II 

116TH CONGRESS 

1ST SESSION S. 527 

To amend the Internal Revenue Code of 1986 to modify the earned income 

tax credit to account for the amount by which economic growth has 

outpaced income growth, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 14, 2019 

Mr. BROWN introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to modify 

the earned income tax credit to account for the amount 

by which economic growth has outpaced income growth, 

and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Cost-of-Living Refund 

5 Act of 2019’’. 

6 SEC. 2. MODIFICATION OF EARNED INCOME TAX CREDIT. 

7 (a) IN GENERAL.— 


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1 (1) INCREASE IN CREDIT PERCENTAGE.—The 

2 table in section 32(b)(1) of the Internal Revenue 

3 Code of 1986 is amended— 

4 (A) by striking ‘‘7.65’’ in the second col5 umn (relating to credit percentage) and insert6 ing ‘‘30’’; 

7 (B) by striking ‘‘7.65’’ in the third column 

8 (relating to phaseout percentage) and inserting 

9 ‘‘15.98’’; 

10 (C) by striking ‘‘34’’ and inserting 

11 ‘‘65.28’’; 

12 (D) by striking ‘‘40’’ and inserting 

13 ‘‘76.80’’; and 

14 (E) by striking ‘‘45’’ and inserting 

15 ‘‘86.40’’. 

16 (2) EARNED INCOME AMOUNT AND PHASEOUT

17 AMOUNT.— 

18 (A) IN GENERAL.—Subparagraph (A) of 

19 section 32(b)(2) of such Code is amended by 

20 striking ‘‘Subject to subparagraph (B), the 

21 earned income amount and the phaseout 

22 amount’’ and inserting ‘‘Subject to subpara23 graph (B)— 

24 ‘‘(i) PHASEOUT AMOUNT.—The phase25 out amount is $18,340. 


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1 ‘‘(ii) EARNED INCOME AMOUNT.—The 

2 earned income amount’’. 

3 (B) CREDIT PHASE-IN ENDS.—Section 

4 32(b)(2)(A)(ii) of such Code, as amended by 

5 subparagraph (A), is further amended by strik6 ing the table and inserting the following: 

‘‘In the case of an The earned income 

eligible individual with: amount is: 

1 qualifying child ......................................................................... $10,000

2 or more qualifying children ...................................................... $14,040

No qualifying children ................................................................. $10,000.’’. 

7 (b) ELIGIBILITY AGE.—Subclause (II) of section 

8 32(c)(1)(A)(ii) of the Internal Revenue Code of 1986 is 

9 amended by striking ‘‘25’’ and inserting ‘‘21’’. 

10 (c) CONFORMING AND TECHNICAL AMENDMENT.— 

11 Paragraph (1) of section 32(j) of the Internal Revenue 

12 Code of 1986 is amended to read as follows: 

13 ‘‘(1) IN GENERAL.—In the case of any taxable 

14 year beginning after 2019, each of the dollar 

15 amounts in subsections (b)(2) and (i)(1) shall be in16 creased by an amount equal to— 

17 ‘‘(A) such dollar amount, multiplied by 

18 ‘‘(B) the cost-of-living adjustment deter19 mined under section 1(f)(3) for the calendar 

20 year in which the taxable year begins, deter21 mined by substituting in subparagraph (A)(ii) 

22 thereof— 


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1 ‘‘(i) in the case of amounts in sub2 section (b)(2)(A), by substituting ‘calendar 

3 year 2018’ for ‘calendar year 2016’, and 

4 ‘‘(ii) in the case of amounts in sub5 section (i)(1), by substituting ‘calendar 

6 year 1995’ for ‘calendar year 2016’.’’. 

7 (d) EFFECTIVE DATE.—The amendments made by 

8 this section shall apply to taxable years beginning after 

9 December 31, 2018. 

10 SEC. 3. EXPANSION OF EARNED INCOME TAX CREDIT. 

11 (a) INCLUSION OF INDIVIDUALS WITH QUALIFYING

12 DEPENDENTS.— 

13 (1) IN GENERAL.—Section 32(c)(1) of the In14 ternal Revenue Code of 1986 is amended— 

15 (A) in subparagraph (A), by striking 

16 ‘‘qualifying child’’ each place such term appears 

17 and inserting ‘‘qualifying dependent’’, and 

18 (B) by striking subparagraphs (B) and (F) 

19 and by redesignating subparagraphs (C), (D), 

20 and (E) as subparagraphs (B), (C), and (D), 

21 respectively. 

