I

106TH CONGRESS

2D SESSION H. R. 5128

To amend the Internal Revenue Code of 1986 to allow distilled spirits wholesalers a credit against income tax for their cost of carrying Federal

excise taxes prior to the sale of the product bearing the tax.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 7, 2000

Mr. COLLINS (for himself and Mr. NEAL of Massachusetts) introduced the

following bill; which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to allow distilled spirits wholesalers a credit against income tax for

their cost of carrying Federal excise taxes prior to the

sale of the product bearing the tax.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE: AMENDMENT OF 1986 CODE.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Domestic Spirits Tax Equity Act of 2000’’.
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1 SECTION 2. INCOME TAX CREDIT TO DISTILLED SPIRITS

2 WHOLESALERS FOR COST OF CARRYING FED3 ERAL EXCISE TAXES ON BOTTLED DISTILLED

4 SPIRITS.

5 (a) IN GENERAL.—Subpart A of part I of subchapter

6 A of chapter 51 of the Internal Revenue Code of 1986

7 (relating to gallonage and occupational taxes) is amended

8 by adding at the end the following new section:

9 ‘‘SEC. 5011. INCOME TAX CREDIT FOR WHOLESALER’S AV10 ERAGE COST OF CARRYING EXCISE TAX.

11 ‘‘(a) IN GENERAL.—For purposes of section 38, in

12 the case of an eligible wholesaler, the amount of the dis13 tilled spirits wholesalers credit for any taxable year is the

14 amount equal to the product of—

15 ‘‘(1) the number of cases of bottled distilled

16 spirits purchased by such wholesaler during the tax17 able year directly from the distiller or importer of

18 such spirits, and

19 ‘‘(2) the average tax-financing cost per case for

20 the most recent calendar year ending before the be21 ginning of such taxable year.

22 ‘‘(b) ELIGIBLE WHOLESALER.—For purposes of this

23 section, the term ‘eligible wholesaler’ means any person

24 who holds a permit under the Federal Alcohol Administra25 tion Act as a wholesaler of distilled spirits.

26 ‘‘(c) AVERAGE TAX-FINANCING COST.—
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1 ‘‘(1) IN GENERAL.—For purposes of this sec2 tion, the average tax-financing cost per case for any

3 calendar year is the amount of interest which would

4 accrue at the deemed financing rate during a 60-day

5 period on an amount equal to the deemed Federal

6 excise per case.

7 ‘‘(2) DEEMED FINANCING RATE.—For purposes

8 of paragraph (1), the deemed financing rate for any

9 calendar year is the average of the corporate over10 payment rates under paragraph (1) of section

11 6621(a) (determined without regard to the last sen12 tence of such paragraph) for calendar quarters of

13 such year.

14 ‘‘(3) DEEMED FEDERAL EXCISE TAX BASED ON

15 CASE OF 80 PROOF 750ML BOTTLES.—For purposes

16 of paragraph (1), the deemed Federal excise tax per

17 case is $25.68.’’

18 (b) CONFORMING AMENDMENTS.—

19 (1) Subsection (b) of section 38 of such Code

20 is amended by striking ‘‘plus’’ at the end of para21 graph (11), by striking the period at the end of

22 paragraph (12) and inserting ‘‘, plus’’, and by add23 ing at the end the following new paragraph:

24 ‘‘(13) in the case of an eligible wholesaler (as

25 defined in section 5011(b)), the distilled spirits
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1 wholesaler credit determined under section

2 5011(a).’’

3 (2) Subsection (d) of section 39 of such Code

4 (relating to carryback and carryforward of unused

5 credits) is amended by adding at the end the fol6 lowing new paragraph:

7 ‘‘(9) NO CARRYBACK OF SECTION 5011 CREDIT

8 BEFORE JANUARY 1, 2001.—No portion of the un9 used business credit for any taxable year which is

10 attributable to the credit determined under section

11 5011(a) may be carried back to a taxable year be12 ginning before January 1, 2001.’’.

13 (3) The table of sections for subpart A of part

14 I of subchapter A of chapter 51 of such Code is

15 amended by adding at the end the following new

16 item:

‘‘Sec. 5011. Income tax credit for wholesaler’s average cost of carrying excise tax.’’.

17 (c) EFFECTIVE DATE.—The amendments made by

18 this section shall apply to taxable years beginning after

19 December 31, 2000.

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