[Code of Federal Regulations]
[Title 45, Volume 2]
[Revised as of October 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 45CFR260.33]

[Page 122]
 
                        TITLE 45--PUBLIC WELFARE
 
     CHAPTER II--OFFICE OF FAMILY ASSISTANCE (ASSISTANCE PROGRAMS), 
 
PART 260_GENERAL TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) PROVISIONS
--Table of Contents
 
        Subpart A_What Rules Generally Apply to the TANF Program?
 
Sec. 260.33  When are expenditures on State or local tax credits allowable 
expenditures for TANF-related purposes?

    (a) To be an allowable expenditure for TANF-related purposes, any 
tax credit program must be reasonably calculated to accomplish one of 
the purposes of the TANF program, as specified at Sec. 260.20.
    (b)(1) In addition, pursuant to the definition of expenditure at 
Sec. 260.30, we would only consider the refundable portion of a State 
or local tax credit to be an allowable expenditure.
    (2) Under a State Earned Income Tax Credit (EITC) program, the 
refundable portion that may count as an expenditure is the amount that 
exceeds a family's State income tax liability prior to application of 
the EITC. (The family's tax liability is the amount owed prior to any 
adjustments for credits or payments.) In other words, we would count 
only the portion of a State EITC that the State refunds to a family and 
that is above the amount of EITC used as credit towards the family's 
State income tax liability.
    (3) For other refundable (and allowable) State and local tax 
credits, such as refundable dependent care credits, the refundable 
portion that would count as an expenditure is the amount of the credit 
that exceeds the taxpayer's tax liability prior to the application of 
the credit. (The taxpayer's liability is the amount owed prior to any 
adjustments for credits or payments.) In other words, we would count 
only the portion of the credit that the State refunds to the taxpayer 
and that is above the amount of the credit applied against the 
taxpayer's tax bill.