22 (2) QUALIFYING DEPENDENT DEFINED.—Sec23 tion 32(c) of such Code is amended by redesignating 

24 paragraphs (3) and (4) as paragraphs (4) and (5), 


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1 respectively, and by inserting after paragraph (2) 

2 the following: 

3 ‘‘(3) QUALIFYING DEPENDENT.— 

4 ‘‘(A) IN GENERAL.—The term ‘qualifying 

5 dependent’ means, with respect to a taxable 

6 year— 

7 ‘‘(i) a qualifying child, 

8 ‘‘(ii) a dependent for whom a deduc9 tion is allowable under section 151 who— 

10 ‘‘(I) has attained the age of 65 

11 before the close of the taxable year, or 

12 ‘‘(II) is an individual described in 

13 section 21(b)(1)(B), or 

14 ‘‘(iii) an individual described in sec15 tion 21(b)(1)(C). 

16 ‘‘(B) IDENTIFICATION REQUIREMENTS.— 

17 No credit shall be allowed under this section 

18 with respect to a qualifying dependent unless 

19 the taxpayer includes the name, age, and TIN 

20 of the individual on the return of tax for the 

21 taxable year. 

22 ‘‘(C) PLACE OF ABODE.—The term ‘quali23 fying dependent’ shall not include an individual 

24 unless such individual has a principal place of 


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1 abode in the United States for more than one2 half of such taxable year.’’. 

3 (3) CONFORMING AMENDMENTS.— 

4 (A) The tables in paragraphs (1) and (2) 

5 of section 32(b) of such Code are each amend6 ed— 

7 (i) by striking ‘‘qualifying child’’ each 

8 place it appears and inserting ‘‘qualifying 

9 dependent’’, and 

10 (ii) by striking ‘‘qualifying children’’ 

11 each place it appears and inserting ‘‘quali12 fying dependents’’. 

13 (B) Section 32(c)(4) of such Code, as re14 designated by this Act, is amended by striking 

15 subparagraphs (C) and (D). 

16 (C) Section 32(m) of such Code is amend17 ed by striking ‘‘subsections (c)(1)(E) and 

18 (c)(3)(D)’’ and inserting ‘‘subsections (c)(1)(D) 

19 and (c)(3)(B)’’. 

20 (b) INCLUSION OF QUALIFYING STUDENTS.— 

21 (1) IN GENERAL.—Section 32(c)(1)(A) of such 

22 Code is amended by striking ‘‘or’’ at the end of 

23 clause (i), by striking the period at the end of clause 

24 (ii)(III) and inserting ‘‘, or’’, and by inserting after 

25 clause (ii)(III) the following new clause: 


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1 ‘‘(iii) any individual who is a quali2 fying student.’’. 

3 (2) QUALIFYING STUDENT DEFINED.—Section 

4 32(c)(1) of such Code, as amended by subsection 

5 (a), is further amended by adding at the end the fol6 lowing new subparagraph: 

7 ‘‘(E) QUALIFYING STUDENT.— 

8 ‘‘(i) IN GENERAL.—The term ‘quali9 fying student’ means, with respect to a 

10 taxable year, an individual who is an eligi11 ble student (as defined in section 

12 25A(b)(3)) with respect to an institution of 

13 higher education (as defined in section 101 

14 of the Higher Education Act of 1965) 

15 who— 

16 ‘‘(I)(aa) has qualified for a Fed17 eral Pell Grant with respect to the 

18 academic year beginning in such tax19 able year, or 

20 ‘‘(bb) whose modified adjusted 

21 gross income (as defined in section 

22 24(b)(1)) is less than 250 percent of 

23 the poverty line (defined in section 

24 529A(b)(7)(B)) as for the size of the 


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1 family involved for the taxable year, 

2 and 

3 ‘‘(II) is not a dependent for 

4 whom a deduction is allowable under 

5 section 151 to another taxpayer for 

6 any taxable year beginning in the 

7 same calendar year as such taxable 

8 year. 

