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106TH CONGRESS

1ST SESSION S. 213

To amend the Internal Revenue Code of 1986 to repeal the limitation of

the cover over of tax on distilled spirits, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JANUARY 19, 1999

Mr. MOYNIHAN (for himself and Mr. SCHUMER) 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 repeal

the limitation of the cover over of tax on distilled spirits,

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. REPEAL OF LIMITATION OF COVER OVER OF

4 TAX ON DISTILLED SPIRITS.

5 (a) IN GENERAL.—Section 7652 (relating to limita6 tion on cover over of tax on distilled spirits) is amended

7 by striking subsection (f) and by redesignating subsection

8 (g) as subsection (f).

9 (b) CONFORMING AMENDMENTS.—Section 7652(f) of

10 such Code (as so redesignated) is amended by striking
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1 ‘‘subsection (f) of this section’’ in paragraph (1)(B) and

2 inserting ‘‘section 5001(a)(1)’’.

3 (c) EFFECTIVE DATE.—

4 (1) IN GENERAL.—The amendments made by

5 this section shall apply to articles containing distilled

6 spirits that are tax-determined after September 30,

7 1999.

8 (2) SPECIAL RULE.—

9 (A) IN GENERAL.—For the 5-year period

10 beginning after September 30, 1999, the treas11 ury of Puerto Rico shall make a Conservation

12 Trust Fund transfer within 30 days from the

13 date of each cover over payment made during

14 such period to such treasury under section

15 7652(e) of the Internal Revenue Code of 1986.

16 (B) CONSERVATION TRUST FUND TRANS17 FER.—

18 (i) IN GENERAL.—For purposes of

19 this paragraph, the term ‘‘Conservation

20 Trust Fund transfer’’ means a transfer to

21 the Puerto Rico Conservation Trust Fund

22 of an amount equal to 50 cents per proof

23 gallon of the taxes imposed under section

24 5001 or section 7652 of such Code on dis25 tilled spirits that are covered over to the
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1 treasury of Puerto Rico under section

2 7652(e) of such Code.

3 (ii) TREATMENT OF TRANSFER.—

4 Each Conservation Trust Fund transfer

5 shall be treated as principal for an endow6 ment, the income from which to be avail7 able for use by the Puerto Rico Conserva8 tion Trust Fund for the purposes for

9 which the Trust Fund was established.

10 (ii) RESULT OF NONTRANSFER.—

11 (I) IN GENERAL.—Upon notifica12 tion by the Secretary of the Interior

13 that a Conservation Trust Fund

14 transfer has not been made by the

15 treasury of Puerto Rico during the pe16 riod described in subparagraph (A),

17 the Secretary of the Treasury shall,

18 except as provided in subclause (II),

19 deduct and withhold from the next

20 cover over payment to be made to the

21 treasury of Puerto Rico under section

22 7652(e) of such Code an amount

23 equal to the appropriate Conservation

24 Trust Fund transfer and interest

25 thereon at the underpayment rate es-
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1 tablished under section 6621 of such

2 Code as of the due date of such trans3 fer. The Secretary of the Treasury

4 shall transfer such amount deducted

5 and withheld, and the interest there6 on, directly to the Puerto Rico Con7 servation Trust Fund.

8 (II) GOOD CAUSE EXCEPTION.—

9 If the Secretary of the Interior finds,

10 after consultation with the Governor

11 of Puerto Rico, that the failure by the

12 treasury of Puerto Rico to make a re13 quired transfer was for good cause,

14 and notifies the Secretary of the

15 Treasury of the finding of such good

16 cause before the due date of the next

17 cover over payment following the noti18 fication of nontransfer, then the Sec19 retary of the Treasury shall not de20 duct the amount of such nontransfer

21 from any cover over payment.

22 (C) PUERTO RICO CONSERVATION TRUST

23 FUND.—For purposes of this paragraph, the

24 term ‘‘Puerto Rico Conservation Trust Fund’’

25 means the fund established pursuant to a
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1 Memorandum of Understanding between the

2 United States Department of the Interior and

3 the Commonwealth of Puerto Rico, dated De4 cember 24, 1968.

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