26 U.S.C. § 131

Certain foster care payments

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(a) General rule

Gross income shall not include amounts received by a foster care provider during the taxable year as qualified foster care payments.

(b) Qualified foster care payment definedFor purposes of this section—(1) In generalThe term “qualified foster care payment” means any payment made pursuant to a foster care program of a State or political subdivision thereof—(A) which is paid by—(i) a State or political subdivision thereof, or(ii) a qualified foster care placement agency, and(B) which is—(i) paid to the foster care provider for caring for a qualified foster individual in the foster care provider’s home, or(ii) a difficulty of care payment.(2) Qualified foster individualThe term “qualified foster individual” means any individual who is living in a foster family home in which such individual was placed by—(A) an agency of a State or political subdivision thereof, or(B) a qualified foster care placement agency.(3) Qualified foster care placement agencyThe term “qualified foster care placement agency” means any placement agency which is licensed or certified by—(A) a State or political subdivision thereof, or(B) an entity designated by a State or political subdivision thereof,for the foster care program of such State or political subdivision to make foster care payments to providers of foster care.(4) Limitation based on number of individuals over the age of 18

In the case of any foster home in which there is a qualified foster care individual who has attained age 19, foster care payments (other than difficulty of care payments) for any period to which such payments relate shall not be excludable from gross income under subsection (a) to the extent such payments are made for more than 5 such qualified foster individuals.

(c) Difficulty of care paymentsFor purposes of this section—(1) Difficulty of care paymentsThe term “difficulty of care payments” means payments to individuals which are not described in subsection (b)(1)(B)(i), and which—(A) are compensation for providing the additional care of a qualified foster individual which is—(i) required by reason of a physical, mental, or emotional handicap of such individual with respect to which the State has determined that there is a need for additional compensation, and(ii) provided in the home of the foster care provider, and(B) are designated by the payor as compensation described in subparagraph (A).(2) Limitation based on number of individualsIn the case of any foster home, difficulty of care payments for any period to which such payments relate shall not be excludable from gross income under subsection (a) to the extent such payments are made for more than—(A) 10 qualified foster individuals who have not attained age 19, and(B) 5 qualified foster individuals not described in subparagraph (A).(Added Pub. L. 97–473, title I, § 102(a), Jan. 14, 1983, 96 Stat. 2606; amended Pub. L. 99–514, title XVII, § 1707(a), Oct. 22, 1986, 100 Stat. 2781; Pub. L. 107–147, title IV, § 404(a)–(c), Mar. 9, 2002, 116 Stat. 41.)Editorial NotesPrior Provisions

A prior section 131 was renumbered section 140 of this title.

Amendments

2002—Subsec. (b)(1). Pub. L. 107–147, § 404(a), amended provisions preceding subpar. (B) generally. Prior to amendment, text of such provisions read as follows: “The term ‘qualified foster care payment’ means any amount—

“(A) which is paid by a State or political subdivision thereof or by a placement agency which is described in section 501(c)(3) and exempt from tax under section 501(a), and”.

Subsec. (b)(2)(B). Pub. L. 107–147, § 404(b), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: “in the case of an individual who has not attained age 19, an organization which is licensed by a State (or political subdivision thereof) as a placement agency and which is described in section 501(c)(3) and exempt from tax under section 501(a).”

Subsec. (b)(3), (4). Pub. L. 107–147, § 404(c), added par. (3) and redesignated former par. (3) as (4).

1986—Subsec. (a). Pub. L. 99–514 amended subsec. (a) generally. Prior to amendment, subsec. (a) read as follows: “Gross income shall not include amounts received by a foster parent during the taxable year as qualified foster care payments.”

Subsec. (b). Pub. L. 99–514 amended subsec. (b) generally. Prior to amendment, par. (1) “In general” read as follows: “The term ‘qualified foster care payment’ means any amount—

“(A) which is paid by a State or political subdivision thereof or by a child-placing agency which is described in section 501(c)(3) and exempt from tax under section 501(a), and

“(B) which is—

“(i) paid to reimburse the foster parent for the expenses of caring for a qualified foster child in the foster parent’s home, or

“(ii) a difficulty of care payment.”

and par. (2) “Qualified foster child” read as follows: “The term ‘qualified foster child’ means any individual who—

“(A) has not attained age 19, and

“(B) is living in a foster family home in which such individual was placed by—

“(i) an agency of a State or political subdivision thereof, or

“(ii) an organization which is licensed by a State (or political subdivision thereof) as a child-placing agency and which is described in section 501(c)(3) and exempt from tax under section 501(a).”

