I 

118TH CONGRESS 

1ST SESSION H. R. 5421 

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

tax credit to all taxpayers with dependents and to qualifying students, 

and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 12, 2023 

Mrs. WATSON COLEMAN (for herself, Mr. CARTER of Louisiana, Ms. LEE of 

California, and Ms. ADAMS) 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 extend 

the earned income tax credit to all taxpayers with dependents and to qualifying students, 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 ‘‘EITC Modernization 

5 Act’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 


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1 (1) The Federal earned income tax credit is a 

2 refundable tax credit for lower- and middle-income 

3 working individuals and families whose earnings are 

4 below an income threshold. 

5 (2) Since its establishment in 1975, the credit 

6 has increased family income, reduced child poverty, 

7 and promoted employment by supplementing the 

8 earnings of low-wage workers, including military 

9 families. 

10 (3) The credit has a positive impact on the edu11 cation and health of children living in poverty. 

12 (4) The credit has a positive economic impact 

13 on local economies and businesses because it puts 

14 more money in the hands of low- and middle-income 

15 working people who spend the money on immediate 

16 needs, such as groceries, school supplies, car repairs, 

17 rent, and health care. 

18 (5) The widening gap between the incomes of 

19 the wealthiest Americans and those of middle- and 

20 lower-income Americans is alarming. 

21 (6) There is an urgent need to address that 

22 gap, including through measures like this legislation 

23 and by raising the Federal minimum wage which to24 gether increase the wages of working Americans, 


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1 widen the path to income stability, and narrow in2 come inequality. 

3 SEC. 3. MODIFICATIONS OF THE EARNED INCOME TAX 

4 CREDIT. 

5 (a) INCLUSION OF INDIVIDUALS WITH QUALIFYING

6 DEPENDENTS.— 

7 (1) IN GENERAL.—Section 32(c)(1) of the In8 ternal Revenue Code of 1986 is amended— 

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

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

11 and inserting ‘‘qualifying dependent’’, and 

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

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

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

15 respectively. 

16 (2) QUALIFYING DEPENDENT DEFINED.—Sec17 tion 32(c) of such Code is amended by redesignating 

18 paragraphs (3) and (4) as paragraphs (5) and (6), 

19 and by inserting after paragraph (2) the following 

20 new paragraphs: 

21 ‘‘(3) QUALIFYING DEPENDENT.— 

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

23 dependent’ means, with respect to a taxable 

24 year— 

25 ‘‘(i) a qualifying child, 


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1 ‘‘(ii) an aged dependent, or 

2 ‘‘(iii) a qualifying individual described 

3 in subparagraph (B) or (C) of section 

4 21(b)(1). 

5 ‘‘(B) IDENTIFICATION REQUIREMENTS.— 

6 No credit shall be allowed under this section 

7 with respect to a qualifying dependent unless 

8 the taxpayer includes the name, age, and TIN 

9 of the individual on the return of tax for the 

10 taxable year. 

11 ‘‘(C) PLACE OF ABODE.—The term ‘quali12 fying dependent’ shall not include an individual 

13 unless such individual has a principal place of 

14 abode in the United States for more than one15 half of such taxable year. 

16 ‘‘(4) AGED DEPENDENT.—The term ‘aged de17 pendent’ means a dependent for whom a deduction 

18 is allowable under section 151 who has attained the 

19 age of 65 before the close of the taxable year.’’. 

20 (3) CONFORMING AMENDMENTS.— 

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

22 of section 32(b) of such Code are each amend23 ed— 


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

2 place it appears and inserting ‘‘qualifying 

3 dependent’’, and 

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

5 each place it appears and inserting ‘‘quali6 fying dependents’’. 

7 (B) Section 32(c)(5) of such Code, as re8 designated by this Act, is amended by striking 

9 subparagraphs (C) and (D). 

10 (C) Section 32(m) of such Code is amend11 ed by striking ‘‘(c)(3)(D)’’ and inserting 

12 ‘‘(c)(3)(B)’’. 

