26 U.S.C. § 7527A — Advance payment of child tax credit

(a) The IRS (the Secretary) must set up a program that sends taxpayers regular payments throughout a calendar year that add up to that taxpayer's "annual advance amount." Except as allowed under (b)(3)(B), each payment in a year must be the same size. (b) How the annual advance amount is figured. (1) Generally, it's the IRS's estimate of 50% of the refundable child tax credit the taxpayer would be allowed for that year under section 24(i)(1) — calculated as if: the taxpayer's eligibility is judged using their "reference taxable year" (defined below) (A); their income for the current year equals their reference-year income (B); their only qualifying children are the ones properly claimed on the reference-year return (C); and those children's ages and qualifying status are updated to reflect time that's passed since the reference year (D). (2) The "reference taxable year" is normally the tax year the taxpayer's most recent return covers — the prior calendar year's return, or, if none was filed, the return from two years before. (3) The IRS may update the annual advance amount partway through the year based on a return the taxpayer files during the year (which can become the new reference year) (A)(i), or other information the taxpayer provides that helps the payments better match the true credit amount (A)(ii). When an update happens, later payments are adjusted up or down to correct for whatever was overpaid or underpaid earlier (B). (4) If the reference-year return doesn't clearly establish the taxpayer's eligibility, the IRS decides based on whatever other information it has. (5) A child isn't counted in the calculation if the IRS already knows that child died before the calendar year began. (c) The IRS must build an online portal where taxpayers can opt out of receiving these payments (1), and can report information relevant to updating their advance amount — such as a new child (including a birth), a change in marital status, a significant income change, or any other factor the IRS specifies (2). (d) By January 31 of the following year, the IRS must send each recipient a written notice listing their taxpayer ID, the total amount paid to them that year, and any other information the IRS thinks appropriate. (e) Administrative rules. (1) These payments must be made by direct electronic transfer, the same way other federal payments are made. (2) Certain verification and anti-fraud rules that apply to a related 2021 payment program also apply here. (3) These payments can't be reduced or intercepted to cover other debts under the usual tax-refund offset rules, and can't be reduced to cover other unpaid federal taxes. (4) For U.S. territories: the advance amount is calculated without regard to the special rule that treats bona fide Puerto Rico residents differently, and without regard to a related possessions cross-reference (A). For a territory that mirrors the federal tax code, this program doesn't automatically become part of that territory's own tax law unless the territory specifically elects it (B). If a mirror-code territory elects in and has an IRS-approved plan for making these advance payments, it gets an extra $300,000 in funding for 2021 tax years (C)(i); American Samoa specifically gets that same $300,000 boost if its own approved plan includes a similar advance-payment program (C)(ii); and the IRS can pay that extra funding right away, as soon as the plan is approved, if the territory asks (C)(iii). (f) No payments under this program can be made for any time before July 1, 2021, or after December 31, 2021. (g) The IRS must issue whatever regulations or guidance are needed to carry out this section and the related child-tax-credit provisions — including guidance for cases where a taxpayer's filing status changes between the year used to calculate their advance payments and their actual return.

The record shows that 26 U.S.C. § 7527A was added by Public Law 117–2, title IX, § 9611(b)(1), enacted March 11, 2021, and published at 135 Stat. 146. The source credit does not reflect any subsequent amendments to the section; the text as codified appears to remain as originally enacted. Public Law 117–2 is commonly known as the American Rescue Plan Act of 2021, a large-scale economic relief measure enacted in the early months of the COVID-19 pandemic. The Act is generally understood to have addressed widespread economic disruption, unemployment, and financial hardship facing individuals and families during that period, and it included a range of tax and direct-payment provisions intended to provide fast, broad-based relief. Within that broader context, this section's establishment of a mechanism for periodic advance payments of the child tax credit is consistent with the commonly cited purpose of getting relief funds to families more quickly, rather than requiring them to wait until the annual tax-filing process to receive the credit's benefit. The provision's built-in limitation to payments made only between July and December of 2021, evident from the statutory text itself, is consistent with the temporary, emergency character generally associated with the American Rescue Plan Act's relief measures. Beyond this general understanding of the Act's purpose and era, the record does not establish the specific legislative reasoning, deliberations, or intent behind the particular design choices embodied in this section.