II

106TH CONGRESS

1ST SESSION S. 432

To amend the Internal Revenue Code of 1986 to increase the rate of tax

on wine and to dedicate the resulting increased revenues to programs

for the prevention and treatment of alcohol abuse.

IN THE SENATE OF THE UNITED STATES

FEBRUARY 22, 1999

Mr. THURMOND 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 increase

the rate of tax on wine and to dedicate the resulting

increased revenues to programs for the prevention and

treatment of alcohol abuse.

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 ‘‘Alcohol Abuse Preven5 tion and Treatment Trust Fund Act of 1999’’.
2

•S 432 IS

1 SEC. 2. ALCOHOL ABUSE PREVENTION AND TREATMENT

2 TRUST FUND.

3 (a) GENERAL RULE.—Subchapter A of chapter 98 of

4 the Internal Revenue Code of 1986 (relating to establish5 ment of trust funds) is amended by adding at the end the

6 following:

7 ‘‘SEC. 9511. ALCOHOL ABUSE PREVENTION AND TREAT8 MENT TRUST FUND.

9 ‘‘(a) CREATION OF TRUST FUND.—There is estab10 lished in the Treasury of the United States a trust fund

11 to be known as the ‘Alcohol Abuse Prevention and Treat12 ment Trust Fund’ (in this section referred to as ‘Trust

13 Fund’), consisting of such amounts as may be appro14 priated or credited to the Trust Fund as provided in this

15 section or section 9602(b).

16 ‘‘(b) TRANSFERS TO TRUST FUND.—There are here17 by appropriated to the Trust Fund amounts equivalent to

18 the additional taxes received in the Treasury under chap19 ter 51 by reason of the amendments made by section 3

20 of the Alcohol Abuse Prevention and Treatment Trust

21 Fund Act of 1999 and the additional taxes received in the

22 Treasury by reason of section 3(d) of such Act.

23 ‘‘(c) EXPENDITURES FROM TRUST FUND.—Amounts

24 in the Trust Fund shall be available, as provided in appro25 priation Acts, for appropriation to the National Institute

26 of Alcohol Abuse and Alcoholism and to the Substance
3

•S 432 IS

1 Abuse and Mental Health Services Administration for pro2 grams for the prevention and treatment of alcoholism and

3 for research on the causes, consequences, prevention, and

4 treatment of the health problems related to alcohol use,

5 including high blood pressure, stroke, heart disease, can6 cer (including breast cancer), and birth defects.’’

7 (b) CONFORMING AMENDMENT.—The table of sec8 tions for subchapter A of chapter 98 of the Internal Reve9 nue Code of 1986 is amended by adding at the end the

10 following:

‘‘Sec. 9511. Alcohol Abuse Prevention and Treatment Trust

Fund.’’

11 SEC. 3. INCREASE IN EXCISE TAXES ON WINE TO ALCO12 HOLIC EQUIVALENT OF TAXES ON DISTILLED

13 SPIRITS.

14 (a) IN GENERAL.—

15 (1) WINES CONTAINING NOT MORE THAN 14

16 PERCENT ALCOHOL.—Paragraph (1) of section

17 5041(b) of the Internal Revenue Code of 1986 (re18 lating to rates of tax on wines) is amended by strik19 ing ‘‘$1.07’’ and inserting ‘‘$2.97’’.

20 (2) WINES CONTAINING MORE THAN 14 (BUT

21 NOT MORE THAN 21) PERCENT ALCOHOL.—Para22 graph (2) of section 5041(b) of such Code is amend23 ed by striking ‘‘$1.57’’ and inserting ‘‘$4.86’’.
4

•S 432 IS

1 (3) WINES CONTAINING MORE THAN 21 (BUT

2 NOT MORE THAN 24) PERCENT ALCOHOL.—Para3 graph (3) of section 5041(b) of such Code is amend4 ed by striking ‘‘$3.15’’ and inserting ‘‘$6.08’’.

5 (b) EFFECTIVE DATE.—The amendments made by

6 this section shall take effect on October 1, 1999.

7 (c) FLOOR STOCKS TAXES.—

8 (1) IMPOSITION OF TAX.—

9 (A) IN GENERAL.—In the case of any tax10 increased article—

11 (i) on which tax was determined

12 under part I of subchapter A of chapter 51

13 of the Internal Revenue Code of 1986 or

14 section 7652 of such Code before October

15 1, 1999, and

16 (ii) which is held on such date for sale

17 by any person,

18 there shall be imposed a tax at the applicable

19 rate on each such article.

