,i #aadth ,,congress #ast ,session ,h4 ,r4 #dbcf ,,in ,,the ,,house ,,of ,,representatives ,december #aj1 #bjae ,mr4 ,serrano 7for himself1 ,mr4 ,crowley1 ,mr4 ,ellison1 ,mr4 ,hinojosa1 ,ms4 ,meng1 ,mr4 ,pierluisi1 ,mr4 ,cartwright1 ,mr4 ,nolan1 ,ms4 ,de,lauro1 ,mr4 ,vargas1 ,ms4 ,roybal-,allard1 ,ms4 ,michelle ,lujan ,grisham of ,new ,mexico1 ,mr4 ,ben ,ray ,lujn of ,new ,mexico1 ,mr4 ,jeffries1 ,ms4 ,clarke of ,new ,york1 ,ms4 ,velzquez1 and ,mr4 ,hastings7 introduced the following bill2 which was referred to the ,committee on ,ways and ,means ,a ,,bill ,to promote savings by providing a tax credit for eligible taxpayers who contribute to savings products and to facilitate taxpayers receiving this credit and open a designated savings product when they file their ,federal income tax returns4 #a4 ,short title ,this ,act may be cited as the ,financial ,security ,credit ,act of #bjae4 #b4 ,findings ,congress finds the following3 7#a7 ,united ,states households are experiencing significant levels of financial vulnerability1 characterized by a lack of personal savings4 ,the personal savings rate reached historic lows in the past decade1 and a lack of personal savings was a major contributor to the recession of #bjjg-bjji1 and to the slow recovery of ensuing years4 7#b7 ,households continue to lack the savings or structures to meet short-term and long-term needs1 as evidenced by the following3 7,a7 ,according to the ,employee ,benefit ,research ,institute1 among full-time1 full-year wage and salary workers ages #ba-fd1 only #ed4e percent participated in a retirement plan in #bjac4 7,b7 ,according to the ,federal ,deposit ,insurance ,corporation #bjac ,survey of ,unbanked and ,underbanked ,households1 an estimated #g4g percent of ,united ,states households are unbanked4 ,these households do not have a checking or savings account4 ,in total1 #ca4b percent of households do not have a savings account4 7,c7 ,according to the ,pew ,charitable ,trusts1 the majority of ,american households 7#ee percent7 are savings-limited1 meaning they can replace less than one month of their income through liquid savings4 7#c7 ,financial shocks are common and savings make households more resilient to financial shocks and more upwardly mobile1 as evidenced by the following3 7,a7 ,substantial fluctuations in family income are the norm4 ,in any given #b-year period1 nearly half of households experience an income gain or drop of more than #be percent1 a rate of volatility that has been relatively constant since #aigi4 7,b7 ,even small sums of savings1 #b1jjj or less1 have been shown to significantly reduce the incidence of negative financial or material outcomes1 such as foregoing adequate nutrition4 7,c7 ,children born to low-income1 high-saving parents are much more likely 7#ga percent7 to move up the economic ladder than children born to low-income1 low-saving parents 7#ej percent7 over a generation4 7#d7 ,emergency savings are necessary to protect retirement savings from early1 penalized withdrawals and to support long-term retirement security4 7#e7 ,successful pilot programs administered through local ,volunteer ,income ,tax ,assistance sites in cities as diverse as ,houston1 ,texas2 ,newark1 ,new ,jersey2 ,new ,york ,city1 ,new ,york2 ,san ,antonio1 ,texas2 and ,tulsa1 ,oklahoma1 have shown that tax filers with low incomes can and will save when presented with the right incentive at the right moment and access to an account4 ,the potential of increasing savings at tax time among low- and moderate-income households has been further validated by the low-touch1 large-scale pilot ,refund to ,savings4 7#f7 ,it is in the economic interests of the ,united ,states to promote savings among all members of society1 regardless of income4 #c4 ,financial security credit 7a7 ,in general ,subpart ,c of part ,,iv of subchapter ,a of chapter #a of the ,internal ,revenue ,code of #aihf is amended by inserting after section #cf;,b the following new section3 #cf;,c4 ,financial security credit 7a7 ,allowance of credit ,there shall be allowed as a credit against the tax imposed by this subtitle for a taxable year an amount equal to the lesser of-- 7#a7 #ejj1 or 7#b7 #ej percent of the total amount deposited or contributed by the taxpayer in accordance with subsection 7b77#a7 into designated savings products during such taxable year4 7b7 ,limitations 7#a7 ,credit must be deposited in or contributed to designated savings product ,no amount shall be allowed as a credit