No official summary available for this bill.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6634 Introduced in House (IH)]
<DOC>
119th CONGRESS
1st Session
H. R. 6634
To amend the Internal Revenue Code of 1986 to establish a refundable
childhood education tax credit with monthly advance payments.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
December 11, 2025
Mr. Fields 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
childhood education tax credit with monthly advance payments.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. ESTABLISHMENT OF REFUNDABLE CHILDHOOD EDUCATION TAX CREDIT
WITH MONTHLY ADVANCE PAYMENTS.
(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 section:
``SEC. 24A. MONTHLY CHILDHOOD EDUCATION 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 childhood education allowances determined with respect to
the taxpayer under subsection (b) for each calendar month during such
taxable year.
``(b) Monthly Childhood Education Allowance.--
``(1) In general.--For purposes of this section, the term
`monthly childhood education allowance' means, with respect to
any taxpayer for any calendar month, an amount equal to $667
for each specified child of such taxpayer.
``(2) Limitation based on household income.--
``(A) In general.--The dollar amount under
paragraph (1) with respect to any taxpayer for any
calendar month shall be reduced (but not below zero) by
an amount which bears the same ratio to such dollar
amount (determined without regard to this paragraph)
as--
``(i) the excess (if any) of--
``(I) the taxpayer's household
income for the taxable year which
includes such month, over
``(II) an amount equal to 300
percent of the poverty line for a
family of the size involved for such
taxable year, bears to
``(ii) an amount equal to 100 percent of
the poverty line for a family of the size
involved for such taxable year.
``(B) Definitions related to limitation based on
household income.--For purposes of this paragraph--
``(i) Household income.--The term
`household income' means, with respect to any
taxpayer for any taxable year, an amount equal
to the sum of--
``(I) the modified adjusted gross
income of the taxpayer for such taxable
year, plus
``(II) the aggregate modified
adjusted gross incomes of all other
individuals for such taxable year who--
``(aa) were taken into
account in determining the
taxpayer's family size under
clause (iii) for such taxable
year, and
``(bb) were required to
file a return of tax imposed by
section 1 for such taxable
year.
``(ii) Modified adjusted gross income.--The
term `modified adjusted gross income' means
adjusted gross income increased by any amount
excluded from gross income under section 911,
931, or 933.
``(iii) Family size.--The family size
involved with respect to any taxpayer for any
taxable year shall be equal to the number of
individuals for whom the taxpayer is allowed a
deduction under section 151 for such taxable
year.
``(iv) Poverty line.--The term `poverty
line' has the meaning given such term in
section 2110(c)(5) of the Social Security Act.
``(3) Inflation adjustment.--In the case of any month
beginning after December 31, 2025, the $667 amount under
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 Child.--For purposes of this section--
``(1) In general.--The term `specified child' means, with
respect to any taxpayer for any calendar month, an individual--
``(A) who has the same principal place of abode as
the taxpayer for more than one-half of such month,
``(B) who, as of the beginning of such month, will
have attained age 2 and will not have attained age 5,
``(C) who receives care from the taxpayer during
such month that is not compensated,
``(D) who is enrolled in an early childhood
education program during such month, and
``(E) who either--
``(i) is a citizen, national, or resident
of the United States, or
``(ii) if the taxpayer is a citizen or
national of the United States, is a legally
adopted individual of such taxpayer or is
lawfully placed with such taxpayer for legal
adoption by such taxpayer.
``(2) Early childhood education program.--The term `early
childhood education program' has the meaning given such term in
section 103 of the Higher Education Act of 1965, except that
such term includes any private prekindergarten program licensed
or regulated by a State.
``(3) Care from the taxpayer.--
``(A) In general.--Except as otherwise provided by
the Secretary, whether any individual receives care
from the taxpayer (within the meaning of paragraph
(1)(C)) shall be determined on the basis of facts and
circumstances with respect to the following factors:
``(i) The supervision provided by the
taxpayer regarding the daily activities and
needs of the individual.
``(ii) The maintenance by the taxpayer of a
secure environment at which the individual
resides.
``(iii) The provision or arrangement by the
taxpayer of, and transportation by the taxpayer
to, medical care at regular intervals and as
required for the individual.