13 (b) INCLUSION OF QUALIFYING STUDENTS.— 

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

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

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

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

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

19 ‘‘(iii) any individual who is a quali20 fying student.’’. 

21 (2) QUALIFYING STUDENT DEFINED.—Section 

22 32(c)(1) of such Code, as amended by subsection 

23 (a), is further amended by adding at the end the fol24 lowing new subparagraph: 


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1 ‘‘(E) QUALIFYING STUDENT.—The term 

2 ‘qualifying student’ means, with respect to a 

3 taxable year, an individual who is an eligible 

4 student (as defined in section 25A(b)(3)) with 

5 respect to an institution of higher education (as 

6 defined in section 101 of the Higher Education 

7 Act of 1965) who— 

8 ‘‘(i) is not a dependent for whom a 

9 deduction is allowable under section 151 to 

10 another taxpayer for any taxable year be11 ginning in the same calendar year as such 

12 taxable year, and 

13 ‘‘(ii) either— 

14 ‘‘(I) is qualified for a Federal 

15 Pell Grant with respect to the aca16 demic year beginning in such taxable 

17 year, or 

18 ‘‘(II) has modified adjusted gross 

19 income of less than 250 percent of the 

20 poverty line for the size of the family 

21 involved for the taxable year. 

22 ‘‘(F) DEFINITIONS.—For purposes of this 

23 subparagraph: 

24 ‘‘(i) MODIFIED ADJUSTED GROSS IN25 COME.—The term ‘modified adjusted gross 


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1 income’ means the adjusted gross income 

2 of the taxpayer for the taxable year in3 creased by any amount excluded from 

4 gross income under section 911, 931, or 

5 933. 

6 ‘‘(ii) POVERTY LINE.— 

7 ‘‘(I) IN GENERAL.—The term 

8 ‘poverty line’ has the meaning given 

9 such term in section 673(2) of the 

10 Community Services Block Grant Act 

11 (42 U.S.C. 9902(2)), including any 

12 revision required by such section. 

13 ‘‘(II) FAMILY SIZE.—For pur14 poses of determining the poverty line 

15 applicable to the taxpayer, the family 

16 size with respect to any taxpayer shall 

17 be equal to the number of individuals 

18 for whom the taxpayer is allowed a 

19 deduction under section 151 (relating 

20 to allowance of deduction for personal 

21 exemptions) for the taxable year.’’. 

22 (3) CONFORMING AMENDMENT.—Section 

23 32(c)(1)(A)(ii) of such Code is amended by inserting 

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

25 individual’’. 


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1 (c) MINIMUM CREDIT FOR STUDENTS AND FOR INDI2 VIDUALS WITH CERTAIN QUALIFYING DEPENDENTS.— 

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

4 end the following new paragraph: 

5 ‘‘(3) MINIMUM CREDIT FOR STUDENTS AND

6 FOR INDIVIDUALS WITH CERTAIN QUALIFYING DE7 PENDENTS.— 

8 ‘‘(A) IN GENERAL.—In the case of a quali9 fying student, or an eligible individual who has 

10 a specified dependent for the taxable year, the 

11 amount determined under paragraph (1) (be12 fore the application of paragraph (2)) and the 

13 amount determined under paragraph (2)(A) 

14 shall not be less than $1,200. 

15 ‘‘(B) SPECIFIED DEPENDENT.—For pur16 poses of this paragraph, the term ‘specified de17 pendent’ means any qualifying dependent (other 

18 than a qualifying child who has attained the 

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

20 (d) MONTHLY PAYMENT.—Section 32 of such Code, 

21 as amended by this Act, is further amended by adding 

22 at the end the following new subsection: 

23 ‘‘(n) MONTHLY PAYMENT.— 

24 ‘‘(1) IN GENERAL.—In the case of an individual 

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1 ment of tax imposed by this subtitle that exceeds 

2 $240 (but only to the extent such refund does not 

3 exceed the credit allowed under this section) such in4 dividual may elect to have the Secretary, in lieu of 

5 such refund, make a payment equal to— 

‘‘(A) 2 6 ⁄13 of such refund (with interest) 

7 during the earlier of the first practicable month 

8 or the second month that begins after the date 

9 the return was filed, and 

‘‘(B) 1 10 ⁄13 of such refund (with interest) 

11 during each of the 11 months subsequent to the 

12 month determined under subparagraph (A). 

