To amend the Internal Revenue Code of 1986 to allow certain credits and deductions to be taken as a refundable tax credit by Puerto Rico businesses or residents, and to extend such credits and deductions to possessions of the United States.

I 118TH CONGRESS 1ST SESSION H. R. 4026 To amend the Internal Revenue Code of 1986 to allow certain credits and deductions to be taken as a refundable tax credit by Puerto Rico busi- nesses or residents, and to extend such credits and deductions to posses- sions of the United States. IN THE HOUSE OF REPRESENTATIVES JUNE 12, 2023 Mrs. GONZA´LEZ-COLO´N (for herself, Mr. TORRES of New York, and Mr. MOYLAN) introduced the following bill; which was referred to the Com- mittee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to allow cer- tain credits and deductions to be taken as a refundable tax credit by Puerto Rico businesses or residents, and to extend such credits and deductions to possessions of the United States. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. EXPENDITURES TO PROVIDE ACCESS TO DIS- 3 ABLED INDIVIDUALS. 4 (a) IN GENERAL.—Section 44 of the Internal Rev- 5 enue Code of 1986 is amended by redesignating subsection 6 VerDate Sep 11 2014 01:07 Jul 12, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H4026.IH H4026 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 4026 IH (e) as subsection (f) and by inserting after subsection (d) 1 the following new subsection: 2 ‘‘(e) APPLICATION OF CREDIT IN POSSESSIONS.— 3 ‘‘(1) MIRROR CODE POSSESSIONS.— 4 ‘‘(A) IN GENERAL.—The Secretary shall 5 pay to each possession of the United States 6 with a mirror code tax system amounts equal to 7 the loss (if any) to that possession by reason of 8 the application of this section (determined with- 9 out regard to this subsection) with respect to 10 taxable years beginning after December 31, 11 2022. Such amounts shall be determined by the 12 Secretary based on information provided by the 13 government of the respective possession. 14 ‘‘(B) MIRROR CODE TAX SYSTEM.—For 15 purposes of this paragraph, the term ‘mirror 16 code tax system’ means, with respect to any 17 possession of the United States, the income tax 18 system of such possession if the income tax li- 19 ability of the residents of such possession under 20 such system is determined by reference to the 21 income tax laws of the United States as if such 22 possession were the United States. 23 ‘‘(2) CREDIT MADE REFUNDABLE FOR RESI- 24 DENTS OF PUERTO RICO.—In the case of any tax- 25 VerDate Sep 11 2014 01:07 Jul 12, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H4026.IH H4026 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 4026 IH able year beginning after December 31, 2022, if the 1 taxpayer is a bona fide resident of Puerto Rico 2 (within the meaning of section 937(a)) or a corpora- 3 tion or partnership organized in Puerto Rico or 4 under the law of Puerto Rico for such taxable year, 5 the credit determined under subsection (a) shall be 6 allowable to such resident, corporation, or partner- 7 ship under subpart C (and not allowed under this 8 subpart). 9 ‘‘(3) AMERICAN SAMOA.—The Secretary shall 10 pay to American Samoa amounts estimated by the 11 Secretary as being equal to the aggregate benefits 12 that would have been provided to residents of Amer- 13 ican Samoa by reason of the application of this sec- 14 tion for taxable years beginning after December 31, 15 2022, if the provisions of this section had been in ef- 16 fect in American Samoa. The preceding sentence 17 shall not apply unless American Samoa has a plan, 18 which has been approved by the Secretary, under 19 which such possession will promptly distribute such 20 payments to its residents. 21 ‘‘(4) COORDINATION WITH CREDIT ALLOWED 22 AGAINST UNITED STATES INCOME TAXES.—No cred- 23 it shall be allowed under this section for any taxable 24 year to any person— 25 VerDate Sep 11 2014 01:07 Jul 12, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H4026.IH H4026 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 4026 IH ‘‘(A) to whom a credit is allowable against 1 taxes imposed by a possession of the United 2 States with a mirror code tax system by reason 3 of the application of this section in such posses- 4 sion for such taxable year, or 5 ‘‘(B) who is eligible for a payment under 6 a plan described in paragraph (3). 