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 re-
ferred 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 de-
pendents and to qualifying students, and for other pur-
poses. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘EITC Modernization 
Act’’. 
SEC. 2. FINDINGS. 
Congress finds the following: 
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(1) The Federal earned income tax credit is a 
refundable tax credit for lower- and middle-income 
working individuals and families whose earnings are 
below an income threshold. 
(2) Since its establishment in 1975, the credit 
has increased family income, reduced child poverty, 
and promoted employment by supplementing the 
earnings of low-wage workers, including military 
families. 
(3) The credit has a positive impact on the edu-
cation and health of children living in poverty. 
(4) The credit has a positive economic impact 
on local economies and businesses because it puts 
more money in the hands of low- and middle-income 
working people who spend the money on immediate 
needs, such as groceries, school supplies, car repairs, 
rent, and health care. 
(5) The widening gap between the incomes of 
the wealthiest Americans and those of middle- and 
lower-income Americans is alarming. 
(6) There is an urgent need to address that 
gap, including through measures like this legislation 
and by raising the Federal minimum wage which to-
gether increase the wages of working Americans, 
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widen the path to income stability, and narrow in-
come inequality. 
SEC. 3. MODIFICATIONS OF THE EARNED INCOME TAX 
CREDIT. 
(a) INCLUSION OF INDIVIDUALS WITH QUALIFYING 
DEPENDENTS.— 
(1) IN GENERAL.—Section 32(c)(1) of the In-
ternal Revenue Code of 1986 is amended— 
(A) in subparagraph (A), by striking 
‘‘qualifying child’’ each place such term appears 
and inserting ‘‘qualifying dependent’’, and 
(B) by striking subparagraphs (B) and (F) 
and by redesignating subparagraphs (C), (D), 
and (E) as subparagraphs (B), (C), and (D), 
respectively. 
(2) QUALIFYING DEPENDENT DEFINED.—Sec-
tion 32(c) of such Code is amended by redesignating 
paragraphs (3) and (4) as paragraphs (5) and (6), 
and by inserting after paragraph (2) the following 
new paragraphs: 
‘‘(3) QUALIFYING DEPENDENT.— 
‘‘(A) IN GENERAL.—The term ‘qualifying 
dependent’ means, with respect to a taxable 
year— 
‘‘(i) a qualifying child, 
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‘‘(ii) an aged dependent, or 
‘‘(iii) a qualifying individual described 
in subparagraph (B) or (C) of section 
21(b)(1). 
‘‘(B) IDENTIFICATION
REQUIREMENTS.— 
No credit shall be allowed under this section 
with respect to a qualifying dependent unless 
the taxpayer includes the name, age, and TIN 
of the individual on the return of tax for the 
taxable year. 
‘‘(C) PLACE OF ABODE.—The term ‘quali-
fying dependent’ shall not include an individual 
unless such individual has a principal place of 
abode in the United States for more than one- 
half of such taxable year. 
‘‘(4) AGED DEPENDENT.—The term ‘aged de-
pendent’ means a dependent for whom a deduction 
is allowable under section 151 who has attained the 
age of 65 before the close of the taxable year.’’. 
(3) CONFORMING AMENDMENTS.— 
(A) The tables in paragraphs (1) and (2) 
of section 32(b) of such Code are each amend-
ed— 
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(i) by striking ‘‘qualifying child’’ each 
place it appears and inserting ‘‘qualifying 
dependent’’, and 
(ii) by striking ‘‘qualifying children’’ 
each place it appears and inserting ‘‘quali-
fying dependents’’. 
(B) Section 32(c)(5) of such Code, as re-
designated by this Act, is amended by striking 
subparagraphs (C) and (D). 
(C) Section 32(m) of such Code is amend-
ed by striking ‘‘(c)(3)(D)’’ and inserting 
‘‘(c)(3)(B)’’. 
(b) INCLUSION OF QUALIFYING STUDENTS.— 
(1) IN GENERAL.—Section 32(c)(1)(A) of such 
Code is amended by striking ‘‘or’’ at the end of 
clause (i), by striking the period at the end of clause 
(ii)(III) and inserting ‘‘, or’’, and by inserting after 
clause (ii)(III) the following new clause: 
‘‘(iii) any individual who is a quali-
fying student.’’. 
(2) QUALIFYING STUDENT DEFINED.—Section 
32(c)(1) of such Code, as amended by subsection 
(a), is further amended by adding at the end the fol-
lowing new subparagraph: 
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income’ means the adjusted gross income 
of the taxpayer for the taxable year in-
creased by any amount excluded from 
gross income under section 911, 931, or 
933. 
