[Congressional Record Volume 154, Number 106 (Wednesday, June 25, 2008)]
[Senate]
[Pages S6160-S6162]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SCHUMER:
  S. 3190. 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; to the Committee on Finance.
  Mr. SCHUMER. Mr. President, I am pleased to introduce today, along 
with my colleague from the House, Rep. Rahm Emanuel, an important and 
noncontroversial bill designed to increase the percentage of eligible 
families that claim the Earned Income Tax Credit, or EITC, every year.
  The bill is endorsed by the Service Employees International Union, 
SEIU, Wal-Mart, the Center on Budget and Policy Priorities, the 
Citizens for Tax Justice, the Leadership Conference on Civil Rights, 
Corporate Voices for Working Families, the College and University 
Professional Association for Human Resources, TJ Maxx, Kindred 
Healthcare, and Cintas.
  Even in these tough economic times, Wal-Mart is still the nation's 
top private employer, and they place a huge emphasis on keeping their 
business costs low. If they are taking such a lead role on this bill, 
it should send a strong signal to the business community and to 
Republicans that it is a good idea and that the cost burden on business 
is next to nothing.
  The EITC is a hugely important and popular program for working 
families. Started under President Ford after President Nixon advanced a 
similar program, and expanded under virtually every President since, 
the EITC sends a message that if you work hard and play by the rules, 
you shouldn't live in poverty.
  I know the program isn't perfect, but it's the best tax tool we have 
for helping working families make ends meet. Combined with the recent 
increase in the minimum wage that Democrats pushed through the 
Congress, the EITC is improving the lives of million of families.
  For tax year 2006, more than $44 billion in benefits were distributed 
to more than 22.4 million American families. That shows what a success 
the program is.
  As one of the most populous states, with millions of working families 
of modest means, the numbers for New York State by itself are 
impressive. In 2006, nearly 1.5 million New York families took 
advantage of the EITC, claiming $2.8 billion in benefits. That's an 
average of $1,867 per family. But if the estimates from the Government 
Accountability Office are right and 25 percent of eligible families do 
not file for the credit, that's almost 500,000 families in my state who 
are missing out.
  At an average EITC benefit of nearly $1,900, that means that more 
than $900 million could be going back into the pockets of New Yorkers--
without a single change in the law--if we could find a way to reach 
these families. It could represent a second stimulus package for 
500,000 working families as large as the one we passed earlier this 
year--and all eligible families have to do is ask for it.
  With gasoline costing over $4 a gallon, and health care and tuition 
costs on the rise, if we can get an average of $1,900 into the pockets 
of 500,000 New York families, or 7.5 million people nationally--that's 
an opportunity we can't pass up.
  Since these families are eligible for the credit under current law, 
it's not a policy that has to be scored or ``paid for'' under the PAYGO 
rules, because current law assumes these benefits will be paid. I can't 
imagine anyone objecting to this bill.
  The Emanuel/Schumer legislation simply requires that employers notify 
their workers of their potential eligibility for the EITC when they 
send out the annual W-2 wage notice. To satisfy the notice requirement, 
employers would provide either a copy of IRS Notice 797, which explains 
how one qualifies for the EITC, or a separate written notice that is 
described in the language of the bill.
  For those that might be concerned about the cost to business, our 
bill exempts firms with less than 25 employees.
  This is a bill that is such common-sense, and represents such little 
cost to business, and offers such a large potential benefit to so many 
families, that it's something that we ought to be able to pass 
unanimously before the end of the year.

[[Page S6161]]

  Rep. Emanuel and I sent a letter to Treasury Secretary Henry Paulson 
today about the bill. Even though the Bush Administration is nearing 
its end, the goals of this legislation could be accomplished via 
regulation or executive order, and I urge the Administration to take 
such action and render the bill moot. Rep. Emanuel and I would be happy 
not to have to pass this bill. Otherwise, we will push it and hope to 
pass it with broad bipartisan support by year's end. With unions and 
major employers both supporting the bill, there really should be no 
objection.
  Mr. President, I ask unanimous consent that the text of the bill and 
a letter of support be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 3190

       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.
                                  ____

                                                    June 25, 2008.
     Hon. Henry Paulson,
     Secretary, Department of the Treasury, Washington, DC.
       Dear Secretary Paulson: Over the last 30 years, the Earned 
     Income Tax Credit (EITC) has grown into the largest Federal 
     anti-poverty program in the United States. In 2006, over 22 
     million taxpayers received almost $44 billion through the 
     EITC. During its history, the program has been supported by 
     both Democrats and Republicans. 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.''
       As you know, millions of eligible Americans fail to take 
     advantage of this critical program, costing themselves 
     billions in tax benefits. Based on an analysis conducted by 
     the General Accountability Office, 25 percent of those 
     eligible to receive the EITC do not take advantage of it. The 
     Internal Revenue Service (IRS) estimates that between 20 and 
     25 percent of taxpayers who are eligible don't claim the 
     credit. While this issue has been a persistent source of 
     concern, it is particularly troubling now when Americans are 
     contending with record high gas prices and surging costs for 
     other consumer goods.

[[Page S6162]]

       On October 13, 2007, Governor Arnold Schwarzenegger signed 
     into law Assembly Bill 650, the Earned Income Tax Credit 
     Information Act. The legislation seeks to reduce the number 
     of eligible taxpayers who fail to take advantage of the EITC 
     by requiring California employers to notify their employees 
     of their potential eligibility for the EITC. We believe that 
     the California law should serve as a model for federal 
     action, and will shortly introduce legislation to accomplish 
     this goal.
       We bring this to your attention because we believe that the 
     goal of increasing awareness of the EITC, and thus expanding 
     the number of taxpayers who access it, can also be 
     accomplished through administrative rule-making.
       Earlier in the year, you played a critical role in 
     providing needed economic stimulus to working Americans that 
     is now helping to soften the brunt of our current economic 
     downturn. By increasing the number of eligible taxpayers who 
     take advantage of the EITC program, you can build on this 
     accomplishment and add further stimulus by providing, in some 
     cases, thousands of dollars of assistance that can be used to 
     buy gas or groceries, or pay the mortgage.
       For this reason, we ask you to explore what the 
     Administration can do to improve EITC outreach efforts, and 
     specifically ask that you examine the possibility of 
     requiring employers to provide information to their employees 
     about the EITC at the same time that they provide W-2 
     statements. Earlier this year, at an EITC Awareness Day 
     event, you noted: ``Ensuring that more eligible families 
     receive their EITC is important this year, as it is every 
     year. I encourage people all across America to check to see 
     if you are eligible for the Earned Income Credit.'' We 
     couldn't agree more, but believe we should also look to 
     employers to help taxpayers take advantage of critical 
     federal tax programs like the EITC.
       Finally, we are aware that the Administration instructed 
     federal agencies on May 9, 2008 to not undertake any new 
     rulemaking procedures after June 1, 2008. We sincerely hope 
     that this policy will not prevent the Administration from 
     helping hardworking Americans who need it the most.
       We look forward to your response and thank you for your 
     consideration.
           Sincerely,
     Rahm Emanuel,
       House Democratic Caucus Chair.
     Charles Schumer,
       Senate Democratic Caucus Vice-Chair.
                                 ______