13 ‘‘(2) METHOD OF PAYMENT.—A payment made 

14 under this subsection shall be made by direct deposit 

15 or by general-use prepaid card, or by such other 

16 method (other than by check) as the Secretary may 

17 prescribe and the taxpayer may elect. 

18 ‘‘(3) ONE-TIME INCREASE.—The first time an 

19 individual receives a payment under this subsection, 

20 paragraph (1)(A) shall be applied by substituting 

‘

4⁄13’ for ‘2 21 ⁄13’.’’. 

22 (e) SPECIAL RULE FOR NEW LOW-INCOME PAR23 ENTS.—Section 32 of such Code, as amended by this Act, 

24 is further amended by adding at the end the following new 

25 subsection: 


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1 ‘‘(o) SPECIAL RULE FOR NEW LOW-INCOME PAR2 ENTS.— 

3 ‘‘(1) IN GENERAL.—In the case of an individual 

4 who— 

5 ‘‘(A) is eligible for payments under sub6 section (o)(1) with respect to a refund for a 

7 taxable year, and 

8 ‘‘(B) has a qualifying child who is born or 

9 adopted during the following taxable year and 

10 not later than the penultimate month for which 

11 the taxpayer is eligible for such payments, 

12 the amount of any such payments made after such 

13 birth or adoption shall be adjusted to the amount 

14 such payments would be if such qualifying child were 

15 a qualifying child of the taxpayer under this section 

16 for the taxable year to which such payments relate. 

17 ‘‘(2) QUALIFYING CHILD DETERMINATION.— 

18 For purposes of determining if a child is a quali19 fying child for purposes of this subsection, sub20 section (m) shall be applied by inserting ‘or, in the 

21 case of an adoption, such other identifying informa22 tion as specified by the Secretary’ before the period 

23 at the end.’’. 

24 (f) AGE OF ELIGIBLE INDIVIDUALS WITHOUT DE25 PENDENTS.—Section 32(c)(1)(A)(ii)(II) of such Code is 


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1 amended by striking ‘‘age 25 but not attained age 65’’ 

2 and inserting ‘‘age 18’’. 

3 (g) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to taxable years beginning after 

5 the date of the enactment of this Act. 

6 SEC. 4. RETURN PREPARATION PROGRAMS FOR LOW-IN7 COME TAXPAYERS. 

8 (a) IN GENERAL.—Chapter 77 of such Code is 

9 amended by inserting after section 7526A the following 

10 new section: 

11 ‘‘SEC. 7526B. RETURN PREPARATION PROGRAMS FOR LOW12 INCOME TAXPAYERS. 

13 ‘‘(a) ESTABLISHMENT OF VOLUNTEER INCOME TAX

14 ASSISTANCE MATCHING GRANT PROGRAM.—The Sec15 retary, through the Internal Revenue Service, shall estab16 lish a Community Volunteer Income Tax Assistance 

17 Matching Grant Program under which the Secretary may, 

18 subject to the availability of appropriated funds, make 

19 grants to provide matching funds for the development, ex20 pansion, or continuation of qualified return preparation 

21 programs assisting low-income taxpayers and members of 

22 underserved populations. 

23 ‘‘(b) USE OF FUNDS.— 


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1 ‘‘(1) IN GENERAL.—Qualified return prepara2 tion programs may use grants received under this 

3 section for— 

4 ‘‘(A) ordinary and necessary costs associ5 ated with program operation in accordance with 

6 cost principles under the applicable Office of 

7 Management and Budget circular, including— 

8 ‘‘(i) wages or salaries of persons co9 ordinating the activities of the program, 

10 ‘‘(ii) developing training materials, 

11 conducting training, and performing qual12 ity reviews of the returns prepared under 

13 the program, 

14 ‘‘(iii) equipment purchases, and 

15 ‘‘(iv) vehicle-related expenses associ16 ated with remote or rural tax preparation 

17 services, 

18 ‘‘(B) outreach and educational activities 

19 described in subsection (c)(2)(B), and 

20 ‘‘(C) services related to financial education 

21 and capability, asset development, and the es22 tablishment of savings accounts in connection 

23 with tax return preparation. 

