I 
108TH CONGRESS 
2D SESSION 
H. R. 5340
To provide additional protections for recipients of the earned income tax 
credit. 
IN THE HOUSE OF REPRESENTATIVES 
OCTOBER 8, 2004
Ms. SCHAKOWSKY introduced the following bill; which was referred to the 
Committee on Ways and Means, and in addition to the Committee on Fi-
nancial Services, for a period to be subsequently determined by the 
Speaker, in each case for consideration of such provisions as fall within 
the jurisdiction of the committee concerned 
A BILL 
To provide additional protections for recipients of the earned 
income tax credit.
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 ‘‘Taxpayer Abuse Pre-
vention Act’’. 
SEC. 2. PREVENTION OF DIVERSION OF EARNED INCOME 
TAX CREDIT BENEFITS. 
(a) IN GENERAL.—Section 32 of the Internal Rev-
enue Code of 1986 (relating to earned income tax credit)
is amended by adding at the end the following new sub-
section: 
‘‘(n) PREVENTION OF DIVERSION OF CREDIT BENE-
FITS.—The right of any individual to any future payment 
of the credit under this section shall not be transferable 
or assignable, at law or in equity, and none of the moneys 
paid or payable or right shall be subject to any execution, 
levy, attachment, garnishment, offset, or other legal proc-
ess except for any outstanding Federal obligation. Any 
waiver of the protections of this subsection shall be 
deemed null, void, and of no effect.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall take effect on the date of the enactment 
of this Act. 
SEC. 3. PROHIBITION ON DEBT COLLECTION OFFSET. 
(a) IN GENERAL.—No person shall, directly or indi-
rectly, individually or in conjunction or in cooperation with 
another person, engage in the collection of an outstanding 
or delinquent debt for any creditor or assignee by means 
of soliciting the execution of, processing, receiving, or ac-
cepting an application or agreement for a refund anticipa-
tion loan or refund anticipation check that contains a pro-
vision permitting the creditor to repay, by offset or other 
means, an outstanding or delinquent debt for that creditor 
from the proceeds of the debtor’s Federal tax refund.
(b) REFUND ANTICIPATION LOAN.—For purposes of 
subsection (a), the term ‘‘refund anticipation loan’’ means 
a loan of money or of any other thing of value to a tax-
payer because of the taxpayer’s anticipated receipt of a 
Federal tax refund. 
(c) EFFECTIVE DATE.—This section shall take effect 
on the date of the enactment of this Act. 
SEC. 4. PROHIBITION OF MANDATORY ARBITRATION. 
(a) IN GENERAL.—Any person that provides a loan 
to a taxpayer that is linked to or in anticipation of a Fed-
eral tax refund for the taxpayer may not include manda-
tory arbitration of disputes as a condition for providing 
such a loan. 
(b) EFFECTIVE DATE.—This section shall apply to 
loans made after the date of the enactment of this Act. 
SEC. 5. TERMINATION OF DEBT INDICATOR PROGRAM. 
The Secretary of the Treasury shall terminate the 
Debt Indicator program announced in Internal Revenue 
Service Notice 99–58. 
SEC. 6. DETERMINATION OF ELECTRONIC FILING GOALS. 
(a) IN GENERAL.—Any electronically filed Federal 
tax returns, that result in Federal tax refunds that are 
distributed by refund anticipation loans, shall not be taken 
into account in determining if the goals required under 
section 2001(a)(2) of the Restructuring and Reform Act
of 1998 that the Internal Revenue Service have at least 
80 percent of all such returns filed electronically by 2007 
are achieved. 
(b) REFUND ANTICIPATION LOAN.—For purposes of 
subsection (a), the term ‘‘refund anticipation loan’’ means 
a loan of money or of any other thing of value to a tax-
payer because of the taxpayer’s anticipated receipt of a 
Federal tax refund. 
SEC. 7. EXPANSION OF ELIGIBILITY FOR ELECTRONIC 
TRANSFER ACCOUNTS. 
(a) IN GENERAL.—The last sentence of section 
3332(j) of title 31, United States Code, is amended by 
inserting ‘‘other than any payment under section 32 of 
such Code’’ after ‘‘1986’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to payments made after the date 
of the enactment of this Act. 
SEC. 8. PROGRAM TO ENCOURAGE THE USE OF THE AD-
VANCE EARNED INCOME TAX CREDIT. 
(a) IN GENERAL.—Not later than 6 months after the 
date of the enactment of this Act, the Secretary of the 
Treasury shall, after consultation with such private, non-
profit, and governmental entities as the Secretary deter-
mines appropriate, develop and implement a program to
encourage the greater utilization of the advance earned in-
come tax credit. 
(b) REPORTS.—Not later than the date of the imple-
mentation of the program described in subsection (a), and 
annually thereafter, the Secretary of the Treasury shall 
report to the Committee on Finance of the Senate and 
the Committee on Ways and Means of the House of Rep-
resentatives on the elements of such program and progress 
achieved under such program. 
(c) AUTHORIZATION OF APPROPRIATIONS.—There is 
authorized to be appropriated such sums as are necessary 
to carry out the program described in this section. Any 
sums so appropriated shall remain available until ex-
pended. 
SEC. 9. PROGRAM TO LINK TAXPAYERS WITH DIRECT DE-
POSIT ACCOUNTS AT FEDERALLY INSURED 
DEPOSITORY INSTITUTIONS. 
(a) ESTABLISHMENT OF PROGRAM.—Not later than 
1 year after the date of the enactment of this Act, the 
Secretary of the Treasury shall enter into cooperative 
agreements with federally insured depository institutions 
to provide low- and moderate-income taxpayers with the 
option of establishing low-cost direct deposit accounts 
through the use of appropriate tax forms.
(b) FEDERALLY INSURED DEPOSITORY INSTITU-
TION.—For purposes of this section, the term ‘‘federally 
insured depository institution’’ means any insured deposi-
tory institution (as defined in section 3 of the Federal De-
posit Insurance Act (12 U.S.C. 1813)) and any insured 
credit union (as defined in section 101 of the Federal 
Credit Union Act (12 U.S.C. 1752)). 
(c) OPERATION OF PROGRAM.—In providing for the 
operation of the program described in subsection (a), the 
Secretary of the Treasury is authorized—
(1) to consult with such private and nonprofit 
organizations and Federal, State, and local agencies 
as determined appropriate by the Secretary, and 
(2) to promulgate such regulations as necessary 
to administer such program. 
(d) AUTHORIZATION OF APPROPRIATIONS.—There is 
authorized to be appropriated such sums as are necessary 
to carry out the program described in this section. Any 
sums so appropriated shall remain available until ex-
pended.
Æ