[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7547 Introduced in House (IH)]
<DOC>
118th CONGRESS
2d Session
H. R. 7547
To amend the Internal Revenue Code of 1986 to establish a refundable
young adult tax credit with monthly advance payment.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 5, 2024
Mr. McGarvey (for himself, Mrs. Watson Coleman, Mr. Carson, Mr.
Landsman, Ms. Lee of California, Ms. Norton, Mrs. Ramirez, and Mr.
Thanedar) 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 a refundable
young adult tax credit with monthly advance payment.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Young Adult Tax Credit Act''.
SEC. 2. ESTABLISHMENT OF REFUNDABLE YOUNG ADULT TAX CREDIT WITH MONTHLY
ADVANCE PAYMENT.
(a) In General.--Subpart A of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by inserting after
section 24 the following new sections:
``SEC. 24A. MONTHLY YOUNG ADULT TAX CREDIT.
``(a) Allowance of Credit.--There shall be allowed as a credit
against the tax imposed by this chapter for the taxable year the sum of
the monthly specified young adult allowances determined with respect to
the taxpayer under subsection (b) for each calendar month during such
taxable year.
``(b) Monthly Specified Young Adult Allowance.--
``(1) In general.--For purposes of this section, the term
`monthly specified young adult allowance' means the sum of $500
for each taxpayer or dependent of the taxpayer who is a
specified young adult for any calendar month.
``(2) Monthly specified young adult allowance.--In the case
of any month beginning after December 31, 2024, the $500 amount
in paragraph (1) shall be increased by an amount equal to--
``(A) such dollar amount, multiplied by--
``(B) the percentage (if any) by which--
``(i) the CPI (as defined in section
1(f)(4)) for the calendar year preceding the
calendar year in which such month begins,
exceeds
``(ii) the CPI (as so defined) for calendar
year 2024.
``(c) Specified Young Adult.--The term `specified young adult'
means an individual--
``(1) who, as of the close of such month, is at least 18
and will not have attained age 25, and
``(2) who either is a citizen, national, or resident of the
United States.
``(d) Denial of Credit to Dependents.--No credit shall be allowed
under this section to 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 such individual's taxable year
begins.
``(e) Credit Refundable.--If the taxpayer (in the case of a joint
return, either spouse) has a principal place of abode (determined as
provided in section 32) in the United States or Puerto Rico for more
than one-half of any calendar month during the taxable year, so much of
the credit otherwise allowed under subsection (a) as is attributable to
monthly specified young adult allowances with respect to any such
calendar month shall be allowed under subpart C (and not allowed under
this subpart).
``(f) Identification Requirements.--
``(1) Dependent identification requirement.--No credit
shall be allowed under this section to a taxpayer with respect
to any dependent unless the taxpayer includes the name and
taxpayer identification number of such dependent on the return
of tax for the taxable year and such taxpayer identification
number was issued on or before the due date for filing such
return.
``(2) Taxpayer identification requirement.--No credit shall
be allowed under this section if the taxpayer identification
number of the taxpayer was issued after the due date for filing
the return for the taxable year.
``(g) Reconciliation of Credit and Monthly Advance Young Adult
Payments.--
``(1) In general.--The amount otherwise determined under
subsection (a) with respect to any taxpayer for any taxable
year shall be reduced (but not below zero) by the aggregate
amount of payments made under section 7527B to such taxpayer
for one or more calendar months in such taxable year. 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) Recapture of excess advance payments in certain
circumstances.--In the case of a taxpayer described in
paragraph (3) for any taxable year, the tax imposed by this
chapter for such taxable year shall be increased by the excess
(if any) of--
``(A) the aggregate amount of payments made to the
taxpayer under section 7527B for one or more calendar
months in such taxable year, over
``(B) the amount determined under subsection (a)
with respect to the taxpayer for such taxable year
(without regard to paragraph (1) of this subsection).
``(3) Taxpayers subject to recapture.--
``(A) Fraud or reckless or intentional disregard of
rules and regulations.--A taxpayer is described in this
paragraph with respect to any taxable year if the
Secretary determines that the amount described in
paragraph (2)(A) with respect to the taxpayer for such
taxable year was determined on the basis of fraud or a
reckless or intentional disregard of rules and
regulations.
``(B) Certain payments made after notice from
secretary.--If the Secretary notifies a taxpayer under
section 7527B(e)(2) that such taxpayer is subject to
recapture with respect to any payments--
``(i) such taxpayer shall be treated as
described in this paragraph, and
``(ii) the increase determined under
paragraph (2) by reason of this subparagraph
shall not exceed the aggregate amount of such
payments.