‘‘(ii) POVERTY LINE.— 
‘‘(I) IN
GENERAL.—The term 
‘poverty line’ has the meaning given 
such term in section 673(2) of the 
Community Services Block Grant Act 
(42 U.S.C. 9902(2)), including any 
revision required by such section. 
‘‘(II) FAMILY
SIZE.—For pur-
poses of determining the poverty line 
applicable to the taxpayer, the family 
size with respect to any taxpayer shall 
be equal to the number of individuals 
for whom the taxpayer is allowed a 
deduction under section 151 (relating 
to allowance of deduction for personal 
exemptions) for the taxable year.’’. 
(3) 
CONFORMING
AMENDMENT.—Section 
32(c)(1)(A)(ii) of such Code is amended by inserting 
‘‘(other than a qualifying student)’’ after ‘‘any other 
individual’’. 
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(c) MINIMUM CREDIT FOR STUDENTS AND FOR INDI-
VIDUALS WITH CERTAIN QUALIFYING DEPENDENTS.— 
Section 32(a) of such Code is amended by adding at the 
end the following new paragraph: 
‘‘(3) MINIMUM
CREDIT
FOR
STUDENTS
AND 
FOR INDIVIDUALS WITH CERTAIN QUALIFYING DE-
PENDENTS.— 
‘‘(A) IN GENERAL.—In the case of a quali-
fying student, or an eligible individual who has 
a specified dependent for the taxable year, the 
amount determined under paragraph (1) (be-
fore the application of paragraph (2)) and the 
amount determined under paragraph (2)(A) 
shall not be less than $1,200. 
‘‘(B) SPECIFIED
DEPENDENT.—For pur-
poses of this paragraph, the term ‘specified de-
pendent’ means any qualifying dependent (other 
than a qualifying child who has attained the 
age of 7 before the close of the taxable year).’’. 
(d) MONTHLY PAYMENT.—Section 32 of such Code, 
as amended by this Act, is further amended by adding 
at the end the following new subsection: 
‘‘(n) MONTHLY PAYMENT.— 
‘‘(1) IN GENERAL.—In the case of an individual 
who is entitled to a refund relating to an overpay-
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ment of tax imposed by this subtitle that exceeds 
$240 (but only to the extent such refund does not 
exceed the credit allowed under this section) such in-
dividual may elect to have the Secretary, in lieu of 
such refund, make a payment equal to— 
‘‘(A) 2⁄13 of such refund (with interest) 
during the earlier of the first practicable month 
or the second month that begins after the date 
the return was filed, and 
‘‘(B) 1⁄13 of such refund (with interest) 
during each of the 11 months subsequent to the 
month determined under subparagraph (A). 
‘‘(2) METHOD OF PAYMENT.—A payment made 
under this subsection shall be made by direct deposit 
or by general-use prepaid card, or by such other 
method (other than by check) as the Secretary may 
prescribe and the taxpayer may elect. 
‘‘(3) ONE-TIME INCREASE.—The first time an 
individual receives a payment under this subsection, 
paragraph (1)(A) shall be applied by substituting 
‘4⁄13’ for ‘2⁄13’.’’. 
(e) SPECIAL RULE
FOR NEW LOW-INCOME PAR-
ENTS.—Section 32 of such Code, as amended by this Act, 
is further amended by adding at the end the following new 
subsection: 
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‘‘(o) SPECIAL RULE FOR NEW LOW-INCOME PAR-
ENTS.— 
‘‘(1) IN GENERAL.—In the case of an individual 
who— 
‘‘(A) is eligible for payments under sub-
section (o)(1) with respect to a refund for a 
taxable year, and 
‘‘(B) has a qualifying child who is born or 
adopted during the following taxable year and 
not later than the penultimate month for which 
the taxpayer is eligible for such payments, 
the amount of any such payments made after such 
birth or adoption shall be adjusted to the amount 
such payments would be if such qualifying child were 
a qualifying child of the taxpayer under this section 
for the taxable year to which such payments relate. 
‘‘(2) QUALIFYING
CHILD
DETERMINATION.— 
For purposes of determining if a child is a quali-
fying child for purposes of this subsection, sub-
section (m) shall be applied by inserting ‘or, in the 
case of an adoption, such other identifying informa-
tion as specified by the Secretary’ before the period 
at the end.’’. 
