I 
115TH CONGRESS 
2D SESSION 
H. R. 6873 
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 25, 2018 
Mrs. WATSON COLEMAN (for herself, Mr. KHANNA, Mr. RYAN of Ohio, Mr. 
GRIJALVA, Ms. NORTON, Mr. SOTO, Ms. CLARKE of New York, Ms. 
JACKSON LEE, Ms. BASS, Ms. BARRAGA´N, Mr. LAWSON of Florida, Ms. 
JAYAPAL, Mr. THOMPSON of Mississippi, and Mr. RASKIN) 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 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 of 2018’’. 
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)(A) of the 
Internal Revenue Code of 1986 is amended by strik-
ing ‘‘qualifying child’’ each place such term appears 
and inserting ‘‘qualifying dependent’’. 
(2) QUALIFYING DEPENDENT DEFINED.—Sec-
tion 32(c)(1) of such Code is amended by striking 
subparagraphs (B) and (F), and by redesignating 
subparagraphs (C) and (D) as subparagraphs (B) 
and (C), respectively, by redesignating subparagraph 
(E) as subparagraph (F), and by adding at the end 
the following new subparagraphs: 
‘‘(D) QUALIFYING DEPENDENT.— 
‘‘(i) The term ‘qualifying dependent’ 
means, with respect to a taxable year— 
‘‘(I) a qualifying child, or 
‘‘(II) an aged or disabled depend-
ent. 
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‘‘(ii) 
IDENTIFICATION
REQUIRE-
MENTS.—The term ‘qualifying dependent’ 
shall not include an individual unless— 
‘‘(I) the taxpayer includes the 
name, age, and TIN of the individual 
on the return of tax for the taxable 
year, and 
‘‘(II) such individual has a prin-
cipal place of abode in the United 
States for more than one-half of such 
taxable year. 
‘‘(E) AGED OR DISABLED DEPENDENT.— 
The term ‘aged or disabled dependent’ means a 
dependent for whom a deduction is allowable 
under section 151 who— 
‘‘(i) has attained the age of 65 before 
the close of the taxable year, or 
‘‘(ii) is determined to be under a dis-
ability under title II or XVI of the Social 
Security Act at any point during such tax-
able year.’’. 
(3) CONFORMING AMENDMENTS.— 
(A) The tables in paragraphs (1) and (2) 
of section 32(b) of such Code are amended by 
striking ‘‘qualifying child’’ each place such term 
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appears and inserting ‘‘qualifying dependent’’ 
and by striking ‘‘qualifying children’’ each place 
such term appears and inserting ‘‘qualifying de-
pendents’’. 
(B) Section 32(c)(3) of such Code 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)(1)(G)(ii)’’. 
(b) INCLUSION OF QUALIFYING STUDENTS.— 
(1) IN GENERAL.—Section 32(c)(1)(A) of the 
Internal Revenue Code of 1986 is amended by strik-
ing ‘‘or’’ at the end of clause (i), by striking the pe-
riod at the end of clause (ii)(III) and inserting ‘‘, 
or’’, and by inserting after clause (ii)(III) the fol-
lowing 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: 
‘‘(G) QUALIFYING
STUDENT.—The term 
‘qualifying student’ means, with respect to 
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month in a taxable year, an individual who is 
an eligible student (as defined in section 
25A(b)(3)) with respect to an institution of 
higher education (as defined in section 101 of 
the Higher Education Act of 1965) who— 
‘‘(i) is eligible for a Federal Pell 
Grant with respect to the academic year 
beginning in such taxable year, and 
‘‘(ii) is not a dependent for whom a 
deduction is allowable under section 151 to 
another taxpayer for the taxable year.’’. 
(c) MINIMUM CREDIT AMOUNT FOR INDIVIDUALS 
WITH QUALIFYING DEPENDENTS AND FOR QUALIFYING 
STUDENTS.—Section 32(a)(1) of the Internal Revenue 
Code of 1986 is amended to read as follows: 
‘‘(1) CREDIT AMOUNT.— 
‘‘(A) IN GENERAL.—In the case of an eligi-
ble individual, there shall be allowed as a credit 
against the tax imposed by this subtitle for the 
taxable year an amount equal to the credit per-
centage of so much of the taxpayer’s earned in-
come for the taxable year as does not exceed 
the earned income amount. 
‘‘(B) MINIMUM CREDIT AMOUNT FOR INDI-
VIDUALS WITH DEPENDENTS AND FOR QUALI-
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FYING STUDENTS.—In the case of an eligible 
individual described in clause (i) or (iii) of sub-
section (c)(1)(A), the following provisions shall 
be applied by inserting ‘the greater of $1,200 
or’ before ‘the credit percentage’: 
‘‘(i) CREDIT AMOUNT.—Subparagraph 
(A). 
‘‘(ii) 
PHASEOUT.—Paragraph 
(2)(A).’’. 
(d) MONTHLY PAYMENT.—Section 32 of the Internal 
Revenue Code of 1986 is amended by adding at the end 
the following new subsection: 
‘‘(n) MONTHLY PAYMENT.— 
‘‘(1) IN GENERAL.—In the case of an individual 
entitled under this section to a refund that exceeds 
$240, such individual may elect to have the Sec-
retary, 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). 
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‘‘(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 the Internal Revenue Code of 1986, 
after amendment by subsection (c), is further amended by 
adding at the end the following new subsection: 
‘‘(o) SPECIAL RULE FOR NEW LOW-INCOME PAR-
ENTS.—In the case of an individual who— 
‘‘(1) has a qualifying child, and 
‘‘(2) is, on the date of the birth (or adoption by 
such taxpayer) of such child, eligible for a payment 
under subsection (n)(1) to be made after the date 
that is one month after such date of birth or adop-
tion by reason of a return, 
the amount of the subsequent payments made under sub-
section (n)(1) by reason of such return shall be determined 
as if such qualifying child were a qualifying child of the 
taxpayer with respect to the taxable year for which such 
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return was filed. For purposes of determining if a child 
is a qualifying child for purposes of this subsection, sub-
section (m) shall be applied by inserting ‘or, in the case 
of an adoption, such other identifying information as spec-
ified by the Secretary’ before the period at the end.’’. 
(f) DECREASE IN MINIMUM AGE FOR INDIVIDUALS 
WITHOUT DEPENDENTS.—Section 32(c)(1)(A)(ii)(II) of 
the Internal Revenue Code of 1986 is amended by striking 
‘‘age 25’’ and inserting ‘‘age 18’’. 
(g) RETURN PREPARATION PROGRAMS FOR LOW-IN-
COME TAXPAYERS.— 
(1) IN GENERAL.—Chapter 77 of the Internal 
Revenue Code of 1986 is amended by inserting after 
section 7526 the following new section: 
‘‘SEC. 7526A. 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 
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programs assisting low-income taxpayers and members of 
underserved populations. 
‘‘(b) USE OF FUNDS.— 
‘‘(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-
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tablishment of savings accounts in connection 
with tax return preparation. 
‘‘(2) USE
OF
GRANTS
FOR
OVERHEAD
EX-
PENSES PROHIBITED.—No grant received under this 
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 
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‘‘(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-
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— 
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‘‘(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-
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 
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‘‘(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, 
‘‘(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, 
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‘‘(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 
‘‘(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 
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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 
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-
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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. 
‘‘(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.’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions for chapter 77 is amended by inserting after 
the item relating to section 7526 the following new 
item: 
‘‘7526A. Return preparation programs for low-income taxpayers.’’. 
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(h) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to taxable years begin-
ning after December 31, 2018. 
Æ 
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