9 ‘‘(ii) FAMILY SIZE.—For purposes of 

10 this subparagraph, in determining the pov11 erty line applicable to the taxpayer, the 

12 family size with respect to such taxpayer 

13 shall be equal to the number of individuals 

14 for whom such taxpayer is allowed a de15 duction under section 151 for the taxable 

16 year.’’. 

17 (3) CONFORMING AMENDMENT.—Section 

18 32(c)(1)(A)(ii) of such Code is amended by inserting 

19 ‘‘(other than a qualifying student)’’ after ‘‘any other 

20 individual’’. 

21 (c) MINIMUM CREDIT FOR STUDENTS AND FOR INDI22 VIDUALS WITH CERTAIN QUALIFYING DEPENDENTS.— 

23 Section 32(a) of such Code is amended by adding at the 

24 end the following new paragraph: 


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1 ‘‘(3) MINIMUM CREDIT FOR STUDENTS AND

2 FOR INDIVIDUALS WITH CERTAIN QUALIFYING DE3 PENDENTS.— 

4 ‘‘(A) IN GENERAL.—In the case of an eligi5 ble individual who is a qualifying student or 

6 who has a specified dependent for the taxable 

7 year, the amount determined under paragraph 

8 (1) (before the application of paragraph (2)) 

9 and the amount determined under paragraph 

10 (2)(A) shall not be less than $1,200. 

11 ‘‘(B) SPECIFIED DEPENDENT.—For pur12 poses of this paragraph, the term ‘specified de13 pendent’ means any qualifying dependent (other 

14 than a qualifying child who has attained the 

15 age of 7 before the close of the taxable year).’’. 

16 (d) EFFECTIVE DATE.—The amendments made by 

17 this section shall apply to taxable years beginning after 

18 the date of the enactment of this Act. 

19 SEC. 4. ADVANCE PAYMENT OF EARNED INCOME CREDIT. 

20 (a) IN GENERAL.—Chapter 25 of subtitle C of the 

21 Internal Revenue Code of 1986 is amended by inserting 

22 after section 3506 the following new section: 

23 ‘‘SEC. 3507. ADVANCE PAYMENT OF EARNED INCOME CRED24 IT. 

25 ‘‘(a) ADVANCE PAYMENT.— 


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1 ‘‘(1) IN GENERAL.—An employer making pay2 ment of wages to an employee with respect to whom 

3 an eligibility certificate is in effect shall, at the time 

4 of paying such wages for the payroll period elected 

5 by the employee under paragraph (2), make an addi6 tional lump sum payment to such employee equal to 

7 the earned income advance amount (except as pro8 vided in subsection (b)(1)(C)(ii)) of such employee. 

9 ‘‘(2) PAYMENTS AVAILABLE AFTER 6 MONTHS

10 OF EMPLOYMENT DURING CALENDAR YEAR.—For 

11 purposes of paragraph (1), an employee with respect 

12 to whom an eligibility certificate is in effect for the 

13 calendar year may elect to receive the earned income 

14 advance amount at the same time as wages for any 

15 payroll period which begins after the employee has 

16 been paid wages by the employer for a period of not 

17 less than 6 months during such calendar year. 

18 ‘‘(b) ELIGIBILITY CERTIFICATE.— 

19 ‘‘(1) IN GENERAL.—For purposes of this sec20 tion, an eligibility certificate is a statement sub21 mitted by an employee to the employer which— 

22 ‘‘(A) certifies that the employee is eligible 

23 to receive the credit provided by section 32 for 

24 the taxable year, 


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1 ‘‘(B) certifies that the employee does not 

2 have an eligibility certificate in effect for the 

3 calendar year with respect to the payment of 

4 wages by another employer, and 

5 ‘‘(C) certifies that— 

6 ‘‘(i) an eligibility certificate has not 

7 been in effect for the spouse of the em8 ployee on any date during the calendar 

9 year, or 

10 ‘‘(ii) such a certificate is in effect for 

11 the spouse of the employee, and the employee is eligible to receive only 1 12 ⁄2 the 

13 earned income advance amount otherwise 

14 determined with respect to the employee. 

15 ‘‘(2) EMPLOYER NOT RESPONSIBLE FOR

16 VERIFICATION.—For purposes of this section, an 

17 employer shall not— 

18 ‘‘(A) be required to verify any certification 

19 made by an employee in the statement de20 scribed in paragraph (1), or 

21 ‘‘(B) be held liable for any false claims or 

22 statements made by an employee in regards to 

23 such statement. 

