I 

114TH CONGRESS 

2D SESSION H. R. 4872 

To amend the Internal Revenue Code of 1986 to reform the American 

opportunity tax credit to support college savings. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 23, 2016 

Mr. BEN RAY LUJA ́N of New Mexico introduced the following bill; which was 

referred to the Committee on Ways and Means, and in addition to the 

Committee on Education and the Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such 

provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To amend the Internal Revenue Code of 1986 to reform 

the American opportunity tax credit to support college 

savings. 

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 ‘‘Save for Success Act’’. 

5 SEC. 2. AMERICAN OPPORTUNITY TAX CREDIT SAVINGS 

6 CREDIT. 

7 (a) IN GENERAL.—Section 25A of the Internal Rev8 enue Code of 1986 is amended by redesignating subsection 


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1 (j) as subsection (k) and by inserting after subsection (i) 

2 the following: 

3 ‘‘(j) SPECIAL RULES RELATING TO AOTC SAVINGS

4 CREDIT.— 

5 ‘‘(1) IN GENERAL.—For purposes of this sec6 tion, the term ‘qualified tuition and related expenses’ 

7 with respect to any individual includes eligible col8 lege savings contributions for such individual. Such 

9 contributions shall be taken into account for pur10 poses of subsection (i)(1)(A) before tuition and fees. 

11 ‘‘(2) LIMITATION.— 

12 ‘‘(A) IN GENERAL.—The aggregate 

13 amount of contributions with respect to an indi14 vidual which may be taken into account under 

15 paragraph (1) for a taxable year is $250. 

16 ‘‘(B) PHASE OUT.—The dollar amount in 

17 subparagraph (A) shall be reduced (but not 

18 below zero) by the amount which bears the 

19 same ratio to such dollar amount as— 

20 ‘‘(i) the number of percentage points 

21 (if any) in excess of 133 percent that the 

22 taxpayer’s household income for the tax23 able year is of the poverty line for a family 

24 of the size involved, bears to 

25 ‘‘(ii) 400 percentage points. 


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1 ‘‘(3) TERMS RELATING TO INCOME AND FAMI2 LIES.—The terms ‘family size’, ‘household income’, 

3 and ‘poverty line’ shall have the meanings given 

4 such terms by section 36B(d). 

5 ‘‘(4) ELIGIBLE HIGHER EDUCATION CONTRIBU6 TION.—For purposes of paragraph (1), the term ‘eli7 gible college savings contribution’ with respect to an 

8 individual means the excess of— 

9 ‘‘(A) contributions by the taxpayer in the 

10 taxable year to qualified college savings ac11 counts of which the individual is the bene12 ficiary, over 

13 ‘‘(B) distributions from all such qualified 

14 college savings accounts for the taxable year. 

15 ‘‘(5) QUALIFIED COLLEGE SAVINGS AC16 COUNTS.—The term ‘qualified college savings ac17 count’ with respect to which such individual is the 

18 beneficiary means— 

19 ‘‘(A) an account under a qualified tuition 

20 program (as defined by section 529), and 

21 ‘‘(B) an account under a program of a 

22 State (or political jurisdiction thereof) estab23 lished exclusively for the purpose of paying for 

24 college tuition and other post-secondary edu25 cational expenses. 


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1 ‘‘(6) PORTION OF CREDIT MADE REFUND2 ABLE.—So much of the credit allowed under sub3 section (a) as is attributable to this subsection (de4 termined after the application of subsection (i) and 

5 without regard to this subsection and section 26(a)) 

6 shall be treated as a credit allowable under subpart 

7 C (and not allowed under subsection (a)). The pre8 ceding sentence shall not apply to any taxpayer for 

9 any taxable year if such taxpayer is a child to whom 

10 subsection (g) of section 1 applies for such taxable 

11 year.’’. 

12 (b) AOTC LIFETIME LIMITATION.—Section 

13 25A(i)(2) of such Code is amended to read as follows: 

14 ‘‘(2) LIMITATION.—In lieu of subparagraphs 

15 (A) and (C) of subsection (b)(2), the amount allowed 

16 as a credit under this section for the taxable year 

17 with respect to an individual shall not exceed— 

18 ‘‘(A) $10,000, reduced 

19 ‘‘(B) by the amount allowed under this 

20 section with respect to such individual for all 

21 prior taxable years.’’. 

22 (c) PILOT PROGRAM TO MAKE PERIODIC PAYMENTS

23 AS COLLEGE EXPENSES INCURRED.—Section 25A(i) of 

24 such Code is amended by adding at the end the following: 


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1 ‘‘(8) PILOT PROGRAM TO MAKE PERIODIC PAY2 MENTS AS COLLEGE EXPENSES INCURRED.— 

3 ‘‘(A) IN GENERAL.—The Secretary of the 

4 Treasury and the Secretary of Education shall 

5 jointly establish a program designed to make 

6 payments periodically to or on behalf of an eli7 gible student as the student incurs qualified ex8 penses during the taxable year. The total 

9 amount that may be so paid to or on behalf of 

10 an eligible student through this program shall 

11 not exceed the credit which would (but for sub12 paragraph (B)) be allowable under this section 

13 if subsection (d) were applied by using the tax14 payer’s modified adjusted gross income for the 

15 preceding taxable year. 

