H.R. 6634

[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>