I 

112TH CONGRESS 

1ST SESSION H. R. 1883 

To amend the Internal Revenue Code of 1986 to regulate the subsidies 

paid to rum producers in Puerto Rico and the Virgin Islands, and 

for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 12, 2011 

Mr. PIERLUISI (for himself, Mr. ISSA, Mr. SERRANO, Ms. ROS-LEHTINEN, Mr. 

GRIMM, Mr. JONES, Mr. BURTON of Indiana, and Mr. YOUNG of Alaska) 

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 regulate 

the subsidies paid to rum producers in Puerto Rico and 

the Virgin Islands, and for other purposes. 

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. 

4 This Act may be cited as the ‘‘Investing in U.S. Ter5 ritories, Not Corporations Act of 2011’’. 


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1 SEC. 2. LIMITATION ON GOVERNMENT ASSISTANCE TO RUM 

2 PRODUCERS. 

3 Subsection (e) of section 7652 of the Internal Rev4 enue Code of 1986 (relating to shipments of rum to the 

5 United States) is amended by redesignating paragraphs 

6 (3) and (4) as paragraphs (4) and (5), respectively, and 

7 by inserting after paragraph (2) the following new para8 graph: 

9 ‘‘(3) LIMITATION ON GOVERNMENT ASSISTANCE

10 TO RUM PRODUCERS.— 

11 ‘‘(A) IN GENERAL.—If the amount of di12 rect and indirect government assistance paid or 

13 incurred by any covered government during any 

14 calendar year to persons producing rum within 

15 the jurisdiction of such government exceeds the 

16 limitation under subparagraph (B), the amount 

17 which would (but for this paragraph) be covered 

18 into the treasury of such government under this 

19 subsection shall be reduced for each of the 2 

20 succeeding calendar years by the amount of 

21 such excess. 

22 ‘‘(B) LIMITATION.—The limitation under 

23 this subparagraph is the amount equal to 15 

24 percent of the amount which would (but for this 

25 paragraph) be covered into the treasury of such 


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1 government under this section for the calendar 

2 year. 

3 ‘‘(C) SEPARATE APPLICATION TO EACH

4 PRODUCER.—The provisions of subparagraphs 

5 (A) and (B) shall also be applied separately to 

6 each rum producer, taking into account only the 

7 assistance paid or incurred by any covered gov8 ernment to such producer and only such pro9 ducer’s production to which subsection (a)(3) or 

10 (b)(3) applies, whichever is applicable. 

11 ‘‘(D) GOVERNMENT ASSISTANCE.—For 

12 purposes of this paragraph— 

13 ‘‘(i) DIRECT GOVERNMENT ASSIST14 ANCE.—The term ‘direct government as15 sistance’ includes any transfer of funds, 

16 grant, subsidy (other than any generally 

17 available tax subsidy), loan, equity invest18 ment, loan guarantee, production or mar19 keting incentive, income or price support, 

20 provision of goods or services (other than 

21 generally available infrastructure and pub22 lic services), and such other assistance pro23 vided by a covered government as the Sec24 retary identifies as consistent with the pur25 poses of this paragraph. 


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1 ‘‘(ii) INDIRECT GOVERNMENT ASSIST2 ANCE.—The term ‘indirect government as3 sistance’ includes any amounts expended 

4 by a covered government— 

5 ‘‘(I) to promote, market, or oth6 erwise support the rum industry with7 in the jurisdiction of such govern8 ment, 

9 ‘‘(II) to pay principal and inter10 est on, and expenses related to, in11 debtedness incurred, the proceeds of 

12 which are used to provide rum sub13 sidies, or 

14 ‘‘(III) for any other purpose 

15 identified by the Secretary as con16 sistent with the purposes of this para17 graph. 

18 ‘‘(iii) CERTAIN DEBT-FINANCED PAY19 MENTS EXCLUDED.—The terms ‘direct 

20 government assistance’ and ‘indirect gov21 ernment assistance’ shall not include any 

22 payment made by a covered government to 

23 a rum producer out of funds raised 

24 through a loan (including the issuance of a 

25 debt instrument), but shall include any 


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1 payment of principal and interest on the 

2 loan (or debt instrument). 

3 ‘‘(E) ANNUAL REPORTS.—Each covered 

4 government shall, for each calendar year, sub5 mit a report to the Secretary detailing the 

6 amount and type of direct and indirect govern7 ment assistance provided by such government 

8 to each rum producer during such calendar year 

9 and to rum producers in the aggregate during 

10 such year. Such report shall be submitted at 

11 such time, and in such form, as is prescribed by 

12 the Secretary. 

13 ‘‘(F) COVERED GOVERNMENT.—For pur14 poses of this paragraph, the term ‘covered gov15 ernment’ means the government of Puerto Rico 

16 and the government of the Virgin Islands.’’. 

17 SEC. 3. MAXIMUM AND MINIMUM ALLOCATIONS OF RUM 

18 EXCISE TAXES BETWEEN PUERTO RICO AND 

19 THE VIRGIN ISLANDS. 

20 Section 7652 of the Internal Revenue Code of 1986 

21 is amended by inserting after subsection (h) the following 

22 new subsection: 

23 ‘‘(i) LIMITATIONS ON ALLOCATION OF RUM EXCISE

24 TAXES BETWEEN PUERTO RICO AND THE VIRGIN IS25 LANDS.— 


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1 ‘‘(1) IN GENERAL.—Notwithstanding sub2 sections (a), (b), and (e), if, without regard to this 

3 subsection and subsection (e)(3), the Secretary de4 termines that the respective shares of Puerto Rico 

5 and the Virgin Islands of the aggregate amount to 

6 be covered into their treasuries under this section 

7 for any calendar year are not within the parameters 

8 of paragraph (2), the Secretary shall increase or de9 crease such shares to the extent necessary to bring 

10 them within such parameters. 

11 ‘‘(2) PARAMETERS.—The parameters of this 

12 paragraph are that— 

13 ‘‘(A) Puerto Rico’s share shall be at least 

14 65 percent but not more than 70 percent of 

15 such aggregate amount, and 

16 ‘‘(B) the Virgin Islands’s share shall be at 

17 least 30 percent but not more than 35 percent 

18 of such aggregate amount. 

19 ‘‘(3) APPLICATION WITH SUBSECTION (e)(3).— 

20 This subsection shall be applied before subsection 

21 (e)(3).’’. 


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1 SEC. 4. DENIAL OF COVER OVER FOR RUM REDISTILLED 

2 INTO CANE NEUTRAL SPIRITS. 

3 Section 7652 of the Internal Revenue Code of 1986 

4 is amended by inserting after subsection (i) the following 

5 new subsection: 

6 ‘‘(j) DENIAL OF COVER OVER FOR RUM REDIS7 TILLED INTO CANE NEUTRAL SPIRITS.—No amount shall 

8 be covered over under subsection (a) or (b) with respect 

9 to rum which is redistilled into cane neutral spirits after 

10 being brought into the United States. The Secretary shall 

11 prescribe such information reporting as the Secretary de12 termines necessary to carry out the preceding sentence.’’. 

13 SEC. 5. EFFECTIVE DATE. 

14 (a) IN GENERAL.—Except as provided in subsection 

15 (b), the amendments made by this section shall apply to 

16 calendar years after 2011. 

17 (b) DENIAL OF COVER OVER FOR RUM REDISTILLED

18 INTO CANE NEUTRAL SPIRITS.—The amendment made 

19 by section 4 shall apply to rum brought into the United 

20 States after the date of the enactment of this Act. 

Æ 


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