``(C) Other circumstances to prevent abuse.--A
taxpayer is described in this paragraph with respect to
any taxable year pursuant to regulations or other
guidance of the Secretary describing other recapture
circumstances to facilitate the administration and
enforcement by the Secretary of section 7527B to
minimize the amount of advance payments made under
section 7527B to ineligible individuals and to prevent
abuse.
``(4) Coordination with possessions of the united states.--
For purposes of this subsection, payments made under section
7527B include payments made by any jurisdiction other than the
United States under section 7527B of the income tax law of such
jurisdiction, and advance payments made by American Samoa
pursuant to a plan described in subsection (e)(3)(B). Any
increase in tax imposed on a taxpayer by reason of paragraph
(2) of the income tax law of a jurisdiction other than the
United States shall be considered to reduce the aggregate
amount of payments made to such taxpayer by such jurisdiction.
In carrying out this section, the Secretary shall coordinate
with each possession of the United States to prevent any
application of this paragraph that is inconsistent with the
purposes of this subsection.
``(h) Application of Credit in Possessions.--
``(1) Mirror code possessions.--
``(A) In general.--The Secretary shall pay to each
possession of the United States with a mirror code tax
system amounts equal to the loss (if any) to that
possession by reason of the application of this section
(determined without regard to this subsection) with
respect to taxable years beginning in calendar years
after 2023. Such amounts shall be determined by the
Secretary based on information provided by the
government of the respective possession.
``(B) Coordination with credit allowed against
united states income taxes.--No credit shall be allowed
under this section for any taxable year to any
individual to whom a credit is allowable against taxes
imposed by a possession of the United States with a
mirror code tax system by reason of the application of
this section in such possession for such taxable year.
``(C) Mirror code tax system.--For purposes of this
paragraph, 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.
``(2) Cross references related to application of credit to
residents of puerto rico.--
``(A) For application of refundable credit to
residents of Puerto Rico, see subsection (d).
``(B) For application of advance payment to
residents of Puerto Rico, see section 7527B(b)(2).
``(3) American samoa.--
``(A) In general.--The Secretary shall pay to
American Samoa amounts estimated by the Secretary as
being equal to the aggregate benefits that would have
been provided to residents of American Samoa by reason
of the application of this section for taxable years
beginning in calendar years after 2023 if the
provisions of this section had been in effect in
American Samoa (applied as if American Samoa were the
United States and without regard to the application of
this section to residents of Puerto Rico under
subsection (d)).
``(B) Distribution requirement.--Subparagraph (A)
shall not apply unless American Samoa has a plan, which
has been approved by the Secretary, under which
American Samoa will promptly distribute such payments
to its residents.
``(C) Coordination with credit allowed against
united states income taxes.--
``(i) In general.--In the case of a taxable
year with respect to which a plan is approved
under subparagraph (B), this section (other
than this subsection) shall not apply to any
individual eligible for a distribution under
such plan.
``(ii) Application of section in event of
absence of approved plan.--In the case of a
taxable year with respect to which a plan is
not approved under subparagraph (B), subsection
(d) shall be applied by substituting `, Puerto
Rico, or American Samoa' for `or Puerto Rico'.
``(4) 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.
``(i) Regulations.--The Secretary shall issue such regulations or
other guidance as the Secretary determines necessary or appropriate to
carry out the purposes of this section.''.
(b) Monthly Payment of Young Adult Tax Credit.--Chapter 77 of such
Code is amended by inserting after section 7527A the following new
section:
``SEC. 7527B. MONTHLY PAYMENTS OF YOUNG ADULT TAX CREDIT.
``(a) In General.--The Secretary shall establish a program for
making payments to taxpayers with respect to each calendar month equal
to the monthly advance young adult payment determined with respect to
such taxpayer for such month.
``(b) Monthly Advance Young Adult Payment.--
``(1) In general.--For purposes of this section and except
as otherwise provided in this section, the term `monthly
advance young adult payment' means, with respect to any
taxpayer for any calendar month, the amount (if any) which is
estimated by the Secretary as being equal to the monthly
specified young adult allowance which would be determined under
section 24A(b) with respect to such taxpayer for such calendar
month.
``(2) Residence requirement.--Unless determined by the
Secretary based on any information known to the Secretary, no
monthly specified young adult allowance shall be determined
with respect to such taxpayer for a calendar month unless the
taxpayer (in the case of a joint return, either spouse) has a
principal place of abode (determined as provided in section 32)
in the United States or Puerto Rico for more than one-half of
the month.