(f) AGE OF ELIGIBLE INDIVIDUALS WITHOUT DE-
PENDENTS.—Section 32(c)(1)(A)(ii)(II) of such Code is 
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amended by striking ‘‘age 25 but not attained age 65’’ 
and inserting ‘‘age 18’’. 
(g) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 4. RETURN PREPARATION PROGRAMS FOR LOW-IN-
COME TAXPAYERS. 
(a) IN GENERAL.—Chapter 77 of such Code is 
amended by inserting after section 7526A the following 
new section: 
‘‘SEC. 7526B. RETURN PREPARATION PROGRAMS FOR LOW- 
INCOME TAXPAYERS. 
‘‘(a) ESTABLISHMENT OF VOLUNTEER INCOME TAX 
ASSISTANCE MATCHING GRANT PROGRAM.—The Sec-
retary, through the Internal Revenue Service, shall estab-
lish a Community Volunteer Income Tax Assistance 
Matching Grant Program under which the Secretary may, 
subject to the availability of appropriated funds, make 
grants to provide matching funds for the development, ex-
pansion, or continuation of qualified return preparation 
programs assisting low-income taxpayers and members of 
underserved populations. 
‘‘(b) USE OF FUNDS.— 
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‘‘(1) IN GENERAL.—Qualified return prepara-
tion programs may use grants received under this 
section for— 
‘‘(A) ordinary and necessary costs associ-
ated with program operation in accordance with 
cost principles under the applicable Office of 
Management and Budget circular, including— 
‘‘(i) wages or salaries of persons co-
ordinating the activities of the program, 
‘‘(ii) developing training materials, 
conducting training, and performing qual-
ity reviews of the returns prepared under 
the program, 
‘‘(iii) equipment purchases, and 
‘‘(iv) vehicle-related expenses associ-
ated with remote or rural tax preparation 
services, 
‘‘(B) outreach and educational activities 
described in subsection (c)(2)(B), and 
‘‘(C) services related to financial education 
and capability, asset development, and the es-
tablishment of savings accounts in connection 
with tax return preparation. 
‘‘(2) USE
OF
GRANTS
FOR
OVERHEAD
EX-
PENSES PROHIBITED.—No grant received under this 
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section may be used for overhead expenses that are 
not directly related to a qualified return preparation 
program. 
‘‘(c) APPLICATION.— 
‘‘(1) IN GENERAL.—Each applicant for a grant 
under this section shall submit an application to the 
Secretary at such time, in such manner, and con-
taining such information as the Secretary may rea-
sonably require. 
‘‘(2) PRIORITY.—In awarding grants under this 
section, the Secretary shall give priority to applica-
tions which demonstrate— 
‘‘(A) assistance to low-income taxpayers, 
with emphasis on outreach to, and services for, 
such taxpayers, 
‘‘(B) taxpayer outreach and educational 
activities relating to eligibility and availability 
of income supports available through the Inter-
nal Revenue Code of 1986, including the earned 
income tax credit, and 
‘‘(C) specific outreach and focus on one or 
more underserved populations. 
‘‘(3) AMOUNTS TAKEN INTO ACCOUNT.—In de-
termining matching grants under this section, the 
Secretary shall only take into account amounts pro-
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vided by the qualified return preparation program 
for expenses described in subsection (b). 
‘‘(d) ACCURACY REVIEWS.— 
‘‘(1) IN GENERAL.—The Secretary shall estab-
lish procedures for, and shall conduct, periodic site 
visits of qualified return preparation programs oper-
ating under a grant under this section— 
‘‘(A) to ensure such programs are carrying 
out the purposes of this section, and 
‘‘(B) to determine the return preparation 
accuracy rate of the program. 
‘‘(2) ADDITIONAL REQUIREMENTS FOR GRANT 
RECIPIENTS NOT MEETING MINIMUM STANDARDS.— 
In the case of any qualified return preparation pro-
gram which— 
‘‘(A) is awarded a grant under this section, 
and 
‘‘(B) is subsequently determined— 
‘‘(i) to have a less than 90 percent av-
erage accuracy rate for preparation of tax 
returns, or 
‘‘(ii) not to be otherwise carrying out 
the purposes of this section, 
such program shall not be eligible for any addi-
tional grants under this section unless such pro-
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gram provides sufficient documentation of cor-
rective measures established to address any 
such deficiencies determined. 