``(iv) The involvement by the taxpayer in,
and financial and other support by the taxpayer
for, educational or similar activities of the
individual.
``(v) Any other factor that the Secretary
determines to be appropriate to determine
whether the individual receives care from the
taxpayer.
``(B) Determination of whether care is
compensated.--For purposes of determining if care is
compensated within the meaning of paragraph (1)(C),
compensation from the Federal Government, a State or
local government, a Tribal government, or any
possession of the United States shall not be taken into
account.
``(4) Application of tie-breaker rules.--
``(A) In general.--Except as provided in
subparagraph (D), if any individual would (but for this
paragraph) be a specified child of 2 or more taxpayers
for any month, such individual shall be treated as the
specified child only of the taxpayer who is--
``(i) the parent of the individual (or, if
such individual would (but for this paragraph)
be a specified child of 2 or more parents of
the individual for such month, the parent of
the individual determined under subparagraph
(B)),
``(ii) if the individual is not a specified
child of any parent of the individual
(determined without regard to this paragraph),
the specified relative of the individual with
the highest adjusted gross income for the
taxable year which includes such month, or
``(iii) if the individual is neither a
specified child of any parent of the individual
nor a specified child of any specified relative
of the individual (in both cases determined
without regard to this paragraph), the taxpayer
with the highest adjusted gross income for the
taxable year which includes such month.
``(B) Tie-breaker among parents.--If any individual
would (but for this paragraph) be the specified child
of 2 or more parents of the individual for any month,
such child shall be treated only as the specified child
of--
``(i) the parent with whom the child
resided for the longest period of time during
such month, or
``(ii) if the child resides with both
parents for the same amount of time during such
month, the parent with the highest adjusted
gross income for the taxable year which
includes such month.
``(C) Specified relative.--For purposes of this
paragraph, the term `specified relative' means an
individual who is--
``(i) an ancestor of a parent of the
specified child,
``(ii) a brother or sister of a parent of
the specified child, or
``(iii) a brother, sister, stepbrother, or
stepsister of the specified child.
``(D) Certain parents or specified relatives not
taken into account.--This paragraph shall be applied
without regard to any parent or specified relative of
an individual for any month if--
``(i) such parent or specified relative
elects to have such individual not be treated
as a specified child of such parent or
specified relative for such month,
``(ii) in the case of a parent of such
individual, the adjusted gross income of the
taxpayer (with respect to whom such individual
would be treated as a specified child after
application of this subparagraph) for the
taxable year which includes such month is
higher than the highest adjusted gross income
of any parent of the individual for any taxable
year which includes such month (determined
without regard to any parent with respect to
whom such individual is not a specified child,
determined without regard to subparagraphs (A)
and (B) and after application of this
subparagraph), and
``(iii) in the case of a specified relative
of such individual, the adjusted gross income
of the taxpayer (with respect to whom such
individual would be treated as a specified
child after application of this subparagraph)
for the taxable year which includes such month
is higher than the highest adjusted gross
income of any parent and any specified relative
of the individual for any taxable year which
includes such month (determined without regard
to any parent and any specified relative with
respect to whom such individual is not a
specified child, determined without regard to
subparagraphs (A) and (B) and after application
of this subparagraph).
``(E) Treatment of joint returns.--For purposes of
this paragraph, with respect to any month, the adjusted
gross income of each person who files a joint return
for the taxable year which includes such month is the
total adjusted gross income shown on the joint return
for the taxable year.
``(F) Parent.--Except as otherwise provided by the
Secretary, the term `parent' shall have the same
meaning as when used in section 152(c)(4).
``(5) Treatment of temporary absences.--Except as provided
in regulations or other guidance issued by the Secretary, for
purposes of this subsection--
``(A) In general.--In the case of any individual's
temporary absence from such individual's principal
place of abode, each day composing the temporary
absence shall--
``(i) be treated as a day at such
individual's principal place of abode,
``(ii) be treated as satisfying the care
requirement described in paragraph (1)(C) for
each day described in clause (i), and
``(iii) not be treated as a day at any
other location.
``(B) Temporary absence.--For purposes of
subparagraph (A), an absence shall be treated as
temporary if--
``(i) the individual would have resided at
the place of abode but for the absence, and
``(ii) under the facts and circumstances,
it is reasonable to assume that the individual
will return to reside at the place of abode.
