[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 3712 Introduced in Senate (IS)]

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115th CONGRESS
  2d Session
                                S. 3712

 To amend the Internal Revenue Code of 1986 to establish a refundable 
   tax credit to increase the take-home pay of American workers and 
       enhance their financial stability, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            December 5, 2018

  Ms. Harris 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 establish a refundable 
   tax credit to increase the take-home pay of American workers and 
       enhance their financial stability, 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 ``LIFT (Livable Incomes for Families 
Today) the Middle Class Act''.

SEC. 2. ESTABLISHMENT OF MIDDLE CLASS TAX 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 36 the following new section:

``SEC. 36A. MIDDLE CLASS TAX CREDIT.

    ``(a) Allowance of Credit.--
            ``(1) In general.--In the case of an eligible individual, 
        for any taxable year beginning after December 31, 2018, there 
        shall be allowed as a credit against the tax imposed by this 
        subtitle for the taxable year an amount equal to so much of the 
        taxpayer's earned income for the preceding taxable year as does 
        not exceed $3,000.
            ``(2) Phaseout of credit.--The amount of the credit 
        allowable to the taxpayer under paragraph (1) for the taxable 
        year shall be reduced (but not below zero) by an amount which 
        bears the same ratio to the amount of the credit determined 
        under such paragraph as--
                    ``(A) the amount (not less than zero) equal to the 
                adjusted gross income (or, if greater, the earned 
                income) of the taxpayer for the preceding taxable year 
                minus $30,000, bears to
                    ``(B) $20,000.
            ``(3) Joint returns.--
                    ``(A) In general.--For purposes of determining the 
                amount of the credit allowed under this section for any 
                taxable year, if a joint return was filed for the 
                preceding taxable year by an eligible individual and 
                such individual's spouse, each of the dollar amounts 
                under paragraphs (1) and (2) shall be doubled.
                    ``(B) Married individuals.--For purposes of 
                determining the amount of the credit allowed under this 
                section for any taxable year, if an individual was 
                married during the preceding taxable year (within the 
                meaning of section 7703), this section shall apply only 
                if a joint return was filed for the preceding taxable 
                year under section 6013.
            ``(4) Head of household.--For purposes of determining the 
        amount of the credit allowed under this section for any taxable 
        year, if a taxpayer filed a return as a head of household for 
        the preceding taxable year, the reduction of the credit 
        allowable to the taxpayer under paragraph (1) shall be 
        determined under paragraph (2) by substituting `$60,000' for 
        `$30,000' in subparagraph (A) thereof.
            ``(5) Inflation adjustments.--
                    ``(A) In general.--In the case of any taxable year 
                after 2019, each of the dollar amounts under paragraphs 
                (1), (2), and (4) shall be increased by an amount equal 
                to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) 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 2018' 
                        for `calendar year 2016' in subparagraph 
                        (A)(ii) thereof.
                    ``(B) Rounding.--If any increase determined under 
                subparagraph (A) is not a multiple of $50, such 
                increase shall be rounded to the nearest multiple of 
                $50.
    ``(b) Definitions.--For purposes of determining the credit allowed 
under this section for any taxable year--
            ``(1) Eligible individual.--
                    ``(A) In general.--The term `eligible individual' 
                means an individual--
                            ``(i) who attained 18 years of age before 
                        the close of the preceding taxable year,
                            ``(ii) whose principal place of abode was 
                        in the United States for more than one-half of 
