,i #aahth ,,congress #ast ,session ,h4 ,r4 #edba ,,in ,,the ,,house ,,of ,,representatives ,september #ab1 #bjbc,mrs4 ,watson ,coleman 7for herself1 ,mr4 ,carter of ,louisiana1 ,ms4 ,lee of ,california1 and ,ms4 ,adams7 introduced the following bill2 which was referred to the ,committee on ,ways and ,means ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to extend the earned income tax credit to all taxpayers with dependents and to qualifying students1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,,eitc ,modernization ,act4 #b4 ,findings ,congress finds the following3 7#a7 ,the ,federal earned income tax credit is a refundable tax credit for lower- and middle-income working individuals and families whose earnings are below an income threshold4 7#b7 ,since its establishment in #aige1 the credit has increased family income1 reduced child poverty1 and promoted employment by supplementing the earnings of low-wage workers1 including military families4 7#c7 ,the credit has a positive impact on the education and health of children living in poverty4 7#d7 ,the credit has a positive economic impact on local economies and businesses because it puts more money in the hands of low- and middle-income working people who spend the money on immediate needs1 such as groceries1 school supplies1 car repairs1 rent1 and health care4 7#e7 ,the widening gap between the incomes of the wealthiest ,americans and those of middle- and lower-income ,americans is alarming4 7#f7 ,there is an urgent need to address that gap1 including through measures like this legislation and by raising the ,federal minimum wage which together increase the wages of working ,americans1 widen the path to income stability1 and narrow income inequality4 #c4 ,modifications of the earned income tax credit 7a7 ,inclusion of individuals with qualifying dependents 7#a7 ,in general ,section #cb7;c77#a7 of the ,internal ,revenue ,code of #aihf is amended-- 7,a7 in subparagraph 7,a71 by striking qualifying child each place such term appears and inserting qualifying dependent1 and 7,b7 by striking subparagraphs 7,b7 and 7,f7 and by redesignating subparagraphs 7,c71 7,d71 and 7,e7 as subparagraphs 7,b71 7,c71 and 7,d71 respectively4 7#b7 ,qualifying dependent defined ,section #cb7;c7 of such ,code is amended by redesignating paragraphs 7#c7 and 7#d7 as paragraphs 7#e7 and 7#f71 and by inserting after paragraph 7#b7 the following new paragraphs3 7#c7 ,qualifying dependent 7,a7 ,in general ,the term qualifying dependent means1 with respect to a taxable year-- 7i7 a qualifying child1 7ii7 an aged dependent1 or 7iii7 a qualifying individual described in subparagraph 7,b7 or 7,c7 of section #ba7;b77#a74 7,b7 ,identification requirements ,no credit shall be allowed under this section with respect to a qualifying dependent unless the taxpayer includes the name1 age1 and ,,tin of the individual on the return of tax for the taxable year4 7,c7 ,place of abode ,the term qualifying dependent shall not include an individual unless such individual has a principal place of abode in the ,united ,states for more than one-half of such taxable year4 7#d7 ,aged dependent ,the term aged dependent means a dependent for whom a deduction is allowable under section #aea who has attained the age of #fe before the close of the taxable year4 4 7#c7 ,conforming amendments 7,a7 ,the tables in paragraphs 7#a7 and 7#b7 of section #cb7;b7 of such ,code are each amended-- 7i7 by striking qualifying child each place it appears and inserting qualifying dependent1 and 7ii7 by striking qualifying children each place it appears and inserting qualifying dependents4 7,b7 ,section #cb7;c77#e7 of such ,code1 as redesignated by this ,act1 is amended by striking subparagraphs 7,c7 and 7,d74 7,c7 ,section #cb7m7 of such ,code is amended by striking 7c77#c77;,d7 and inserting 7c77#c77;,b74 7b7 ,inclusion of qualifying students 7#a7 ,in general ,section #cb7;c77#a77;,a7 of such ,code is amended by striking or at the end of clause 7i71 by striking the period at the end of clause 7ii77,,iii7 and inserting 1 or1 and by inserting after clause 7ii77,,iii7 the following new clause3 7iii7 any individual who is a qualifying student4 4 7#b7 ,qualifying student defined ,section #cb7;c77#a7 of such ,code1 as amended by subsection 7a71 is further amended by adding at the end the following new subparagraph3 7,e7 ,qualifying student ,the term qualifying student means1 with respect to a taxable