Title: EITC Modernization Act of 2018
Policy area: Taxation

Summary:
EITC Modernization Act of 2018
This bill modifies the Earned Income Tax Credit (EITC) to: (1) make certain individuals who are college students or have an aged or disabled dependent eligible for the credit, (2) specify minimum credit amounts for the qualifying students and individuals with an aged or disabled dependent, (3) allow certain EITC recipients to elect to receive the credit payments monthly, and (4) decrease from 25 to 18 the minimum age of eligibility for individuals without dependents.
The bill also requires the Internal Revenue Service to establish a Community Volunteer Income Tax Assistance Matching Grant Program to provide matching funds for the development, expansion, or continuation of tax preparation programs to assist low-income taxpayers and members of underserved populations.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6873 Introduced in House (IH)]

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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. Barragan, 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 dependents and to qualifying students, 
                        and for other purposes.

    Be it enacted by the Senate and House of Representatives 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:
            (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 education 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 together increase the wages of 
        working Americans, widen the path to income stability, and 
        narrow income 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 striking ``qualifying 
        child'' each place such term appears and inserting ``qualifying 
        dependent''.
            (2) Qualifying dependent defined.--Section 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 
                                dependent.
                            ``(ii) Identification requirements.--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 
                                principal 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 
                        disability under title II or XVI of the Social 
                        Security Act at any point during such taxable 
                        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 appears and inserting 
                ``qualifying dependent'' and by striking ``qualifying 
                children'' each place such term appears and inserting 
                ``qualifying dependents''.
                    (B) Section 32(c)(3) of such Code is amended by 
                striking subparagraphs (C) and (D).
                    (C) Section 32(m) of such Code is amended 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 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 qualifying 
                        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 following new subparagraph:
                    ``(G) Qualifying student.--The term `qualifying 
                student' means, with respect to 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 eligible 
                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 percentage of so much of 
                the taxpayer's earned income for the taxable year as 
                does not exceed the earned income amount.
                    ``(B) Minimum credit amount for individuals with 
                dependents and for qualifying students.--In the case of 
                an eligible individual described in clause (i) or (iii) 
                of subsection (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 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 Parents.--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 Parents.--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 adoption by reason of a return,
the amount of the subsequent payments made under subsection (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 return was filed. For purposes of determining if a 
child is a qualifying child for purposes of this subsection, subsection 
(m) shall be applied by inserting `or, in the case of an adoption, such 
other identifying information as specified 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-Income 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 Secretary, through the Internal Revenue Service, 
shall establish 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, expansion, or continuation of qualified 
return preparation programs assisting low-income taxpayers and members 
of underserved populations.
    ``(b) Use of Funds.--
            ``(1) In general.--Qualified return preparation programs 
        may use grants received under this section for--
                    ``(A) ordinary and necessary costs associated with 
                program operation in accordance with cost principles 
                under the applicable Office of Management and Budget 
                circular, including--
                            ``(i) wages or salaries of persons 
                        coordinating the activities of the program,
                            ``(ii) developing training materials, 
                        conducting training, and performing quality 
                        reviews of the returns prepared under the 
                        program,
                            ``(iii) equipment purchases, and
                            ``(iv) vehicle-related expenses associated 
                        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 establishment of 
                savings accounts in connection with tax return 
                preparation.
            ``(2) Use of grants for overhead expenses 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 containing such information as the 
        Secretary may reasonably require.
            ``(2) Priority.--In awarding grants under this section, the 
        Secretary shall give priority to applications 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 Internal 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 determining matching 
        grants under this section, the Secretary shall only take into 
        account amounts provided by the qualified return preparation 
        program for expenses described in subsection (b).
    ``(d) Accuracy Reviews.--
            ``(1) In general.--The Secretary shall establish procedures 
        for, and shall conduct, periodic site visits of qualified 
        return preparation programs operating 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 program which--
                    ``(A) is awarded a grant under this section, and
                    ``(B) is subsequently determined--
                            ``(i) to have a less than 90 percent 
                        average 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 additional 
                grants under this section unless such program provides 
                sufficient documentation of corrective measures 
                established to address any such deficiencies 
                determined.
    ``(e) Definitions.--For purposes of this section--
            ``(1) Qualified return preparation program.--The term 
        `qualified return preparation program' means any program--
                    ``(A) which provides assistance to individuals, not 
                less than 90 percent of whom are low-income taxpayers, 
                in preparing and filing Federal 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,
                            ``(iii) is not debarred or suspended from 
                        Federal contracts, grants, or cooperative 
                        agreements, and
                            ``(iv) agrees to provide documentation to 
                        substantiate any matching funds provided 
                        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 enactment 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 section 
                        501(c) and exempt from tax under section 
                        501(a),
                            ``(iii) a local government agency, 
                        including--
                                    ``(I) a county or municipal 
                                government agency, and
                                    ``(II) an Indian tribe, as defined 
                                in section 4(13) of the Native American 
                                Housing Assistance and Self-
                                Determination Act of 1996 (25 U.S.C. 
                                4103(13)), including any tribally 
                                designated housing entity (as defined 
                                in section 4(22) of such Act (25 U.S.C. 
                                4103(22))), tribal subsidiary, 
                                subdivision, or other wholly owned 
                                tribal entity,
                            ``(iv) a local, State, regional, or 
                        national coalition (with one lead organization 
                        which meets the eligibility requirements of 
                        clause (i), (ii), or (iii) acting as the 
                        applicant organization), or
                            ``(v) in the case of a targeted population 
                        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 
                                Cooperative Extension services (as 
                                established 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 
        section 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 persons 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 Secretary is authorized to 
        award a multi-year grant not to exceed 3 years.
            ``(2) Aggregate limitation.--Unless otherwise provided by 
        specific appropriation, the Secretary 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 promote tax 
        preparation through qualified return preparation programs 
        through the use of mass communications, referrals, and other 
        means.
            ``(2) Internal revenue service referrals.--The Secretary 
        may refer taxpayers to qualified return preparation programs 
        receiving grants under this section.
            ``(3) Vita grantee referral.--Qualified return preparation 
        programs receiving a grant under this section are encouraged to 
        refer, as appropriate, to local or regional Low-Income Taxpayer 
        Clinics individuals who are eligible for such clinics.''.
            (2) Clerical amendment.--The table of sections 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.''.
    (h) Effective Date.--The amendments made by this section shall 
apply with respect to taxable years beginning after December 31, 2018.
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