[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 3190 Introduced in Senate (IS)]







110th CONGRESS
  2d Session
                                S. 3190

  To amend the Internal Revenue Code of 1986 to require employers to 
notify their employees of the availability of the earned income credit.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 25, 2008

  Mr. Schumer introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
  To amend the Internal Revenue Code of 1986 to require employers to 
notify their employees of the availability of the earned income credit.

    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 ``Earned Income Credit Information Act 
of 2008''.

SEC. 2. FINDINGS AND PURPOSE.

    (a) Findings.--The Congress hereby finds:
            (1) President Gerald Ford and Congress created the earned 
        income credit (EIC) in 1975 to offset the adverse effects of 
        Social Security and Medicare payroll taxes on working poor 
        families and to encourage low-income workers to seek employment 
        rather than welfare.
            (2) President Ronald Reagan described the earned income 
        credit as ``the best anti-poverty, the best pro-family, the 
        best job-creation measure to come out of Congress.''
            (3) Over the last 30 years, the EIC program has grown into 
        the largest Federal anti-poverty program in the United States. 
        In 2005, 22.8 million tax filers received $42.4 billion in tax 
        credits through the EIC program.
            (4) In 2007, the EIC provided a maximum Federal benefit of 
        $4,716 for families with 2 or more children, $2,853 for 
        families with a single child, and $428 for a taxpayer with no 
        qualifying children.
            (5) Based on analysis conducted by the General 
        Accountability Office, 25 percent of those eligible to receive 
        the EIC do not take advantage of the tax benefit.
            (6) Based on analysis conducted by the Joint Economic 
        Committee, working Americans may have lost out on approximately 
        $8 billion in unclaimed earned income credits in 2004.
            (7) In response to a study by the California Franchise Tax 
        Board that found that there were approximately 460,000 
        California families that qualified, but did not file, for the 
        EIC, Governor Arnold Schwarzenegger signed into law Assembly 
        Bill 650, the Earned Income Tax Credit Information Act, on 
        October 13, 2007. The law requires that California employers 
        notify employees of their potential eligibility for the EIC.
            (8) In order to ensure that tax benefits designed to assist 
        working Americans reach the maximum number of people, the 
        Federal Government should enact a similar law.
    (b) Purpose.--The purpose of this Act is to inform the greatest 
possible number of Americans about their potential eligibility for the 
earned income credit in a way that is neither costly nor burdensome for 
employers or the Government.

SEC. 3. EMPLOYER NOTIFICATION OF AVAILABILITY OF EARNED INCOME CREDIT.

    (a) In General.--Chapter 77 of the Internal Revenue Code of 1986 
(relating to miscellaneous provisions) is amended by adding at the end 
the following new section:

``SEC. 7529. EMPLOYER NOTIFICATION OF AVAILABILITY OF EARNED INCOME 
              CREDIT.