Subsec. (c). Pub. L. 99–514, in amending subsec. (c) generally, in par. (1)(A), substituted references to “qualified foster individual”, “such individual”, and “foster care provider” for references to “qualified foster child”, “such child”, and “foster parent”, respectively, and in par. (2) substituted “more than (A) 10 qualified foster individuals who have not attained age 19, and (B) 5 qualified foster individuals not described in subparagraph (A)” for “more than 10 qualified foster children”.

Statutory Notes and Related SubsidiariesEffective Date of 2002 Amendment

Pub. L. 107–147, title IV, § 404(d), Mar. 9, 2002, 116 Stat. 42, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2001.”

Effective Date of 1986 Amendment

Pub. L. 99–514, title XVII, § 1707(b), Oct. 22, 1986, 100 Stat. 2782, provided that: “The amendment made by this section [amending this section] shall apply to taxable years beginning after December 31, 1985.”

Effective Date

Pub. L. 97–473, title I, § 102(c), Jan. 14, 1983, 96 Stat. 2607, provided that: “The amendments made by this section [enacting this section] shall apply to taxable years beginning after December 31, 1978.”

Notes of Decisions

Cited in 36 cases (1 in the last 5 years), 1935–2026 · leading case: In re Hite

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In re Hite (2016) vawb · cites it 4× “” 26 U.S.C. § 131 (c)(1) (emphasis added); see also id.”

In the Matter of Holly Doherty and William Doherty (2016) nh “See 26 U.S.C. § 131 (a) (2012) (“Gross income shall not include *699 amounts received by a foster care provider during the taxable year as qualified foster care payments.”

Rios v. South Dakota Department of Social Services (1988) sd · cites it 2× “26 U.S.C. § 131 (1982). In Foster v. Celani, 683 F.”

DeWater v. State (1996) wash “26 U.S.C. § 131 (1994). The foster parent payments are considered reimbursement for child care, rather than payment of wages.”

Albemarle Corporation & Subsidiaries v. United States (2014) uscfc · cites it 2× “Regarding the contested tax doctrine, the Cuba Railroad court stated, in full: Turning now to the second ground urged by the defendant, we find the argument that the amount of the Cuban tax deficiency having been contested, the amount actually paid on settlement of the claim…”

DeWater v. State (1996) wash “26 U.S.C. § 131 (1994). The foster parent payments are considered reimbursement for child care, rather than payment of wages.”

American Chicle Co. v. United States (1942) scotus “Although *455 the regulations definitely govern this case, and were made prior to the years ha controversy, the petitioner insists that the antecedent administrative interpretation long in force renders it impossible for the Commissioner to promulgate a regulation changing for…”

Marsman v. Commissioner of Internal Revenue (1953) ca4 “The taxpayer bases her claim to the credit upon the literal unambiguous wording of Section 131 of the Internal Revenue Code, as amended by the Revenue Act of 1942, 26 U.S.C.A. § 131 , as follows: “Sec. 131(a) Allowance of Credit.”

Biddle v. Commissioner of Internal Revenue (1936) ca2 · cites it 2× “791 [ 26 U.S.C.A. § 131 and note]) and the balance deducted from gross income under section 23 (c) of the act of 1928 ( 26 U.”

F. W. Woolworth Co. v. United States (1937) ca2 “(2d) 718 , under section 131 (a) (1) of the Revenue Act of 1928 ( 26 U.S.C.A. § 131 (a) (1) and note). The plaintiff reargues the point and asks us to reconsider our decision.”

Commissioner of Internal Revenue v. The American Metal Co., Limited, the American Metal Co., Limited v. Commissioner of (1955) ca2 “The taxpayer’s petition presents this question: Were the Production Taxes paid by Minera under the Mexican Mining Tax Law income taxes or taxes in lieu of income taxes within the meaning of Section 131(a) (1) or (h) of the Internal Revenue Code, 26 U.S.C.A. § 131 (a) (1), (h) ?…”

Associated Telephone and Telegraph Company, and Cross v. United States of America, and Cross (1962) ca2 “131(f) (2), 26 U.S.C.A. § 131 (f) (2). 14 . Revenue Act of 1936, Sec.”

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