                        the preceding taxable year,
                            ``(iii) who was not a dependent for whom a 
                        deduction is allowable under section 151 to 
                        another taxpayer for any taxable year beginning 
                        in the same calendar year as the preceding 
                        taxable year, and
                            ``(iv) who did not claim the benefits of 
                        section 911 for the preceding taxable year.
                    ``(B) Limitation on eligibility of nonresident 
                aliens.--The term `eligible individual' shall not 
                include any individual who is a nonresident alien 
                individual for any portion of the preceding taxable 
                year, unless such individual is treated for such 
                taxable year as a resident of the United States for 
                purposes of this chapter by reason of an election under 
                subsection (g) or (h) of section 6013.
                    ``(C) Identification number requirement.--No credit 
                shall be allowed under this section to an eligible 
                individual who does not include on the return of tax 
                for the taxable year--
                            ``(i) such individual's taxpayer 
                        identification number, and
                            ``(ii) if the individual was married during 
                        the preceding taxable year (within the meaning 
                        of section 7703), the taxpayer identification 
                        number of such individual's spouse.
                    ``(D) Treatment of military personnel stationed 
                outside of the united states.--For purposes of 
                subparagraph (A)(ii), the principal place of abode of a 
                member of the Armed Forces of the United States shall 
                be treated as in the United States during any period 
                during which such member is stationed outside the 
                United States while serving on extended active duty 
                with the Armed Forces of the United States. For 
                purposes of the preceding sentence, the term `extended 
                active duty' means any period of active duty pursuant 
                to a call or order to such duty for a period in excess 
                of 90 days or for an indefinite period.
            ``(2) Earned income.--The term `earned income' has the same 
        meaning given such term under section 32(c)(2), except that 
        such term shall include any amounts received by the taxpayer as 
        a Federal Pell Grant under section 401 of the Higher Education 
        Act of 1965.
    ``(c) Taxable Year Must Be Full Taxable Year.--Except in the case 
of a taxable year closed by reason of the death of the taxpayer, no 
credit shall be allowable under this section in the case of a taxable 
year covering a period of less than 12 months.
    ``(d) Restrictions on Taxpayer Who Improperly Claimed Credit in 
Prior Year.--Rules similar to subsection (k) of section 32 shall apply 
for purposes of this section.
    ``(e) Amount of Credit To Be Determined Under Tables.--
            ``(1) In general.--The amount of the credit allowed by this 
        section shall be determined under tables prescribed by the 
        Secretary.
            ``(2) Requirements for tables.--The tables prescribed under 
        paragraph (1) shall reflect the provisions of subsection (a) 
        and shall have income brackets of not greater than $50 each--
                    ``(A) for earned income between $0 and the amount 
                of earned income at which the credit is phased out 
                under subsection (a)(2), and
                    ``(B) for adjusted gross income between the dollar 
                amount at which the phaseout begins under subsection 
                (a)(2) and the amount of adjusted gross income at which 
                the credit is phased out under such subsection.
    ``(f) Reconciliation of Credit and Advance Payments.--The amount of 
the credit allowed under this section for any taxable year shall be 
reduced (but not below zero) by the aggregate amount of any advance 
payments of such credit under section 7527A for such taxable year.''.
    (b) Advance Payment of Middle Class Tax Credit.--
            (1) In general.--Chapter 77 of the Internal Revenue Code of 
        1986 is amended by inserting after section 7527 the following 
        new section:

