasury finds that any such amount is payable, he shall
withhold from such refunds an amount equal to the past-due support,
and pay such amount to the State agency (together with notice of
the individual's
Page 475 U. S. 857
home address) for distribution in accordance with section
467(b)(3)."
§ 464(a), 42 U.S.C. § 664(a). [
Footnote 5]
Section 2331(c) of OBRA amended the Internal Revenue Code. It
added a new subsection to the provision governing the Secretary of
the Treasury's authority to refund overpayments to taxpayers. The
new subsection, § 6402(c), requires the Secretary to withhold from
the refund otherwise due the taxpayer the amount owed the State in
past-due child support and to remit the amount withheld to the
State:
"The amount of any overpayment to be refunded to the person
making the overpayment shall be reduced by the amount of any
past-due support (as defined in section 464(c) of the Social
Security Act) owed by that person of which the Secretary has been
notified by a State in accordance with section 464 of the Social
Security Act. The Secretary shall remit the amount by which the
overpayment is so reduced to the State to which such support has
been assigned and notify the person making the overpayment that so
much of the overpayment as was necessary to satisfy his obligation
for past-due support has been paid to the State. This subsection
shall be applied to an overpayment prior to its being credited to a
person's future liability for an internal revenue tax."
C
After negotiations concerning the status of tax refunds in
community property States such as Washington -- issues that are not
germane to the question now presented to this Court -- the
Secretary ultimately withheld only half of the refund increment the
Sorensons claimed. Petitioner then filed
Page 475 U. S. 858
a class action in the United States District Court for the
Western District of Washington seeking, among other things, a
declaration that § 464 of the Social Security Act did not reach a
refund attributable to an excess earned-income credit. The District
Court rejected the Secretary's jurisdictional arguments, which were
renewed on appeal to the Court of Appeals but which are not pressed
in this Court.
See Brief for Respondents 5, n. 1. But it
agreed with the Secretary's arguments on the merits, and granted
summary judgment for the Government.
557 F.
Supp. 729 (1982).
The Court of Appeals affirmed that judgment. 752 F.2d 1433 (CA9
1985). It rejected petitioner's statutory construction arguments,
and held that, since the Code expressly defined excess
earned-income credits as "overpayments" and disbursed those excess
credits to recipients through the income tax refund process, the
credits were "payable
as' refunds of federal taxes
paid" and therefore could be intercepted. Id. at 1441
(emphasis in original). Congress used the broad terms "any amounts"
and "any overpayment" in the tax-intercept law, and gave no
indication that it intended to exclude earned-income credit
payments from these terms.
The Court of Appeals also rejected petitioner's argument that
the Secretary's position conflicted with Congress' intention to
provide benefits to the poor through the earned-income credit.
First, the legislative history of § 43 did not suggest that the
earned-income credit was intended primarily as a type of welfare
grant; rather, it was meant to negate the disincentive to work
caused by Social Security taxes. Since the earned-income credit was
payable as a lump sum, it was more like excess withholding, which
was clearly reachable by the intercept program, than it was like
wages, a portion of which Congress exempted from the assessment and
collection process.
See 752 F.2d at 1443, n. 1. Second,
had Congress intended to exempt earned-income credit payments from
the intercept program, it could have done so expressly. Instead, it
provided that any amount payable
Page 475 U. S. 859
through the federal tax-refund process might be intercepted. "In
the face of this rather clear statutory mandate," said the Court of
Appeals, "we conclude that we are not free to speculate that
Congress intended otherwise."
Id. at 1443.
II
Petitioner advances two arguments to support her claim that an
excess earned-income credit cannot be intercepted. First, she
claims that the language and structure of the interlocking
statutory provisions that make up the intercept law exclude an
earned-income credit from its reach: excess earned-income credits
are neither "overpayments" nor "refunds of Federal taxes paid," and
only those items are subject to interception. Second, she claims
that permitting interception of an earned-income credit would
frustrate Congress' aims in providing the credit, and thus that
Congress could not have intended the intercept law to reach
earned-income credits. We find neither argument persuasive.