24 ‘‘(c) EARNED INCOME ADVANCE AMOUNT.— 

25 ‘‘(1) DETERMINATION OF AMOUNT.— 


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1 ‘‘(A) IN GENERAL.—Subject to subpara2 graph (B), the term ‘earned income advance 

3 amount’ means, with respect to any payroll pe4 riod, the amount of the credit provided under 

5 section 32 as determined— 

6 ‘‘(i) on the basis of the wages of the 

7 employee from the employer during such 

8 calendar year through such payroll period, 

9 and 

10 ‘‘(ii) in accordance with tables issued 

11 by the Secretary. 

12 ‘‘(B) LIMITATION.—For each calendar 

13 year, except as provided in subparagraph (C), 

14 the earned income advance amount shall not ex15 ceed $500. 

16 ‘‘(C) ADJUSTMENT FOR INFLATION.— 

17 ‘‘(i) IN GENERAL.—In the case of any 

18 taxable year beginning after 2021, the 

19 $500 amount in subparagraph (B) shall be 

20 increased by an amount equal to— 

21 ‘‘(I) such dollar amount, multi22 plied by 

23 ‘‘(II) the cost-of-living adjust24 ment determined under section 1(f)(3) 

25 for the calendar year in which the taxVerDate Sep 11 2014 04:20 Feb 23, 2019 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S527.IS S527

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1 able year begins determined by sub2 stituting ‘calendar year 2020’ for ‘cal3 endar year 2016’ in subparagraph 

4 (A)(ii) thereof. 

5 ‘‘(ii) ROUNDING.—If any increase de6 termined under paragraph (1) is not a 

7 multiple of $10, such increase shall be 

8 rounded to the nearest multiple of $10. 

9 ‘‘(2) ARMED FORCES.—In the case of an em10 ployee who is a member of the Armed Forces of the 

11 United States, the earned income advance amount 

12 shall be determined by taking into account the total 

13 wages of such employee, as determined for purposes 

14 of section 32. 

15 ‘‘(3) ADVANCE AMOUNT TABLES.—For pur16 poses of paragraph (1)(A)(ii), the tables issued by 

17 the Secretary shall be similar in form to the tables 

18 issued under section 3402 and, to the extent fea19 sible, coordinated with such tables. 

20 ‘‘(d) PAYMENTS TO BE TREATED AS PAYMENTS OF

21 WITHHOLDING AND FICA TAXES.— 

22 ‘‘(1) IN GENERAL.—Payments made by an em23 ployer under subsection (a) to an employee— 

24 ‘‘(A) shall not be treated as payment of 

25 compensation, and 


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1 ‘‘(B) shall be treated as made out of— 

2 ‘‘(i) amounts required to be deducted 

3 and withheld for the payroll period under 

4 section 3401, 

5 ‘‘(ii) amounts required to be deducted 

6 for the payroll period under section 3102, 

7 and 

8 ‘‘(iii) amounts of the taxes imposed 

9 for the payroll period under section 3111, 

10 as if the employer had paid to the Secretary, on 

11 the day on which the wages are paid to the em12 ployee, an amount equal to such payments. 

13 ‘‘(2) ADVANCE PAYMENTS EXCEED TAXES

14 DUE.—In the case of any employer, if for any pay15 roll period the aggregate amount of earned income 

16 advance payments exceeds the sum of the amounts 

17 referred to in paragraph (1)(B), the employer shall 

18 pay only so much of such earned income advance 

19 payment as does not exceed such sum, and shall not 

20 make any further advance payments to the employee 

21 for the calendar year. 

22 ‘‘(3) FAILURE TO MAKE ADVANCE PAY23 MENTS.—Failure to make any payment of an earned 

24 income advance amount as required under this sec25 tion shall be treated as the failure at such time to 


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1 deduct and withhold under chapter 24 an amount 

2 equal to the earned income advance amount. 

3 ‘‘(e) SUBMISSION OF CERTIFICATE.— 

4 ‘‘(1) EFFECTIVE PERIOD.—An eligibility certifi5 cate submitted to an employer at any time during 

6 the calendar year shall continue in effect with re7 spect to the employee during such calendar year 

8 until revoked by the employee or until another such 

9 certificate takes effect under this section. 

