Payback Act

In Learning Resources, Inc. v. Trump, the Supreme Court of the United States clarified that although the International Emergency Economic Powers Act authorizes the President to exercise certain economic authorities during a bona fide national emergency, that statute does not confer authority to impose tariffs absent clear and express congressional authorization; in so holding, the Court reaffirmed that article I, section 8 of the Constitution vests exclusively in Congress the power to lay and collect duties and tariffs, and that such legislative authority may not be exercised by the executive branch solely by virtue of an emergency declaration.

The Constitution establishes a deliberate separation of powers, vesting in Congress alone the authority to lay and collect taxes, duties, imposts, and excises under article I, section 8; allowing the executive branch to unilaterally impose tariffs absent explicit congressional authorization would improperly transfer core legislative power to the Presidency, erode democratic accountability, and undermine the foundational principle that laws affecting the economic lives of Americans must originate with the people’s elected representatives.

These unlawful tariffs resulted in billions of dollars in collections by the Federal Government and materially increased the prices of goods for American consumers, functioning as a regressive tax that disproportionately burdened working families, seniors, and small businesses.

American consumers bore the direct financial consequences of these actions through higher costs on everyday necessities, without meaningful notice, representation, or recourse, and shall be made whole through a transparent and congressionally directed refund process administered by the Federal Government.

Covered tariffs— The term “covered tariffs” means any duties or fees imposed pursuant to Presidential proclamations or Executive orders under the International Emergency Economic Powers Act that were subsequently determined to lack congressional authorization.

Not later than 120 days after enactment of this Act, the Secretary of the Treasury shall develop and publish a formula to calculate refunds to American consumers for amounts paid that were attributable to covered tariffs.

The refund formula shall—

Consultation— In developing the formula, the Secretary shall consult with the Bureau of Economic Analysis, the Internal Revenue Service, the Federal Reserve Board, and independent economists with expertise in trade policy and consumer pricing.

To the maximum extent practicable, refunds shall be issued automatically using existing Treasury and Internal Revenue Service payment systems, including direct deposit or refundable tax credits.

For individuals not captured through existing systems, the Secretary shall establish a streamlined application process requiring minimal documentation.