A
The Internal Revenue Code's treatment of earned-income credits
supports the Government's position. An individual can receive the
amount by which his entitlement to an earned-income credit exceeds
his tax liability only because § 6401(b) of the Code defines that
amount as an "overpayment," and § 6402 provides a mechanism for
disbursing overpayments, namely, the income tax refund process. The
refundability of the earned-income credit is thus inseparable from
its classification as an overpayment of tax. Petitioner therefore
acknowledges that the excess earned-income credit is an
"overpayment" for purposes of § 6402(a), the general provision that
authorizes all tax refunds.
See n 4,
supra. If it were not, the Secretary
would lack authorization for refunding it to her. She claims,
however, that, while an excess earned-income credit is an
"overpayment" for purposes of § 6402(a), it is not an "overpayment"
for purposes of § 6402(c), which requires that the "amount of any
overpayment . . .
Page 475 U. S. 860
shall be reduced by the amount of any past-due support" assigned
to the State.
The normal rule of statutory construction assumes that
"
identical words used in different parts of the same act are
intended to have the same meaning.'" Helvering v. Stockholms
Enskilda Bank, 293 U. S. 84,
293 U. S. 87
(1934), quoting Atlantic Cleaners & Dyers, Inc. v. United
States, 286 U. S. 427,
286 U. S. 433
(1932). That the Internal Revenue Code includes an explicit
definition of "overpayment" in the same subchapter strengthens the
presumption. And that both subsections concern the tax refund
treatment of "overpayment[s]" is especially damaging to any claim
that
"the words, though in the same act, are found in such dissimilar
connections as to warrant the conclusion that they were employed in
the different parts of the act with different intent."
Stockholms Enskilda Bank, 293 U.S. at
293 U. S.
87.
Petitioner and the two Courts of Appeals that have excluded
excess earned-income credits from the definition of "overpayment"
used in § 6402(c) offer two bases for their position. First, they
believe that § 6402(c) limits § 6401(b)'s broad definition "by
[using] the phrase
overpayment to be refunded to the person
making the overpayment.'" Nelson v. Regan, 731 F.2d at
111; see Rucker v. Secretary of Treasury, 751 F.2d at 356.
Not all overpayments, they suggest, are refunded to persons who
"made" them, since some -- those consisting of earned-income
credits -- may be refunded to persons who actually have not paid
any tax. We disagree. All refunds made by the Secretary under §
6402(a) are paid to "the person who made the overpayment." The
phrase merely identifies the person entitled to the refund; it does
not restrict the nature of the refund itself. Petitioner must
characterize herself as a person who has "made" an overpayment;
otherwise, she cannot claim her excess earned-income credit. The
phrase in § 6402(c) on which petitioner and the Second and Tenth
Circuits relied is virtually identical to the phrase used in §
6402(a). Since the words cannot have
Page 475 U. S. 861
the limiting effect petitioner proposes when used in § 6402(a),
no justification exists for giving them such a construction in §
6402(c).
Second, petitioner and the Second and Tenth Circuits perceive a
tension between § 6401(b)'s and § 6402(a)'s treatment of excess
earned-income credits and § 464(a)'s treatment of interceptable
amounts. As used in those Code sections, "overpayment" includes
more than "refunds of Federal taxes paid," the phrase used in the
Social Security Act. Since § 464 and § 6402(c) were enacted
simultaneously as part of OBRA, petitioner and the two Circuits
believe that § 6402(c) should be harmonized with § 464, rather than
with §§ 6401(b) and 6402(a).
See Rucker v. Secretary of
Treasury, 751 F.2d at 357;
Nelson v. Regan, 731 F.2d
at 111.
