text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Financial Security Credit Act of 
  2015''.
  
  SEC. 2. FINDINGS.
  
      Congress finds the following:
              (1) United States households are experiencing significant 
          levels of financial vulnerability, characterized by a lack of 
          personal savings. The personal savings rate reached historic 
          lows in the past decade, and a lack of personal savings was a 
          major contributor to the recession of 2007-2009, and to the 
          slow recovery of ensuing years.
              (2) Households continue to lack the savings or structures 
          to meet short-term and long-term needs, as evidenced by the 
          following:
                      (A) According to the Employee Benefit Research 
                  Institute, among full-time, full-year wage and salary 
                  workers ages 21-64, only 54.5 percent participated in a 
                  retirement plan in 2013.
                      (B) According to the Federal Deposit Insurance 
                  Corporation 2013 Survey of Unbanked and Underbanked 
                  Households, an estimated 7.7 percent of United States 
                  households are unbanked. These households do not have a 
                  checking or savings account. In total, 31.2 percent of 
                  households do not have a savings account.
                      (C) According to the Pew Charitable Trusts, the 
                  majority of American households (55 percent) are 
                  savings-limited, meaning they can replace less than one 
                  month of their income through liquid savings.
              (3) Financial shocks are common and savings make households 
          more resilient to financial shocks and more upwardly mobile, as 
          evidenced by the following:
                      (A) Substantial fluctuations in family income are 
                  the norm. In any given 2-year period, nearly half of 
                  households experience an income gain or drop of more 
                  than 25 percent, a rate of volatility that has been 
                  relatively constant since 1979.
                      (B) Even small sums of savings, $2,000 or less, 
                  have been shown to significantly reduce the incidence 
                  of negative financial or material outcomes, such as 
                  foregoing adequate nutrition.
                      (C) Children born to low-income, high-saving 
                  parents are much more likely (71 percent) to move up 
                  the economic ladder than children born to low-income, 
                  low-saving parents (50 percent) over a generation.
              (4) Emergency savings are necessary to protect retirement 
          savings from early, penalized withdrawals and to support long-
          term retirement security.
              (5) Successful pilot programs administered through local 
          Volunteer Income Tax Assistance sites in cities as diverse as 
          Houston, Texas; Newark, New Jersey; New York City, New York; 
          San Antonio, Texas; and Tulsa, Oklahoma, have shown that tax 
          filers with low incomes can and will save when presented with 
          the right incentive at the right moment and access to an 
          account. The potential of increasing savings at tax time among 
          low- and moderate-income households has been further validated 
          by the low-touch, large-scale pilot Refund to Savings.
              (6) It is in the economic interests of the United States to 
          promote savings among all members of society, regardless of 
          income.
  
  SEC. 3. FINANCIAL SECURITY 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 36B the following new section:
  
  ``SEC. 36C. FINANCIAL SECURITY CREDIT.
  