7 ‘‘(5) TREATMENT OF PAYMENTS.—For pur- 8 poses of section 1324(b)(2) of title 31, United 9 States Code, the payments under this subsection 10 shall be treated in the same manner as a refund due 11 from credit provisions described in such section.’’. 12 (b) EFFECTIVE DATE.—The amendment made by 13 this section shall apply to taxable years beginning after 14 December 31, 2022. 15 SEC. 2. EXPENDITURES TO REMOVE ARCHITECTURAL AND 16 TRANSPORTATION BARRIERS TO THE HANDI- 17 CAPPED AND ELDERLY. 18 (a) IN GENERAL.—Section 190 of the Internal Rev- 19 enue Code of 1986 is amended by adding at the end the 20 following new subsections: 21 ‘‘(d) ELECTION TO TAKE DEDUCTION AS REFUND- 22 ABLE CREDIT FOR RESIDENTS OF PUERTO RICO.—In the 23 case of a taxpayer (in the case of a joint return, either 24 spouse) who is a bona fide resident of Puerto Rico (within 25 VerDate Sep 11 2014 01:07 Jul 12, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H4026.IH H4026 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 4026 IH the meaning of section 937(a)) or a corporation or part- 1 nership organized in Puerto Rico or under the law of 2 Puerto Rico for the taxable year, 21 percent of the 3 amounts otherwise allowed as a deduction under this sec- 4 tion shall be allowed as a credit under subpart C. 5 ‘‘(e) APPLICATION OF DEDUCTION IN POSSES- 6 SIONS.— 7 ‘‘(1) MIRROR CODE POSSESSIONS.— 8 ‘‘(A) IN GENERAL.—The Secretary shall 9 pay to each possession of the United States 10 with a mirror code tax system amounts equal to 11 the loss (if any) to that possession by reason of 12 the application of this section (determined with- 13 out regard to this subsection) with respect to 14 taxable years beginning after December 31, 15 2022. Such amounts shall be determined by the 16 Secretary based on information provided by the 17 government of the respective possession. 18 ‘‘(B) MIRROR CODE TAX SYSTEM.—For 19 purposes of this paragraph, the term ‘mirror 20 code tax system’ means, with respect to any 21 possession of the United States, the income tax 22 system of such possession if the income tax li- 23 ability of the residents of such possession under 24 such system is determined by reference to the 25 VerDate Sep 11 2014 01:07 Jul 12, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H4026.IH H4026 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 4026 IH income tax laws of the United States as if such 1 possession were the United States. 2 ‘‘(2) AMERICAN SAMOA.—The Secretary shall 3 pay to American Samoa amounts estimated by the 4 Secretary as being equal to the aggregate benefits 5 that would have been provided to residents of Amer- 6 ican Samoa by reason of the application of this sec- 7 tion for taxable years beginning after December 31, 8 2022, if the provisions of this section had been in ef- 9 fect in American Samoa. The preceding sentence 10 shall not apply unless American Samoa has a plan, 11 which has been approved by the Secretary, under 12 which such possession will promptly distribute such 13 payments to its residents. 14 ‘‘(3) COORDINATION WITH CREDIT ALLOWED 15 AGAINST UNITED STATES INCOME TAXES.—No de- 16 duction shall be allowed under this section for any 17 taxable year to any person— 18 ‘‘(A) to whom a credit is allowable against 19 taxes imposed by a possession of the United 20 States with a mirror code tax system by reason 21 of the application of this section in such posses- 22 sion for such taxable year, or 23 ‘‘(B) who is eligible for a payment under 24 a plan described in paragraph (2). 25 VerDate Sep 11 2014 01:07 Jul 12, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H4026.IH H4026 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 4026 IH ‘‘(4) TREATMENT OF PAYMENTS.—For pur- 1 poses of section 1324(b)(2) of title 31, United 2 States Code, the payments under this subsection 3 shall be treated in the same manner as a refund due 4 from credit provisions described in such section.’’. 5 (b) EFFECTIVE DATE.—The amendment made by 6 this section shall apply to taxable years beginning after 7 December 31, 2022. 8 Æ VerDate Sep 11 2014 01:07 Jul 12, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6301 E:\BILLS\H4026.IH H4026 kjohnson on DSK79L0C42PROD with BILLS