This second argument, it seems to us, misperceives the structure
of the tax-intercept law, and manufactures a tension that need not
exist. OBRA's placement of provisions regarding interception in
both Acts reflects a division of functions. The tax-intercept
program lies at the intersection of the Social Security Act's
concern in Subchapter IV, Part D, with child support, and the
Internal Revenue Code's concern in Chapter 65, Subchapter A, with
the treatment of credits in the tax-refund process. Section 464
addresses the concerns of the States that have received
AFDC-related grants. It defines past-due child support, authorizes
procedures by which the States can notify the Secretary of the
Treasury of their entitlement to recover such past-due support, and
directs the Secretary to aid the States, through his control over
the tax-refund process, in recouping that support. Sections 6401
and 6402 address the operation of the tax-refund process under the
Internal Revenue Code. They define the status of certain tax
credits, set up a mechanism for disbursing refunds, and direct the
Secretary to divert certain amounts from the refund process. To the
extent that the tax-intercept law regulates the relationship of the
Secretary of the Treasury to refund claimants, it does so
through
Page 475 U. S. 862
§ 6402, and not through a provision that governs the Secretary's
relationship to state agencies.
Petitioner, however, views § 6402(c)'s reference to § 464 as
indicating that § 464(a) is meant to be read into § 6402(c) as a
limitation on the Secretary's intercept powers. This argument
depends on a somewhat strained construction of § 6402(c)'s
statement that
"[t]he amount of any overpayment to be refunded to the person
making the overpayment shall be reduced by the amount of any
past-due support . . . owed by that person of which the Secretary
has been notified by a State in accordance with section 464 of the
Social Security Act."
Petitioner claims that
"[t]he words 'in accordance with section 464 of the Social
Security Act' . . . do not modify 'has been notified by a State,'
as one might initially assume. Rather they belatedly modify the
words 'shall be reduced.'"
Brief for Petitioner 18. In petitioner's view, her construction
would lead to the conclusion that a refund can be reduced only to
the extent that the refund represents a refund of tax actually
paid, since that is all § 464(a) permits.
We disagree with both petitioner's construction of § 6402(c) and
her reading of § 464(a). First, it seems far more plausible that
the words modify the nearest verb. If they are given this more
natural reading, then § 6402(c) directs the Secretary to intercept
only that amount which properly is classified as past-due support
and of which he properly has been notified.
But even if the reference in § 6402(c) to § 464 were read to
refer solely to § 464(a), [
Footnote
6] nothing in that subsection exempts excess earned-income
credits from interception. Petitioner and the Second and Tenth
Circuits recast their
Page 475 U. S. 863
argument regarding the meaning of "overpayment" by contending
that the amount of a refund that is attributable to an excess
earned-income credit is not a "refun[d] of Federal taxes paid," and
that §464(a) permits interception of only "amounts, as refunds of
Federal taxes paid":
"A refund of federal taxes is a repayment of money paid by a
taxpayer in excess of that taxpayer's liability. Although the
earned income credit is given effect through the income tax return,
the credit is not a tax refund because eligibility for the credit
is not contingent upon payment of any federal income tax."
Rucker v. Secretary of Treasury, 751 F.2d at 356. But
just as eligibility for an earned-income credit does not depend
upon an individual's actually having paid any tax, the Code's
classification of the credit as an "overpayment" to be refunded is
similarly independent of the individual's actually having made any
payment.
Cf. § 6401(c). The Ninth Circuit correctly held
that, to the extent an excess earned-income credit is "payable" to
an individual, it is payable as if it were a refund of tax paid.
752 F.2d at 1441. Section 464(a)'s reference to the tax-refund
process is best understood as a directive to the Secretary that he
follow the procedures established by the Internal Revenue Code for
calculating and disbursing refunds, rather than as an attempt
implicitly to redefine terms given special meaning by the Code.
B
Nor do we agree with petitioner's claim that Congress did not
intend the intercept program to reach excess earned-income credits.
Petitioner and the Government agree that Congress never mentioned
the earned-income credit in enacting OBRA.