``(6) Special rule for divorced parents, etc.--Rules
similar to the rules of section 152(e) shall apply for purposes
of this subsection.
``(7) Eligibility determined on basis of presumptive
eligibility.--
``(A) In general.--If a period of presumptive
eligibility is established under section 7527B(c) with
respect to any taxpayer and child--
``(i) such child shall be treated as the
specified child of such taxpayer for any month
in such period of presumptive eligibility, and
``(ii) such child shall not be treated as
the specified child of any other taxpayer with
respect to whom a period of presumptive
eligibility has not been established for any
such month.
``(B) Ability of credit claimants to establish
presumptive eligibility.--Nothing in section 7527B(c)
shall be interpreted to preclude a taxpayer from
establishing a period of presumptive eligibility
(including any period described in subparagraph (D)
with respect to which payment could be made) with
respect to any specified child for purposes of this
section solely because such taxpayer affirmatively
elects not to receive monthly advance childhood
education payments under section 7527B.
``(C) Exception for income-based tie-breaker
rules.--If a period of presumptive eligibility is
established under section 7527B(c) for any individual
with respect to any taxpayer and such individual is not
the specified child of such taxpayer for any month in
such period by reason of such taxpayer failing to be
described in clause (i), (ii), or (iii) of paragraph
(4)(A) for the taxable year which includes such month,
subparagraph (A) shall not apply with respect to such
month.
``(D) Treatment of certain retroactive payments.--
If any payment is made under subparagraph (A) or (B) of
section 7527B(f)(3) or paragraph (1) or (2) of section
7527B(g), with respect to any taxpayer and child for
any period, such period shall be treated as a period of
presumptive eligibility established under section
7527B(c) with respect to such taxpayer and child for
purposes of applying subparagraph (A).
``(E) Fraud and intentional disregard of rules or
regulations.--If the Secretary determines that the
taxpayer committed fraud or intentionally disregarded
rules or regulations in establishing or maintaining any
period of presumptive eligibility, the months with
respect to which such fraud or intentional disregard
relates shall not be treated as a period of presumptive
eligibility for purposes of subparagraph (A).
``(d) 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 childhood education allowances with respect to any such
calendar month shall be allowed under subpart C (and not allowed under
this subpart).
``(e) Identification Requirements.--
``(1) Specified child identification requirement.--No
credit shall be allowed under this section to a taxpayer with
respect to any specified child unless the taxpayer includes the
name and taxpayer identification number of such specified child
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.
``(f) Restrictions on Taxpayers Who Improperly Claimed Credit or
Improperly Received Monthly Advance Childhood Education Payments.--
``(1) Taxpayers making prior fraudulent or reckless
claims.--
``(A) In general.--No credit shall be allowed under
this section for any taxable year (and no payment shall
be made under section 7527B for any month) in the
disallowance period.
``(B) Disallowance period.--For purposes of
subparagraph (A), the disallowance period is--
``(i) the period of 120 calendar months
after the most recent calendar month for which
there was a final determination that the
taxpayer's claim of credit under this section
(or payment received under section 7527B) was
due to fraud, and
``(ii) the period of 24 calendar months
after the most recent calendar month for which
there was a final determination that the
taxpayer's claim of credit under this section
(or payment received under section 7527B) was
due to reckless or intentional disregard of
rules and regulations (but not due to fraud).
``(2) Taxpayers making improper prior claims.--In the case
of a taxpayer who is denied credit under this section for any
taxable year as a result of the deficiency procedures under
subchapter B of chapter 63, no credit shall be allowed under
this section for any subsequent taxable year (and no payment
shall be made under section 7527B for any subsequent month)
unless the taxpayer provides such information as the Secretary
may require to demonstrate eligibility for such credit.
``(3) Coordination with possessions of the united states.--
For purposes of this subsection, a taxpayer's claim of credit
under this section (or payment received under section 7527B)
includes a claim of credit under this section of the income tax
law of any jurisdiction other than the United States (or
similar payment received under section 7527B of such income tax
law), and a claim made or a payment received from American
Samoa pursuant to a plan described in subsection (h)(3)(B).
