SEC. 70601. Modification and extension of limitation on excess business losses of noncorporate taxpayers.
(a) Rule made permanent.—Section 461(l)(1) is amended by striking “and before January 1, 2029,” each place it appears.
(b) Adjustment of amounts for calculation of excess business loss.—Section 461(l)(3)(C) is amended—
(1) in the matter preceding clause (i), by striking “December 31, 2018” and inserting “December 31, 2025”, and
(2) in clause (ii), by striking “2017” and inserting “2024”.
(c) Effective dates.—
(1) RULE MADE PERMANENT.—The amendments made by subsection (a) shall apply to taxable years beginning after December 31, 2026.
(2) ADJUSTMENT OF AMOUNTS FOR CALCULATION OF EXCESS BUSINESS LOSS.—The amendments made by subsection (b) shall apply to taxable years beginning after December 31, 2025.
SEC. 70602. Treatment of payments from partnerships to partners for property or services.
(a) In general.—Section 707(a)(2) is amended by striking “Under regulations prescribed” and inserting “Except as provided”.
(b) Effective date.—The amendment made by this section shall apply to services performed, and property transferred, after the date of the enactment of this Act.
(c) Rule of construction.—Nothing in this section, or the amendments made by this section, shall be construed to create any inference with respect to the proper treatment under section 707(a) of the Internal Revenue Code of 1986 with respect to payments from a partnership to a partner for services performed, or property transferred, on or before the date of the enactment of this Act.
SEC. 70603. Excessive employee remuneration from controlled group members and allocation of deduction.
(a) Application of aggregation rules.—Section 162(m) is amended by adding at the end the following new paragraph:
“(7) REMUNERATION FROM CONTROLLED GROUP MEMBERS.—
“(A) IN GENERAL.—In the case of any publicly held corporation which is a member of a controlled group—
“(i) paragraph (1) shall be applied by substituting ‘specified covered employee’ for ‘covered employee’, and
“(ii) if any person which is a member of such controlled group (other than such publicly held corporation) provides applicable employee remuneration to an individual who is a specified covered employee of such controlled group and the aggregate amount described in subparagraph (B)(ii) with respect to such specified covered employee exceeds $1,000,000—
“(I) paragraph (1) shall apply to such person with respect to such remuneration, and
“(II) paragraph (1) shall apply to such publicly held corporation and to each such related person by substituting ‘the allocable limitation amount’ for ‘$1,000,000’.
“(B) ALLOCABLE LIMITATION AMOUNT.—For purposes of this paragraph, the term ‘allocable limitation amount’ means, with respect to any member of the controlled group referred to in subparagraph (A) with respect to any specified covered employee of such controlled group, the amount which bears the same ratio to $1,000,000 as—
“(i) the amount of applicable employee remuneration provided by such member with respect to such specified covered employee, bears to
“(ii) the aggregate amount of applicable employee remuneration provided by all such members with respect to such specified covered employee.
“(C) SPECIFIED COVERED EMPLOYEE.—For purposes of this paragraph, the term ‘specified covered employee’ means, with respect to any controlled group—
“(i) any employee described in subparagraph (A), (B), or (D) of paragraph (3), with respect to the publicly held corporation which is a member of such controlled group, and
“(ii) any employee who would be described in subparagraph (C) of paragraph (3) if such subparagraph were applied by taking into account the employees of all members of the controlled group.
“(D) CONTROLLED GROUP.—For purposes of this paragraph, the term ‘controlled group’ means any group treated as a single employer under subsection (b), (c), (m), or (o) of section 414.”.
(b) Effective date.—The amendment made by this section shall apply to taxable years beginning after December 31, 2025.
SEC. 70604. Excise tax on certain remittance transfers.
(a) In general.—Chapter 36 is amended by inserting after subchapter B the following new subchapter:
“subchapter C—Remittance transfers
“Sec. 4475. Imposition of tax.
“SEC. 4475. Imposition of tax.
“(a) In general.—There is hereby imposed on any remittance transfer a tax equal to 1 percent of the amount of such transfer.
“(b) Payment of tax.—
“(1) IN GENERAL.—The tax imposed by this section with respect to any remittance transfer shall be paid by the sender with respect to such transfer.
“(2) COLLECTION OF TAX.—The remittance transfer provider with respect to any remittance transfer shall collect the amount of the tax imposed under subsection (a) with respect to such transfer from the sender and remit such tax quarterly to the Secretary at such time and in such manner as provided by the Secretary,
“(3) SECONDARY LIABILITY.—Where any tax imposed by subsection (a) is not paid at the time the transfer is made, then to the extent that such tax is not collected, such tax shall be paid by the remittance transfer provider.
“(c) Tax limited to cash and similar instruments.—The tax imposed under subsection (a) shall apply only to any remittance transfer for which the sender provides cash, a money order, a cashier’s check, or any other similar physical instrument (as determined by the Secretary) to the remittance transfer provider.