``(c) On-Line Information Portal.--
``(1) On-line information portal.--The Secretary shall
establish an on-line portal which allows taxpayers to--
``(A) subject to such restrictions as the Secretary
may provide, elect to begin or cease receiving payments
under this section,
``(B) provide information to the Secretary which is
relevant in determining the monthly advance young adult
payment and the taxpayer's eligibility for such
payment, including changes in expected dependent status
for the following tax year, and
``(C) subject to such restrictions as the Secretary
may provide, elect to begin or cease an annual lump sum
in lieu of monthly payments.
``(2) Availability in multiple languages.--The Secretary
shall ensure that the on-line portal described in paragraph (1)
is available in multiple languages.
``(3) Administration.--The Secretary shall identify and
allocate the resources necessary to administer the on-line
portal described in paragraph (1) and will create an internal
review process to ensure the portal is frequently updated for
efficiency, accuracy, and ease-of-use.
``(4) Mobile device compatibility.--The on-line portal
described in paragraph (1) shall be compatible with mobile
devices.
``(5) Determination of dependent status for purposes of
advance payment.--
``(A) In general.--For purposes of determining the
recipient of any monthly advance young adult payment
under this section, a specified young adult shall be
treated as a dependent of a taxpayer if such young
adult was claimed as a dependent of the taxpayer on the
return of tax filed by such taxpayer for the reference
year.
``(B) Reference year.--The term `reference year'
means, with respect to any taxpayer for any calendar
year, the most recent of--
``(i) in the case of a taxpayer who filed a
return of tax for the last taxable year ending
before the taxable year in which a payment is
made, such taxable year, or
``(ii) in the case of a taxpayer who filed
a return of tax for the taxable year preceding
the taxable year described in subparagraph (A),
such preceding taxable year.
``(C) Resolution of multiple claims relating to
same dependent.--In the case of multiple returns of tax
claiming a payment with respect to the same specified
young adult as a result of a change in dependent
status, the Secretary shall--
``(i) establish procedures under which the
Secretary expeditiously adjudicates taxpayers'
competing claims with respect to such payment,
``(ii) notify any taxpayer of the
termination of eligibility for a payment
pursuant to this subparagraph, and
``(iii) treat any error as arising due to a
clerical error and assessed according to
section 6213(b)(1) unless information indicates
that such error is due to fraud or determined
on the basis of fraud or a reckless or
intentional disregard of rules and regulations.
``(d) Provisions Related to Form, Manner, and Treatment of
Payments.--
``(1) Application of electronic funds payment
requirement.--The payments made by the Secretary under
subsection (a) shall be made by electronic funds transfer to
the same extent and in the same manner as if such payments were
Federal payments not made under this title.
``(2) Delivery of payments.--Notwithstanding any other
provision of law, the Secretary may certify and disburse
refunds payable under this section electronically to--
``(A) any account to which the payee authorized, on
or after January 1, 2023, the delivery of a refund of
taxes under this title or of a Federal payment (as
defined in section 3332 of title 31, United States
Code),
``(B) any account belonging to a payee from which
that individual, on or after January 1, 2023, made a
payment of taxes under this title, or
``(C) any Treasury-sponsored account (as defined in
section 208.2 of title 31, Code of Federal
Regulations).
``(3) Waiver of certain rules.--Notwithstanding section
3325 of title 31, United States Code, or any other provision of
law, with respect to any payment of a refund under this
section, a disbursing official in the executive branch of the
United States Government may modify payment information
received from an officer or employee described in section
3325(a)(1)(B) of such title for the purpose of facilitating the
accurate and efficient delivery of such payment. Except in
cases of fraud or reckless neglect, no liability under section
3325, 3527, 3528, or 3529 of title 31, United States Code,
shall be imposed with respect to payments made under this
paragraph.
``(4) Exception from reduction or offset.--Any applicable
payment (as defined in paragraph (5)(E)(iii)) shall not be--
``(A) subject to reduction or offset pursuant to
section 3716 or 3720A of title 31, United States Code,
``(B) subject to reduction or offset pursuant to
subsection (c), (d), (e), or (f) of section 6402, or
``(C) reduced or offset by other assessed Federal
taxes that would otherwise be subject to levy or
collection.
``(5) Assignment of benefits.--
``(A) In general.--The right of any person to any
applicable payment shall not be transferable or
assignable, at law or in equity, and no applicable
payment shall be subject to execution, levy,
attachment, garnishment, or other legal process, or the
operation of any bankruptcy or insolvency law.
