SEC. 2. FINDINGS. 
Congress finds the following: 
(1) The personal savings rate reached historic 
lows in the past decade, and a lack of personal sav-
ings was a major contributor to the depth and sever-
ity of the recession of 2007–2009. 
(2) Households continue to lack the savings or 
structures to meet short-term and long-term needs, 
as evidenced by the following: 
(A) According to the Employee Benefit Re-
search Institute, among full-time, full-year wage 
and salary workers ages 21–64, only 54.5 per 
cent participated in a retirement plan in 2010. 
(B) According to the Federal Deposit In-
surance 
Corporation’s 
2011 
Survey 
of 
Unbanked and Underbanked Households, an es-
timated 8.2 percent of United States house-
holds, approximately 10 million households, are 
unbanked. These households do not have a 
checking or savings account. In total, 29.3 per-
cent of households do not have a savings ac-
count. 
(C) More than 1 in 4 American households 
lives in ‘‘asset poverty’’, meaning they lack the 
savings or other assets to cover basic expenses 
(equivalent to what could be purchased with a 
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poverty level income) for three months if a lay-
off or other emergency leads to loss of income. 
If assets that cannot easily be converted to 
cash, are excluded, such as a home or a busi-
ness, as many as 4 in 10 households live in 
‘‘liquid asset poverty’’, meaning they lack the 
cash savings to survive three months at the 
poverty line. 
(3) Savings make families more resilient to fi-
nancial shocks and more upwardly mobile, as evi-
denced by the following: 
(A) Even small sums of savings, $2,000 or 
less, have been shown to significantly reduce 
the incidence of negative financial or material 
outcomes, such as foregoing adequate nutrition. 
(B) Children born to low-income, high sav-
ing parents are much more likely (71 percent) 
to move up the economic ladder than children 
born to low-income, low-saving parents (50 per-
cent) over a generation. 
(4) Successful pilot programs have been run in 
cities as diverse as Houston, Texas; Newark, New 
Jersey; New York City, New York; San Antonio, 
Texas; and Tulsa, Oklahoma. These programs, run 
through Volunteer Income Tax Assistance sites serv-
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ing only a fraction of potentially eligible tax filers in 
each city, have shown that tax filers with low in-
comes can and will save when presented with the 
right incentive at the right moment. 
(5) It is in the economic interests of the United 
States to promote savings among all members of so-
ciety, regardless of income. 
SEC. 3. FINANCIAL SECURITY CREDIT. 
(a) IN GENERAL.—Subpart C of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after section 36C the fol-
lowing new section: 
‘‘SEC. 36D. FINANCIAL SECURITY CREDIT. 
‘‘(a) ALLOWANCE OF CREDIT.—There shall be al-
lowed as a credit against the tax imposed by this subtitle 
for a taxable year an amount equal to the lesser of— 
‘‘(1) $500, or 
‘‘(2) 50 percent of the total amount deposited 
or contributed by the taxpayer in accordance with 
subsection (b)(1) into designated savings products 
during such taxable year. 
‘‘(b) LIMITATIONS.— 
‘‘(1) CREDIT MUST BE DEPOSITED IN OR CON-
TRIBUTED TO DESIGNATED SAVINGS PRODUCT.—No 
amount shall be allowed as a credit under subsection 
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(a) for a taxable year unless the taxpayer designates 
on the taxpayer’s return of tax for the taxable year 
that the amount of the credit for such taxable year 
be deposited in or contributed to one or more des-
ignated savings products of the taxpayer and the 
Secretary makes such deposits or contributions to 
the designated savings products. 
‘‘(2) LIMITATION BASED ON ADJUSTED GROSS 
INCOME.— 
‘‘(A) IN
GENERAL.—The amount of the 
credit allowable under subsection (a) shall be 
reduced (but not below zero) by an amount 
which bears the same ratio to the amount of 
such credit (determined without regard to this 
paragraph) as— 
‘‘(i) the amount by which the tax-
payer’s adjusted gross income exceeds the 
threshold amount, bears to 
‘‘(ii) $15,000. 
