II 110th CONGRESS 2d Session S. 3372 IN THE SENATE OF THE UNITED STATES July 31, 2008 Mr. Menendez introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To promote savings by providing a match for eligible taxpayers who contribute to savings products and to facilitate taxpayers receiving this match and open a bank account when they file their Federal income tax returns.

1.

Short title

This Act may be cited as the Saver's Bonus Act of 2007.

2.

Findings

Congress finds the following: (1)According to the Department of Commerce, Americans are currently saving less than 1 percent of their disposable income. (2)According to the Federal Reserve's 2004 Survey of Consumer Finances, 17 percent of all households have zero or negative net worth, while 30 percent have net worth of less than $10,000. (3)According to the Federal Reserve's 2004 Survey of Consumer Finances, 11 percent of households do not have a checking account and 9 percent do not have a transaction account of any kind. (4)According to the Retirement Security Project, in 2004 more than half of all households had zero savings in an employer-based 401(k)-type plan or tax-preferred savings plan account. (5)It is in the economic interests of the United States to promote savings among all members of society, regardless of income.

3.

Saver's bonus

(a)

In general

The Secretary of the Treasury shall develop a program to match deposits made by qualifying low-income individuals into designated savings products. (b)

Qualifying low-income individuals

For purposes of this Act, the term qualifying low-income individual means any individual determined by the Secretary of the Treasury to be eligible for the saver's bonus under this Act. (c)

Designated savings products

For purposes of this Act, the term designated savings product means any savings product, including— (1)qualified retirement plans (as defined in section 4974(c)) of such Code, (2)qualified tuition programs under section 529 of such Code, (3)Coverdell education savings accounts under section 530 of such Code, (4)United States savings bonds, (5)certificates of deposits with durations of at least 6 months, and (6)other types of savings products considered appropriate by the Secretary of the Treasury for the purposes of this Act. (d)

Saver's bonus program

The program established under subsection (a) shall provide that— (1)qualifying low-income individuals who direct their Federal income tax refund (in its entirety or a portion thereof) be deposited into any designated savings product shall be eligible for a dollar-for-dollar match or saver's bonus to be deposited directly in any designated savings product, (2)qualifying low-income individuals who claim (when filing a Federal income tax return) to have deposited funds into any designated savings product during the course of the tax year shall be eligible for a saver's bonus to be deposited directly into any designated savings product, and (3)the saver’s bonus— (A)shall equal $500 for qualifying low-income individuals who are eligible for the earned income credit under section 32 of such Code and shall be phased out (but not below zero) for such individuals whose earned income exceeds 120 percent of the earned income threshold at which such eligibility ceases, (B)shall be indexed for inflation every 5 years, and (C)shall be considered a refundable credit for purposes of the Internal Revenue Code of 1986. (e)

Conforming amendment regarding funding of saver's bonus

Section 1324(b)(2) of title 31, United States Code, is amended by inserting or enacted by the Saver's Bonus Act of 2007,. (f)

Effective date

The program under, and amendment made by, this section shall be effective with respect to Federal income tax returns for taxable years beginning after December 31, 2008.

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 qualifying low-income individuals who qualify for a Federal income tax refund but fail to provide an ACH direct deposit number on their Federal income tax return that they have the option of an electronic direct deposit and that they may be eligible for the saver’s bonus program under section 3 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 the Internal Revenue and others as necessary, at least 6 months before January 2009, and (B)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 an 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 and limitations on overdrafts, overdraft fees, and other requirements, (3)establishment of means for the taxpayer to access the account electronically or through a payment card, 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 that is insured under the Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.). (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, 2008.

5.

Purchase of savings bonds on Federal income tax returns

(a)

Notification of option

The Commissioner of Internal Revenue shall notify individual taxpayers that they have the option of purchasing United States savings bonds when they file their Federal income tax returns and that they may be eligible for the saver's bonus program under section 3. Such notification shall be included in the instruction material for any Federal income tax return. (b)

Establishment of savings bond purchase program

The Secretary of the Treasury shall develop, in consultation with a task force, a program for the purchase by individual taxpayers of United States savings bonds on their Federal income tax returns. (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, 2008.