See Brief for
Petitioner 24; Tr. of Oral Arg. 21. But it defies belief that
Congress was unaware, when it provided in § 6402(c) that
"
any overpayment to be refunded . . . shall be reduced by
the amount of any past-due support" (emphasis
Page 475 U. S. 864
added), that this would include refunds attributable to excess
earned-income credits. Congress had previously expressly defined an
excess earned-income credit as an "overpayment," in § 6401(b) of
the Internal Revenue Code -- the section immediately preceding the
section to which Congress added the intercept provision. [
Footnote 7]
What petitioner and the Second and Tenth Circuits are really
claiming is that the intercept law should be read narrowly to avoid
frustrating the goals of the earned-income credit program. The
earned-income credit was enacted to reduce the disincentive to work
caused by the imposition of Social Security taxes on earned income
(welfare payments are not similarly taxed), to stimulate the
economy by funneling funds to persons likely to spend the money
immediately, and to provide relief for low-income families hurt by
rising food and energy prices. [
Footnote 8] Each is an undeniably important objective. It
is impossible, however, for us to say that these goals outweigh the
goals served by the subsequently enacted tax-intercept program --
securing child support from absent
Page 475 U. S. 865
parents whenever possible and reducing the number of families on
welfare. [
Footnote 9] Congress
of course could conclude that families eligible for earned-income
credits have a more compelling claim to the funds involved than do
either the States or non-AFDC families. But it is equally clear
that Congress could have decided that the more pressing need was to
alleviate the "devastating consequences for children and the
taxpayers" of the epidemic of nonsupport.
See Hearings
before the Senate Committee on Finance on Spending Reduction
Proposals, 97th Cong., 1st Sess., pt. 1, p. 34 (1981) (statement of
Secretary Schweiker). [
Footnote
10]
The ordering of competing social policies is a quintessentially
legislative function. In light of Congress' decision to direct the
interception of any overpayment otherwise refundable to a taxpayer,
the Ninth Circuit correctly refused to "speculate that Congress
intended otherwise." 752 F.2d at 1443. Its judgment, accordingly,
is affirmed.
Page 475 U. S. 866
It is so ordered.
[
Footnote 1]
Section 402(a)(26)(A) of the Social Security Act, as amended, 42
U.S.C. § 602(a)(26)(A), requires the assignment to the State of
"any rights to support from any other person such applicant may
have (i) in his own behalf or in behalf of any other family member
for whom the applicant is applying for or receiving aid, and (ii)
which have accrued at the time such assignment is executed.
[
Footnote 2]
By the Tax Reform Act of 1984, Pub.L. 98-369, § 471(c)(1), 98
Stat. 826, Congress redesignated § 43 as § 32. By § 1042 of that
Act, 98 Stat. 1043, it raised the earned-income percentage from 10
to 11 percent, the maximum amount of the credit from $500 to $550,
and the eligibility ceiling from $10,000 to $11,000.
[
Footnote 3]
At the time relevant to this lawsuit, § 6401(b) of the 1954 Code
provided, in pertinent part:
"If the amount allowable as credits under sections 31 (relating
to tax withheld on wages), and 39 (relating to certain uses of
gasoline, special fuels, and lubricating oil), and 43 (relating to
earned income credit), exceeds the tax imposed by subtitle A
(reduced by the credits allowable under subpart A of part IV of
subchapter A of chapter 1, other than the credits allowable under
sections 31, 39, and 43), the amount of such excess shall be
considered an overpayment."
Section 6401(b) was amended by the Tax Reform Act of 1984.
Section 474(r)(36) of that Act, 98 Stat. 846, designated existing §
6401(b) as § 6401(b)(1) and substituted the following language for
the language quoted above:
"If the amount allowable as credits under subpart C of part IV
of subchapter A of chapter 1 (relating to refundable credits)
exceeds the tax imposed by subtitle A (reduced by the credits
allowable under subparts A, B, and D of such part IV), the amount
of such excess shall be considered an overpayment."
The earned-income credit remains refundable under the revised
provision, since it is within the category of "refundable credits."
See Tax Reform Act of 1984, § 471, 98 Stat. 825.
