To amend the Internal Revenue Code of 1986 to establish the individual tariff refund credit.
- Bill Number
- H.R. 7636
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2026-02-20: Referred to the House Committee on Ways and Means.
- Last Updated
- 2026-03-11T23:02:17Z
AI-Generated Summary
Purpose This legislation establishes a mechanism to refund tariff revenues collected from tariffs deemed unlawful by a court order, distributing those funds to eligible U.S. individuals through a tax credit.
Key Provisions
- Individual Tariff Refund Credit: Creates new Internal Revenue Code section 6436, allowing a refundable tax credit for eligible individuals equal to a per-person share of repaid tariff revenues, multiplied by household size (including the filer and dependents).
- Eligibility: Applies to U.S. individuals (not nonresident aliens, dependents claimed by others, or estates/trusts) for the most recent tax year ending before a qualifying court order.
- Covered Tariffs: Limited to tariffs imposed unlawfully after January 20, 2025, and before the bill's enactment, where a final court order requires repayment.
- Advance Payments: Directs the IRS to issue rapid refunds or credits for the full amount, with notices sent to recipients; no interest applies.
- Excise Tax: Imposes a 100% tax on large businesses (those failing the $1 billion gross receipts test) receiving non-qualifying tariff refunds, unless they demonstrate limited price pass-through to consumers (no more than 50% of tariff costs, adjusted for inflation).
- Possessions Treatment: Provides payments to U.S. territories with mirror tax systems or approved distribution plans to extend equivalent benefits.
- Effective Dates: Credit applies to tax years after December 31, 2024; excise tax to amounts received after December 31, 2025.
Significant Changes to Existing Law
- Adds section 6436 to the Internal Revenue Code for the new credit and updates related sections on deficiencies and refunds (e.g., sections 6211 and 1324 of title 31).
- Introduces a new subchapter in chapter 42 for the excise tax on tariff refunds.
- Modifies existing refund and credit coordination rules to prevent double benefits.
Potential Impacts
- Government Agencies: Requires IRS administration of credits, advance payments, and notices; Treasury must calculate and distribute funds to possessions and determine per-person amounts based on total repaid revenues.
- Citizens: Provides direct financial relief to individuals and households proportional to tariff repayments, functioning similarly to a per-person distribution.
- International Relations: No direct provisions, but the framework responds to court findings on tariff legality without altering trade policy.
Main Stakeholders Affected
- Eligible U.S. taxpayers and households receiving credits.
- Large corporations or businesses subject to the excise tax on refunds.
- U.S. territories and their residents via coordinated payments.
- The Internal Revenue Service and Department of the Treasury for implementation.
- Importers or businesses originally paying the tariffs now subject to repayment orders.
Notable Legal, Constitutional, or Political Implications
- Ties tax benefits to judicial determinations of unlawful tariffs, potentially raising issues of separation of powers between courts and Congress in revenue distribution.
- The excise tax targets businesses based on size and pricing behavior, which could face challenges regarding retroactive taxation or equal protection.
- Coordination rules prevent overlapping benefits, treating failures to adjust credits as mathematical errors under existing tax procedures.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Recent Actions
- 2026-02-20: Referred to the House Committee on Ways and Means.
- 2026-02-20: Introduced in House
- 2026-02-20: Introduced in House
Bill Versions
- To amend the Internal Revenue Code of 1986 to establish the individual tariff refund credit. — issued 2026-02-20 — PDF (11 pages)