24 ‘‘(2) USE OF GRANTS FOR OVERHEAD EX25 PENSES PROHIBITED.—No grant received under this 


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1 section may be used for overhead expenses that are 

2 not directly related to a qualified return preparation 

3 program. 

4 ‘‘(c) APPLICATION.— 

5 ‘‘(1) IN GENERAL.—Each applicant for a grant 

6 under this section shall submit an application to the 

7 Secretary at such time, in such manner, and con8 taining such information as the Secretary may rea9 sonably require. 

10 ‘‘(2) PRIORITY.—In awarding grants under this 

11 section, the Secretary shall give priority to applica12 tions which demonstrate— 

13 ‘‘(A) assistance to low-income taxpayers, 

14 with emphasis on outreach to, and services for, 

15 such taxpayers, 

16 ‘‘(B) taxpayer outreach and educational 

17 activities relating to eligibility and availability 

18 of income supports available through the Inter19 nal Revenue Code of 1986, including the earned 

20 income tax credit, and 

21 ‘‘(C) specific outreach and focus on one or 

22 more underserved populations. 

23 ‘‘(3) AMOUNTS TAKEN INTO ACCOUNT.—In de24 termining matching grants under this section, the 

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1 vided by the qualified return preparation program 

2 for expenses described in subsection (b). 

3 ‘‘(d) ACCURACY REVIEWS.— 

4 ‘‘(1) IN GENERAL.—The Secretary shall estab5 lish procedures for, and shall conduct, periodic site 

6 visits of qualified return preparation programs oper7 ating under a grant under this section— 

8 ‘‘(A) to ensure such programs are carrying 

9 out the purposes of this section, and 

10 ‘‘(B) to determine the return preparation 

11 accuracy rate of the program. 

12 ‘‘(2) ADDITIONAL REQUIREMENTS FOR GRANT

13 RECIPIENTS NOT MEETING MINIMUM STANDARDS.— 

14 In the case of any qualified return preparation pro15 gram which— 

16 ‘‘(A) is awarded a grant under this section, 

17 and 

18 ‘‘(B) is subsequently determined— 

19 ‘‘(i) to have a less than 90 percent av20 erage accuracy rate for preparation of tax 

21 returns, or 

22 ‘‘(ii) not to be otherwise carrying out 

23 the purposes of this section, 

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1 gram provides sufficient documentation of cor2 rective measures established to address any 

3 such deficiencies determined. 

4 ‘‘(e) DEFINITIONS.—For purposes of this section— 

5 ‘‘(1) QUALIFIED RETURN PREPARATION PRO6 GRAM.—The term ‘qualified return preparation pro7 gram’ means any program— 

8 ‘‘(A) which provides assistance to individ9 uals, not less than 90 percent of whom are low10 income taxpayers, in preparing and filing Fed11 eral income tax returns, 

12 ‘‘(B) which is administered by a qualified 

13 entity, 

14 ‘‘(C) in which all volunteers who assist in 

15 the preparation of Federal income tax returns 

16 meet the training requirements prescribed by 

17 the Secretary, and 

18 ‘‘(D) which uses a quality review process 

19 which reviews 100 percent of all returns. 

20 ‘‘(2) QUALIFIED ENTITY.— 

21 ‘‘(A) IN GENERAL.—The term ‘qualified 

22 entity’ means any entity which— 

23 ‘‘(i) is an eligible organization, 

24 ‘‘(ii) is in compliance with Federal tax 

25 filing and payment requirements, 


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1 ‘‘(iii) is not debarred or suspended 

2 from Federal contracts, grants, or coopera3 tive agreements, and 

4 ‘‘(iv) agrees to provide documentation 

5 to substantiate any matching funds pro6 vided pursuant to the grant program under 

7 this section. 

