[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7636 Introduced in House (IH)]

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119th CONGRESS
  2d Session
                                H. R. 7636

To amend the Internal Revenue Code of 1986 to establish the individual 
                         tariff refund credit.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           February 20, 2026

  Mr. Thompson of California introduced the following bill; which was 
              referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to establish the individual 
                         tariff refund credit.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. INDIVIDUAL TARIFF REFUND CREDIT.

    (a) In General.--Subchapter B of chapter 65 of subtitle F of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new section:

``SEC. 6436. INDIVIDUAL TARIFF REFUND CREDIT.

    ``(a) In General.--In the case of an eligible individual, there 
shall be allowed a credit against the tax imposed by subtitle A for the 
covered taxable year in an amount equal to the applicable tariff refund 
amount.
    ``(b) Treatment of Credit.--The credit allowed by subsection (a) 
shall be treated as allowed by subpart C of part IV of subchapter A of 
chapter 1.
    ``(c) Eligible Individual.--For purposes of this section, the term 
`eligible individual' means any individual who, on the date on which 
any covered court order is issued, is an individual other than--
            ``(1) any nonresident alien individual,
            ``(2) any individual with respect to whom a deduction under 
        section 151 is allowable to another taxpayer for a taxable year 
        beginning in the calendar year in which the individual's 
        taxable year begins, and
            ``(3) an estate or trust.
    ``(d) Covered Taxable Year.--For purposes of this section, the term 
`covered taxable year' means, with respect to an individual, the most 
recent taxable year of such individual ending before the date on which 
a covered court order is issued.
    ``(e) Covered Court Order.--
            ``(1) In general.--For purposes of this section, the term 
        `covered court order' means a final court order which requires 
        the Federal Government to repay tariff revenues collected 
        pursuant to an unlawfully imposed tariff.
            ``(2) Unlawful tariff.--For purposes of paragraph (1), the 
        term `unlawful tariff' means a tariff imposed unlawfully after 
        January 20, 2025, and before the date of the enactment of this 
        section.
    ``(f) Covered Tariff Revenues.--For purposes of this section, the 
term `covered tariff revenues' means the aggregate amount of tariff 
revenues required to be repaid by the Federal Government pursuant to a 
covered court order.
    ``(g) Applicable Tariff Refund Amount.--
            ``(1) In general.--For purposes of subsection (a), the term 
        `applicable tariff refund amount' means, with respect to any 
        individual, an amount equal to--
                    ``(A) the individual tariff refund amount, 
                multiplied by
                    ``(B) the number of individuals in such 
                individual's household.
            ``(2) Household.--For purposes of this subsection, the 
        number of individuals in an individual's household for any 
        taxable year is equal to the sum of--
                    ``(A) 1 (2 in the case of a joint return), plus
                    ``(B) the number of dependents of the individual 
                for such taxable year.
            ``(3) Individual tariff refund amount.--The term `tariff 
        refund amount' means the amount that the Secretary determines 
        is equal to the quotient of--
                    ``(A) the aggregate amount of covered tariff 
                revenues, divided by
                    ``(B) the aggregate number of individuals in the 
                households of eligible individuals.
    ``(h) Coordination With Advance Refund of Credit.--
            ``(1) Reduction of refundable credit.--The amount of the 
        credit which would (but for this paragraph) be allowable under 
        subsection (a) shall be reduced (but not below zero) by the 
        aggregate refunds and credits made or allowed to the individual 
        (or, except as otherwise provided by the Secretary, any 
        dependent of the individual) under subsection (i). Any failure 
        to so reduce the credit shall be treated as arising out of a 
        mathematical or clerical error and assessed according to 
        section 6213(b)(1).
            ``(2) Joint returns.--Except as otherwise provided by the 
        Secretary, in the case of a refund or credit made or allowed 
        under subsection (i) with respect to a joint return, half of 
        such refund or credit shall be treated as having been made or 
        allowed to each individual filing such return.
    ``(i) Advanced Payment.--
            ``(1) In general.--Each eligible individual shall be 
        treated as having made a payment against the tax imposed by 
        chapter 1 for the covered taxable year in an amount equal to 
        the amount of the credit allowed to such individual under 
        subsection (a) for such covered taxable year.
            ``(2) Timing of payment.--The Secretary shall, subject to 
        the provisions of this title, refund or credit any overpayment 
        attributable to this subsection as rapidly as possible.
            ``(3) No interest.--No interest shall be allowed on any 
        overpayments attributable to this subsection.
            ``(4) Notice to taxpayer.--Not later than 15 days after the 
        date on which the Secretary distributed any payment to an 
        eligible individual pursuant to this subsection, notice shall 
        be sent by mail to such individual's last known address. Such 
        notice shall indicate the method by which such payment was 
        made, the amount of such payment, and a phone number for the 
        appropriate point of contact at the Internal Revenue Service to 
        report any failure to receive such payment.''.
    (b) Definition of Deficiency.--Section 6211(b)(4)(A) of such Code 
is amended by striking ``and 6433'' and inserting ``6433, and 6436''.
    (c) Treatment of Certain Possessions.--
            (1) Payments to possessions with mirror code tax systems.--
        The Secretary of the Treasury shall pay to each possession of 
        the United States which has a mirror code tax system amounts 
        equal to the loss (if any) to that possession by reason of the 
        amendments made by this section. Such amounts shall be 
        determined by the Secretary of the Treasury based on 
        information provided by the government of the respective 
        possession.
            (2) Payments to other possessions.--The Secretary of the 
        Treasury shall pay to each possession of the United States 
        which does not have a mirror code tax system amounts estimated 
        by the Secretary of the Treasury as being equal to the 
        aggregate benefits (if any) that would have been provided to 
        residents of such possession by reason of the amendments made 
        by this section if a mirror code tax system had been in effect 
        in such possession. The preceding sentence shall not apply 
        unless the respective possession has a plan, which has been 
        approved by the Secretary of the Treasury, under which such 
        possession will promptly distribute such payments to its 
        residents.
            (3) Inclusion of administrative expenses.--The Secretary of 
        the Treasury shall pay to each possession of the United States 
        to which the Secretary makes a payment under paragraph (1) or 
        (2) an amount equal to the lesser of--
                    (A) the increase (if any) of the administrative 
                expenses of such possession--
                            (i) in the case of a possession described 
                        in paragraph (1), by reason of the amendments 
                        made by this section, and
                            (ii) in the case of a possession described 
                        in paragraph (2), by reason of carrying out the 
                        plan described in such paragraph, or
                    (B) $500,000 ($10,000,000 in the case of Puerto 
                Rico).
        The amount described in subparagraph (A) shall be determined by 
        the Secretary of the Treasury based on information provided by 
        the government of the respective possession.
            (4) Coordination with credit allowed against united states 
        income taxes.--No credit shall be allowed against United States 
        income taxes under section 6436 of such Code (as added by this 
        section), nor shall any credit or refund be made or allowed 
        under subsection (i) of such section, to any person--
                    (A) to whom a credit is allowed against taxes 
                imposed by the possession by reason of the amendments 
                made by this section, or
                    (B) who is eligible for a payment under a plan 
                described in paragraph (2).
            (5) Mirror code tax system.--For purposes of this 
        subsection, the term ``mirror code tax system'' means, with 
        respect to any possession of the United States, the income tax 
        system of such possession if the income tax liability of the 
        residents of such possession under such system is determined by 
        reference to the income tax laws of the United States as if 
        such possession were the United States.
            (6) Treatment of payments.--For purposes of section 1324 of 
        title 31, United States Code, the payments under this 
        subsection shall be treated in the same manner as a refund due 
        from a credit provision referred to in subsection (b)(2) of 
        such section.
    (d) Clerical Amendment.--The table of sections for subchapter B of 
chapter 65 of subtitle F of such Code is amended by adding at the end 
the following new item:

``Sec. 6436. Individual tariff refund credit.''.
    (e) Conforming Amendment.--Section 1324(b)(2) of title 31, United 
States Code, is amended by striking ``or 7527A'' and inserting ``7527A, 
or 6436''.
    (f) Effective Date.--The amendments made by this sections shall 
apply to taxable years beginning after December 31, 2024.

SEC. 2. EXCISE TAX ON CERTAIN TARIFF REFUNDS.

    (a) In General.--Chapter 42 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new subchapter:

          ``Subchapter I--Excise Tax on Certain Tariff Refunds

``Sec. 4969. Excise tax on certain tariff refunds.

``SEC. 4969. EXCISE TAX ON CERTAIN TARIFF REFUNDS.

    ``(a) In General.--There is hereby imposed on each covered taxpayer 
for the taxable year a tax in an amount equal to 100 percent of the 
non-qualifying tariff refunds received by such taxpayer.
    ``(b) Exception for Costs Not Passed On to Consumers.--
            ``(1) In general.--Subsection (a) shall not apply with 
        respect to a covered taxpayer if such taxpayer can demonstrate 
        that any increase in price of products sold by the taxpayer 
        during the covered period did not exceed 50 percent of the 
        amount of the tariffs imposed on such products on any input 
        used by the taxpayer to produce such products.
            ``(2) Covered period.--For purposes of paragraph (1), the 
        term `covered period' means the period beginning on January 20, 
        2025, and ending on the date on which a covered court order is 
        issued.
            ``(3) Treatment of price increases attributable to 
        inflation.--For purposes of paragraph (1), the amount of the 
        increase in the retail price of any product shall be determined 
        without regard to so much of such increase as is attributable 
        to inflation.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Covered court order.--The term `covered court order' 
        has the meaning given such term in section 6436.
            ``(2) Covered taxpayer.--The term `covered taxpayer' means 
        a corporation or taxpayer which does not meet the gross 
        receipts test of section 448(c), determined by substituting 
        `$1,000,000,000' for `$25,000,000' in paragraph (1) thereof.
            ``(3) Non-qualifying tariff refund.--For purposes of this 
        section, the term `non-qualifying tariff refund' means a 
        repayment made pursuant to a covered court order of tariff 
        revenues which were collected from the taxpayer in the course 
        of the trade or business of such taxpayer.''.
    (b) Clerical Amendment.--The table of subchapters for chapter 42 of 
such Code is amended by adding at the end the following new item:

``I. Excise Tax on Certain Tariff Refunds''.
    (c) Effective Date.--The amendments made by this section shall 
apply to amounts received after December 31, 2025.
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