[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. <all>