[
Footnote 4]
The version of § 6402(a) in effect for the tax year 1981
provided:
"In the case of any overpayment, the Secretary, within the
applicable period of limitations, may credit the amount of such
overpayment, including any interest allowed thereon, against any
liability in respect of an internal revenue tax on the part of the
person who made the overpayment and shall, subject to subsection
(c), refund any balance to such person."
The question presented by this case is the scope of subsection
(c) -- the provision governing the offset of past-due child support
payments.
Section 2663(b)(2) of the Spending Reduction Act of 1984, 98
Stat. 1155, amended § 6402(a). Under amended § 6402(a), the
Secretary's authority, with respect to refunds payable after
December 31, 1985, and before January 1, 1988,
see §
2653(c) of the 1984 Act, 98 Stat. 1166, is restricted by a new
subsection (d) as well as by subsection (c) of § 6402. Section
2653(b)(1) of the 1984 Act, 98 Stat. 1164, added the new subsection
(d). Section 6402(d) requires the offset of debts owed to various
federal agencies. Under § 6402(d)(2), the collection of past-due
child support payments pursuant to § 6402(c) has priority over the
collection of debts covered by § 6402(d).
[
Footnote 5]
Section 464(a) was amended by the Child Support Enforcement
Amendments of 1984, Pub.L. 98-378, § 21, 98 Stat. 1322, which
authorized the interception and diversion of refunds for the
benefit of non-AFDC children as well as children receiving AFDC
benefits. The Amendments also provided additional procedural
protections for refund claimants whose refunds are intercepted.
[
Footnote 6]
In light of Congress' specific reference to § 464(c) earlier in
§ 6402(c), it seems particularly likely that Congress would have
referred to subsection (a) of § 464 expressly had it meant "in
accordance with § 464(a)," rather than in accordance with the
entire scheme for identifying past-due support payments and
notifying the Federal Government of such obligations set out in §
464
[
Footnote 7]
That Congress could not have viewed the earned-income credit as
immune from seizure to satisfy child support obligations is
suggested by a number of other factors as well. As the Government
notes, once an individual has actually received his tax refund
payment, the proceeds of that refund, even if they reflect an
earned-income credit component, are subject to levy under § 6305 of
the Code. The fact that the Government may not have used this
cumbersome procedure,
see Tr. of Oral Arg. 23-25, reflects
the economic inefficiency of locating and pursuing a payment that
cannot exceed $550, rather than a lack of authority to do so. And
certainly no one has suggested that the former spouse to whom a
support obligation not assigned to the State is owed would be
precluded from employing the judicial process to attach and seize
the credit once the recipient had received it.
[
Footnote 8]
See, e.g., S.Rep. No. 94-36, pp. 11, 33 (1976);
H.R.Rep. No. 94-19, pp. 3-4, 29-31 (1975); Hearings on H.R. 2166
before the Senate Committee on Finance, 94th Cong., 1st Sess., 66,
315 (1975); Hearings before the House Committee on Ways and Means
on the President's Authority to Adjust Imports of Petroleum; Public
Debt Ceiling Increase; and Emergency Tax Proposals, 94th Cong., 1st
Sess., 661, 742-743, 797 (1975); 121 Cong.Rec. 4609 (1975).
[
Footnote 9]
See, e.g., S.Rep. No. 98-387, pp. 5-8 (1984); Hearings
before the Senate Committee on Finance on Spending Reduction
Proposals, 97th Cong., 1st Sess., pt. 1, pp.19, 34-35, 81, 312
(1981); Hearings before the House Committee on Ways and Means on
Tax Aspects of the President's Economic Program, 97th Cong., 1st
Sess., pt. 1, pp. 159, 237 (1981).
[
Footnote 10]
Even if Congress' sole concern were providing funds to the
neediest children involved, it is far from certain that all
children living in households receiving refunds of earned-income
credits are needier than all children owed past-due child support.
