WASHINGTON – On July 12, United States Sens. Tim Johnson, James Inhofe, Heidi Heitkamp and Lisa Murkowski introduced the Tribal Adoption Parity Act, which ensures parents adopting American Indian and Alaskan Native children through tribal courts are treated fairly under the nation’s tax code by making it easier for adoptive parents across Indian Country to claim the full adoption tax credit for special needs children.
“The Tribal Adoption Parity Act will provide financial relief for families in South Dakota by making it easier for adoptive parents in Indian Country to claim the full adoption tax credit,” Johnson, D–S.D., said. “It is unacceptable that parents who adopt an Indian child through a tribal court are prevented from accessing the financial relief that is provided to adoptive families in non-tribal areas. This bill addresses an oversight in our tax code by ensuring that adoptive parents throughout Indian Country receive fair tax treatment.”
Under the current law, parents adopting a child who has been determined by a state as special needs can claim the full adoption tax credit regardless of their qualified adoption expenses. In 1996, Congress created it to provide an added incentive for parents adopting children who might otherwise be difficult to place in adoptive homes. Parents adopting children through tribal courts are currently ineligible for the special needs adoption tax credit.
In 1978, Congress passed the Indian Child Welfare Act that gives Indian tribes exclusive jurisdiction over custody proceedings involving Indian children within a reservation and the special needs adoption tax credit currently does not recognize the authority that tribal governments have over adoption proceedings of Indian children.
The Tribal Adoption Parity Act would amend the Internal Revenue Code to provide fair tax treatment to parents adopting Indian children through tribal courts. Under the act, a tribal government would be permitted to designate an adoptive Indian child, as having special needs ensuring that families in Indian Country are provided the same financial relief that adoptive families currently receive across the nation.
The adoption tax credit provides a tax credit of up to $10,000 and is adjusted for inflation. The credit was $12,970 for tax year 2013. Since 2003, families adopting children with special needs are allowed to claim the full adoption tax credit regardless of their qualified adoption expenses.