``(g) Reconciliation of Credit and Monthly Advance Childhood
Education 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) Increase in tax equal to excess advance payments in
certain circumstances.--If the aggregate amount of payments
made to the taxpayer under section 7527B for one or more
calendar months in such taxable year exceeds the amount allowed
as a credit under subpart C by reason of this section with
respect to such taxpayer for such taxable year (without regard
to paragraph (1) of this subsection), the tax imposed by this
chapter for such taxable year shall be increased by so much of
such excess as is attributable to one or more of the following:
``(A) Fraud, or reckless or intentional disregard
of rules and regulations, by the taxpayer.
``(B) Changes in the taxpayer's household income
that affect the application of the limitation imposed
by subsection (b)(2).
``(C) Payments under section 7527B which were made
for months which were not part of a period of
presumptive eligibility.
``(D) A failure to be the taxpayer described in
clause (i), (ii), or (iii) of subsection (c)(4)(A).
``(E) A failure to satisfy the requirements of
subsection (d).
``(F) A failure to satisfy the requirements of
paragraph (1) or (2) of subsection (e), except that a
failure to satisfy the requirements of subsection
(e)(1) shall not be taken into account under this
paragraph if the taxpayer demonstrates to the
satisfaction of the Secretary that it is reasonable to
expect that the specified child will be issued a
taxpayer identification number and that the delay in
such issuance was due to reasonable cause and not
willful neglect.
``(G) Such other circumstances as the Secretary
identifies for purposes of this paragraph 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.
``(H) Payments subject to treatment as excess
advance payments after notice under section
7527B(j)(2).
``(3) Joint returns.--Except as otherwise provided by the
Secretary, in the case of an advance payment made under section
7527B with respect to a joint return, half of such payment
shall be treated as having been made to each individual filing
such return.
``(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 (h)(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 2025. 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)(5).
``(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 2025 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, including regulations or other
guidance--
``(1) for determining whether an individual receives care
from a taxpayer for purposes of subsection (c)(1)(C), and
``(2) to coordinate or modify the application of this
section and section 7527B in the case of any taxpayer--
``(A) whose taxable year is other than a calendar
year,
``(B) whose filing status for a taxable year is
different from the status used for determining one or
more monthly payments under section 7527B during such
taxable year, or
``(C) whose principal place of abode for any month
is different from the principal place of abode used for
determining the monthly payment under section 7527B for
such month.''.
(b) Advance Payment of Monthly Childhood Education Tax Credit.--
Chapter 77 of such Code is amended by inserting after section 7527A the
following new section:
``SEC. 7527B. ADVANCE PAYMENT OF MONTHLY CHILDHOOD EDUCATION TAX
CREDIT.
``(a) In General.--The Secretary shall pay to each taxpayer, during
each calendar month which is during a period of presumptive eligibility
with respect to the taxpayer and any child, an amount equal to the
monthly advance childhood education payment determined with respect to
such taxpayer for such month.
``(b) Monthly Advance Childhood Education Payment.--The term
`monthly advance childhood education 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 childhood
education allowance which would be determined under section 24A(b) with
respect to such taxpayer for such calendar month if--
``(1) the only specified children of such taxpayer for such
calendar month are the specified children of such taxpayer for
the reference month (determined without regard to section
24A(c)(7)),
``(2) the ages of such children (and the status of such
children as specified children) are determined for such
calendar month by taking into account the passage of time since
such reference month,
``(3) each child is only taken into account as a specified
child for such calendar month if such calendar month is during
a period of presumptive eligibility with respect to the
taxpayer and such child,
``(4) the limitations of section 24A(b)(2) were applied
with respect to the reference taxable year rather than with
respect to the applicable taxable year, and
``(5) no monthly childhood education allowance was
determined with respect to such taxpayer for such 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 reference month.
