I 

113TH CONGRESS 

2D SESSION H. R. 5070 

To amend the Internal Revenue Code of 1986 to provide for improved 

compliance with the requirements of the earned income tax credit. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 10, 2014 

Mr. GARDNER (for himself and Mr. STEWART) introduced the following bill; 

which was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

for improved compliance with the requirements 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 ‘‘Earnings Advancement 

5 and Recovery Now Act’’ or the ‘‘EARN Act’’. 

6 SEC. 2. DEDICATION OF EITC COMPLIANCE SAVINGS TO EX7 PANDING THE EITC. 

8 (a) FINDINGS.—The Congress finds the following: 

9 (1) The March 2014 report of the Treasury In10 spector General for Tax Administration on the InVerDate Mar 15 2010 22:32 Jul 15, 2014 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H5070.IH H5070

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1 ternal Revenue Service’s compliance with the Im2 proper Payments Elimination and Recovery Act of 

3 2010 highlights significant improper payments re4 lated to the earned income tax credit under section 

5 32 of the Internal Revenue Code of 1986. 

6 (2) The Improper Payments Elimination and 

7 Recovery Act of 2010 defines an improper payment 

8 as ‘‘any payment that should not have been made or 

9 that was made in an incorrect amount . . . under 

10 statutory, contractual, administrative, or other le11 gally applicable requirements’’. 

12 (3) The Internal Revenue Service estimates 

13 that 22 percent to 26 percent of earned income tax 

14 credit payments were issued improperly in fiscal 

15 year 2013, with the dollar value of these improper 

16 payments estimated to be between $13.3 billion and 

17 $15.6 billion. 

18 (4) The Treasury Inspector General for Tax 

19 Administration has concluded that the Internal Rev20 enue Service has made little improvement in reduc21 ing improper earned income tax credit payments 

22 since being required to report estimates of these 

23 payments to Congress, and as a result, the earned 

24 income tax credit program remains at high risk for 

25 improper payments. 


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1 (5) The Joint Committee on Taxation estimates 

2 that for tax year 2014 there will be 28.5 million fil3 ers that will receive the earned income tax credit. 

4 (6) Billions of dollars of improper payments will 

5 continue to made unless reforms and improvements 

6 take place with respect to the earned income tax 

7 credit and its administration by the Internal Rev8 enue Service. 

9 (b) SENSE OF CONGRESS.—Any budgetary savings 

10 resulting from the reforms and improvements enacted by 

11 this Act with respect to the earned income tax credit 

12 should be dedicated to expanding the credit for working 

13 families eligible for the earned income tax credit. 

14 SEC. 3. INCREASE THE PENALTY APPLICABLE TO PAID TAX 

15 PREPARERS WHO ENGAGE IN WILLFUL OR 

16 RECKLESS CONDUCT. 

17 (a) IN GENERAL.—Section 6694(b)(1)(B) of the In18 ternal Revenue Code of 1986 is amended by striking ‘‘50 

19 percent’’ and inserting ‘‘75 percent’’. 

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

21 this section shall apply to returns prepared for taxable 

22 years ending after the date of the enactment of this Act. 


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1 SEC. 4. EXPANSION OF DISALLOWANCE PERIOD FOR TAX2 PAYERS WHO IMPROPERLY CLAIM EITC 

3 BASED ON RECKLESS OR INTENTIONAL DIS4 REGARD OF THE RULES. 

5 (a) IN GENERAL.—Section 32(k)(1)(B)(ii) of the In6 ternal Revenue Code of 1986 is amended by striking ‘‘2 

7 taxable years’’ and inserting ‘‘5 taxable years’’. 

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

9 this section shall apply to taxable years beginning after 

10 December 31, 2013. 

11 SEC. 5. EXPANSION OF MATH-ERROR AUTHORITY TO 

12 COVER EITC CLAIMS DURING PERIOD WHEN 

13 TAXPAYER IS BARRED FROM CLAIMING THE 

14 CREDIT. 

15 (a) IN GENERAL.—Section 6213(g)(2)(K) of the In16 ternal Revenue Code of 1986 is amended by striking ‘‘sec17 tion 32(k)(2)’’ and inserting ‘‘section 32(k)’’. 

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

19 this section shall apply to taxable years ending after the 

20 date of the enactment of this Act. 

21 SEC. 6. PENALTY FOR ERRONEOUS CLAIM OF CREDIT 

22 MADE APPLICABLE TO EARNED INCOME 

23 CREDIT. 

24 (a) IN GENERAL.—Section 6676(a) of the Internal 

25 Revenue Code of 1986 is amended by striking ‘‘(other 


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1 than a claim for a refund or credit relating to the earned 

2 income credit under section 32)’’. 

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

4 this section shall apply to claims filed after the date of 

5 the enactment of this Act. 

6 SEC. 7. STUDY ON EARNED INCOME CREDIT AND IM7 PROPER PAYMENTS. 

8 (a) IN GENERAL.—The Comptroller General of the 

9 United States shall conduct a study on— 

10 (1) the effectiveness and impact of the earned 

11 income tax credit under section 32 of the Internal 

12 Revenue Code of 1986, and 

13 (2) the incidence and cause of improper pay14 ments made by the Internal Revenue Service with 

15 respect to the credit. 

16 (b) RECOMMENDATIONS.—The study required under 

17 subsection (a) shall include recommendations to— 

18 (1) improve the efficiency and effectiveness of 

19 the earned income tax credit, and 

20 (2) reduce the improper payments made by the 

21 Internal Revenue Service with respect to the credit. 

22 (c) REPORT.—Not later than 6 months after the date 

23 of the enactment of this Act, the Comptroller General shall 

24 submit to the Committee on Ways and Means of the 

25 House of Representatives and the Committee on Finance 


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1 of the Senate a report with the results of the study con2 ducted under subsection (a) and recommendations re3 quired under subsection (b). 

Æ 


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