8 ‘‘(B) ELIGIBLE ORGANIZATION.—The term 

9 ‘eligible organization’ means— 

10 ‘‘(i) an institution of higher education 

11 which is described in section 102 (other 

12 than subsection (a)(1)(C) thereof) of the 

13 Higher Education Act of 1965 (20 U.S.C. 

14 1002), as in effect on the date of the en15 actment of this section, and which has not 

16 been disqualified from participating in a 

17 program under title IV of such Act, 

18 ‘‘(ii) an organization described in sec19 tion 501(c) and exempt from tax under 

20 section 501(a), 

21 ‘‘(iii) a local government agency, in22 cluding— 

23 ‘‘(I) a county or municipal gov24 ernment agency, and 


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1 ‘‘(II) an Indian tribe, as defined 

2 in section 4(13) of the Native Amer3 ican Housing Assistance and Self-De4 termination Act of 1996 (25 U.S.C. 

5 4103(13)), including any tribally des6 ignated housing entity (as defined in 

7 section 4(22) of such Act (25 U.S.C. 

8 4103(22))), tribal subsidiary, subdivi9 sion, or other wholly owned tribal en10 tity, 

11 ‘‘(iv) a local, State, regional, or na12 tional coalition (with one lead organization 

13 which meets the eligibility requirements of 

14 clause (i), (ii), or (iii) acting as the appli15 cant organization), or 

16 ‘‘(v) in the case of a targeted popu17 lation or community with respect to which 

18 no organizations described in the preceding 

19 clauses are available— 

20 ‘‘(I) a State government agency, 

21 or 

22 ‘‘(II) an office providing Cooper23 ative Extension services (as estab24 lished at the land-grant colleges and 


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1 universities under the Smith-Lever 

2 Act of May 8, 1914). 

3 ‘‘(3) LOW-INCOME TAXPAYERS.—The term ‘low4 income taxpayer’ means a taxpayer whose income 

5 for the taxable year does not exceed an amount 

6 equal to the completed phaseout amount under sec7 tion 32(b) for a married couple filing a joint return 

8 with 3 or more qualifying children, as determined in 

9 a revenue procedure or other published guidance. 

10 ‘‘(4) UNDERSERVED POPULATION.—The term 

11 ‘underserved population’ includes populations of per12 sons with disabilities, persons with limited English 

13 proficiency, Native Americans, individuals living in 

14 rural areas, members of the Armed Forces and their 

15 spouses, and the elderly. 

16 ‘‘(f) SPECIAL RULES AND LIMITATIONS.— 

17 ‘‘(1) DURATION OF GRANTS.—Upon application 

18 of a qualified return preparation program, the Sec19 retary is authorized to award a multi-year grant not 

20 to exceed 3 years. 

21 ‘‘(2) AGGREGATE LIMITATION.—Unless other22 wise provided by specific appropriation, the Sec23 retary shall not allocate more than $30,000,000 per 

24 fiscal year (exclusive of costs of administering the 

25 program) to grants under this section. 


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1 ‘‘(g) PROMOTION AND REFERRAL.— 

2 ‘‘(1) PROMOTION.—The Secretary shall pro3 mote tax preparation through qualified return prepa4 ration programs through the use of mass commu5 nications, referrals, and other means. 

6 ‘‘(2) INTERNAL REVENUE SERVICE REFER7 RALS.—The Secretary may refer taxpayers to quali8 fied return preparation programs receiving grants 

9 under this section. 

10 ‘‘(3) VITA GRANTEE REFERRAL.—Qualified re11 turn preparation programs receiving a grant under 

12 this section are encouraged to refer, as appropriate, 

13 to local or regional Low-Income Taxpayer Clinics in14 dividuals who are eligible for such clinics.’’. 

15 (b) CLERICAL AMENDMENT.—The table of sections 

16 for chapter 77 is amended by inserting after the item re17 lating to section 7526A the following new item: 

‘‘7526B. Return preparation programs for low-income taxpayers.’’. 

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

19 this section shall apply with respect to taxable years begin20 ning after the date of enactment of this Act. 

Æ 


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