16 ‘‘(B) CREDIT REDUCED BY PILOT PRO17 GRAM PAYMENTS.—The credit allowable under 

18 this section (without regard to this subpara19 graph) for any taxable year shall be reduced 

20 (but not below zero) by the payments made 

21 with respect to a student under subparagraph 

22 (A) for expenses which would otherwise be 

23 taken into account in determining the credit 

24 under this section for such year. 


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1 ‘‘(C) PROGRAM PARTICIPATION.—Partici2 pation in the program established under this 

3 paragraph shall be voluntary with respect to 

4 both students and educational institutions; ex5 cept that, institutions which are taxable under 

6 this chapter (other than by reason of section 

7 511) may not participate in such program. 

8 ‘‘(D) PROGRAM PERIOD.—The program es9 tablished under this paragraph shall apply to 

10 expenses for academic periods beginning during 

11 the 5-year period which begins on the date 

12 which is 1 year after the date of the enactment 

13 of this paragraph. 

14 ‘‘(E) PAYMENTS NOT TREATED AS RE15 SOURCES FOR FINANCIAL AID.—Payments 

16 made under this paragraph shall not be treated 

17 as resources for purposes of determining the 

18 amount of any financial aid which is funded in 

19 whole or part with Federal funds. Payments 

20 under the program shall not be made in a man21 ner that would reduce the State, private, or in22 stitutional aid available to an eligible student. 

23 ‘‘(F) NOTICE OF PROGRAM.—Educational 

24 institutions participating in the program estab25 lished under this paragraph shall provide approVerDate Sep 11 2014 00:55 Mar 25, 2016 Jkt 059200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H4872.IH H4872

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1 priate notices to parents and students of the 

2 option of payments under such program. Such 

3 notices shall not be considered tax advice for 

4 purposes of any Federal law or regulation. 

5 ‘‘(G) REPORTING.—The Secretary of the 

6 Treasury and the Secretary of Education shall 

7 jointly submit annual reports to Congress on 

8 the program established under this subsection, 

9 together with any recommendations with re10 spect to such program.’’. 

11 (d) CONFORMING AMENDMENT.—Section 

12 6211(b)(4)(A) of such Code is amended by inserting ‘‘or 

13 (j)(6)’’ after ‘‘subsection (i)(6)’’. 

14 (e) INCREASED PUBLIC AWARENESS OF AMERICAN

15 OPPORTUNITY TAX CREDIT.— 

16 (1) IN GENERAL.—The Secretary of the Treas17 ury, or the Secretary’s delegate, in consultation with 

18 the Secretary of Education, shall establish a tax19 payer awareness program to inform the taxpaying 

20 public of the availability of the American Oppor21 tunity Tax Credit allowed under section 25A of the 

22 Internal Revenue Code of 1986. Such public aware23 ness program shall be designed to assure that indi24 viduals who may be eligible are informed of the 

25 availability of such credit and filing procedures. 


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1 (2) MEANS OF COMMUNICATIONS.— 

2 (A) IN GENERAL.—The Secretary of the 

3 Treasury, or the Secretary’s delegate, in con4 sultation with the Secretary of Education, shall 

5 use appropriate means of communication to 

6 carry out the provisions of this section. The 

7 taxpayer awareness program shall include, but 

8 not be limited to, prominent display of informa9 tion about the availability of the American Op10 portunity Tax Credit on information return 

11 forms specified by such Secretary for use by 

12 educational institutions to report qualified tui13 tion and related expenses incurred. 

14 (B) ADDITIONAL STEPS.—In addition, the 

15 Secretary of the Treasury, or the Secretary’s 

16 delegate, in consultation with the Secretary of 

17 Education, should— 

18 (i) make students aware of the Amer19 ican Opportunity Tax Credit through the 

20 data retrieval tool and the student aid re21 port of the Department of Education, 

22 (ii) include information on the finan23 cial aid shopping sheet, 


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1 (iii) include the American Opportunity 

2 Tax Credit in the volunteer income tax as3 sistance program, and 

4 (iv) bring awareness of the American 

5 Opportunity Tax Credit in the Federal 

6 TRIO Programs (commonly known as 

7 ‘‘TRIO’’) under chapter 1 of subpart 2 of 

8 part A of title IV of the Higher Education 

9 Act of 1965 (20 U.S.C. 1070a–11 et seq.) 

10 and in the Gaining Early Awareness and 

11 Readiness for Undergraduate Programs 

12 (commonly known as ‘‘GEAR UP’’) under 

13 chapter 2 of subpart 2 of part A of title 

14 IV of such Act (20 U.S.C. 1070a–21 et 

15 seq.). 

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

17 this section shall apply to taxable years beginning after 

18 December 31, 2015. 

Æ 


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