20 (B) APPLICABLE RATE.—For purposes of

21 clause (i), the applicable rate is—

22 (i) $1.90 per wine gallon in the case

23 of wine described in paragraph (1) of sec24 tion 5041(b) of such Code,
5

•S 432 IS

1 (ii) $3.29 per wine gallon in the case

2 of wine described in paragraph (2) of sec3 tion 5041(b) of such Code, and

4 (iii) $2.93 per wine gallon in the case

5 of wine described in paragraph (3) of sec6 tion 5041(b) of such Code.

7 In the case of a fraction of a gallon, the tax im8 posed by subparagraph (A) shall be the same

9 fraction of the amount of such tax imposed on

10 a whole gallon.

11 (C) TAX-INCREASED ARTICLE.—For pur12 poses of this subsection, the term ‘‘tax-in13 creased article’’ means wine described in para14 graph (1), (2), or (3) of section 5041(b) of such

15 Code.

16 (2) EXCEPTION FOR CERTAIN SMALL WHOLE17 SALE OR RETAIL DEALERS.—No tax shall be im18 posed by paragraph (1) on tax-increased articles

19 held on October 1, 1999, by any dealer if—

20 (A) the aggregate liquid volume of tax-in21 creased articles held by such dealer on such

22 date does not exceed 500 wine gallons, and

23 (B) such dealer submits to the Secretary

24 (at the time and in the manner required by the
6

•S 432 IS

1 Secretary) such information as the Secretary

2 shall require for purposes of this subparagraph.

3 (3) LIABILITY FOR TAX AND METHOD OF PAY4 MENT.—

5 (A) LIABILITY FOR TAX.—A person hold6 ing any tax-increased article on October 1,

7 1999, to which the tax imposed by paragraph

8 (1) applies shall be liable for such tax.

9 (B) METHOD OF PAYMENT.—The tax im10 posed by paragraph (1) shall be paid in such

11 manner as the Secretary shall prescribe by reg12 ulations.

13 (C) TIME FOR PAYMENT.—The tax im14 posed by paragraph (1) shall be paid on or be15 fore March 31, 2000.

16 (4) CONTROLLED GROUPS.—

17 (A) CORPORATIONS.—In the case of a con18 trolled group of corporations, the 500 wine gal19 lon amount specified in paragraph (2) shall be

20 apportioned among the dealers who are compo21 nent members of such group in such manner as

22 the Secretary shall by regulations prescribe.

23 For purposes of the preceding sentence, the

24 term ‘‘controlled group of corporations’’ has the

25 meaning given to such term by subsection (a)
7

•S 432 IS

1 of section 1563 of such Code; except that for

2 such purposes the phrase ‘‘more than 50 per3 cent’’ shall be substituted for the phrase ‘‘at

4 least 80 percent’’ each place it appears in such

5 subsection.

6 (B) NONINCORPORATED DEALERS UNDER

7 COMMON CONTROL.—Under regulations pre8 scribed by the Secretary, principles similar to

9 the principles of subparagraph (A) shall apply

10 to a group of dealers under common control

11 where 1 or more of such dealers is not a cor12 poration.

13 (5) OTHER LAWS APPLICABLE.—All provisions

14 of law, including penalties, applicable to the tax im15 posed by section 5041 of such Code with respect to

16 any tax-increased article shall, insofar as applicable

17 and not inconsistent with the provisions of this sec18 tion, apply to the floor stocks taxes imposed by

19 paragraph (1) to the same extent as if such taxes

20 were imposed by such section 5041.

21 (6) DEFINITIONS.—For purposes of this

22 subsection—

23 (A) IN GENERAL.—Terms used in this

24 paragraph which are also used in subchapter A

25 of chapter 51 of such Code shall have the re-
8

•S 432 IS

1 spective meanings such terms have in such sub2 chapter.

3 (B) PERSON.—The term ‘‘person’’ includes

4 any State or political subdivision thereof, or any

5 agency or instrumentality of a State or political

6 subdivision thereof.

7 (C) SECRETARY.—The term ‘‘Secretary’’

8 means the Secretary of the Treasury or his del9 egate.

Æ