year1 an individual who is an eligible student 7as defined in section #be;,a7b77#c77 with respect to an institution of higher education 7as defined in section #aja of the ,higher ,education ,act of #aife7 who-- 7i7 is not a dependent for whom a deduction is allowable under section #aea to another taxpayer for any taxable year beginning in the same calendar year as such taxable year1 and 7ii7 either-- 7,i7 is qualified for a ,federal ,pell ,grant with respect to the academic year beginning in such taxable year1 or 7,,ii7 has modified adjusted gross income of less than #bej percent of the poverty line for the size of the family involved for the taxable year4 7,f7 ,definitions ,for purposes of this subparagraph3 7i7 ,modified adjusted gross income ,the term modified adjusted gross income means the adjusted gross income of the taxpayer for the taxable year increased by any amount excluded from gross income under section #iaa1 #ica1 or #icc4 7ii7 ,poverty line 7,i7 ,in general ,the term poverty line has the meaning given such term in section #fgc7b7 of the ,community ,services ,block ,grant ,act 7#db ,u4,s4,c4 #iijb7b771 including any revision required by such section4 7,,ii7 ,family size ,for purposes of determining the poverty line applicable to the taxpayer1 the family size with respect to any taxpayer shall be equal to the number of individuals for whom the taxpayer is allowed a deduction under section #aea 7relating to allowance of deduction for personal exemptions7 for the taxable year4 4 7#c7 ,conforming amendment ,section #cb7;c77#a77;,a77ii7 of such ,code is amended by inserting 7other than a qualifying student7 after any other individual4 7c7 ,minimum credit for students and for individuals with certain qualifying dependents ,section #cb7;a7 of such ,code is amended by adding at the end the following new paragraph3 7#c7 ,minimum credit for students and for individuals with certain qualifying dependents 7,a7 ,in general ,in the case of a qualifying student1 or an eligible individual who has a specified dependent for the taxable year1 the amount determined under paragraph 7#a7 7before the application of paragraph 7#b77 and the amount determined under paragraph 7#b77;,a7 shall not be less than #a1bjj4 7,b7 ,specified dependent ,for purposes of this paragraph1 the term specified dependent means any qualifying dependent 7other than a qualifying child who has attained the age of #g before the close of the taxable year74 4 7d7 ,monthly payment ,section #cb of such ,code1 as amended by this ,act1 is further amended by adding at the end the following new subsection3 7n7 ,monthly payment 7#a7 ,in general ,in the case of an individual who is entitled to a refund relating to an overpayment of tax imposed by this subtitle that exceeds #bdj 7but only to the extent such refund does not exceed the credit allowed under this section7 such individual may elect to have the ,secretary1 in lieu of such refund1 make a payment equal to-- 7,a7 #b_/ac of such refund 7with interest7 during the earlier of the first practicable month or the second month that begins after the date the return was filed1 and 7,b7 #a_/ac of such refund 7with interest7 during each of the #aa months subsequent to the month determined under subparagraph 7,a74 7#b7 ,method of payment ,a payment made under this subsection shall be made by direct deposit or by general-use prepaid card1 or by such other method 7other than by check7 as the ,secretary may prescribe and the taxpayer may elect4 7#c7 ,one-time increase ,the first time an individual receives a payment under this subsection1 paragraph 7#a77;,a7 shall be applied by substituting #d_/ac for #b_/ac4 4 7e7 ,special rule for new low-,income parents ,section #cb of such ,code1 as amended by this ,act1 is further amended by adding at the end the following new subsection3 7o7 ,special rule for new low-,income parents 7#a7 ,in general ,in the case of an individual who-- 7,a7 is eligible for payments under subsection 7o77#a7 with respect to a refund for a taxable year1 and 7,b7 has a qualifying child who is born or adopted during the following taxable year and not later than the penultimate month for which the taxpayer is eligible for such payments1 the amount of any such payments made after such birth or adoption shall be adjusted to the amount such payments would be if such qualifying child were a qualifying child of the taxpayer under this section for the taxable year to which such payments