‘‘(B) THRESHOLD AMOUNT.—For purposes 
of subparagraph (A), the term ‘threshold 
amount’ means— 
‘‘(i) $55,500 in the case of a joint re-
turn, 
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‘‘(ii) $41,625 in the case of an indi-
vidual who is not married, and 
‘‘(iii) 50 percent of the dollar amount 
in effect under clause (i) in the case of a 
married individual filing a separate return. 
For purposes of this subparagraph, marital sta-
tus shall be determined under section 7703. 
‘‘(c) DESIGNATED SAVINGS PRODUCT.—For pur-
poses of this section, the term ‘designated savings product’ 
means any of the following: 
‘‘(1) A qualified retirement plan (as defined in 
section 4974(c)). 
‘‘(2) A qualified tuition program (as defined in 
section 529). 
‘‘(3) A Coverdell education savings account (as 
defined in section 530). 
‘‘(4) A United States savings bond. 
‘‘(5) A certificate of deposit (or similar class of 
deposit) with a duration of at least 8 months. 
‘‘(6) A savings account. 
‘‘(7) Any other type of savings product consid-
ered to be appropriate by the Secretary for the pur-
poses of this section. 
‘‘(d) SPECIAL RULES.— 
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‘‘(1) TAX REFUNDS TREATED AS DEPOSITED 
OR CONTRIBUTED IN CURRENT TAXABLE YEAR.— 
For purposes of subsection (a)(2), the amount of 
any overpayment of taxes refunded to the taxpayer 
(reduced by any amount attributable to the credit al-
lowed under this section by reason of being consid-
ered as an overpayment by section 6401(b)) and 
designated for deposit in or contribution to a des-
ignated savings product of the taxpayer shall be 
treated as an amount deposited or contributed in the 
taxable year in which so deposited or contributed. 
‘‘(2) MAINTENANCE
OF
DEPOSIT.—No con-
tribution or deposit shall be taken into account 
under subsection (a) unless such contribution or de-
posit remains in the designated savings product for 
not less than 8 continuous months. 
‘‘(3) REDUCTION IN DEPOSITS IN DESIGNATED 
SAVINGS PRODUCTS.— 
‘‘(A) IN GENERAL.—The amount of depos-
its or contributions taken into account under 
subsection (a) shall be reduced (but not below 
zero) by the aggregate amount of distributions 
(other than interest from designated savings 
products specified in paragraphs (4), (5), (6), 
and (7) of subsection (c)) from all designated 
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savings products of the taxpayer during the 
testing period. The preceding sentence shall not 
apply to the portion of any distribution which 
is not includible in gross income by reason of 
a trustee-to-trustee transfer or a rollover dis-
tribution. 
‘‘(B) TESTING PERIOD.—For purposes of 
subparagraph (A), the testing period, with re-
spect to a taxable year, is the period which in-
cludes— 
‘‘(i) such taxable year, 
‘‘(ii) the 2 preceding taxable years, 
and 
‘‘(iii) the period after such taxable 
year and before the due date (including ex-
tensions) for filing the return of tax for 
such taxable year. 
‘‘(C) OTHER
RULES.—Rules similar to 
subparagraphs 
(C) 
and 
(D) 
of 
section 
25B(d)(2) shall apply for purposes of this para-
graph. 
‘‘(4) DENIAL OF DOUBLE BENEFIT.—No credit 
shall be allowed under section 25B with respect to 
any deposit for which a credit is allowed under this 
section. 
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‘‘(5) COORDINATION
WITH
OTHER
REFUND-
ABLE CREDITS.—The credit allowed by subsection 
(a) shall be taken into account after taking into ac-
count the credits allowed by (or treated as allowed 
by) this subpart (other than this section). 
‘‘(e) INFLATION ADJUSTMENTS.— 
‘‘(1) CREDIT LIMIT.—In the case of any taxable 
year beginning in a calendar year after 2023, the 
dollar amount in subsection (a)(1) shall be increased 
by an amount equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar 
year in which the taxable year begins, deter-
mined by substituting ‘calendar year 2012’ for 
‘calendar year 1992’ in subparagraph (B) 
thereof. 