    ``(a) In General.--Every employer required to provide a statement 
under section 6051 (relating to W-2 statements) to a potential EIC-
eligible employee shall provide to such employee the notice described 
in subsection (c).
    ``(b) Potential EIC-Eligible Employee.--For purposes of this 
section, the term `potential EIC-eligible employee' means any 
individual whose annual wages from the employer are less than the 
amount of earned income (as defined in section 32(c)(2)) at which the 
credit under section 32(a) phases out for an individual described in 
section 32(c)(1)(A)(ii) (or such other amount as may be prescribed by 
the Secretary).
    ``(c) Contents of Notice.--
            ``(1) In general.--The notice required by subsection (a) 
        shall be--
                    ``(A) a copy of Internal Revenue Service Notice 797 
                or any successor notice, or
                    ``(B) a notice stating: `Based on your annual 
                earnings, you may be eligible to receive the earned 
                income credit from the Federal Government. The earned 
                income credit is a tax credit for certain working 
                individuals and families. In 2008, earned income credit 
                benefits are available for taxpayers with earnings up 
                to $38,646 ($41,646 if married filing jointly). 
                Eligibility and benefit amounts vary according to 
                filing status (single or married), number of qualifying 
                children, and other sources of income. For example, in 
                2008, earned income credit benefits are available for 
                childless taxpayers earning less than $15,880, 
                taxpayers with 1 child earning less than $36,995, and 
                taxpayers with 2 or more children earning less than 
                $41,646. In most cases, earned income credit payments 
                will not be used to determine eligibility for Medicaid, 
                supplemental security income, food stamps, low-income 
                housing or most temporary assistance for needy families 
                programs. Even if you do not owe Federal taxes, you may 
                qualify, but must file a tax return to receive the 
                earned income credit. For information regarding your 
                eligibility to receive the earned income credit, 
                contact the Internal Revenue Service by calling 1-800-
                829-1040 or through its web site at www.irs.gov. The 
                Volunteer Income Tax Assistance (VITA) program provides 
                free tax preparation assistance to individuals under 
                the above income limits. Call the IRS at 1-800-906-9887 
                to find sites in your area.'.
            ``(2) Years after 2008.--In the case of the notice in 
        paragraph (1)(B) for taxable years beginning in a calendar year 
        after 2008--
                    ``(A) such calendar year shall be substituted for 
                `2008',
                    ``(B) the lowest amount of earned income for a 
                taxpayer with no qualifying children at which the 
                credit phases out under section 32(a)(2)(B) for taxable 
                years beginning in such calendar year shall be 
                substituted for `$15,880',
                    ``(C) the lowest amount of earned income for a 
                taxpayer with 1 qualifying child at which the credit 
                phases out under section 32(a)(2)(B) for such taxable 
                years shall be substituted for `$36,995', and
                    ``(D) the lowest amount of earned income for a 
                taxpayer with 2 or more qualifying children at which 
                the credit phases out under section 32(a)(2)(B) for 
                such taxable years shall be substituted for `$41,646'.
    ``(d) Exemption for Small Employers.--
            ``(1) In general.--An employer shall not be required to 
        provide notices under this section during any calendar year if 
        the employer employed an average of 25 or fewer employees on 
        business days during the preceding calendar year. For purposes 
        of the preceding sentence, a preceding calendar year may be 
        taken into account only if the employer was in existence 
        throughout such year.
            ``(2) Employers not in existence in preceding year.--In the 
        case of an employer which was not in existence throughout the 
        preceding calendar year, the determination under paragraph (1) 
        shall be based on the average number of employees that it is 
        reasonably expected such employer will employ on business days 
        in the current calendar year.
            ``(3) Special rules.--
                    ``(A) Controlled groups.--For purposes of this 
                subsection, all persons treated as a single employer 
                under subsection (b), (c), (m), or (o) of section 414 
                shall be treated as 1 employer.
                    ``(B) Predecessors.--Any reference in this 
                subsection to an employer shall include a reference to 
                any predecessor of such employer.
    ``(e) Timing of Notice.--The notice required by subsection (a) 
shall be provided to each employee at the same time the employer 
statement is furnished to each such employee under section 6051.
    ``(f) Manner of Providing Notice.--The notice required by 
subsection (a) shall be provided either by hand or by mail to the 
address used to provide the statement under section 6051 to the 
employee.''.
    (b) Penalty for Failure To Provide Notice.--Section 6724(d)(2) of 
such Code is amended by striking ``or'' at the end of subparagraph 
(BB), by striking the period at the end of subparagraph (CC) and 
inserting ``, or'', and by inserting after subparagraph (CC) the 
following new subparagraph:
                    ``(DD) section 7529 (relating to employer 
                notification of availability of earned income 
                credit).''.
    (c) Clerical Amendment.--The table of sections for such chapter 77 
is amended by adding at the end the following new item:

``Sec. 7529. Employer notification of availability of earned income 
                            credit.''.
    (d) Effective Date.--The amendments made by this section shall 
apply with respect to statements required to be provided under section 
6051 of the Internal Revenue Code of 1986 more than 180 days after the 
date of the enactment of this Act.
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