``(c) Period of Presumptive Eligibility.--
``(1) In general.--For purposes of this section, the term
`period of presumptive eligibility' means, with respect to any
taxpayer and any child, the period--
``(A) beginning with the calendar month following
the calendar month during which the taxpayer provides
the Secretary with sufficient information for the
Secretary to--
``(i) determine that such child was a
specified child of the taxpayer for the
reference month (determined without regard to
section 24A(c)(7)), and
``(ii) estimate the monthly advance
childhood education payment for such calendar
month, and
``(B) ending with the earliest of--
``(i) the month beginning immediately after
the month on which the Secretary sends the
taxpayer a written notice that the taxpayer's
period of presumptive eligibility with respect
to such child is being terminated by reason of
information known to the Secretary (including a
failure to provide annual information under
paragraph (2)) which casts doubt on such
taxpayer's status as being allowed the monthly
childhood education allowance under section 24A
for such child (determined without regard to
section 24A(c)(7)) with respect to one or more
months following the reference month,
``(ii) any month with respect to which the
taxpayer notifies the Secretary that such
taxpayer is not allowed a monthly childhood
education allowance for such month under
section 24A(b) (determined without regard to
section 24A(c)(7)), and
``(iii) the month beginning immediately
before the first month of a new period of
presumptive eligibility with respect to such
taxpayer and such child which is established on
the basis of a reference month more recent than
the reference month with respect to which such
prior period was established (including on the
basis of an annual renewal described in
paragraph (2)).
``(2) Annual renewal.--The Secretary shall terminate a
taxpayer's period of presumptive eligibility with respect to
any child under paragraph (1)(B)(i) unless such taxpayer
provides information sufficient to establish a new period of
presumptive eligibility with respect to such child (as
described in paragraph (1)(B)(ii)) on an annual basis.
``(3) Presumptive eligibility based on certain government
programs.--The Secretary shall issue regulations or other
guidance to establish procedures under which--
``(A) based on information provided to the
Secretary by one or more government entities, a parent
or specified relative of a child is treated as
automatically establishing a period of presumptive
eligibility with respect to such child, and
``(B) the month for which such period begins, the
month by which the first annual renewal described in
paragraph (2) must be completed, and any additional
circumstances under which such period will terminate,
are determined.
``(4) Taxpayer responsibility to notify secretary.--In the
event that any taxpayer is not allowed a monthly childhood
education allowance under section 24A(b) (determined without
regard to section 24A(c)(7)) for any month in a period of
presumptive eligibility with respect to such taxpayer, such
taxpayer shall notify the Secretary under paragraph (1)(B)(ii)
at such time and in such manner as the Secretary may provide.
``(5) Transition rule.--With respect to periods of
presumptive eligibility beginning during the first 6 months to
which this section applies, the Secretary shall issue
regulations or other guidance to establish procedures pursuant
to which--
``(A) based on information known to the Secretary,
including returns of tax for either of the last 2
taxable years ending before such month, a parent or
specified relative of a child is treated as
automatically establishing a period of presumptive
eligibility with respect to such child, and
``(B) the month for which such period begins, the
month by which the first annual renewal described in
paragraph (2) must be completed, and any additional
circumstances under which such period will terminate,
are determined.
``(d) Determination of Reference Month and Reference Taxable
Year.--For purposes of this section--
``(1) Reference month.--The term `reference month' means,
with respect to any calendar month in a period of presumptive
eligibility with respect to a taxpayer, the most recent of--
``(A) in the case of a taxpayer who filed a return
of tax for the last taxable year ending before such
calendar month, the last month of such taxable year,
``(B) in the case of a taxpayer who filed a return
of tax for the taxable year preceding the taxable year
described in subparagraph (A), the last month of such
preceding taxable year, and
``(C) in the case of a taxpayer who otherwise
provides the information referred to in subsection
(c)(1)(A), the month with respect to which such
information is provided.
``(2) Reference taxable year.--The term `reference taxable
year' means, with respect to any calendar month in a period of
presumptive eligibility with respect to a taxpayer--
``(A) if the reference month with respect to such
calendar month is determined under subparagraph (A) or
(B) of paragraph (1), the taxable year referred to in
such subparagraph, respectively, and
``(B) if the reference month with respect to such
calendar month is determined under paragraph (1)(C),
the last taxable year ending before such reference
month.
``(e) Methods of Providing Information To Establish a Period of
Presumptive Eligibility.--
``(1) In general.--The Secretary shall ensure the
information described in subsection (c)(1)(A) may be provided
on the return of tax for the taxable year ending before the
calendar year which includes the month for which such period
would begin, through the on-line portal described in paragraph
(2), or in such other manner as the Secretary may provide.