      ``(a) Allowance of Credit.--There shall be allowed as a credit 
  against the tax imposed by this subtitle for a taxable year an amount 
  equal to the lesser of--
              ``(1) $500, or
              ``(2) 50 percent of the total amount deposited or 
          contributed by the taxpayer in accordance with subsection 
          (b)(1) into designated savings products during such taxable 
          year.
      ``(b) Limitations.--
              ``(1) Credit must be deposited in or contributed to 
          designated savings product.--No amount shall be allowed as a 
          credit under subsection (a) for a taxable year unless the 
          taxpayer designates on the taxpayer's return of tax for the 
          taxable year that the amount of the credit for such taxable 
          year be deposited in or contributed to one or more designated 
          savings products of the taxpayer and the Secretary makes such 
          deposits or contributions to the designated savings products.
              ``(2) Limitation based on adjusted gross income.--
                      ``(A) In general.--The amount of the credit 
                  allowable under subsection (a) shall be reduced (but 
                  not below zero) by an amount which bears the same ratio 
                  to the amount of such credit (determined without regard 
                  to this paragraph) as--
                              ``(i) the amount by which the taxpayer's 
                          adjusted gross income exceeds the threshold 
                          amount, bears to
                              ``(ii) $15,000.
                      ``(B) Threshold amount.--For purposes of 
                  subparagraph (A), the term `threshold amount' means--
                              ``(i) $55,500 in the case of a joint 
                          return,
                              ``(ii) $41,625 in the case of an individual 
                          who is not married, and
                              ``(iii) 50 percent of the dollar amount in 
                          effect under clause (i) in the case of a 
                          married individual filing a separate return.
                  For purposes of this subparagraph, marital status shall 
                  be determined under section 7703.
      ``(c) Designated Savings Product.--For purposes of this section, 
  the term `designated savings product' means any of the following:
              ``(1) A qualified retirement plan (as defined in section 
          4974(c)).
              ``(2) A qualified tuition program (as defined in section 
          529).
              ``(3) A Coverdell education savings account (as defined in 
          section 530).
              ``(4) A United States savings bond.
              ``(5) A certificate of deposit (or similar class of 
          deposit) with a duration of at least 8 months.
              ``(6) A savings account.
              ``(7) Any other type of savings product considered to be 
          appropriate by the Secretary for the purposes of this section.
      ``(d) Special Rules.--
              ``(1) Tax refunds treated as deposited or contributed in 
          current taxable year.--For purposes of subsection (a)(2), the 
          amount of any overpayment of taxes refunded to the taxpayer 
          (reduced by any amount attributable to the credit allowed under 
          this section by reason of being considered as an overpayment by 
          section 6401(b)) and designated for deposit in or contribution 
          to a designated savings product of the taxpayer shall be 
          treated as an amount deposited or contributed in the taxable 
          year in which so deposited or contributed.
              ``(2) Maintenance of deposit.--No contribution or deposit 
          shall be taken into account under subsection (a) unless such 
          contribution or deposit remains in the designated savings 
          product for not less than 8 continuous months.
              ``(3) Reduction in deposits in designated savings 
          products.--
                      ``(A) In general.--The amount of deposits or 
                  contributions taken into account under subsection (a) 
                  shall be reduced (but not below zero) by the aggregate 
                  amount of distributions (other than interest from 
                  designated savings products specified in paragraphs 
                  (4), (5), (6), and (7) of subsection (c)) from all 
                  designated savings products of the taxpayer during the 
                  testing period. The preceding sentence shall not apply 
                  to the portion of any distribution which is not 
                  includible in gross income by reason of a trustee-to-
                  trustee transfer or a rollover distribution.
                      ``(B) Testing period.--For purposes of subparagraph 
                  (A), the testing period, with respect to a taxable 
                  year, is the period which includes--
                              ``(i) such taxable year,
                              ``(ii) the 2 preceding taxable years, and
                              ``(iii) the period after such taxable year 
                          and before the due date (including extensions) 
                          for filing the return of tax for such taxable 
                          year.
                      ``(C) Other rules.--Rules similar to subparagraphs 
                  (C) and (D) of section 25B(d)(2) shall apply for 
                  purposes of this paragraph.
              ``(4) Denial of double benefit.--No credit shall be allowed 
          under section 25B with respect to any deposit for which a 
          credit is allowed under this section.
              ``(5) Coordination with other refundable credits.--The 
          credit allowed by subsection (a) shall be taken into account 
          after taking into account the credits allowed by (or treated as 
          allowed by) this subpart (other than this section).
      ``(e) Inflation Adjustments.--
              ``(1) Credit limit.--In the case of any taxable year 
          beginning in a calendar year after 2016, the dollar amount in 
          subsection (a)(1) shall be increased by an amount equal to--
                      ``(A) such dollar amount, multiplied by
                      ``(B) 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 2015' for `calendar year 1992' in 
                  subparagraph (B) thereof.
              ``(2) AGI thresholds.--In the case of any taxable year 
          beginning in a calendar year after 2016, each of the dollar 
          amounts in clauses (i) and (ii) of subsection (b)(2)(B) shall 
          be increased by an amount equal to--
                      ``(A) such dollar amount, multiplied by
                      ``(B) 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 2015' for `calendar year 1992' in 
                  subparagraph (B) thereof.
              ``(3) Rounding.--
                      ``(A) Credit limit.--If any increase under 
                  paragraph (1) is not a multiple of $10, such increase 
                  shall be rounded to the next lowest multiple of $10.
                      ``(B) AGI thresholds.--If any increase under 
                  paragraph (1) is not a multiple of $100, such increase 
                  shall be rounded to the next lowest multiple of $100.
      ``(f) Regulations.--Not later than 12 months from date of enactment 
  of this section, the Secretary shall issue such regulations or other 
  guidance as the Secretary determines necessary or appropriate to carry 
  out this section, including regulations or guidance--
              ``(1) to ensure that designated savings products are 
          subject to appropriate reporting requirements, including the 
          reporting of contributions and other deposits during the 
          calendar year, end of calendar year account balances, and 
          earnings from designated savings products specified in 
          paragraphs (4), (5), (6), and (7) of subsection (c),
              ``(2) to carry out the maintenance of deposit provisions 
          under subsection (d)(2), and
              ``(3) to prevent avoidance of the purposes of this 
          subsection.''.
      (b) Conforming Amendments.--
              (1) Section 1324(b)(2) of title 31, United States Code, is 
          amended by inserting ``36C,'' after ``36B,''.
              (2) The table of sections for subpart C of part IV of 
          subchapter A of chapter 1 of the Internal Revenue Code of 1986 
          is amended by inserting after the item relating to section 36C 
          the following new item:
  
  ``Sec. 36C. Financial security credit.''.
      (c) Effective Date.--The amendments made by this section shall 
  apply to taxable years beginning after December 31, 2015.
  
  SEC. 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 individuals who may qualify for a credit under section 
          36C of the Internal Revenue Code of 1986 but fail to provide 
          sufficient information to allow the Secretary to deposit or 
          contribute the credit amount to a designated savings product 
          that they have the option of an electronic direct deposit and 
          that they may be eligible for the financial security credit 
          under section 36C of such Code 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 Internal Revenue and others as 
                  necessary, beginning not later than 6 months after the 
                  date of the enactment of this Act;
                      (B) tax return preparers and low-income taxpayer 
                  clinics; and
                      (C) 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 a safe, low-
  cost 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, limitations on overdrafts, 
          overdraft fees, other fees, and additional requirements;
              (3) establishment of means for the taxpayer to access the 
          account electronically and to have timely, direct access to the 
          funds in the account; 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 insured under the Federal Deposit Insurance Act or 
          a credit union insured under the Federal Credit Union Act.
      (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, 2015.
target: Financial Security Credit Act of 2015 This bill amends the Internal Revenue Code to allow an income-based tax credit equal to the lesser of $500 or 50% of the total amount deposited or contributed into designated savings products in a taxable year (financial security credit). A "designated savings product" is a qualified retirement plan, a qualified tuition plan, a Coverdell education savings account, a U.S. savings bond, a certificate of deposit with a duration of at least eight months, a savings account, or other savings product considered appropriate by the&nbsp;Department&nbsp;of the Treasury.  The Internal Revenue Service must notify individual taxpayers who may qualify for a financial security credit that they have the option of an electronic direct deposit if they deposit any portion of their tax refund into a designated savings product. 
feat_title: Financial Security Credit Act of 2015