relate4 7#b7 ,qualifying child determination ,for purposes of determining if a child is a qualifying child for purposes of this subsection1 subsection 7m7 shall be applied by inserting or1 in the case of an adoption1 such other identifying information as specified by the ,secretary before the period at the end4 4 7f7 ,age of eligible individuals without dependents ,section #cb7;c77#a77;,a77ii77,,ii7 of such ,code is amended by striking age #be but not attained age #fe and inserting age #ah4 7g7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after the date of the enactment of this ,act4 #d4 ,return preparation programs for low-income taxpayers 7a7 ,in general ,chapter #gg of such ,code is amended by inserting after section #gebf;,a the following new section3 #gebf;,b4 ,return preparation programs for low-income taxpayers 7a7 ,establishment of volunteer income tax assistance matching grant program ,the ,secretary1 through the ,internal ,revenue ,service1 shall establish a ,community ,volunteer ,income ,tax ,assistance ,matching ,grant ,program under which the ,secretary may1 subject to the availability of appropriated funds1 make grants to provide matching funds for the development1 expansion1 or continuation of qualified return preparation programs assisting low-income taxpayers and members of underserved populations4 7b7 ,use of funds 7#a7 ,in general ,qualified return preparation programs may use grants received under this section for-- 7,a7 ordinary and necessary costs associated with program operation in accordance with cost principles under the applicable ,office of ,management and ,budget circular1 including-- 7i7 wages or salaries of persons coordinating the activities of the program1 7ii7 developing training materials1 conducting training1 and performing quality reviews of the returns prepared under the program1 7iii7 equipment purchases1 and 7iv7 vehicle-related expenses associated with remote or rural tax preparation services1 7,b7 outreach and educational activities described in subsection 7c77#b77;,b71 and 7,c7 services related to financial education and capability1 asset development1 and the establishment of savings accounts in connection with tax return preparation4 7#b7 ,use of grants for overhead expenses prohibited ,no grant received under this section may be used for overhead expenses that are not directly related to a qualified return preparation program4 7c7 ,application 7#a7 ,in general ,each applicant for a grant under this section shall submit an application to the ,secretary at such time1 in such manner1 and containing such information as the ,secretary may reasonably require4 7#b7 ,priority ,in awarding grants under this section1 the ,secretary shall give priority to applications which demonstrate-- 7,a7 assistance to low-income taxpayers1 with emphasis on outreach to1 and services for1 such taxpayers1 7,b7 taxpayer outreach and educational activities relating to eligibility and availability of income supports available through the ,internal ,revenue ,code of #aihf1 including the earned income tax credit1 and 7,c7 specific outreach and focus on one or more underserved populations4 7#c7 ,amounts taken into account ,in determining matching grants under this section1 the ,secretary shall only take into account amounts provided by the qualified return preparation program for expenses described in subsection 7b74 7d7 ,accuracy reviews 7#a7 ,in general ,the ,secretary shall establish procedures for1 and shall conduct1 periodic site visits of qualified return preparation programs operating under a grant under this section-- 7,a7 to ensure such programs are carrying out the purposes of this section1 and 7,b7 to determine the return preparation accuracy rate of the program4 7#b7 ,additional requirements for grant recipients not meeting minimum standards ,in the case of any qualified return preparation program which-- 7,a7 is awarded a grant under this section1 and 7,b7 is subsequently determined-- 7i7 to have a less than #ij percent average accuracy rate for preparation of tax returns1 or 7ii7 not to be otherwise carrying out the purposes of this section1 such program shall not be eligible for any additional grants under this section unless such program provides sufficient documentation of corrective measures established to address any such deficiencies determined4 7e7 ,definitions ,for purposes of this section-- 7#a7 ,qualified return preparation program ,the