II 109th CONGRESS 1st Session S. 324 IN THE SENATE OF THE UNITED STATES February 9, 2005 Mr. Akaka (for himself, Mr. Bingaman, Mr. Sarbanes, Mr. Dayton, and Mr. Durbin) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To provide additional protections for recipients of the earned income tax credit.

1.

Short title

This Act may be cited as the Taxpayer Abuse Prevention Act.

2.

Prevention of diversion of earned income tax credit benefits

(a)

In general

Section 32 of the Internal Revenue Code of 1986 (relating to earned income tax credit) is amended by adding at the end the following new subsection: (n)

Prevention of diversion of credit benefits

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 such right or any moneys paid or payable under this section shall not be subject to any execution, levy, attachment, garnishment, offset, or other legal process 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.

3.

Prohibition on debt collection offset

(a)

In general

No person shall, directly or indirectly, 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 accepting an application or agreement for a refund anticipation loan or refund anticipation check that contains a provision 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 taxpayer 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.

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 Federal tax refund for the taxpayer may not include mandatory 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.

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.

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 taxpayer because of the taxpayer’s anticipated receipt of a Federal tax refund.

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.

8.

Program to encourage the use of the advance 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, nonprofit, and governmental entities as the Secretary determines appropriate, develop and implement a program to encourage the greater utilization of the advance earned income tax credit. (b)

Reports

Not later than the date of the implementation 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 Representatives 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 expended.

9.

Program to link taxpayers with direct deposit 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 institution

For purposes of this section, the term federally insured depository institution means any insured depository institution (as defined in section 3 of the Federal Deposit 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 expended.