``SEC. 7527A. ADVANCE PAYMENT OF MIDDLE CLASS TAX CREDIT.

    ``(a) In General.--Not later than 6 months after the date of the 
enactment of the LIFT (Livable Incomes for Families Today) the Middle 
Class Act, the Secretary shall establish a program for making advance 
payments of the credit allowed under section 36A on a monthly basis 
(determined without regard to subsection (f) of such section) to any 
taxpayer who--
            ``(1) the Secretary has determined will be allowed such 
        credit for the taxable year, and
            ``(2) has made an election under subsection (c).
    ``(b) Amount of Advance Payment.--
            ``(1) In general.--For purposes of subsection (a), the 
        amount of the monthly advance payment of the credit provided to 
        a taxpayer during the applicable period shall be equal to the 
        lesser of--
                    ``(A) an amount equal to--
                            ``(i) the amount of the credit which the 
                        Secretary has determined will be allowed to 
                        such taxpayer under section 36A for the taxable 
                        year ending in such applicable period, divided 
                        by
                            ``(ii) 12, or
                    ``(B) such other amount as is elected by the 
                taxpayer.
            ``(2) Applicable period.--For purposes of this section, the 
        term `applicable period' means the 12-month period from the 
        month of July of the taxable year through the month of June of 
        the subsequent taxable year.
    ``(c) Election of Advance Payment.--A taxpayer may elect to receive 
an advance payment of the credit allowed under section 36A for any 
taxable year by including such election on a timely filed return for 
the preceding taxable year.
    ``(d) Internal Revenue Service Notification.--The Internal Revenue 
Service shall take such steps as may be appropriate to ensure that 
taxpayers who are eligible to receive the credit under section 36A are 
aware of the availability of the advance payment of such credit under 
this section.
    ``(e) Authority.--The Secretary may prescribe such regulations or 
other guidance as may be appropriate or necessary for the purposes of 
carrying out this section.''.
    (c) Income Disregard.--Any credit or refund allowed or made to any 
individual by reason of section 36A of the Internal Revenue Code of 
1986 (as added by this section) shall not be taken into account as 
income and shall not be taken into account as resources for purposes of 
determining the eligibility of such individual or any other individual 
for benefits or assistance, or the amount or extent of benefits or 
assistance, under any Federal program or under any State or local 
program financed in whole or in part with Federal funds.
    (d) Conforming Amendments.--
            (1) Section 6211(b)(4)(A) of the Internal Revenue Code of 
        1986 is amended by inserting ``36A,'' after ``36,''.
            (2) Section 6213(g)(2) of such Code is amended--
                    (A) in subparagraph (F), by inserting ``or section 
                36A'' after ``credit)'';
                    (B) in subparagraph (G), by inserting ``or 36A'' 
                after ``section 32'';
                    (C) by striking subparagraph (K) and inserting the 
                following:
                    ``(K) an omission of information required by 
                section 32(k)(2) or 36(e) or an entry on the return 
                claiming--
                            ``(i) the credit under section 32 for a 
                        taxable year for which the credit is disallowed 
                        under subsection (k)(1) thereof, or
                            ``(ii) the credit under section 36A for a 
                        taxable year for which the credit is disallowed 
                        under subsection (d) thereof,''; and
                    (D) in subparagraph (L), by striking ``or 32'' and 
                inserting ``32, or 36A''.
            (3) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of such Code is amended by inserting 
        after the item relating to section 36 the following new item:

``Sec. 36A. Middle class tax credit.''.
            (4) The table of sections for chapter 77 of such Code is 
        amended by inserting after the item relating to section 7527 
        the following:

``Sec. 7527A. Advance payment of middle class tax credit.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to earned income received after December 31, 2017.

SEC. 3. RETURN PREPARATION PROGRAMS FOR LOW-INCOME TAXPAYERS.