“(d) Nonapplication to certain noncash remittance transfers.—Subsection (a) shall not apply to any remittance transfer for which the funds being transferred are—
“(1) withdrawn from an account held in or by a financial institution—
“(A) which is described in subparagraphs (A) through (H) of section 5312(a)(2) of title 31, United States Code, and
“(B) that is subject to the requirements under subchapter II of chapter 53 of such title, or
“(2) funded with a debit card or a credit card which is issued in the United States.
“(e) Definitions.—For purposes of this section—
“(1) IN GENERAL.—The terms ‘remittance transfer’, ‘remittance transfer provider’, and ‘sender’ shall each have the respective meanings given such terms by section 919(g) of the Electronic Fund Transfer Act (15 U.S.C. 1693o–1(g)).
“(2) CREDIT CARD.—The term ‘credit card’ has the same meaning given such term under section 920(c)(3) of the Electronic Fund Transfer Act (15 U.S.C. 1693o–2(c)(3)).
“(3) DEBIT CARD.—The term ‘debit card’ has the same meaning given such term under section 920(c)(2) of the Electronic Fund Transfer Act (15 U.S.C. 1693o–2(c)(2)), without regard to subparagraph (B) of such section.
“(f) Application of anti-conduit rules.—For purposes of section 7701(l), with respect to any multiple-party arrangements involving the sender, a remittance transfer shall be treated as a financing transaction.”.
(b) Conforming amendment.—The table of subchapters for chapter 36 is amended by inserting after the item relating to subchapter B the following new item:
“SUBCHAPTER C—REMITTANCE TRANSFERS”.
(c) Effective date.—The amendments made by this section shall apply to transfers made after December 31, 2025.
SEC. 70605. Enforcement provisions with respect to COVID-related employee retention credits.
(a) Assessable penalty for failure to comply with due diligence requirements.—
(1) IN GENERAL.—Any COVID–ERTC promoter which provides aid, assistance, or advice with respect to any COVID–ERTC document and which fails to comply with due diligence requirements imposed by the Secretary with respect to determining eligibility for, or the amount of, any credit or advance payment of a credit under section 3134 of the Internal Revenue Code of 1986, shall pay a penalty of $1,000 for each such failure.
(2) DUE DILIGENCE REQUIREMENTS.—The due diligence requirements referred to in paragraph (1) shall be similar to the due diligence requirements imposed under section 6695(g) of the Internal Revenue Code of 1986.
(3) RESTRICTION TO DOCUMENTS USED IN CONNECTION WITH RETURNS OR CLAIMS FOR REFUND.—Paragraph (1) shall not apply with respect to any COVID–ERTC document unless such document constitutes, or relates to, a return or claim for refund.
(4) TREATMENT AS ASSESSABLE PENALTY, ETC.—For purposes of the Internal Revenue Code of 1986, the penalty imposed under paragraph (1) shall be treated as a penalty which is imposed under section 6695(g) of such Code and assessed under section 6201 of such Code.
(5) SECRETARY.—For purposes of this subsection, the term “Secretary” means the Secretary of the Treasury or the Secretary’s delegate.
(b) COVID–ERTC promoter.—For purposes of this section—
(1) IN GENERAL.—The term “COVID–ERTC promoter” means, with respect to any COVID–ERTC document, any person which provides aid, assistance, or advice with respect to such document if—
(A) such person charges or receives a fee for such aid, assistance, or advice which is based on the amount of the refund or credit with respect to such document and, with respect to such person’s taxable year in which such person provided such assistance or the preceding taxable year, the aggregate of the gross receipts of such person for aid, assistance, and advice with respect to all COVID-ERTC documents exceeds 20 percent of the gross receipts of such person for such taxable year, or
(B) with respect to such person’s taxable year in which such person provided such assistance or the preceding taxable year—
(i) the aggregate of the gross receipts of such person for aid, assistance, and advice with respect to all COVID–ERTC documents exceeds 50 percent of the gross receipts of such person for such taxable year, or
(ii) both—
(I) such aggregate gross receipts exceed 20 percent of the gross receipts of such person for such taxable year, and
(II) the aggregate of the gross receipts of such person for aid, assistance, and advice with respect to all COVID–ERTC documents (determined after application of paragraph (3)) exceeds $500,000.
(2) EXCEPTION FOR CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS.—The term “COVID–ERTC promoter” shall not include a certified professional employer organization (as defined in section 7705 of the Internal Revenue Code of 1986).
(3) AGGREGATION RULE.—For purposes of paragraph (1), all persons treated as a single employer under subsection (a) or (b) of section 52 of the Internal Revenue Code of 1986, or subsection (m) or (o) of section 414 of such Code, shall be treated as 1 person.
(4) SHORT TAXABLE YEARS.—In the case of any taxable year of less than 12 months, a person shall be treated as a COVID-ERTC promoter if such person is described in paragraph (1) either with respect to such taxable year or by treating any reference to such taxable year as a reference to the calendar year in which such taxable year begins.
(c) COVID–ERTC document.—For purposes of this section, the term “COVID–ERTC document” means any return, affidavit, claim, or other document related to any credit or advance payment of a credit under section 3134 of the Internal Revenue Code of 1986, including any document related to eligibility for, or the calculation or determination of any amount directly related to, any such credit or advance payment.
