A bill to amend the Internal Revenue Code of 1986 to modify the cover over of certain distilled spirits taxes.

II 118TH CONGRESS 1ST SESSION S. 1477 To amend the Internal Revenue Code of 1986 to modify the cover over of certain distilled spirits taxes. IN THE SENATE OF THE UNITED STATES MAY 9, 2023 Mr. MENENDEZ (for himself and Mr. CASSIDY) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to modify the cover over of certain distilled spirits taxes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. COVER OVER OF CERTAIN DISTILLED SPIRITS 3 TAXES. 4 (a) REPEAL OF LIMITATION ON COVER OVER OF 5 DISTILLED SPIRITS TAXES TO PUERTO RICO AND VIRGIN 6 ISLANDS.— 7 (1) IN GENERAL.—Section 7652 of the Internal 8 Revenue Code of 1986 is amended by striking sub- 9 section (f). 10 VerDate Sep 11 2014 23:00 May 15, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1477.IS S1477 kjohnson on DSK79L0C42PROD with BILLS 2 •S 1477 IS (2) CONFORMING AMENDMENT.—Section 1 7652(g)(1) of such Code is amended— 2 (A) by striking subparagraph (B), and 3 (B) by striking ‘‘as if—’’ and all that fol- 4 lows through ‘‘the use and tax’’ and inserting 5 ‘‘as if the use and tax’’. 6 (3) EFFECTIVE DATE.—The amendments made 7 by this subsection shall apply to articles brought into 8 the United States after December 31, 2021. 9 (b) REQUIRED TRANSFER TO PUERTO RICO CON- 10 SERVATION TRUST FUND OF PORTION OF PUERTO RICO 11 RUM COVER OVER.— 12 (1) IN GENERAL.—Section 7652(a) of the In- 13 ternal Revenue Code of 1986 is amended by adding 14 at the end the following new paragraph: 15 ‘‘(4) REQUIRED TRANSFER TO PUERTO RICO 16 CONSERVATION TRUST FUND OF PORTION OF RUM 17 TAXES COVERED OVER.— 18 ‘‘(A) IN GENERAL.—From any taxes col- 19 lected on rum transported to the United States 20 that are covered into the treasury of Puerto 21 Rico under paragraph (3) at a rate equal to or 22 greater than $10.50 per proof gallon, Puerto 23 Rico shall transfer to the Puerto Rico Con- 24 servation Trust Fund an amount per proof gal- 25 VerDate Sep 11 2014 23:00 May 15, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1477.IS S1477 kjohnson on DSK79L0C42PROD with BILLS 3 •S 1477 IS lon equal to or greater than 1⁄6 of the difference 1 between $10.50 and the rate, not to exceed 2 $13.25, at which such taxes are covered into 3 such treasury. Puerto Rico’s obligations under 4 this paragraph shall not modify or impair pay- 5 ment priorities established under Puerto Rico 6 law and in effect on December 31, 2022 . 7 ‘‘(B) PUERTO RICO CONSERVATION TRUST 8 FUND.—For purposes of this section, the term 9 ‘Puerto Rico Conservation Trust Fund’ means 10 the fund which— 11 ‘‘(i) was established pursuant to a 12 Memorandum of Understanding between 13 the United States Department of the Inte- 14 rior and the Commonwealth of Puerto 15 Rico, dated December 24, 1968, and 16 ‘‘(ii) provides for the conservation of 17 natural areas in Puerto Rico, including 18 through sustainable agriculture efforts and 19 the reforestation and restoration of Puerto 20 Rico’s natural habitats.’’. 21 (2) COVER OVER DETERMINED WITHOUT RE- 22 GARD TO CERTAIN RATE REDUCTIONS.—Section 23 7652(i) of such Code, as amended by subsection (c), 24 is amended by inserting ‘‘(a)(4),’’ after ‘‘(a)(3),’’. 25 VerDate Sep 11 2014 23:00 May 15, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1477.IS S1477 kjohnson on DSK79L0C42PROD with BILLS 4 •S 1477 IS (3) EFFECTIVE DATE.—The amendments made 1 by this subsection shall apply to distilled spirits 2 brought into the United States after December 31, 3 2021. 4 (c) RETROACTIVE APPLICATION OF RULES RELAT- 5 ING TO DETERMINATION OF COVER OVER.—Notwith- 6 standing section 107(a)(3) of division EE of Public Law 7 116–260— 8 (1) the amendments made by section 9 107(a)(2)(A) thereof shall take effect as if included 10 in section 13807 of Public Law 115–97, and 11 (2) the amendments made by section 12 107(a)(2)(B) thereof shall take effect as if included 13 in section 41102 of Public Law 115–123. 14 Æ VerDate Sep 11 2014 23:00 May 15, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6301 E:\BILLS\S1477.IS S1477 kjohnson on DSK79L0C42PROD with BILLS