‘‘(2) AGI THRESHOLDS.—In the case of any 
taxable year beginning in a calendar year after 
2013, each of the dollar amounts in clauses (i) and 
(ii) of subsection (b)(2)(B) shall be increased by an 
amount equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar 
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year in which the taxable year begins, deter-
mined by substituting ‘calendar year 2012’ for 
‘calendar year 1992’ in subparagraph (B) 
thereof. 
‘‘(3) ROUNDING.— 
‘‘(A) CREDIT
LIMIT.—If any increase 
under paragraph (1) is not a multiple of $10, 
such increase shall be rounded to the next low-
est multiple of $10. 
‘‘(B) AGI THRESHOLDS.—If any increase 
under paragraph (1) is not a multiple of $100, 
such increase shall be rounded to the next low-
est multiple of $100. 
‘‘(f) REGULATIONS.—Not later than 12 months from 
date of enactment of this section, the Secretary shall issue 
such regulations or other guidance as the Secretary deter-
mines necessary or appropriate to carry out this section, 
including regulations or guidance— 
‘‘(1) to ensure that designated savings products 
are subject to appropriate reporting requirements, 
including the reporting of contributions and other 
deposits during the calendar year, end of calendar 
year account balances, and earnings from designated 
savings products specified in paragraphs (4), (5), 
(6), and (7) of subsection (c), 
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‘‘(2) to carry out the maintenance of deposit 
provisions under subsection (d)(2), and 
‘‘(3) to prevent avoidance of the purposes of 
this subsection.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 1324(b)(2) of title 31, United 
States Code, is amended by inserting ‘‘36D,’’ after 
‘‘36B,’’. 
(2) The table of sections for subpart C of part 
IV of subchapter A of chapter 1 of the Internal Rev-
enue Code of 1986 is amended by inserting after the 
item relating to section 36C the following new item: 
‘‘Sec. 36D. Financial security credit.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2013. 
SEC. 4. OPENING OF ACCOUNTS ON FEDERAL INCOME TAX 
RETURNS TO FACILITATE SAVINGS. 
(a) NOTIFICATION OF OPTION.— 
(1) IN GENERAL.—The Commissioner of Inter-
nal Revenue shall notify individuals who may qualify 
for a credit under section 36D of the Internal Rev-
enue Code of 1986 but fail to provide sufficient in-
formation to allow the Secretary to deposit or con-
tribute the credit amount to a designated savings 
product that they have the option of an electronic di-
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rect deposit and that they may be eligible for the fi-
nancial security credit under section 36D of the In-
ternal Revenue Code of 1986 if they deposit a re-
fund or a portion of their refund in any designated 
savings product. 
(2) METHOD OF NOTIFICATION.—The notifica-
tion under paragraph (1) shall be made through— 
(A) a public awareness program under-
taken by the Secretary of the Treasury, in con-
cert with the Commissioner of the Internal Rev-
enue and others as necessary, beginning not 
later than 6 months after the date of the enact-
ment of this Act; 
(B) tax return preparers and low-income 
taxpayer clinics; and 
(C) the inclusion of such a notice in the in-
struction material for any Federal income tax 
return. 
(b) ESTABLISHMENT
OF
DESIGNATED
ACCOUNT 
PROGRAM.—The Secretary of the Treasury shall develop, 
in consultation with the Federal Management System, a 
program to minimize the delivery of non-electronic Federal 
income tax refunds by depositing refunds electronically to 
a safe, low-cost account held by a depository institution. 
This program shall include— 
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(1) provisions for such tax refunds to be depos-
ited into a designated account; 
(2) establishment of account parameters with 
respect to minimum balance requirements, limita-
tions on overdrafts, overdraft fees, other fees, and 
additional requirements; 
(3) establishment of means for the taxpayer to 
access the account electronically and to have timely, 
direct access to the funds in the account; and 
(4) provisions to allow taxpayers to open an ac-
count with their Federal income tax refunds through 
financial service providers, so long such account is 
held at a depository institution insured under the 
Federal Deposit Insurance Act or a credit union in-
sured under the Federal Credit Union Act. 
(c) EFFECTIVE DATE.—The notification under sub-
section (a) and the program under subsection (b) shall be 
effective with respect to Federal income tax returns for 
taxable years beginning after December 31, 2013. 
Æ 
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