10 ‘‘(2) REQUIREMENT TO REVOKE CERTIFI11 CATE.—In the case of an employee who has sub12 mitted an eligibility certificate under this section and 

13 subsequently becomes ineligible for the credit pro14 vided under section 32 for the taxable year, the em15 ployee shall, not later than 10 days after becoming 

16 ineligible for such credit, submit to the employer a 

17 revocation of such certificate. 

18 ‘‘(3) FORM AND CONTENTS OF CERTIFICATE.— 

19 Eligibility certificates shall be in such form and con20 tain such other information as the Secretary may by 

21 regulations prescribe. 

22 ‘‘(f) TAXPAYERS MAKING PRIOR FRAUDULENT OR

23 RECKLESS CLAIMS.— 


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1 ‘‘(1) IN GENERAL.—No earned income advance 

2 amount shall be paid under this section for any tax3 able year in the disallowance period. 

4 ‘‘(2) DISALLOWANCE PERIOD.—For purposes of 

5 paragraph (1), the disallowance period is— 

6 ‘‘(A) the period of 10 taxable years after 

7 the most recent taxable year for which there 

8 was a final determination that the taxpayer’s 

9 claim of an earned income advance amount 

10 under this section was due to fraud, and 

11 ‘‘(B) the period of 2 taxable years after 

12 the most recent taxable year for which there 

13 was a final determination that the taxpayer’s 

14 claim of an earned income advance amount 

15 under this section was due to reckless or inten16 tional disregard of rules and regulations (but 

17 not due to fraud). 

18 ‘‘(g) TAXABLE YEAR.—The term ‘taxable year’ 

19 means the last taxable year of the employee under subtitle 

20 A beginning in the calendar year in which the wages are 

21 paid. 

22 ‘‘(h) IRS NOTIFICATION.—The Internal Revenue 

23 Service shall take such steps as may be appropriate to en24 sure that taxpayers who receive a refund of the credit 


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1 under section 32 are aware of the availability of earned 

2 income advance amounts under this section.’’. 

3 (b) COORDINATION WITH ADVANCE PAYMENTS.— 

4 Section 32 of the Internal Revenue Code of 1986 is 

5 amended by inserting after subsection (f) the following 

6 new subsection: 

7 ‘‘(g) COORDINATION WITH ADVANCE PAYMENTS OF

8 EARNED INCOME CREDIT.— 

9 ‘‘(1) RECAPTURE OF ADVANCE PAYMENTS.—If 

10 any payment is made to the individual by an em11 ployer under section 3507 during any calendar year, 

12 then the tax imposed by this chapter for the individ13 ual’s last taxable year beginning in such calendar 

14 year shall be increased by the aggregate amount of 

15 such payments. 

16 ‘‘(2) RECONCILIATION OF PAYMENTS AD17 VANCED AND CREDIT ALLOWED.—Any increase in 

18 tax under paragraph (1) shall not be treated as tax 

19 imposed by this chapter for purposes of determining 

20 the amount of any credit (other than the credit al21 lowed by subsection (a)) allowable under this part.’’. 

22 (c) FILING REQUIREMENT.—Section 6012(a) of the 

23 Internal Revenue Code of 1986 is amended— 

24 (1) in paragraph (7), by striking ‘‘and’’ at the 

25 end, 


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1 (2) in paragraph (8), by adding ‘‘and’’ at the 

2 end, and 

3 (3) by inserting after paragraph (8) the fol4 lowing new paragraph: 

5 ‘‘(9) Every individual who receives payments 

6 during the calendar year in which the taxable year 

7 begins under section 3507;’’. 

8 (d) RECEIPTS FOR EMPLOYEES.—Section 6051(a) of 

9 the Internal Revenue Code of 1986 is amended by insert10 ing after paragraph (6) the following new paragraph: 

11 ‘‘(7) the total amount paid to the employee 

12 under section 3507 (relating to advance payment of 

13 earned income credit),’’. 

14 (e) CLERICAL AMENDMENT.—The table of sections 

15 for chapter 25 of subtitle C of the Internal Revenue Code 

16 of 1986 is amended by inserting after the item relating 

17 to section 3506 the following new item: 

‘‘Sec. 3507. Advance payment of earned income credit.’’. 

18 (f) EFFECTIVE DATE.—The amendments made by 

19 this section shall apply to taxable years beginning after 

20 December 31, 2020. 

Æ 


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