II 

109TH CONGRESS 

1ST SESSION S. 324 

To provide additional protections for recipients of the earned income tax 

credit. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 9, 2005 

Mr. AKAKA (for himself, Mr. BINGAMAN, Mr. SARBANES, Mr. DAYTON, and 

Mr. DURBIN) introduced the following bill; which was read twice and referred to the Committee on Finance 

A BILL

To provide additional protections for recipients of the earned 

income tax credit.

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 ‘‘Taxpayer Abuse Pre5 vention Act’’. 

6 SEC. 2. PREVENTION OF DIVERSION OF EARNED INCOME 

7 TAX CREDIT BENEFITS. 

8 (a) IN GENERAL.—Section 32 of the Internal Rev9 enue Code of 1986 (relating to earned income tax credit) 
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1 is amended by adding at the end the following new sub2 section: 

3 ‘‘(n) PREVENTION OF DIVERSION OF CREDIT BENE4 FITS.—The right of any individual to any future payment 

5 of the credit under this section shall not be transferable 

6 or assignable, at law or in equity, and such right or any 

7 moneys paid or payable under this section shall not be 

8 subject to any execution, levy, attachment, garnishment, 

9 offset, or other legal process except for any outstanding 

10 Federal obligation. Any waiver of the protections of this 

11 subsection shall be deemed null, void, and of no effect.’’. 

12 (b) EFFECTIVE DATE.—The amendment made by 

13 this section shall take effect on the date of the enactment 

14 of this Act. 

15 SEC. 3. PROHIBITION ON DEBT COLLECTION OFFSET. 

16 (a) IN GENERAL.—No person shall, directly or indi17 rectly, individually or in conjunction or in cooperation with 

18 another person, engage in the collection of an outstanding 

19 or delinquent debt for any creditor or assignee by means 

20 of soliciting the execution of, processing, receiving, or ac21 cepting an application or agreement for a refund anticipa22 tion loan or refund anticipation check that contains a pro23 vision permitting the creditor to repay, by offset or other 

24 means, an outstanding or delinquent debt for that creditor 

25 from the proceeds of the debtor’s Federal tax refund. 
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1 (b) REFUND ANTICIPATION LOAN.—For purposes of 

2 subsection (a), the term ‘‘refund anticipation loan’’ means 

3 a loan of money or of any other thing of value to a tax4 payer because of the taxpayer’s anticipated receipt of a 

5 Federal tax refund. 

6 (c) EFFECTIVE DATE.—This section shall take effect 

7 on the date of the enactment of this Act. 

8 SEC. 4. PROHIBITION OF MANDATORY ARBITRATION. 

9 (a) IN GENERAL.—Any person that provides a loan 

10 to a taxpayer that is linked to or in anticipation of a Fed11 eral tax refund for the taxpayer may not include manda12 tory arbitration of disputes as a condition for providing 

13 such a loan. 

14 (b) EFFECTIVE DATE.—This section shall apply to 

15 loans made after the date of the enactment of this Act. 

16 SEC. 5. TERMINATION OF DEBT INDICATOR PROGRAM. 

17 The Secretary of the Treasury shall terminate the 

18 Debt Indicator program announced in Internal Revenue 

19 Service Notice 99–58. 

20 SEC. 6. DETERMINATION OF ELECTRONIC FILING GOALS. 

21 (a) IN GENERAL.—Any electronically filed Federal 

22 tax returns, that result in Federal tax refunds that are 

23 distributed by refund anticipation loans, shall not be taken 

24 into account in determining if the goals required under 

25 section 2001(a)(2) of the Restructuring and Reform Act 
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1 of 1998 that the Internal Revenue Service have at least 

2 80 percent of all such returns filed electronically by 2007 

3 are achieved. 

4 (b) REFUND ANTICIPATION LOAN.—For purposes of 

5 subsection (a), the term ‘‘refund anticipation loan’’ means 

6 a loan of money or of any other thing of value to a tax7 payer because of the taxpayer’s anticipated receipt of a 

8 Federal tax refund. 

9 SEC. 7. EXPANSION OF ELIGIBILITY FOR ELECTRONIC 

10 TRANSFER ACCOUNTS. 

11 (a) IN GENERAL.—The last sentence of section 

12 3332(j) of title 31, United States Code, is amended by 

13 inserting ‘‘other than any payment under section 32 of 

14 such Code’’ after ‘‘1986’’. 

15 (b) EFFECTIVE DATE.—The amendment made by 

16 this section shall apply to payments made after the date 

17 of the enactment of this Act. 

18 SEC. 8. PROGRAM TO ENCOURAGE THE USE OF THE AD19 VANCE EARNED INCOME TAX CREDIT. 

20 (a) IN GENERAL.—Not later than 6 months after the 

21 date of the enactment of this Act, the Secretary of the 

22 Treasury shall, after consultation with such private, non23 profit, and governmental entities as the Secretary deter24 mines appropriate, develop and implement a program to 
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1 encourage the greater utilization of the advance earned in2 come tax credit. 

3 (b) REPORTS.—Not later than the date of the imple4 mentation of the program described in subsection (a), and 

5 annually thereafter, the Secretary of the Treasury shall 

6 report to the Committee on Finance of the Senate and 

7 the Committee on Ways and Means of the House of Rep8 resentatives on the elements of such program and progress 

9 achieved under such program. 

10 (c) AUTHORIZATION OF APPROPRIATIONS.—There is 

11 authorized to be appropriated such sums as are necessary 

12 to carry out the program described in this section. Any 

13 sums so appropriated shall remain available until ex14 pended. 

15 SEC. 9. PROGRAM TO LINK TAXPAYERS WITH DIRECT DE16 POSIT ACCOUNTS AT FEDERALLY INSURED 

17 DEPOSITORY INSTITUTIONS. 

18 (a) ESTABLISHMENT OF PROGRAM.—Not later than 

19 1 year after the date of the enactment of this Act, the 

20 Secretary of the Treasury shall enter into cooperative 

21 agreements with federally insured depository institutions 

22 to provide low- and moderate-income taxpayers with the 

23 option of establishing low-cost direct deposit accounts 

24 through the use of appropriate tax forms. 
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1 (b) FEDERALLY INSURED DEPOSITORY INSTITU2 TION.—For purposes of this section, the term ‘‘federally 

3 insured depository institution’’ means any insured deposi4 tory institution (as defined in section 3 of the Federal De5 posit Insurance Act (12 U.S.C. 1813)) and any insured 

6 credit union (as defined in section 101 of the Federal 

7 Credit Union Act (12 U.S.C. 1752)). 

8 (c) OPERATION OF PROGRAM.—In providing for the 

9 operation of the program described in subsection (a), the 

10 Secretary of the Treasury is authorized— 

11 (1) to consult with such private and nonprofit 

12 organizations and Federal, State, and local agencies 

13 as determined appropriate by the Secretary, and 

14 (2) to promulgate such regulations as necessary 

15 to administer such program. 

16 (d) AUTHORIZATION OF APPROPRIATIONS.—There is 

17 authorized to be appropriated such sums as are necessary 

18 to carry out the program described in this section. Any 

19 sums so appropriated shall remain available until ex20 pended.

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