term qualified return preparation program means any program-- 7,a7 which provides assistance to individuals1 not less than #ij percent of whom are low-income taxpayers1 in preparing and filing ,federal income tax returns1 7,b7 which is administered by a qualified entity1 7,c7 in which all volunteers who assist in the preparation of ,federal income tax returns meet the training requirements prescribed by the ,secretary1 and 7,d7 which uses a quality review process which reviews #ajj percent of all returns4 7#b7 ,qualified entity 7,a7 ,in general ,the term qualified entity means any entity which-- 7i7 is an eligible organization1 7ii7 is in compliance with ,federal tax filing and payment requirements1 7iii7 is not debarred or suspended from ,federal contracts1 grants1 or cooperative agreements1 and 7iv7 agrees to provide documentation to substantiate any matching funds provided pursuant to the grant program under this section4 7,b7 ,eligible organization ,the term eligible organization means-- 7i7 an institution of higher education which is described in section #ajb 7other than subsection 7a77#a77;,c7 thereof7 of the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajjb71 as in effect on the date of the enactment of this section1 and which has not been disqualified from participating in a program under title ,,iv of such ,act1 7ii7 an organization described in section #eja7;c7 and exempt from tax under section #eja7;a71 7iii7 a local government agency1 including-- 7,i7 a county or municipal government agency1 and 7,,ii7 an ,indian tribe1 as defined in section #d7ac7 of the ,native ,american ,housing ,assistance and ,self-,determination ,act of #aiif 7#be ,u4,s4,c4 #dajc7ac771 including any tribally designated housing entity 7as defined in section #d7bb7 of such ,act 7#be ,u4,s4,c4 #dajc7bb7771 tribal subsidiary1 subdivision1 or other wholly owned tribal entity1 7iv7 a local1 ,state1 regional1 or national coalition 7with one lead organization which meets the eligibility requirements of clause 7i71 7ii71 or 7iii7 acting as the applicant organization71 or 7v7 in the case of a targeted population or community with respect to which no organizations described in the preceding clauses are available-- 7,i7 a ,state government agency1 or 7,,ii7 an office providing ,cooperative ,extension services 7as established at the land-grant colleges and universities under the ,smith-,lever ,act of ,may #h1 #aiad74 7#c7 ,low-income taxpayers ,the term low-income taxpayer means a taxpayer whose income for the taxable year does not exceed an amount equal to the completed phaseout amount under section #cb7;b7 for a married couple filing a joint return with #c or more qualifying children1 as determined in a revenue procedure or other published guidance4 7#d7 ,underserved population ,the term underserved population includes populations of persons with disabilities1 persons with limited ,english proficiency1 ,native ,americans1 individuals living in rural areas1 members of the ,armed ,forces and their spouses1 and the elderly4 7f7 ,special rules and limitations 7#a7 ,duration of grants ,upon application of a qualified return preparation program1 the ,secretary is authorized to award a multi-year grant not to exceed #c years4 7#b7 ,aggregate limitation ,unless otherwise provided by specific appropriation1 the ,secretary shall not allocate more than #cj1jjj1jjj per fiscal year 7exclusive of costs of administering the program7 to grants under this section4 7g7 ,promotion and referral 7#a7 ,promotion ,the ,secretary shall promote tax preparation through qualified return preparation programs through the use of mass communications1 referrals1 and other means4 7#b7 ,internal revenue service referrals ,the ,secretary may refer taxpayers to qualified return preparation programs receiving grants under this section4 7#c7 ,vita grantee referral ,qualified return preparation programs receiving a grant under this section are encouraged to refer1 as appropriate1 to local or regional ,low-,income ,taxpayer ,clinics individuals who are eligible for such clinics4 4 7b7 ,clerical amendment ,the table of sections for chapter #gg is amended by inserting after the item relating to section #gebf;,a the following new item3 #gebf;,b4 ,return preparation programs for low-income taxpayers4 4 7c7 ,effective date ,the amendments made by this section shall apply with respect to taxable years beginning after the date of enactment of this ,act4