When the earned-income credit is claimed at the end of the tax year
(an individual can, pursuant to § 3507 of the Code, receive an
advance on his earned-income credit over the course of the year),
it may in fact go to a recipient who is not currently needy. For
example, an individual, with a dependent child, who was unemployed
during most of 1981 and therefore earned only $5,000, but found a
job paying $20,000 per year on January 1, 1982, would have been
able to claim in a tax return filed in April, 1982, an
earned-income credit of $500, despite the fact that, in late spring
1982, when the refund check ultimately arrived, the individual
might no longer be needy.
JUSTICE STEVENS, dissenting.
The class of persons that Congress intended to benefit by
creating the "Earned Income Credit" Program in 1975 is composed
entirely of low-income families. [
Footnote 2/1] The Court has fairly described the
purposes of the 1975 legislation:
"The earned-income credit was enacted to reduce the disincentive
to work caused by the imposition of social security taxes on earned
income (welfare payments are not similarly taxed), to stimulate the
economy by funneling funds to persons likely to spend the money
immediately, and to provide relief for low-income families hurt by
rising food and energy prices."
Ante at
475 U. S. 864.
The mechanism by which Congress funneled the funds to those persons
was to treat the credits as though their recipients had overpaid
their taxes, giving them a right to a "refund" of a hypothetical
overpayment. This relatively obscure provision of the Internal
Revenue Code gave rise to no particular difficulties for the
ensuing six years.
The principal beneficiaries of the Intercept Program enacted by
Congress as part of what is appropriately called the Omnibus Budget
Reconciliation Act of 1981 were state governments which had claims
for recoupment of welfare payments made to families that were
unable to enforce a departed parent's child support obligations.
Thus, the real adversaries in this case are the Sorensons -- a
low-income family -- on the one hand, and the State of Washington,
on the other, which will ultimately receive the intercepted
"refund" under the Court's holding. The question is whether
Congress in 1981 intended to divert these federal funds from the
original beneficiaries of the Earned Income Credit Program to the
treasuries of state governments. Notwithstanding the Court's
careful and admittedly accurate parsing of the language of the
statute, I am not persuaded that Congress had any such intent.
Page 475 U. S. 867
The Court confidently asserts that "it defies belief that
Congress was unaware" of the impact of its Intercept Program upon
the Earned Income Credit Program when it enacted OBRA in 1981.
See ante at
475 U. S. 863.
The Court does not pause to tell us why, if that be so, Congress
did not even mention this important change at any point in the
legislative history of OBRA. With all due respect to the Court and
to our hard-working neighbors in the Congress, I think "it defies
belief" to assume that a substantial number of legislators were
sufficiently familiar with OBRA to realize that somewhere in that
vast piece of hurriedly enacted legislation there was a provision
that changed the 6-year-old Earned Income Credit Program. [
Footnote 2/2]
I agree that the Court's reading of the statutory language is
faithful to its grammar. I am not persuaded, however, that it
actually reflects the intent of the Congress that enacted OBRA. I
therefore would accept the construction of the relevant statutes
adopted by the Courts of Appeals for the Second and Tenth Circuits.
See Rucker v. Secretary of Treasury, 751 F.2d 351, 356-357
(CA10 1984);
Nelson v. Regan, 731 F.2d 105, 110-112 (CA2),
cert. denied sub nom. Manning v. Nelson, 469 U.S. 853
(1984). I respectfully dissent.
[
Footnote 2/1]
121 Cong.Rec. 8861 (1975) (remarks of Sen. Long).
[
Footnote 2/2]
"Smoking a big cigar, the Speaker [of the House of
Representatives] got angry again over the slap-dash quality of the
bill [that became the Omnibus Budget Reconciliation Act of 1981],
with parts of it photocopied from memorandums, other parts
handwritten at the last minute, and some final sections hastily
crossed out in whorls of pencil marks."
"
* * * *"
"But then he smiled, too, noting such cryptic and accidental
entries in the bill as a name and phone number -- 'Ruth Seymour,
225-4844' -- standing alone as if it were a special appropriation
item."
N.Y. Times, July 1, 1981, p. A16, col. 1.