I 

108TH CONGRESS 

1ST SESSION H. R. 791

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 

FEBRUARY 13, 2003

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 2003’’. 
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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—

17 ‘‘(A) which were bottled in the United 

18 States, and 

19 ‘‘(B) which are purchased by such whole20 saler during the taxable year directly from the 

21 bottler of such spirits, and 

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

23 the most recent calendar year ending before the be24 ginning of such taxable year. 

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

26 section, the term ‘eligible wholesaler’ means any person 
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1 who holds a permit under the Federal Alcohol Administra2 tion Act as a wholesaler of distilled spirits. 

3 ‘‘(c) AVERAGE TAX-FINANCING COST.—

4 ‘‘(1) IN GENERAL.—For purposes of this sec5 tion, the average tax-financing cost per case for any 

6 calendar year is the amount of interest which would 

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

8 period on an amount equal to the deemed Federal 

9 excise per case. 

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

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

12 calendar year is the average of the corporate over13 payment rates under paragraph (1) of section 

14 6621(a) (determined without regard to the last sen15 tence of such paragraph) for calendar quarters of 

16 such year. 

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

18 CASE OF 12 80-PROOF 750ML BOTTLES.—For pur19 poses of paragraph (1), the deemed Federal excise 

20 tax per case is $25.68. 

21 ‘‘(4) NUMBER OF CASES IN LOT.—For purposes 

22 of this section, the number of cases in any lot of dis23 tilled spirits shall be determined by dividing the 

24 number of liters in such lot by 9.’’

25 (b) CONFORMING AMENDMENTS.—
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1 (1) Subsection (b) of section 38 of such Code 

2 is amended by striking ‘‘plus’’ at the end of para3 graph (14), by striking the period at the end of 

4 paragraph (15) and inserting ‘‘, plus’’, and by add5 ing at the end the following new paragraph: 

6 ‘‘(16) in the case of an eligible wholesaler (as 

7 defined in section 5011(b)), the distilled spirits 

8 wholesaler credit determined under section 

9 5011(a).’’

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

11 (relating to carryback and carryforward of unused 

12 credits) is amended by adding at the end the fol13 lowing new paragraph: 

14 ‘‘(11) NO CARRYBACK OF SECTION 5011 CREDIT

15 BEFORE JANUARY 1, 2004.—No portion of the un16 used business credit for any taxable year which is 

17 attributable to the credit determined under section 

18 5011(a) may be carried back to a taxable year be19 ginning before January 1, 2004.’’. 

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

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

22 amended by adding at the end the following new 

23 item:

‘‘Sec. 5011. Income tax credit for wholesaler’s average cost of carrying excise tax.’’.
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1 (c) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to taxable years beginning after 

3 December 31, 2003.

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