``(2) On-line information portal.--The Secretary shall
establish an on-line portal (available in multiple languages)
which allows taxpayers to--
``(A) subject to such restrictions as the Secretary
may provide, elect to begin or cease receiving payments
under this section, and
``(B) provide the information described in
subsection (c)(1)(A).
``(f) Resolution of Competing Claims of Presumptive Eligibility
With Respect to Same Child.--
``(1) In general.--If there is a period of presumptive
eligibility with respect to any taxpayer and child (hereafter
referred to as the `original claim'), a period of presumptive
eligibility would (without regard to this subsection) be
established with respect to another taxpayer and such child
(hereafter referred to as the `challenge claim'), and the
period of such challenge claim would overlap with the period of
such original claim--
``(A) such challenge claim shall not be taken into
account under this section unless the reference month
with respect to which the challenge claim would be
established is at least as recent as the reference
month with respect to which the original claim is
established,
``(B) such challenge claim shall not begin before
the original claim is terminated, and
``(C) the Secretary shall establish procedures
under which the Secretary expeditiously adjudicates
such claims on the basis of the most recent feasible
reference month.
``(2) Provisions related to adjudication.--
``(A) Challenge claim must relate to at least 3
months prospectively.--The procedures established under
paragraph (1)(C) shall require that the taxpayer
establishing the challenge claim express a reasonable
expectation and intent that such taxpayer would be
allowed a monthly childhood education allowance under
section 24A(b) (determined without regard to section
24A(c)(7)) for at least the first 2 months following
the reference month referred to in paragraph (1)(C).
``(B) Expedited process; appeals.--The procedures
established under paragraph (1)(C) shall include--
``(i) an expedited process for taxpayers
who meet such requirements as the Secretary may
establish for such expedited process, and
``(ii) procedures for adjudicating an
appeal of an adverse decision.
``(C) Information receipt and coordination.--For
purposes of obtaining information relevant to any
adjudication under this paragraph, the Secretary may
enter into agreements to receive information from, and
otherwise coordinate with--
``(i) Federal agencies (including the
Social Security Administration),
``(ii) any State, local government, Tribal
government, or possession of the United States,
and
``(iii) any other individual or entity that
the Secretary determines to be appropriate for
such purposes.
``(D) Adjudication not treated as assessment.--Any
adjudication under this paragraph shall not be treated
as an assessment described in section 6201.
``(E) Adjudication not treated as inspection of
taxpayer's books of account.--The inspection of a
taxpayer's books of account in connection with any
adjudication under this paragraph shall not be treated
as an examination or inspection of a taxpayer's books
of account for purposes of section 7605(b).
``(3) Retroactive payments related to adjudication.--
``(A) Delay in establishment of challenge claim.--
If the challenge claim is established pursuant to the
procedures established under paragraph (1)(C), the
Secretary shall make a one-time payment to the taxpayer
with respect to such claim equal to the aggregate
amount of increases in the monthly advance childhood
education payments which would have been made to such
taxpayer if such challenge claim had been allowed to
take effect without regard to this subsection. Any
payment under this subparagraph shall be in addition to
any payment made under subsection (g).
``(B) Termination and reinstatement of original
claim.--If, pursuant to the procedures established
under paragraph (1)(C), the original claim is
terminated under subsection (c)(1)(B)(i) and a new
period of presumptive eligibility is subsequently
established pursuant to such procedures with respect to
the same taxpayer and child as for such original claim,
the Secretary shall make a one-time payment to the
taxpayer with respect to such claim equal to the
aggregate amount of increases in the monthly advance
childhood education payments which would have been made
to such taxpayer if such original claim had never been
terminated.
``(g) Rules Related to Grace Periods and Hardships.--
``(1) Automatic grace period.--
``(A) In general.--If a taxpayer establishes a
period of presumptive eligibility with respect to any
child, elects the application of this paragraph, and
demonstrates to the satisfaction of the Secretary that
such taxpayer would be allowed a monthly childhood
education allowance under section 24A(b) (determined
without regard to section 24A(c)(7)) for one or more of
the 3 months immediately preceding the first month of
such period, the Secretary shall make a one-time
payment to the taxpayer equal to the aggregate amount
of increases in the monthly advance childhood education
payments which would have been made to such taxpayer if
such months were part of such period. The preceding
sentence shall not apply to the extent that the
Secretary determines that the failure to establish the
period of presumptive eligibility with respect to such
child for any such month was due to fraud or reckless
or intentional disregard of rules and regulations.
