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H.R.7636

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

Introduced·2/20/26
Introduced

H. R. 7636

Introduced in House · March 10, 2026

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.

Individual tariff refund credit

Excise tax on certain tariff refunds

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.

  1. (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.

“(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.”.

  1. (b) Definition of deficiency.—Section 6211(b)(4)(A) of such Code is amended by striking “and 6433” and inserting “6433, and 6436”.
  2. (c) Treatment of certain possessions.—
  1. (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. (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. (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—
    1. (A) the increase (if any) of the administrative expenses of such possession—
      1. (i) in the case of a possession described in paragraph (1), by reason of the amendments made by this section, and
      2. (ii) in the case of a possession described in paragraph (2), by reason of carrying out the plan described in such paragraph, or
    2. (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.

  1. (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—
    1. (A) to whom a credit is allowed against taxes imposed by the possession by reason of the amendments made by this section, or
    2. (B) who is eligible for a payment under a plan described in paragraph (2).

mirror code tax system.— (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.

  1. (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.
    1. (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:
    2. (e) Conforming amendment.—Section 1324(b)(2) of title 31, United States Code, is amended by striking “or 7527A” and inserting “7527A, or 6436”.

Effective date.—(f) Effective date.—The amendments made by this sections shall apply to taxable years beginning after December 31, 2024.