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II 111TH CONGRESS 2D SESSION S. 3208 To amend the Internal Revenue Code of 1986 to provide a special rule for allocating the cover over of distilled spirits taxes between Puerto Rico and the Virgin Islands. IN THE SENATE OF THE UNITED STATES APRIL 15, 2010 Mr. MENENDEZ (for himself, Mr. COCHRAN, Mr. NELSON of Florida, Mr. LEMIEUX, and Mr. KAUFMAN) 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 provide a special rule for allocating the cover over of distilled spirits taxes between Puerto Rico and the Virgin Islands. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Reinvesting in U.S. 4 Territories, Not Corporations Act’’. 5 VerDate Nov 24 2008 04:26 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S3208.IS S3208 tjames on DSKG8SOYB1PROD with BILLS 2 •S 3208 IS SEC. 2. SPECIAL RULE FOR ALLOCATING DISTILLED SPIR- 1 ITS TAXES BETWEEN PUERTO RICO AND THE 2 VIRGIN ISLANDS. 3 (a) IN GENERAL.—Section 7652 of the Internal Rev- 4 enue Code of 1986 is amended by adding at the end the 5 following new subsection: 6 ‘‘(i) REDUCTION OF COVER OVER FOR UNREASON- 7 ABLE AND EXCESSIVE RUM SUBSIDIES.— 8 ‘‘(1) IN GENERAL.—For purposes of this sec- 9 tion, with respect to taxes imposed under section 10 5001 or this section on distilled spirits, the amount 11 covered into the treasury of any covered government 12 (after the application of subsection (f)) in any cal- 13 endar year shall be reduced (but not below zero) by 14 the sum of— 15 ‘‘(A) the amount of any unreasonable and 16 excessive rum subsidy paid or incurred by such 17 government in the preceding calendar year, and 18 ‘‘(B) the amount of any unreasonable and 19 excessive rum subsidy paid or incurred by such 20 government for any calendar year preceding 21 such preceding calendar year which has not 22 been taken into account to reduce the amount 23 so covered for any preceding calendar year. 24 ‘‘(2) UNREASONABLE AND EXCESSIVE RUM 25 SUBSIDY.— 26 VerDate Nov 24 2008 04:26 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S3208.IS S3208 tjames on DSKG8SOYB1PROD with BILLS 3 •S 3208 IS ‘‘(A) IN GENERAL.—For any calendar 1 year, the unreasonable and excessive rum sub- 2 sidy paid by any covered government during 3 such calendar year is the amount of the excess, 4 if any, of— 5 ‘‘(i) the aggregate amount of direct 6 and indirect government assistance paid or 7 incurred in such calendar year by such 8 government to all persons that produce 9 distilled spirits in the geographical area 10 governed by such government for consump- 11 tion or sale in such geographical area or in 12 the United States, over 13 ‘‘(ii) the amount that is 10 percent of 14 the amounts which would (but for this sub- 15 section) be covered into the treasury of 16 such government under subsection (a)(3) 17 or (b)(3), whichever is applicable, in such 18 calendar year (without regard to amounts 19 covered into such treasury under sub- 20 section (e)). 21 ‘‘(B) DIRECT GOVERNMENT ASSIST- 22 ANCE.—For purposes of subparagraph (A)(i), 23 direct government assistance includes any 24 transfer of funds, grant, loan, equity invest- 25 VerDate Nov 24 2008 04:26 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S3208.IS S3208 tjames on DSKG8SOYB1PROD with BILLS 4 •S 3208 IS ment, loan guarantee, production or marketing 1 incentive, income or price support, provision of 2 goods or services other than generally available 3 infrastructure and public services, and such 4 other assistance provided by a covered govern- 5 ment as the Secretary identifies as consistent 6 with the purposes of this subsection. 7 ‘‘(C) INDIRECT GOVERNMENT ASSIST- 8 ANCE.—For purposes of subparagraph (A)(i), 9 indirect government assistance includes any 10 amounts expended by a covered government to 11 promote, market, or otherwise support the rum 12 industry in the geographical area governed by 13 such government, to pay interest on, and ex- 14 penses related to, indebtedness incurred, the 15 proceeds of which are used to provide rum sub- 16 sidies, and for any other purpose identified by 17 the Secretary as consistent with the purposes of 18 this subsection. 19 ‘‘(3) COVERED GOVERNMENT.—For purposes of 20 this subsection, the term ‘covered government’ 21 means the government of Puerto Rico and the gov- 22 ernment of the Virgin Islands. 23 ‘‘(4) REGULATIONS.—The Secretary may pre- 24 scribe regulations and guidance as necessary or ap- 25 VerDate Nov 24 2008 04:26 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S3208.IS S3208 tjames on DSKG8SOYB1PROD with BILLS 5 •S 3208 IS propriate to carry out the purposes of this sub- 1 section, including regulations requiring annual re- 2 ports to be submitted by covered governments re- 3 porting the amount of direct and indirect govern- 4 ment assistance provided to persons that produce 5 distilled spirits, the monetary value of such assist- 6 ance, and any other information as required by the 7 Secretary.’’. 8 (b) EFFECTIVE DATE.—The amendment made by 9 this section shall apply to deposits made under subsection 10 (a)(3) or (b)(3) of section 7652 of the Internal Revenue 11 Code of 1986 for calendar years beginning after December 12 31, 2009. 13 Æ VerDate Nov 24 2008 04:26 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6301 E:\BILLS\S3208.IS S3208 tjames on DSKG8SOYB1PROD with BILLS