``(B) Limitation.--Subparagraph (A) shall not apply
with respect to any taxpayer more than once during any
36-month period.
``(2) Hardship.--If a taxpayer establishes a period of
presumptive eligibility with respect to any child, elects the
application of this paragraph (and does not elect the
application of paragraph (1) with respect to the establishment
of such period), demonstrates to the satisfaction of the
Secretary that such taxpayer would be allowed a monthly
childhood education allowance under section 24A(b) (determined
without regard to section 24A(c)(7)) for one or more of the 6
months immediately preceding the first month of such period,
and the Secretary determines that the failure to establish the
period of presumptive eligibility with respect to such child
for such months was due to domestic violence, serious illness,
natural disaster, or any other hardship, the Secretary shall
make a one-time payment to the taxpayer equal to the aggregate
amount of increases in the monthly advance childhood education
payments which would have been made to such taxpayer if such
months were part of such period.
``(3) Coordination with retroactive payment for delay in
establishment of challenge claim.--For purposes of applying
paragraph (1) or (2) with respect to any challenge claim to
which subsection (f)(3)(A) applies, the period of presumptive
eligibility shall be treated as including the period for which
payment is made under such subsection.
``(h) 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, 2025, 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, 2025, 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 (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 child
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)), and
``(II) any advance payment made by
a possession of the United States with
a mirror code tax system (as defined in
section 24A(h)) pursuant to an election
under paragraph (6)(B) which
corresponds to a payment described in
subclause (I).
``(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 child support
enforcement agency, including a lien arising by
operation of law for overdue child 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 monthly childhood
education tax credit to residents of Puerto
Rico, see section 24A(d).
``(ii) For application of monthly advance
childhood education payments to residents of
Puerto Rico, see subsection (b)(5).
``(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.
``(i) Application of Certain Definitions and Rules Applicable to
Monthly Childhood Education Tax Credit.--
``(1) Definitions.--Except as otherwise provided in this
section, terms used in this section which are also used in
section 24A shall have the same respective meanings as when
used in section 24A.
``(2) Treatment of certain deaths.--A child shall not be
taken into account in determining the monthly advance childhood
education payment for any calendar month if the death of such
child before the end of such month is known to the Secretary as
of the date on which the Secretary estimates such payment.
``(3) Identification requirements.--Rules similar to the
rules which apply under section 24A(e) shall apply for purposes
of this section, except that such rules shall apply with
respect to the return of tax for the reference taxable year or,
in the case of information provided through the on-line portal
or otherwise, with respect to the information so provided.
``(4) Restrictions on taxpayers who improperly claimed
credit or improperly received monthly advance childhood
education payments.--For restrictions on taxpayers who
improperly claimed credit or improperly received monthly
advance childhood education payments, see section 24A(f).
``(j) 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 treatment as excess
advance payments.--In the case of any payments made to a
taxpayer which the Secretary has determined are subject to
treatment as excess advance payments, the notice provided under
paragraph (1) to such taxpayer shall include the amount of such
payments.
``(k) Notification of Certain Events.--With respect to any taxpayer
receiving monthly advance childhood education payments under this
section with respect to any specified child, 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
childhood education payment will increase (relative to the
preceding month) by reason of an inflation adjustment under
section 24A(b)(3).
``(2) Any month with respect to which such monthly advance
childhood education payment will be reduced (relative to the
preceding month) by reason of such child ceasing to be a
specified child by reason of attaining age 5.
``(3) Such other events as the Secretary determines
appropriate.