``(B) Encoding of payments.--In the case of an
applicable payment described in subparagraph
(E)(iii)(I) that is paid electronically by direct
deposit through the Automated Clearing House (ACH)
network, the Secretary of the Treasury (or the
Secretary's delegate) shall--
``(i) issue the payment using a unique
identifier that is reasonably sufficient to
allow a financial institution to identify the
payment as an applicable payment, and
``(ii) further encode the payment pursuant
to the same specifications as required for a
benefit payment defined in section 212.3 of
title 31, Code of Federal Regulations.
``(C) Garnishment.--
``(i) Encoded payments.--In the case of a
garnishment order that applies to an account
that has received an applicable payment that is
encoded as provided in subparagraph (B), a
financial institution shall follow the
requirements and procedures set forth in part
212 of title 31, Code of Federal Regulations,
except--
``(I) notwithstanding section 212.4
of title 31, Code of Federal
Regulations (and except as provided in
subclause (II)), a financial
institution shall not fail to follow
the procedures of sections 212.5 and
212.6 of such title with respect to a
garnishment order merely because such
order has attached, or includes, a
notice of right to garnish federal
benefits issued by a State young adult
support enforcement agency, and
``(II) a financial institution
shall not, with regard to any
applicable payment, be required to
provide the notice referenced in
sections 212.6 and 212.7 of title 31,
Code of Federal Regulations.
``(ii) Other payments.--In the case of a
garnishment order (other than an order that has
been served by the United States) that has been
received by a financial institution and that
applies to an account into which an applicable
payment that has not been encoded as provided
in subparagraph (B) has been deposited
electronically on any date during the lookback
period or into which an applicable payment that
has been deposited by check on any date in the
lookback period, the financial institution,
upon the request of the account holder, shall
treat the amount of the funds in the account at
the time of the request, up to the amount of
the applicable payment (in addition to any
amounts otherwise protected under part 212 of
title 31, Code of Federal Regulations), as
exempt from a garnishment order without
requiring the consent of the party serving the
garnishment order or the judgment creditor.
``(iii) Liability.--A financial institution
that acts in good faith in reliance on clause
(i) or (ii) shall not be subject to liability
or regulatory action under any Federal or State
law, regulation, court or other order, or
regulatory interpretation for actions
concerning any applicable payments.
``(D) No reclamation rights.--This paragraph shall
not alter the status of applicable payments as tax
refunds or other nonbenefit payments for purpose of any
reclamation rights of the Department of the Treasury or
the Internal Revenue Service as per part 210 of title
31, Code of Federal Regulations.
``(E) Definitions.--For purposes of this
paragraph--
``(i) Account holder.--The term `account
holder' means a natural person whose name
appears in a financial institution's records as
the direct or beneficial owner of an account.
``(ii) Account review.--The term `account
review' means the process of examining deposits
in an account to determine if an applicable
payment has been deposited into the account
during the lookback period. The financial
institution shall perform the account review
following the procedures outlined in section
212.5 of title 31, Code of Federal Regulations
and in accordance with the requirements of
section 212.6 of title 31, Code of Federal
Regulations.
``(iii) Applicable payment.--The term
`applicable payment' means--
``(I) any payment made to an
individual under this section (other
than any payment made pursuant to
paragraph (6)),
``(II) any advance payment made by
a possession of the United States with
a mirror code tax system (as defined in
section 24(h)) pursuant to an election
under paragraph (6)(B) which
corresponds to a payment described in
subclause (I), and
``(III) any advance payment made by
American Samoa pursuant to a program
for making such payments which is
described in paragraph (6)(C)(ii).
``(iv) Garnishment.--The term `garnishment'
means execution, levy, attachment, garnishment,
or other legal process.
``(v) Garnishment order.--The term
`garnishment order' means a writ, order,
notice, summons, judgment, levy, or similar
written instruction issued by a court, a State
or State agency, a municipality or municipal
corporation, or a State young adult support
enforcement agency, including a lien arising by
operation of law for overdue young adult
support or an order to freeze the assets in an
account, to effect a garnishment against a
debtor.
``(vi) Lookback period.--The term `lookback
period' means the two month period that begins
on the date preceding the date of account
review and ends on the corresponding date of
the month two months earlier, or on the last
date of the month two months earlier if the
corresponding date does not exist.
``(6) Application of advance payments in the possessions of
the united states.--
``(A) Puerto rico.--
``(i) For application of young adult tax
credit to residents of Puerto Rico, see section
24A(d).