‘‘(e) DEFINITIONS.—For purposes of this section— 
‘‘(1) QUALIFIED
RETURN
PREPARATION
PRO-
GRAM.—The term ‘qualified return preparation pro-
gram’ means any program— 
‘‘(A) which provides assistance to individ-
uals, not less than 90 percent of whom are low- 
income taxpayers, in preparing and filing Fed-
eral income tax returns, 
‘‘(B) which is administered by a qualified 
entity, 
‘‘(C) in which all volunteers who assist in 
the preparation of Federal income tax returns 
meet the training requirements prescribed by 
the Secretary, and 
‘‘(D) which uses a quality review process 
which reviews 100 percent of all returns. 
‘‘(2) QUALIFIED ENTITY.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
entity’ means any entity which— 
‘‘(i) is an eligible organization, 
‘‘(ii) is in compliance with Federal tax 
filing and payment requirements, 
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‘‘(iii) is not debarred or suspended 
from Federal contracts, grants, or coopera-
tive agreements, and 
‘‘(iv) agrees to provide documentation 
to substantiate any matching funds pro-
vided pursuant to the grant program under 
this section. 
‘‘(B) ELIGIBLE ORGANIZATION.—The term 
‘eligible organization’ means— 
‘‘(i) an institution of higher education 
which is described in section 102 (other 
than subsection (a)(1)(C) thereof) of the 
Higher Education Act of 1965 (20 U.S.C. 
1002), as in effect on the date of the en-
actment of this section, and which has not 
been disqualified from participating in a 
program under title IV of such Act, 
‘‘(ii) an organization described in sec-
tion 501(c) and exempt from tax under 
section 501(a), 
‘‘(iii) a local government agency, in-
cluding— 
‘‘(I) a county or municipal gov-
ernment agency, and 
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‘‘(II) an Indian tribe, as defined 
in section 4(13) of the Native Amer-
ican Housing Assistance and Self-De-
termination Act of 1996 (25 U.S.C. 
4103(13)), including any tribally des-
ignated housing entity (as defined in 
section 4(22) of such Act (25 U.S.C. 
4103(22))), tribal subsidiary, subdivi-
sion, or other wholly owned tribal en-
tity, 
‘‘(iv) a local, State, regional, or na-
tional coalition (with one lead organization 
which meets the eligibility requirements of 
clause (i), (ii), or (iii) acting as the appli-
cant organization), or 
‘‘(v) in the case of a targeted popu-
lation or community with respect to which 
no organizations described in the preceding 
clauses are available— 
‘‘(I) a State government agency, 
or 
‘‘(II) an office providing Cooper-
ative Extension services (as estab-
lished at the land-grant colleges and 
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universities under the Smith-Lever 
Act of May 8, 1914). 
‘‘(3) LOW-INCOME TAXPAYERS.—The term ‘low- 
income taxpayer’ means a taxpayer whose income 
for the taxable year does not exceed an amount 
equal to the completed phaseout amount under sec-
tion 32(b) for a married couple filing a joint return 
with 3 or more qualifying children, as determined in 
a revenue procedure or other published guidance. 
‘‘(4) UNDERSERVED
POPULATION.—The term 
‘underserved population’ includes populations of per-
sons with disabilities, persons with limited English 
proficiency, Native Americans, individuals living in 
rural areas, members of the Armed Forces and their 
spouses, and the elderly. 
‘‘(f) SPECIAL RULES AND LIMITATIONS.— 
‘‘(1) DURATION OF GRANTS.—Upon application 
of a qualified return preparation program, the Sec-
retary is authorized to award a multi-year grant not 
to exceed 3 years. 
‘‘(2) AGGREGATE
LIMITATION.—Unless other-
wise provided by specific appropriation, the Sec-
retary shall not allocate more than $30,000,000 per 
fiscal year (exclusive of costs of administering the 
program) to grants under this section. 
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‘‘(g) PROMOTION AND REFERRAL.— 
‘‘(1) PROMOTION.—The Secretary shall pro-
mote tax preparation through qualified return prepa-
ration programs through the use of mass commu-
nications, referrals, and other means. 
‘‘(2) INTERNAL
REVENUE
SERVICE
REFER-
RALS.—The Secretary may refer taxpayers to quali-
fied return preparation programs receiving grants 
under this section. 
‘‘(3) VITA GRANTEE REFERRAL.—Qualified re-
turn preparation programs receiving a grant under 
this section are encouraged to refer, as appropriate, 
to local or regional Low-Income Taxpayer Clinics in-
dividuals who are eligible for such clinics.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for chapter 77 is amended by inserting after the item re-
lating to section 7526A the following new item: 
‘‘7526B. Return preparation programs for low-income taxpayers.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to taxable years begin-
ning after the date of enactment of this Act. 
Æ 
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