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. 

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 ‘‘Reinvesting in U.S. 

5 Territories, Not Corporations Act’’. 


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•S 3208 IS

1 SEC. 2. SPECIAL RULE FOR ALLOCATING DISTILLED SPIR2 ITS TAXES BETWEEN PUERTO RICO AND THE 

3 VIRGIN ISLANDS. 

4 (a) IN GENERAL.—Section 7652 of the Internal Rev5 enue Code of 1986 is amended by adding at the end the 

6 following new subsection: 

7 ‘‘(i) REDUCTION OF COVER OVER FOR UNREASON8 ABLE AND EXCESSIVE RUM SUBSIDIES.— 

9 ‘‘(1) IN GENERAL.—For purposes of this sec10 tion, with respect to taxes imposed under section 

11 5001 or this section on distilled spirits, the amount 

12 covered into the treasury of any covered government 

13 (after the application of subsection (f)) in any cal14 endar year shall be reduced (but not below zero) by 

15 the sum of— 

16 ‘‘(A) the amount of any unreasonable and 

17 excessive rum subsidy paid or incurred by such 

18 government in the preceding calendar year, and 

19 ‘‘(B) the amount of any unreasonable and 

20 excessive rum subsidy paid or incurred by such 

21 government for any calendar year preceding 

22 such preceding calendar year which has not 

23 been taken into account to reduce the amount 

24 so covered for any preceding calendar year. 

25 ‘‘(2) UNREASONABLE AND EXCESSIVE RUM

26 SUBSIDY.— 


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•S 3208 IS

1 ‘‘(A) IN GENERAL.—For any calendar 

2 year, the unreasonable and excessive rum sub3 sidy paid by any covered government during 

4 such calendar year is the amount of the excess, 

5 if any, of— 

6 ‘‘(i) the aggregate amount of direct 

7 and indirect government assistance paid or 

8 incurred in such calendar year by such 

9 government to all persons that produce 

10 distilled spirits in the geographical area 

11 governed by such government for consump12 tion or sale in such geographical area or in 

13 the United States, over 

14 ‘‘(ii) the amount that is 10 percent of 

15 the amounts which would (but for this sub16 section) be covered into the treasury of 

17 such government under subsection (a)(3) 

18 or (b)(3), whichever is applicable, in such 

19 calendar year (without regard to amounts 

20 covered into such treasury under sub21 section (e)). 

22 ‘‘(B) DIRECT GOVERNMENT ASSIST23 ANCE.—For purposes of subparagraph (A)(i), 

24 direct government assistance includes any 

25 transfer of funds, grant, loan, equity investVerDate Nov 24 2008 04:26 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S3208.IS S3208

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•S 3208 IS

1 ment, loan guarantee, production or marketing 

2 incentive, income or price support, provision of 

3 goods or services other than generally available 

4 infrastructure and public services, and such 

5 other assistance provided by a covered govern6 ment as the Secretary identifies as consistent 

7 with the purposes of this subsection. 

8 ‘‘(C) INDIRECT GOVERNMENT ASSIST9 ANCE.—For purposes of subparagraph (A)(i), 

10 indirect government assistance includes any 

11 amounts expended by a covered government to 

12 promote, market, or otherwise support the rum 

13 industry in the geographical area governed by 

14 such government, to pay interest on, and ex15 penses related to, indebtedness incurred, the 

16 proceeds of which are used to provide rum sub17 sidies, and for any other purpose identified by 

18 the Secretary as consistent with the purposes of 

19 this subsection. 

20 ‘‘(3) COVERED GOVERNMENT.—For purposes of 

21 this subsection, the term ‘covered government’ 

22 means the government of Puerto Rico and the gov23 ernment of the Virgin Islands. 

24 ‘‘(4) REGULATIONS.—The Secretary may pre25 scribe regulations and guidance as necessary or apVerDate Nov 24 2008 04:26 Apr 16, 2010 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S3208.IS S3208

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•S 3208 IS

1 propriate to carry out the purposes of this sub2 section, including regulations requiring annual re3 ports to be submitted by covered governments re4 porting the amount of direct and indirect govern5 ment assistance provided to persons that produce 

6 distilled spirits, the monetary value of such assist7 ance, and any other information as required by the 

8 Secretary.’’. 

9 (b) EFFECTIVE DATE.—The amendment made by 

10 this section shall apply to deposits made under subsection 

11 (a)(3) or (b)(3) of section 7652 of the Internal Revenue 

12 Code of 1986 for calendar years beginning after December 

13 31, 2009. 

Æ 


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