``(ii) For application of monthly advance
young adult payments to residents of Puerto
Rico, see subsection (b)(2).
``(B) Mirror code possessions.--In the case of any
possession of the United States with a mirror code tax
system (as defined in section 24A(h)(1)(C)), this
section shall not be treated as part of the income tax
laws of the United States for purposes of determining
the income tax law of such possession unless such
possession elects to have this section be so treated.
``(e) Notice of Payments.--
``(1) In general.--Not later than January 31 of the
calendar year following any calendar year during which the
Secretary makes one or more payments to any taxpayer under this
section, the Secretary shall provide such taxpayer with a
written notice which includes--
``(A) the taxpayer's taxpayer identity (as defined
in section 6103(b)(6)),
``(B) the aggregate amount of such payments made to
such taxpayer during such calendar year, and
``(C) such other information as the Secretary
determines appropriate.
``(2) Certain payments subject to recapture.--In the case
of any payments made to a taxpayer which the Secretary has
determined are subject to recapture, the notice provided under
paragraph (1) to such taxpayer shall include the amount of such
payments.
``(f) Notification of Certain Events.--With respect to any taxpayer
receiving monthly advance young adult payments under this section with
respect to any specified young adult, the Secretary shall, to the
maximum extent practicable, provide reasonable advance notice of each
of the following:
``(1) Any month with respect to which such monthly advance
young adult payment will increase (relative to the preceding
month) by reason of an inflation adjustment under section
24A(b)(2).
``(2) Any month with respect to which such monthly advance
young adult payment will be reduced (relative to the preceding
month) by reason of such young adult ceasing to be a specified
young adult by reason of attaining age 25.
``(g) Regulations.--The Secretary shall issue such regulations or
other guidance as the Secretary determines necessary or appropriate to
carry out the purposes of this section.''.
(c) Conforming Amendments.--
(1) Section 26(b)(2) is amended by striking ``and'' at the
end of subparagraph (Y), by striking the period at the end of
subparagraph (Z) and inserting ``, and'', and by adding at the
end the following new subparagraph:
``(AA) section 24A(f)(2) (relating to recapture of
certain monthly advance young adult payments).''.
(2) Section 3402(f)(1)(C) is amended by inserting ``or
section 24A (determined after application of subsection (g)
thereof)'' after ``section 24 (determined after application of
subsection (j) thereof)''.
(3) Section 6211(b)(4)(A) is amended by inserting ``24A by
reason of subsection (d) thereof,'' after ``24 by reason of
subsections (d) and (i)(1) thereof,''.
(4) Section 6213(g)(2)(I) is amended by inserting ``or
section 24A(f) (relating to monthly young adult tax credit)''
after ``section 24(f) (relating to young adult tax credit)''.
(5) Section 6213(g)(2)(L) is amended by inserting ``24A,''
after ``24,''.
(6) Section 6695(g)(2) is amended by inserting ``24A,''
after ``24,''.
(7) Paragraph (2) of section 1324(b) of title 31, United
States Code, as amended by the preceding provisions of this
Act, is amended--
(A) by inserting ``24A,'' after ``24,'', and
(B) by inserting ``7527B,'' after ``7527A,''.
(8) The table of sections for subpart A of part IV of
subchapter A of chapter 1 is amended by inserting after the
item relating to section 24 the following new items:
``Sec. 24A. Monthly young adult tax credit.''.
(9) The table of sections for chapter 77 is amended by
inserting after the item relating to section 7527A the
following new item:
``Sec. 7527B. Monthly payments of young adult tax credit.''.
(d) Effective Dates.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply to
taxable years beginning after December 31, 2023.
(2) Monthly advance young adult payments.--The amendments
made by subsection (b) shall apply to calendar months beginning
after December 31, 2023.
SEC. 3. OUTREACH CAMPAIGN.
(a) In General.--The Secretary of the Treasury, in coordination
with local community-based organizations, shall conduct an outreach
campaign to--
(1) provide information to the public regarding the young
adult tax credit under section 24A of the Internal Revenue Code
of 1986, as added by this Act, and
(2) assist individuals with claiming such credit.
(b) Methods.--With respect to the outreach campaign described in
paragraph (1), the Secretary shall--
(1) provide relevant information on the public website of
the Internal Revenue Service, and
(2) send direct mailings to individuals who have been
identified as eligible for such credit for the taxable year.
(c) Outreach to Underrepresented Populations.--In carrying out the
outreach campaign described in paragraph (1), the Secretary shall
prioritize outreach to members of populations which are less likely
than the general population to file taxes or have bank accounts.
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