Financial Security Credit Act of 2015

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Financial Security Credit Act of 
2015''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) United States households are experiencing significant 
        levels of financial vulnerability, characterized by a lack of 
        personal savings. The personal savings rate reached historic 
        lows in the past decade, and a lack of personal savings was a 
        major contributor to the recession of 2007-2009, and to the 
        slow recovery of ensuing years.
            (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 Research 
                Institute, among full-time, full-year wage and salary 
                workers ages 21-64, only 54.5 percent participated in a 
                retirement plan in 2013.
                    (B) According to the Federal Deposit Insurance 
                Corporation 2013 Survey of Unbanked and Underbanked 
                Households, an estimated 7.7 percent of United States 
                households are unbanked. These households do not have a 
                checking or savings account. In total, 31.2 percent of 
                households do not have a savings account.
                    (C) According to the Pew Charitable Trusts, the 
                majority of American households (55 percent) are 
                savings-limited, meaning they can replace less than one 
                month of their income through liquid savings.
            (3) Financial shocks are common and savings make households 
        more resilient to financial shocks and more upwardly mobile, as 
        evidenced by the following:
                    (A) Substantial fluctuations in family income are 
                the norm. In any given 2-year period, nearly half of 
                households experience an income gain or drop of more 
                than 25 percent, a rate of volatility that has been 
                relatively constant since 1979.
                    (B) 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.
                    (C) Children born to low-income, high-saving 
                parents are much more likely (71 percent) to move up 
                the economic ladder than children born to low-income, 
                low-saving parents (50 percent) over a generation.
            (4) Emergency savings are necessary to protect retirement 
        savings from early, penalized withdrawals and to support long-
        term retirement security.
            (5) Successful pilot programs administered through local 
        Volunteer Income Tax Assistance sites in cities as diverse as 
        Houston, Texas; Newark, New Jersey; New York City, New York; 
        San Antonio, Texas; and Tulsa, Oklahoma, have shown that tax 
        filers with low incomes can and will save when presented with 
        the right incentive at the right moment and access to an 
        account. The potential of increasing savings at tax time among 
        low- and moderate-income households has been further validated 
        by the low-touch, large-scale pilot Refund to Savings.
            (6) It is in the economic interests of the United States to 
        promote savings among all members of society, regardless of 
        income.

SEC. 3. FINANCIAL SECURITY CREDIT.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 
section 36B the following new section:

``SEC. 36C. FINANCIAL SECURITY CREDIT.

    ``(a) Allowance of Credit.--There shall be allowed 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 contributed to 
        designated savings product.--No amount shall be allowed as a 
        credit under subsection (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 designated 
        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 taxpayer'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 
                        return,
                            ``(ii) $41,625 in the case of an individual 
                        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 status shall 
                be determined under section 7703.
    ``(c) Designated Savings Product.--For purposes 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 considered to be 
        appropriate by the Secretary for the purposes of this section.
    ``(d) Special Rules.--
            ``(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 allowed under 
        this section by reason of being considered as an overpayment by 
        section 6401(b)) and designated for deposit in or contribution 
        to a designated 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 contribution or deposit 
        shall be taken into account under subsection (a) unless such 
        contribution or deposit 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 deposits 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 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 distribution.
                    ``(B) Testing period.--For purposes of subparagraph 
                (A), the testing period, with respect to a taxable 
                year, is the period which includes--
                            ``(i) such taxable year,
                            ``(ii) the 2 preceding taxable years, and
                            ``(iii) the period after such taxable year 
                        and before the due date (including extensions) 
                        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 paragraph.
            ``(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.
            ``(5) Coordination with other refundable credits.--The 
        credit allowed by subsection (a) shall be taken into account 
        after taking into account 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 2016, 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 determined 
                under section 1(f)(3) for the calendar year in which 
                the taxable year begins, determined by substituting 
                `calendar year 2015' for `calendar year 1992' in 
                subparagraph (B) thereof.
            ``(2) AGI thresholds.--In the case of any taxable year 
        beginning in a calendar year after 2016, 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 determined 
                under section 1(f)(3) for the calendar year in which 
                the taxable year begins, determined by substituting 
                `calendar year 2015' 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 lowest 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 lowest 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 determines 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),
            ``(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 ``36C,'' after ``36B,''.
            (2) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of the Internal Revenue Code of 1986 
        is amended by inserting after the item relating to section 36C 
        the following new item:

``Sec. 36C. Financial security credit.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2015.

SEC. 4. OPENING OF ACCOUNTS ON FEDERAL INCOME TAX RETURNS TO FACILITATE 
              SAVINGS.

    (a) Notification of Option.--
            (1) In general.--The Commissioner of Internal Revenue shall 
        notify individuals who may qualify for a credit under section 
        36C of the Internal Revenue Code of 1986 but fail to provide 
        sufficient information to allow the Secretary to deposit or 
        contribute the credit amount to a designated savings product 
        that they have the option of an electronic direct deposit and 
        that they may be eligible for the financial security credit 
        under section 36C of such Code if they deposit a refund or a 
        portion of their refund in any designated savings product.
            (2) Method of notification.--The notification under 
        paragraph (1) shall be made through--
                    (A) a public awareness program undertaken by the 
                Secretary of the Treasury, in concert with the 
                Commissioner of Internal Revenue and others as 
                necessary, beginning not later than 6 months after the 
                date of the enactment of this Act;
                    (B) tax return preparers and low-income taxpayer 
                clinics; and
                    (C) the inclusion of such a notice in the 
                instruction 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--
            (1) provisions for such tax refunds to be deposited into a 
        designated account;
            (2) establishment of account parameters with respect to 
        minimum balance requirements, limitations 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 account 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 insured under the Federal Credit Union Act.
    (c) Effective Date.--The notification under subsection (a) and the 
program under subsection (b) shall be effective with respect to Federal 
income tax returns for taxable years beginning after December 31, 2015.

Summary: Financial Security Credit Act of 2015 This bill amends the Internal Revenue Code to allow an income-based tax credit equal to the lesser of $500 or 50% of the total amount deposited or contributed into designated savings products in a taxable year (financial security credit). A "designated savings product" is a qualified retirement plan, a qualified tuition plan, a Coverdell education savings account, a U.S. savings bond, a certificate of deposit with a duration of at least eight months, a savings account, or other savings product considered appropriate by the&nbsp;Department&nbsp;of the Treasury.  The Internal Revenue Service must notify individual taxpayers who may qualify for a financial security credit that they have the option of an electronic direct deposit if they deposit any portion of their tax refund into a designated savings product.