under subsection 7a7 for a taxable year unless the taxpayer designates on the taxpayer's return of tax for the taxable year that the amount of the credit for such taxable year be deposited in or contributed to one or more designated savings products of the taxpayer and the ,secretary makes such deposits or contributions to the designated savings products4 7#b7 ,limitation based on adjusted gross income 7,a7 ,in general ,the amount of the credit allowable under subsection 7a7 shall be reduced 7but not below zero7 by an amount which bears the same ratio to the amount of such credit 7determined without regard to this paragraph7 as-- 7i7 the amount by which the taxpayer's adjusted gross income exceeds the threshold amount1 bears to 7ii7 #ae1jjj4 7,b7 ,threshold amount ,for purposes of subparagraph 7,a71 the term threshold amount means-- 7i7 #ee1ejj in the case of a joint return1 7ii7 #da1fbe in the case of an individual who is not married1 and 7iii7 #ej percent of the dollar amount in effect under clause 7i7 in the case of a married individual filing a separate return4 ,for purposes of this subparagraph1 marital status shall be determined under section #ggjc4 7c7 ,designated savings product ,for purposes of this section1 the term designated savings product means any of the following3 7#a7 ,a qualified retirement plan 7as defined in section #digd7;c774 7#b7 ,a qualified tuition program 7as defined in section #ebi74 7#c7 ,a ,coverdell education savings account 7as defined in section #ecj74 7#d7 ,a ,united ,states savings bond4 7#e7 ,a certificate of deposit 7or similar class of deposit7 with a duration of at least #h months4 7#f7 ,a savings account4 7#g7 ,any other type of savings product considered to be appropriate by the ,secretary for the purposes of this section4 7d7 ,special rules 7#a7 ,tax refunds treated as deposited or contributed in current taxable year ,for purposes of subsection 7a77#b71 the amount of any overpayment of taxes refunded to the taxpayer 7reduced by any amount attributable to the credit allowed under this section by reason of being considered as an overpayment by section #fdja7;b77 and designated for deposit in or contribution to a designated savings product of the taxpayer shall be treated as an amount deposited or contributed in the taxable year in which so deposited or contributed4 7#b7 ,maintenance of deposit ,no contribution or deposit shall be taken into account under subsection 7a7 unless such contribution or deposit remains in the designated savings product for not less than #h continuous months4 7#c7 ,reduction in deposits in designated savings products 7,a7 ,in general ,the amount of deposits or contributions taken into account under subsection 7a7 shall be reduced 7but not below zero7 by the aggregate amount of distributions 7other than interest from designated savings products specified in paragraphs 7#d71 7#e71 7#f71 and 7#g7 of subsection 7c77 from all designated savings products of the taxpayer during the testing period4 ,the preceding sentence shall not apply to the portion of any distribution which is not includible in gross income by reason of a trustee-to-trustee transfer or a rollover distribution4 7,b7 ,testing period ,for purposes of subparagraph 7,a71 the testing period1 with respect to a taxable year1 is the period which includes-- 7i7 such taxable year1 7ii7 the #b preceding taxable years1 and 7iii7 the period after such taxable year and before the due date 7including extensions7 for filing the return of tax for such taxable year4 7,c7 ,other rules ,rules similar to subparagraphs 7,c7 and 7,d7 of section #be;,b7d77#b7 shall apply for purposes of this paragraph4 7#d7 ,denial of double benefit ,no credit shall be allowed under section #be;,b with respect to any deposit for which a credit is allowed under this section4 7#e7 ,coordination with other refundable credits ,the credit allowed by subsection 7a7 shall be taken into account after taking into account the credits allowed by 7or treated as allowed by7 this subpart 7other than this section74 7e7 ,inflation adjustments 7#a7 ,credit limit ,in the case of any taxable year beginning in a calendar year after #bjaf1 the dollar amount in subsection 7a77#a7 shall be increased by an amount equal to-- 7,a7 such dollar amount1 multiplied by 7,b7 the cost-of-living adjustment determined under section #a7;f77#c7 for the calendar year in which the taxable year begins1 determined by substituting calendar year #bjae for calendar year #aiib in subparagraph 7,b7 thereof4 7#b7 ,,agi thresholds ,in the case of any taxable year beginning in a calendar year after #bjaf1 each of the dollar amounts in clauses 7i7 and 7ii7 of subsection 7b77#b77;,b7 shall be increased by an amount equal to-- 7,a7 such dollar amount1 multiplied by 7,b7 the cost-of-living adjustment determined under section #a7;f77#c7 for the calendar year in which the taxable year begins1 determined by substituting calendar year #bjae for calendar year #aiib in subparagraph 7,b7 thereof4 7#c7 ,rounding 7,a7 ,credit limit ,if any increase under paragraph 7#a7 is not a multiple of #aj1 such increase shall be rounded to the next lowest multiple of #aj4 7,b7 ,,agi thresholds ,if any increase under paragraph 7#a7 is not a multiple of #ajj1 such increase shall be rounded to the next lowest multiple of #ajj4 7f7 ,regulations ,not later than #ab months from date of enactment of this section1 the ,secretary shall issue such regulations or other guidance as the ,secretary determines necessary or appropriate to carry out this section1 including regulations or guidance-- 7#a7 to ensure that designated savings products are subject to appropriate reporting requirements1 including the reporting of contributions and other deposits during the calendar year1 end of calendar year account balances1 and earnings from designated savings products specified in paragraphs 7#d71 7#e71 7#f71 and 7#g7 of subsection 7c71 7#b7 to carry out the maintenance of deposit provisions under subsection 7d77#b71 and 7#c7 to prevent avoidance of the purposes of this subsection4 4 7b7 ,conforming amendments 7#a7 ,section #acbd7;b77#b7 of title #ca1 ,united ,states ,code1 is amended by inserting #cf;,c1 after #cf;,b14 7#b7 ,the table of sections for subpart ,c of part ,,iv of subchapter ,a of chapter #a of the ,internal ,revenue ,code of #aihf is amended by inserting after the item relating to section #cf;,c the following new item3 ,sec4 #cf;,c4 ,financial security credit4 4 7c7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjae4 #d4 ,opening of accounts on ,federal income tax returns to facilitate savings 7a7 ,notification of option 7#a7 ,in general ,the ,commissioner of ,internal ,revenue shall notify individuals who may qualify for a credit under section #cf;,c of the ,internal ,revenue ,code of #aihf but fail to provide sufficient information to allow the ,secretary to deposit or contribute the credit amount to a designated savings product that they have the option of an electronic direct deposit and that they may be eligible for the financial security credit under section #cf;,c of such ,code if they deposit a refund or a portion of their refund in any designated savings product4 7#b7 ,method of notification ,the notification under paragraph 7#a7 shall be made through-- 7,a7 a public awareness program undertaken by the ,secretary of the ,treasury1 in concert with the ,commissioner of ,internal ,revenue and others as necessary1 beginning not later than #f months after the date of the enactment of this ,act2 7,b7 tax return preparers and low-income taxpayer clinics2 and 7,c7 the inclusion of such a notice in the instruction material for any ,federal income tax return4 7b7 ,establishment of designated account program ,the ,secretary of the ,treasury shall develop1 in consultation with the ,federal ,management ,system1 a program to minimize the delivery of non-electronic ,federal income tax refunds by depositing refunds electronically to a safe1 low-cost account held by a depository institution4 ,this program shall include-- 7#a7 provisions for such tax refunds to be deposited into a designated account2 7#b7 establishment of account parameters with respect to minimum balance requirements1 limitations on overdrafts1 overdraft fees1 other fees1 and additional requirements2 7#c7 establishment of means for the taxpayer to access the account electronically and to have timely1 direct access to the funds in the account2 and 7#d7 provisions to allow taxpayers to open an account with their ,federal income tax refunds through financial service providers1 so long such account is held at a depository institution insured under the ,federal ,deposit ,insurance ,act or a credit union insured under the ,federal ,credit ,union ,act4 7c7 ,effective date ,the notification under subsection 7a7 and the program under subsection 7b7 shall be effective with respect to ,federal income tax returns for taxable years beginning after ,december #ca1 #bjae4