(d) Limitation on credits and refunds.—Notwithstanding section 6511 of the Internal Revenue Code of 1986, no credit under section 3134 of the Internal Revenue Code of 1986 shall be allowed, and no refund with respect to any such credit shall be made, after the date of the enactment of this Act, unless a claim for such credit or refund was filed by the taxpayer on or before January 31, 2024.
(e) Extension of limitation on assessment.—Section 3134(l) is amended to read as follows:
“(l) Extension of limitation on assessment.—
“(1) IN GENERAL.—Notwithstanding section 6501, the limitation on the time period for the assessment of any amount attributable to a credit claimed under this section shall not expire before the date that is 6 years after the latest of—
“(A) the date on which the original return which includes the calendar quarter with respect to which such credit is determined is filed,
“(B) the date on which such return is treated as filed under section 6501(b)(2), or
“(C) the date on which the claim for credit or refund with respect to such credit is made.
“(2) DEDUCTION FOR WAGES TAKEN INTO ACCOUNT IN DETERMINING IMPROPERLY CLAIMED CREDIT.—
“(A) IN GENERAL.—Notwithstanding section 6511, in the case of an assessment attributable to a credit claimed under this section, the limitation on the time period for credit or refund of any amount attributable to a deduction for improperly claimed ERTC wages shall not expire before the time period for such assessment expires under paragraph (1).
“(B) IMPROPERLY CLAIMED ERTC WAGES.—For purposes of this paragraph, the term ‘improperly claimed ERTC wages’ means, with respect to an assessment attributable to a credit claimed under this section, the wages with respect to which a deduction would not have been allowed if the portion of the credit to which such assessment relates had been properly claimed.”.
(f) Amendment to penalty for erroneous claim for refund or credit.—Section 6676(a) is amended by striking “income tax” and inserting “income or employment tax”.
(g) Effective dates.—
(1) IN GENERAL.—The provisions of this section shall apply to aid, assistance, and advice provided after the date of the enactment of this Act.
(2) LIMITATION ON CREDITS AND REFUNDS.—Subsection (d) shall apply to credits and refunds allowed or made after the date of the enactment of this Act.
(3) EXTENSION OF LIMITATION ON ASSESSMENT.—The amendment made by subsection (e) shall apply to assessments made after the date of the enactment of this Act.
(4) AMENDMENT TO PENALTY FOR ERRONEOUS CLAIM FOR REFUND OR CREDIT.—The amendment made by subsection (f) shall apply to claims for credit or refund after the date of the enactment of this Act.
(h) Regulations.—The Secretary (as defined in subsection (a)(5)) shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section (and the amendments made by this section).
SEC. 70606. Social security number requirement for American Opportunity and Lifetime Learning credits.
(a) Social security number of taxpayer required.—Section 25A(g)(1) is amended to read as follows:
“(1) IDENTIFICATION REQUIREMENT.—
“(A) SOCIAL SECURITY NUMBER REQUIREMENT.—No credit shall be allowed under subsection (a) to an individual unless the individual includes on the return of tax for the taxable year—
“(i) such individual’s social security number, and
“(ii) in the case of a credit with respect to the qualified tuition and related expenses of an individual other than the taxpayer or the taxpayer’s spouse, the name and social security number of such individual.
“(B) INSTITUTION.—No American Opportunity Tax Credit shall be allowed under this section unless the taxpayer includes the employer identification number of any institution to which the taxpayer paid qualified tuition and related expenses taken into account under this section on the return of tax for the taxable year.
“(C) SOCIAL SECURITY NUMBER DEFINED.—For purposes of this paragraph, the term ‘social security number’ shall have the meaning given such term in section 24(h)(7).”.
(b) Omission treated as mathematical or clerical error.—Section 6213(g)(2)(J) is amended by striking “TIN” and inserting “social security number or employer identification number”.
(c) Effective date.—The amendments made by this section shall apply to taxable years beginning after December 31, 2025.
SEC. 70607. Task force on the replacement of Direct File.
Out of any money in the Treasury not otherwise appropriated, there is hereby appropriated for the fiscal year ending September 30, 2026, $15,000,000, to remain available until September 30, 2026, for necessary expenses of the Department of the Treasury to deliver to Congress, within 90 days following the date of the enactment of this Act, a report on—
(1) the cost of enhancing and establishing public-private partnerships which provide for free tax filing for up to 70 percent of all taxpayers calculated by adjusted gross income, and to replace any direct e-file programs run by the Internal Revenue Service;
(2) taxpayer opinions and preferences regarding a taxpayer-funded, government-run service or a free service provided by the private sector;
(3) assessment of the feasibility of a new approach, how to make the options consistent and simple for taxpayers across all participating providers, and how to provide features to address taxpayer needs; and
(4) the cost (including options for differential coverage based on taxpayer adjusted gross income and return complexity) of developing and running a free direct e-file tax return system, including costs to build and administer each release.