    (a) 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) Volunteer Income Tax Assistance Matching Grant Program.--
            ``(1) Establishment of program.--The Secretary, through the 
        Internal Revenue Service, shall establish a Community Volunteer 
        Income Tax Assistance Matching Grant Program (hereinafter in 
        this section referred to as the `VITA grant program'). Except 
        as otherwise provided in this section, the VITA grant program 
        shall be administered in a manner which is substantially 
        similar to the Community Volunteer Income Tax Assistance 
        matching grants demonstration program established under title I 
        of division D of the Consolidated Appropriations Act, 2008.
            ``(2) Matching grants.--
                    ``(A) In general.--The Secretary may, subject to 
                the availability of appropriated funds, make available 
                grants under the VITA grant program 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) Application.--
                            ``(i) In general.--Subject to clause (ii), 
                        in order to be eligible for a grant under this 
                        section, a qualified return preparation program 
                        shall submit an application to the Secretary at 
                        such time, in such manner, and containing such 
                        information as the Secretary may reasonably 
                        require.
                            ``(ii) Accuracy review.--In the case of any 
                        qualified return preparation program which was 
                        awarded a grant under this section and was 
                        subsequently subject to a field site visit by 
                        the Internal Revenue Service (including through 
                        the Stakeholder Partnerships, Education, and 
                        Communication office) in which it was 
                        determined that the average accuracy rate for 
                        preparation of tax returns through such program 
                        was less than 90 percent, such program shall 
                        not be eligible for any additional grants under 
                        this section unless such program provides, as 
                        part of their application, sufficient 
                        documentation regarding the corrective measures 
                        established by such program to address the 
                        deficiencies identified following the field 
                        site visit.
                    ``(C) Priority.--In awarding grants under this 
                section, the Secretary shall give priority to 
                applications--
                            ``(i) demonstrating assistance to low-
                        income taxpayers, with emphasis on outreach to 
                        and services for such taxpayers,
                            ``(ii) demonstrating taxpayer outreach and 
                        educational activities relating to eligibility 
                        and availability of income supports available 
                        through the Internal Revenue Code of 1986, such 
                        as the earned income tax credit, and
                            ``(iii) demonstrating specific outreach and 
                        focus on one or more underserved populations.
                    ``(D) 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.
            ``(3) 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 carry out the purposes of this 
        section.
    ``(b) Use of Funds.--
            ``(1) In general.--Qualified return preparation programs 
        receiving a grant under this section may use the grant for--
                    ``(A) ordinary and necessary costs associated with 
                program operation in accordance with Cost Principles 
                Circulars as set forth by the Office of Management and 
                Budget, including--
                            ``(i) for wages or salaries of persons 
                        coordinating the activities of the program,
                            ``(ii) to develop training materials, 
                        conduct training, and perform quality reviews 
                        of the returns for which assistance has been 
                        provided under the program, and
                            ``(iii) for equipment purchases and 
                        vehicle-related expenses associated with remote 
                        or rural tax preparation services,
                    ``(B) outreach and educational activities described 
                in subsection (a)(2)(C)(ii), 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 made under this section may be used for overhead expenses 
        that are not directly related to any qualified return 
        preparation program.
    ``(c) Promotion and Referral.--
            ``(1) Promotion.--The Secretary shall promote the benefits 
        of, and encourage the use of, 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 funding 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 to receive services at 
        such clinics.
    ``(d) 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 of the 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 (as 
                        described in subparagraph (B)),
                            ``(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 under 
                        the VITA grant program.
                    ``(B) Eligible organization.--
                            ``(i) In general.--Subject to clause (ii), 
                        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. 1088), 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) of the Internal Revenue 
                                Code of 1986 and exempt from tax under 
                                section 501(a) of such Code,
                                    ``(III) a local government agency, 
                                including--
                                            ``(aa) a county or 
                                        municipal government agency, 
                                        and
                                            ``(bb) 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, or
                                    ``(IV) a local, State, regional, or 
                                national coalition (with one lead 
                                organization which meets the 
                                eligibility requirements of subclause 
                                (I), (II), or (III) acting as the 
                                applicant organization).
                            ``(ii) Alternative eligible organization.--
                        If no eligible organization described in clause 
                        (i) is available to assist the targeted 
                        population or community, the term `eligible 
                        organization' shall include--
                                    ``(I) a State government agency, 
                                and
                                    ``(II) a Cooperative Extension 
                                Service office.
            ``(3) Low-income taxpayers.--The term `low-income taxpayer' 
        means a taxpayer who has income for the taxable year which does 
        not exceed an amount equal to the completed phaseout amount 
        under section 32(b) for a married couple filing a joint return 
        with three 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.''.
    (b) Clerical Amendment.--The table of sections for chapter 77 of 
the Internal Revenue Code of 1986 is amended by inserting after the 
item relating to section 7526 the following new item:

``7526A. Return preparation programs for low-income taxpayers.''.

SEC. 4. SENSE OF THE SENATE.

    It is the sense of the Senate that the costs of carrying out this 
Act and the amendments made by this Act should be fully offset 
through--
            (1) the repeal of Public Law 115-97, with the exception of 
        any provisions or amendments under such Public Law that provide 
        relief to taxpayers with less than $100,000 in annual income, 
        and
            (2) a fee, in such amount as is determined appropriate by 
        the Secretary of the Treasury for purposes of offsetting the 
        costs of carrying out this Act and the amendments made by this 
        Act, to be assessed on any financial institution that has total 
        consolidated assets of more than $50,000,000,000.
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