``(l) 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) Disclosure of Information Relating to Advance Payment of
Monthly Childhood Education Tax Credit.--Section 6103(e) of such Code
is amended by adding at the end the following new paragraph:
``(12) Disclosure of information relating to advance
payment of monthly childhood education tax credit.--
``(A) Joint filers.--In the case of any individual
who is eligible for monthly advance childhood education
payments under section 7527B, if the reference taxable
year (as defined in section 7527B(d)(2)) that the
Secretary uses to calculate such payments is a year for
which the individual filed an income tax return jointly
with another individual, the Secretary may disclose to
such individual any information which is relevant in
determining the monthly advance childhood education
payment under section 7527B, and the individual's
eligibility for such payment, including information
regarding any of the following:
``(i) The number of specified children.
``(ii) The name and taxpayer identification
number of specified children.
``(iii) Marital status.
``(iv) Household income.
``(v) Modified adjusted gross income.
``(vi) Principal place of abode.
``(vii) Such other information as the
Secretary may provide.
``(B) Competing claimants.--In the case of any
adjudication under section 7527B(f), the Secretary may
disclose return information provided by the individual
with the original claim to the individual with the
challenge claim, return information provided by the
individual with the challenge claim to the individual
with the original claim, and any other information
considered by the Secretary in such adjudication to
either or both such individuals. Such information shall
be limited to the items specified in subparagraph (A)
and the following:
``(i) Information received under any
agreements or coordination the Secretary
entered into with--
``(I) any State, local government,
Tribal government, or possession of the
United States, or
``(II) any other individual or
entity that the Secretary determines to
be appropriate for purposes of
adjudicating claims under section
7527B(f).
``(ii) Information considered by the
Secretary about where and with whom the
specified child resided.
``(iii) Information considered by the
Secretary about expenditures made by the
claimants to the extent such payments relate to
the original or challenge claim.''.
(d) Conforming Amendments.--
(1) Section 26(b)(2) of such Code 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(g)(2) (relating to increase in
tax equal to excess advance payments in certain
circumstances).''.
(2) Section 152(f)(6)(B)(ii) of such Code is amended to
read as follows:
``(ii) the credits under sections 24 and
24A, and the payments under section 7527B,''.
(3) Section 3402(f)(1)(C) of such Code is amended by
inserting ``or section 24A (determined after application of
subsection (g) thereof)'' after ``section 24 (determined after
application of subsection (j) thereof)''.
(4) Section 6103(l)(13)(A)(v) of such Code is amended by
inserting ``or section 24A, as the case may be'' after
``section 24''.
(5) Section 6211(b)(4)(A) of such Code is amended by
inserting ``24A by reason of subsection (d) thereof,'' after
``24 by reason of subsections (d) and (i)(1) thereof,''.
(6) Section 6213(g)(2)(I) of such Code is amended by
inserting ``or section 24A (relating to monthly childhood
education tax credit)'' after ``section 24 (relating to child
tax credit)''.
(7) Section 6213(g)(2)(L) of such Code is amended by
inserting ``24A,'' after ``24,''.
(8) Section 6213(g)(2)(P) of such Code is amended--
(A) by inserting ``or 24A(f)(2)'' after ``section
24(g)(2)'',
(B) by inserting ``or 24A'' after ``under section
24'', and
(C) by striking ``subsection (g)(1) thereof'' and
inserting ``section 24(g)(1) or section 24A(f)(1),
respectively''.
(9) Section 6695(g)(2) of such Code is amended by inserting
``24A,'' after ``24,''.
(10) Paragraph (2) of section 1324(b) of title 31, United
States Code, is amended by inserting ``24A,'' after ``24,''.
(11) The table of sections for subpart A of part IV of
subchapter A of chapter 1 of the Internal Revenue Code of 1986
is amended by inserting after the item relating to section 24
the following new item:
``Sec. 24A. Monthly childhood education tax credit.''.
(12) The table of sections for chapter 77 of such Code is
amended by inserting after the item relating to section 7527A
the following new item:
``Sec. 7527B. Advance payment of monthly childhood education tax
credit.''.
(e) 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, 2025.
(2) Advance payment of monthly childhood education tax
credit.--The amendment made by subsection (b) shall apply to--
(A) calendar months beginning after the date of the
enactment of this Act, and
(B) in the case of section 7527B(g) of the Internal
Revenue Code of 1986 (relating to grace periods and
hardships), calendar months beginning after December
31, 2025.
(3) Disclosure of information.--The amendment made by
subsection (c) shall take effect on the date of the enactment
of this Act.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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