A bill to amend the Internal Revenue Code of 1986 to provide a refundable credit for certain education expenses.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Educational Opportunity for All Act 
of 2005''.

SEC. 2. EDUCATIONAL OPPORTUNITY FOR ALL TAX CREDIT.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by redesignating 
section 36 as section 37 and by inserting after section 35 the 
following new section:

``SEC. 36. EDUCATIONAL OPPORTUNITY TAX CREDIT.

    ``(a) Allowance of Credit.--
            ``(1) In general.--There shall be allowed as a credit 
        against the tax imposed by this subtitle for the taxable year 
        an amount equal to the qualified tuition expenses paid by the 
        taxpayer during the taxable year (for education furnished 
        during any academic period beginning in such taxable year).
            ``(2) Per student limitation.--The credit allowed under 
        this section shall not exceed $4,000 with respect to any 
        individual.
    ``(b) Election Not to Have Section Apply.--A taxpayer may elect not 
to have this section apply with respect to the qualified tuition 
expenses of an individual for any taxable year.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Qualified tuition expenses.--
                    ``(A) In general.--The term `qualified tuition 
                expenses' means tuition required for the enrollment or 
                attendance of--
                            ``(i) the taxpayer,
                            ``(ii) the taxpayer's spouse, or
                            ``(iii) any dependent of the taxpayer with 
                        respect to whom the taxpayer is allowed a 
                        deduction under section 151,
                at an eligible educational institution for courses of 
                instruction of such individual at such institution.
                    ``(B) Exception for education involving sports, 
                etc.--Such term does not include expenses with respect 
                to any course or other education involving sports, 
                games, or hobbies, unless such course or other 
                education is part of the individual's degree program.
                    ``(C) Exception for nonacademic fees.--Such term 
                does not include student activity fees, athletic fees, 
                insurance expenses, or other fees or expenses unrelated 
                to an individual's academic course of instruction.
                    ``(D) Job improvement included.--Such term shall 
                include tuition expenses described in subparagraph (A) 
                with respect to any course of instruction at an 
                eligible educational institution to acquire or improve 
                job skills.
            ``(2) Eligible educational institution.--The term `eligible 
        educational institution' means an institution--
                    ``(A) which is described in section 481 of the 
                Higher Education Act of 1965 (20 U.S.C. 1088), as in 
                effect on the date of the enactment of the Taxpayer 
                Relief Act of 1997, and
                    ``(B) which is eligible to participate in a program 
                under title IV of such Act.
    ``(d) Special Rules.--
            ``(1) Identification requirement.--No credit shall be 
        allowed under subsection (a) to a taxpayer with respect to the 
        qualified tuition expenses of an individual unless the taxpayer 
        includes the name and taxpayer identification number of such 
        individual on the return of tax for the taxable year.
            ``(2) Adjustment for certain scholarships, etc.--The amount 
        of qualified tuition expenses otherwise taken into account 
        under subsection (a) with respect to an individual for an 
        academic period shall be reduced by the sum of any amounts paid 
        for the benefit of such individual which are allocable to such 
        period as--
                    ``(A) a qualified scholarship which is excludable 
                from gross income under section 117,
                    ``(B) an educational assistance allowance under 
                chapter 30, 31, 32, 34, or 35 of title 38, United 
                States Code, or under chapter 1606 of title 10, United 
                States Code, and
                    ``(C) a payment (other than a gift, bequest, 
                devise, or inheritance within the meaning of section 
                102(a)) for such individual`s educational expenses, or 
                attributable to such individual's enrollment at an 
                eligible educational institution, which is excludable 
                from gross income under any law of the United States.
            ``(3) Treatment of expenses paid by dependent.--If a 
        deduction under section 151 with respect to an individual is 
        allowed to another taxpayer for a taxable year beginning in the 
        calendar year in which such individual's taxable year begins--
                    ``(A) no credit shall be allowed under subsection 
                (a) to such individual for such individual's taxable 
                year, and
                    ``(B) qualified tuition expenses paid by such 
                individual during such individual's taxable year shall 
                be treated for purposes of this section as paid by such 
                other taxpayer.
            ``(4) Treatment of certain prepayments.--If qualified 
        tuition expenses are paid by the taxpayer during a taxable year 
        for an academic period which begins during the first 3 months 
        following such taxable year, such academic period shall be 
        treated for purposes of this section as beginning during such 
        taxable year.
            ``(5) Denial of double benefit.--No credit shall be allowed 
        under this section for any expense for which a deduction is 
        allowed under any other provision of this chapter.
            ``(6) Coordination with hope scholarship and lifetime 
        learning credits.--The qualified tuition and related expenses 
        with respect to an individual for whom a Hope Scholarship 
        Credit or the Lifetime Learning Credit under section 25A is 
        allowed for the taxable year shall not be taken into account 
        under this section.
            ``(7)  No credit for married individuals filing separate 
        returns.--If the taxpayer is a married individual (within the 
        meaning of section 7703), this section shall apply only if the 
        taxpayer and the taxpayer's spouse file a joint return for the 
        taxable year.
            ``(8) Nonresident aliens.--If the taxpayer is a nonresident 
        alien individual for any portion of the taxable year, this 
        section shall apply only if such individual is treated as a 
        resident alien of the United States for purposes of this 
        chapter by reason of an election under subsection (g) or (h) of 
        section 6013.
    ``(e) Regulations.--The Secretary may prescribe such regulations as 
may be necessary or appropriate to carry out this section, including 
regulations providing for a recapture of the credit allowed under this 
section in cases where there is a refund in a subsequent taxable year 
of any amount which was taken into account in determining the amount of 
such credit.''.
    (b) Refundability of Credit.--Paragraph (2) of section 1324(b) of 
title 31, United States Code, is amended by inserting before the period 
``or enacted by the Educational Opportunity for All Act of 2005''.
    (c) Conforming Amendments.--
            (1) Sections 135(d)(2)(A), 222(c)(2)(A), 
        529(c)(3)(B)(v)(II), and 530(d)(2)(C)(i)(II) of the Internal 
        Revenue Code of 1986 are each amended by inserting ``or section 
        36'' after ``section 25A'' each place it appears.
            (2) Section 6213(g)(2)(J) of such Code is amended by 
        inserting ``or section 36(d)(1)'' after ``expenses)''.
            (3) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of such Code is amended by striking 
        the item relating to section 36 and inserting the following:

        ``Sec. 36. Educational opportunity tax credit.
        ``Sec. 37. Overpayments of tax.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to expenses paid after December 31, 2004, for education furnished 
in academic periods beginning after such date.

Summary: Educational Opportunity for All Act of 2005 - Amends the Internal Revenue Code to allow a refundable tax credit for qualfied tuition expenses. Defines "qualified tuition expenses" as tuition required for the enrollment of the taxpayer, the taxpayer's spouse or dependents at an institution of higher learning. Limits the annual amount of such credit to $4,000 per student.