H.R. 7636

119 HR 7636 IH: To amend the Internal Revenue Code of 1986 to establish the individual tariff refund credit.
 U.S. House of Representatives
 2026-02-20
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 Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
 I  119th CONGRESS  2d Session  H. R. 7636  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.
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:
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.
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:
I
Excise Tax on Certain Tariff Refunds
Sec. 4969. Excise tax on certain tariff refunds.
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.